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
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
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
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.
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
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.
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