If a person starts a lawsuit within two years of when they realized they had a claim, the lawsuit has been commenced within the two-year limitation period, right? Perhaps not, due to an expectation imposed on individuals to learn of claims at the time a “reasonable person” would do so.
If a reasonable person would have discovered the claim more than two years before the lawsuit was filed, an individual can still be denied the right to pursue their claim, even if they personally became aware of it later.
Section 5(1)(b) of the Limitations Act bars lawsuits if the hypothetical “reasonable person” with the abilities and in the circumstances of the person with the claim ought to have discovered the claim more than two years before the lawsuit started.
In simple terms, as explained by the Ontario Court of Appeal in Service Mold + Aerospace Inc v Khalaf, s. 5(1)(b) is “about what one ought to know” and exists to ensure people with claims act prudently when considering if they have a legal claim against another.
How do you know when a hypothetical “reasonable person” ought to have discovered a claim? It depends on the nature of the claim in question and the abilities and circumstances of the person with the claim in question. The nature of the claim may impact when a reasonable hypothetical person would have discovered the claim. Some types of claims, such as a slip and fall leading to a broken bone may be more obvious and easily known than claims arising from more complex matters such as business transactions, when problems sometimes do not appear for months or years after the fact. The circumstances of the person with the claim, such as their intelligence, experience, or education, also informs the characteristics attributed to the hypothetical “reasonable person” and how quickly they ought to have discovered the claim.
Put differently, the reasonable person referenced in s. 5(1)(b) of the Limitations Act bears resemblance to the person with the claim. This means that the abilities and circumstances of the reasonable person varies from case to case, as every individual with a potential claim is different from every other individual. The abilities and circumstances of a reasonable hypothetical person can only vary to a certain extent. The hypothetical “reasonable person” must not, as set out in Service Mold, take on unreasonable characteristics, such as being overly trusting and gullible.
The reasonable person analysis of whether a lawsuit has been started on time or whether the person who has been sued may have a limitations defence is technical and context contingent. As mentioned, the characteristics of a reasonable hypothetical person can vary to some degree based on the context but must not take on characteristics that turn the hypothetical “reasonable person” into an “unreasonable person” or creates an unreasonable standard to be met. The analysis should focus attention on a balance of the expectation of reasonable diligence without elevating those to impose unreasonable expectations as to when claims ought to have been discovered.
