Issuing an Invoice - Limitations

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-26
CLNP Page ID:	2322
Page Categories:	[Limitations], [Contract Law]
Citation:	Issuing an Invoice - Limitations, CLNP 2322, <https://rvt.link/ah>, retrieved on 2024-11-26
Editor:	Sharvey
Last Updated:	2023/12/03

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Normar Drywall v 4241258 Canada Inc o/a Laurin General Contractor and Dennis Laurin, 2023 ONSC 3106 (CanLII)

[43] A reasonable time for an invoice to be delivered is one or two months after the work is completed. A reasonable time for payment is thirty days after receipt of an invoice: see Bougadis Chang LLP v. 1231238 Ontario Inc., 2012 CarswellOnt 10430 (S.C.), at paras. 18-19, leave to appeal refused, 2012 ONSC 6409, 300 O.A.C. 363.

Hugh Munro Construction Ltd. v. Donald Moschuk (also known as Don), 2011 ONSC 3271 (CanLII)

[31] In East-West Disposal Service Ltd. v. Jerudan Developments Ltd. 2003 Carswell Ont 855 (S.C.J.) Greer J., at para 30 adopted the reasoning of Nordheimer J. in G.J. White Construction that the cause of action arose from the time after two events took place, namely, the expiration of a reasonable period of time for the plaintiff to deliver an invoice to the defendant and the expiration of a reasonable time for the defendant to pay that invoice. The reasoning of G.J. White Construction has also been followed in Delmar Construction Inc. v. Toronto (City), [2008] O.J. No. 1623 (S.C.J.)

[32] Applying this approach, and taking into consideration only the plaintiff’s evidence, the plaintiff, if it had acted in accordance with its usual practices, would have sent out an invoice on the completion of the work in March 2007 and payment would have been due within 30 days of the invoice having been sent out. I believe that it is reasonable to expect that an invoice would be sent out within at least two months of the work having been completed, i.e. by at least the end of May 2007 and that in accordance with the plaintiff’s practices, payment would be due in 30 days, i.e. by the end of June 2007. Even if one concluded that the invoice should have been sent out as late as six months after the work was completed (and I do not believe it would be reasonable to so conclude), the plaintiff’s action would still be out of time. Under any reasonable view of the plaintiff’s established practices, the two year limitation expired before the statement of claim was issued on November 24, 2009.

1238235 Ontario Limited (Distinct Management Group) v Toronto Common Element Condominium Corporation No. 1702, 2017 CanLII 51564 (ON SCSM)

[11] The two Invoices relate to alleged work done by the plaintiff for bookkeeping services associated with the reconstruction of accounting records from September 5, 2005 to November 30, 2010 related to the Chatsworth fraud (the “Plaintiff’s Work”). The Plaintiff’s Work was completed in two parts: December 1, 2011 and April 25, 2012, as set out in the Invoices.

...

[21] Even if I were to accept that there was authorization or approval of the Plaintiff’s Work sometime in 2012 related to the two Invoices, as submitted by the plaintiff, are the Invoices statute barred?

[22] The paralegal for the defendant referred me to several cases on the limitation period. From these cases it has been clearly established that a cause of action for unpaid invoices or accounts arises from the time after two events take place:

(a) the expiration of a reasonable period of time for the plaintiff to deliver an invoice to the defendant, and

(b) the expiration of a reasonable time for the defendant to pay the invoice.

See G.J. White Construction Ltd. v. Palermo, [1999] O.J. No. 5563 at para. 22 (ONSC); Bougadis Chang LLP v. 1231230 Ontario Inc. cob Billy’s Souvlaki Place, [2012] O.J. No. 3982 at para. 15 (ONSC-SCC) upheld by the Divisional Court reported at 2012 ONSC 6409 (CanLII), [2012] O.J. No. 5433; Hugh Munro Construction Ltd. v. Donald Moschuk, 2011 ONSC 3271, at paras. 29-32; and Delmar Construction Inc. v. City of Toronto, 2008 ONSC 19223, at para. 13.

[23] In other words, “a claim is discovered a reasonable time between the time that the account should have been delivered - not necessarily when actually delivered as submitted by the defendant - and the time when it should have been paid”. See Bougadis at para. 17, emphasis supplied.

