T-1952-87
Karl Mueller Construction Ltd. (Plaintiff)
v.
The Queen (Defendant)
INDEXED AS: KARL MUELLER CONSTRUCTION LTD. V. CANADA
(T.D.)
Trial Division, Joyal J.—Edmonton, April 7;
Ottawa, August 29, 1989.
Crown — Practice — Limitation of actions — Action
against Crown on contract and in tort concerning road con
struction work in Northwest Territories — Interpretation of
contract to determine material facts — Burden on party
asserting limitation — Contra proferentum rule — Cause of
action not arising until engineer's certificate of final comple
tion filed, at which time Crown's refusal to pay constituting
breach — Earlier claim for payment and exercise of Crown's
right to remove contract from plaintiffs hands immaterial —
Federal Court Act, s. 39 and Crown Liability Act, s. 32
establish six-year limitation period with respect to cause of
action arising otherwise than in province, whether in contract
or tort — Alberta legislation governing limitation of actions
not applicable as cause of action not arising in Alberta —
Northwest Territories ordinance not applicable as not
province.
Crown — Contracts — Action on contract for unpaid work
— Work under road construction contract taken out of plain
tiffs hands in October 1980 — Formal claim filed immediate
ly — Final certificate of completion not filed until June, 1985
— Action commenced in 1987 — Action in contract not
statute-barred — Cause of action arising upon filing of final
certificate of completion, when Crown's refusal to pay con
stituting actionable breach — Claim on contract merely claim
on covenant to pay — Exercise of Crown's right to take
contract out of plaintiffs hands not breach.
Crown — Torts — Highway construction projects —
Whether rejection of six low bids over period of years mali
cious, negligent — Not continuing tort — Separate claims
timely except that regarding 1980 project — Alternative claim
based on negligence, misrepresentation statute-barred.
This was a determination of questions of law upon an agreed
statement of facts. The questions were: (1) whether the cause
of action was statute-barred by either provincial or federal
legislation, and (2) which legislation applied. Work under a
road construction contract was taken out of the plaintiffs
hands prior to completion on October 1, 1980 on grounds of
delay and lack of diligence. The contract provided that in such
circumstances the engineer would determine the amount owing
to the contractor. The plaintiff filed a formal claim on October
15, 1980. It was not until June 24, 1985 that the defendant
filed a final certificate of completion of the contract. The
plaintiff commenced an action on contract for unpaid work and
in tort for damages, based upon allegations of misrepresenta
tions in tender documents and negligence in the administration
of the contract, on September 18, 1987. It also claimed dam
ages for the malicious, negligent or unfair rejection of a
number of its low-bid tenders for 1980, 1983, 1985, 1986 and
1987. The Crown argued that section 4 of the Alberta Limita
tion of Actions Act barred the action on contract six years after
the breach (i.e. October 1986). The plaintiff submitted that its
claim did not arise until the engineer's final certificate of
completion was filed. The issue was whether the alleged breach
of the Crown's obligation to pay under the contract arose when
the Crown took the contract out of the plaintiffs hands or at
some later date. The Crown also submitted that the action in
tort was similar to one for slander of title—a species of action
in defamation—and was barred after two years by section 51 of
the Alberta statute. The plaintiff argued that the Crown's
actions in respect of the various contracts constituted a continu
ing tort. Alternatively, if each rejection gave rise to a separate
cause of action, and the six-year rule applied, only the 1980
rejection was statute-barred.
Held, the action on contract was not statute-barred under the
applicable legislation—the Federal Court Act or the Crown
Liability Act. The tort action was also timely except with
regard to the 1980 construction project bid. The alternative
claim based on negligence and misrepresentation was statute-
barred in October, 1986.
