BC Business
Once someone discovers that he or she has a claim, the limitation clock starts ticking. If the victim does not start the lawsuit in time, he or she loses the right to do so forevereven if the claim has merit.
A limitation period (sometimes referred to colloquially as a “statute of limitations”) is the period of time following the alleged breach of a right during which the law allows the victim to initiate legal action on account of the breach. As a general rule, if the victim does not start the lawsuit in time, he or she loses the right to do so forever–even if his or her claim has merit.
In British Columbia, the most important statute governing limitation periods is the B.C. Limitation Act. There are numerous other statutes that prescribe different limitation periods for specific types of claims, as well as for proceedings in certain administrative tribunals such as the BC Securities Commission, but the Limitation Act covers the broadest range of circumstances.
Section 6 of the B.C. Limitation Act provides that the “basic” or default limitation period in B.C. is two years, beginning on the day the claim is “discovered.” Subject to various exceptions set out in the act, a claim is discovered on the day that the prospective claimant knew, or reasonably ought to have known, that: (1) injury, loss or damage occurred; (2) the injury, loss or damage was caused by an act or omission; (3) the act or omission was that of the person against whom the claim would be made; and (4) having regard to the nature of the injury, loss or damage, a court proceeding would be an appropriate means to remedy it. In addition, there are also special rules that apply to discovery of claims based on fraud, for recovery of trust property, to enforce demand loans and to realize or redeem security (to name but a few).
Thus, once someone discovers, according to the legal criteria previously mentioned, that he or she has a claim, the limitation clock starts ticking. That person then has two years to initiate legal action by filing the necessary paperwork with the appropriate court registry.
Nevertheless, the two-year basic limitation period is not the only limitation period that must be considered. There is also a 15-year “ultimate” limitation period, which, unlike the basic limitation period, runs not from the date of discovery but from “the day on which the act or omission on which the claim is based took place.” Thus, a prospective claimant with an undiscovered claim will still become time-barred 15 years after the act or omission, even though the basic limitation period may not even have started to run. In this way, it is paradoxically possible for the 15-year ultimate limitation period to expire before the two-year basic limitation period.
Take the following hypothetical example. Mary hires John to build a house. Among the terms of their contract is a stipulation that the house must be built in compliance with the BC Building Code. Unfortunately for Mary, John is not a very careful contractor, and he ignores the code’s requirements for waterproofing the foundation. Nevertheless, for the first 16 years after the house is built, there is absolutely no outward indication that there is anything wrong. However, one day during the sixteenth year, the foundation cracks and significant amounts of water enter the basement, causing thousands of dollars of damage to Mary’s home and belongings. She investigates, and it quickly becomes clear to her that the disaster was caused by John’s shoddy workmanship, which fell far short of the standard he had agreed to provide. Mary decides to sue him for breach of contract.
In this scenario, the basic two-year limitation period is not triggered until the foundation fails in the sixteenth year, and Mary learns that it wasn’t built “to code,” that it was John specifically who didn’t build it to code, and that legal action is the only way to get compensation from him. Once all of these four conditions are met, Mary has “discovered” her claim, and the basic two-year limitation period begins to run.
Unfortunately for Mary however, the 15-year ultimate limitation period has already expired, so she is barred from suing John for breach of contract. This is because the ultimate limitation period on her claim was triggered by the act or omission–John’s breach of contract 16 years ago–and not by Mary’s discovery of it. Consequently, Mary is out of luck, at least as far as her breach of contract claim is concerned. Nevertheless, she would be smart to consult her lawyer because she may have other potential claims against John–such as negligence–that are not yet time-barred.
The topic of the Limitation Act is rife with special rules and exceptions. Moreover, as with so many other areas of the law, when seemingly simple legal principles are applied to the chaos of real life, matters can quickly become very complicated. For these and other reasons, anyone who thinks he or she might have a claim (or might be faced with defending a claim), is strongly advised to consult qualified legal counsel to ensure that the limitation period is calculated correctly and is not missed.
Robin Bennett is a lawyer at Hakemi & Ridgedale LLP.