PROBLEMS OF INTERPRETING STATUTES OF LIMITATIONS IN CASES OF CONTINUING BREACH OF CONTRACT

Transcription

1 PROBLEMS OF INTERPRETING STATUTES OF LIMITATIONS IN CASES OF CONTINUING BREACH OF CONTRACT 1. Introduction The principle that there is a limited time-period to begin an action is deeply ingrained in common law legal systems. 1 There is a widespread consensus that it is unproductive to have plaintiffs bringing suits many years after the event. In particular, it is desirable for the law of limitation to provide a high degree of certainty, as it is inefficient to clog the court system with people disputing about what limitation period applies. For this reason, Canadian provinces have been reforming their limitations laws to provide greater certainty and uniformity for different types of actions. There is now generally a limitation period of two years for most types of actions, compared to a greater range of variation in earlier legislation, but centred on six years. The Ontario Court of Appeal, in one notable decision, has interpreted the Limitations Act, as being aimed specifically at achieving greater certainty. In Joseph v. Paramount Canada s Wonderland, 3 the court was confronted with a personal injury claim where the plaintiff s solicitor had neglected to file a claim on time. The court took a strong position that discretion to extend the time should be refused, stating that it would be: 4... contrary to the purpose of the new Act by removing the certainty of its limitation scheme. Instead, we would continue with the procedure that developed under the former Act where courts were asked to consider in detail the actions of solicitors who missed limitation periods by neglecting to add parties or claims, and to assess in each case whether there should be relief. Because an extension is a matter of discretion, there was always uncertainty and the perception of a degree of unfairness in the application of limitation periods. 1. Limitation on actions in general goes back nearly 400 years in England, to the Act for Limitation of Actions, and for Avoiding of Suits in Law, of James I, enacted in Specific limitations on actions related to land go back much further. A complete history can be found in Developments in the Law Statutes of Limitations (1950), 63 Harv. L. Rev ( Developments in the Law are unsigned surveys of major issues written by the Review s editors.) 2. S.O. 2002, c. 24, Sch. B ONCA 469 (Ont. C.A.). 4. Joseph v. Paramount Canada s Wonderland, supra, at para

2 412 Canadian Business LawJournal [Vol. 54 In spite of this, there is one area of law where considerable uncertainty remains. This is where there is a continuing breach, either of contract or fiduciary duty. Most authorities hold that a cause of action for breach of contract crystallizes as soon as the breach has occurred. Logically, for statutes of limitations, the time should start to run from that point. Quite a number of Canadian cases, particularly in Ontario, have taken a very different approach. Where the injured party affirms the contract rather than terminating it for breach, the contract remains in force and it can be said that there is a continuing breach. Several decisions have held that each missed payment or other omission by the party in breach is counted as a new cause of action. As a result, the statute of limitations will never apply to completely bar a claim. However, other decisions, particularly at the federal level, have taken the opposite approach, and rejected this idea as inconsistent with the principle of limitations. There appears to be an increasing amount of inconsistency over the issue. 5 This comment surveys the case law and argues for legislative reform to clarify the position. 2. Cases where Continuing Breach of Contract Prevented Limitations from Running (a) An Early Illustration The 1858 case of Brown v. Trumper is an early example of a case holding that a continuing breach of contract postpones the commencement of the limitation period. 6 In 1805, the landlord gave a seven-year lease of a farm to the tenant, with the lease specifying that the tenant had the responsibility to keep the buildings in repair. At the end of the term, the lease would continue as a year-to-year tenancy, which indeed went on until the tenant died in At that point, the landlord sought payment of 390 for dilapidation, including the replacement of a building that had fallen down 23 years earlier. The administratrix of the tenant s estate sought refuge in the statute of limitations. The plaintiff responded that The Statute of Limitations is set up, but it is inapplicable, for there was a continuing breach of the 5. A point noted by the New Zealand Law Commission in a recent issues paper: Civil Pecuniary Penalties, NZLC IP33 (Wellington, New Zealand, Law Commission, 2012), at section This document is available at 5www.lawcom.- govt.nz4. 6. Brown v. Trumper (1858), 26 Beavan 11, 53 E.R. 800.

