INSURANCE AND TORT LIABILITY ALERT
FEBRUARY 2013
NEW BRITISH COLUMBIA LIMITATION ACT
On June 1, 2013 the significantly revamped Limitation Act will come into effect in
British Columbia. The Act imposes a tight two-year limitation period on most claims.
Any company or person with business ties to British Columbia should closely monitor
areas where litigation may be necessary, and review contractual provisions concerning
potential litigation, to make sure that any potential claims are not statute-barred by
the new Act.
We set out below the main changes under the new Act: this Alert is not intended to be an
exhaustive review of the new Act.
GENERAL TWO-YEAR LIMITATION PERIOD
Under the new Limitation Act, in most
circumstances, the claimant must sue within two
years of the discovery of the claim. For most
claims, this is a significant shortening of the
limitation period under the present Act.
A claim is “discovered” under the new Limitation
Act when the claimant knows that injury, loss or
damage has occurred as a result of the defendant’s
actions, and that a court proceeding would be an
appropriate way to address that harm. A claimant
must exercise reasonable diligence in investigating,
discovering, and acting on a potential claim
ULTIMATE LIMITATION PERIOD REDUCED
TO 15 YEARS
Even if the two-year limitation period can be
extended through late discovery, a claim must still
be brought within the “ultimate limitation period”.
The new Act sets this period at 15 years (cutting
in half the current ultimate limitation period of
30 years).
The ultimate limitation period “clock” starts ticking
when the original act or omission takes place,
regardless of whether damage has yet occurred or
whether the claim has been discovered.
Once 15 years from the original act or omission
has passed, all remedies, even private remedies
(including arbitration rights and references to
accountants and auditors), are extinguished,
barring any claim.
This extinguishment, however, is modified in
three important ways. First, if the defendant
confirms that the claimant has a claim against the
defendant, the limitation clock will be reset for
both the basic limitation period and the ultimate
limitation period. Second, the basic limitation
period and the ultimate limitation period do not run,
INSURANCE AND TORT LIABILITY ALERT | FEBRUARY 2013
2
subject to few exceptions, while the person with the
claim is under a disability or is a minor (under 19
years of age). Finally, the new Limitation Act sets
out specific types of claims (including fraud) where
the ultimate limitation period “clock” does not start
until the discovery of the claim, which is subject to
special discovery rules set out in the Act.
ALL DISPUTES NOW IN REAL TIME
DOES THE OLD ACT OR THE NEW ACT APPLY?
REVIEW CONTRACTUAL REMEDIES
The new Act does not provide for grandfathering or
retroactivity. If the act or omission occurred and was
discovered before the new Act is enacted (i.e. before
June 1st), the limitation period under the current Act
will apply. If the act or omission occurred prior to the
new Act coming into force, but was not discovered
until after June 1, 2013, the limitation period under
the new Act will apply.
When a limitation period expires, the claimant
is not only barred from filing a claim in court.
Instead, all judicial AND non-judicial remedies are
extinguished. In other words, not only is the claimant
prevented from suing, but is also be prevented from
demanding payment, carrying out rent distress,
repossessing vehicles and other secured goods,
or starting an arbitration. Many contracts, such as
joint-venture agreements, will set out processes for
dealing with disputes. If those processes take longer
than 2 years, the aggrieved party may be out of luck
in pursuing a remedy. It is thus crucial to review all
contracts with dispute-resolution provisions in light
of the new Act.
This change may make a significant difference for
litigants, as some claims discovered but not brought
prior to June 1, 2013 may have a limitation period of
6 or 10 years, while that same claim, if discovered
after June 1, 2013, will only have a limitation
period of 2 years.
SHORTENED LIMITATION PERIODS FOR CLAIMS
FOR CONTRIBUTION AND INDEMNITY
The new Act will also significantly reduce a
defendant’s right to bring claims for contribution and
indemnity against third parties. Under the current
Act, a defendant may wait and see whether he loses
at the first trial before claiming against another party
for contribution and indemnity. Under the new Act,
however, the defendant will have to name as a third
party or sue for contribution and indemnity soon
after the start of the initial lawsuit.
Claimants can no longer take a leisurely wait-andsee approach. All potential claims in all past and
ongoing projects should be reviewed. Potential
problem areas in ongoing projects and transactions
should be anticipated, monitored, investigated, and
swiftly acted upon. If in doubt, sue.
IS IT POSSIBLE TO CONTRACT OUT OF THE NEW
ACT, AND SHORTEN OR LENGTHEN LIMITATION
PERIODS?
The new Limitation Act does not expressly allow
parties to contract out of the Act. The validity of
provisions that attempt to shorten or lengthen
time periods for litigation remains uncertain. It is
likely that shorter limitation periods will only be
permissible between sophisticated business parties,
each bargaining with equal power.
3
That being said, contracts that set down a shorter
(or longer) limitation period should be reviewed and
potentially redrafted to better permit alteration of a
time period for dispute resolution.
