While the limitation periods set out in the Alberta Limitations Act RSA 2000, c L-12 [Limitations Act] appear simple and straightforward, there a numerous issues that can arise when trying to determine when exactly a limitation period has begun. This article will provide an overview of the limitation periods in Alberta and how they are influenced by the Alberta Rules of Court.
Two-year Limitation Period
The Limitations Act at section 3(1)(a) sets out the basic two-year limitation period. The two-year limitation commences when the claimant knows, or ought to know, that the injury/damage has occurred and was caused by the act or omission of the defendant. The damages and injury must also warrant bringing a proceeding to seek a remedy. Once the limitation period starts, the claim will be statute-barred two years from that date. The courts have no discretion to extend the limitation period once it has begun unless there was fraud or the claimant had not obtained the age of majority.
The factor that is most often litigated when determining when the two-year limitation period is when limitation period started. Alberta case law has set out that the clock begins to run from the date the claimant knew or ought to have known that (i) the injury occurred; (ii) the injury was attributed to the defendant’s conduct; and, (iii) the injury warrants bringing a proceeding. It is only when all three of these factors have been met that the limitation period commences. Thus, in a situation where a house is built improperly, the limitation period does not start when construction was finished, but rather once the homeowner discovered the defect, understood that it was caused by the defendant homebuilder, and that the defect was substantial enough that it warranted commencing an action against the homebuilder.
Ten-year Ultimate Limitation Period
The Limitations Act also sets out a second limitation period which is an ultimate limitation of 10 years. Unlike the two-year limitation period, the ten-year ultimate limitation period does not depend on discoverability. The limitation period commences when the wrong-doer commits the negligent act, conduct, or omission. The claimant’s knowledge that a negligent act was committed is irrelevant. The ultimate limitation period most often is in play in construction matters where the negligent act is not immediately discoverable.
The Court of Appeal in James H. Meek Trust v San Juan Resources Inc, 2005 ABCA 448 confirmed that discoverability principles do not apply to ultimate limitation periods. In other words, if the Plaintiff did not know about the defect and 10 years has past since the act or omission of the wrong-doer, the plaintiff remains barred from commencing an action. The only exceptions to the ultimate limitation period are actions relating to sexual assault or battery and situations where the wrong-doer has committed fraud in trying to hide its negligent act.
In Addison & Leyen Ltd. v Fraser Milner Casgrain LLP, 2013 ABQB 473, the court stated that section 3 of the Act is very clear in stating that the ultimate ten-year limitation period begins to run from date of the negligent or wrongful act or omission itself, not from the date the claimant knew or ought to have known of claim. In this case, the plaintiffs were statute-barred from claiming against a firm for an inaccurate legal opinion as 10 years has past since the legal opinion was given. The lower court’s decision was affirmed in the Court of Appeal.
In Bowes v Edmonton (City), 2007 ABCA 347, the court found that the time under the ultimate limitation period began when the plaintiffs built their homes with the knowledge that the riverbank they were building on was potentially unstable. Therefore, they were statute-barred from commencing an action as it had been 12 years since they built the home.
Claims for Contribution
Under Section 3(1.1) of the Act, a defendant named in an action against another party may commence a claim for contribution within the earlier of: (i) 2 years after the later of, the date the original defendant was served with the statement of claim, and the date that original defendant knew or ought to have known that the new defendant was liable or would have been liable if sued, or (b) 10 years after the claim of contribution arose.
Section 3(3)(e) of the Act provides that a “claim of contribution” arises when the claimant for contribution is made a defendant in respect of, or incurs a liability through the settlement of, a claim seeking to impose a liability, whichever first occurs. So, if a Plaintiff commences an action against a defendant one day before the limitation period expires, that defendant will still have two years from the date of being served the claim to initiate a third party claim for contribution against another party. That way, the defendant is not prejudiced by the Plaintiff’s decision to wait until the end of the limitation period before bringing its claim.
The Court of Appeal in WhiteCourt Power Limited Partner v Elliot Turbomachinery Canada Inc., 2015 ABCA 252 held that service of the statement of claim is usually the earliest date that a limitations period could begin to run with respect to claims for contribution absent an independent contribution claim.
CONCLUSION
Due to the drop-dead nature of limitation periods, care should be taken to assess whether the two-year or ten-year limitation period applies. It is best practice for companies to retain records for a minimum of ten years in the event litigation is commenced and records are required to defend against a claim.
Written by Jeremy Ellergodt with assistance from Nesta Chan.