Ontario Court Of Appeal: Defendant's Jurisdiction Motion Does Not Stop 2-Year Limitation Period For Third Party Contribution And Indemnity Claims From Running

Author:Mr Ian C. Matthews
Profession:Borden Ladner Gervais LLP
 
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In Lillydale Cooperative Limited v. Meyn Canada Inc., the Court of Appeal for Ontario explained that the running of the 2-year period for a defendant to issue a third party claim for contribution and indemnity was not delayed by the defendant's jurisdictional challenge to Ontario as the appropriate forum for the dispute. A challenge to Ontario's jurisdiction in favour of another forum does not affect the "discoverability" of a third party claim, and thus does not pause or "toll" the limitation period associated with commencing that third party claim in Ontario.

Background

In late 2004, Lillydale sued Meyn and others in Alberta. A year and a half later, in March 2006, Lillydale also sued Meyn and others in Ontario. Meyn moved to stay Lillydale's action in Ontario on the basis that Alberta was the more appropriate forum.

Meyn's forum non conveniens motion was unsuccessful, and its subsequent appeal was dismissed. Following this, Meyn served its statement of defence in Ontario. Then, in November 2008 - approximately two years and eight months after it had been served with Lillydale's claim in Ontario - Meyn issued a third party claim seeking contribution and indemnity from Weishaupt.

Weishaupt moved for summary judgment dismissing the third party claim against it as barred by Ontario's Limitations Act, 2002.

The key section of the statute, section 18, provides as follows:

18 (1) For the purposes of subsection 5 (2) and section 15, in the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought shall be deemed to be the day the act or omission on which that alleged wrongdoer's claim is based took place.

(2) Subsection (1) applies whether the right to contribution and indemnity arises in respect of a tort or otherwise.

After the motion had been heard and decided in late 2017, the Court of Appeal released Mega International Commercial Bank (Canada) v. Yung. There, the Court of Appeal decided that the "discoverability" principle applies to section 18 of the Limitations Act, 2002.

Specifically, the Mega decision confirms that while the 2-year period for bringing a claim for contribution and indemnity is presumed to begin running on the date that the party seeking contribution and indemnity is served with a claim in the proceeding in which contribution and indemnity is sought, that period can...

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