Court of Appeal warns that pending “forum issues” will not delay the commencement of a limitation period in Ontario

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In Lilydale Cooperative Limited v Meyn Canada Inc, 2019 ONCA 761, the Court of Appeal for Ontario concluded that it is not appropriate for a party to wait for a forum dispute to be decided prior to commencing a claim in Ontario. A forum dispute does not toll the limitation period under the Limitations. Act, 2002. This decision is consistent with recent Court of Appeal cases, which have held that settlement discussions and appeals do not postpone the commencement of limitation periods.

In 2004, the plaintiff commenced an action against two defendants in Alberta. Because of a limitation issue in the Alberta action, the plaintiff also commenced an action in Ontario against the same defendants in early 2006, making the same claims as in the Alberta action. The plaintiff served the defendants, Meyn, with the statement of claim in the Ontario action in March 2006, and EMK in April 2006. Subsequently, Meyn moved to stay the plaintiff’s action in Ontario on the basis that Alberta was the most convenient forum. Pending the resolution of the forum issue, neither Meyn nor EMK defended the Ontario action. Meyn’s motion and the subsequent appeal were dismissed in February 2008. As a result, the Alberta action was discontinued.

On May 22, 2008, following the dismissal of the Alberta claim, Meyn served its statement of defence and crossclaim against EMK in the Ontario action. On November 14, 2008, just over two years and eight months after the Ontario claim was served, Meyn issued a third party claim. Shortly thereafter, EMK also issued third party claims.

One of the third parties brought a summary judgment motion on the basis that the claims were statute barred. Meyn argued that it was not legally appropriate under s. 5(1)(a)(iv) of the Limitations Act to bring the third party proceedings until the forum issue was finally decided in February 2008, and that two years ran from that time. It argued that delivering a third party claim in Ontario might attorn and prejudice the forum motion.

The Court of Appeal held that the word “appropriate” in section 5(1)(a)(iv) means “legally appropriate” and that tactical choices do not delay the commencement of the limitation period. The Court stated that while serving a third party claim could be fatal to a forum motion, it was a strategic decision that does not affect whether it is legally appropriate. In addition, the Court noted that there were procedural avenues the defendants could have taken, which would have preserved the limitation period without prejudice to the forum motion. For example, the defendants could have alerted the party of a potential third party claim and sought agreement to a stand-still pending the determination of the forum issue under s. 22(3) of the Act. Alternatively, the defendants could have served a third party claim, with an express reservation of their rights, and argue at the forum motion that it did so only to preserve the limitation period, and not to attorn.   

Meyn also argued it was not legally appropriate to commence a third party claim because if they were successful in challenging the proceedings in Ontario, there would be no need to commence the third party claim. The Court rejected this argument on the basis that a forum challenge does not resolve a dispute but merely moves the dispute to another jurisdiction.

Co-authored by Ilan Levy