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The Limitations Act (S.29)

October 26, 2021

Manitoba

,

Canada

Issue

What is the limitation period for an action against a lawyer based in professional negligence and breach of fiduciary duty?

Conclusion

The Limitations Act provides for a basic limitation period of two years, which begins to run on the day on which the claim is discovered. The Act also established a maximum limitation period of 15 years (beyond which the basic limitation period cannot extend) which begins to run on the day the event giving rise to the claim takes place. The Limitations Act does not apply if another Act contains a specific limitation period that applies to the claim or otherwise conflicts with the Act (s.1). A claim is discovered on the day the claimant first knew or ought to have known that the loss, injury, or damage occurred, that it 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 a proceeding would be an appropriate means to seek to remedy it given the circumstances (s.7). (The Limitations Act)

The transitional provisions of The Limitations Act deal with claims under The Limitation of Actions Act. Despite the repeal of The Limitations of Actions Act, the LAA continues to apply to a proceeding that was commenced under that Act (s.29). In the case of a claim discovered before the coming into force of The Limitations Act, a proceeding may be commenced under the Limitations Act if it is commenced the earlier of (a) two years after the coming into force of the Limitations Act; and, (b) the day the limitation period under the former Act expires or would expire (s.31(3)). in the case of a claim discovered after the coming into force of the Limitations Act, the Limitations Act applies as if the act or omission on which the claim is based occurred on the day the Limitations Act came into force (s.31(4)). If there was no limitation period respecting a claim under the Limitation of Actions Act but the Limitations Act establishes a limitation period, then in the case of a claim discovered before the coming into force of the Limitations act, there is no limitation period, and if the case is discovered after that point, the Limitations Act applies as if the act or omission took place on the day that the Limitations Act comes into force (s.31(5)). (The Limitations Act)

Pursuant to The Limitation of Actions Act, CCSM c L150, actions for the recovery of money (except in respect of a debt charged upon land), whether recoverable as a debt or damages or otherwise, and whether a recognizance, bond, covenant, or other specialty, or on a simple contract, express or implied, and actions for an account or not accounting, must be brought within six years after the cause of action arose (s.2(i)). Actions grounded on accident, mistake, or other equitable grounds of relief not otherwise specifically dealt with, might be brought within six years from the discovery of the cause of action (s.2(k)). Actions which are not otherwise dealt with by the act are subject to a six-year limitation period (s.2(n)). (The Limitation of Actions Act)

In Burke v. Heaton, the Manitoba Court of Appeal dealt with case in which a solicitor was sued for allegedly providing negligent advice. The defendant solicitor moved to have the claim struck out on the basis that it was statute-barred. The issue became when did the cause of action arise; when the advice was given or when it was discovered that negligent advice had been given. The Court found that the six-year limitation period in the case before it commenced when the lawyer gave the advice.

In Sentinel Self-Storage Corp. v. Dyregrov, the Court of Appeal dealt with an action based in both contract and tort against a soil engineer. The Court held that the Limitations of Actions Act specifies that an action for breach of contract must be brought within six years of the cause of action arising. In contract, this point occurs when the breach of contractual duty occurs regardless of when damage results from the breach. In negligence, on the other hand, the cause of action arises only when damage results from the defendant’s breach of duty. So, the cause of action arises and damage results at the time when damage is inflicted and not at that perhaps much later date when the plaintiff gains knowledge or discovers the damage. Section 2(1)(n) of The Limitation of Actions Act states that the period for commencing an action where no specific statutory provision is made is six years after the cause of action arose. In a case involving negligent performance of services, the cause of action arises at the time the service is provided.

In Riddell et al. v. Meyers Norris Penny & Co. et al., which was decided under the Limitations of Actions Act, the parties were in agreement that the ordinary limitation period for a claim based on the negligent performance of services is six years.

In Manitoba Métis Federation Inc. v. Canada (Attorney General) et al., an aboriginal law case, the Manitoba Court of Appeal held that the limitation period for breach of fiduciary duty is six years, running from the discovery of the cause of action. The limitation will begin to toll when the material facts on which a claim is based have been discovered or ought to have been discovered by the plaintiffs by the exercise of reasonable diligence.

In C.M.F. v. Manitoba, which was a case against a child services organization, the Court held that a claim for damages for breach of fiduciary duty, is, under s. 2(1)(k) of the Limitation of Actions Act, which provides for a six-year limitation period.