[24] If one were to start counting the limitation period from the time an account or invoice is actually delivered, a person would effectively be tolling the limitation period for as long as he/she wished by simply withholding delivery of the invoice. Jurisprudence frowns on tolling the limitation period. See for example Bougadis at para. 27 and Delmar at para. 12.

[25] These cases also establish that once an invoice has been delivered by the service provider one would allow a reasonable time for the recipient to receive the invoice and a reasonable amount of time, say 30 days, to pay such invoice.

[26] In the case at bar the Invoices are dated December 1, 2011 and April 25, 2012 respectively. Therefore, allowing one to two months for receiving and paying the Invoices, the cause of action would be “discovered” as follows: by February 1, 2012 for the December 1, 2011 Invoice and by June 25, 2012 for the April 25, 2012 Invoice.

[27] Any action should therefore have been commenced by June 25, 2014, at the latest. As this action was commenced on May 20, 2016 – some four years after the date of the last Invoice -- it is beyond the two-year limitation period under the LA and is therefore statute barred.

Clancy v 2228200 Ontario Inc., 2018 CanLII 64435 (ON SCSM)

14.As a matter of general principle, I see no contract law justification for a rigid common law rule that accountants or other professionals generally, or Mr. Clancy in particular, are obligated to issue invoices for ongoing matters at specific intervals such as 30 or 60 days or longer. There are many reasons why it might be more practical, more fair, better for professional-client relations, and better for the client not to have such a rule imposed on the parties by implication of the common law. In this case, the defence submits that Mr. Clancy ought to have issued his invoice within a month or two of the last services billed for, which were provided in mid-December 2013. Therefore, the defence submits that the limitation period started prior to the actual invoice date of June 30, 2014 and the claim issued two years less a day later is barred by limitation.

...

21. The implication of reasonable time in the contract law context is done with a view to the reasonable expectations of the parties. As Justice Nordheimer pointed out in G.J. White Construction Ltd. v. Palermo, supra, at para. 21, the reasonable time to issue an invoice can’t be the date the work was performed because that would lead to the absurd result that invoices would have to be issued continuously. Dealing with the construction context, he referred to the absurdity of requiring a new invoice to be issued “when each nail was hammered in...” In the context of ongoing professional engagements, in my opinion, imposing a legal requirement that invoices be issued even every 30 days would be equally absurd

20. When an invoice is issued and delivered and is payable within 30 days, one might expect the failure of the customer to pay would trigger the start of the limitation period on the 31st day. However the inherent flexibility of the discovery concept under s. 5(1) has led some courts to conclude that for limitation purposes, failure to pay an invoice that is payable within 30 days does not start the limitation period until 60 days have passed: New Tec Building Envelopes Ltd. v. Deciantis Construction Ltd. (2015), 340 O.A.C. 127 (Div. Ct.), at para. 25. There is no absolute rule concerning when the limitation period for nonpayment of an invoice starts to run. When the common law implies a reasonable time, that is done on a case-by-case basis depending on the particular facts. That is consistent with the inherently subjective aspects that are built into the statutory concept of discovery. See Everding v. Skrijel (2010), 2010 ONCA 437 (CanLII), 100 O.R. (3d) 641 (C.A.), dealing with discovery under the Limitations Act, 2002; and Waschkowski v. Hopkinson Estate (2000),2000 CanLII 5646 (ON CA), 47 O.R. (3d) 370 (C.A.), discussing the “temporal elasticity” of the common law discoverability rule.

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22. Mr. Clancy’s view was that invoicing was a matter within his discretion. There is certainly a discretion involved, assuming the retainer agreement is silent on the matter. The problem lies in identifying any limit on the professional’s discretion to defer billing. In Bougadis Chang LLP v. 1231238 Ontario Inc., supra, the file had been concluded but the invoice was not delivered until just over two years later and the action was not commenced until three years and eight months after the file was concluded. In those circumstances my colleague Prattas D.J. found the professional’s claim for services rendered to be barred by limitation. He concluded at para. 27:

27 In short, a service provider cannot sit on an invoice indefinitely and then expect the court to disregard the meaning and intent of the basic two-year limitation period and endorse its inordinate delay.

