Indemnification clauses are fairly standard in commercial
contracts. The decision to invoke those clauses, however, are often
a matter of strategy. It may strain the relationship of cooperating
defendants if a claim for contribution or indemnity is hanging over
the parties' heads, or the parties may, initially, feel that
indemnification is not beneficial for an ongoing commercial
Regardless, the Ontario Court of Appeal has confirmed that
despite the contractual nature of an indemnification clause, it is
properly characterized as a claim for contribution and indemnity,
and is governed by the two-year limitations period in section 18 of
the Limitations Act, 2002 ("Limitations
In Canaccord Capital Corporation v
Roscoe, Roscoe's employment contract with Canaccord
Capital Corporation ("Canaccord") contained an
indemnification clause that required Roscoe to indemnify Canaccord
for any claim made against Canaccord arising out of Roscoe's
acts or omissions. When Canaccord and Roscoe were sued by two
former clients, they presented a unified defence, funded by
Canaccord . Only after settling the claim did Canaccord seek to
enforce the indemnity provision in the employment contract with
Roscoe, which was more than three years after the commencement of
the original claim.
Canaccord argued that the limitations period did not begin to
run until after Roscoe refused to indemnify Canaccord and thereby
breached his employment contract, which occurred after the
parties reached a settlement. In response, Roscoe argued that
Canaccord was statute barred by the two-year limitations period set
out in section 18 of the Limitations Act.
The Court of Appeal agreed with Roscoe and held that
Canaccord's claim was properly characterized as a claim for
contribution and indemnity, not a breach of contract, meaning that
it had to be brought within two years of the initial claim. In
coming to its decision, the Court noted that section 18 refers to
"wrongdoers", not just "tortfeasors", and is
broad enough to include claims arising out of contract. Ultimately,
Canaccord's claim was dismissed because the limitation period
The Court's decision makes it clear that any claim for
contribution and indemnity, whether grounded in tort or contract,
is strictly governed by the two-year limitation period set out in
section 18 of the Limitations Act.
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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