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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

By Dentons Limitations Law Group
June 2, 2017
  • Contribution and Indemnity
  • Discoverability
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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. The insured, Sharon Brindley, was involved in a car accident while on a business trip. Her employer had third party liability insurance with Lloyds and she also had her own personal car insurance through ICBC. Although ICBC was notified of a claim commenced by the driver of the other vehicle (Smith) on February 12, 2014, the statement of claim was not served on Brindley until August 6, 2014.

Lloyds argued that ICBC commenced the application more than two years after the two-year limitation period began to run. The application brought by ICBC was commenced on April 15, 2016, more than two years after ICBC was made aware of Smith’s claim, but within two years of Brindley having been served with the statement of claim. Lloyds argued that by February 12, 2014, ICBC had knowledge of the personal injury claim and all of the material facts and circumstances which ultimately gave rise to this application. Because the application was not commenced until April 2016, ICBC missed the limitation period by about two months.

Much of the argument about the limitation issue turned on s. 18 of the Limitations Act, 2002. However, despite s. 18, the court’s analysis turned on s. 5(1)(a)(iv), “that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek a remedy.” Having regard to the nature of the “loss” (that ICBC might have to respond first if Lloyds did not) it could not be said that a “proceeding” would be an appropriate means to seek a remedy. This was because Brindley had not yet been served with any claim, and might never be served with a claim. Until Brindley was served, there was no claim over which ICBC and Lloyds could join issue because there was no obligation for either insurer to respond. To have brought this application before Brindley was served would have been premature.

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The Limitations Law Blog contains summaries of the latest developments arising from appellate and lower court decisions on limitations law in Ontario. Subscribe today and be one of the first to receive our insights on recent limitations law developments in Ontario.

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