Determining Limitation Periods in Construction Law Matters
July 12, 2022
Many areas of law can be considered complicated and construction law is no exception. One of the reasons construction law is challenging is because of the number of parties that can be involved in a project, even one that is residential in nature. For example, a developer may hire a general contractor to oversee the construction of a house. That general contractor might then subcontract various parts of the project, such as the pouring of concrete, electrical work, plumbing, and more.
For this reason, when something goes wrong or is alleged to have gone wrong, there may be disputes about who is responsible. A plaintiff might only realize late in the process that someone else should be brought in to be a defendant. However, the Limitations Act states that claims can only be brought against parties within a certain period of time (often two years for civil matters). A recent decision from the Court of Queen’s Bench of Alberta provides us with a great summary of what must be established in order for a limitation period to be extended.
Plaintiffs file claim following construction of their home
The plaintiffs purchased a home that was constructed between 2014 to 2015. One of the defendants, ICF, was hired by the general contractor to build an insulated concrete foundation for the house. ICF then subcontracted that work to another party, Primetime, who hired another company called Rapid to supply the concrete.
The plaintiffs filed their statement of claim on May 24, 2018, alleging a number of issues related to the concrete foundation. This included the “honeycombing” of the concrete foundation through the home, which allowed water to pass through. By February 2019, ICF was successful in adding Primetime to the claim. ICF tried to add Rapid to it on April 9, 2021. However, Rapid argued that this should not be allowed because the limitation period had expired. Rapid also claimed there was no merit to the notice. ICF was not successful at the initial hearing on ICF’s application to file a third-party claim against Rapid. The plaintiffs then appealed to the Court of Queen’s Bench of Alberta.
Did the limitation period expire?
The Limitations Act states that the clock on a limitation period starts to tick when a claim is discovered or ought to have been discovered. In some cases, damages may not show up for some time after the event causing them occurs. In this case, Rapid claimed that even if ICF did not know that Rapid had provided the concrete, they should have known all along that it was not Primetime. It ought to have been deduced that, if not Primetime, another third party was responsible. Rapid said that even if ICF had not known of a third-party at the time of construction, they would have known when Primetime filed its statement of defence in February 2019. More than two years after that, ICF attempted to name Rapid as a party.
ICF’s position was that the identity of who provided the concrete is a red herring. It wasn’t until the limitation period had lapsed that they had discovered that the deficiency may have been related to the concrete itself. This was not known until January 2021.
Rapid was not entitled to immunity as a result of the limitation period lapsing
The court stated that it did not have to address the discoverability issue because the Limitations Act states that a defendant is not entitled to immunity if two conditions are met. The first is that the added claim must be related to the conduct, transaction, or events described in the original pleading. The court found this condition to be satisfied. The second condition states,
“The defendant must have received, within the limitation period applicable to the added claim plus the time provided by law for the service of process, sufficient knowledge of the added claim that the defendant will not be prejudiced in maintaining a defence to it on the merits.”
This condition required some additional analysis because the parties did not agree on the meaning of the phrase, “plus the time provided by law for the service of process.” ICF was successful in arguing that the time period allowed for the service of process is one year. This extends the limitation period to three years (plus an additional 75-days as a result of limitation periods temporarily pausing in the early days of the pandemic).
Is there merit to the claim?
To satisfy the second condition, ICF had to establish that there was a triable issue that would constitute a viable action in court based on the facts. ICF stated in its claim that if honeycombing had occurred, it would have been a result of breach of contract with Rapid. ICF alleges that Rapid failed to provide concrete that was of reasonable quality, failed to ensure it was mixed properly, and failed to notify the parties of what concrete was used. The court was satisfied that there were sufficient alleged facts that, if true, would constitute a viable action.
The court then looked at whether the length of delay should prevent ICF’s claim, but found that two years was not an unreasonable amount of time. The court was also satisfied that Rapid would not be prejudiced by the appeal being allowed and that there was a reasonable excuse for the delay on ICF’s part. Therefore, ICF’s appeal was allowed and they were able to add Rapid to the third-party claim.
Contact HMC Lawyers if you are involved in matters related to negligent construction
HMC Lawyers and our team of construction law lawyers acts on behalf of contractors, subcontractors, lenders, and developers, both advancing and defending claims arising from negligent construction and negligent professional advice. As a team, we have decades of experience successfully advocating for our clients in the construction industry in Calgary and across Alberta. To make an appointment to discuss a potential or emerging claim, call 1-800-480-3534 or contact us online.