Canada: Alberta's Top Court Dismisses Appeal Of Employer's Limitations Defence

Limitations on Actions have been legislated to provide certainty to parties that cause(s) of action(s) from many years earlier would not resurface. This permits members of society to govern their affairs without the spectre of litigation hanging as a cloud over their heads. However, the two (2) year principle is not absolute. Both the common law and the legislation, in general, dictate that a Limitations Period cannot run until the claimant could reasonably discover an injury, particularly when it is the actions of the defendant that delays discovery of the very injury the claimant is required to pursue.

Earlier caselaw on this issue demonstrates that each situation is fact dependent. 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 Case

In the recent case of Eberle v Terroco Drilling Ltd, 2022 ABCA 8 [Eberle], the Court applied principles from the case of Weitzman v SAP Canada Inc, [2009] OJ No 3619 at paras 16-17 (ONSC), (varied on other grounds) 2010 ONCA 274 [Weitzman]. In so doing, Alberta's Court of Appeal has altered the legal landscape to now be increasingly commensurate with the principles outlined in Weitzman.

In Eberle, Terroco had brought a summary judgement application seeking to dismiss Mr. Eberle's entire action on the basis of section 3 of the Limitations Act, RSA 2000, C L-12 and the issue went all the way to the Court of Appeal. The main issues were, when did the Limitation Period commence, and did the Court correctly apply Weitzman in reaching its conclusions.

The Facts

Mr. Eberle, worked for Terroco as a drilling manager from September 2003 to December 2012. At that point, Terroco ceased to do business and sold their physical assets to a third-party purchaser for value and Mr. Eberle ceased working for Terroco.

There was no formal contract between the parties until March 2010. Prior to March 2010, the contract between the parties appears to have existed mostly on a hand-shake basis. Mr. Eberle says that he then signed a document entitled "Rig Manager Independent Contractor Agreement" (the "2010 Agreement"). He asserts that this document governed the parties' relationship after that point. The relevant portion of that contract is Schedule "B".

Schedule "B" set out a bonus structure with deductions for incidents of non-compliance, deficiency and job performance or safety. The deductions were at the sole discretion of Terroco's President and Drilling Superintendent, Mr. Tom Pettie. The principle of the Terroco group of companies was Mr. Terry O'Conner. Mr. Pettie's evidence was that Mr. O'Conner was, in practice, the decision maker with respect to bonuses and deductions.

In June 2010, a rig hand was severely injured at an oil well that Terroco was drilling in Manitoba. Mr. Eberle was the rig manager at the time. Shortly after, the Manitoba Occupational Health & Safety department commenced an investigation. The matter was not finally resolved until the summer of 2015. Terroco claimed that it needed to deliberate on possible deductions to Mr. Eberle's bonus because of this incident. Further, Terroco represented that their decision was purely discretionary as per their interpretation of the written Contract.

During the course of working for Terroco, Mr. Eberle had received two bonuses, the last one in 2006.

Over time, a dispute arose as to Mr. Eberle's entitlement to three types of remuneration: (i) bonuses; (ii) mileage reimbursement; and (iii) finders' fees for work that he brought to Terroco by referral. Mr. Eberle claimed he has never been paid these entitlements, which he asserts total over $226,000.00.

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. Mr. Beal had successfully claimed for his bonuses against Terroco, under the Employment Standards Code. Terroco Drilling Ltd. appealed this decision, and the appeal was heard April 14, 2015, in front of the Honourable Judge J.A. Glass. A decision was rendered on June 1, 2015. Terroco conceded that the bonus was indeed payable, and Mr. Beal was awarded $4,050.00 for bonuses and $7,000.00 for termination pay. This decision was made notwithstanding Mr. Pettie's testimony that bonuses were discretionary. This decision was not appealed. The Schedule "B" in Mr. Beal's contract is the same as in Eberle's 2010 Contract, with the exception of the title. The only difference was that the word 'Performance' was spelled incorrectly in Mr. Eberle's Schedule "B".

The last communication between Terry O'Conner and Eberle occurred in June 2015. On June 22, 2015, Mr. Eberle sent a text message to Mr. O'Conner requesting a discussion. Shortly afterwards, he was informed by telephone, by Mr. O'Conner, that he will not be paying bonuses to anyone at any time.