IMPORTANT IMPLICATIONS FOR
THE INSURANCE WORLD
The following are of particular importance to
insurance companies and companies affected by
insurance issues:
• The changes to third-party claims for
contribution and indemnity are the most
significant for insurers: if in doubt, add the party,
and do soon after receiving a claim.
• Medical professionals no longer enjoy a tighter
6-year ultimate limitation period, but are subject
to the same 15-year ultimate limitation period
as everyone else: resulting in increased
exposure and revised and lengthened document
retention policies.
• Given the standard 2-year limitation period,
insurers may expect fewer attempts by plaintiffs
to do an “end-run” around the limitation period
by framing a claim in breach of trust or
fiduciary duty.
• The significant limitation period amendments
in The Insurance Act (in effect July 1, 2012),
remain in effect, and will govern limitation
periods falling within those specific areas.
• Strategic litigation decisions and opportunities:
defendants may be better able to have statutebarred claims dismissed at an early stage.
Standard choice-of-law clauses should also be
reconsidered in light of the tight BC limitation
period: it may be more desirable to sue or be
sued elsewhere.
• The Insurance Act expressly allows parties to
extend (but not shorten) limitation periods: that
provision will prevail over the new Act’s silence
on the issue.
• Given the tight limitation periods, insurers and
other companies will wish to review all systems
for limitation period alerts and starting litigation.
If in doubt, sue.
• Given the policy goal of swifter resolution of
disputes, courts may expect insurers to exercise
greater diligence and speed in investigating
and suing to recoup payments on fraudulent
insurance claims, despite the provisions
extending the limitation period to two years
following discovery.
Please feel free to contact the authors David Crerar
([email protected]); Michelle Mania go
([email protected]); Sarah McEachern
([email protected]) for further information on this
topic or to provide comments or questions. The authors
would be pleased to be of assistance with you and your
business’s transition to the new Limitations Act.
AUTHORS
David A. Crerar
Vancouver
604.640.4181
[email protected]
Michelle T. Maniago
Vancouver
604.640.4139
[email protected]
Sarah K. McEachern
Vancouver
604.632.3471
[email protected]
INSURANCE AND TORT LIABILITY GROUP
National Leader
Larry A. Elliot Ottawa 613.787.3537 [email protected]
Regional Leaders
Bruce Churchill-Smith Peter G. Pamel
Graham Walker T. Kirk Boyd Kevin A. McGivney Calgary Montréal Vancouver Ottawa Toronto 403.232.9669 514.954.3169 604.640.4045 613.787.3563 416.367.6118 [email protected]
[email protected]
[email protected]
[email protected]
[email protected]
BORDEN LADNER GERVAIS
LAWYERS | PATENT & TRADE-MARK AGENTS
Calgary
Centennial Place, East Tower
1900, 520 – 3rd Ave S W
Calgary, AB, Canada T2P 0R3
T 403.232.9500
F 403.266.1395
blg.com
Toronto
Scotia Plaza, 40 King St W
Toronto, ON, Canada M5H 3Y4
T 416.367.6000
F 416.367.6749
blg.com
Montréal
1000, rue De La Gauchetière Ouest
Suite 900
Montréal, QC, Canada H3B 5H4
Tél. 514.879.1212
Téléc. 514.954.1905
blg.com
Vancouver
1200 Waterfront Centre
200 Burrard St, P.O. Box 48600
Vancouver, BC, Canada V7X 1T2
T 604.687.5744
F 604.687.1415
blg.com
Ottawa
World Exchange Plaza
100 Queen St, Suite 1100
Ottawa, ON, Canada K1P 1J9
T 613.237.5160
F 613.230.8842 (Legal)
F 613.787.3558 (IP)
[email protected] (IP)
blg.com
Waterloo Region
Waterloo City Centre
100 Regina St S, Suite 220
Waterloo, ON, Canada N2J 4P9
T 519.579.5600
F 519.579.2725
F 519.741.9149 (IP)
blg.com
This alert is prepared as a service for our clients and other persons dealing with insurance
and tort liability law issues. It is not intended to be a complete statement of the law or an
opinion on any subject. Although we endeavour to ensure its accuracy, no one should act
upon it without a thorough examination of the law after the facts of a specific situation are
considered. No part of this publication may be reproduced without prior written permission
of Borden Ladner Gervais LLP (BLG). This alert has been sent to you courtesy
of BLG. We respect your privacy, and wish to point out that our privacy policy relative to
alerts may be found at http://www.blg.com/home/website-electronic-privacy. If you have
received this alert in error, or if you do not wish to receive further alerts, you may
ask to have your contact information removed from our mailing lists by phoning
1.877.BLG.Law1 or by emailing [email protected].
© 2013 Borden Ladner Gervais LLP
Borden Ladner Gervais LLP is an Ontario Limited Liability Partnership.