{"id":991,"date":"2020-04-06T20:58:47","date_gmt":"2020-04-07T00:58:47","guid":{"rendered":"http:\/\/limitations.ca\/?p=991"},"modified":"2020-04-06T20:58:58","modified_gmt":"2020-04-07T00:58:58","slug":"ontario-court-of-appeal-on-the-interaction-of-s-51aiv-and-s-18-of-the-limitations-act","status":"publish","type":"post","link":"http:\/\/limitations.ca\/?p=991","title":{"rendered":"Ontario: Court of Appeal on the interaction of s. 5(1)(a)(iv) and s. 18 of the Limitations Act"},"content":{"rendered":"

Two aspects of the Court of Appeal\u2019s decision in Ridel v. Goldberg<\/em><\/a> are noteworthy.<\/p>\n

First, the court held that a contribution and indemnity proceeding does not become an appropriate remedy for a loss only when the main action resolves.\u00a0 Section 5(1)(a)(iv)<\/a> will not suspend the limitation period as against a second defendant where a plaintiff has commenced a legal proceeding against another defendant for the same wrong:<\/p>\n

\n

[<\/a>70]\u00a0\u00a0 \u00a0\u00a0\u00a0The appellants rely on s. 5(1)(a)(iv) of the\u00a0Limitations Act<\/em>\u00a0to argue that the appeal of the 2013 Judgment postponed the running of the limitation period against e3m. They say that, because the appeal may have eliminated e3m\u2019s liability to the Ridels and hence e3m\u2019s claim against Goldberg, they would not reasonably have known that an action was \u201can appropriate means\u201d to seek to remedy e3m\u2019s losses until the appeal was dismissed.<\/p>\n<\/blockquote>\n

\n
\n

[<\/a>72]\u00a0\u00a0 \u00a0\u00a0\u00a0The appellants rely on this court\u2019s decision in\u00a0Independence Plaza 1 Associates, L.L.C. v. Figliolini<\/em>,\u00a02017 ONCA 44<\/span>,\u00a0136 O.R. (3d) 202<\/span><\/a><\/span>, a case involving an action in Ontario to enforce a foreign judgment, in support of their argument that it was not legally appropriate to commence a claim against Goldberg until the appeal of the 2013 Judgment was determined. In\u00a0Figliolini<\/em>,<\/em>\u00a0this court held, at para. 77:<\/p>\n

\u00a0In the usual case, it will not be legally appropriate to commence a legal proceeding on a foreign judgment in Ontario until the time to appeal the judgment in the foreign jurisdiction has expired or all appeal remedies have been exhausted. The foreign appeal process has the potential to resolve the dispute between the parties. If the judgment is overturned, the debt obligation underlying the judgment creditor\u2019s proceeding on the foreign judgment disappears.<\/div>\n

[<\/a>73]\u00a0\u00a0 \u00a0\u00a0\u00a0The appellants say that, just as this court held that the basic limitation period for an action to enforce a foreign judgment in Ontario runs from the date of exhaustion of all appeals (subject to discoverability principles), the same should apply to a claim that, as here, is based on a domestic judgment. In either case, the debt obligation underlying the claimant\u2019s proceeding would disappear if the judgment were overturned.<\/p>\n

