Change in Limitation Period Law Significant for Construction Projects

Written By Christopher Petrucci

In Whitecourt Power Limited Partnership v Elliott Turbomachinery Canada Inc., 2015 ABCA 252 (Whitecourt Power), the Alberta Court of Appeal interpreted a recent amendment to the Limitations Act that changed the limitation period for a defendant seeking contribution from a third party. For a detailed account of this recent decision, see Breathing Room: The Alberta Court of Appeal Addresses the New Limitation Period for Third-Party Claims.

Prior to the amendment, which became law on December 14, 2014, the limitation period for a defendant seeking contribution from a third party where the third party may be liable to the plaintiff, started from the time that the plaintiff knew or ought to have known of its claim against that third party. The difficulty created with this approach is that the defendant was often at the mercy of the plaintiff's limitation period relative to the third party even though the defendant may not have yet been sued. This limited the defendant's ability to bring third parties into the lawsuit where the limitation period between the plaintiff and the third party had expired.

In Whitecourt Power, the Alberta Court of Appeal interpreted the amendment for the first time. In doing so, the Court held that the earliest date the limitation period could start for a third-party claim that alleged a breach of a duty owed between the third party and the plaintiff was the date the defendant was served with a statement of claim. The Court also found that the wording of the Limitations Act amendment meant a defendant may not discover its claim for contribution until sometime after it received the statement of claim.

This change in the law is likely going to be significant for industries where defendant companies are often confronted with the question of whether there are any third parties that should be accountable for the plaintiff's claim, or potential claim. To focus on construction as an example, there are often multiple layers of contractors on a project, which is further complicated by the fact that owners or general contractors are frequently unaware of the universe of entities providing labour, materials and equipment.

As a defendant operating in such industries, knowing which party to bring into a lawsuit, how to properly frame the claim for contribution against a third party, and by when, can all be challenging tasks. As far as the "when" is concerned, the recent decision of Whitecourt Power, and the Limitations Act amendment that gave rise to it, appear to better position defendants faced with a limitations argument from third parties.

Christopher Petrucci appeared as lead counsel for the plaintiff, Whitecourt, before the Master and the Court of Appeal.

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