3 2013] Commentaries 413 covenant, and the breach of the covenant to yield up in substantial repair took place at the end of the term. 7 The Master of the Rolls, Sir John Romilly, agreed with this view, and stated that: 8 I am of opinion that the covenant to repair continued to the end of the demise, and that the tenant was bound at that time to give up possession of the premises in as good a state of repair as when he took possession. Echoes of this approach to continuing breach can be found in most common law countries, including the Canadian cases discussed below. 9 As for Brown v. Trumper itself, one might well conclude that the decision was a reasonable one. The tenant was in possession, and as long as the rent was being paid, it did not make any difference to the landlord whether the building was in good repair or not. However, the issue becomes one of where to draw the line, and when this type of rule may lead to perverse outcomes. (b) Recent Ontario cases In Sungard Availability Services (Canada) Ltd. v. ICON Funding ULC, 10 the plaintiff Sungard operated a data recovery service, and had a contract to supply this service to the defendant ICON for a 10-year period from October, 1999 to September, The defendant stopped making payments to Sungard around July of 2006, arguing substandard performance, and seeking to terminate the contract. A notice of action by Sungard was issued in February of 2010, well past the two-year statutory limitation period that was in effect in Ontario. The defendant argued that Sungard s claim was entirely statute-barred. The court ruled differently. It held that each individual monthly payment for service that was due under the contract, and not paid, was a new cause of action. Money that would have been due more than two years before the notice of action was indeed statute-barred. However, payments due in the period from February, 2008 to the end of the contract were not statute-barred, and the plaintiff was awarded $60,000 in damages for this period. Campbell J. relied on the principle that: [W]hen one party to a contract wrongly terminates or repudiates a contract, the innocent, non-repudiating party has a choice, namely, to accept the 7. Brown v. Trumper, supra. at p Supra. at p A recent U.S. example is Guilbert v. Gardner, 480 F.3d 140 (C.A.2d N.Y. 2007) ONSC 7367 (Ont. S.C.J.).

4 414 Canadian Business LawJournal [Vol. 54 repudiation and sue for any current and prospective losses in relation to the contract or, alternatively, to refuse to accept the repudiation and continue on as if the contract is in full force and effect. 11 Sungard did not accept the repudiation, and continued to perform the unwanted data recovery services. Therefore, it was held to be entitled to continuing monthly payments. However, this theory of repeated causes of action appears to be contrary to the principle of res judicata. All the claims based on the same set of facts should be brought in a single action. The valuation of the damage related to the expectation interest in the contract can be made as soon as the contract is breached, once it is apparent that the breach will not be remedied. In Sungard, the court placed special reliance on an Ontario case from four years earlier. In Germain v. Clement, the plaintiff Germain entered into an oral contract of employment, where he was allegedly entitled to annual profit-sharing. 12 The last profitsharing payment he received was in He brought suit for the past payments he claimed were owed to him in 2006, when he ceased his employment. The plaintiff argued that the entire amount fell due in 2006, while the defendant argued that the entire claim was statute-barred. The court rejected both of these approaches, holding instead that each failure to pay was a new breach of the contract. 13 The earliest missed payments were indeed statute-barred, but the ones that fell within the limitation period were awarded to the employee. In Germain v. Clement we have a situation where the plaintiff was silent from 1994 to 2006 and, in spite of the Limitations Act, he succeeded in gaining at least partial compensation for a breach that had became apparent 12 years earlier. One could argue that the employer was unfairly prejudiced, because he may well have assumed that the profitsharing arrangement had ceased and relied to his detriment on this assumption by paying the plaintiff a higher regular salary than he would otherwise have paid. The most extreme of all the cases, in terms of the length of the period for which a limitation failed to apply, is Brown v. Belleville. 14 In 1953, the predecessor of the City of Belleville entered into an agreement with a farmer that it would maintain 11. Sungard, supra, at para Germain v. Clement (2008), 166 A.C.W.S. (3d) 978, [2008] O.J. No (Ont. S.C.J.). 13. Sungard, supra, footnote 10, at para (2013), 114 O.R. (3d) 561, 2013 ONCA 148 (Ont. C.A.).

