1. Limitation Act Reform:
The Canadian Perspective
Shortening The Time To Sue &
The Impact On The Construction Industry
USLAW Spring 2013 Client Conference
Presented by Samantha Ip, Partner
April 2013

2. Limitation Act Reform: The Canadian Perspective
Overview
•Limitation Act Reform in British
Columbia
•Limitation Acts in other Canadian
Provinces
•Impact on Construction Industry
– The good and the bad
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3. Limitation Act Reform: The Canadian Perspective
Introduction
•Canada’s new limitation regime
– Sets out the time limits by which a legal claim must be
commenced
– Comes into force in B.C. on June 1, 2013
– Regime already in place in other Provinces
– Significantly changes law on limitation periods
– Represents a response to numerous calls for reform by
multiple stakeholders, including the building design and
construction sectors (architects, engineers, builders,
developers, etc.)
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4. Limitation Act Reform: The Canadian Perspective
Current Limitation Regime
•Variable system – 2, 6, 10, 30
– Prescribes specified periods calculated from the date of the
event giving rise to the claim – subject to interpretation –
leading to uncertainty
– Applicable period depends on the nature of the claim
•Most construction related claims – 6 year limitation period
– Construction defects, delay claims, fee disputes, contract
claims
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5. Limitation Act Reform: The Canadian Perspective
Current Limitation Regime
•Liens – different rules apply (Builders Lien Act)
– Must commence action 1 year from the date of filing a lien
(must also file Certificate of Pending Litigation)
– For action against trustee (contractor or sub) for holdback -
must commence action not later than 1 year after the head
contract is completed, abandoned or terminated or, if there is
no head contractor, 1 year after completion or abandonment
of the improvement
– For action to enforce lien on holdback – 6 year limitation
period applies
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6. Limitation Act Reform: The Canadian Perspective
Current Limitation Regime
•Ultimate limitation period of 30 years
– Clock starts running when all elements of a cause of action
have accrued
•Discoverability rule – common law
– Running of limitation period is postponed until plaintiff knew
or ought have known of cause of action and identity of
defendants
– Deficiencies claim – running of limitation period often delayed
until expert report indicating clear “systemic failure”
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7. Limitation Act Reform: The Canadian Perspective
Current Limitation Regime
•Contribution and indemnity
– Limitation period does not start to run until the main action is
determined
– Defendant may wait and see whether it loses at trial before
claiming against third parties
•Adding parties – you get an extra year or more
– In B.C. plaintiffs are entitled to the limitation period plus 1 year
when adding a party to an action (not commencing the action
against the party for the first time)
– A party may be added as a defendant beyond the limitation
period plus one year in certain circumstances, usually where no
prejudice results
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8. Limitation Act Reform: The Canadian Perspective
Problems and Impetus for Change
•Uncertain application
– Resulted in significant amounts of litigation and issues with
risk management
•Inconsistent application
– Unfair balance between plaintiff and defendant’s rights
•Need for uniformity
– Need to bring BC limitations law in line with other provinces
with which BC has the greatest economic connections
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9. Limitation Act Reform: The Canadian Perspective
New Limitation Regime
•Basic 2 year limitation period
– Applies to all claims, except those in relation to debts owed to
the government
Subject to this Act, a court proceeding in respect of a claim must
not be commenced more than 2 years after the day on which
the claim is discovered.
• Construction related claims affected
– All construction claims relating to defects, delay, and fee and
contract disputes must be brought within 2 years and not the
current 6 year period
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10. Limitation Act Reform: The Canadian Perspective
New Limitation Regime
•Lien claims partially affected
– Actions to enforce liens on holdbacks will likely have to be
commenced within two years as opposed to the current six
year period
•Ultimate limitation period of 15 years
– Clock starts running at the time of the original act or omission,
whether damage has occurred or the claim has been discovered
– Extends to private remedies (e.g. right to arbitration in a
construction contract)
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11. Limitation Act Reform: The Canadian Perspective
New Limitation Regime
•Discoverability is central to the new regime
– Subjective / objective test
…a claim is discovered by a person on the first day on which the person
knew or reasonably ought to have known all of the following:
(a) that injury, loss or damage had occurred;
(b) that the injury, loss or damage was caused by or contributed to by an
act or omission;
(c) that the act or omission was that of the person against whom the claim
is or may be made;
(d) that, having regard to the nature of the injury, loss or damage, a court
proceeding would be an appropriate means to seek to remedy the injury,
loss or damage. Construction defects, delay claims, fee disputes,
contract claims
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12. Limitation Act Reform: The Canadian Perspective
New Limitation Regime
•Contribution and indemnity
– Special discovery rules will apply to claims for contribution and
indemnity, effectively preventing defendants from waiting for
a lose at initial trial before suing third parties
•Summary of key changes – B.C.
