Limitation Periods for Property Damage Losses in Canada

What is a Limitation Period?

All legal proceedings, including subrogated recovery actions, must be commenced within a certain period of time set out by legislation. The time period in which an action can be brought is called a limitation period. It is also sometimes called a prescription period. If an action is not brought within the applicable limitation period, the claim will be forever lost. Even the most meritorious subrogated claim will disappear because of the expiry of a limitation period.

What is the Purpose of a Limitation Period?

The essential purpose of a limitation period is to place a reasonable limit on the amount of time which a party may take to commence an action. This serves a number of important purposes:

  • It creates an incentive for plaintiffs to bring their lawsuits in a timely fashion.
  • It defines a period of time in which a defendant can know with certainty that it will be free of ancient obligations.
  • It prevents plaintiffs from bringing old claims in which evidence has been lost by the passage of time

When Does a Limitation Period Start to Run?

Each province has different rules about when a limitation period begins to run. For example, in some provinces, time will start to run as soon as the facts which give rise to the claim take place. In other cases, the limitation period may not begin to run until the plaintiff discovers that he or she has been wronged. In some cases, a limitation period may temporarily stop running while parties are attempting to reach a settlement agreement. A party’s conduct may also affect the running of a limitation period. Additionally, where a plaintiff is a minor or under a disability, the limitation period may not start to run until after that person reaches the age of majority or is represented by a litigation guardian.

Which Limitation Period Applies?

The limitation period that applies in a particular case is determined by a number of factors. Just as limitation periods vary from province to province, they may also vary depending on the nature of the subrogated claim or cause of action, or the subject matter of the claim. Furthermore, some actions are dealt with by federal law in which case there may be one single limitation period that applies across Canada. Limitation periods may also vary depending upon the identity of the party being sued. For example, different limitation periods may apply if an action is brought against a municipality or other government body. The applicable limitation period may also be affected by the identity of the plaintiff, for example, where the plaintiff is a minor or under a disability. Finally, in some provinces, but not all of them, parties can agree to a different limitation period than is set out in the legislation.

You will also notice that some provinces have a maximum time period, called an “ultimate limitation period”, after which time the claim will be barred, even if the person did not ever become aware of the circumstances giving rise to the claim. The ultimate limitation may be particularly significant in claims arising out of faulty construction or environmental contamination where a defendant’s wrongful conduct may often not be discovered for long periods of time  The following is intended as an educational overview of some of the general limitation periods that will apply in claims for property losses in Canada:

(NOTE: Depending on the circumstances, different limitation periods may apply, or additional notice requirements may be applicable. For example, claims involving assaults or intentional acts, claims against municipalities, claims against medical professionals may be subject to additional notice requirements AND shorter limitation periods. For this reason alone, you should always seek legal advice specific to your circumstances).

ALBERTA

BRITISH COLUMBIA

MANITOBA

NEW BRUNSWICK

  • General Limitation Period – 6 years commencing when the cause of action arises. Limitation of Actions Act, R.S. N.B. 1973, c. L-8, s. 9.
  • UPDATE:  As of May  1, 2010, there is a general limitation period of 2 years, and an ultimate limitation period of 15 years. Limitation of Actions Act, S.N.B. 2009, c. L-8.5.

NFLD. & LABRADOR

N.W.T.

NOVA SCOTIA

  • General Limitation Period – 6 years commencing when the cause of action arises. Limitation of Actions Act, R.S.N.S. 1989, c.258, s. 2(1)(e). However, within 4 years of expiry of general limitation period, court may disallow the limitation period, having regard to circumstances of the case – Listed are enumerated factors to consider including date of “discovery” of claim, Limitation of Actions Act, R.S.N.S. 1989, c.258, s. 3.
  • Note: A 2009 version of this Act has received royal assent but has not yet been proclaimed in force.

NUNAVUT

ONTARIO

  • General Limitation Period – 2 years commencing when the cause of action is discovered. Limitations Act, 2002, S.O. 2004, c. 31, ss. 4,5.
  • Ultimate Limitation Period – 15 years (commencing  from 2004 or when the cause of action arises, whichever is later). Limitations Act, 2002, S.O. 2004, c. 31, s. 15.
  • Transitional Rules: Apply if a cause of action arose before January 1, 2004 and a proceeding has not yet been commenced:  (1) Claim not “discovered” until after Jan 1, 2004, then 2 years from discovery, s. 24(5)(1); (2) Claim “discovered” before Jan 1, 2004, then 6 years from discovery, s. 24(5)(4); (3); If former limitation period expired before Jan 1, 2004, then no proceeding shall be commenced, s. 24(3).

P.E.I.

QUEBEC

SASKATCHEWAN

YUKON

Conclusion

Although it is important for subrogation professionals to be alert to some of the limitation periods which might commonly apply in property damage claims, the limitation period which finally applies in a given case can be a complex and difficult legal issue to determine and may require resort to both legislation and case law. Oftentimes, the seemingly obvious limitation period is not the correct one and in some cases, the correct limitation period may even be difficult for lawyers to identify or locate. The opinion of an experienced lawyer should always be obtained in order to ensure that a subrogated claim is not unintentionally forsaken.

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2 Responses

  1. I received a letter from the insurance company that insures my home and it says I had one year to bring a claim and they referred to section148 Insurance Act, statutory condition 14. So, I found that act and section and read it and it says it’s about fire insurance. have an all risks home owners policy and my loss was not due to fire. So I think the insurance company is trying to apply and lead people to think that a one year limitation period applies when as an all risks homeowners insurance policy the fire coverage is incidental and only a portion of the broad all risks coverage given for all kinds of losses. I read your article and it clearly says a 2 year limitation period applies. If that is right, then I think the insurance company should stop this practice of telling customers its a one year period.

    • Hi David,

      Thanks for your comment. I think that I should clarify. My article deals with limitation periods for lawsuits brought by a plaintiff against a defendant who has somehow caused or contributed to the plaintiff’s property damage.

      Conversely, the one-year limitation period that is being referred to by your insurer, statutory condition 14 as set out in s. 148 of the Insurance Act, deals with a different type of claim – a lawsuit that you might bring against your insurance company for failing to pay out a claim that you have made under your policy – it is a specific type of breach of contract claim. The one year limitation period has likely been incorporated into your insurance policy as a contractual term:

      Action

      14. Every action or proceeding against the insurer for the recovery of a claim under or by virtue of this contract is absolutely barred unless commenced within one year next after the loss or damage occurs.

      I really do appreciate your remark as it provides a good illustration of why blogs shouldn’t be replied upon as legal advice – there can be many different limitation periods that will apply in a given case in addition to the ones I have discussed. If you have concerns about your insurance claim, I really would recommend that you consult a lawyer.

      Thanks again! Pam

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