5 2013] Commentaries 415 certain drains on the farmer s land. Six years later, the municipality stopped maintaining the drains. The land changed hands a number of times. Some subsequent owners, learning of the agreement, asked the city to do the maintenance, but it never did. None of the owners launched a legal action until the Browns acquired the land, and sued the city in 2011, 52 years after the original breach. The city argued that the claim was statute-barred, but the Court of Appeal rejected this argument. The court actually had very little to say about how the principle of limitation applied. It focused instead on the contractual principle of affirmation. It quoted the Supreme Court of Canada (itself merely quoting from a reference book), to the effect that if the injured party treats the contract as still being in full force and effect, the contract remains in being for the future on both sides. Each [party] has a right to sue for damages for past or future breaches. 15 With respect, this statement appears to be taken out of context; the Supreme Court s purpose in making the point was to draw a distinction between rescission and repudiation of contracts. The right to sue for future damages is a way of calculating what the damages are in terms of the expectation interest for the remaining term of the contract. It does not say anything about whether the injured party in a long-term contract can sleep on that right and launch a suit decades after the breach first occurred. The court in Brown v. Belleville went on to quote Professor McCamus: [A]lthough the innocent party is entitled to disaffirm the agreement immediately and sue, that party may prefer to affirm the agreement and encourage or insist upon performance by the repudiating party. 16 The court went through the evidence to establish that neither the plaintiffs nor their predecessors had disaffirmed the agreement and it rejected the limitation period argument on that basis. However the court did not cite any authority to show that a plaintiff s election not to disaffirm the contract affects limitations. To avoid a limitation period from running, injured parties are normally expected to take legal action, rather than merely writing letters of complaint. In this instance, the policy justification for voiding the statute of limitations appears to be lacking. The plaintiffs had bought the 15. Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423 (S.C.C.), at para Brown v. Belleville, supra, footnote 14, at para. 44, citing John D. McCamus, The Law of Contracts (Toronto, Irwin Law, 2005), at p. 654.

6 416 Canadian Business LawJournal [Vol. 54 land without the drains being maintained, and the purchase price presumably reflected the value of the land with inferior drainage. Success in getting a court to enforce a supposed right that had been dormant for over 50 years represents a windfall for the successful plaintiff. Moreover, the court s decision in Brown v. Belleville begs the question of who is an innocent party in a breach of contract case. While one speaks about innocent parties, in practice there are often varying degrees of innocence and blame. The party who has stopped making payments or stopped providing a service that was the subject of the contract will rarely admit that he has done so just because he changed his mind. In many cases, there is an element of breach on both sides. The party who has stopped doing something will argue that it was in response to some default on the part of the other party (in terms of quality of service, timeliness of payments, etc.), and that it was in fact the other side that breached the contract first. Or one party may argue that there was never a binding contract to begin with. Such cases need to be adjudicated to discover who really is most at fault. This needs to be done while the evidence is fresh and the memories of witnesses are still reliable. That is why maintaining a clear statute of limitations is important for breach of contract cases. It has been suggested that commencement of the period of limitations should be delayed until final performance of the defaulting party is due, because encouraging immediate suit would engender litigation which may be needless if the breach can be repaired. 17 There may be some merit to this argument on policy grounds, but the issue still should not be left completely open-ended, so as to defeat even the ultimate limitation period in the statute. If the law wants to recognize this consideration, it should be specifically provided for in legislation and the statutory rule should specify a time-limit after which reconciliation between the parties should be considered hopeless. There are a number of other cases that have accepted the concept of continuing breach, but none as significant as Brown v. Belleville. One rather odd case, Scipio v. False Creek Co-operative Housing Assn., from British Columbia, was an action by a resident against the board of his co-op housing community. 18 The board had replaced the roof in 1995, and in the process disabled 17. Developments in the Law Statutes of Limitations, supra, footnote 1, at p Scipio v. False Creek Co-operative Housing Assn., 2012 BCSC 1339 (B.C. S.C.).

