Down For The Count: Notice Of Termination Starts The Limitations Clock

Two recent decisions from Ontario highlight that unlike fine wine, wrongful dismissal claims do not get better with age. The Superior Court decision of Kennedy v. RBC, and the Court of Appeal decision of Bailey v. Milo-Food & Agricultural Infrastructure & Services Inc, highlight that limitation periods can be live issues where employees engage in protracted pre-litigation negotiations or are provided a long period of working notice. These decisions re-affirm the general rule that once proper notice of an employee's termination is given, the limitation clock starts to run.

In Kennedy, the defendant brought a summary judgment motion to dismiss the plaintiff's action as limitation barred. The plaintiff had been an employee of Royal Bank of Canada in Toronto. She moved to work at a Royal Bank in Trinidad and Tobago. For reasons that are unclear, sometime prior to November 27, 2009, the plaintiff resigned from the company. She subsequently retained counsel and attempted to rescind her resignation. On December 17, 2009, RBC determined that the employment relationship was irreparably damaged and advised that they would be offering her a severance package. What followed was several months of back and forth negotiations between lawyers for the parties. Eventually, no settlement was reached and the plaintiff issued a claim sometime after May 26, 2012.

The plaintiff attempted to rely on s. 5(1)(b) of the Limitations Act to claim she had not "discovered" her full claim until July or November 2010, when certain run-off payments from RBC were not received. Nakatsuru J. disagreed. The correspondence between the parties made it abundantly clear that by May 26, 2010, the plaintiff was aware of her claims and was explicitly threatening litigation. In finding that the plaintiff's claim was limitation barred, the judge outlined several basic principles:

Generally speaking, a cause of action in contract arises when the alleged breach occurs; In wrongful dismissal claims, the breach occurs when insufficient notice is provided upon termination; A plaintiff does not need to know the full extent of the damages suffered, but merely that they are aware some loss occurred due to the defendant's actions; When addressing the issue of discoverability, the test is objective. It requires a determination of when a reasonable person in the plaintiff's position with her abilities and circumstances would have...