A cause of action arises for the purposes of a limitation
period when the material facts upon which it is based have been
discovered. To determine the material facts it was necessary to
scrutinize the contract provisions, bearing in mind that the
burden rests on the party alleging limitation and that the
interpretation of the contract must be more favourable to the
plaintiff as it was drafted by the Crown (contra proferentum
rule). The fact that the contract had been taken out of the
plaintiffs hands and that the plaintiff immediately claimed
payment had no legal significance with respect to the accrual of
the cause of action. A claim on the contract was a claim on the
covenant to pay in accordance with its terms. The exercise by
the Crown of its right to take the contract out of the contrac
tor's hands did not constitute a breach per se. The cause of
action on the contract arose only upon the Crown's refusal to
pay upon the filing of the final certificate of completion. Many
of the contract provisions were matters determinable by the
engineer, and until the final certificate of completion was issued
and the Crown refused to pay there was no actionable breach.
The Crown's conduct did not constitute a continuing tort. A
series of independent or separate actions, perhaps by different
people at different times, which result in one particular type of
damage is not a continuing tort. The alternative claim based on
negligence and misrepresentation was statute-barred as of
October, 1986, but the separate claims in tort (except that
relating to the 1980 highway construction project) were timely.
The action was instituted against the federal Crown and the
Federal Court had exclusive jurisdiction to hear it. Section 39
of the Federal Court Act and section 32 of the Crown Liability
Act provide that provincial limitations laws apply to proceed
ings in respect of any cause of action arising in that province,
but that proceedings in respect of a cause of action arising
otherwise than in a province shall be taken within six years
after the cause of action arose. The Limitation of Actions Act
of Alberta did not apply because the cause of action arose in
the Northwest Territories. The Limitation of Actions Ordi
nance of the Northwest Territories did not apply because the
Northwest Territories is not a province. The limitation period
was six years under either the Federal Court Act or the Crown
Liability Act whether the action was founded on contract or in
tort.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Crown Liability Act, R.S.C., 1985, c. C-50, s. 32.
Federal Court Act, R.S.C., 1985, c. F-7, s. 39.
Federal Court Rules, C.R.C., c. 663, R. 474.
Limitation of Actions Act, R.S.A. 1980, c. L-15, ss. 4, 51.
Limitation of Actions Ordinance, R.O.N.W.T. 1974, c.
L-6, s. 3.
CASES JUDICIALLY CONSIDERED
APPLIED:
Rittinger Construction Ltd. v. Clark Roofing (Sask.) Ltd.
(1967), 65 D.L.R. (2d) 158 (Sask. Q.B.); affd (1968), 68
D.L.R. (2d) 670 (Sask. C.A.).
CONSIDERED:
Kamloops (City of) v. Nielsen et al., [1984] 2 S.C.R. 2;
Central Trust Co. v. Rafuse, [ 1986] 2 S.C.R. 147.
REFERRED TO:
Mott v. Trott, [1943] S.C.R. 256; McBride v. Vacher &
Vacher, [1951] 2 D.L.R. 274 (Ont. C.A.); Power v.
Halley (1981), 124 D.L.R. (3d) 350 (Nfld. C.A.).
AUTHORS CITED
Fleming, John G. The Law of Torts, 7th ed. Sydney: Law
Book Company, 1987.
Halsbury's Laws of England, 4th ed. London: Butter-
worths, 1987.
Heuston, R. F. V. and Buckley R.A. Salmond and Heus-
ton on The Law of Torts, 19th ed. London: Sweet &
Maxwell, 1977.
Linden, Allen M. Canadian Tort Law, 4th ed. Toronto:
Butterworths, 1988.
COUNSEL:
Bruce E. Mintz for plaintiff.
Kirk Lambrecht for defendant.
SOLICITORS:
Lefsrud, Coulter & Kerby, Edmonton, for
plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
JOYAL J.: On September 18, 1987, the plaintiff
issued a statement of claim in this Court claiming
various heads of damages against the defendant
Crown.
The claim originally arose out of a road con
struction contract awarded to the plaintiff by the
Department of Public Works on January 10, 1979,
for the Liard Highway project in the Northwest
Territories. During the performance of the con
tract, the work was taken out of the plaintiff s
hands on grounds of delay and lack of diligence.
The plaintiff claims that this was unjustified and
that fault lay with the Crown by reason of the
Crown's own misrepresentations and negligence
with respect to the nature of the work to be
performed. The plaintiff claims an amount of some
$500,000 for unpaid work and damages.