On December 9, 2015, Mr. Eberle issued a Statement of Claim against Terroco and several other parties, including two directors of the company, Mr. O'Conner and Mr. Pettie. An Amended Statement of Claim, filed on June 21, 2017, added Charles Eberle Consulting Ltd. as a plaintiff. The causes of action include breach of contract, negligent misrepresentation and breach of a duty of good faith in contract. Among other things, the claim sought unpaid bonuses.

Terroco, elected not to cross-examine Mr. Eberle on his Affidavits, and did not provide (i) their own factual version of the contractual relationship; (ii) any account for the amounts said to be owing; and (iii) a response to the statements they allegedly made in response to Mr. Eberle's requests for payment.

The Lower Courts

Terroco's summary judgement application sought to dismiss Eberle's claim on the basis that he took too 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, the Beal decision was not the focus in the written decision(s).

The Master did not accept Mr. Eberle's position and summarily dismissed his claim. The Master reasoned that when the relationship between Terroco and Mr. Eberle ended in 2012, Mr. Eberle "clearly knew that he felt that further money was owed to him. He didn't know the exact amount, but he clearly knew that something was owing so normally the limitation started then."

On appeal, the Justice accepted Mr. Eberle's argument with respect to the post 2010 Accident bonuses. He found that there was a continuing discussion over the payment of post-2010 Accident bonuses that remained unresolved until O'Connor's refusal to pay in June 2015. Until that date, Terroco left open the possibility that payment might be forthcoming in accordance with the terms of their contract, elongating the period before it can be said that a known injury occurred: Weitzman.

On further Appeal, the Court of Appeal was not persuaded that the Justice's conclusion was unreasonable and dismissed Terroco's appeal.

Issues

Did the Limitation Period only commence when the decision was issued by Terroco on June 22, 2015, and did the Court correctly apply Weitzman in reaching this conclusion?

The Reasoning

The triggering of a Limitation Period is often the breach of the contract. Mr. O'Connor persisted in asserting that a final conclusion to the Manitoba OHS proceedings was a necessary condition precedent for him to exercise his discretion under Schedule B in respect of Mr. Eberle's outstanding bonuses. Mr. O'Connor cannot now argue that Mr. Eberle knew or ought to have known that Terroco was in breach of his obligations under Schedule B prior to him definitively telling Mr. Eberle that he was not going to pay anything.

Mr. O'Connor made clear representations that Schedule B remained executory and that he was within his contractual rights to defer payment. The Justice found that a plaintiff is entitled to rely on the defendant's own characterization of the operation of the disputed contract as it relates to the triggering of the Limitation Period. A 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, irrespective of whether the defendant was advancing that interpretation insincerely and with fraudulent intent.

There was a continuing discussion over the payment of post-2010 Accident bonuses that remained unresolved until Mr. O'Connor's refusal to pay in June 2015. Until that date, Terroco left open the possibility that payment might be forthcoming in accordance with the terms of their contract, elongating the period before it can be said that a known injury occurred (as outlined in Weitzman).

The Justice stated that in an application to dismiss summarily, Mr. O'Connor will not be heard to have told Mr. Eberle that the bonuses he was asking for remained contingent and undetermined pursuant to the terms of their contract, and then say to the Court that Mr. Eberle knew or ought to have known that his assertions were false and warranted earlier commencement of litigation.

Key Takeaways

The Court did recognize that an acknowledgement by a defendant must be in writing as per Section 9(1) of the Limitations Act, and that Limitation Periods are not extended by oral promises to pay in the future or requests to wait for payment with an implied promise that payment is forthcoming. This continues to be the Law in Alberta.

However, in certain contexts, the communications of the employer can very well extend the Limitation Period, particularly when their own contract is ambiguous on the process of how discretionary bonuses are to be decided. In addition, Employers cannot interpret a contract in such a way as to delay a discretionary decision, and then try to use a Limitations Period to dismiss an employee's claim.

Mr. Eberle was represented by Lenci Kadavil of Parlee McLaws LLP.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.