The Limitations Act as a Sword and Shield

Written by: Lenci J. Kadavil 


Counsel Comments provided by Counsel for the successful Respondent, Lenci Kadavil

Eberle v Terroco Drilling Ltd, 2022 ABCA 8

Using the Limitations Act, as either a sword or shield is not as simple as it seems. On the face of it, it is straightforward, you have two (2) years from when you know an injury occurred to file your claim. However, as the cases quickly demonstrate, each situation is heavily fact-dependent, and it is important to know what the Limitations Act means when it uses concepts such as injury, knowledge, discoverability, fraudulent concealment, and reasonable diligence.

The Dilemma

For instance, what happens when the drafter of a contract, uses their own contract to delay a discretionary decision and then tries to tell the claimant that they are out of time to make a claim because they incorrectly relied on the drafter’s representations?

The Case

This is what happened in Eberle v Terroco. Parlee McLaws successfully represented Eberle all the way to the Court of Appeal in this matter. Eberle was an oil rig manager working for Terroco. Terroco sold the rigs Eberle was working on, and their relationship terminated in December 2012. Eberle wanted bonuses paid and requested bonuses be paid both prior to termination of the relationship and afterwards, but Terroco advised that they needed to deliberate. Further, Terroco represented that their decision was purely discretionary as per their interpretation of the written Contract. Terroco continued deliberating until June 2015 when Eberle was finally informed that he was getting no bonuses.

Eberle began to suspect that the bonuses were not actually discretionary, but indeed an entitlement, when he discovered that a fellow rig manager, James Beal, successfully went to Trial and had his bonuses paid in June 2015 (Terroco Drilling Ltd v Beal, 2015 CanLII 33529 (AB ESA [Beal]). The same counsel represented both Beal and Eberle, but the Court did not focus on the Beal decision in their written reasons.

Eberle filed a claim in December 2015 and Terroco brought a summary judgement application seeking to dismiss Eberle’s claim on the basis that he took to long to file a claim, and that his deadline was, at the latest, December 2014.

Terroco contended that Eberle had sufficient facts to recognize that the contract had been breached in December 2012. Terroco submitted that the calculation of the loss need not be exact when one is assessing the time at which the discovery limitation period begins.

Eberle stated that whether there would even be a bonus (let alone its amount) was in the discretion of Terroco and he was not flatly denied the bonuses until June 2015. He further argued that it was not until his knowledge of the Beal decision, that he realized the bonuses were an entitlement However again, the Beal decision was not the focus in the written decision(s). The Master agreed with Terroco, but on appeal, on the point of post 2010 bonuses, the Chambers Judge agreed with Eberle, and the Court of Appeal confirmed Eberle’s proposed interpretation.

The Chambers Judge found that there was a continuing discussion about the payment of bonuses that remained unresolved and Terroco left open the possibility that payment might be forthcoming, which elongated the period before it can be said that a known injury occurred. He used a case out of Ontario called, Weitzman v SAP Canada Inc, [2009] OJ No 3619 to reach this conclusion. The Chambers Judge concluded that the Plaintiff is entitled to argue that a limitation period only began at the point where it would run on the defendant’s own asserted interpretation of the contract, and the Court of Appeal agreed.

What you need to know

The key takeaway for any employer trying to use a Limitations Act is to ensure their contract is unambiguous on the process of how discretionary bonuses are to be decided, and if it does choose to communicate to an employee, it must be careful not characterize the contract such that time can be elongated.