Further, the plaintiff claims that in a number of
tenders for other road construction work submitted
during the period 1980-1987, and in which the
plaintiff was the lowest bidder, the defendant mali
ciously, capriciously, negligently or unfairly,
rejected the plaintiffs bids. For this the plaintiff
claims general damages of $300,000 and punitive
damages of $100,000.
In its statement of defence, the Crown alleges,
inter alia, that the cause of action in contract as
well as the cause of action in tort are statute-
barred by the reason of section 4 and section 51 of
the Limitation of Actions Act, R.S.A. 1980, c.
L-15. Section 4 provides for a six-year limitation
for an action on contract and section 51 provides
for a two-year limitation on actions in tort.
Subsequently, the parties agreed to submit the
question of limitation to a determination by this
Court pursuant to Rule 474 of the Federal Court
Rules [C.R.C., c. 663]. The parties agreed on a
statement of facts and set down the question of law
as follows:
Whether the plaintiffs action is barred in whole
or in part by the application or any of all of the
following statutes:
(a) Federal Court Act, R.S.C., 1985, c. F-7,
section 39;
(b) Limitation of Actions Act, R.S.A. 1980, c.
L-15, sections 4 and 51;
(c) Limitation of Actions Ordinance,
R.O.N.W.T. 1974, c. L-6, section 3; and
(d) Crown Liability Act, R.S.C., 1985, c. C-50,
section 32.
THE FACTS
The plaintiff's contract with the Crown was for
a three-mile stretch of the Liard Highway in the
Northwest Territories. The plaintiff proceeded
with the contract from the date of the award on
January 10, 1979 until October 1, 1980, when the
work was taken out of its hands pursuant to clause
16 of General Conditions "C" of the contract. In
this clause, the Crown reserves the right to take
over a contract when there is delay or default or
lack of diligence which goes unremedied after a
certain notice period. Once such action has been
taken by the Crown, clause 16 goes on to say:
16....
(2) Where the work or any portion thereof has been taken out
of the Contractor's hands under subsection (1) the Contractor
shall not except as provided in subsection (3), be entitled to any
further payment including payments then due and payable but
not paid and the obligation of Her Majesty to make payments
as provided for in the Terms of Payment shall be at an end and
the Contractor shall be liable to and upon demand therefor pay
to Her Majesty an amount equal to all loss and damage
suffered by Her Majesty by reason of the non-completion of the
work by the Contractor.
(3) Where the work or any portion thereof has been taken out
of the Contractor's hands under subsection (1) and that portion
is subsequently completed by Her Majesty, the Engineer shall
determine the amount, if any, of holdback and progress claims
of the Contractor unpaid at the time of taking the work out of
his hands that in his opinion are not required by Her Majesty
for the purposes of the contract and the Minister shall, if he is
of the opinion that no financial prejudice to Her Majesty will
result, authorize payment of that amount to the Contractor.
Clause 17 also provides that:
17.(1) The taking of the work, or any portion thereof, out of
the Contractor's hands pursuant to section 16 of the General
Conditions does not operate so as to relieve or discharge the
Contractor from any obligation under the contract or imposed
upon him by law except the obligation to complete the physical
execution of that portion of the work so taken out of his hands.
On October 15, 1980, the plaintiff filed a formal
claim with the defendant in the sum of $575,000.
A few months later, on January 31, 1981, the
plaintiff filed a supplemental claim in the sum of
$67,000.
Between 1981 and 1985, the plaintiff unsuccess
fully sought payment of the foregoing sums from
the defendant.
It was only on June 24, 1985 that the defendant,
pursuant to the contract, filed a final certificate of
completion of the contract. This was followed on
October 29, 1985 with an offer by the defendant to
pay the plaintiff the sum of $19,090.06 as final
payment under the contract. The plaintiff did not
accept this offer and some two years later, on
September 18, 1987, instituted its action on con
tract. To that action of course was joined its action
in tort to which I have already referred but as the
limitations applicable to contracts and torts might
be different, I shall defer to later the consideration
involving that part of the case.
