Stop the Clocks: The New Limitation Act and Its Effect on Local Governments

The new Limitation Act (the “New Act”) will affect many types of claims typically faced by local governments.  The biggest changes in the New Act are a shift to a basic limitation period of 2 years for most claims and a reduction in the ultimate limitation period from 30 to 15 years.

Before describing the changes under the New Act, it is important to state what I mean by “basic limitation period” and “ultimate limitation period”.  The basic limitation period is the time in which a person must bring a claim under normal circumstances.  If the person attempts to bring a claim outside of the limitation period, the court can dismiss the claim on the basis that the claim has been “extinguished”.  The basic limitation period is what people usually mean when they refer to the “limitation period” for a certain type of claim.

The basic limitation period can be postponed in a number of different circumstances.  For example, under the New Act it can be postponed where the defendant acknowledges liability.  The ultimate limitation period is the maximum time period in which the claim may be brought, even if the limitation period has been postponed.

A standard 2 year basic limitation period, but…

The current Limitation Act (the “Current Act”) has many different basic limitation periods. The length of the limitation period depends on the type of claim. Most claims have either a 2, 6 or 10 year basic limitation period.  For example, the basic limitation period for damages sustained in motor vehicle accident is 2 years, while claims for breach of contract or debt are subject to a 6 year limitation period.  The New Act keeps the 2 year limitation for those claims that were previously subject to a 2 year period, and replaces most of the 6 year basic limitation periods under the Current Act with a 2 year period.  This includes the limitation period for claims in debt, breach of contract and wrongful dismissal.  Under the New Act, a limitation period commences at the time a claim is “discovered” (see discussion below). Interestingly, as a result of a consequential amendment to the Financial Administration Act, claims in debt by the provincial government will continue to be subject to a more generous 6 year basic limitation period.

Importantly for local governments, the New Act will not affect limitation periods found in other statutes.  This means that the 6 month limitation period in section 285 of the Local Government Act, and the 2 month notice period in section 286, will continue to apply.

The New Act does not reduce all basic limitation periods to 2 years.  Among other types of claim, it maintains the 10 year limitation period for enforcing a judgment.  Additionally, like the Current Act, it states that no limitation period applies to proceedings for judicial review or for enforcing covenants and statutory rights of way.  The New Act continues to exempt claims for sexual misconduct against minors, and claims for sexual assault, which are not subject to a limitation period. The New Act also adds a new exemption for claims based on assault or battery where the victim is a minor or a person in an intimate or dependent relationship with the person who committed the assault.

While reducing the basic limitation period for most claims to 2 years, the New Act also provides for the postponement of the running of a limitation period based upon statutory rules for “discovery” of a claim. A general “discovery” rule ensures that a limitation period will not commence until the claimant knows or reasonably ought to have known that injury, loss or damage has occurred as a result of an act or omission, and that court proceedings would be an appropriate means to seek to remedy the loss. Other specific “discovery” rules apply to particular categories of claims such as claims for fraud or recovery of trust property. Claims by minors are generally “discovered” when the minor reaches the age of majority.

Significantly, the New Act does not apply to aboriginal claims for title or rights.  The New Act states that the limitation periods in the Current Act will continue to apply to such claims, even after the Current Act is repealed.  It also does not apply to claims for remediation of a contaminated site.

A reduction in the ultimate limitation period

The New Act also significantly shortens the ultimate limitation period for bringing a claim.  As stated above, the ultimate limitation period is the maximum period in which a claim can be brought.

The ultimate limitation period under the Current Act is 30 years from the time the right to bring a claim arises, and that ultimate time limit operates in most cases despite the operation of the postponement rules (as one exception, the ultimate limitation period does not begin to run against an infant until he or she reaches the age of majority). The limitation period under the Old Act is premised on an “accrual model” under which the right to bring an action runs from the point at which all elements of the cause of action are in place – for example a wrongful act or omission and damage. Rules of “discoverability” do not apply for the purposes of the ultimate limitation period. For a claim for negligent building inspection, where the damage to the building may not occur for some time after the date of the negligent inspection, the ultimate limitation would run from the date on which the damage occurred, even if the damage were not discovered until months or years later.

The New Act changes the ultimate limitation period by stopping the clock 15 years after the act or omission on which the claim is based took place.  In the case of our negligent building inspector, the ultimate limitation period would run from the date of the negligent building inspection, even though the damage may not have occurred until months or years later. For certain categories of claim such as claims for fraud or breach of trust, the ultimate limitation period runs from the date the claim is “discovered”, while in the case of infants the ultimate limitation period generally runs from the date the infant reaches the age of majority.

The New Act has received Royal Assent.  Once it comes into force, it will streamline the law of limitations in BC by reducing the basic limitation period for most claims and reducing the ultimate limitation period from 30 to 15 years.