Written by Duncan Taylor, Associate and Courtney R. Chrusch, Associate

An ongoing dispute over a leaky roof between a condominium board and the developer responsible for the condominium’s construction sheds light on the challenges faced by litigators when determining the commencement of a limitations period. In Condominium Corporation No 062 1161 v Park Place Communities Ltd, 2023 ABKB 373 (“Park Place”), Justice Mah of the Alberta Court of King’s Bench struggled with the subjective language “know or ought to know” in s.3(1) of the Limitations Act, RSA 2000, c L-12 (the “Limitations Act”) to determine when the clock starts running in a limitation period. The ruling ultimately affirmed the highly subjective nature of determining when a party "ought to have known" that their damages warranted initiating legal proceedings. This subjective factor within the analysis of s. 3(1) creates a significant challenge, as it can easily lead to a triable issue. Consequently, applications seeking dismissal under the Limitations Act may be ineligible for summary dismissal due to the inherent complexity involved in assessing this factor.

Background

In 2006, the development in question, Park Place Ellerslie, was completed. The roof began to leak shortly thereafter. From 2007 to 2012, the condo board and the developer engaged in discussions and repairs to stop the leakage. The developer persisted in its attempt to troubleshoot the issue and find solutions through two roofing contractors, but to no avail.  Despite both parties engaging in good-faith discussions and solutions, the leakage persisted. In 2010, the warranty under the National Home Warranty certificate expired.

A number of engineering reports were commissioned to identify the source of the leak and a roofing company was engaged to conduct repairs. In November 2012, the developer, to the apparent surprise of the condo board, suggested that the parties split the cost of the repairs evenly. After attempts to resolve the question of which party was responsible for the cost of repairs failed in April 2013, the condo board filed a lawsuit against the developer on August 22.

Application

The developer applied for summary dismissal of the condo board’s action, arguing it had been filed outside of the 2-year limitations period provided for in the Limitations Act. In an oral decision, Applications Judge Schlosser denied the application, finding that the developer’s conduct may well have extended the limitation period, creating a triable issue.

Appeal

The developer appealed, claiming that there were multiple dates that could have triggered the start of the limitation clock, all of which are more than two years before the condo board filed its suit. These included the unsuccessful repairs conducted in December 2009, when the warrantee expired in December 2010, or in July of 2011 after a member of the condo board was warned of a potential limitations issue after consulting with his personal attorney.  

In response, the condo board argued that the limitation period did not begin until November 2012 when the developer first indicated they would not completely cover the cost of repairs, or May 2013 when the developer withdrew all prior proposals regarding the repairs of the roof and directed the condo board to the developer’s counsel.

It was the position of the condo board that by the developer’s words or conduct, they represented the intention to pay the cost, which the condo board relied upon. Alternatively, they argued that the developer’s conduct and long-standing representations about fixing the roof amounted to promissory estoppel, extending the limitation period. Finally, the condo board argued that they were only aware that the seriousness of the injury potentially warranted a claim after receiving an expert report in September 2011.

Section s.3(1) of the Limitations Act requires that potential litigants file their claim within two years of the date they knew, or ought to have known they suffered an injury, that the injury was attributable to the conduct of the defendant, and that the injury must warrant a legal claim.

The first two elements of the test were not in serious dispute. Before Justice Mah was the question of when the condo board knew that the issue, assuming the developer’s liability, warranted filing a claim.

Citing Condominium Corporation 0812755 v IBI Group Inc, 2019 ABQB, Justice Mah attempted to find a proper balance between not allowing a cause of action to linger and to avoid lawsuits being commenced prematurely. In that decision, Master (as they were then called) Robertson found that a party was not required to start a claim if they had reasonable grounds to believe that a responsible party was addressing the matter. This rational was followed in Points West Living Red Deer Inc v Rockliff Pierchaljlo Kroman Architects Ltd, 2021 ABQB 589 where Master Summer embraced the subjective elements of s.3(1) and found that placing himself in the shoes of the Plaintiff, he would have felt that it would have been premature to commence an action during the period in dispute.

Justice Mah recognized that the developer should not be held hostage or penalized as a result of its own attempts to act in good faith and remediate the issue. To do so would be to disincentivize any potential defendant from resolving the issue in dispute outside of the court process. However, based on the aforementioned cases, if a responsible party was attempting to resolve the injury in dispute, any litigation would be premature.

Based on the evidentiary record, the Court found that it would be reasonable to infer (but did not make a finding) that the developer assumed responsibility for the leak from 2007 to 2012, but changed its position in November 2012; and that the condo board did not believe an action was warranted until at least that time.

In addition to the above, he reasoned that elements of promissory estoppel may have existed to pause the countdown on the applicable limitation period. While no discussion of the limitations period existed between the condo board and the developer, the developer’s conduct in remedying the leak could be interpreted as an intention to take responsibility for the problem. Neither the warrantee or the board member’s consultation with his own counsel were determined to have impacted the limitations period. In the end, whether the Developer’s conduct in addressing the board’s concerns with the leak indicated that an action was not yet warranted, or whether this conduct constituted promissory estoppel was a matter that required an assessment of credibility and a full trial of the facts. The developer’s appeal was dismissed, affirming the decision of Applications Judge Schlosser.

Takeaways

The Park Place decision highlights the need for effective communication during a potential limitations period. Potential defendants contemplating a limitations defence in the future while simultaneously attempting to resolve the issue in dispute should be sure to communicate to the aggrieved party that their actions should not be construed as suspension of the limitations period. Likewise, potential claimants relying on the efforts of a wrongdoer to remediate the damage caused should communicate that they are doing so early and often.

Ultimately, neither party to the Park Place dispute will likely be satisfied with the result. While the condo board’s action lives to see another sunrise, the limitations defence remains a live issue. In the end, the best way to avoid potential limitations issues is to file an action as early as possible, followed by a stand-still agreement while remediation efforts continue.