\u00a0[<\/a>74]\u00a0\u00a0 \u00a0\u00a0\u00a0In my view,\u00a0Figliolini<\/em>\u00a0does not apply by analogy or otherwise. The main issue in\u00a0Figliolini<\/em>\u00a0was whether s. 16(1)(b) of the\u00a0Limitations Act<\/em>\u00a0(which provides that there is no limitation period in respect of, among other things, \u201ca proceeding to enforce an order of a court, or any other order that may be enforced in the same way as an order of a court\u201d) would apply to an action to enforce a foreign judgment. The court rejected that argument, and then went on to determine when the basic two-year limitation period for an action to enforce a foreign judgment would begin to run.<\/div>\n
\u00a0[<\/a>75]\u00a0\u00a0 \u00a0\u00a0\u00a0Figliolini<\/em>\u00a0dealt only with actions to enforce foreign judgments. Strathy C.J.O. noted that \u201ca judgment creditor who brings an Ontario proceeding on a foreign judgment must show that the foreign court had jurisdiction and that the judgment is final and for the payment of money\u201d: at para. 51. An action to enforce a domestic judgment is, by s. 16(1)(b) of the\u00a0Limitations Act<\/em>, not subject to\u00a0any<\/u>\u00a0limitation period. And, importantly, actions such as the present action \u2013 which are not to enforce a judgment, but to claim indemnity \u2013 are governed by their own provisions in the\u00a0Limitations Act\u00a0<\/em>that would be entirely undermined if the appellants\u2019 argument were given effect<\/em>.\u00a0<\/i>This is the fatal flaw in the appellants\u2019 reliance on\u00a0Figliolini<\/em>.<\/i><\/div>\n
\u00a0[<\/a>76]\u00a0\u00a0 \u00a0\u00a0\u00a0Unlike proceedings to enforce a foreign judgment, which require finality, there is no requirement that in order to effectively claim contribution and indemnity there must be a final judgment against the claimant. To the contrary, the two-year limitation period runs from the date the claim is made against the first wrongdoer, subject to the discoverability rules in s. 5(1)(a):\u00a0Mega International<\/em>, at para. 74. In\u00a0Canaccord<\/em>, this court noted that s. 18 of the\u00a0Limitations Act<\/em>\u00a0specifically departs from the previous law for contribution claims between tortfeasors, where the limitation period ran against the party claiming indemnity from the date of judgment: at para. 20.<\/div>\n
\u00a0[<\/a>77]\u00a0\u00a0 \u00a0\u00a0\u00a0While not determinative, this court\u2019s decision in\u00a0Tapak<\/em>\u00a0v. Non-Marine Underwriters, Lloyd\u2019s of London<\/i>,\u00a02018 ONCA 168<\/span><\/a>,\u00a076 C.C.L.I. (5th) 197<\/span><\/span>, leave to appeal refused, [2018] S.C.C.A. No. 157, is instructive. In that case, the appellants relied on s. 5(1)(a)(iv) to argue that an appeal against other parties, if successful, might have eliminated their losses and that they therefore did not know that their action for contribution and indemnity was \u201can appropriate means\u201d to seek to remedy their losses until the appeal was dismissed. At para. 13, the court rejected this argument, stating:<\/div>\n
\u00a0[Section] 5(1)(a)(iv) is not intended to be used to parse claims as between different defendants and thus permit one defendant to be pursued before turning to another defendant. Rather, it is intended to address the situation where there may be an avenue of relief outside of a court proceeding that a party can use to remedy their \u2018injury, loss or damage\u2019\u2026.<\/div>\n

I agree with the latter observation that s. 5(1)(a)(iv) is not intended to operate in the manner proposed by the appellants.<\/p>\n

[<\/a>78]\u00a0\u00a0 \u00a0\u00a0\u00a0In the present appeal, the appellants assert that it was legally appropriate for e3m to delay an action against Goldberg until the Prior Action was finally disposed of on appeal. This is precisely the sort of litigation in stages which will not delay the commencement of a limitation period for purposes of s. 5(1)(a)(iv). In the usual case, s. 5(1)(a)(iv) will not suspend the limitation period as against a second defendant where a plaintiff has commenced a legal proceeding against another defendant for the same wrong:\u00a0Presley<\/em>, at para.\u00a031<\/a>. This general principle is buttressed by the specific and certain rules for the commencement of claims for contribution and indemnity ushered in by s. 18 of the\u00a0Limitations Act<\/em>. Sharpe J.A., in\u00a0Canaccord<\/em>, carefully described the legislative history in concluding that s. 18 provided a \u201cmarked departure from\u201d and \u201csignificant reforms to\u201d the previous regime governing limitation periods for claims for contribution and indemnity: at para. 27. Under the previous law, a tort claimant seeking contribution and indemnity could wait for judgment in the main action before commencing a claim for indemnification. In contrast, \u201cs. 18 significantly shortens the limitation period governing contribution and indemnity claims to two years from the date the first alleged wrongdoer was served with the underlying claim, thereby encouraging resolution of all claims arising from the wrong at the same time\u201d:\u00a0Canaccord<\/em>, at para. 20.<\/p>\n<\/blockquote>\n

