REALWorld Law


Limitation period

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?



The general comments below related to bringing claims in Canada apply to the common law provincial and territorial jurisdictions, of which there are 12. There is one additional province, Quebec, which operates under a civil law system unlike any of the other 12 Canadian jurisdictions. Due to the generality of this paper, we have excluded discussion of the Quebec legal system.

The time within which a party to a contract may bring a claim generally is imposed by provincial and territorial statutes if the parties do not provide otherwise in their construction contract. As such, the times differ between the various common law jurisdictions in Canada.

Each province and territory has a form of limitations statute prescribing the deadline by which a legal action must be commenced, in default of which the cause of action is extinguished. For example, in British Columbia, the Limitation Act, S.B.C. 2012, c.13 establishes a 2-year limitation period for most types of claims running from the date that the claimant either knows of, or reasonably ought to have known of, the basic elements of the claim. A 2-year 'reasonable discovery' test can be found in many of the Canadian common law jurisdictions. Others use a basic 6-year limitation period.

The various limitations statutes also prescribe an ultimate limitation period running from the date on which the impugned act or omission took place (and not extended by a 'reasonable discovery' test). A lengthy ultimate limitation period is common in the various Canadian common law jurisdictions, although the number of years varies typically from between 10 to 15 years. Some jurisdictions outside of Canada, such as Illinois, U.S.A. for example, stipulate an ultimate limitation period by way of a separate 'statute of repose' (which is generally not done in Canada).

Parties in Canada may agree to vary the effect of a limitations statute by contract. For example, it is possible for parties to agree that notwithstanding the limitation statute, the time limit for commencing legal action will be shorter than the two years. Similarly, parties are permitted to enter into standstill agreements postponing or lengthening the running of time under the applicable limitation statute, usually to defer an ancillary dispute (or potential ancillary dispute) until such time as the principal dispute is determined. Such agreements are typically struck if there is a prospect that a particular determination of the principal dispute will render the ancillary dispute moot.

No matter what the limitation period is, it is necessary to determine at the outset of any new claim whether the limitation period has expired. If it has, the claim will be barred, and the claimant may be prevented from bringing a claim against the alleged wrongdoer. The defendant will be able to plead a limitations defence, and the claimant will have the evidentiary burden of proving that the claim was commenced within the relevant statutory period.