15 Years

Last December, the Limitations Act, 2002 was enacted in Ontario through Bill 213. The new Act will come into force on January 1, 2004 with both positive and negative implications for engineers.

The new Act concerns the time limits for suing alleged wrongdoers in cases related to negligence, contracts, liens, debt collection and environmental claims. It is intended to consolidate and bring consistency to the hodgepodge of rules found in a variety of existing statutes.

The legislation establishes a standard limitation period of two years. Therefore, in most cases, an action must be commenced within two years of the act or omission causing injury, loss or damage being discovered.

The simplification of the law is a mixed blessing for engineers because it reduces the current limitation period in some cases, but extends that period, sometimes considerably, in others.

At the present time, under the Professional Engineers’ Act, an action against a member of Professional Engineers Ontario, or the holder of a Certificate of Authorization for a temporary licence, must be commenced within 12 months of the service being performed. The clock begins to run on the day that the project is substantially completed. The 12-month period can be extended at a judge’s discretion.

Under the new legislation, the time when the work is completed is not part of the limitation period, but rather the limitation period for commencing an action will increase to two years after the discovery of an act, omission or negligence. The change substantially extends the time limits for launching an action against an engineer as the limitation period will only begin to run upon discovery of the defect.

However, the Limitations Act, 2002 also establishes an “ultimate limitation period” which applies to most actions regardless of when the components of the claim are discovered. The ultimate limitation period states that no claim can be brought more than 15 years after the act or omission took place.

The introduction of an ultimate limitation period is important for engineers and tempers the impact of the legislation. The repeal of section 46 of Ontario’s Professional Engineers’ Act, by the new Act, means that it is conceivable that an engineer could be found liable for negligence that occurred at any time in the past, as long as a claim is filed within two years of the time when the act, omission was discovered. On the other hand, a claim will be barred by statute after 15 years has passed since the work was constructed, unless the engineer has willfully concealed the act or omission. Consequently, once the new Act is in force, engineers will be able to sleep easily on the fifteenth anniversary of a project’s completion.

Whether the new Act or the current Limitations Act applies to an action is determined with reference to when the potential claim is discovered. If the claim is discovered before January 1, 2004 the current Limitations Act will apply. If the claim is discovered after January 1, 2004, the date the Limitations Act, 2002 comes into force, then the new Act will apply.

The Limitations Act, 2002 will only apply to actions and claims originating in Ontario; although other provinces already have, or are in the process of enacting, similar legislation.

Other statutes of particular interest to the building professions where the time limit provisions have been amended or preserved by the new legislation are:

Municipal Act, 2001. Currently, no action may be brought against a municipality for damages caused by lack of repair to a highway once three months have passed since the damages were sustained. This section is repealed by the Limitations Act, 2002. Therefore, the new limitation period for commencing an action against a municipality will be extended to two years.

Construction Lien Act. The limitation periods contained within this Act relating to the expiry of liens and “perfection” of liens are preserved and will continue to apply after the Limitations Act, 2002 is in force. Contractors or other parties that provide services will still have 45 days to “preserve” a lien from the date of abandonment, last work, completion or substantial performance.

David A. Whitten is an associate with Miller Thomson LLP in Markham, Ontario practising environmental, labour and employment law. E-mail: dwhitten@millerthomson.ca.