THE LEGAL WORLD GETS A BIT SIMPLER FOR CONSTRUCTION PARTICIPANTS
The Limitation Act transition period is over as of June 1, 2019.
BC’s current Limitation Act came into force on June 1, 2013, replacing an old Act which had been criticized as both burdensome and cumbersome.
From the point of view of design professionals and contractors, the new Act was a significant improvement. Whereas the old Act provided for limitation periods of either two years or six years, depending on the type of claim, the new Act provides for a single two-year limitation period from the time of discovery. “Discovery” occurs when the plaintiff knows that a loss caused by the defendant has occurred and that he or she can sue for recovery. This significantly shortens the time within which plaintiffs must sue for most claims. For instance, with respect to a defect discovered in a structural component of a building, under the old Act an owner would have had six years from that discovery in which to sue the parties responsible; under the new Act, an owner has just two years. In addition, the new Act shortens the “ultimate limitation period” – which runs from the act or omission in question regardless of discovery — from 30 to 15 years.
Because such dramatic changes could not be made overnight, the new Act came with a transition period, during which time both Acts would be applicable to claims, depending on when they were discovered. Claims discovered before the new Act came into force on June 1, 2013 would continue to be subject to the old Act and the old limitation periods. This meant that an owner who discovered a defect in a structural component of a building before June 1, 2013 would have six years to sue, whereas one who discovered the defect after that date would have two years. This has obviously resulted in a somewhat confusing state of affairs.
However, this situation is now at an end. Since the very last date on which a claim could be discovered and still be subject to the old Act was May 31, 2013, the very last six-year limitation period provided by the old Act expired on June 1, 2019 and the very last claim which could have been discovered under the old Act has been extinguished. We are now at last in a world where all claims are subject to a two-year limitation period.
As with all things legal, there are a few provisos to this general statement. The first is that there are some exceptions under the new Act that can extend the limitation period. However, these relate to claims for breach of trust, claims by minors and other claims which are not typically found in the design or construction industries. The second is that, since a plaintiff has one year to serve a Notice of Civil Claim after it has been filed at the courthouse, it is possible that claims which were to have expired on June 1, 2019 have, in fact, been brought (i.e. a Notice of Civil Claim has been filed), but not yet served. Those claims could be served any time up to May 31, 2020.
The third proviso concerns claims for contribution or indemnity, or third party claims. The Act provides that a defendant has two years from the date he or she is served with a claim to sue a third party for contribution or indemnity, effectively extending the limitation period against the third party up to four years. However, in some circumstances, the Act can extend claims indefinitely. Although the 15-year ultimate limitation period provides that a claim may not be brought “more than 15 years after the day on which the act or omission on which the claim is based took place,” it goes on to say that, for claims for contribution or indemnity, that act or omission is deemed to have taken place on the day the defendant is served with the claim for which he or she seeks contribution or indemnity. So, for instance, if a building designed and built in 1980 collapses in 2019 causing injury, a current owner who is sued by the injured party in 2019 would be able to bring third party proceedings against the architect or contractor involved in the original construction despite the apparent expiry of the 15-year ultimate limitation period. The “act or omission on which the claim is based” — design and construction of the building — is deemed to have occurred in 2019, when the current owner is served with the claim. Although it is anticipated that this will be an unusual circumstance, it nevertheless has the potential to place a very long tail on some claims.