On October 2, 2012, the Government of British Columbia announced that the province’s new Limitation Act (Bill 34) (New Act) will come into force on June 1, 2013.1 The New Act will bring about important changes to the calculation of limitation periods in the province. Here are 10 things you should know.
- The basic limitation period for most claims will be shortened to two years
The New Act shortens the basic limitation period to two years for most claims, including claims against hospitals. Under the current Limitation Act (Current Act), the basic limitation period for most claims ranges from two to 10 years.
Lawyers and their clients will need to be mindful of the shorter timeframe for bringing a claim, as the shortened basic limitation period will require that plaintiffs act promptly once a claim is discovered. Potential defendants will benefit from increased certainty due to shortened and more unified time limits.
The two-year limitation period does not apply to claims brought by governments. The New Act extends the time period for such claims to six years.
- The test for determining when a claim is "discovered" will remain unchanged
The New Act is not meant to change to the meaning of "discoverability" for the purposes of the basic limitation period.2 The New Act provides that a claim is discovered (and the clock starts ticking) once a person knows or reasonably ought to know that:
an injury, loss or damage has occurred;
an act or omission caused or contributed to the injury, loss or damage;
the act or omission was committed by the person against whom the claim is made or may be made; and,
a court proceeding would be an appropriate means to seek to remedy the injury, loss or damage.
Specific discovery rules apply for minors and persons under disability, as well as for other specifically enumerated claims (including claims based on fraud, the recovery of trust property or demand obligations, claims to realize or redeem security, or for contribution or indemnity, and claims for successors, predecessors, principals and agents).
- The new ultimate limitation period is 15 years from the date an act or omission occurs
Under the Current Act, the ultimate limitation period for bringing a claim is 30 years, with time beginning to run once all the elements of the legal claim have crystallized (for example, in a negligence claim, once a negligent act or omission and damage have occurred). This is often referred to as an accrual.
The New Act significantly shortens the ultimate limitation period to 15 years. This period starts to run from the date the act or omission occurs, and not from the date of accrual or the date of discoverability. Therefore, if a claim is not discovered until 16 years after an act or omission has occurred, the claim will be statute-barred, even if the potential plaintiff has not yet suffered any damages. The two-year basic limitation period will not revive a claim that is discovered after the expiry of the ultimate limitation period.
The ultimate limitation period will expire after 15 years, even if a claim has not been discovered, and even if damage has not yet occurred.
The rationale underlying this change is to simplify the law by eliminating the need for litigants and courts to determine at what point all of the elements of a claim accrued. The change has also been touted as a way to balance claimants’ rights to sue against defendants’ rights to have certainty and finality in managing their affairs, since the old rule subjected defendants to potential liability almost indefinitely.3
To temper the effect of this change, the New Act provides that the wilful concealment of a claim postpones the 15 year ultimate limitation period. In cases of wilful concealment, the act or omission will be deemed to have taken place on the day on which the claim is discovered.
- Lawyers should become familiar with the New Act’s transitional provisions
The New Act contains transitional provisions. Subject to some exceptions, claims discovered after the date the New Act comes into force (June 1, 2013) will be subject to the New Act. Claims that were discovered before this date will be subject to the Current Act.
Practically speaking, consideration should be given to documenting dates of discovery of claims and receipt of advice under the Current Act. This information will be useful in the event of a dispute about the application of the transitional provisions.
- Separate discovery rules will apply to demand obligations
The New Act provides that a claim for a demand obligation "is discovered on the first day that there is a failure to perform the obligation after a demand for the performance has been made." Ontario courts have held that a claim does not exist (and the clock does not start ticking) until a demand has been made, for example by way of a demand letter.4
Where a demand letter specifies a deadline for performance, it is not clear whether time starts running as of the date of the letter, or as of the deadline for performance of the obligation specified in the letter. For now, it is probably best to err on the side of caution and work from the date of the former when advising clients and setting bring-forward dates.
- New discovery rules will apply to claims for contribution or indemnity
The New Act provides that a claim for contribution or indemnity is discovered on the later of the day on which the claimant is served with pleadings or the first day on which the claimant knew or ought to have known that a claim for contribution or indemnity may be made.
This is a significant change by which it will often no longer be possible for parties to wait to see the outcome of litigation before filing a claim for contribution or indemnity.
- When applying the substantive law of another jurisdiction, courts will apply the law of that other jurisdiction respecting limitation periods
The Current Act allows the courts to apply British Columbia limitation law or foreign limitation law, depending on which would produce a more just result. The New Act provides that the courts must apply foreign limitation law when applying the substantive law of another jurisdiction, subject to some exceptions. This change is something to think about when drafting choice of law clauses in agreements.
- The New Act does not address the ability of private parties to vary limitation periods by agreement
At common law, parties can generally agree not to enforce a limitation period and can agree to a shorter period than would otherwise apply.5 It is not known whether the enactment of the New Act will affect the ability of contracting parties to agree on limitation issues. Unlike the Ontario legislation, both the Current Act and the New Act are silent on the ability of private parties to suspend, extend, vary or exclude limitation periods.
Solicitors will need to be mindful of this when drafting agreements, as it is not yet clear whether or how the New Act might affect agreements that purport to change a limitation period or agreements that contain arbitration clauses.
- The New Act’s consequential amendments will affect a number of other statutes
The New Act contains a number of consequential amendments to other statutes. For example, Section 36 provides that despite the New Act, a legal proceeding may be brought at any time to recover costs under the Environmental Management Act. Lawyers should familiarize themselves with the consequential amendments that are relevant to their practice areas.
- Lawyers should become familiar with the exempted claims listed in the New Act
Section 3 of the New Act sets out a list of claims that will be exempted from the limitation periods, including claims for sexual assault, title to property and arrears of child or spousal support. The list of exempted claims is worth consulting.