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

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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. 18. InMiakowski v. Persaud, 2015 ONSC 1654 Justice Perell determined that section 18 of the Act imposes a strict two-year limitation period on claims for contribution and indemnity, entirely unaffected by the discoverability principle. By contrast, in Demide v. Attorney General of Canada, 2015 ONSC 3000, Justice Leach was of the view that section 18 of the Act simply identifies the presumptive trigger date for the limitation period for contribution and indemnity claims, subject to discoverability principles. The Court of Appeal preferred the view taken by Justice Leach in Demide

This OCA’s decision provides some much needed clarity on the issue of whether claims for contribution and indemnity are subject to discoverability under s. 5. In Justice Paciocco’s view, sections 18 and 5(2) work “hand in glove” in contribution or indemnity claims.