Limitation Periods in Claims for Contribution and Indemnity

The Court of Appeal recently commented on limitation periods in claims for contribution and indemnify, clarifying that s. 18 of the Limitations Act imposes a two year limitation regardless if the claim is based in contract or tort.

In Canaccord Capital Corp. v. Roscoe, [2013] ONCA 378 (C.A.), the defendant was an investment advisor employed by the plaintiff, an investment dealer.  The employment agreement provided that the defendant would indemnify the company for any claim arising out of his acts or omissions in the course of his employment.  In 2008, two clients sued Canaccord and Roscoe for losses they sustained in an investment for which Roscoe was their advisor.  Canaccord filed a joint defence and did not crossclaim against Roscoe for indemnity.  The claim was settled in 2009 without Roscoe's involvement.  Canaccord issued a claim for indemnity in 2011, more than three years after the initial claim.  Roscoe brought a summary judgment motion on the basis that the limitation period had expired.  The motions judge held that that s. 18 of the Limitations Act does not apply to indemnity claims arising out of contract.  She held that the claim was not one for contribution and indemnity, but rather one of a breach of the employment contract.  She held the limitation began to run from the settlement date.

Roscoe appealed and the Court of Appeal allowed the appeal.  Section 18 refers to "wrongdoers", not just "tortfeasors" and so is broad enough to include claims arising out of contract.  The limitation began to run when Canaccord was served with the claim, and accordingly, the action was out of time.