Guest blog by Joel Skapinker.
It is important for lawyers and parties starting mediation to understand the interaction between limitation periods and the mediation process. The Ontario Limitations Act and other statutes such as the Family Law Act sets out the limitation periods that apply to different causes of action. The most common limitation period is 2 years which means that if a period exceeding 2 years expires after one knew or ought to have known one had a cause of action, that person would be statute-barred from pursuing that claim in court.
What happens if the parties to a potential lawsuit undertake a failed mediation during which time the limitation period expires? In order to encourage potential litigants to mediate without running this risk, the Limitations Act (s.11) provides that limitation periods are frozen from the date an agreement to mediate is entered into until the claim is resolved or unsuccessfully ends.
One may rightfully ask why this blog is being written as the Limitation Act’s stopping of the clock means that parties who agree to mediate run no risk of a limitation period expiring during mediation. If only things were that simple. A recent case in Sudbury [1] (upheld by the Ontario Court of Appeal) held that the clock only stops running for those issues the parties agreed to mediate. In that case there was an oral agreement between counsel to mediate and the court was called on to decide what issues they had agreed to mediate as the 2 year limitation on one issue had expired before the mediation got started. Because of the limitation dispute the mediation never did proceed and the parties headed to court to argue about whether s.11 of the Limitations Act applied to that one issue. Luckily for the Plaintiff in the Sudbury case the court chose to believe that there was in fact an agreement to mediate that issue and therefore the limitation period had not expired.
What can lawyers and unrepresented parties learn from the Sudbury case? The safest approach is for parties to obtain independent legal advice before they agree to mediate. In the real world unrepresented parties are reluctant to do so or cannot afford to. One way lawyers and litigants can protect themselves is to enter into a written mediation agreement which contains reference to every possible issue being the subject matter of the mediation. For example the limitation period in the Family Law Act for an equalization claim is 2 years after the date of a divorce and 6 years after a separation. A party may not realize he/she has an equalization claim until financial statements have been exchanged by which time the mediation may have started. There is no risk, in fact I encourage lawyers & unrepresented parties to specify every possible issue in their intake forms and mediation agreements. If it turns out a particular issue is not in fact an issue then that will be agreed upon in the mediation. In the meantime all claims are preserved and survive an unsuccessful mediation.
[1] Sandro Steel Fabrication Ltd. V. Chiaca [2013] O.J. No. 477
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