Justice Leach’s decision in Demide v. Attorney General of Canada et al. holds that the limitation period applicable to claims for contribution and indemnity is subject to discoverability. This departs from the jurisprudence, which generally considers this to be a fixed two-year limitation period beginning on the date of service of the plaintiff’s claim.
Section 18(1) of the Limitations Act provides when this limitation period begins:
(1) 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.
Prior to this decision, I would have said that it was settled that this provision provides a two year limitation period for bringing crossclaims, running from deemed discovery on the date of the claim’s service, and not subject to extension by application of the section 5 discovery provisions. As Justice Leach notes, this is the position of many of his colleagues on the Superior Court, including Justice Perell who articulated it eloquently in Miaskowski v. Persaud:
[81] Pursuant to s. 18 of the Limitations Act, a claim for contribution and indemnity is deemed to be discovered on the date upon which the “first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought,” and with this deeming provision, the limitation period expires two years after the date on which the claim is served.
Justice Perell’s analysis in Miaskowski turned on the language of section 18. The word “deemed” is a declarative legal concept that is a “firmer or more certain assertion of discovery” than the rebuttable presumption of discovery contained within section 5(2). Further, section 18 does not contain the moderating language “unless the contrary is proved” present in section 5(2), i.e. a person discovers a claim on the date of the act or omission unless she proves the contrary.
Justice Leach disagreed. His reasoning also starts with the language of section 18. In his view, approaching section 18 as a self-contained deeming provision ignores its opening words. Those words provide expressly that the provision was enacted for “the purposes of subsection 5(2) and 15”, that is, to inform and dictate the meaning of those subsections. When applying section 5(2) to claims for contribution and indemnity, section 18(1) dictates that the presumed commencement date for the two year limitation is the date of service of the claim for which contribution and indemnity is sought. The defendant can rebut this presumption by proving the contary.
The reference to section 15, the ultimate limitation period, reinforces this conclusion. If section 18 is an absolute two-year limitation period beginning on a fixed date, section 15 could have no application. Only if the section 5 discovery provisions can delay the beginning of the limitation period is there need for an ultimate limitation period.
This is a very compelling analysis, and I’m persuaded that it’s correct even if it’s currently an outlier–the Court continues to deliver decisions like this one (see paragraph 58) based on section 18 being a fixed limitation period. It will be interesting to see how the Court of Appeal determines the issue should it come before it. I don’t expect that it will; it’s surely the rare case where a defendant through reasonable diligence can’t discover a crossclaim within two years of service of the plaintiff’s claim.
Should you be interested, these are the relevant paragraphs from Justice Leach’s decision:
[87] […] With great respect, I disagree with that view, as it seems to approach section 18 as if it were a self-contained deeming provision, and ignores the opening words of s.18(1). In my opinion, those words make it clear that section 18 was not intended to operate as a “stand alone” limitation period, with independent application, or a provision to be viewed and read separately and in contrast to s.5(2). Rather, section 18 expressly was enacted “For the purposes of subsection 5(2) and 15”, [emphasis added]; i.e., to inform and dictate the meaning to be given to certain concepts referred to in ss.5(2) and 15, when applying those sections. In particular, when applying s.5(2) to claims for contribution and indemnity, s.18(1) dictates that the “day [of] the act or omission” referred to in s.5(2) shall be the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought. Subsection 18(1) thereby dictates the relevant presumed starting point for the basic two year limitation period, in relation to the operation of s.5(2); a presumption that is still capable of being rebutted by proof to the contrary, pursuant to the provisions of s.5(2). In particular, I see nothing in the language of s.18(1) that displaces or alters the natural meaning to be given to the other language of s.5(2). Section 18 itself does not have or require language of presumption or proof to the contrary, in relation to operation of the basic limitation period, but this is because its inclusion in section 18 would have been unnecessary and redundant, given that such wording already is found in s.5(2), with which it is expressly and inextricably linked. In my opinion, reading s.18(1) in conjunction with s.5(2), as the legislation intended, and substituting into s.5(2) only those concepts whose substitution is dictated by s.18(1), one finds that s.5(2) effectively reads as follows in relation to claims for contribution and indemnity: “An alleged wrongdoer with a claim against another alleged wrongdoer for contribution and indemnity shall be presumed to have known of the matters referred to in clause 5(1)(a) on the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought,unless the contrary is proved.” [Emphasis added.] The presumption applicable to such claims is therefore rebuttable, not conclusive.
