November 26, 2012
Time limit change to civil suits adds certainty for industry
A new B.C. law that sets the amount of time people have to file civil lawsuits will come into effect in June of next year.
The Limitation Act will set out reduced limitation periods, which could affect such business matters as record-keeping practices and the cost and availability of insurance.
In the future, there will be a basic, two-year limitation period for most civil claims.
In addition, there will be an ultimate limitation period for legal matters that haven’t been discovered right away.
In that case, plaintiffs will have up to 15 years to file a civil suit.
The new act is designed to simplify limitation law, said commercial and construction litigation lawyers Matthew Swanson and Erin Tolfo, from the Vancouver office of Borden Ladner Gervais LLP.
Under the current act, limitation periods are either two, six or 10 years, depending on the nature of the claim.
Claims involving injury to person or property have to be made within two years, whereas claims for breach of contract have to be made within six.
Generally speaking, said Swanson and Tolfo, limitation periods under the current act start when the cause of action arises but, in some cases, they start when the claim is discovered.
The new act will make significant changes to the duration of limitation periods.
“It will move away from the current model of having a variety of limitation periods and will introduce a basic limitation period of two years for most claims,” said the lawyers.
There are exceptions to the basic limitation period, including situations where another statute, such as the Builders Lien Act, imposes a different limitation period.
“The new act balances the need to give plaintiffs sufficient time to commence their lawsuits with the need to provide defendants a greater amount of certainty about when their liability, for claims, comes to an end,” said Swanson and Tolfo.
Regardless of the nature of the claim, the limitation period under the new act starts when the cause of action is or should have been discovered.
If a claim is not discovered, the right to bring the claim expires 15 years after the act or omission took place.
The new act won’t apply retroactively.
It contains transition provisions to determine whether the new or old rules apply.
“If a claim is discovered before the effective date of the new act, then the old limitation rules apply,” said Swanson and Tolfo.
“If the claim is not discovered as of the effective date of the new act, then the new rules will apply.”
Renée Mulligan, Ministry of Justice legal counsel, who helped reform the legislation, said the current act had not been reviewed comprehensively since it was made law in 1975.
She said reform of the act responds to calls for change from a long list of stakeholders, including architects, engineers, builders, developers, the Union of British Columbia Municipalities, local governments and various professional groups.
Consultations began in early 2007 and continued until mid-2011.
“The key issues for the building design and construction industry stakeholders were the reduction of the ultimate limitation period and changes to the start of the ultimate limitation period – when time starts to run,” Mulligan said.
B.C. is not the first Canadian province to streamline its limitation legislation.
“Alberta, Saskatchewan, Ontario and New Brunswick have all reformed their limitation statutes to reflect a model uniform limitations statute developed by the Uniform Law Conference of Canada,” she said.
“It made sense, based on the need to remain competitive and the cost of doing business, to bring B.C.’s act into line with legislation in (the four) provinces. Other provinces are currently reviewing their legislation and looking at reforming their laws.”
The B.C. construction industry seems pleased with the changes.
“The new legislation is definitely better than what we had before,” said Manley McLachlan, president and CEO of the B.C. Construction Association.
“The move towards a unified basic limitation period of two years should greatly increase the ability of those involved in the construction sector to plan and mitigate short-time liability.”
Others agree that the new act is good for the industry.
“The new limitation periods will help to provide certainty for our profession, as they allow more capacity for long-term planning and provide increased opportunities for B.C. businesses to remain competitive,” said Steve Fleck, president of the Association of Consulting Engineering Companies of B.C.
Philip Hochstein, president of the Independent Contractors and Businesses Association of B.C., said the new act will be good for everybody in the construction industry.
“Where there was a lot of uncertainty, the changes in the legislation will create more certainty about where liability begins and ends,” he said.
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