23. In the circumstances of this matter, the net position advanced by the defence is that Mr. Clancy was under a legal obligation to issue this invoice within approximately four or five months after the last work being invoiced - assuming the defendant’s reasonable time to pay would have been either one or two months. The total of approximately six months is therefore posited by the defence as inordinate. Given this was an ongoing professional retainer with no specific agreement on the timing of invoices, I am unable to accept that position. I find that the deadline for “a reasonably-timed invoice” and a reasonable time for payment thereof had not expired by June 30, 2014 when this invoice was issued.

Pioneer Corp. v. Godfrey, 2019 SCC 42 (CanLII)

[31] This Court has recognized that limitation periods may be subject to a rule of discoverability, such that a cause of action will not accrue for the purposes of the running of a limitation period until “the material facts on which [the cause of action] is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence” (Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), (1986) 2 S.C.R. 147, at p. 224; Ryan, at paras. 2 and 22).

[32] This discoverability rule does not apply automatically to every limitation period. While a “rule”, it is not a universally applicable rule of limitations, but a rule of construction to aid in the interpretation of statutory limitation periods (Peixeiro v. Haberman, 1997 CanLII 325 (SCC), (1997) 3 S.C.R. 549, at para. 37]). It can therefore be displaced by clear legislative language (Ermineskin Indian Band and Nation v. Canada, 2006 FCA 415, (2007) 3 F.C.R. 245, at para. 333, aff’d 2009 SCC 9, (2009) 1 S.C.R. 222). In this regard, many provincial legislatures have chosen to enact statutory limitation periods that codify, limit or oust entirely discoverability’s application, particularly in connection with ultimate limitation periods (see e.g. Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, ss. 4-5 and 15; Limitations Act, R.S.A. 2000, c. L-12, s. 3(1), Limitation Act, S.B.C. 2012, c. 13, ss. 6-8 and 21; The Limitations Act, S.S. 2004, c. L-16.1, ss. 5-7, Limitation of Actions Act, S.N.B. 2009, c. L-8.5, s. 5, Limitation of Actions Act, S.N.S. 2014 c. 35, s. 8; see also Bowes v. Edmonton (City), 2007 ABCA 347, 425 A.R. 123, at paras. 146-58).

[33] Further, absent legislative intervention, the discoverability rule applies only where the limitation period in question runs from the accrual of the cause of action, or from some other event that occurs when the plaintiff has knowledge of the injury sustained:

In my opinion, the judge-made discoverability rule is nothing more than a rule of construction. Whenever a statute requires an action to be commenced within a specified time from the happening of a specific event, the statutory language must be construed. When time runs from “the accrual of the cause of action” or from some other event which can be construed as occurring only when the injured party has knowledge of the injury sustained, the judge-made discoverability rule applies. But, when time runs from an event which clearly occurs without regard to the injured party’s knowledge, the judge-made discoverability rule may not extend the period the legislature has prescribed. [Emphasis added.]

(Fehr v. Jacob (1993), 1993 CanLII 4407 (MB CA), 14 C.C.L.T. (2d) 200 (Man. C.A.), at para. 22, cited in Peixeiro, at para. 37.)

[34] Two points flow from this statement. First, where the running of a limitation period is contingent upon the accrual of a cause of action or some other event that can occur only when the plaintiff has knowledge of his or her injury, the discoverability principle applies in order to ensure that the plaintiff had knowledge of the existence of his or her legal rights before such rights expire (Peixeiro, at para. 39).

[35] Secondly (and conversely), where a statutory limitation period runs from an event unrelated to the accrual of the cause of action or which does not require the plaintiff’s knowledge of his or her injury, the rule of discoverability will not apply. In Ryan, for example, this Court held that discoverability did not apply to s. 5 of the Survival of Actions Act, R.S.N.L. 1990, c. S-32, which stated that an action against a deceased could not be brought after one year from the date of death. As the Court explained (para. 24):

The law does not permit resort to the judge-made discoverability rule when the limitation period is explicitly linked by the governing legislation to a fixed event unrelated to the injured party’s knowledge or the basis of the cause of action. [Emphasis added; citation omitted.]

