The B.C. Government recently amended the limitation period for filing lawsuits (the deadline for suing) under 2-5-10 warranty policies. Unfortunately, the amendments have not resolved the uncertainty which exists with respect to the applicable limitation period. This uncertainty poses a significant risk to Strata Corporations since lawsuits filed after the expiry of the limitation period will be dismissed, regardless of their merits.
The amendments to the Insurance Act create separate deadlines for (1) loss and damage that occurred on or after July 1, 2012, and (2) loss and damage that occurred prior to July 1, 2012.
For loss and damage occurring on or after July 1, 2012, lawsuits must now be commenced “not later than two years after the date the cause of action against the insurer arose.” It is unclear what is meant by is meant by the phrase “the date the cause of action…arose”.
For loss and damage that occurred prior to July 1, 2012, the old version of the Insurance Act (the “Old Act”) may govern. The Old Act requires that actions to enforce certain insurance contracts “be commenced within one year after the furnishing of sufficient proof of a loss or claim under the contract.” It is unclear whether this one year limitation period applies as the Old Act does not specifically mention 2-5-10 warranty policies and most construction defect claims are currently subject to a six-year limitation period (note, this six-year limitation period will be replaced by a two year limitation period on June 1, 2013).
A further complicating factor is that it is not always clear whether the old or new version of the Insurance Act may apply to a particular strata corporation. This is particularly the case where the building was constructed and occupied prior to July 1, 2012, but warranty deadlines expire on July 1, 2012.
Given the uncertainty about which limitation period applies, the safest course of action is to give early consideration to whether it is necessary to file a lawsuit in order to preserve warranty rights.
Filing a lawsuit does not commit the strata corporation to pursuing litigation. Once a lawsuit is filed, the strata corporation has one year to serve the lawsuit on the named defendants. This year can be used to investigate the defects, negotiate with the warranty provider and/or builder and decide whether litigation is in the strata corporation’s interests.
What We Do: Lesperance Mendes acts exclusively for strata corporations and owners of developers, builders, warranty companies and insurers. If you manage a strata corporation and are concerned about the potential expiration of a limitation period, please contact John Mendes or Sat Harwood. John can be reached by phone at 604-685-4822 and by email at jgm@lmlaw.ca. Sat can be reached by phone at 604-685-3550 and by email at sdh@lmlaw.ca.
Lesperance Mendes Lawyers
900 Howe St #550, Vancouver, BC V6Z 2M4
(604) 685-3567