{"id":1026,"date":"2020-04-16T15:17:19","date_gmt":"2020-04-16T19:17:19","guid":{"rendered":"http:\/\/limitations.ca\/?p=1026"},"modified":"2020-04-16T15:18:19","modified_gmt":"2020-04-16T19:18:19","slug":"ontario-court-of-appeal-on-the-impact-of-a-forum-dispute-on-a-third-party-claim","status":"publish","type":"post","link":"http:\/\/limitations.ca\/?p=1026","title":{"rendered":"Ontario: Court of Appeal on the impact of a forum dispute on a third party claim"},"content":{"rendered":"

Will a third party claim become an appropriate remedy within the meaning of s. 5(1)(a)(iv)<\/a> only once the court has determined the forum for the main action?\u00a0 No, held the Court of Appeal in Lilydale Cooperative Limited v. Meyn Canada Inc.<\/em><\/a>\u00a0 The issues arising from a contested forum, in particular the risk of attornment, are tactical and do not impact on when the claimant discovers the claim.\u00a0 The court\u2019s analysis is well-reasoned:<\/p>\n

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[<\/a>49]\u00a0\u00a0 \u00a0\u00a0\u00a0Meyn\u2019s position is that it was not legally appropriate under s. 5(1)(a)(iv) of the\u00a0Limitations Act<\/em>\u00a0to bring the third party proceedings until the forum issue was finally decided in February 2008 and that the two years ran from that time. Its submission is based on what occurred in the main action where Lilydale took the position by letter dated March 10, 2006 that it would only be proceeding in one jurisdiction, Alberta or Ontario. Meyn did not defend or take any steps in the Ontario action. In its submissions on this appeal, Meyn explained that the reason for this was because it believed that doing so had the potential to undermine its position in support of the stay of the Ontario action.<\/p>\n

\u00a0[<\/a>50]\u00a0\u00a0 \u00a0\u00a0\u00a0Meyn\u2019s argument regarding discoverability has two prongs. First, it could not deliver any third party claim in the Ontario action to ensure that it did not attorn and thereby jeopardize the forum argument. Second, if it had been successful in establishing that Alberta was the correct forum, then the Ontario action would have been discontinued and there would have been no need for any third party proceedings. Therefore, the principle applies from\u00a0407 ETR Concession Co. v. Day<\/em>,\u00a0<\/i>2016 ONCA 709<\/span>,\u00a0133 O.R. (3d) 762<\/span><\/a><\/span>, and\u00a0Presidential MSH Corp. v. Marr, Foster & Co. LLP<\/em>,\u00a0<\/i>2017 ONCA 325<\/span>,\u00a0135 O.R. (3d) 321<\/span><\/a><\/span>, that it would not be legally appropriate to commence a legal proceeding while another resolution process that may resolve the matter is ongoing.<\/div>\n

[<\/a>55]\u00a0\u00a0 \u00a0\u00a0\u00a0While a finding that serving a third party claim amounted to attornment could be prejudicial, or even fatal to a party\u2019s forum challenge, the strategic decision of how to deal with this risk of prejudice is the type of tactical consideration that does not affect the \u201clegally appropriate\u201d calculus in s. 5(1)(a)(iv) of the\u00a0Limitations Act<\/em>. The issue of whether serving a third party claim solely to protect a limitation period will amount to voluntary attornment is for the forum judge to decide. It does not affect the discoverability of the third party claim and therefore the commencement of the limitation period.<\/p>\n

\u00a0[<\/a>56]\u00a0\u00a0 \u00a0\u00a0\u00a0I also note that a party such as Meyn, facing the expiry of a limitation period, had a number of procedural avenues to take to avoid that consequence rather than allow a limitation period to expire or be found to have expired on the application of discoverability principles.<\/div>\n
\u00a0[<\/a>57]\u00a0\u00a0 \u00a0\u00a0\u00a0First, Meyn could have alerted Weishaupt that the third party claim was coming and sought its agreement under s. 22(3) of the\u00a0Limitations Act<\/em>\u00a0to a stand-still pending the determination of the forum issue. I can see no reason for the third party not to agree. However, if there were one, then judicial authorization on the attornment issue could be sought. That is what occurred in\u00a0Joyce v. MtGox Inc.<\/em>,\u00a02016 ONSC 581<\/span><\/a><\/span>, where Perell J., on a case management conference in advance of the expiry of the limitation period, involving a party in Meyn\u2019s position, ruled that issuing the third party claim would not amount to attornment.<\/div>\n
\u00a0[<\/a>58]\u00a0\u00a0 \u00a0\u00a0\u00a0Second, Meyn could have served the third party claim, with an express reservation of its rights, and then argued at its forum motion that it did so only to preserve the limitation period and therefore has not attorned to Ontario\u2019s jurisdiction. Meyn brought a\u00a0forum non conveniens<\/em>\u00a0motion. It was understood by all the existing parties that Meyn was not acknowledging the convenience of Ontario as the forum for the action by bringing the motion. While that motion was outstanding, it would be anomalous indeed if Meyn\u2019s service of a third party claim to preserve a limitation period in Ontario would be found to amount to such an acknowledgement.<\/div>\n
\u00a0[<\/a>59]\u00a0\u00a0 \u00a0\u00a0\u00a0To conclude, while risk of attornment was a potentially legitimate concern for Meyn, that concern related to its position on the forum issue and did not affect the discoverability of its third party claim and the need to take the steps necessary to preserve the claim within the limitation period.<\/div>\n<\/blockquote>\n