THE ACTION ON CONTRACT
I. Position of the Crown
It is the Crown's position that the plaintiffs
claim is divisible in three parts. There is the action
on the contract which was taken out of the plain
tiffs hands on October 1, 1980 and on which a
claim for damages for breach of it, for misrepre
sentations in the tender documents and for negli
gence in the administration of the contract, are
founded. If a breach of contract occurred, argues
the Crown, the limitation date starts to run from
the date of the breach and the action became
statute-barred some six years later, i.e., on or
about October, 1986.
The Crown acknowledges, however, that the
second claim in contract, that one arising from the
dispute over the Crown's final determination of
moneys owing pursuant to its final certificate of
completion on June 24, 1985, is not statute-barred.
II. Position of the Plaintiff on the Contract
The plaintiff's approach is primarily based on
the nature of the contract entered into with the
Crown and on the various provisions relating to the
method of its costs calculations and to payment of
these costs.
The plaintiff states that the contract was on a
unit price basis involving both quantities and vari
ous types of soil conditions. It was by reason of
miscalculation by the Crown in these matters that
the plaintiff suffered considerable cost overruns
which give rise to a quantum meruit type of claim.
The contract establishes payment terms for this
unit price work in Article II of the Articles of
Agreement. The quantification of the payment
itself is based on a formula which contemplates
additions or amendments or an application of sec
tion 46 of the General Conditions "C". In clause 2
of this section, there is found a detailed formula to
determine any amount owing which, on an analysis
of it, is no more, no less than quantum meruit.
Further, says the plaintiff, the engineer appoint
ed under the contract, is vested with a discretion in
dealing with changes in soil conditions as well as
with evaluating claims for extras, the whole to
make sure that the "burden of substantial increase
in cost will not be borne by the contractor".
According to the plaintiffs interpretation of the
contractual links between the parties, its claims of
October 15, 1980 and of January 31, 1981,
remained outstanding and in limbo pending the
engineer's final certificate of completion which
was filed on June 24, 1985. That certificate states:
Revised Unit Prices determined by the Engineer as a fair and
reasonable settlement in accordance with Articles of Agree
ment, Article II(2)(e).
The plaintiff concludes that cost overruns under
the contract are determined on a quantum meruit
basis as the overruns might be determined by the
engineer. In exercising his authority in this respect,
the engineer must decide what in any event is
required of the contractor under its contract and
what is the nature and extent of the soil conditions
which cause a substantial increase in the contrac
tor's costs.
As a result, the plaintiffs claim cannot arise
until the engineer's final certificate of completion
is filed. It is at that time that the plaintiffs claim
becomes crystallized and it is at that time that the
cause of action arises. Finally, it is at that time
that the Crown's failure to pay constitutes an
actionable breach of contract.
THE FINDINGS ON THE ACTION ON CONTRACT
The ground rule with respect to determining the
commencement of a limitation period with respect
to any cause of action was expressed in Kamloops
(City of) v. Nielsen et al., [1984] 2 S.C.R. 2, and
restated by Le Dain J. in Central Trust Co. v.
Rafuse, [1986] 2 S.C.R. 147, when he said, at
page 224:
I am thus of the view that the judgment of the majority in
Kamloops laid down a general rule that a cause of action arises
for purposes of a limitation period when the material facts on
which it is based have been discovered or ought to have been
discovered by the plaintiff by the exercise of reasonable
diligence ....
The wording of this general rule seems quite
simple. Its application, however, is somewhat more
difficult and it calls upon the court to make a
determination as to what facts are the material
ones to cause the clock to start ticking in respect of
the commencement of the appropriate limitation
period.
In general, in contract cases, it has been held
that the limitation begins to run from the occur
rence of the breach of contract. The cases of Mott
v. Trott, [1943] S.C.R. 256; McBride v. Vacher &
Vacher, [1951] 2 D.L.R. 274 (Ont. C.A.); Power
v. Halley (1981), 124 D.L.R. (3d) 350 (Nfld.
C.A.), all confirm this proposition. The issue
before me is therefore whether or not the alleged
breach of the Crown's obligation to pay under the
contract occurred at the time the Crown unilater
ally took the contract out of the plaintiffs hands
and subsequently failed to pay demands for pay
ment over the years 1980 to 1985, or whether the
contractual breach for failure to pay arose at some
subsequent date.
