Library:

Cross-claim Not Time-barred

Published in the December 2010 issue of Litigation Notes - View Article

A tortfeasor can claim against a joint tortfeasor despite the plaintiff’s claim against the joint tortfeasor being time-barred.

On January 1, 2004, a new Limitations Act (“Act”)was introduced in Ontario. The Act reduced the limitation period for the commencement of most actions from six years to two years. The Act also repealed Section 8 of the Negligence Act of Ontario as it then was. That section read:

“8 Where an action is commenced against a tortfeasor or where a tortfeasor settles with a person who has suffered damages as a result of a tort, within the period of limitation prescribed for the commencement of actions by any relevant statute, no proceedings for contribution or indemnity against any other tortfeasor shall be defeated by the operation of any statute limiting the time for the commencement of action against such other tortfeasor provided,

a) such proceedings are commenced within one year of the date of the judgment in the action or in the settlement, as the case may be; and

b) there has been compliance with any statute requiring notice of claim against such tortfeasor. [Emphasis added.]”

Section 8 did three things: (1) it made the claim for contribution and indemnity an action that could be brought in separate proceedings after judgment against, or settlement by a tortfeasor in the main action; (2) it enacted a one-year limitation period, subject to certain conditions; and (3) it allowed the contribution claim to be brought notwithstanding the passage of the limitation period that would have applied to a claim by the plaintiff against the other tortfeasor, had one been brought.

On January 1, 2004, Section 8 of the Negligence Act was effectively replaced by Section 18 of the Limitations Act, 2002 which reads:

“18 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.”

In a recent decision, the Court of Appeal for Ontario had to consider the effect of this change on a claim brought by one joint tortfeasor against another, in circumstances where the plaintiff’s action against the other tortfeasor was time-barred. The action arose from storm which, in July of 2002, blew down the walls of a new school gymnasium being constructed for the Waterloo Region District School Board. The School Board commenced action against a number of defendants, including Truax Engineering Ltd (“Truax”). The action was not commenced until June of 2008 but, because of transitional provisions in the Limitations Act, 2002, the old six year limitation period applied to all of the defendants except Truax, who benefited from a one-year limitation period in the Professional Engineering Act.

The other defendants claimed contribution and indemnity from Truax in respect of the plaintiff’s claim against them. Truax brought a motion for summary judgment seeking to dismiss their cross-claims on the basis that cross-claims could not be brought in circumstances where the plaintiff’s action against Truax was time barred. This motion was dismissed by the Ontario Superior Court of Justice and Truax appealed to the Court of Appeal for Ontario.

Truax argued that without the saving words in Section 8 (in italics in the citation above), no cross claim could be brought where the plaintiff’s potential claim against a proposed concurrent tortfeasor had expired. Because Section 8 replaced the first and second components of Section 8, namely providing for a new limitation period and a new commencement date, but did not specifically permit actions to be brought after the expiry of a limitation period applicable to the plaintiff’s action against a tortfeasor, the intention of the legislature must have been to require claims for contribution and indemnity to be brought within the time allowed for an action against the party from whom contribution or indemnity is sought.

The respondents argued that it would be an unfair result if a concurrent tortfeasor were to be prevented from seeking contribution and indemnity from another concurrent tortfeasor simply because the plaintiff had elected not to sue the second tortfeasor in a timely way.

The Court of Appeal dismissed the appeal stating that a claim for contribution and indemnity, whether in tort or otherwise, now has a two-year limitation period that 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 its claim over. This is the only limitation period in the Act that applies to claims for contribution and indemnity. “There is nothing in the new Act itself, or in the working papers and recommendations that accompanied the drafting of the new Act, to suggest that there was any intention to change the effect of s. 8 of the Negligence Act, other than as specifically done with a new limitation period of two years and a new commencement date based on the overriding conceptual basis of the new Act;: the discoverability of a claim. If the court were to conclude that, despite the clear wording of s. 18, there is a further limitation period that applies to claims for contribution and indemnity against a concurrent tortfeasor in negligence, and that such claims must also be brought before the expiry of the limitation period applicable to the plaintiff’s claim against that tortfeasor, the effect of a universal limitation period for contribution and indemnity claims in s. 18 would be abrogated and the clarity and efficacy of the section undermined.”

Waterloo Region District School Board v. Truax Engineering Ltd. 2010 ONCA 838 (CanLII)