Preparing for Trial Found a Limitation Clock Already Running

The situation

Jing owned a mid-sized construction company that built custom homes across the Richmond Hill area. In one of the company's larger contracts, worth roughly $1.4 million, the client was Kwame, a surgeon, and his spouse Abena, who had hired the company to build their new home on a lot they already owned. The build ran long, as custom builds often do, but it finished, the couple moved in, and the only thing left was the final payment: a holdback balance of about $850,000 tied to substantial completion of the contract.

Kwame and Abena refused to pay it. They pointed to a list of alleged deficiencies, some cosmetic and some more substantial, and said the amount owed should be reduced by roughly $150,000 to account for the cost of fixing them. Jing disputed most of the list but was willing to negotiate a modest reduction. Talks dragged on for the better part of a year without resolution, and eventually Jing decided the company needed to sue for the balance. That decision brought the file to our office.

What the review found

Before drafting a statement of claim, our litigation team does what we call a trial-readiness review: reading every piece of correspondence in the file in date order, not just the recent emails the client remembers. It is tedious work, and it is also where limitation problems hide.

In Jing's file, that review turned up a letter the company's bookkeeper had sent to Kwame and Abena more than two years before Jing walked into our office. The letter was informal, sent from a general company email address, but it did three things that mattered: it stated a specific dollar amount owed, it demanded payment, and it set a deadline for payment before the company would consider legal action.

In Ontario, most civil claims are governed by a basic two-year limitation period under the Limitations Act, 2002. The clock does not start on the date of the contract or even the date work finished. It starts on the date the claim was discovered, or reasonably ought to have been discovered — the date a person knew, or should have known, that a loss had occurred, that it was caused by the other party's act or omission, and that a legal proceeding would be an appropriate way to seek a remedy. A clear written demand for a specific sum, refused or ignored, is strong evidence that discovery happened right then, not later.

That old bookkeeper's letter was a problem. If a court treated it as the discovery date, the two-year clock had been running since before Jing ever called our office, and it was due to expire in a matter of weeks. Jing had never mentioned the letter, not out of any intent to mislead us, but because it had been sent over a year before the company started treating the dispute as serious, and nobody had thought to flag it as legally significant. That is the recurring danger with demand letters: whoever sends the first one, even an assistant firing off a routine collections email, can set a deadline the business does not know exists until someone goes looking for it.

What we did

1. Pulled every dated document touching the dispute, not just the recent ones. We asked Jing for the complete correspondence file, including anything sent by staff, bookkeepers, or subcontractors on the company's behalf, and built a full timeline before drafting anything. The bookkeeper's letter surfaced in that process.
2. Treated the earliest plausible discovery date as the operative deadline. Rather than assume the more recent, more formal demands our client remembered were the ones that counted, we worked backward from the earliest date a court could reasonably find the claim was discoverable, and planned around that date rather than a more comfortable, later one.
3. Confirmed the demand met the threshold for triggering discovery. Not every letter that mentions money starts the clock. We looked at whether the bookkeeper's letter stated an amount, identified a specific breach, and demanded payment clearly enough that a court could treat it as the moment Jing's company knew it had a claim. It did.
4. Prepared the statement of claim on an accelerated timeline. Once the deadline was confirmed, drafting moved from a normal pace to an urgent one. We finalized the pleading, gathered the supporting contract documents and deficiency correspondence, and had it ready to issue with real time to spare rather than racing the clock on the final day.
5. Issued and served the claim well before expiry. The claim was issued at the Superior Court roughly three weeks before the two-year period calculated from the bookkeeper's letter would have run out, and served on Kwame and Abena shortly after. That timing meant the company's right to sue was preserved no matter which demand a court ultimately treated as the discovery date.

The outcome

Because the claim was filed with weeks to spare rather than days, or after expiry, Kwame and Abena's lawyer never had the opening to argue that the lawsuit was out of time. A limitation defence, if it succeeds, does not require a court to decide who was right about the deficiencies at all — it simply ends the case on a technicality regardless of the merits. That door stayed closed.

The underlying dispute over the $850,000 balance and the $150,000 in claimed deficiencies proceeded through the normal litigation process: document exchange, examinations for discovery, and eventually a mediation, which is where most Ontario civil cases resolve before ever reaching a trial date. Because the case was never at risk of being thrown out on a limitations technicality, Jing's company negotiated from a position of full strength, with the entire $850,000 claim still live and enforceable.

The lesson for Jing's business was not really about litigation strategy. It was about internal habits. The company had no practice of logging or reviewing demand letters sent by staff, even routine ones, as legally significant events. After this case, Jing put a simple rule in place: any letter demanding payment or asserting a breach, from anyone in the company, gets copied to a central file with the date noted, specifically so that if a dispute ever escalates to a lawyer, nobody has to reconstruct the timeline from memory under time pressure.

What you can learn from this