The Issue: Determining Limitation Period under the
Fluor contracted with Canadian Natural Resources Limited (CNRL)
to provide engineering, procurement and construction services in
relation to an oil sands project. CNRL purchased large amounts of
steel pipes from EMCO and BHD, two steel pipe suppliers. Both of
these companies had bought the pipe from Vass Pipe and Steel (Vass)
that had in turn bought the pipe directly from its Romanian
manufacturer Arcelormittal Tubular Products Roman S.A
(Arcelormittal) and Arcelormittal's North American
representative, Mittal Steel North America (Mittal).
Eventually, defects were discovered in some of the pipe which
CNRL then replaced and removed. CNRL started two separate actions
against EMCO and BHD in 2007, both of which also included Vass,
Arcelormittal and Mittal as Defendants (the "Primary
Actions"). Several months later, CNRL started an action
against Fluor, but discontinued the action a month later.
Approximately three years later, the Defendants of the Primary
Actions served party notices against Fluor.
Specifically, the Defendants alleged that Fluor: (i) failed to
warn, (ii) failed to help CNRL mitigate its loss, (iii) breached
its contract with CNRL and (iv) breached duties of care owed to
CNRL for which the other defendants sought contribution under the
Tort-feasors Act (TFA).
Fluor was unsuccessful in its application to strike out third
party notices under Rule 3.68 before the case management judge and
appealed to the Alberta Court of Appeal (ABCA). At the ABCA, Fluor
argued that, in the context of an action brought under Section
3(1)(c) of the TFA, CNRL's limitation period against Fluor had
expired, therefore CNRL could not meet the test under Section
3(1)(c). The TFA provides tort-feasors (someone committing a tort)
an ability to "recover contribution from"
(emphasis added) another third party (the second
tort-feasor) in respect of the same damage that the
tort-feasor is alleged to have committed.
ABCA Decision a Key Lesson for Defendants Seeking to Add Third
Parties to Lawsuits as Contributing Tort-feasors
The court discussed the test under the TFA, namely that the
contribution alleged must be from a tort-feasor who
"is or would, if sued, have been liable in
respect of the same damage" (italics added).
The court summarized that the third party notice, itself, was not
out of time, but rather that the Defendants were out of time with
respect to a contribution claim under the TFA.
In other words, by the time the third party notices were issued
to Fluor (some three years after the commencement of the Primary
Actions), CNRL was unable to file a claim against Fluor due to
limitations. The original tort-feasors (the Defendants) were unable
to seek contribution from Fluor because Fluor could not be sued by
CNRL due to the lapse in time. Therefore, Section 3(1)(c) of the
TFA effectively shielded Fluor.
The ABCA has clarified that the test under Section 3(1)(c) is
strict and unforgiving. A defendant seeking to add third parties to
its lawsuit as contributing tort-feasors under the TFA needs to be
careful to file and issue third party notices in accordance with
Section 3(1)(c). This means analyzing the original basis for the
plaintiff's claim and ensuring that third party notices are
drafted, filed and served well within the limitation period
that exists as between the plaintiff and the party that the
tort-feasors are seeking contribution from.
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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