Landmark OCA decision on s. 18 of the Limitations Act, 2002

The Ontario Court of Appeal released a landmark decision in Mega International Commercial Bank v. Yung, 2018 ONCA 429, in respect of whether the discoverability principle under s. 5 applies to a claim for contribution and indemnity under s. 18 of the Limitations Act, 2002.

Justice Paciocco held that s. 18 creates a presumed start date for the running of the limitation period. That presumed limitation period start date will result in a claim for contribution or indemnity being statute barred two years after the party seeking contribution or indemnity is served with a claim in the proceeding in which contribution or indemnity is sought, unless that party proves that the claim for contribution or indemnity was not discovered and was not capable of being discovered through the exercise of due diligence until some later date. 

Before this decision was released, there was a divide in the case law regarding the interpretation of s.

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Ontario Court of appeal resolves conflicting limitation periods between the Trustee Act and Limitations Act, 2002

​In Levesque v. Crampton Estate, 2017 ONCA 455, the Court of Appeal for Ontario resolved that theTrustee Act supersedes the Limitations Act2002 when both limitation periods apply. Because section 38(3) of the Trustee Act is set out in the Schedule to the Limitations Act, 2002 it prevails in the event of a conflict.

This case concerned a crossclaim by a tortfeasor against the estate of a deceased wrongdoer for contribution and indemnity. The estate brought a motion to dismiss the crossclaim under section 38(3) of the Trustee Act. Section 38(3) establishes an absolute limitation period of two-years starting from the death of the wrongdoer.

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Limitation period for contribution and indemnity begins to run when defendant served with claim, even if defendant had prior knowledge of the claim

An application judge was recently tasked with having to determine whether the two-year limitation period for contribution and indemnity under s. 18 of the Limitations Act, 2002, could start earlier if the claim for contribution and indemnity was discovered prior to the defendant being served with the plaintiff’s claim. The judge held that it could not.

In Insurance Corp. of British Columbia v. Lloyds Underwriters, 2017 ONSC 670, the Insurance Company of British Columbia (ICBC) commenced an application against Lloyds to determine which of the two insurance companies was responsible to respond to a personal injury claim for indemnity under an insurance policy.

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Demide v. AG of Canada, 2015 ONSC 3000, Superior Court renders conflicting decision with respect to discoverability of claims for contribution and indemnity

There has been an interesting development with respect to the interpretation of section 18 of the Limitations Act, 2002(claims for contribution and indemnity).  You might recall that the Court of Appeal concluded in Waterloo Region District School Board v. CRD Construction Ltd., 2010 ONCA 838 that claims for contribution and indemnity are subject to a two year limitation period starting from when the defendant was first served with the underlying claim.  The operation of the discoverability principle with respect to claims for contribution and indemnity was not in issue inWaterloo, and has not been the subject of consideration by the Court of Appeal.

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Tarion Warranty Corporation and New Millennium Homes Inc., 2013 ONSC 4339 (discoverability of indemnity claim)

In Tarion Warranty Corporation and New Millennium Homes Inc., 2013 ONSC 4339, the Ontario Superior Court of Justice considered when a claim for indemnity is discovered.  Generally speaking a limitation period commences as soon as the plaintiff has discovered that the defendant has caused loss or injury, and that neither the extent of the damages nor even the type of damage needs to be known in order for time to begin to run.  Furthermore, the limitation period begins to run notwithstanding the fact that certainty of the defendant’s responsibility for the act or omission that caused or contributed to the loss is not present.  It is enough for the plaintiff to have prima facie grounds to infer that the acts or omissions were caused by the defendant.

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Canaccord Capital Corp. v. Roscoe, 2013 ONCA 378 (Contractual Indemnity Subject to Limitation Period under s. 18)

In Canaccord Capital Corporation v. Roscoe, 2013 ONCA 378, the Court of Appeal concluded that a contractual indemnity is caught by section 18 of the Limitations Act, 2002.  In the Court of Appeal’s view, interpreting section 18 to embrace all claims for contribution and indemnity, whether arising in tort or contract, accords with the scheme and object of the Act.

The defendant, Roscoe, was an investment advisor with Canaccord. Roscoe’s employment agreement provided that Roscoe would indemnify Canaccord for any claim made against Canaccord arising out of Roscoe’s conduct. Roscoe’s former clients sued both Canaccord and Roscoe claiming negligence.

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Waterloo Region District School Board v CRD Construction, 2010 ONCA 838 (Contribution and Indemnity, s. 18)

In Waterloo Region District School Board v CRD Construction, 2010 ONCA 838, a five member panel of the Court of Appeal confirmed that a claim for contribution and indemnity, whether in tort or otherwise, now has a two-year limitation period. This period is presumed to run from the date when the person who seeks contribution and indemnity is served with the plaintiff’s claim that gives rise to the claim (and not the date in which the plaintiff files the claim, although the two may be the same). The Court of Appeal concluded that this “is the only limitation period in the Act that applies to claims for contribution and indemnity.”

Accordingly, the limitation period for contribution and indemnity is separate from the plaintiff’s limitation period.  This case is particularly beneficial to defendants in cases where a plaintiff failed to name a party who may be liable for the damages being claimed. 

For a more fulsome summary of the case see Christina Porretta, “Court Rules that Claim for Contribution and Indemnity has Two-Year Limitation Period”, International Law Office (Online: January 25, 2011)

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