This is the first time the court has confronted the tension between s. 18<\/a> and its recent appropriateness jurisprudence.\u00a0 It is settled that an alternative process with the potential to eliminate the plaintiff\u2019s loss can suspend the discovery of a claim.\u00a0 In a claim for contribution and indemnity, if the main action results in the dismissal of the claim, the defendant will have no loss for which to claim contribution and indemnity.\u00a0 The main action will have eliminated the plaintiff\u2019s loss.<\/p>\n<\/div>\n

However, this is clearly at odds with the intent of s. 18, which the court notes.\u00a0 I think the court resolved this problem as best it could: the main action is not an alternative process, but the same litigation.<\/p>\n

Secondly, the court reiterated that s. 12<\/a> of the Limitations Act applies to claims asserted by a creditor who has taken an\u00a0assignment of a claim of a bankrupt under s. 38 of the BIA<\/a>. The applicable date of discovery is the earlier of the predecessor\u2019s discovery of the claim, or the person claiming through the predecessor\u2019s discovery of the claim.\u00a0 The assignment does not restart the limitation period.<\/p>\n

The court\u2019s analysis is well-reasoned and instructive:<\/p>\n

\n

[<\/a>44]\u00a0\u00a0 \u00a0\u00a0\u00a0In this case, by contrast, the appellants are pursuing a claim that initially belonged to e3m and that vested in the trustee on e3m\u2019s bankruptcy. The claim for breach of Goldberg\u2019s fiduciary and other duties to e3m is not one that the appellants could have pursued before e3m\u2019s bankruptcy.\u00a0Indcondo<\/em>\u00a0did not address the question of when the limitation period under s. 12 would run in respect of a creditor who may well have known of the potential claim by the bankrupt, but had no way to enforce it until the bankruptcy.<\/p>\n

\u00a0[<\/a>45]\u00a0\u00a0 \u00a0\u00a0\u00a0The appellants characterize the motions judge\u2019s error here as a failure to consider s. 5(1)(a)(iv) of the\u00a0Limitations Act<\/em>\u00a0<\/i>in relation to the claim against Goldberg. Whether a proceeding was an appropriate means to remedy a claim is an essential element in the discoverability analysis and the failure to consider s. 5(1)(a)(iv) is an error of law:\u00a0Presley<\/em>, at para.\u00a015<\/a>.<\/div>\n
\u00a0[<\/a>46]\u00a0\u00a0 \u00a0\u00a0\u00a0I agree with the appellants that, because they lacked capacity to bring a claim in the name of e3m against Goldberg, any personal knowledge they might have had before e3m\u2019s bankruptcy respecting a claim did not cause the limitation period to run against them pursuant to s. 12(1). In my view, however, this result does not flow from the application of s. 5(1)(a)(iv).<\/div>\n
\u00a0[<\/a>47]\u00a0\u00a0 \u00a0\u00a0\u00a0In determining when the limitation period began to run in respect of the appellants\u2019 claim, the question is when they, as \u201cclaimants\u201d \u2013 that is, as persons who reasonably had the claim in question \u2013 knew or ought to have known of the matters referred to in s. 5(1)(a). The application of the test in s. 5(1)(a) requires first that the claims at issue be defined or identified:\u00a0Morrison<\/em>, at paras.\u00a033, 49<\/a>.<\/div>\n
\u00a0[<\/a>48]\u00a0\u00a0 \u00a0\u00a0\u00a0In this case, the claim advanced in the appellants\u2019 action is not a claim by them personally, or one that they could have advanced personally (as was the case in\u00a0Indcondo<\/em>), but a claim they are asserting on behalf of the bankrupt, e3m, against its former principal, Goldberg. Section 5(1) applies to \u201cthe person with the claim\u201d. When they were litigating against e3m in the Prior Action, the appellants may well have known of the various matters under s. 5(1)(a) in the general sense, but because they were not and could not have been \u201cthe persons with the claim\u201d at that stage, any such knowledge was immaterial.<\/div>\n
\u00a0[<\/a>49]\u00a0\u00a0 \u00a0\u00a0\u00a0Until e3m was bankrupt, any claim against Goldberg for breach of his duties as a director could only be pursued by e3m. The appellants had no right, title or interest in the claim. They had no ability to bring the claim while the claim continued to belong to e3m.<\/div>\n

