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The Court of Appeal recently released a decision in Hurst v Hancock, 2019 ONCA 483, regarding the rights of parties upon contract repudiation and the associated limitation periods related to those rights.
Background and summary judgment motion:
The employee, Hurst, was denied salary and an ownership stake in his employer, Darwin.
Hurst consulted legal counsel who demanded that compensation be paid via letter to the employer. Hurst did not sue until more than two years after his lawyer’s correspondence to Darwin.
Claiming the action was statute-barred because of the two-year limitation under the Limitations Act, Darwin brought a successful summary judgment motion to dismiss the employee’s claim.
Court of Appeal
The law firm Hurst consulted, was allowed to intervene on the motion for summary judgment and on appeal because a dismissal of Hurst’s claim would be used to claim negligence against the law firm for not advising of the limitations period.
On appeal, the law firm argued that Hurst’s claim was not statute barred. In order to establish this the law firm argued that when Darwin responded to the lawyer, it provided notice that it intended to breach the contract. At that point, Hurst had the option to 1. Accept the repudiation and sue right away 2. Wait until the non-payment and then sue once the payment was past due.
The Court of Appeal agreed and found that when dealing with an anticipatory breach of contract or repudiation, the would-be plaintiff has options and those options have different consequences for when the limitations period begins to run.
In the present case, since Hurst could have chosen to wait for the non-payment and sue thereafter, he was not beyond the limitation period.
This decision is an important reminder that the innocent party of an anticipatory breach of contract has options: they may choose to act right away or they can wait until the breach actually occurs. That said, while the employee and law firm were ultimately successful, it highlights the need and benefit of timely legal advice and timely legal action. When dealing with breach of contract cases, there may also be issues related to the innocent party condoning the change by taking ‘too long’ to act.
If you believe your employment contract has been breached, it is important to get legal advice right away. Contract Monkhouse Law today.
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