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Limitations - Laches

. Hazout v. The Attorney General of Ontario

In Hazout v. The Attorney General of Ontario (Div Court, 2023) the Divisional Court considers whether Ontario, which is not normally subject to a limitation period [under s.16(1)(j) and s.16(2) Limitations Act] nonetheless is subject to the standard s.4 two-year limitation where it takes assignment or has direct standing as a guarantor (which was also found) of a debt.

In these quotes the court considers 'laches', essentially as a limitation substitute:
[13] In Husar Estate v. P. & M. Construction Limited, 2007 ONCA 191, [2007] OJ No 968 (QL) at para. 45, the Court of Appeal reproduced a description of the doctrine of laches endorsed by the Supreme Court of Canada that described it as a “defence which requires that a defendant can successfully resist an equitable (although not a legal) claim made against him” in certain circumstances. Delay alone is not sufficient to trigger the doctrine. Instead, the doctrine considers whether the delay constitutes acquiescence or results in circumstances that make the prosecution of the action unreasonable: Husar Estate, at para. 46; see also Kloos v. Tangas, 2016 ONCA 149, at para 11.

[14] The Deputy Judge did not address whether, here, the doctrine arose in the context of an equitable claim. Following from my analysis above, I would find Ontario’s right to indemnification to be contractual, given the express provision in the loan agreement. Although Ontario did not sign the agreement, it is evident it agreed to its terms. The loan agreement was entitled a “New Ventures Loan Agreement” and specifically stated that New Ventures was a “major initiative of the Government of Ontario” with loans under the program “guaranteed by the Province.” Ontario acted in accordance with its guarantee upon default of the loan. Therefore, I would find that Ontario had a legal right to indemnity and laches does not apply.

[15] However, Ontario’s claim also pleaded the equitable claim of unjust enrichment, where laches could potentially apply. The Deputy Judge dismissed the application of laches because, as he found at para. 10, Ontario “took active steps over many years to collect the debt.” He stated that “no fewer than four collection agencies attempted to collect the monies owing.” He found that Mr. Hazout could not have been taken by surprise or otherwise prejudiced.

[16] The Deputy Judge’s findings were well supported by the record. Ontario’s witness testified to both the usual practice in collecting debts and to the involvement of collection agencies in this particular case. By contrast, Mr. Hazout did not testify nor call any witnesses. The Deputy Judge was entitled to find, as he did, that there was no acquiescence and that laches did not apply.


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Last modified: 03-10-23
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