The New Limitations Act: Key Changes And What You Need To Know (FULL VERSION)

• Published date: 26 September 2022
• Subject Matter: Finance and Banking, Insolvency/Bankruptcy/Re-structuring, Debt Capital Markets, Financial Services, Insolvency/Bankruptcy
• Law Firm: Taylor McCaffrey
• Author: Ms Autumn Giles and Kelby Loeppky

The Limitations Act, SM 2021, c 44 (the "New Act") repeals and replaces the current legislation, The Limitations of Actions Act, CCSM c L150 (the "Old Act").

The New Act comes into force on September 30, 2022 and brings Manitoba in line with other provinces' legislation on limitation periods.

OVERVIEW

This article will outline 11 of the major changes in the New Act with reference to how these changes compare with the provisions of the Old Act. Those changes are summarized as follows:

1. The Old Act provided for limitation periods ranging from 1 to 10 years. The New Act replaces those with a limitation period of 2 years for most claims.
2. The 2 year limitation period under the New Act begins to run from the day the claim is discovered, not when the cause of action arose, as was the case for most claims under the Old Act.
3. Limitation periods under the Old Act generally prevailed over other acts, subject to certain exceptions. If a provision of the New Act is inconsistent with a provision of another Act, that other Act prevails.
4. The ultimate limitation period has been shortened from 30 years to 15 years under the New Act, subject to certain exceptions.
5. Under the New Act, a limitation period does not run during any time a stay of proceedings is in effect under the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada) or the Farm Debt Mediation Act (Canada).
6. Certain assaults (sexual assaults or assaults where the claimant had an intimate relationship with the alleged assaulter or certain dependency on the alleged assaulter) continue to have no limitation period. However, the New Act broadens the language from "an action for assault" to "a claim relating to "an assault as described above as well as adds five other situations where the ultimate limitation period does not apply.
7. The complex provisions relating to charges on land under the Old Act have been done away with and these claims appear to now be caught by the 2 year basic limitation period under the New Act.
8. However, claims to recover possession of land are not subject to the 2 year basic limitation period under the New Act, but rather a period of 15 years.
9. The New Act contains more detailed provisions relating to the acknowledgement of debts and what is required to restart the limitation period.
10. The New Act specifically provides for the amendment of pleadings despite the expiry of a limitation period if certain conditions are met.
11. The New Act explicitly provides that the basic limitation period of 2 years may be extended, but not shortened, in writing However, the ultimate limitation period of 15 years cannot be extended.

Importantly, proceedings commenced under the Old Act will still be governed by the Old Act. However, if a claim is discovered before September 30, 2022, and a proceeding is not commenced, then a proceeding must be commenced before the earlier of:

• 2 years after the New Act comes into force; and
• the day the limitation period under the Old Act expires or would expire.

BASIC LIMITATION PERIOD

Under section 2(1) of the Old Act, specific causes of actions had differing limitation periods ranging from 1 to 10 years. The limitation period for any other action not specifically provided for in the Old Act was 6 years after the cause of action arose.

Under section 6(1) of the New Act, unless provided for elsewhere in the New Act, a proceeding must not be commenced more than 2 years after the day the claim was discovered. This change arguably simplifies limitation periods in Manitoba and brings limitation periods in line with the other provinces in Canada.

DISCOVERY PRINCIPLE

The discovery principle was only relevant in the Old Act under Part II, where a claimant could apply to extend the limitation period within one year after discovering the cause of action if the applicable limitation period had already expired. Otherwise, limitation periods under the Old Act were governed generally by when the cause of action arose, not when the cause of action was discovered.

The New Act relies on the discovery principle to determine when a limitation period begins to run. The discovery principle is present in several other provinces' limitation legislation. The test for when a claim is discovered is covered under section 7 of the New Act, which provides that a claim is discovered on the day the claimant first knew or ought to have known all of the following:

• that injury, loss or damage has occurred;
• that the injury, loss or damage was caused by or contributed to by an act or omission;
• that the act or omission was that of a person against whom the claim is or may be made; and
• that, given the nature and circumstances of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

The Supreme Court of Canada in Grant Thornton LLP v New Brunswick, 2021 SCC 31, recently addressed the test for discoverability in the context of New Brunswick legislation, which contains the same first three steps of the test under the New Act above.¹ The SCC stated that in order to trigger the running of a limitation period, a claimant needs to have a "plausible inference" of liability on the part of the defendant. This plausible inference of liability requires more than mere speculation, and less than certainty of liability.² However...