Limitation Period Extended by Defendant’s Conduct

Written by Daniel Standing LL.B., Editor, First Reference Inc.

Without limitation periods, potential defendants would be at risk of being sued at any time; a perpetual black cloud would loom overhead. Barring lawsuits after the time limit has passed serves several important policy goals: it encourages people to bring forward and resolve their claims in a timely way, and it gives people a degree of finality. Determining whether a claim is time-barred may seem like an easy task, but a party may do something that causes one to wonder when the time limit began to run. Such was the situation in a recent case before the Court of Appeal of Alberta: 2022 ABCA 8, were the defendent brought a summary judgment application seeking to dismiss the plaintiff’s entire action on the basis of s. 3 of the Limitations Act, RSA 2000, C L-12. The main issues were, when did the limitation period commence, and did the court correctly apply previous case precedents.

Background

The plaintiff was an independent contractor who worked for a drilling company from 2003 until 2012 when the company sold its equipment, stopping work. It wasn’t until 2015, however, that he filed a lawsuit claiming breach of contract, negligent misrepresentation, and breach of a duty of good faith in a contract. He sought payment of bonuses he said he was owed for work done before 2012.

The respondent company said that he was out of time for not seeking a remedy within two years of the date he could have first done so. In his responding affidavits, the plaintiff explained how he had made numerous requests for payment, and the company’s owner either demurred, stating that no bonuses would be paid until a 2010 workplace accident was resolved, or was silent in response until 2015 when he told the plaintiff that there would be no bonuses.

The matter was heard at first instance and the claim was ruled too late since the plaintiff knew he was owed some money at the time the parties’ relationship was terminated, having already received two bonuses.

The plaintiff had mixed success on appeal, but critically for the purposes of this article, received a green light for pursuing post-2010 bonuses with the clock starting to run in 2015, since that was when he was finally told the bonus would not be paid. The judge held that the company owner couldn’t claim the plaintiff had missed the deadline when the owner himself led the plaintiff on for several years, giving him hope that a bonus would be paid under the contract. In the words of another judgment, this had the effect of “elongating the period before it can be said that a known injury occurred.” The judge also stated that “a plaintiff is entitled to rely on the defendant’s own characterization of the operation of the disputed contract as it relates to the triggering of the limitation period.”

The court’s decision

The province’s top court stated that the start of the limitation period depended on an interpretation of the contract. It was prepared to give the judge below a high degree of deference on this point since, as the Supreme Court has stated in previous cases on the matter, that, contract interpretation usually involves findings of mixed fact and law, and hence such matters are reviewed for their reasonableness. Here, the court was not persuaded the trial judge had reached an unreasonable conclusion.

Key takeaways

This case evokes the saying that silence is golden. The communications of the employer with the aggrieved employee can extend the limitation period, particularly when the contract is ambiguous on a process, in this instance, how discretionary bonuses are to be decided. Limitation of action statutes provide timeframes to prompt parties to take action, but when the defendant gives its interpretation of the contract and it impacts the limitation period, the plaintiff is entitled to rely on it. Sometimes, it may be better to stay silent.

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