Canada: On Limitations: Alberta Court Reiterates Importance Of Reasonable Diligence To Identify Defendants In Class Proceedings

In Condominium Corporation No 0610078 v Pointe of View Condominiums (Prestwick) Inc ("Condo Corp 0610078"), the Alberta Court of Queen's Bench ("ABQB") considered the extent to which a party that suffered damage is required to identify the parties responsible for that damage for the purpose of triggering the commencement of the limitation period in the context of a certified class proceeding.1

Background

The representative plaintiffs in Condo Corp 0610078 brought an application to amend their claim to add certain defendants. The certified class action claims $2.7 million in damages for the cost of repairs and remediation resulting from a condominium's construction deficiencies.

In October 2009, the representative plaintiffs were provided with a report that described the construction deficiencies to the subject condominium (the "Report"). A Statement of Claim was filed in October 25, 2010, against the developer, Pointe of View Condominiums (Prestwick) Inc. ("POV"), under the Class Proceedings Act.2

On November 26, 2012, the action was certified as a class proceeding. In approximately August 2013, the representative plaintiffs became aware, during examination for discovery, that certain subcontractors had been involved in the construction of the condominium (the "New Defendants"). On June 26, 2015, the representative plaintiffs filed an application to amend the Statement of Claim to add the New Defendants.

Law

In a class proceeding, a party may only amend a pleading with permission of the court.3 In Alberta, section 3(1)(a) of the Limitations Act provides that a claim is statute barred if the claimant did not seek a remedial order within 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, that the injury had occurred, that the injury was attributable to the conduct of the defendant, and that the injury warranted bringing a proceeding.4

Justice Strekaf noted that pleadings can generally be amended at any time, subject to exceptions outlined by Chief Justice Wittman in Dow Chemical Canada Inc v Nova Chemicals Corp ("Dow").5 Dow also outlined options available to the court when an amendment that engages limitations issues is sought:

[W]hen there is an issue of limitations and an amendment is sought, a court may:

  1. Determine the limitation period has not expired and allow the amendment.
  2. Rule the limitation period has expired and therefore consider s.6 of the Limitations Act which provides for when an amendment can be made beyond the limitation period.
  3. Find that because of uncertainty in the evidence, the amendments should be allowed subject to the determination of the limitation issue at trial.6

Justice Strekaf framed the issue before the Court as follows:

While the Plaintiffs did not know the identity of [the New Defendants] until August or September 2013 when it received POV's Affidavit of Records and examined its officer, the question is whether their identity ought to have been known or ought to have been discovered by the Plaintiffs at an earlier date through the exercise of reasonable diligence.[7]

Analysis

The Court found that the representative plaintiffs were aware in October 2009, upon receipt of the Report, that an injury had occurred that warranted bringing a proceeding, and stated:

Once a party becomes aware that it has suffered damage that merits bringing proceedings, then it is incumbent on that party to take reasonable steps to identify the parties responsible for that damage.8

The actions taken by the representative plaintiffs to identify consultants or subcontractors of POV had not amounted to reasonable diligence. The only action that the representative plaintiffs had taken was delivering a single letter to POV in March 2010 to request the names of consultants and contractors. Justice Strekaf opined that reasonable steps in this case might have included: (1) performing searches; (2) reviewing the plans and permits of the construction; or, (3) making inquiries of the City of Calgary or of POV's counsel after the proceedings commenced.

Justice Strekaf did not determine the exact date at which the limitation period commenced, but found that it began running sometime prior to June 26, 2012. Since the representative plaintiffs knew the claim merited bringing a proceeding in October 2009, and failed to exercise reasonable due diligence to identify the New Defendants in the period between October 2009 and June 26, 2012 (a period of almost three years), the claim was statute barred as against the New Defendants.

The Court dismissed the application to add the New Defendants to the class proceedings.

Takeaways

Condo Corp 0610078 provides an interesting discussion of the importance of reasonable diligence which must be exercised by claimants in multi-party actions. This decision reminds plaintiffs of the importance of identifying and notifying defendants in a timely manner.

Footnotes

1. Condominium Corporation No 0610078 v Pointe of View Condominiums (Prestwick) Inc, 2016 ABQB 609 [Condo Corp 0610078].

2. Class Proceedings Act, SA 2003, c C-16.5.

3. Alberta Rules of Court, Alta Reg 390/1968, s 2.7 [Rules]. Note that these are the former Rules.

4. Limitations Act, RSA 2000, c L-12 [Limitations Act].

5. Dow Chemical Canada Inc v Nova Chemicals Corp, 2010 ABQB 524 at para 21 [Dow]. These exceptions include: (1) the amendment would cause serious prejudice to the opposing party, not compensable in costs; (2) the amendment requested is "hopeless" (an amendment that, if it were in the original pleadings, would have been struck); (3) unless permitted by statute, the amendment seeks to add a new party or a new cause of action after the expiry of a limitation period; and, (4) there is an element of bad faith associated with the failure to plead the amendment in the first instance.

6. Dow at para 64 [citations omitted].

7. Condo Corp 0610078 at para 21 [emphasis added].

8. Condo Corp 0610078 at para 23 [emphasis added].

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