CITATION: Waterloo Region District School Board v. Truax Engineering Ltd., 2010 ONCA 838 |
DATE: 20101209 |
DOCKET: C51366 |
COURT OF APPEAL FOR ONTARIO |
Feldman, Simmons, Cronk, LaForme and Epstein JJ.A. |
BETWEEN |
|
Plaintiffs (Respondents) |
And |
CRD Construction Ltd., J.L. Cortes Architect Corporation, Truax Engineering Ltd., GA Masonry Limited and George and Asmussen Limited |
Defendants (Appellant) |
Peter J. Mitchell, for the appellant Truax Engineering Ltd. |
P. John Brunner and Mario Delgado, for the respondent J.L. Cortes Architect Corporation Iain Peck, for the respondent CRD Construction Ltd. Christian Caffarena, for the respondent GA Masonry |
Heard: November 22, 2010 |
On appeal from the order of Justice Michael Code of the Superior Court of Justice, dated October 30, 2009. |
[1] The issue on this appeal is whether, under s. 18 of the new Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, a person who has been sued for damages by a plaintiff and who wishes to bring a cross-claim 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.
[2] Prior to January 1, 2004, by virtue of s. 8 of the Negligence Act, R.S.O. 1990, c. N.1, which section was repealed by the Limitations Act, 2002, a defendant who was originally sued by the plaintiff could make a claim against a concurrent tortfeasor for contribution and indemnity, despite the passage of the relevant limitation period precluding the plaintiff from suing the concurrent tortfeasor, as long as the contribution claim was brought within one year of the original judgment and appropriate notice was given.
[3] The appellant argues that s. 8 was enacted in 1948 to address the state of the law at that time, which it submits was that a claim for contribution and indemnity could only be made against a concurrent tortfeasor who, at the time of the claim, could have been liable to the plaintiff, i.e. where the claim was not statute barred. The appellant submits that s. 18 of the new Limitations Act, 2002, by its wording, does not have the same effect as s. 8 of the Negligence Act and, whether deliberately or inadvertently, the legislature has now removed the effect of s. 8. The result, it submits, is that the law on the issue has reverted to what it was before 1948.
[4] I agree with the conclusion reached by the motion judge that s. 18 of the new Limitations Act, 2002 effectively replaces s. 8 of the Negligence Act with a new two-year limitation period, but with the same legal effect.
[5] The motion judge described the relevant facts briefly as follows:
On July 22, 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 re-built after the storm and the Defendant Truax provided some ongoing engineering services that were concluded on February 19, 2003. At that time, s. 46(1) of 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. Accordingly, the limitation period expired at the latest on February 19, 2004.
Prior to that date, the new Limitations Act 2002 came into force on January 1, 2004. It repealed s. 46 of the Professional Engineering Act. It also contains transitional provisions that apply to the Plaintiff’s claim. In particular, s. 24(5) provides that if the claim was discovered before January 1, 2004, and if the former limitation period did not expire before January 1, 2004, then the former limitation period (such as the one under the Professional Engineering Act) still applies.
The Plaintiff’s action was not commenced until June 23, 2008, long after the former s. 46 limitation period had expired. The Defendants’ various cross-claims, seeking contribution and indemnity, were then brought within the 2 year limitation period provided for such claims in ss. 18, 5(2) and 4 of the new Limitations Act.
[6] The motion judge therefore dismissed the defendant’s motion for summary judgment that sought to have the action dismissed as statute barred.
· Can a cross-claim for contribution and indemnity 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? Or is it sufficient that that person was potentially liable to the plaintiff at one time?
[7] Section 1 of the Negligence Act, enacted in 1930, creates the statutory obligation of joint and several liability of concurrent tortfeasors to a plaintiff, as well as the statutory right of contribution and indemnity among concurrent tortfeasors. Section 1 provides as follows:
s. 1 Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, 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.
[8] Section 5 of the Negligence Act is procedural and allows parties to make claims for contribution and indemnity against persons who were not made party to the action by the plaintiff. Section 5 provides:
s. 5 Wherever it appears that a person not already a party to an action is or may be wholly or partly responsible for the damages claimed, such person may be added as a party defendant to the action upon such terms as are considered just or may be made a third party to the action in the manner prescribed by the rules of court for adding third parties.
[9] Section 2 of the Act allows claims for contribution and indemnity to be brought or continued following settlement with the plaintiff by one tortfeasor. Section 2 provides:
s. 2 A tortfeasor may recover contribution or indemnity from any other tortfeasor who is, or would if sued have been, liable in respect of the damage to any person suffering damage as a result of a tort by settling with the person suffering such damage, and thereafter commencing or continuing action against such other tortfeasor, in which event the tortfeasor settling damage shall satisfy the court that the amount of the settlement was reasonable, and in the event that the court finds the amount of the settlement was excessive it may fix the amount at which the claim should have been settled.
