Long-awaited changes to limitations legislation in Manitoba could be coming, and those changes will change the way claims related to building defects will be litigated.
A recent application under The Limitation of Actions Act considered by the Manitoba Court of Appeal, St. Boniface General Hospital v. PCL Constructors of Canada Inc. et al, highlighted the need for reform of Manitoba’s limitations statute. The matter at issue in St. Boniface Hospital concerned the discovery of water infiltration issues approximately 10 years after a building’s construction. The Court of Appeal ultimately determined that the Hospital’s claim against the contractor could not proceed due to The Limitation of Actions Act (the “Act”).
In commenting on the Act, the Court of Appeal stated that the current law exists “in an unpredictable state” and that the Act “cries out for reform.” The Court noted its approval of the Manitoba Law Reform Commission’s 2010 Report, which recommended a wholesale revision of the Act in order to bring it in line with the modern and simple versions of limitations legislation that have been adopted in other Canadian jurisdictions.
As noted by the Court of Appeal, the purpose of legislated limitation periods is to provide some certainty and finality to disputes by disallowing litigation after a prescribed time period has passed since the cause of the dispute arose. Limitation periods protect defendants by ensuring that plaintiffs with a valid claim pursue it with reasonable diligence, and ensure that claims are brought within a time where it is reasonable that evidence will be preserved.
The Limitation of Actions Act as currently constructed prescribes different limitation periods for different types of claims. It is of particular relevance to construction projects, as claims related to damage to real property, such as building defects, must be brought within six years from the time the cause of the claim arose. This would typically be six years from the time a building was constructed.
Complications arise when defects are discovered outside this six year limitation period. In such a circumstance, a claimant must be granted permission by the Court to proceed with bringing a claim for which the relevant limitation period has expired. In order to obtain this permission from the Court, a claimant must show that not more than 12 months have passed from the date on which they first knew, or ought to have known, of the existence of the defect. If a claimant is successful at this stage and obtains leave from the Court, only then are they entitled to commence their court action.
The 2010 Manitoba Law Reform Commission Report highlighted the differences between Manitoba’s limitations legislation and those of other provinces. The report recommended bringing the current legislation in line with other provinces by abolishing the prescribed limitation periods for the various categories of claims, and replacing them with a basic two year limitation period applicable to all claims. This two year limitation period would start when the existence of a claim was discovered or could have been discovered, instead of when the cause of the claim arose. The report also recommended an ultimate limitation period of 15 years running from the date on which the act or omission on which the claim is based took place.
A function of the proposed changes would be to relieve the claimant of the need to bring an application seeking leave to commence their action. The claimant would simply commence their action and the limitation period would be a defense which could be raised by a defendant at trial. This would remove the time consuming and expensive step requiring the claimant to first apply to the court for leave before commencing its action.
The proposed changes would have a significant impact on construction litigation. Under the current legislation, a claimant who discovers a building defect must first consider whether they are within the six year limitation period for damage to property. If the defect is discovered outside that six year period, they must, within 12 months of discovering the defect, elect to bring an application seeking leave from the Court to commence their claim.
The proposed changes would also replace the six year limitation period with an ultimate limitation period of 15 years. A claimant would have the entirety of the ultimate limitation period to discover defects. It is only when a defect is discovered that the two year limitation period would begin to run.
It is worth noting that the recommendations of the Law Reform Commission were made in 2010, and no reform has yet been undertaken. However, in light of the Manitoba Court of Appeal’s comments in St. Boniface General Hospital, it appears likely to be only a matter of time until Manitoba joins other Canadian jurisdictions on modernizing and simplifying The Limitation of Actions Act.
This article first appeared in Build Manitoba, a publication of the Winnipeg Construction Association.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.