Canada: A Statute-Barred Claim Does Not Mean A Slam Dunk Defence

Last Updated: December 14 2011
Article by Christina Polano

A recent case of the Ontario Court of Appeal, Waterloo Region District School Board v. CRD Construction Ltd., [2010] O.J. No. 5358 (Ont. C.A.) ("CRD Construction") has received much attention of late.

The issue on this Appeal was whether, under section 18 of the Limitations Act, 2002 S.O. 2002, c. 24, Schedule "B" ("Limitations Act, 2002") a person who has been sued for damages by a Plaintiff and who wishes to bring a crossclaim against a concurrent tortfeasor for contribution and indemnity, may bring the claim at a time when the Plaintiff's claim against the concurrent tortfeasor is statute-barred.

Section 18 of the Limitations Act, 2002 provides as follows:

... in the case of a claim by one alleged one wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with a 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.

Background Facts

On July 22nd, 2002, a severe storm blew down the walls of a new school gymnasium being constructed for the Plaintiff School Board by the various Defendants. The gym was rebuilt after the storm and the Engineer Defendant provided some engineering services that were concluded in February of 2003. At that time, the Professional Engineering Act provided for a 12 month limitation period in relation to any action for damages arising from the provision of engineering services. The limitation period ran from the date on which the service was provided.

The Plaintiff's action for negligence arising out of the construction of the gymnasium was not commenced until June of 2008, long after the former limitation period had expired against the Engineer Defendant (under the Professional Engineering Act). Various crossclaims seeking contribution and indemnity were then brought against the Engineer Defendant within the two year limitation period provided for such claims.

The Engineer Defendant brought a motion for summary judgment requesting a dismissal of the crossclaims against it. The motion was not successful at first instance, and the Engineer Defendant therefore appealed the motion judge's decision.

Accordingly, in CRD Construction, the Court was asked to consider whether a crossclaim for contribution and indemnity can exist when the person from whom contribution is sought is no longer liable in law to the Plaintiff because the Plaintiff's claim against that person is statute- barred.

Policy Arguments

Both parties submitted that there were policy reasons favouring their position. The Engineer Defendant argued that the crossclaim should not be allowed because this result preserves the integrity of the limitation regime by ensuring that, once the relevant limitation period had passed in respect of an incident, the party who could potentially have been called on to account for any conduct that caused or contributed to the Plaintiff's damages arising from the incident, but who had not been sued, could rest assured that there was no further risk of liability arising from the incident.

On the other hand, counsel for the Crossclaiming Defendants (who had been sued by the Plaintiff within the relevant limitation period) felt that their crossclaims should be allowed because it would be an unfair result for a concurrent tortfeasor 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 commenced its analysis by reviewing various provisions of the Negligence Act. The Court first reviewed section 1 of the Negligence Act, which states that where two or more persons are found at fault or negligent, they are jointly and severely liable to the person suffering loss or damage for such fault or negligence, and each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.

The Court then reviewed the purpose of contribution and indemnity. The Court of Appeal specifically stated that the purpose of contribution and indemnity is to provide a mechanism to ensure that all those who caused or contributed to the Plaintiff's loss or damage should share the financial responsibility for that loss. Therefore, the basis of the claim is that each person who is held liable to the Plaintiff for all or part of the loss is also liable to contribute or is entitled to receive contribution proportionately to or from the other tortfeasors.

By way of background, the Court reviewed previous decisions in two cases, Cohen v. McCord, [1944] O.R. 568 (C.A.) and Magee v. Canada Coach Lines Ltd., [1946] O.W.N. 73 (Ont. H.C.). It was commented that these two cases had caused significant problems in the law of contribution and indemnity. The Courts struggled between the conflicting goals of recognizing the importance of enforcing limitation periods versus the unfairness of precluding claims for contribution through no fault of an effected Defendant.


The Court of Appeal held that, with the enactment of section 18 of the Limitations Act, 2002, the legislature preferred the underlying policy principle of preventing unfairness as between Defendants when the Plaintiff has sued one within the limitation period and one outside of the limitation period.

This finding leads to the Court's comments as follows:

Reading the relevant sections together, the 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 his claim over. This is the only limitation period in the Act that applies to claims for contribution and indemnity. The previous limitation period provision that applied where the Plaintiff's limitation period against other concurrent tortfeasors had expired, section 8 of the Negligence Act, is repealed by the Limitations Act, 2002.

Accordingly, the effect of section 18 of the Limitations Act, 2002, is that the period for bringing a claim for contribution and indemnity now coincides much more closely with the basic limitation for bringing all actions, and procedurally, it is contemplated that all claims arising out of the incident that caused the injury will be tried and disposed of together. The Court observed that the negative consequences to the tortfeasor from being brought into an action after he or she could have been sued by the Plaintiff, are minimized by the strict and objective two year limitation period provided for in section 18.

CRD Construction therefore stands for the following important principle: a Defendant may proceed with his or her crossclaim for contribution and indemnity against a concurrent tortfeasor, even when the Plaintiff's claim against that concurrent tortfeasor has no chance of success as a result of an expired limitation period. It is important to note that section 18 of the Limitations Act, 2002 only deals with claims for contribution and indemnity. For this reason, if a crossclaim is based on different grounds, such as breach of contract, the analysis in CRD Construction will not be of particular relevance.

Analysis and Commentary

It is interesting to also briefly consider the recent Ontario Court of Appeal decision in Safai v. Bruce N. Huntley Contracting Ltd., [2010] O.J. No. 3338. It seems that the Court of Appeal took variant approaches to the limitation period issues raised by the litigants in Safai and CRD Construction.

In Safai, the Court of Appeal applied the discoverability principle to potentially save the Plaintiff's action against a winter maintenance contractor. However, it was held that the discoverability principle did not save the Plaintiff's action (which had expired under the former Limitations Act) against the property owner that hired the maintenance contractor, both of whom were sued by the Plaintiff as a result of a slip and fall injury.

It could be argued that the combined effect of these decisions is that even though a Plaintiff may miss a limitation period against a negligent Defendant, as long as they correctly sued one Defendant within the two year limitation period (or longer if discoverability applies), the Plaintiff will ultimately not be prevented from recovering.

Therefore, the onus on a Plaintiff to sue all potentially negligent parties within the two year limitation period is reduced. A Plaintiff may even miss a limitation period against the Defendant having the most negligence, and as long as a claim for contribution and indemnity is brought in accordance with the Limitations Act, 2002, the Plaintiff will not be prevented from effectively recovering against the target Defendant.

Accordingly, it is important to recognize that it cannot be assumed that if a Plaintiff misses a limitation period against your client that the action will de facto be barred. Potential Defendants need to pay the most attention to when a claim is issued, and when it is served on the Defendants in the original action. The Plaintiff is required to serve the claim within six months of the claim being issued (as a general rule), although there are provisions in the Rules of Civil Procedure relieving against this general rule in certain circumstances. A process server can be used to do a litigation search to determine the date that a claim was issued.

Given the decisions in CRD Construction and Safai, and the evolving state of the law in this area since the enactment of the Limitations Act, 2002, it is prudent to tread carefully when advising clients on limitation period issues.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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