Edited by Stephen Antle
On June 1, 2013 the significantly revamped Limitation Act came into effect in British Columbia. The Act imposes a two-year limitation period on bringing most legal claims, after which all claims (whether through a lawsuit or other means) are barred. This greatly shortens the deadline for claims from the previous six years for most business disputes. All companies or persons with business ties to British Columbia should closely monitor projects and contracts where litigation may be necessary, and review all contractual provisions concerning potential litigation, to make sure that potential claims are not statute-barred by the new Act. If in doubt, sue.
BASIC TWO-YEAR LIMITATION PERIOD
Under the new Act, in most circumstances, claimants must sue within two years after they "discover" they have a claim. A claim is "discovered" when the claimant knows that harm has been suffered as a result of the defendant's actions, and that a court proceeding would be an appropriate way to remedy that harm. A claimant cannot be complacent, and must be reasonably diligent in investigating, discovering and starting the lawsuit.
For most claims, such as personal injury and contract claims, the claimant will know right away that they have been harmed and that they have a potential lawsuit, so the limitation clock will start to tick immediately. For other claims, such as latent construction defects and fraud claims, the wrong may go undetected for years. There, the clock will start to tick at that later date.
ULTIMATE LIMITATION PERIOD REDUCED TO 15 YEARS
Even if the two-year limitation period is extended through late discovery, a claim must still be made within the "ultimate limitation period". The new Act sets this period at 15 years (cutting in half the 30 years under the old Act).
There are important exceptions. First, if the defendant confirms the claimant has a claim, the limitation clock is reset. This often occurs when a person acknowledges that a debt is owed or makes a payment on it. Second, neither the basic nor the ultimate limitation period runs while the claimant is under a physical or mental disability, is under 19 years of age or is the victim of a fraud.
DOES THE OLD ACT OR THE NEW ACT APPLY?
The new Act is not grandfathered. Generally, if the wrong occurred and was discovered before the new Act came into force on June 1, 2013, the old Act applies. If the wrong occurred before the new Act came into force, but was not discovered until after June 1, the new Act applies.
REVIEW CONTRACTUAL REMEDIES
When a limitation period expires, the claimant is not only barred from beginning a lawsuit. All remedies are extinguished. Not only can the claimant not sue, but they also cannot (for example) demand payment, carry out rent distress, repossess vehicles or other secured goods, or start an arbitration. Many contracts, such as joint-venture agreements, set out processes for dealing with disputes. If those processes take longer than two years, the aggrieved party may be out of luck in pursuing a remedy. It is crucial to review all contracts with dispute-resolution provisions in light of the new Act.
IS IT POSSIBLE TO CONTRACT OUT OF THE NEW ACT?
The new Limitation Act does not expressly allow parties to contract out. Private agreements to shorten or lengthen limitation periods may or may not be accepted by courts. It is not likely that agreements to shorten limitation periods will be allowed, particularly in consumer transactions where one party is more financially sophisticated than the other.
PRACTICAL ADVICE
- Claimants can no longer take a leisurely wait-and-see approach. Review all potential claims in all past and ongoing projects and transactions. Anticipate, monitor, investigate and swiftly act on potential problem areas in ongoing projects and transactions.
- Start calculating potential limitation periods from the moment of potential harm, not actual harm.
- Review all potential claims well in advance of the two-year deadline.
- Review all systems for limitation period alerts and starting litigation on all files.
- The new Act may present new opportunities for arguing limitation defences and striking unmeritorious claims at early stage, thus saving money and resources.
- If in doubt, file a claim and preserve your rights.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