Needless to say, for anyone who is familiar with
construction contracts involving the Crown, their
terms and conditions, built up over the many years
through the brick by brick method, are not always
clear in their meaning or in their conformity.
The Articles of Agreement filed in the record
contain six small-print pages. This document is
followed by Schedule "B" entitled "Terms of Pay
ment" which run through four small-print pages.
The whole is followed by General Conditions "C"
which contain 48 sections running through 18
pages of equally fine print. There are as well other
appendices pertaining to Class of Labour, Plant
and Material, Estimated Quantity and Price per
Unit, and to Labour Conditions as well as to
Classification of Labour including applicable rates
of pay for some 67 different trades or occupations.
I might add that all the substantive provisions of
these contract documents are drafted or printed by
the Crown. They constitute what civil law calls
"contrats d'adhésion" and the contra proferentum
rule applies to favour the plaintiff.
In any event, there is imposed on the Court the
obligation to scrutinize the various interactive
provisions of such contracts keeping in mind two
fundamental precepts, namely that in matters of
limitation, the burden to prove it rests on the party
alleging it and, if this involves the interpretation of
certain ambiguities in the contract documents
themselves, the interpretation, for reasons previ
ously stated, must be one more favourable to the
plaintiff.
For example, in Rittinger Construction Ltd. v.
Clark Roofing (Sask.) Ltd. (1967), 65 D.L.R.
(2d) 158 (Sask. Q.B.); affirmed in (1968), 68
D.L.R. (2d) 670 (Sask. C.A.), the Court was faced
with the problem of the proper construction of a
contract to determine when the limitation clock
would start to run. The contract was for the
construction of a roof and it provided for the
contractor to remedy defects within one year of
completion. Such defects appeared and attempts to
remedy them were unsuccessfully made over the
next four years. The six-year limitation was raised
but the Court held that the time started to run not
from the date of completion but from the time the
last attempt was made to remedy the defects or at
least from a year after the contract was substan
tially completed.
In the contractual documents before me, I
should single out the following provisions:
(1) Under Terms of Payment "B", clause 6, a
delay by the Crown in making payment in
respect of any sum due and payable "shall be
deemed not to be a breach of the contract".
(2) Under Terms of Payment "B", clause 4, as
read together with General Conditions "C",
clause 16(3), the Crown is only legally bound to
pay any outstanding amounts due to the plain
tiff upon the expiration of 60 days from the
issuance of a certificate of final completion.
(3) Under Terms of Payment "B", clause 5, a
clause which reflects the accrual method of
payment provided for in clause 4, any progress
report or any payment by the Crown shall not be
construed as evidence that the work, material or
any part thereof is complete, is satisfactory or is
in accordance with the contract.
My interpretation of these clauses, whether or
not they were inserted there by the Crown for
purposes of providing generous limitation periods
to an unhappy contractor, which I seriously doubt,
is that they provide that, a cause of action, based
on the breach of the covenant to pay, cannot arise
until the Crown is legally bound to pay the plain
tiff and refuses to do so. The fact that the contract
was taken out of the plaintiff's hands and that the
plaintiff immediately claimed payment on account
of it, would have, in my opinion, no legal signifi
cance with respect to the accrual of the plaintiff's
cause of action. Had the plaintiff taken immediate
action after the contract was taken out of its
hands, the Crown, by relying on the same provi
sions, could have claimed that the payments were
not yet contractually due.
As I see it, a claim on this contract is a claim
based on the breach of the Crown's covenant to
pay in accordance with its terms. The exercise by
the Crown of its right to take the contract out of
the contractor's hands under General Condition
"C", clause 16, does not appear to me to constitute
a breach per se. In fact, clause 17 stipulates that in
such an event, the plaintiff remains contractually
bound to all the terms and conditions of the con
tract except to complete that portion of the work
taken out of its hands.
I should observe that it would be difficult for me
to conclude that on the one hand, a contract
subsists for the purposes of binding a party to fulfil
its obligations but that it does not survive with
respect to the payment covenants beyond the point
when the contract is taken over.
