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.

By the time Jing sat down with us, the dispute already felt old — a year of back-and-forth emails, a few tense phone calls, and a deficiency list that had been revised twice. Jing assumed the next step was simply drafting a lawsuit and filing it, the way a straightforward collections matter usually goes. What Jing did not know, because there was no reason to have thought about it, was that the file's actual history stretched back further than the year of visible negotiation — and that the earlier part of that history mattered more than anything said in the last twelve months.

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.

There was a further wrinkle. Discoverability is not always a single, undisputed date — it is often a question a court has to decide after hearing evidence about what a reasonable person in the plaintiff's position would have known and when. That uncertainty cuts both ways: a plaintiff might later argue a different, later date applies, but a defendant is entitled to argue for the earliest plausible date, since an earlier start date is what helps a limitation defence succeed. Because we could not be certain which date a judge would ultimately land on, the only safe course was to plan around the earliest one and remove the argument entirely rather than gamble on winning a discoverability fight later.

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, not only the emails Jing had personally written or remembered. Clients naturally reconstruct a dispute's timeline around the moments that felt significant to them, but a limitation period does not care what felt significant — it cares what was actually said and when. Building the full timeline first, before drafting a word of the claim, is what let the bookkeeper's letter surface at all.
2. Treated the earliest plausible discovery date as the operative deadline, not the most convenient one. 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. This is a deliberately conservative approach: if there is any real argument that the clock started earlier, planning around the later, more comfortable date is how a company loses a claim it never realized was already dying.
3. Confirmed the demand met the legal threshold for triggering discovery, rather than assuming it automatically did. Not every letter that mentions money starts the clock — a vague complaint or a general reservation of rights is not the same as a specific demand. We assessed whether the bookkeeper's letter stated a dollar amount, identified a specific breach, and demanded payment clearly enough that a court could treat it as the moment Jing's company knew, or ought to have known, that it had a claim worth pursuing. On close review, it did all three, which meant the two-year clock had to be treated as already running.
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, draw schedules, and deficiency correspondence needed to plead the claim properly, and coordinated with Jing to confirm the exact figures rather than estimate them, so the claim would not need to be amended later under time pressure.
5. Issued and served the claim well before expiry, rather than on the deadline itself. 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. Building in that margin meant the company's right to sue was preserved no matter which of the several demand letters in the file a court ultimately treated as the true discovery date, rather than depending on our own reading of the earliest letter being correct.

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.

Jing later said the closest call in the whole file was not the eventual mediation or the size of the claim — it was realizing how close the company had come to losing the right to sue over a letter nobody remembered sending. A bookkeeper firing off a routine collections email is not thinking about the Limitations Act; that is not part of the job. But the letter carries legal weight regardless of who typed it or what they intended, and a business that treats every demand as a footnote risks discovering, the way Jing nearly did, that the footnote was actually the deadline.

What you can learn from this