In Albrecht v 1300880 Ontario Inc., 2024 ONSC 3328, the Ontario Superior Court of Justice examined key legal principles surrounding the extension of limitation periods through promissory estoppel and part performance. The case involved a mortgage that had been in default for over a decade, with the mortgagee seeking enforcement beyond the statutory limitation period (the “Mortgage”). The applicant sought to have the Mortgage discharged, arguing that enforcement was barred under Ontario’s Real Property Limitations Act (“RPLA”) ten-year cutoff. The respondent countered by asserting that an oral agreement between the parties extended the limitation period, relying on promissory estoppel and part performance to justify enforcement despite the expired limitation period.
Citing the doctrine of promissory estoppel, which prevents a party from reneging on a promise without formal consideration, the respondent claimed there was an oral agreement to delay the enforcement of the Mortgage until the applicant’s financial condition improved, thereby extending the limitation period. However, the Court ruled that the evidence before it did not corroborate the respondent’s assertion of an enforceable agreement. The Court stressed that for promissory estoppel to be valid, there must be clear and unambiguous proof of the promise. Lacking such evidence, the Court noted that the respondent’s promissory estoppel claim could not be upheld.
The respondent also argued that the doctrine of part performance applied to the case, enabling the court to uphold an oral contract even in the absence of written documentation. They asserted that the applicant maintained the Mortgage in good standing and made tax payments, representing part performance of the agreement and postponing enforcement. However, the Court dismissed this claim, determining that these actions were merely obligations stemming from the Mortgage and did not directly relate to any agreement concerning the extension of the time to enforce the Mortgage. As there were no specific actions linked to the purported oral agreement, the doctrine of part performance was deemed inapplicable.
Overall, the Court concluded that there was insufficient evidence to support the existence of an agreement, oral or otherwise, that would extend the limitation period based on the principles of promissory estoppel or part performance. As a result, the enforcement of the Mortgage was prohibited under the RPLA due to the expiration of the ten-year limitation period contained in that Act.
The above decision underscores the challenges with extending limitation periods using equitable doctrines like promissory estoppel and part performance. Courts demand stringent proof of a clear, unambiguous promise or action relating to the contract. Parties engaged in contractual disputes concerning limitation periods should contemplate obtaining legal advice to review any agreements that modify the terms of an existing contract, especially those that could potentially extend statutory deadlines, to ensure they are properly documented.
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