“There is no statutory limitation period in Ontario for equitable claims such as rescission. However, equitable claims are to be brought promptly. As Lord Blackburn wrote in Erlanger v. New Sombrero Phosphate Co. (1878), 3 A.C. 1218 at p. 1279, 39 L.T. 269 (H.L.), “a Court of Equity requires that those who come to it to ask its active interposition to give them relief, should use due diligence, after there has been such notice or knowledge as to make it inequitable to lie by”. This doctrine has given rise to the equitable defence of laches.
La Forest J. considered the problem of delay in bringing an equitable claim in M. (K.) v. M. (H.), 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, 96 D.L.R. (4th) 289. After referring to several authorities, he summarized the laches doctrine as follows at pp. 77-78 S.C.R.:
Thus there are two distinct branches to the laches doctrine, and either will suffice as a defence to a claim in equity. What is immediately obvious from all of the authorities is that mere delay is insufficient to trigger laches under either of its two branches. Rather, the doctrine considers whether the delay of the plaintiff constitutes acquiescence or results in circumstances that make the prosecution of the action unreasonable. Ultimately, laches must be resolved as a matter of justice as between the parties, as is the case with any equitable doctrine [emphasis added].
This case turns on whether the appellant’s delay constituted acquiescence, which La Forest J. explained at p. 78 S.C.R.: “after the deprivation of her rights and in the full knowledge of their existence, the plaintiff delays. This leads to an inference that her rights have been waived”. Knowledge is the critical element. La Forest J. continued at pp. 78-79 S.C.R.:
It is not enough that the plaintiff knows of the facts that support a claim in equity; she must also know that the facts give rise to that claim . . . However, this Court has held that knowledge of one’s claim is to be measured by an objective standard . . . [T]he question is whether it is reasonable for a plaintiff to be ignorant of her legal rights given her knowledge of the underlying facts relevant to a possible legal claim.”
Louie v. Lastman (No. 2), 2002 CanLII 45061 (ON CA) at 14-16