The appeal court speaks on limitations (again)

In 2004, Ontario enacted its new Limitations Act, 2002, which was intended to streamline and simplify the law governing the shelf life of causes of action in the province. In general terms, it imposed a universal two-year limitation period to commence a proceeding, subject to some limited carve-outs for the limitation periods expressly stipulated in specified statutes, and subject to the discoverability principle, which was incorporated in s. 5 of the act. If not expressly preserved by the new act, all limitation periods in other statutes were of no force or effect pursuant to s. 19.

The intent of the act is twofold. First, it sought to make it easier to figure out when a cause of action would be statute barred. Second, it sought to “balance the right of claimants to sue with the right of defendants to have some certainty and finality in managing their affairs.” (York Condominium Corp. No. 382 v. Jay-M Holdings Ltd.) That certainty has been elusive, as the courts have been struggling to interpret the legislation since its enactment. It has turned out to be no simple matter.

One of the most important limitations decisions of the last decade was 2008’s Joseph v. Paramount Canada’s Wonderland. In Joseph, the Ontario Court of Appeal was asked to interpret s. 20 of the act. Confusing, in that it appears right after s. 19, which directs: “A limitation period set out in or under another Act that applies to a claim to which this Act applies is of no effect,” s. 20 says: “This Act does not affect the extension, suspension or other variation of a limitation period or other time limit by or under another Act. So, the limitation period in another statute is vacated, but a change from the standard limitation period continues.”

In Joseph, the Court of Appeal concluded s. 20 terminated the long-standing common law judicial discretion to extend or otherwise relieve against the application of a limitation period based upon equitable principle of “special circumstances.” In reaching this conclusion, the Court of Appeal noted s. 4 of the act imposes a two-year limitation “[u]nless this Act provides otherwise.” Hence, it concluded the act is a comprehensive code governing limitation periods in Ontario, except to the extent the act itself recognizes the continuation of another statutory limitation period. The act does not recognize and extend any common law principles other than those which were codified.

The combined appeals in Green v. CIBC, Silver v. IMAX, and Millwrights v. Celestica, a five-judge panel will likely be addressing — among many other issues — the question of the survival of other common law doctrines in the face of the Limitations Act, 2002, and under the Securities Act. More will follow on that in a future post. Stay tuned.

The most recent foray seeking to shed light on the meaning of the Limitations Act was in the Court of Appeal’s July decision in Canaccord Capital Corp. v. Roscoe. In this case, the court contemplated s. 18 of the act, and the running of time to commence a claim for contribution and indemnity. The new act repealed the old law permitting a claim for contribution and indemnity under the Negligence Act to be brought within one year of the date of judgment or settlement resolving the injured party’s tort claim. As the Court of Appeal identified, s. 18 applies beyond the scope of tort claims:

“In contrast, s. 18 applies not only to claims as between tortfeasors but also to claims for contribution and indemnity by one ‘wrongdoer’ against another, ‘whether the right to contribution and indemnity arises in respect of a tort or otherwise.’ Moreover, s. 18 significantly shortens the limitation period governing contribution and indemnity claims to two years from the date the first alleged wrongdoer was served with the underlying claim, thereby encouraging resolution of all claims arising from the wrong at the same time.”

The change in language to include “or otherwise” was a conscious decision by the legislature to expand the reach of s. 18 to include all claims for contribution or indemnity, not only those as between joint tortfeasors. Specifically, a contractual claim for indemnity must also be commenced within two years of the date when the first wrongdoer is served with the claim in respect of which the contribution and indemnity is sought:

“[28] Section 18 creates a specific rule for determining when a claim for contribution and indemnity is discovered. Section 18 provides that a claim for contribution and indemnity is discovered on the day the first alleged wrongdoer is served with the claim in respect of which contribution and indemnity is sought. In other words, once the party seeking indemnity is served with the injured party’s statement of claim, the claim is discovered and the two-year limitation period starts to run. Section 18(2) makes clear that this special rule for claims for contribution and indemnity ‘applies whether the right to contribution and indemnity arises in respect of a tort or otherwise’ (emphasis added). The legal theory grounding the contribution and indemnity claim is not relevant for deciding whether s. 18 is triggered; the provision applies when there is a claim for contribution and indemnity, no matter what legal theory underlies the claim.”

Accordingly, in Roscoe, the fact Canaccord’s claim was founded in an employment agreement was irrelevant to the calculation of the running of time to commence the contractual indemnification claim. Time started to run when Canaccord was served with the plaintiffs’ claim.

Undoubtedly, the Limitations Act, 2002 was intended to create a comprehensive and simplified limitations regime. It is also clear from the cases decided to date that the Court of Appeal is rigorously applying an interpretive analysis to the act consistent with that legislative intent. In all cases, except when a contrary intent is expressly provided, the act has been interpreted as paramount, and a two-year limitation from discovery of the claim is being applied.

Practitioners should be scrupulously alert to the running of the standard limitation period regardless of how they might previously have framed a claim, as the courts have shown no willingness to deviate from the legislated two-year claims bar.

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