Law

The Limitations Act, SM 2021, c 44 provides for a basic limitation period of two years, which begins to run on the day on which the claim is discovered. The Act also established a maximum limitation period of 15 years (beyond which the basic limitation period cannot extend) which begins to run on the day the event giving rise to the claim takes place. The new Limitations Act does not apply if another Act contains a specific limitation period that applies to the claim or otherwise conflicts with the Act (s.1). A claim is discovered on the day the claimant first knew or ought to have known that the loss, injury, or damage occurred, that it 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 a proceeding would be an appropriate means to seek to remedy it given the circumstances (s.7):

Overview

1 This Act sets out limitation periods for civil claims. A person with a claim must start a court proceeding within the limitation period or lose their right to do so. For most claims, the Act

(a) establishes a basic limitation period of two years, which begins to run on the day the claim is discovered;

(b) establishes a maximum limitation period of 15 years (beyond which the basic limitation period cannot extend), which begins to run on the day the event giving rise to the claim takes place;

(c) does not apply if another Act contains a specific limitation period that applies to the claim or otherwise conflicts with this Act.

[...]

Relationship to other Acts

4(1) This Act does not apply to a claim

(a) that is subject to a limitation provision in another Act, except in the circumstance mentioned in section 13 and subsection 14(1) (suspension of limitation periods); or

(b) if another enactment states that no limitation period applies to the claim.

Conflict with another Act

4(2) If a provision of this Act is inconsistent or in conflict with a provision of another Act, the provision of the other Act prevails.

[...]

Basic limitation period — 2 years from discovery

6 Unless this Act provides otherwise, a proceeding respecting a claim must not be commenced more than two years after the day the claim is discovered.

When is a claim discovered?

7 A claim is discovered under this Act on the day the claimant first knew or ought to have known all of the following:

(a) that injury, loss or damage has occurred;

(b) that the injury, loss or damage was caused by or contributed to by an act or omission;

(c) that the act or omission was that of a person against whom the claim is or may be made;

(d) that, given the nature and circumstances of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

Date of injury, loss or damage — specific cases

8 For the purpose of clause 7(a), the day an injury, loss or damage occurs is as follows:

(a) in the case of a continuous act or omission, the day the act or omission ceases;

(b) in the case of a series of acts or omissions respecting the same obligation, the day the last act or omission in the series occurs;

(c) in the case of a claim to realize on collateral under a security agreement, the day the default first occurs;

(d) in the case of a claim to redeem collateral under a security agreement, the day the creditor takes possession of the collateral;

(e) in the case of a default in performing a demand obligation, the day the default occurs, once a demand for performance is made;

(f) in the case of a claim for contribution or indemnity by one alleged wrongdoer against another, the day the liability of the claimant, in relation to the matter for which contribution or indemnity is sought, is confirmed by a court judgment, arbitration award or settlement agreement.

Burden of proof

9 The claimant has the burden of proving that a proceeding has been commenced within the basic limitation period.

Ultimate limitation period — 15 years

10(1) Even if the basic limitation period for a claim has not expired, a proceeding must not be commenced more than 15 years after the day the act or omission on which the claim is based took place.

The transitional provisions deal with claims under The Limitation of Actions Act, CCSM c L150. Despite the repeal of The Limitations of Actions Act, the former Act continues to apply to a proceeding that was commenced under that Act (s.29). In the case of a claim discovered before the coming into force of The Limitations Act, a proceeding may be commenced under the Limitations Act if it is commenced the earlier of (a) two years after the coming into force of the Limitations Act; and, (b) the day the limitation period under the former Act expires or would expire (s.31(3)). in the case of a claim discovered after the coming into force of the Limitations Act, the Limitations Act applies as if the act or omission on which the claim is based occurred on the day the Limitations Act came into force (s.31(4)). If there was no limitation period respecting a claim under the Limitation of Actions Act but the Limitations Act establishes a limitation period, then in the case of a claim discovered before the coming into force of the Limitations act, there is no limitation period, and if the case is discovered after that point, the Limitations Act applies as if the act or omission took place on the day that the Limitations Act comes into force (s.31(5)):

TRANSITIONAL

Transitional — definition of "former Act"

28 In sections 29 to 31, "former Act" means The Limitation of Actions Act.

Proceeding commenced under former Act

29 Despite its repeal, the former Act continues to apply to a proceeding that was commenced under that Act.

Expiry of former limitation

30 No proceeding shall be commenced under this Act respecting a claim if the limitation period that applied under the former Act expired before the coming into force of this Act.

