Canada: The Time Limit For Making Claims

The Alberta Limitations Act1 sets time limits within which a party may commence an action. After a limitation period has expired, potential defendants need no longer be concerned about stale claims haunting them because the claim will be time-barred. Subject to a few exceptions, if a court action or arbitration proceeding is not initiated before the earlier of:

(a) two years after the claimant knew, or ought to have known, that: (i) an injury occurred; (ii) the injury was attributable to the conduct of the defendant; and (iii) the injury, assuming liability on the part of the defendant, warrants commencing an action; or

(b) ten years after the claim arose.

then the claim is likely time-barred.2

The first rule in point (a) can be described as the Discovery Rule, in the sense that the two-year clock starts ticking not when the claim arises but when the claimant discovers it. For example, in Penhold (Town) v Boulder Contracting Ltd,3 although the allegedly defective work had been completed in September 2001, Master Laycock found that the claim had only been discovered when the town's engineer found and reported on the problem in June 2005, and therefore the limitation period only expired in June of 2007.

The ten-year period in (b) can be described as the Drop Dead Rule because it is an absolute time period that bars a claim if it is not brought within ten years after it arose, regardless of discovery. This Drop Dead Rule suffers from no exceptions except those outlined at section 3.1(1) of the Limitations Act, which concern various claims for sexual assault, misconduct, or battery and those outlined in sections 4, 5 and 5.1, which may pause the limitation period if the claimant is disabled or a minor, or if the defendant fraudulently conceals the injury that they caused. A striking example of the powerful effect of the Drop Dead Rule is Bowes v Edmonton (City),4 where a claim regarding homes which suddenly collapsed into the riverbank 12 years after they had been built was found to have expired two years prior to the collapse occurring.

The Limitations Act also permits parties to agree in writing to extend a limitation period, as is commonly done through what are referred to as "tolling agreements". However, the limitation periods set out in the Limitations Act cannot be shortened.5

Third Party and Contribution Claims

A defendant named in an action may wish to claim against another party, either because they believe the new defendant is the entity which is legally obligated to pay, or because they believe the new defendant shares responsibility for the damage caused. The Alberta Court of Appeal in Whitecourt Power Limited Partnership v Elliott Turbomachinery Canada Inc6 stated the common law rule that the two-year clock for contribution claims starts ticking "when the Defendant knew or ought to have known that the Third Party had a duty to contribute to any damages suffered by the Plaintiff, for which the Defendant might be held jointly liable with the proposed Third Party." Thus the Discovery Rule moves from focus on the plaintiff, in the original action, to the defendant. In essence, the defendant takes the role of plaintiff in regards to the third party.

The Limitations Act also provides specific limitation periods for contribution claims, where a new defendant is being sued by a defendant for statutory contribution under the Tort-Feasors Act.7 Section 3(1.1) of the Limitations Act sets out that the limitations period for a claim for contribution is the earlier of:

(a) two years after the later of, the date the original defendant was served with the statement of claim, and the date the date the original defendant knew or ought to have known that the new defendant was liable or would have been liable if sued,

(b) 10 years after the claim for contribution arose.

However, in 2013 the Court of Appeal in Arcelormittal Tubular Products Roman S.A. v Fluor Canada Ltd found that a claim under the Tort-Feasors Act was dependent on the limitation period of the plaintiff against the new third party defendant not having expired.8 So a third party defendant could not be held liable under the Tort-Feasors Act if they could show that the plaintiff had discovered its claim against it more than two years prior to when it was added to the claim.

Often the earliest that a claim against a new defendant can be discovered by an original defendant is the date that pleading was served on that original defendant. The effect of Arcelormittal was that defendants could lose their ability to seek contribution against a third party under the Tort-Feasors Act even before they knew they were a defendant themselves.

As a result, the Alberta Legislature amended the Limitations Act by adding subsection 3(1.2), which states that a contribution claim against a defendant in respect of damage referred to in the Tort‑Feasors Act is not barred by the expiry of a limitation period within which the plaintiff who suffered the damage could seek a remedial order.