I should therefore subscribe to the plaintiff's
view that the cause of action on the contract arises
only upon the Crown's refusal to pay upon the
filing of the final certificate of completion. It is
only as of that date that the plaintiff is certain that
the Crown is in fact refusing to pay what the
plaintiff felt is properly owed and is thus in breach
of the contract. By the nature of the contract
many of the other contract provisions (including
the determination of what constitutes entire quan
tities or what unit prices are payable depending
upon the nature of the anticipated soil conditions,
or generally what cost overruns are properly the
responsibility of the plaintiff or are at the charge
of the Crown), are matters determinable by the
engineer under General Conditions "C", clause 34
and clause 12 or under Articles of Agreement,
Article II, s. (2). Until all of this is done (resulting
in the issuance of the final certificate of comple
tion), and the Crown refuses to pay, there is no
actionable breach of contract. Under that head,
therefore, and assuming that the applicable limita
tion period is six years, the plaintiff's claim is not
statute-barred.
Admittedly, the plaintiff makes an alternative
claim under the same head but which in terms of
negligence or misrepresentation alleged against the
Crown, has the earmarks of an action in tort. In
such event, a different limitation period might
apply and it could be argued that the material
facts on which this claim is based was known to
the plaintiff as early as 1980. Plaintiff's counsel
concedes that the statement of claim may require
an amendment to further clarify these two distinct
causes. Given the flexibility in amendments to
pleadings, I should leave such matter to the initia
tive of counsel, and to determination at trial.
THE ACTION IN TORT
I. Position of the Crown
Crown counsel interprets this action as one
analogous to an action for slander of title. It is a
species of an action in defamation. Counsel claims
that this is governed by the two-year limitation
rule, i.e. that any claim in relation to damage
which occurred before September 18, 1985 is
untimely.
II. Position of the Plaintiff
In accordance with the agreed statement of
facts, low bids were submitted by the plaintiff for
various Crown projects in the years 1980, 1983,
1985, 1986 and 1987. Some six bids in total were
rejected by the Crown and the plaintiff views this
action as malicious, unfounded, capricious, negli
gent and unfair. The plaintiff claims loss of profits
on these contracts totalling $565,000.
The plaintiff submits that these events, running
from 1980 to 1987, are on a continuing basis. In
the alternative, if each rejection constitutes a sepa
rate cause of action, only the 1980 rejection would
be statute-barred if the six-year rule is found
applicable.
THE FINDINGS ON ACTION IN TORT
Whether or not the actions taken by the Crown
in respect of all these contracts constitute a con
tinuing tort or a continuing cause of action is not
easy to determine. Fleming's The Law of Torts,
Salmond and Heuston's The Law of Torts or
Linden's Canadian Tort Law and Halsbury's
Laws of England do not appear to define what
constitutes a continuing tort or, in any event,
would not appear to cover any case where the facts
are as singular and peculiar as the ones before me.
It could be said that in the mind of any plaintiff,
a tort does not necessarily occur by reason of the
first rejection. It might not even come to mind by
reason of the second rejection. It should therefore
be over a certain period of time that the accumula
tion of rejections would provide the material facts
on which a claim in tort could be founded. In such
case, the various rejections might lead to a finding
that there exists a continuing tort.
On the other hand, it could be argued that for a
tort to be considered continuing, it must arise out
of conduct which results in damages or conse
quences continuing over a certain period of time. It
is therefore not the tort in itself which is necessari
ly repeated, but its consequences which either flow
or continue by design or by circumstance. Such
could be the case in the case of a continuing
trespass.
I should find that the conduct of the Crown
cannot be construed as a continuing tort. A series
of independent or separate actions, perhaps by
different people at different times, which result in
one particular type of damage, may not be called a
continuing tort. As an example, if a defamatory
pamphlet is written and distributed by someone
and excerpts from this pamphlet are later pub
lished by a magazine or newspaper, such might be
a continuing tort giving rise to one cause of action.
However, if a succession of different defamatory
pamphlets are written and distributed by different
people on a number of different dates, any liability
for these acts would have to be treated on a
case-by-case basis and not under one cause of
action.
