August 6, 2012

A new Limitation Act for British Columbia

Guest Column | Erin Tolfo and Matt Swanson

A limitation period requires a person to enforce their legal rights against another person within a specified period of time. If a lawsuit is not commenced within the limitation period, the action may be barred.

Limitation periods in British Columbia are about to undergo a significant change as a new Limitation Act is expected to come into force in early 2013.

The new Act contains changes that are designed to simplify limitation law.

The new Act balances the need to give plaintiffs sufficient time to commence their lawsuits, with the need to provide defendants a greater amount of certainty about when their liability for claims comes to an end.

Under the current Act, limitation periods are either two, six or 10 years depending on the nature of the claim.

Claims involving injury to person or property have to be made within two years, whereas claims for breach of contract have to be made within six. 

For the most part, limitation periods under the current Act start when the cause of action arises but, in some cases, they start when the claim is discovered.

The new Act will make significant changes to the duration of limitation periods.

It will move away from the current model of having a variety of limitation periods and will introduce a basic limitation period of two years for all claims.

Exceptions will exist to the basic limitation period, and they will include situations where another statute, such as the Builders Lien Act, imposes a different limitation period.

Regardless of the nature of the claim, the limitation period under the new Act starts to run when the cause of action is or should have been discovered.

Generally, a claim is discovered when: (a) injury, loss or damage has occurred and was caused by or contributed to by an “act or omission”; (b) the act or omission was that of the person against whom a claim may be made; and (c) a court proceeding would be the appropriate means to seek a remedy.

Special discoverability rules will exist for cases involving fraud, trust property, minors and disabled claimants, and a limitation period may be extended if a person acknowledges liability in respect of the claim before the limitation period actually expires.

If a claim is not discovered, the right to bring such a claim finally expires 15 years after the act or omission on which the claim is based took place. The new Act will make a significant change to a defendant’s right to bring claims for contribution or indemnity against third parties.

Under the current Act, claims against third parties for contribution or indemnity can be made after a defendant’s liability has been determined by a court.

Under the new Act, the limitation period for such claims runs on the later of the day on which a defendant was served with a claim or when that defendant knew or ought to have known that a claim for contribution or indemnity could be made. The new Act will not apply retroactively and contains transition provisions to determine whether the new or old limitation rules apply. If a claim is discovered before the effective date of the new Act, then the old limitation rules apply.

If the claim is not discovered as of the effective date of the new Act, then the new rules will apply.

The new Act will mark a significant shift in limitation law in British Columbia.

While the new Act aims to simplify matters with the implementation of the basic limitation period, there are bound to be disputes over the meaning of the discoverability rules and, for the first several years after the new Act comes into force, disputes about whether the new or old limitation rules will apply.

Whether the new Act will in fact create more certainty for litigants remains to be seen.

This article is provided for general information only and may not be relied upon as legal advice.

Matthew G. Swanson is an associate lawyer at Borden Ladner Gervais LLP. He practices in the area of commercial litigation with an emphasis on contract and construction disputes. Erin Tolfo is an associate lawyer at Borden Ladner Gervais LLP. She practices in the area of commercial litigation with an emphasis on construction disputes. Send comments or questions to editor@journalofcommerce.com.

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