Do you know when your limitation period begins?

An analysis of the discoverability requirements under Saskatchewan’s Limitations Act

Across Canada, limitation periods are provincially governed by limitations legislation. In Saskatchewan, The Limitations Act, SS 2004 (the “Act”) creates a general rule: a claimant must commence a proceeding within two years after a claim is discovered. The Act states, in section 6, a claim is discovered on the day when the claimant first knew or ought to have known:

• the injury, loss, or damage has occurred;
• the injury, loss, or damage appears to have been caused by or contributed to by an act or omission that is the subject of the claim;
• the acts or omissions appear to be from the person or entity whom the claim is made against; and
• commencing a claim is an appropriate way to address the injury, loss, or damage.

When a claim is challenged based on a limitation period, the relevant question is: when was the claim discoverable? This answer is: when all four discoverability requirements from section 6 of the Act were first present.

In Saskatchewan (Highways and Infrastructure) v Venture Construction Inc., 2020 SKCA 39, the Court of Appeal reviewed the Act and discussed when the four discoverability requirements will be satisfied.

What events led to this case?

In 2010, the Ministry of Highways and Infrastructure (the “Ministry”) contracted Venture Construction Inc. (“Venture”) to perform provincial highway work which required: (i) preparatory work; 2) laying down subgrade; and 3) surface paving. Venture subcontracted the preparatory and subgrade work to Johnston Bros. (Binscarth) Ltd. (“Johnston”). Johnston began its scope of work in August 2010 and completed a portion of the preparatory and subgrade work by December 2010.

In May 2011, when Venture attempted to begin surface paving, it discovered the subgrade was not up to standard and required extensive remediation before surface paving could commence. The Ministry opined Johnston had adequately performed the subgrade work, relying on previous testing results, and concluded Venture failed to properly prepare the subgrade work for the winter and was ultimately responsible for any deterioration that occurred over the winter.

In July 2011, Venture requested the Ministry’s testing results on the subgrade work from 2010. The Ministry did not immediately respond; however, it did represent to Venture the subgrade had been adequate when the testing was completed, but became non-compliant due to excessive winter and spring runoff.

In December 2012, Venture received unofficial results from the Ministry’s 2010 subgrade testing. Venture took the position the test results demonstrated the Ministry improperly tested the subgrade work.

By July 2013, Venture had completed the project, which included remediation of the subgrade work prior to beginning surface paving.

In December 2013, Venture requested the Ministry compensate them for expenses incurred to remediate the subgrade. In January 2014, the Ministry advised it would review the request and provide a formal response in the future.

In April 2014, after receiving no response, Venture commenced a claim against the Ministry to recover its remediation costs in the amount of $4,000,000.00. The Ministry denied Venture’s allegations and brought a summary judgment application to dismiss the claim for being statute-barred because the limitation period had expired.

The Queen’s Bench Decision

According to the Queen’s Bench Chambers Judge, the limitation period began in July 2013, based on the following accepted facts:

• Venture did not know, nor could it have reasonably known, it suffered a loss until the work under the contract was completed in 2013 because an Extra Work clause in the contract made it reasonable for Venture to believe it might be compensated for the remedial work;
• It was not until Venture submitted its claim for payment and the Ministry denied it, that Venture became aware of the loss; and
• It would not have been appropriate for Venture to commence its claim in 2011 or 2012 because there were juridical reasons for delaying the claim, such as:

(i) The possibility the contract provided a mechanism for Venture to pursue compensation from the Ministry for the remedial work before filing a claim; and

(ii) Commencing the claim in 2011 or 2012 would have brought the project to a halt, and therefore the public interest (keeping the highway open) would not be fostered by filing a claim until the work under the contract was completed.

Ultimately, the Ministry’s application for summary judgement was dismissed (see: 2018 SKQB 293). The Ministry appealed to the Saskatchewan Court of Appeal.

The Court of Appeal Decision

The Court of Appeal overturned the Chamber Judge’s decision, finding the claim was commenced outside the limitation period and was statute-barred. According to the Court, the limitation period began to run in July 2011 because this was when the discoverability requirements were first met, specifically:

• Venture suffered the loss identified in the claim as soon as it was required to undertake remediation work. The fact Venture had hope, or an expectation, it would be compensated by the Ministry under the contract does not change the fact Venture knew it suffered a loss as a result of incurring the cost of remediating the subgrade work; and
• It was appropriate for Venture to commence a legal proceeding against the Ministry because there was no evidence that:

(i) Venture actually sought to invoke the provisions of the contract, such as the Extra Work clause, prior to requesting compensation in December 2013;

(ii) Venture’s delay in bringing the action was because it pursued an alternative dispute mechanism; and

(iii) Venture’s ability to complete work on the project would have been impacted or delayed by issuing and prosecuting a claim.

In other words, all the facts accepted by the Chambers Judge illustrated, as of July 2011, the four discoverability requirements of the Act were satisfied, specifically:

• Venture’s loss was identifiable;
• The Ministry’s conduct appeared to have caused Venture’s loss;
• The Ministry was responsible for the loss; and
• As of July 2011, it was appropriate for Venture to commence an action.

The Court of Appeal reversed the lower court’s decision and dismissed Venture’s claim against the Ministry in its entirety. The Ministry was awarded a portion of its legal costs at both levels.

Key Take Aways

Missing a limitation period is fatal to your claim. If you suspect you have suffered a loss or damages you should always ask yourself the following questions to ensure you meet the applicable limitation period:

• Can you identify: (1) the loss or damage; (2) the cause of the loss or damage; and, (3) the party responsible for the loss or damage?
• Does your contract contain an alternative dispute mechanism and, if it does, have you advised the other party of your intention to pursue such mechanism?
• If you made a request for payment, did your request specifically reference which contractual provision you were relying on?

If you experience any issues during a project related to the questions above, you should reach out to your counsel to determine whether a limitation period has begun.

Our experienced lawyers at Miller Thomson can assist in all aspects of litigation and can advise you on applicable limitation periods during construction projects. If you have any questions please feel free to contact Troy Baril or Hasith Andrahennadi from our Saskatchewan Construction Team at [email protected] or 306.667.5630 or [email protected].