Claims to which this section applies

31(1) Subject to section 30, this section applies to claims based on acts or omissions that occurred before the coming into force of this Act and in respect of which no proceeding was commenced under the former Act.

Exception

31(2) This section does not apply to claims referred to in clause 18(1)(a) or (b) (sexual assault or assault in an intimate or dependent relationship).

Claim discovered under former Act

31(3) In the case of a claim discovered before the coming into force of this Act, a proceeding may be commenced under this Act if it is commenced before the earlier of

(a) two years after the coming into force of this Act; and

(b) the day the limitation period under the former Act expires or would expire.

Claim discovered under this Act

31(4) In the case of a claim discovered after the coming into force of this Act, this Act applies as if the act or omission on which the claim is based occurred on the day this Act came into force.

No former limitation period

31(5) If there was no limitation period respecting a claim under the former Act but this Act establishes a limitation period,

(a) in the case of a claim discovered before the coming into force of this Act, there is no limitation period; and

(b) in the case of a claim discovered after the coming into force of this Act, this Act applies as if the act or omission took place on the day this Act comes into force.

Pursuant to The Limitation of Actions Act, CCSM c L150, provides various limitation periods in s.2. Actions for the recovery of money (except in respect of a debt charged upon land), whether recoverable as a debt or damages or otherwise, and whether a recognizance, bond, covenant, or other specialty, or on a simple contract, express or implied, and actions for an account or not accounting, must be brought within six years after the cause of action arose (s.2(i)). Actions grounded on accident, mistake, or other equitable grounds of relief not otherwise specifically dealt with, might be brought within six years from the discovery of the cause of action (s.2(k)).

Limitations

2(1) The following actions shall be commenced within and not after the times respectively hereinafter mentioned:

[...]

(i) actions for the recovery of money (except in respect of a debt charged upon land), whether recoverable as a debt or damages or otherwise, and whether a recognizance, bond, covenant, or other specialty, or on a simple contract, express or implied, and actions for an account or not accounting, within six years after the cause of action arose;

[...]

(k) actions grounded on accident, mistake, or other equitable ground of relief not hereinbefore specifically dealt with, within six years from the discovery of the cause of action;

[...]

(n) any other action for which provision is not specifically made in this Act, within six years after the cause of action arose.

In Burke v. Heaton, 2003 MBCA 104 (CanLII), the Manitoba Court of Appeal dealt with case in which a solicitor was sued for allegedly providing negligent advice. The defendant solicitor moved to have the claim struck out on the basis that it was statute-barred. The issue became when did the cause of action arise; when the advice was given or when it was discovered that negligent advice had been given. The Court found that the six-year limitation period in the case before it commenced when the lawyer gave the advice:

30 I therefore come to the conclusion that the motions judge erred when he relied on Winnipeg Condominium Corp. No. 266 to find that it was not clear on the evidence when the third essential element of a tort (damage) occurred. Quite to the contrary the case law is clear on the point and in this case it is not an issue of evidence or lack thereof. The damage occurred when the defendant Greenberg gave the advice. By suing the claim in 1988 the plaintiffs were past the six-year limitation period.

In Sentinel Self-Storage Corp. v. Dyregrov, 2003 MBCA 136 (CanLII), the Court of Appeal dealt with an action based in both contract and tort against a soil engineer. The Court held that the Limitations of Actions Act specifies that an action for breach of contract must be brought within six years of the cause of action arising. In contract, this point occurs when the breach of contractual duty occurs regardless of when damage results from the breach. In negligence, on the other hand, the cause of action arises only when damage results from the defendant’s breach of duty. So, the cause of action arises and damage results at the time when damage is inflicted and not at that perhaps much later date when the plaintiff gains knowledge or discovers the damage. Section 2(1)(n) of The Limitation of Actions Act states that the period for commencing an action where no specific statutory provision is made is six years after the cause of action arose. In a case involving negligent performance of services, the cause of action arises at the time the service is provided:

35 This action was originally based on both contract and tort. The Limitation of Actions Act, in s. 2(1)(i), specifies that an action for breach of contract must be brought within six years of the cause of action arising. In contract, this point occurs when the breach of contractual duty occurs regardless of when damage results from the breach. Therefore, there is no question that more than six years had passed from the breach of contractual duty when the statement of claim was filed on May 31, 1996. As pointed out by the motions court judge, when this matter appeared before him, the claim was based only on the tort of negligence. The contract claim had been abandoned.

