Commercial Litigation and Dispute Resolution Blog

A limitation period is a specific period of time within which a person with a legal claim must commence a court proceeding to assert that claim. In British Columbia, the Limitation Act, SBC 2012, c 13 (the “Limitation Act”) provides for a basic limitation period of two years from the date a claim is discovered. Failure to start a claim within the applicable limitation period will result in the claim being barred (sometimes referred to as “statue barred” or “time barred”).

But what if your claim arises from an ongoing course of conduct, rather than a discrete act or event? How does the limitation period operate in those circumstances?

The BC Court of Appeal recently took up this question in Brockman v. Valmont Industries Holland B.V., 2022 BCCA 80 (“Brockman”) and clarified that the limitations clock will start to run when the conduct complained of is first discovered, and not (as the lower court held) only when the ongoing conduct comes to an end. The facts of Brockman provide a useful illustration:

Mr. Brockman indirectly owned 20% of the shares of Valmont West Coast Engineering Ltd. (“Valmont”). Valmont’s parent company, Valmont Industries Inc. (“VMI”), indirectly owned the other 80%. In March of 2018, VMI exercised a call option to purchase Mr. Brockman’s shares at a price to be determined by a contractual formula set out in Valmont’s shareholders agreement. Mr. Brockman complained that the value for his shares as determined by the formula was lower than it should have been because VMI had repeatedly directed Valmont not to bid on or solicit job opportunities in the Canadian Utility Market so as not to compete with other VMI subsidiaries. Mr. Brockman alleged that VMI had exercised its control over Valmont in a manner that was oppressive or unfairly prejudicial to him as a shareholder, and on December 31, 2018 filed a petition seeking relief from oppression under section 227 of British Columbia’s Business Corporations Act, SBC 2002, c 57 (the “Business Corporations Act”).

The judge hearing Mr. Brockman’s oppression petition in chambers agreed with Mr. Brockman. The chambers judge found Mr. Brockman reasonably expected that Valmont would continue to operate as a going concern and to compete and grow within its existing markets with the support of VMI. Those reasonable expectations were violated by VMI’s oppressive conduct, which began almost immediately after VMI acquired its majority stake in Valmont in February 2008 and continued through 2018.

The chambers judge also concluded that VMI’s oppression was continuing or ongoing, as opposed to a series of discrete acts. Following existing British Columbia Supreme Court authority decided under the former Limitation Act, RSBC 1996, c 266, the chambers judge proceeded on the basis that the limitation period did not begin to run at least until after the oppressive conduct ceased or was rectified. Since the oppressive conduct continued into 2018 when the petition was filed, the limitation period by which to bring a claim in respect of this conduct had not expired. Satisfied that Mr. Brockman was entitled to a remedy under section 227 of the Business Corporations Act, the chambers judge ordered an accounting to determine a fair and reasonable purchase price for his minority shares, which accounting was to include an assessment of the effects of VMI’s oppressive conduct since it began in 2008.

VMI appealed. The Court of Appeal concluded that the chambers judge erred in holding that where conduct is ongoing or continuous, a limitation period does not begin to run at least until the oppressive conduct ceases or is rectified. In reaching this conclusion, the Court of Appeal focused on the terms and aims of the current Limitation Act, and particularly section 6(1) which sets out the basic limitation period and provides:

Subject to this Act, a court proceeding in respect of a claim must not be commenced more than 2 years after the day on which the claim is discovered.

The Court of Appeal reasoned that an oppression claim involves company conduct that causes particular types of injury to one or more shareholders and accordingly “oppression, even if it is ongoing, has a starting point; at some juncture, a pattern of conduct becomes oppression.”^[1] In order to trigger the running of the limitation period, the conduct complained of must not only have crossed the line into oppression for the purposes section 227 of the Business Corporations Act, it must also be “discovered” by the affected shareholder for the purposes of section 8 of the Limitation Act.^[2] While the questions of (i) when a pattern of conduct becomes oppression, and (ii) when the oppression will be said to have been discovered by a relevant stakeholder will depend on the facts of each case, the Court of Appeal clarified that once a claim for oppression is discovered, the limitation period will start to run even if the conduct is ongoing:

The fact that discovered oppression is continuing does not mean the necessary and sufficient conditions to trigger the running of the limitation period are not in place. The language of s. 6 of the current Act is express; the running of a limitation period starts on the day the claim is discovered. Nothing in the statute suggests the limitation period does not start running until ongoing oppression stops or is remedied.^[3]

The Court of Appeal noted VMI’s oppressive conduct (i.e. its imposition of a policy on Valmont precluding it from making bids in the Canadian Utility Market) started almost immediately after VMI acquired its stake in the company in 2008. Mr. Brockman was aware of and complained about the policy from the beginning. Accordingly, the Court of Appeal concluded that Mr. Brockman’s oppression claim arose and was discovered by him for the first time in 2008 or shortly thereafter, and “the plain language of s. 6 means the limitation period had begun to run more than two years before the petition was commenced in December 2018.”^[4]

What were the implications of this conclusion for Mr. Brockman? Mr. Brockman’s remedy could only be in respect of oppressive conduct occurring within the limitation period, and not before. The Court of Appeal set aside the chambers judge’s order and substituted it for an order clarifying that the fair market valuation of Mr. Brockman’s minority shares was to be determined only by reference to oppressive conduct occurring within the limitation period.

What are the implications of this decision for prospective litigants in B.C. more generally? Act with dispatch to protect your rights, even if the wrongful conduct underlying your claim is ongoing. Limitation periods are intended to force timely action to remedy civil wrongs. The Court of Appeal has concluded that, by enacting a basic limitation period of two years, “the legislature has set its face against fashioning remedies based on conduct in proceedings started out of time. Crafting a remedy rooted in the current effects of statute-barred conduct defeats this intent.”^[5] While Brockman concerned oppression under the Business Corporations Act, the Court of Appeal noted “a large variety of causes of action may arise, but then continue”^[6] and the same policy consideration will apply to those claims.

_{[1] Brockman, para. 25-26.}

_{[2] Section 8 of the Limitation Act sets out the principles governing the “discovery” of a claim. Section 8 provides:}

_{Except for those special situations referred to in sections 9 to 11, a claim is discovered by a person on the first day on which the person knew or reasonably ought to have known all of the following:}

_{(a)that injury, loss or damage had occurred;}

_{(b)that the injury, loss or damage was caused by or contributed to by an act or omission;}

_{(c)that the act or omission was that of the person against whom the claim is or may be made;}

_{(d)that, having regard to the nature of the injury, loss or damage, a court proceeding would be an appropriate means to seek to remedy the injury, loss or damage.}

_{[3] Brockman, para. 27.}

_{[4] Brockman, para. 28.}

_{[5] Brockman, para. 38.}

_{[6] Brockman, para. 29.}