[10] 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 proportionally to or from the other tortfeasors.
[11] Section 8 of the Negligence Act was added in 1948, following the 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.). In Cohen, the plaintiff settled with the defendant McCord during the trial, which continued to judgment against the defendant Cohen. Cohen elected not to maintain his claim for contribution in the original action but, following judgment, he commenced a new action against McCord for contribution and indemnity. The court held that the proper interpretation of s. 2(1) (now s. 1) of the Negligence Act, together with the section that allows for joinder of parties (s. 5), was that all claims for contribution were to be brought in one action. The headnote encapsulates the holding of the Court of Appeal:
That statute [The Negligence Act], in addition to creating the right [to contribution and indemnity], provides a method for its enforcement, by bringing in other persons who are or may be wholly or partly responsible, either as party defendants or as third parties, in an action brought by the injured person. It is clearly the intention of the legislation that all issues between such persons shall be litigated in one action, and it follows that this means of enforcing the right to contribution and indemnity is exclusive.
[12] A limitation problem arising out of the application of the Cohen interpretation came before the Master the next year in Magee. The plaintiff was injured in a bus accident and initially sued the bus company, the driver and the Municipality. He later discontinued the action against the Municipality and served a jury notice on the other defendants. The defendants then moved to set aside the Notice of Discontinuance on the basis that its effect was to deprive them of the ability to claim contribution and indemnity in the action because the limitation period for suing the Municipality had passed.
[13] The issue before the Master was whether he could revive the action against the Municipality to allow the other defendants to claim contribution and indemnity in the plaintiff’s action. Otherwise, because of the passage of the one-year limitation contained in the Municipal Act, R.S.O. 1937, c. 266, the court accepted that a new claim for contribution and indemnity was barred by the passage of time. The Master noted that provision had been made in the Highway Traffic Act, R.S.O. 1937, c. 288 to allow claims for contribution and indemnity to be brought in the case of fatal accidents after the expiry of the normal limitation period, but no similar provision was contained in the Negligence Act. He also referred to another unforeseen problem that arose as a result of the decision in McCord: under the Municipal Act, an action against a municipality could not be tried by a jury. The Master determined that the court had no power to correct the law and dismissed the defendants’ motion even though the result was anomalous and created hardship for the defendants.
[14] The explanatory footnote to the enactment of s. 8 of the Negligence Act two years later refers to the problem created by the shorter limitation period for actions against municipalities under the Municipal Act, and it appears clear that the section was enacted to overcome the unanticipated consequences of the decisions in Magee and Cohen.[1]
[15] Section 8 provided:
s. 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 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.]
[16] The new section 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.
[17] On this appeal, counsel for the appellant reviewed both English and Canadian cases, including a recent decision of this court in HSBC Securities (Canada) Inc. v. Davies, Ward & Beck (2005), 74 O.R. (3d) 295, and argued that the case law establishes that, without the saving words in s. 8, no cross-claim could be brought where the plaintiff’s potential claim against the proposed concurrent tortfeasor had expired. He submits that this result preserves the integrity of the limitation regime by ensuring that, once the relevant limitation period had passed in respect of an incident, a party who could potentially have been called 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.
[18] Counsel for the respondent reviewed essentially the same case law, including both HSBC and another recent decision of this court, Placzek v. Green (2009),307 D.L.R. (4th) 441. However, counsel for the respondent argues that these cases establish that, regardless of s. 8, as long as the plaintiff at one time had a potential claim against the proposed defendant to the cross-claim, the fact that the claim had become statute barred had no effect on the ability of a defendant to bring a claim for contribution and indemnity against that person. In support of the correctness of this position, he points to the fact that this result accords with logic and fairness 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.
[19] The reason the appellant seeks to go behind s. 8 of the Negligence Act, is because he argues that when s. 8 was repealed by the new Limitations Act, 2002 in 2004, and replaced by s. 18 of that Act, s. 18 only replaced the first and second components of s. 8: a new limitation period and a new commencement date, but does not re-enact the third component: allowing the claim for contribution to be brought after the expiry of the limitation period that applied to the action that could have been brought by the plaintiff directly against the party from whom contribution is claimed.
[20] In my view, it is not necessary to resolve the question raised by the appellant as to whether, at the time it was passed, s. 8 was necessary in order to allow claims for contribution and indemnity to be brought against a concurrent tortfeasor after the expiry of the limitation period that governed the plaintiff’s claim against the concurrent tortfeasor. Certainly the Magee case had been decided on that basis. It appears that the intent of the legislature was to accept that the Magee and Cohen cases had caused significant problems in the law of contribution and indemnity and, as between the importance of enforcing limitation periods and the unfairness of precluding claims for contribution through no fault of an affected defendant, the legislature preferred to correct the latter.