By tying, then, the limitation period to an event unrelated to the cause of action, and which did not necessitate the plaintiff’s knowledge of an injury, the legislature had clearly displaced the discoverability rule (Ryan, at para. 27).

[36] In determining whether a limitation period runs from the accrual of a cause of action or knowledge of the injury, such that discoverability applies, substance, not form, is to prevail: even where the statute does not explicitly state that the limitation period runs from “the accrual of the cause of action”, discoverability will apply if it is evident that the operation of a limitation period is, in substance, conditioned upon accrual of a cause of action or knowledge of an injury. Indeed, clear statutory text is necessary to oust its application. In Peixeiro, for example, this Court applied the discoverability rule to s. 206(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8, which stated that an action must be commenced within two years of the time when “damages were sustained” (para. 2). The use of the phrase “damages were sustained” rather than “when the cause of action arose” was a “distinction without a difference”, as it was unlikely that the legislature intended that the limitation period should run without the plaintiff’s knowledge (para. 38).

(b) The Statutory Scheme, and the Objects of Statutory Limitation Periods

[47] The application of discoverability to the limitation period in s. 36(4)(a)(i) is also supported by the object of statutory limitation periods. This Court has recognized that three rationales underlie limitation periods (M. (K.), at pp. 29-31), which courts must consider in deciding whether the discoverability rule applies to a particular limitation period. The first is that limitation periods foster certainty, in that “[t]here comes a time . . . when a potential defendant should be secure in his reasonable expectation that he will not be held to account for ancient obligations”(M. (K.), at p. 29). This concern must be balanced against the unfairness of allowing a wrongdoer to escape liability while the victim of injury continues to suffer the consequences (M. (K.), at p. 29). The second rationale is evidentiary: limitation periods are intended to help prevent evidence from going stale, to the detriment of the plaintiff or the defendant (M. (K.), at p. 30). Finally, limitation periods serve to encourage diligence on the part of plaintiffs in pursuing their claims (M. (K.), at p. 30).

[48] Consideration of these rationales for limitation periods affirms discoverability’s application here. Even recognizing that shorter limitation periods indicate that Parliament put a premium on the certainty that comes with a limitation statute’s function of repose (Peixeiro, at para. 34), balancing all of the competing interests underlying s. 36(4)(a)(i) weighs in favour of applying discoverability. The ability of plaintiffs to advance claims for loss arising from conduct contrary to Part VI of the Competition Act outweighs defendants’ interests in barring them, especially where such conduct is, as I have already noted, concealed from plaintiffs (Fanshawe, at para. 46) (such that the evidentiary rationale — that is, the concern about evidence going “stale” — has no place in the analysis). To hold otherwise would create perverse incentives, encouraging continued concealment of anti-competitive behaviour until the two-year limitation period has elapsed. It would therefore not only bar plaintiffs from pursuing their claims, but reward concealment that has been “particularly effective” (Fanshawe, at para. 49).

[138] Limitation clauses are statutory provisions that place temporal limits on a claimant’s ability to institute legal proceedings. The expiry of a limitation period has the effect of “extinguish[ing] a party’s legal remedies and also, in some cases, a party’s legal rights” (G. Mew, D. Rolph and D. Zacks, The Law of Limitations (3rd ed. 2016) (“Mew et al.”), at p. 3). As this Court explained in M. (K.) v. M. (H.), 1992 CanLII 31 (SCC), (1992) 3 S.C.R. 6, statutory limitation clauses reflect the balance struck by the legislature between three distinct policy rationales: granting repose to defendants, avoiding evidentiary issues relating to the passage of time, and encouraging diligence on the part of plaintiffs.

Cross Bridges Inc. v. Z-Teca Foods Inc., 2016 ONCA 27 (CanLII)

[9] Secondly, the appellant submits that the limitation defence should be unavailable because the respondent admitted his indebtedness in his cross-examination on his affidavit filed in the summary judgment proceedings.

[10] We disagree. Read in its totality, the admission of indebtedness by the respondent was qualified and stated to be subject to the limitation period defence. In addition, under s. 13(9) of the Limitations Act, 2002, for an acknowledgement to reset the limitation clock, it must be made before the expiry of the limitation period applicable to the claim. Here, the cross-examination occurred long after the expiry date.