7 2013] Commentaries 417 the plaintiff s fireplace chimney. The plaintiff finally decided to sue in The court ruled for the plaintiff, stating that it could treat the refusal of the Co-op, to the present day, to uncap it as a continuing breach, so that no limitations issue arises. 19 However, it should be noted that there was no claim for damages for the loss of amenity from not using the fireplace for the intervening years, and no obvious prejudice to the board. That is quite different from what might occur if a business was sued for damages due to a breach many years after the occurrence, perhaps after ownership had changed hands, and the new owner had no way to know about that contingent liability. (c) Recent English Cases An English court confronted the issue of continuous breach in the widely cited case of Midland Bank Trust Co. Ltd. v. Hett, Stubbs & Kemp. 20 This was a skirmish related to a landmark case in property law that eventually made its way to the House of Lords as Midland Bank v. Green. 21 A father had given his son an option to purchase his farm, but they later argued, and the father instead sold it to his wife for a nominal sum. The son s solicitors had not carried out their responsibility to register the option on title, and therefore the option failed. The option had been granted in The farm was sold in 1967, defeating the son s unregistered equitable interest. Midland (as executors for the estate of the son) filed suit against the solicitors in 1972, with the limitation period at that time being six years. Oliver J. held that the breach by the solicitors was a continuing one as long as the possibility of registration remained open (that is, until the owner sold the property to somebody else). This extended the period before limitation began to run for several years, allowing the estate to recover damages. Midland Bank was effectively overruled by the Court of Appeal in the very similar case of Bell v. Peter Browne & Co. 22 The facts in Midland Bank and Bell were virtually identical, with the difference 19. Scipio v. False Creek Co-operative Housing Assn., supra, at para [1978] 3 All E.R. 571 (Eng. Ch. Div.). Midland Bank was discussed and explicitly rejected in Costigan v. Ruzicka (1984), 13 D.L.R. (4th) 368 (Alta. C.A.), leave to appeal refused 13 D.L.R. (4th) 368 (note) (S.C.C.). Ruzickah was in turn approved by the Supreme Court of Canada in Wewaykum Indian Band v. Canada), [2002] 4 S.C.R. 245, 2002 SCC 79 (S.C.C.), at para Midland Bank Trust Co. Ltd. v. Hett, Stubbs & Kemp; Midland Bank v. Green (1977), [1978] 3 W.L.R. 167, [1981] 1 All E.R. 153 (H.L.). 22. [1990] 2 Q.B. 495 (U.K. C.A.).

8 418 Canadian Business LawJournal [Vol. 54 that the client did not have an ongoing business relationship with the solicitors in the latter case. It was suggested that it could be distinguished on that ground, but a reading of the reasons makes it appear much more like an outright repudiation of the earlier decision. Beldam L.J. was quite explicit, that: 23 I am not persuaded that [Midland Bank] was distinguishable... from the facts in the present case.... [Mr Bell s] cause of action arose when he conveyed his interest in the property to his former wife without proper precautions being taken to protect his future interest in the proceeds of sale. Accordingly I would hold that his cause of action in contract was barred by statute. Bell v. Peter Browne was approved by the House of Lords in Nykredit Mortgage Bank Plc. v. Edward Erdman Group Ltd. 24 Citing another case where the plaintiff received deficient service from her solicitors with respect to advice about a mortgage, Lord Nicholls stated: 25 She sustained loss as soon as she entered into the transaction. That was when her house became encumbered. Her cause of action against the solicitors arose at that date, even though no demand was made under the mortgage until two years later. (d) Statutory interpretation issues Limitations have always been statutory, but there is a large sphere of common law traditional interpretation as an overlay. Limitations acts are often vague about what constitutes a cause of action. For example, breach of contract is not specifically mentioned, let alone defined, in Ontario s Limitations Act. This has allowed courts considerable creative discretion. Nevertheless, the approach taken by Ontario s courts appears to be contrary to the spirit and general purpose of statutes of limitations. As discussed in the next section, the Supreme Court of Canada in Wewaykum held that reliance on continuing breach is inconsistent with the principle of limitations and is contrary to the legislative intent to create greater certainty and closure. In the latest phase of statutory reform, Alberta and Ontario both inserted a reference to continuous acts or omissions in their statutes, but only in respect of the ultimate limitation period (which is 10 years in Alberta, and 15 years in Ontario) Bell v. Peter Browne & Co., supra, at p [1997] 1 W.L.R (H.L.). 25. Nykredit Mortgage Bank Plc. v. Edward Erdman Group Ltd., supra, p