36 In negligence, on the other hand, the cause of action arises only when damage results from the defendant’s breach of duty. Because of the nature of the Manitoba statute, as well as that of British Columbia[1], Alberta and Newfoundland[2], the judge-made rule of discoverability does not apply. So, the cause of action arises and damage results at the time when damage is inflicted and not at that perhaps much later date when the plaintiff gains knowledge or discovers the damage.

[...]

41 If this action is characterized as negligent performance of services or negligent misrepresentation, then identifying when the cause of action becomes statute-barred is relatively simple. Applying Burke, the cause of action arose at the time service was provided or, as the motions judge held, at the time the advice was relied on. Section 2(1)(n) of The Limitation of Actions Act states that the period for commencing an action where no specific statutory provision is made, which is the case here, is six years after the cause of action arose. In this case, the piles and pile caps and the building were completed in 1988, while the statement of claim was not filed until 1996, far beyond the six years.

In Riddell et al. v. Meyers Norris Penny & Co. et al., 2004 MBQB 131 (CanLII), which was decided under the Limitations of Actions Act, the parties were in agreement that the ordinary limitation period for a claim based on the negligent performance of services is six years:

[8] The parties agree that the ordinary limitation period for a claim based on the negligent performance of services is six years. Further, as a consequence of the decision in Rarie v. Maxwell (1998), 1998 CanLII 17675 (MB CA), 131 Man.R. (2d) 184 (C.A.), the parties agree that the judge-made discoverability rule has no application in Manitoba. In Manitoba, once the ordinary limitation period has expired, a claim may only be filed if a plaintiff first seeks leave to do so under s. 14(1) of the Act. Section 14(1) permits the court to grant leave to the applicant to begin or continue an action if it is satisfied that the application for leave is made within one year of the applicant discovering a material fact of a decisive character related to the applicant’s proposed action. In the present fact circumstances, the plaintiffs made no such application.

In Manitoba Métis Federation Inc. v. Canada (Attorney General) et al., 2010 MBCA 71 (CanLII), an aboriginal law case, the Manitoba Court of Appeal held that the limitation period for breach of fiduciary duty is six years, running from the discovery of the cause of action. The limitation will begin to toll when the material facts on which a claim is based have been discovered or ought to have been discovered by the plaintiffs by the exercise of reasonable diligence:

284 As noted above, the appellants allege that the current limitations statute in force in Manitoba (the LAA) applies to their claim for breach of fiduciary duty. Canada observes that the current limitation period for breach of fiduciary duty claims was originally enacted in 1931; thus, it makes no difference whether the provisions of the LAA or the LAA 1931 are applied. Manitoba argues that the RPLA 1883 operates as a statutory bar to the appellants’ claims.

285 By virtue of s. 32 of the current Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50, provincial limitation periods generally apply to litigation involving the federal Crown. A provision of this nature has been in force since 1887 (see An Act to amend “The Supreme and Exchequer Courts Act,” and to make better provision for the Trial of Claims against the Crown, S.C. 1887, c. 16 (50-51 Vict.), s. 18). As such, the provincial limitations statute that governs this matter will also apply to the appellants’ claims against Canada.

286 Turning first to the legislation in force in Manitoba at the time the relevant events occurred, none of these statutes expressly addressed claims for breaches of fiduciary duties or claims involving declarations of constitutional invalidity. Generally speaking, at that time equitable suits (such as for breach of fiduciary duty) were governed by the doctrine of laches, not statutory limitation periods. Thus, as Manitoba asserts, while it is true that all of the personal actions for the recovery of land by the s. 31 grantees, who would have sold pursuant to the Manitoba statutes, would have been statute-barred by the early twentieth century, the appellants’ fiduciary duty and constitutional invalidity claims would not have been similarly barred.