Moreover, that conclusion is reinforced by the fact that the opening words of s.18(1) refer not only to s.5(2) but also to section 15; i.e., the “ultimate limitation period” of 15 years. As with s.5(2), s.18(1) informs and dictates the meaning to be given to certain concepts referred to in section 15. In particular, s.18(1) informs the meaning to be given to “the day on which the act or omission on which the claims is based took place”, for the purposes of s.15(2). In my opinion, reading s.15(2) in conjunction with s.18(1), as the legislation intended, and substituting into s.15(2) only those concepts whose substitution is dictated by s.18(1), one finds that s.15(2) effectively reads as follows, in relation to claims for contribution and indemnity: “No proceeding shall be commenced in respect of any claim for contribution and indemnity after the 15th anniversary of the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought”. I fail to understand how s.18(1) can be interpreted as creating a conclusive and “absolute” two year limitation period for contribution and indemnity claims, running from the date on which the first alleged wrongdoer was served with the underlying claim in respect of which contribution and indemnity is sought, when the legislature clearly contemplated the possibility that the operation of section 15 might be required to put an end to such possible claims fifteen years after service of the claim in respect of which contribution and indemnity is sought. In my opinion, the obvious conclusion is that the legislature thought section 15 might be needed in relation to claims for contribution and indemnity for the same reason section 15 might be needed in relation to other claims; i.e., because operation of the applicable limitation period might be extended beyond the contemplated two year basic limitation period by considerations of discoverability.
[88] Second, I cannot and do not disagree with Justice Perell’s view that an absolute two year limitation period for contribution and indemnity, (with no allowance whatsoever for possible lack of discoverability, even when capable of proof), would provide certainty and efficiency, which was definitely one of the policies underlying the reforms introduced in the Limitations Act, 2002, supra. However, one could say that in relation to making any limitation period absolute. As Justice Sharpe emphasized in Canaccord Capital Corp. v. Roscoe, supra, at paragraph 17, the overall goal of the legislation was the creation of a clear and comprehensive scheme for addressing limitation issues that would balance a defendant’s need for certainty with the plaintiff’s right to sue. A review of the legislation suggests that, with indicated exceptions, the Legislature generally tried to strike that balance by imposition of a presumptive two year limitation period, capable of extension by demonstrable lack of discovery, (proof of which was the obligation of the claimant). Although the legislature clearly felt that claims for contribution and indemnity warranted a measure of exceptional treatment, to encourage resolution of all claims arising from the wrong at the same time, it seems to me that the approach chosen by the legislature in that regard was the introduction of a modified presumption; i.e., one that moved the presumed starting date of the basic two year limitation period forward considerably, (from the much later starting dates permitted under the previous legislation), to the date on which the party seeking contribution and indemnity was served with the claim in respect of which contribution and indemnity is sought. Such a party, who fails to approach the possibility of contribution and indemnity claims with due diligence during the ensuing presumptive two year limitation period, from that much earlier date, does so at that party’s considerable peril. However, I see nothing in the legislation that suggests the legislature intended to go an extra step; i.e., by absolutely precluding any possibility whatsoever of an extension of time for a party capable of proving that a contemplated claim for contribution and indemnity was indeed incapable of being discovered, even with reasonable due diligence, within two years of the party being served with a statement of claim. As emphasized by our Court of Appeal in Pepper v. Zellers Inc., 2006 CanLII 42355 (ON CA), [2006] O.J. No. 5042 (C.A.), the discoverability principle ensures that a person “is not unjustly precluded from litigation before he or she has the information to commence an action provided that the person can demonstrate he or she exercised reasonable or due diligence to discover the information”. In my view, the court should be reluctant to adopt a legislative interpretation that effectively permits the possibility of such an injustice, unless that is the outcome clearly dictated by the legislation. As demonstrated by the ultimate limitation period provisions of section 15, the legislature has the ability to make such an intention quite clear, when it has that intention.
[89] Third, I similarly do not disagree with Justice Perell’s view that it would be a rare case that a defendant, exercising due diligence within two years of being served with a claim, would not know the parties against whom to claim contribution and indemnity. However, rarity is not impossibility, and in my view, the rarity of such a possibility underscores the somewhat modest concession to fairness, (from a claimant’s point of view), of the Legislature making the limitation period for contribution and indemnity claims subject to discoverability.
Update: Miaskowski was appealed, but on unrelated issues.