[21] It is not necessary to resolve the question because, as a matter of statutory interpretation, it is clear that even without the specific language contained in the repealed s. 8 (italicized in para. 15, supra), s. 18 of the Limitations Act, 2002 was intended to and does have the same effect.
[22] Section 18 provides:
s. 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.
[23] Section 5(2) sets the date when a claim is presumed to be discovered, and s. 15 provides the ultimate limitation period under the Act. Section 4 provides the basic two-year limitation period for all claims unless otherwise provided in the Act.
[24] Reading the relevant sections together, 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. The previous limitation period provision that applied where the plaintiff’s limitation period against other concurrent tortfeasors had expired, s. 8 of the Negligence Act, is repealed by the Limitations Act, 2002.
[25] 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.
[26] 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. In its recent decision in Yugraneft Corp. v. Rexx Management Corp., [2010] 1 S.C.R. 649, the Supreme Court explained the streamlining purpose of Alberta’s new limitations regime at para. 36:
The [Limitations] Act was intended to create a comprehensive and simplified limitations regime to replace the previous Limitation of Actions Act. ... As the Alberta Court of Appeal noted in Daniels v. Mitchell, 2005 ABCA 271... at para. 30:
[A] main purpose of the [Limitations Act] was the simplification of limitations law, by the imposition of one period (two years) for nearly all causes of action. ... [D]ebates in the Legislative Assembly repeatedly emphasized that the new legislation would simplify and clarify the system while eliminating inconsistencies and special treatment for certain defendants.
Thus, the purpose of the Act was to streamline the law of limitations by limiting the number of exceptions and providing a uniform limitation period for most actions. [Internal citations omitted.]
[27] In my view, to the extent that the legislature intended to change the law that has been in place since 1948 regarding the requirements for bringing a claim for contribution and indemnity, it did so specifically by changing the limitation period (from one year to two years) and the commencement date from which it runs (from the date of the plaintiff’s judgment against a particular tortfeasor to the date when the plaintiff’s claim was served on a particular tortfeasor). The new limitation period under s. 18 applies, as did the former one under s. 8, both to claims that are tried and to those that are settled (ss. 1 and 2 of the Negligence Act).
[28] Section 18 also signals that a defendant who wishes to claim contribution and indemnity should bring the claim not after judgment in the main action, but as part of it. Although in theory a defendant could commence a new action for contribution and indemnity within two years of being served with a statement of claim, the more likely procedure is to bring a cross-claim or third party proceeding in the main action. Even if a new action were commenced, one could envision that, for reasons of economy and efficiency, the actions would likely be joined and tried together.
[29] The effect of the new provision is that the period for bringing the 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. Therefore, to the extent that a claim for contribution and indemnity may be brought beyond the limitation period that applied to the plaintiff’s potential claim against a particular tortfeasor, the extension is minimized by the operation of s. 18 and any negative consequences to the tortfeasor by being brought into an action after he or she could have been sued by the plaintiff are minimized as well.
[30] I agree with the conclusion reached by the motion judge that neither the HSBC nor the Placzek cases decided the issue that has arisen squarely for determination in this case. I also agree with the motion judge that there is nothing in the new Act that suggests that the legislature intended to replace s. 8 of the Negligence Act with a new regime that did not protect claims for contribution and indemnity in the same way that s. 8 did. In the result, the motion judge was correct to dismiss the appellant’s motion for summary judgment that sought dismissal before trial of the claim for contribution and indemnity.
[31] I would dismiss the appeal with costs to the respondent fixed at $10,000, inclusive of disbursements and all applicable taxes.
Signed: “K. Feldman J.A.”
“I agree Janet Simmons J.A.”
“I agree E. A. Cronk J.A.”
“I agree H. S. LaForme J.A.”
“I agree Gloria Epstein J.A.”
[1] The explanatory note to The Negligence Amendment Act, 4th Sess., 22nd Leg., Ontario, 1948, cl. 3, reads:
An example of the situation sought to be taken care of by this amendment would be as follows:
Under section 480 of The Municipal Act an action against a municipality for the non-repair of a highway must be brought within three months after the time when the damages were sustained. If the driver of a car brings action within the three-month period for damages sustained on a highway against the driver of a second car but does not serve the writ until after the expiration of the three-month period, the driver of the second car would be precluded from proceeding against the municipal corporation because of the lapse of the three-month period. Under the amendment, the driver of the second car would not be so precluded provided that he had anticipated the bringing of the action and had served the municipality with the notice in writing of his intention to make a claim as required by statute.
The same principle applies where the driver of the second car settles with the driver of the first car and then seeks contribution or indemnity from the municipal corporation.
The proceedings against the municipality must be commenced within a year of the judgment or settlement as the case may be.
The new section is, of course, not limited to motor vehicle accidents or municipal corporations but the example serves to illustrate the nature and principle of the amendment.