By Pamela Branton
How long can a potential claimant wait before pursuing their claim in Court? Or, at what point has a claim “expired” due to failure to bring a Court action?
The Nova Scotia Limitation of Actions Act has recently been amended to provide for a single across-the-board limitation period to bring a Court action to recover a debt (or any other type of claim). The amendments also removed the various factors that a claimant could use if they did file their claim after the limitation period had expired.
The basic time period in which to start a legal action is two years from the date of discovery of the claim; there are some nuances during the transition period for introduction of the new rules. Where the claim was not discovered within 15 years after it occurs, the right to start a court action for the claim ceases after the 15 years. This gives closure to claims where they are historical but undiscovered.
There are some exceptions. For example, if another piece of legislation sets out a limitation period, then that specific limitation period overrides the one in the Limitation of Actions Act. Also, for a claim that is based on a demand obligation, the limitation period does not start to run until the demand has been made.
It is important to note that if a debtor acknowledges the debt, the limitation period runs from the time of the acknowledgement. The acknowledgment basically “restarts the clock” and may, in practice, extend the limitation period in some instances. The acknowledgement may be given to a Licensed Insolvency Trustee in the bankruptcy of the claimant as well as to the claimant itself.
The previous Limitations of Actions Act provided that if the claimant brought the Court action after the expiry of the limitation period, the Court might still hear the claim, if the claimant met certain conditions. These were mainly to promote fairness to the claimant, but they also brought a great deal of uncertainty and in some cases unfairness to the defendant.
Those conditions have been removed from the new legislation (other than in claims for personal injury), so that the limitation period is now more “absolute”; if the claimant does not bring the claim to Court within the limitation period, then they will not be able to pursue the claim in Court.
Pamela Branton is a Senior Solicitor with the Nova Scotia Department of Justice. She is currently Vice-Chair of the Bankruptcy Subsection of the Canadian Bar Association, Nova Scotia, has served as a Director of the Canadian Insolvency Foundation, and as the Co-Chair for the Canadian Bar Association’s Pan-Canadian Insolvency and Restructuring Conference held in Halifax in 2012.