More than that, on the basis of the agreed
statement of facts, I am unfortunately unable to
say more. If in a normal tort action as stated in the
Kamloops case supra, a cause of action arises for
the purposes of a limitation period where the
material facts on which it is based have been
discovered or ought to have been discovered by the
plaintiff, I have no evidence before me to make a
finding on it. I must again leave that issue to
determination at trial. As will be seen, however,
even by adopting the scenario most favourable to
the Crown, most, if not all of the separate claims
might still come within the limitation period.
THE APPLICABLE STATUTE
The question of law before the Court as to the
applicable limitation statute must now be studied.
The case states four statutes, namely the Feder
al Court Act, the Crown Liability Act and the
Limitation of Actions Act of Alberta and the
Limitation of Actions Ordinance of the Northwest
Territories.
It is a fact that the action instituted by the
plaintiff is against the Federal Crown and that the
Federal Court of Canada has exclusive jurisdiction
to hear it. It is also a fact the plaintiff is incorpo
rated in the Northwest Territories and that the
performance of the contract was in that jurisdic
tion. The additional fact, however, that the plain
tiff's action was instituted in the Edmonton Regis
try is, in my view, immaterial to a determination
of which of the foregoing statutes apply.
Limitations on proceedings in the Federal Court
are provided in section 39 of the Federal Court
Act which reads as follows:
39. (1) Except as expressly provided by any other Act, the
laws relating to prescription and the limitation of actions in
force in any province between subject and subject apply to any
proceedings in the Court in respect of any cause of action
arising in that province.
(2) A proceeding in the Court in respect of a cause of action
arising otherwise than in a province shall be taken within six
years after the cause of action arose.
(3) Except as expressly provided by any other Act, the laws,
relating to prescription and the limitation of actions referred to
in subsections (1) and (2) apply to any proceedings brought by
or against the Crown.
I note in terms of this foregoing provision that
provincial limitation rules generally apply in
respect of any cause of action arising in that
province. However, if no other federal statute so
provides and if a cause of action arises otherwise
than in a province of Canada, it follows that a
six-year limitation applies.
A similar limitation provision is found in the
Crown Liability Act. Subsection 32(1) states as
follows:
32. (1) Unless otherwise provided in this Act, the laws
relating to prescription and the limitation of actions in force in
a province between subject and subject apply to any proceed
ings against the Crown under this Act in respect of any cause
of action arising in that province, and proceedings against the
Crown under this Act in respect of a cause of action arising
otherwise than in a province shall be taken within six years
after the cause of action arose.
The conformity between that provision and the
one found in the Federal Court Act is obvious.
Both apply the six-year limitation rule whenever a
cause of action arises otherwise than in a province.
By adopting a process of elimination, it would
appear that the Limitation of Actions Act of
Alberta cannot apply because the cause of action
did not arise in that province. The Limitation of
Actions Ordinance of the Northwest Territories
cannot apply where the Crown is involved, because
the Northwest Territories is not, at least as yet,
constituted as a province. It follows that federal
law, as enacted under either the Federal Court Act
or the Crown Liability Act, would determine the
period of limitation in the action before me. This
limitation period is six years whether the action be
founded on contract or in tort. As a further conse
quence, it matters not whether the plaintiff's tort
action is one of slander, libel, defamation or other
wise. The action is governed by the six-year rule.
In answer to the stated questions, therefore, I
should conclude that the plaintiff's action on con
tract is not statute-barred under the provisions of
the Federal Court Act or of the Crown Liability
Act. The plaintiff's action in tort is similarly
timely except as to the action relating to the
refusal of the Crown to accept the plaintiff's low
bid for the construction of another section of the
Liard Highway in 1980. For reasons already
stated, the status of that particular head of claim
should be left to the trial judge. In any event, it is
a question of mixed fact and law which should not
be determined under Rule 474.
I should also conclude that the plaintiff's alter
native claim on grounds of negligence and mis
representation, as currently framed in the plead-
ings, is statute-barred as of October 1, 1986.
The costs of these proceedings should be in the
cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.