A new Limitation Act that aims to bring B.C. law into closer step with other provinces received royal assent May 14, 2012. Barring any unforeseen complications, B.C. businesses can expect to operate under the new regime.
The new act replaces B.C.’s existing limitation periods, within which legal claims must be made.
Under the old act, limitation periods varied depending on the type of claim. For instance, claims involving injury to people or property had to be made within two years but breach of contract claims had to be made within six. So, under the old act – with the exception of builders lien claims, which are governed by separate legislation – most claims for those involved in the construction industry were governed by a six-year limitation period in B.C.
The new act sets a single limitation period of two years for most claims. The two-year period begins when a claim is (or should have been) discovered. This differs from the old act; although the discovery principle applied to postpone certain types of claims, most limitation periods ran from the date on which the right to bring a claim arose.
Under the new act, a claim will be discovered and the limitation clock will begin ticking on the first day a person knew or ought to have reasonably known: the injury, loss or damage has occurred; the injury, loss or damage was caused or contributed to by an act of omission; the act or omission was that of the person against whom the claim may be made; and a court proceeding would be the appropriate means to seek a remedy.
The right to bring a claim expires two years after all these facts are known. It remains to be seen how courts in B.C. will interpret these legislative requirements for discovery.
The new act contains provisions that can operate to extend this period in cases involving fraud, trust property, minors and disabled claimants, among others. As under the old act, a limitation period will also be extended if a person acknowledges liability in respect of the claim before the limitation period actually expires. However, the new act contains an “ultimate” limitation barring all claims not discovered within 15 years of the date on which the relevant act or omission occurred.
This ultimate limitation period has implications for the construction industry. If an act or omission occurred 15 years ago but has not yet caused damage or has caused damage that has not yet been discovered, the claim may be barred.
The limitation period for claims for contribution or indemnity is also changed by the new act. Under the old act, the limitation period for some third party claims began to run only after the defendant’s liability to the plaintiff had been determined by a court. Under the new act, the clock begins running on the day on which a defendant was served with the initial claim or knew or ought to have known a claim for contribution or indemnity may be made. As the B.C. rules of court now require third party claims to be brought within 42 days after service of the main claim, defendants must now carefully consider whether to bring a third party claim as soon as a claim has been made against them.
The new act is not retroactive. The old limitation periods will apply to claims that were discovered before the new act comes into force. For claims discovered after it comes into force (even if the facts giving rise to them arose earlier), the new act will apply but the ultimate limitation period will be the shorter of the old 30-year period and the new 15-year period.
The new act applies only where there is no conflict with another act. The limitation periods in the Builders Lien Act and the Insurance Act, for example, are unaffected by the new act. Additionally, some contracts contain contractual limitation periods that can affect the ability to bring a claim.
Grant H. Mayovsky is a partner in the construction law practice at Borden Ladner Gervais LLP. Krista M. Johanson is an associate in the firm’s practice.
