NB's New Limitation Periods Effective May 1, 2012

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NB's New Limitation Periods Effective May 1, 2012

April 27, 2012

By Matthew Hayes, Partner at McInnes Cooper,
Christa Bourque, Partner at McInnes Cooper,
Ann Marie McDonald, Former lawyer at McInnes Cooper

Effective May 1, 2012, New Brunswick’s new limitation of actions legislation will take full effect, with a significant impact on any parties engaged in litigation in New Brunswick.

Parties with existing or potential claims should review the changes under the new legislation and deal with any affected claims – both those you may have against another party, and those you may be defending – before May 1, 2012. The key changes include:

the general limitation period will decrease from six years to two years from the claim’s discovery;
a new ultimate general limitation period is created which bars claims after fifteen (15) years from the day of the act or omission that caused the claim, regardless of discovery;
there is a new limitation period for claims for contribution from a third party; and
an admission or a partial payment (including an advance payment) amounts to a waiver of a limitation period defence unless it is expressly made “without prejudice” and/or the right to rely on a limitation period defence is expressly reserved.

New Brunswick’s new Limitations of Actions Act (“New Act”) came into effect on May 1, 2010, but it provided for a transition period that will end on May 1, 2012. The New Act includes a number of changes with a significant impact on all types of claims.

GENERAL AND ULTIMATE LIMITATION PERIODS CONSOLIDATED & SHORTENED

New Brunswick previously had many different limitation periods, some set out in the former Limitation of Actions Act (“Old Act”) and some in many different public and private statutes. This often made it difficult to identify the applicable limitation period for a claim. Although some time limitations in various statutes remain, the New Act simplifies the limitation periods by consolidating many of them in one place.

The New Act also decreases these limitation periods as compared to those under the Old Act; the general limitation period is now the earliest of:

two years from the date of the discovery of the claim; and
15 years from the date of the act or omission that caused the loss or the claim.

CLAIMS FOR CONTRIBUTION FROM THIRD PARTIES

Under the Old Act, if a party started the claim within the limitation period, the defendant could generally make a claim for contribution from another party at any time during that limitation period; there was no separate limitation period applicable only to a third party contribution claim. Thus, a defendant could reach an agreement with the plaintiff to waive the deadline to file its defence, and “wait and see” while attempting to settle the claim. This made the limitation period effectively irrelevant to a claim for contribution from another party.

The New Act changes the limitation period in which a defendant can claim contribution from another party. As of May 1, 2012, under sections 14(1) and (2) of the New Act, claims for contribution from another party are expressly subject to a limitation period of two years from the date the defendant first knew, or ought reasonably to have known, that such other party was liable to make the contribution. If an action was served, the limitation to add another party will expire two years after the date of service.

WAIVER OF LIMITATION PERIOD AS A DEFENCE TO A CLAIM BY AN ADMISSION

Under section 19 of the New Act, if a defendant (or his/her lawyer or an insurer acting as the insured’s attorney) acknowledges in writing the right or liability to which the claim relates, then the limitation period begins when the acknowledgement was made. The practical effect is that the defendant will have waived and given up – perhaps unintentionally – his right to rely on the expiration of the limitation period as a defence to the claim.

Insurance Example:

If an insurance adjuster writes a letter or e-mail to a claimant acknowledging liability, but disputing the amount, a court (if the issue ends up there) could consider that acknowledgement as waiving the limitation period, preventing the insurer from relying on the expiration of the limitation period in its defence of any claim.

Labour and Employment Example:

If an employer writes a letter or e-mail to a dismissed employee acknowledging that it did not provide sufficient notice of termination (or pay in lieu of such notice), a court (if the matter were disputed) could consider that acknowledgement as waiving the limitation period, preventing the employer from relying on the expiration of the limitation period in its defence of any claim.

Other Examples:

If you write a letter or e-mail to a party with which you have a contract acknowledging that you breached the contract, but disputing the amount or the remedy, a court could consider that acknowledgement as waiving the limitation period, preventing you from relying on the limitation period in your defence of any claim.

Parties can avoid the accidental waiver of the limitation period defence. Under section 19(3) of the New Act, an acknowledgement will not be a waiver if the correspondence indicates the admission or statement is made without prejudice, and reserves the defendant’s right to rely on the expiry of the limitation period as a defence to the claim.

EXTENSION OF A LIMITATION PERIOD BY PART PAYMENT

Under section 20(1) of the New Act, if a party makes an advance payment or a part payment before the limitation period is expired, then that payment restarts the limitation period. Thus a defendant could perhaps unintentionally effectively extend the limitation period, with one of the following effects:

giving the other party more time to make his or her claim; or
relinquishing the defendant’s ability to rely on the expiry of the limitation period in defending a claim.

Again, a party can avoid accidentally extending the limitation period or waiving it as a defence as the result of an advance or a partial payment. Under section 20(3) of the New Act, advance or part payment will not restart the limitation period if it is a full payment, if the defendant makes it without prejudice or reserves the right to rely on the limitation period.

COMMENT

New Brunswick limitation periods will change significantly on May 1, 2012. We strongly recommend you review the effect of the New Act on any existing or new claims promptly, and that your review include the following considerations:

review any standard releases or releases for advance payments with counsel to ensure that they comply with Sections 19 and 20 of the Act;
immediately consider whether to add another party to any existing litigation and to make a claim for contribution and, if so, defend the main action and start a third-party claim;
any correspondence acknowledging a right or liability should include appropriate wording confirming the acknowledgement is without prejudice and reserving the defendant’s right to rely on a limitation period in defending any claim; and
before making an advance or partial payment, obtain a partial release that includes confirmation that the payment is made without prejudice, that you do not accept liability for the claim, and that the defendant reserves the right to rely on the limitation period as a defence to the claim.

Click here to download the full PDF version of this article.

McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.

© McInnes Cooper, 2012. All rights reserved. McInnes Cooper owns the copyright in this document. You may reproduce and distribute this document in its entirety as long as you do not alter the form or the content and you give McInnes Cooper credit for it. You must obtain McInnes Cooper’s consent for any other form of reproduction or distribution. Click here to request our consent.

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