[<\/a>51]\u00a0\u00a0 \u00a0\u00a0\u00a0Similarly, in this case, the appellants could not have asserted a claim against Goldberg for wrongs done to e3m until they obtained the\u00a0s. 38<\/a>\u00a0order. In other words, until they obtained the\u00a0s. 38<\/a>\u00a0order, they had no standing to claim for e3m\u2019s losses. Any knowledge of Goldberg\u2019s wrongdoing in relation to e3m, whether by virtue of what they themselves had pleaded in the Prior Action, or when they received Pepall J.\u2019s reasons in the 2013 Judgment, was not sufficient for them to be able to act.<\/p>\n

\u00a0[<\/a>52]\u00a0\u00a0 \u00a0\u00a0\u00a0The motions judge\u2019s conclusion that, because of their personal knowledge of the material facts in relation to e3m\u2019s claim against Goldberg, the limitation period began to run against the appellants as early as July 2006 and as late as April 2013, was therefore in error. Their knowledge of those matters did not become relevant until they had or ought reasonably to have had the authority to pursue the claim, which was, at the very earliest, upon the bankruptcy of e3m in January 2015.<\/div>\n
\u00a0[<\/a>53]\u00a0\u00a0 \u00a0\u00a0\u00a0Under this analysis, s. 5(1)(a)(iv) is not engaged. The question is not whether the appellants knew or ought to have known that a proceeding by the company would be an appropriate remedy for Goldberg\u2019s alleged wrongs. Until they had control over the claim, or the means to obtain such control (by moving promptly in e3m\u2019s bankruptcy), they were not \u201cclaimants\u201d for the purpose of s. 5(1)(a) and therefore their knowledge was not the knowledge of claimants under the section.<\/div>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Two aspects of the Court of Appeal\u2019s decision in Ridel v. Goldberg are noteworthy. First, the court held that a contribution and indemnity proceeding does not become an appropriate remedy for a loss only when the main action resolves.\u00a0 Section 5(1)(a)(iv) will not suspend the limitation period as against a second defendant where a plaintiff … Continue reading Ontario: Court of Appeal on the interaction of s. 5(1)(a)(iv) and s. 18 of the Limitations Act<\/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":[541,195,196,119,577,243,45,43],"class_list":["post-991","post","type-post","status-publish","format-standard","hentry","category-ontario","tag-alternative-dispute-resolution-processes","tag-bankruptcy-and-insolvency-act","tag-bankruptcy-and-insolvency-act-s-38","tag-contribution-and-indemnity","tag-ontario-act-s-12","tag-ontario-act-s-18","tag-ontario-act-s-51aiv","tag-ontario-court-of-appeal"],"_links":{"self":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/991","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=991"}],"version-history":[{"count":2,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/991\/revisions"}],"predecessor-version":[{"id":993,"href":"http:\/\/limitations.ca\/index.php?rest_route=\/wp\/v2\/posts\/991\/revisions\/993"}],"wp:attachment":[{"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=991"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=991"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/limitations.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=991"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}