OLD ACT NEW ACT
Default Limitation Period 6 Years 2 Years
Construction Claims
Ultimate Limitation Period 30 Years 15 Years
Discoverability Rule Exception Default
Contribution and Indemnity After Trial At Trial
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13. Limitation Act Reform: The Canadian Perspective
Transitional Provision
•When the new regime comes into force in B.C., the applicable
limitation period will be based on discovery…
1. If the claim is discovered before the new regime comes
into force the old regime will apply; and
2. If the claim is discovered after the new regime comes into
force the new regime will apply, regardless of whether
the act or omission giving rise to the claim occurred
before the new regime
– The ultimate limitation period will start to run on June 1, 2013
for claims relating to all previous acts or omissions, with a few
exceptions
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14. Limitation Act Reform: The Canadian Perspective
Rationale for Shortening the Limitation Periods
•Certainty
– Potential defendants should not be held accountable for
ancient obligations
•Evidentiary
– Claims based on stale evidence should be foreclosed
•Diligence
– Plaintiffs should have to act diligently and not “sleep on their
rights”
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15. Limitation Act Reform: The Canadian Perspective
Canadian Limitation Acts
Ultimate Limitation
Provinces Basic Limitation Period Discoverability Rule
Period
British Columbia Single limit – 2 years 15 yrs All claims – O/S test*
Alberta Single limit – 2 years 10 yrs All claims – O/S test
Saskatchewan Single limit – 2 years 15 yrs All claims – O/S test
Manitoba** Variable limit – 2 to 6 yrs 30 yrs Common law
Ontario Single limit – 2 years 15 yrs All claims – O/S test
New Brunswick Single limit – 2 years 15 yrs All claims – O/S test
Nova Scotia** Variable limit – 2 to 20 yrs No prescribed limit Common law
Variable Limit – 2 to 10
Newfoundland 30 yrs Common law
yrs
P.E.I. Variable limit – 1 to 10 yrs No prescribed limit Common law
* O/S test = objective /subjective test, “knew or ought to have known”
** Nova Scotia and Manitoba are in the process of bringing in new limitations legislation
with single 2 year limits, 15 year ultimate limitation periods, and codified discovery rules.
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16. Limitation Act Reform: The Canadian Perspective
Impact on Construction Industry – Risk Management
1.Need for Investigation
– If there are signs of a deficiency, then an owner should carry out an
investigation to determine the extent of the defect as the 2 year
limitation period will likely have started to run
– There is greater emphasis and obligation on “discovering”
1.Record Keeping
– There is a lesser need to keep project documents for extended
periods time
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17. Limitation Act Reform: The Canadian Perspective
Impact on Construction Industry – Risk Management
3.CCDC 2008 – GC 12.1: Indemnification
– Requires notice in writing within 6 years from Substantial
Performance of the Work but GC is subject to applicable
limitation period, which means that a party who complies with
this GC may still be prohibited from a claim by the statute
– The incompatibility of the CCDC with the new Limitation Act
will create ambiguity and hence litigation  (just kidding)
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18. Limitation Act Reform: The Canadian Perspective
Impact on Construction Industry – Risk Management
4.CCDC 2008 – GC 12.2: Waiver of Claims
– Owners’ claim against contractor for deficiencies limited to
local limitation statute (i.e. 2 years) despite requirement of
notice within 6 years
• Note that the B.C. Limitation Act (old and new) is silent on the
issue of whether a party can contract out of the statutory
limitation periods
5.Overall shorter risk period
– All parties in construction who may be sued will benefit in
terms of risk management from a shorter risk period
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19. Limitation Act Reform: The Canadian Perspective
Impact on Construction Industry
6.Higher risk for plaintiffs - latent defects
– A serious systemic defect may not show itself until after 15
years from construction
6.Insurance
– Insurers can better assess the risk of underwriting
professionals on errors and omissions policies based on a
shorter risk period
8.Project Costs
– Construction project costs are likely to decrease as insurance
becomes more readily available and at better pricing given the
ability of underwriters to better assess the risk
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20. Please direct inquiries or comments to:
Samantha Ip, Partner, Clark Wilson LLP
email: ssi@cwilson.com; direct: (604) 643-3172
www.cwilson.com
THANK YOU