The Court of Appeal in Whitecourt commented on the above sections of the Limitations Act as follows:

...subsection 1.1 creates a specific limitation period for tort-feasors' claims against each other, when previously the common law informed that issue. Subsection 1.2 clarifies that expiry of the limitation period as between the plaintiff and the third party no longer prevents the defendant from claiming contribution from another tort-feasor under the Tort-feasors Act. It gives the defendant two years from the later of the date served and discoverability to seek indemnity from other tort-feasors.9

Also of note is Rule 3.45 of the Alberta Rules of Court10 which states that a third party claim must be filed and served on the plaintiff and the third party defendant within six months of the original defendant filing a statement of defence. However, this six-month deadline is not absolute and a defendant may obtain a court order extending the time for filing a third party claim if such an order is justified in the circumstances.11

New Parties added by a Plaintiff

Notwithstanding the time periods above, section 6(4) of the Limitations Act allows a plaintiff to bring in a new defendant to an action through a new or amended claim after the expiry of their limitation period when the following two criteria are met:

(a) The claimant must be able to demonstrate that the new claim is related to the events in the original pleading; and

(b) Within the limitation period (normally two years after discovery) plus the time for service (being one year), the new defendant must have received sufficient knowledge of the added claim, such that it would be not be prejudiced in maintaining a defence.

Stated differently, if a plaintiff wishes to add a new defendant to an already existing claim using section 6(4) of the Limitations Act, the plaintiff must be able to show that the new defendant is related to the original pleading and the new defendant must not be able to show that they did not receive sufficient knowledge/notice of the claim. Generally, sufficient knowledge of a claim would occur when the new defendant receives notice of the claim, either from the plaintiff's counsel or otherwise.12 For example, in Condominium Corporation No 0213028 v HCI Architecture Inc.13 the case management judge found that the respondent obtained notice of the claim/sufficient knowledge when it received correspondence from the plaintiff's counsel of the claim. The defendant's sufficient knowledge of the claim must be received within three years of when the limitation period for the original pleading commenced, otherwise the plaintiff may be unable to add the new defendant to the action. Even without actual notice of the claim, courts in Alberta may impute knowledge of a claim upon a third party if the relationship between the original defendant and the new defendant is close. For example if there are overlapping directors or if the new defendant is a director and shareholder of the original defendant.14

Summary

As illustrated by Bowes, the current Limitations Act is effective in limiting exposure to long-term liability. Despite this, designers and construction companies doing business in Alberta need to be aware of the limitation periods for contribution claims and third party claims and how they differ from the standard limitation rules. It is possible to be added to a claim after the expiration of the plaintiff's two-year limitation period. The ten-year Drop Dead Rule, on the other hand, has very few exceptions and is not subject to discovery. The one-year time limit to serve a claim after it has been commenced should also be kept in mind. A claim against someone which was filed within the limitation period could exist even if they are not yet aware of it.

If doing business in Alberta, internal business practices should be monitored to ensure that the appropriate systems are in place to commence or respond to claims in a timely fashion before the limitation period expires, and to maintain records so that if a claim is brought you can defend the action.

Footnotes

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

2 Note that the legislation focuses on when the claim is initiated, not when it is served on the other party(ies).

3 Penhold (Town) v Boulder Contracting Ltd, 2009 ABQB 550 (Alta. Master)  [Boulder].

4 Bowes v Edmonton (City) 2007 ABCA 347 [Bowes].

5 Limitations Actsupra, s. 7.

6 Whitecourt Power Limited Partnership v Elliot Turbomachinery Canada Inc, 2015 ABCA 252, para 32 [Whitecourt].

7 Tort-Feasors Act, RSA 2000, c T-5.

8 Arcelormittal Tubular Products Roman S.A. v Fluor Canada Ltd, 2013 ABCA 279, paras 33-34 [Arcelormittal].

9 Whitecourt, supra, para 36.

10 Alberta Rules of Court Alta Reg 124/2010.

11 As was the case in Whitecourt, see paras 50-55.

12 Condominium Corporation No 0213028 v HCI Architecture Inc., 2017 ABCA 375 [HCI Architecture Inc.].

13 Ibid, para 4.

14 Poff v Great Northern Data Supplies (AB) Ltd, 2015 ABQB 173 and 513320 Alberta Inc v Jean, 2015 ABQB 826.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Jonathan Martin
William J. Fowlis
Similar Articles
Relevancy Powered by MondaqAI
McLennan Ross LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
McLennan Ross LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions