Introduction
Anyone who has provided services or materials in the construction industry has likely run into the issue of non-payment of their invoices. Payees usually hope that a payment dispute can be resolved before a lawsuit is required to be commenced. But how do you determine when the limitation period begins to run for an unpaid invoice, and in turn, the deadline for when a lawsuit must be commenced? Does the ‘clock’ start when the work is performed, or the materials supplied? Does it start when an invoice is issued and provided to the payor? Does each invoice come with its own limitation period, such that multiple lawsuits may be required? The recent case of 1838120 Ontario Inc. v. Township of East Zorra-Tavistock, 2021 ONSC 3341, is of assistance in answering these questions.
Overview of Facts and Dispute
The dispute in this case arose out of the reconstruction of certain roads, sewers and sidewalks in Tavistock, Ontario (the “Project”). The Township of East-Zorra Tavistock (“Tavistock”) retained K. Smart Associates (“K. Smart”) as its consulting engineer and 1838120 Ontario Inc. (“183”) as its contractor on the Project.
The bulk of the work took place during the summer of 2015. There was some dispute as to when the Project was completed. 183 was able to point to an inspection record showing that some work was performed on September 28, 2015, but was unable to provide evidence that it performed any work beyond that date.
The contract provided for the issuance of Progress Payment Certificates on a monthly basis. K. Smart issued four Progress Payment Certificates:
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