9 2013] Commentaries 419 Ontario s Limitations Act, in s. 15(1), deals with ultimate limitations periods as follows: Even if the limitation period established by any other section of this Act in respect of a claim has not expired, no proceeding shall be commenced in respect of the claim after the expiry of a limitation period established by this section. Section 15(6) provides: For the purposes of this section, the day an act or omission on which a claim is based takes place is, (a) in the case of a continuous act or omission, the day on which the act or omission ceases; (b) in the case of a series of acts or omissions in respect of the same obligation, the day on which the last act or omission in the series occurs; It is hard to make out the purpose of s. 15(6) and why the provision applies only with respect to the ultimate limitation period. It is taken verbatim from the Uniform Law Conference of Canada s model Act. In their commentary, there is an explanation of the general reason for having an ultimate limitation period: 27 As a person may be subject to a claim indefinitely if the associated limitation period only runs upon a plaintiff s discovery of the claim, an additional limitation period is necessary to ensure that the interests of defendants for finality and closure are not overlooked. The ultimate limitation period serves to bring certainty as to when exposure to potential liability ends.... Section [15(6)] clarifies when the ultimate limitation period commences in the cases where there is a continuous act or omission and where there are a series of acts or omissions in respect of the same obligation. It also clarifies when the ultimate limitation period commences for cases dealing with demand obligations. There is no attempt to explain why this clarification is necessary for the ultimate limitations period, and not for the normal two-year period. Nor does it appear to contemplate situations where it might serve to completely defeat the ultimate limitations period. 26. Alberta: Limitations Act, R.S.A. 2000, c. L-12; Ontario: Limitations Act, 2002, supra, footnote Uniform Law Conference of Canada, Limitations Act, online: 5http:// start=24.

10 420 Canadian Business LawJournal [Vol. 54 In reviewing the new Limitations Act, two commentators have expressed puzzlement over this provision: 28 The fact that the Legislature has expressly addressed this issue in the context of the 15-year period and not the 2-year period probably means that, for the 2-year period, the fact that a default is continuous is irrelevant. The issue remains as to the date that the claim, continuous or otherwise, was first discovered or first became discoverable. There is no reference to the provision in Brown v. Belleville, where it might have been relevant. The Manitoba Law Reform Commission has also devoted considerable attention to the continuing breach issue. They recommended: 29 [A] similar provision for the basic limitation. The Act should provide that in the case of a continuous act or omission, the ultimate limitation begins to run on the day on which the act or omission ceases, or where there is a series of acts or omissions, on the day on which the last act or omission occurs. In advocating this approach, the Commission may not have given enough thought to the differences between acts in tort and omissions in contract, and the reasonable policy considerations around them. Tort and contract are logically different: a breach of contract generally represents an omission, and the affected party can seek alternatives to mitigate the impact of the breach. By contrast, an ongoing tort represents continuing harm for which relief from a court is needed. 30 In the case of contracts between businesses, where one agreement has been broken, there is a strong policy interest in allowing business to go on, and new contracts to be made to replace the old ones. This cannot be done in an efficient way if it can never be known when the old contracts and their obligations are at an end. 28. Lisa H. Kerbel Caplan and Wayne D. Gray, Impact of the Limitations Act, 2002 on Commercial Transactions, Lending and Debt Recovery, paper presented to The New Ontario Limitations Regime: Exposition and Analysis (Toronto, Ontario Bar Association, November 18, 2005). 29. Manitoba Law Reform Commission, Limitations, Report No. 123 (Winnipeg, The Commission, 2010), at p. 62, online:5http:// 30. Once a contract is repudiated, all the damage resulting from that repudiation is complete (the discounted present value of the expectation interest). In Roberts v. Portage la Prairie (City), [1971] S.C.R. 481 (S.C.C.), the court pointed out that in an ongoing tort there is an active decision by the tortfeasor that creates new damage every day: Thus the wrong of false imprisonment continues so long as the plaintiff is kept in confinement.