287 The LAA 1931 was the first statute in Manitoba to prescribe a limitation period for “actions grounded on accident, mistake or other equitable ground of relief.” This provision has remained in Manitoba’s limitations legislation up to the present day and was in force at the time the appellants’ claim was filed: The Limitation of Actions Act, R.S.M. 1970, c. L150, s. 3(1)(i). Given the transitional provisions contained in that legislation (see ss. 6 and 60), it would appear as though the limitation period prescribed by the 1970 Act governs the case at bar. In all of its iterations, the six-year limitation period ran from “the discovery of the cause of action.”

288 As previously held by this court, this provision encompasses claims for breach of fiduciary duty: Beaudoin at para. 74, and Johnson v. Johnson, 2001 MBCA 203, 163 Man.R. (2d) 46. As well, since it includes a built-in discoverability principle, Part II of Manitoba’s limitations legislation (which gives applicants a one-year window within which to apply for leave to extend the time for commencing or continuing an action, based on discoverability) has no application: Rarie v. Maxwell (1998), 1998 CanLII 17675 (MB CA), 131 Man.R. (2d) 184 (C.A.) at para. 31.

289 Graeme Mew, The Law of Limitations, 2nd ed. (Markham: LexisNexis Butterworths, 2004) at 45, succinctly stated, “A cause of action has accrued and, hence, a limitation period starts to run when all of the elements of a wrong exist, such that an action can [be] brought.” However, Mew goes on to note that this traditional focus on the accrual of the cause of action “has recently been modified in many cases to instead reflect the time when the plaintiff became aware of the cause of action and remedy available” (ibid.).

290 I agree with Canada’s submission that the discoverability principles outlined by this court in Beaudoin are applicable to the case at bar. In that case, a majority of this court concluded, “… the limitation will begin to toll when the material facts on which a claim is based have been discovered or ought to have been discovered by the plaintiffs by the exercise of reasonable diligence” (at para. 75). See also Tacan et al. v. Canada, 2005 FC 385, 261 F.T.R. 161 at para. 73. Thus, if the appellants’ cause of action was complete and discoverable more than six years before April 15, 1981, then the action (at least with respect to the claim for breach of fiduciary duty) would be statute-barred. The burden of proof with respect to discoverability rests with the appellants: Gamey v. Langenburg (Town), 2010 SKCA 11, 343 Sask.R. 258 at paras. 33-38; Authorson at para. 137.

In C.M.F. v. Manitoba, 2001 MBQB 75 (CanLII), which was a case against a child services organization, the Court held that a claim for damages for breach of fiduciary duty, is, under s. 2(1)(k) of the Limitation of Actions Act, which provides for a six-year limitation period:

[13] The complaint against Dr. Doe is that Dr. Doe examined him when he was 19½ months of age. The main complaint is the following finding:

This boy is showing very little ability beyond the thirteen-month level which suggests a considerable degree of retardation. . . .

The applicant says that the doctor incorrectly made this assessment. He alleges that he has the following causes of action against Dr. Doe:

(i) breach of fiduciary duty causing loss, for which s. 2(1)(k) of the Act enacts a limitation period of “six years from the discovery of the cause of action”; and

(ii) negligence or malpractice causing loss, for which s. 61 of the Medical Act, R.S.M. 1987, c. M90, enacts a limitation period of “two years from the date in the matter complained of, those professional services terminated”.

[14] The applicant’s claims against these parties must be divided into two categories, those for which leave may be granted and those for which leave may not be granted. The Manitoba Court of Appeal held in Rarie v. Maxwell (1998), 1998 CanLII 17675 (MB CA), 131 Man.R.(2d) 184 at 190-191 that Part II of the Act does not apply to cases for which the limitation period has a built-in discoverability rule. A claim for damages for breach of fiduciary duty, that is, under s. 2(1)(k) has a built-in discoverability rule. Therefore this court has no jurisdiction to make an order extending the time to sue any of the parties referred to in ¶9 for damages for breach of fiduciary duty. However, the court does have jurisdiction to decide whether leave should be granted to bring an action against the Government of Manitoba, the Director of Child and Family Services of Manitoba, New Directions and Dr. Doe for negligence or breach of duty, whether by statute or otherwise. Neither s. 2(1)(e) of the Act nor s. 61 of the Medical Act has a built-in discoverability rule.

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