Reform Of New Brunswick Limitation Legislation

One of the most fundamental rules in litigation is the observance of limitation periods. Even the best claim disappears if the limitation period is exceeded — even if by only one day — and represents a complete bar to an action. People cannot sit on their rights indefinitely — a defendant is entitled to timely notice of the claim he needs to meet, having consideration for the fading memories of witnesses and the disappearance of evidence.

On Dec. 16, 2008, the attorney general of New Brunswick introduced to the legislature the proposed Bill 28 to amend the current Limitations of Actions Act. After receiving a first reading, the bill was referred to the standing committee on law amendments for review and public hearings were held in February 2009.

It is difficult to speculate the eventual outcome of the hearings and review, however this initiative demonstrates willingness on the part of the attorney general to correct inefficiencies inherent in the current Act. Such amendments will bring the Act in line with acts recently adopted in other jurisdictions, including the Uniform Limitations Act adopted by the Uniform Law Conference of Canada, and in some cases the amendments represent new provisions, which depart from such precedents.

The attorney general should be praised for incorporating several provisions into Bill 28 to address situations not addressed in the current Act. Section 6 deals with the circumstances where an act or omission “continues” and directs that a continuous act be measured on each day that it continues. Section 16 addresses the situation where someone has “willfully concealed” the existence of a claim. Both sections however suffer the same difficulty, since the terms are not defined and subject to differing interpretations.

Bill 28 makes various amendments to the current Act, the most significant being an ultimate limitation period of 15 years. The general limitation period found in Section 5 of the bill stipulates that no claim shall be brought after the earlier of a) two years from the day on which the claim was discovered and b) 15 years from the day on which the act or omission on which the claim is based occurred. The moment of discovery is also defined.

The two-year limitation period, as suggested in the Bill 28, is a departure from the current version of the Act in that it makes the distinction between the moment when the cause of action arose and the moment when someone discovers they have a claim. Even subject to the current version of the Act, common law has already enabled the argument that the discovery of the claim is the salient moment which begins running the limitation period. Nevertheless, the amendment will allow for greater certainty and consistency with other jurisdictions.

The implications of an ultimate limitation period are twofold. Guttel and Novick suggest, in A New Approach to Old Cases: Reconsidering Statutes of Limitation, a plaintiff enjoys an unfair advantage in a late discovery situation since it is the plaintiff who initiates litigation, and is likely to preserve inculpatory evidence while the defendant, unaware they have become the target of an impending law suit, lacks the motivation to maintain the necessary exculpatory evidence.

The decision to include an ultimate limitation period in Bill 28 will at least provide an end point for a defendant, striking a balance between the competing rights of the plaintiff and defendant.

The same “discovery” and “ultimate” limitation periods are found in section 33 pertaining to fatal accidents. An action for wrongful death must be brought two years from the “discovery” with an “ultimate” limitation period of five years and is a necessary reconciliation of the Fatal Accidents’ Act and the Survival of Actions Act.

Although many positive initiatives were incorporated into Bill 28, there were other provisions the attorney general did not attempt to change or address. There was no amendment to the provision that the Crown is bound by the Act. If the Crown is to be bound in the same way as other litigants, then the attorney general should have taken the opportunity to repeal the two-month notice requirement before a lawsuit can be filed against the Crown. There is currently no notice requirement for the federal Crown, and the only provinces that impose such a requirement are Nova Scotia, Prince Edward Island, Ontario and New Brunswick.

Bill 28 did not deal with the limitation periods for insurance claims and the recovery of possession of land. In the Commentary on Bill 28 released by the attorney general in January 2009, it was expressed that, “the Bill does not alter the limitation periods created by the Insurance Act for bringing legal proceedings under different kinds of insurance policies. These, too, are in need of reform, but they are currently under review by the Superintendent of Insurance, and similar reviews are under way in other provinces. It would be premature to amend them in this Bill.”

The Supreme Court of Canada in the matter of K. P. Pacific Holdings v. Guardian Insurance [2003] 1 S. C. R. 433, was critical of the confusion that all risk and multi-peril policies create in limitations laws, issuing that, “A dominant policy in today’s world is the “allrisks” or “multi-peril” policy, which covers a panopoly of perils. This is good for consumers. It minimizes the number of policies they need to buy and ensures comprehensive coverage of costs. But it is bad when legal issues arise. The outmoded category-based Act contains rules based on the old classes of insurance. The newer comprehensive policies are difficult if not impossible to fit into the old categories. The result is continued uncertainty about what rules apply. Claims stall. Litigation ensues. Courts struggle with tortuous alternative interpretations. The rulings that have emerged have been likened to a “judicial lottery”… 5. It would be highly salutary for the legislature to revisit these provisions and indicate its intent with respect to allrisks and multi-peril policies. In the meantime, the task of resolving disputes arising from the disjunction between insurance law and practice falls to the courts.”

The companion case of Churchland v. Gore Mutual Insurance Co. [2003] S. C. R. 445, which involved an action for theft under a multi-peril policy, had a similar outcome.

These two Supreme Court cases were likely the motivation behind the new proposed amendments in other jurisdictions, intended to provide greater certainty with respect to limitation periods in insurance litigation. Bill 11: the Insurance Amendment Act, 2008 has already received Royal Assent in Alberta and Bill 40: the Insurance Amendment Act, 2008 has received a first reading in British Columbia.

While the New Brunswick bar is encouraged that legislative reforms in this area will be forthcoming, litigation in this area will continue to be subject to confusion over the applicable limitation period, and such “judicial lottery,” until such amendments are made. Legislative reform in this heavily litigated area is both necessary and long awaited.

The civil litigation section of the New Brunswick bar took the opportunity to add their input to the detailed consultation process that Bill 28 has enjoyed. The section undertook a thorough analysis of the proposed legislation and provided essential feedback to the standing committee, encapsulating many of the present commentaries and critiques, in addition to others.

The amended Limitation of Actions Act, if proclaimed, will be subject to interpretation and dispute, no matter how well drafted. It would be hard to imagine a piece of legislation a good lawyer would not try to manipulate to their client’s advantage. Bill 28 is an important initiative, which will hopefully have the desired effect of greater clarity for practitioners and litigants in determining the time limits applicable to the laws
uits they face.

Talia C. Profit is an associate at Barry Spalding in Moncton, N. B. Barry Spalding is a member firm of the ARC Group of Canada, Inc.