11 2013] Commentaries Cases Finding that Continuing Breach Does Not Prevent Time from Running (a) Federal Decisions in Aboriginal Claims have Upheld Limitation Periods The Supreme Court of Canada decided the case of Wewaykum Indian Band v. Canada in The decision takes a clear and unambiguous position rejecting the concept of continuing breach as a factor that can defeat limitation periods. The most remarkable thing is that none of the cases in the previous section even refer to Wewaykum. One could conceivably argue that some of the other cases could be distinguished from Wewaykum, but this argument was not advanced in any of the cases because the parties overlooked Wewaykum entirely. The most plausible reason why Wewaykum has been ignored relates to its subject-matter; lawyers who deal in commercial litigation typically do not pay attention to cases dealing with aboriginal land rights. The law with respect to aboriginal land is that it can only be conveyed to the Crown and not directly to private individuals. The Crown, when it has been entrusted with their land, is under a fiduciary duty to the aboriginals to properly manage it for their benefit. 32 In Wewaykum, two bands claimed damages from the federal government. The alleged breaches of fiduciary duty originated around The plaintiffs argued that, as the breach of duty had been ongoing and continuous since then, the statute of limitations should not apply. Binnie J., writing for a unanimous court, rejected this argument: 33 The appellants contend that every day they are kept out of possession of the other band s reserve is a fresh breach, and a fresh cause of action.... Acceptance of such a position would, of course, defeat the legislative purpose of limitation periods. For a fiduciary, in particular, there would be no repose. In my view such a conclusion is not compatible with the intent of the legislation. It should be noted that Wewaykum itself came after a number of earlier federal court cases related to aboriginal land claims, which had also rejected the doctrine of continuing breach. 34 In Semiahmoo, Isaac C.J. stated for the court that: 31. Supra, footnote Calder v. British Columbia (Attorney General), [1973] S.C.R. 313 (S.C.C.); Delgamuukw v. British Columbia, [1997] 3 S.C.R (S.C.C.). 33. Wewaykum, supra, footnote 20, at paras Semiahmoo Indian Band v. Canada (1997), [1998] 1 F.C. 3 (Fed. C.A.); Lower

12 422 Canadian Business LawJournal [Vol. 54 On its face, this argument [of continuing breach] has an attractive ring. But, for the reasons that follow, I find it singularly unpersuasive. While the respondent s post-surrender fiduciary duty can be seen as continuing so long as the respondent retains ownership and control over the land, I am of the view that any breach of that duty must be located at a specific point in time. It would defeat the very purpose of limitation periods to find that a breach of fiduciary duty continues for so long as the Crown retains the surrendered land. 35 (b) Other Decisions from the Western Provinces Lest one think that Wewaykum rejects the continuing breach argument only for aboriginal land claims, the Supreme Court in that case specifically referred to and approved the Alberta Court of Appeal s decision in Costigan v. Ruzicka. 36 That was a commercial case against a solicitor who had allegedly breached his contract to carry out his responsibilities in a real estate transaction. In rejecting the continuing breach argument, Laycraft J.A., speaking for the court stated quite emphatically: 37 With respect, I do not find convincing this novel approach to the enforcement of limitation legislation. The same reasoning could be applied to a great many breaches of contract to the end that the statute would be ineffective in the role the Legislature has assigned to it. For example, the limitation period applicable on the non-delivery of a chattel after sale could, in this way, be extended indefinitely day by day until the chattel had been destroyed or otherwise disposed of... the existence of damage is not an element of a cause of action in contract. The cause of action is complete with breach and, on the plain wording of the statute, the limitation period commences to run at that point. Wewaykum has been repeatedly applied in later aboriginal claims, dealing both with land and other matters. Two cases alleged that aboriginal war veterans received benefits that were inferior to those of their non-aboriginal counterparts. The argument that this was a continuing breach that avoided limitation periods was rejected, both in federal and provincial courts. 38 The Kootenay Indian Band v. Canada (1991), 42 F.T.R. 241 (Fed. T.D.); Fairford First Nation v. Canada (Attorney General) (1998), [1999] 2 F.C. 48 (Fed. T.D.). Actions in the Federal Court of Canada are subject to the limitation periods in the province in which the cause of action arises. 35. Semiahmoo, supra, at para 63 (emphasis added). 36. (1984), 13 D.L.R. (4th) 368 (Alta. C.A.), leave to appeal refused 13 D.L.R. (4th) 368 (note) (S.C.C.). 37. Costigan v. Ruzicka, supra, at para. 19 (emphasis added). 38. Daniels v. Canada (Attorney General), [2003] 2 C.N.L.R. 98 (Sask. Q.B.), leave to appeal refused (March 12, 2003), Doc. 701 (Sask. C.A. [In Chambers]), leave to

