Significant changes to a cause of action may be barred by the Limitation Period

The Saskatchewan Court of Appeal overturned the chambers judge’s decision that although proposed amendments to the statement of claim were outside the limitation period, they should nonetheless be allowed pursuant to section 20 of Saskatchewan’s Limitation Act which provides an exception to the normal limitation periods.  Essentially the plaintiff attempted to substantially alter his statement of claim after the expiration of the limitation period.  The Court of Appeal determined that although an existing cause of action had been filed, and although there may not be signficant prejudice to the existing defendants, allowing the amendments would be contrary to the purpose of limitation periods and could not be allowed under Section 20.

Cameco Corp. v. Insurance Co. of the State of Pennsylvania, [2008] S.J. No. 244 Saskatchewan Court of Appeal G.R. Jackson, R.G. Richards and D.C. Hunter JJ.A. April 18, 2008

The plaintiff incurred potential liability to the victims of a helicopter crash in 1995.  The families of the victims filed actions in Saskatchewan and British Columbia.  One of the plaintiff’s insurers, Associated Aviation Underwriters Inc., now Global Aerospace Inc. (“Global”) assumed the plaintiff’s defence in those actions.  The plaintiff then filed an action against its other insurers in 1999, claiming that they “had neglected or refused to pay legal, defence, investigation, negotiation and settlement costs as required by their respective policies of insurance” (the “Underlying Action”).  Global was a third party to the Underlying Action.  In 2005, Global settled all the claims against the plaintiff arising from the helicopter crash and in 2007, Global filed a notice of motion in the Underlying Action to vary the plaintiff’s pleadings.  The variations sought would effectively substitute Global as a plaintiff by substituting its claim for contribution in place of the plaintiff’s claim for indemnification.  The application asked for “radical changes to [the plaintiff’s] statement of claim”.

The chambers judge held that although Global’s proposed amendments were outside the limitation period, they should nonetheless be allowed pursuant to section 20 of Saskatchewan’s Limitation Act, which provides an exception to the normal limitation periods, holding:

Notwithstanding the expiry of a limitation period after the commencement of a proceeding, a judge may allow an amendment to the pleadings that asserts a new claim or adds or substitutes parties if:

(a) the claim asserted by the amendment, or by or against the new party, arises out of the same transaction or occurrence as the original claim; and

(b) the judge is satisfied that no party will suffer actual prejudice as a result of the amendment.

The defendants appealed the decision of the chambers judge.  The Court of Appeal held that the chambers judge erred in allowing the proposed amendments.  The Court held that provisions like s. 20 “provide for exceptions to limitation periods but should not be allowed to become a means for their wholesale avoidance”, and that the sought amendments were too dramatic to fall within the scope of s. 20.

This case was originally summarized by W. Jay Havelaar and originally edited by David W. Pilley.

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