The appellant also argued that the forum dispute had the potential to resolve the third party claim, and was therefore an alternative resolution process that could render the third party proceeding inappropriate until its conclusion.\u00a0 The court rejected this submission.\u00a0 The forum dispute couldn\u2019t resolve the third party claim, it would only move it to another jurisdiction.<\/p>\n

[<\/a>63]\u00a0\u00a0 \u00a0\u00a0\u00a0The forum challenge is conceptually similar to settlement discussions, which may resolve the entire claim so that no court proceeding need be commenced, but nonetheless do not postpone the running of the limitation period: see\u00a0Presley v. Van Dusen<\/em>,\u00a0<\/i>2019 ONCA 66<\/span><\/a>,\u00a0432 D.L.R. (4th) 712<\/span>, at para.\u00a025<\/a><\/span>; and\u00a0Markel<\/em>\u00a0at para. 34.<\/p>\n

[<\/a>64]\u00a0\u00a0 \u00a0\u00a0\u00a0As in\u00a0Ridel<\/em>,\u00a0Tapak v. Non-Marine Underwriters<\/em>,\u00a0Lloyd\u2019s of London<\/em>,\u00a0<\/i>2018 ONCA 168<\/span><\/a>,\u00a076 C.C.L.I. (5th) 197<\/span><\/span>, leave to appeal refused, [2018] S.C.C.A. No. 157, and\u00a0Gravelle<\/em>, in this case, there was no alternative resolution process to which Weishaupt was a party that could have resolved the issue between it and Meyn. Rather, Meyn was attempting to have the whole Ontario action dismissed, obviating the need for the third party claim.<\/p>\n

[<\/a>65]\u00a0\u00a0 \u00a0\u00a0\u00a0To allow parties to wait, at their discretion, for other court or arbitral proceedings to conclude, where the result could obviate the need to bring a claim that they know exists, is inconsistent with the purpose of the\u00a0Limitations Act<\/em>\u00a0<\/i>for two reasons. First, this approach could extend the limitation period well beyond the two year original threshold in an uncertain and unpredictable manner. Second, there were no significant savings to be achieved by not commencing the third party claim until the forum challenge was complete. Procedurally, a stand-still or tolling agreement could be sought until the forum issue had been finalized by the court so that the third party would not be required to plead in response. However, it would be on notice that if the Ontario action proceeds, it is a named party, required to preserve its documents, and respond to the action as advised.<\/div>\n
[<\/a>66]\u00a0\u00a0 \u00a0\u00a0\u00a0In my view, these factors drive the conclusion that the day Meyn was served with the statement of claim by Lilydale, it knew that a third party claim against Weishaupt was the appropriate means to seek a remedy from Weishaupt. It was therefore not \u201clegally appropriate\u201d for Meyn to wait until the forum issue had been decided before the commencing third party claim.<\/div>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Will a third party claim become an appropriate remedy within the meaning of s. 5(1)(a)(iv) only once the court has determined the forum for the main action?\u00a0 No, held the Court of Appeal in Lilydale Cooperative Limited v. Meyn Canada Inc.\u00a0 The issues arising from a contested forum, in particular the risk of attornment, are … Continue reading Ontario: Court of Appeal on the impact of a forum dispute on a third party claim<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[541,85,586,83,193,45,43,587],"class_list":["post-1026","post","type-post","status-publish","format-standard","hentry","category-ontario","tag-alternative-dispute-resolution-processes","tag-appropriateness","tag-attornment","tag-forum-shopping","tag-legal-appropriateness","tag-ontario-act-s-51aiv","tag-ontario-court-of-appeal","tag-third-party-claim"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/1026","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1026"}],"version-history":[{"count":3,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/1026\/revisions"}],"predecessor-version":[{"id":1029,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/1026\/revisions\/1029"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1026"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1026"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1026"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}