13 2013] Commentaries 423 theory that there was a continuing breach ad infinitum due to the claimants being deprived of their benefits cheque failed based on the decision in Wewaykum. In McCallum v. Canada (Attorney-General), 39 a case involving a claim for breach of contract with respect to the land taken for the Cold Lake Air Weapons Range, the plaintiff raised the continuing breach argument, but the court rejected it in the following terms: 40 The Métis argue that each year results in a new breach and, as such, they are entitled to damages from April 1, 1998, to the present... This argument is not sustainable. The initial breach of fiduciary duty and breach of contact, if any, occurred upon the signing of the agreement... It does not create an annual breach of a new contract. The contract entered into by the parties is the same. The obligations of the parties are found in the original agreement signed in No new obligations arise but, rather, a continuation of the existing obligations remains until such time as the contract is terminated. In Edwards Estate v. Beckmann, 41 a case considering an alleged ongoing mis-management of estate property, the Supreme Court of British Columbia also relied on Wewaykum to reject an attempt to amend the statement of claim and avoid the limitation period. Baumann J. held that in the proposed amendments, the plaintiffs are not effectively raising a fresh or new cause of action within the limitation period, they are rather doing that which Justice Binnie criticized in Wewaykum Indian Band v. Canada Conclusion The cases on continuing breach have produced an odd range of results. There have been several cases dealing with breach of contract holding that every periodic missed payment or omission is a new breach of contract. Each missed payment gives rise to a new cause of action. Taken to its logical (or perhaps, illogical) conclusion, this view can entirely banish the law of limitations from contractual disputes. A plaintiff can come out of the woodwork 50 years later (as in Brown v. Belleville) and bring up a claim that has lain dormant and forgotten. All that has to be established is that there was once a breach, and the other party did appeal refused [2004] 1 C.N.L.R. iv (note) (S.C.C.); Tacan v. Canada (2005), 261 F.T.R. 161, 2005 FC 385 (F.C.). 39. (2010), 353 Sask. R. 269, 2010 SKQB 42 (Sask. Q.B.). 40. McCallum v. Canada (Attorney General), supra, at paras (2008), 166 A.C.W.S. (3d) 377, 2008 BCSC 323 (B.C. S.C.). 42. Edwards Estate v. Beckmann, supra, at para. 19.

14 424 Canadian Business LawJournal [Vol. 54 not disaffirm the contract. The principle of ultimate limitations is effectively abolished. This is the objection made to the continuing breach principle in Ruzicka and Wewaykum. Legislatures all over the common law world have established statutes of limitation. In Canada, these statutes have been made even stricter in recent decades, reducing the standard limitation period to two years compared to six previously. Variations are allowed, particularly for tort claims, due to problems of discoverability. With modern levels of education and record-keeping, fairness does not require limitations periods to be very long for breach of contract. If it is universally acknowledged that limitations are desirable for creating certainty and putting disputes to rest, it can hardly be argued that an exception is needed for situations of continuing breach of contract. None of the court decisions that have ruled against limitations in these situations suggested any policy justification for it. Admittedly, these cases are not very common. Nevertheless, there are enough of them to cast a considerable degree of uncertainty on the subject of limitations for breach of contract. As the courts have been unable to come up with a consistent approach, it would appear that legislative amendment is needed to make clear the intent of the legislatures, particularly with respect to commercial contracts. As things currently stand, Canadian courts are not consistently upholding the basic policies of limitations provisions: 43 [R]epose, elimination of stale claims, and certainty about a plaintiff s opportunity for recovery and a defendant s potential liabilities.... Statutes of limitations are intended to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared. Peter S. Spiro * 43. Roberts U.S.C.J. delivering the opinion of the court in Gabelli v. Securities and Exchange Commission, 568 U.S. (2013), Docket No , at p. 5. * Executive Fellow, Mowat Centre for Policy Innovation, School of Public Policy and Governance, University of Toronto. The author has benefited from the comments of the C.B.L.J. editor-in-chief Professor Anthony Duggan, Professor Brian Slattery of Osgoode Hall Law School and Robert E. Forbes of Miller Thomson.