Is It Time For A Limitations Audit

The new BC Limitation Act came into force on June 1, 2013. One of the significant changes was to reduce the basic limitation period for most claims to two years from the date the claim was discovered. As a result, claims discovered on or after June 1, 2013 will become statute-barred in the very immediate future.

While it is always a good idea to take inventory of potential claims and the limitation periods that will apply to them, the two-year anniversary of the new Limitations Act can be a springboard for an organization to conduct a limitations audit.

Things to keep in mind:

• The Limitation Act is a default statute: there are limitation periods applying to specific types of claims contained in other provincial and federal statutes.
• The question of when a claim is discovered is not always easy to answer, despite detailed provisions on discoverability in the Limitation Act. When in doubt, it would be prudent to assume the limitation period began to run from the date of the act or omission giving rise to damage.
• The ultimate limitation period in the Limitation Act is 15 years, running from the day on which the act or omission on which the claim is based took place.
• The Limitation Act bars non-judicial remedies too. Accordingly, your audit should include a review of contracts that provide for non-judicial remedies, such as set-off, distraint, seizure of assets, etc., to ensure that those remedies are not exercised out of time.
• The old Limitation Act will still apply to some claims, as provided for in the transitional provisions of the new Limitation Act, which are complex.
• Conflict of laws principles will inform which jurisdiction's limitation laws will apply to a given claim. But some limitation statutes contain provisions ousting conflict of laws principles and imposing the local limitations law on suits brought in that jurisdiction's courts. Moreover, limitation statutes across Canada are not uniform, giving rise to traps for the unwary.
• Existing judgments for the payment of money or the return of personal property, including arbitration awards, need to be "refreshed" by suing on them within the express limitation period set out in the Limitation Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.