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Hearsay September 2018: MEGA INTERNATIONAL COMMERCIAL BANK (CANADA) V. YUNG ET AL.

Kasia Kosacka  was published in the September 2018 edition of Hearsay. Below is the article entitled Mega International Commercial Bank (Canada) v. Yung et Al. Click here to view the publication.


MEGA INTERNATIONAL COMMERCIAL BANK (CANADA) V. YUNG ET AL.

By Kasia Kosacka
Reisler Law PC

In its May 7, 2018 decision of Mega International Commercial Bank (Canada) v. Yung et al., the Court of Appeal has confirmed that claims for contribution and indemnity under section 18 of the Limitations Act, 2002, are subject to discoverability. This aspect of Ontario’s limitation scheme required some much needed clarity, and it appears that this case provides just that.

By way of background, Section 4 of the Act provides a basic two-year limitation period that commences on the date when the plaintiff first discovers their claim, and section 5(1) explains when discovery occurs. Section 5(2) provides a rebuttable presumption that discoverability occurs on the date of the act or omission that gives rise to the claim, unless the contrary is proved. Section 15 provides for the ultimate limitation period of 15 years.

Section 18 provides the limitation period for cases involving contribution and indemnity. It provides that the date of the act or omission that gives rise to a defendant’s claim against another alleged wrongdoer is the date they are served with the plaintiff’s Statement of Claim.

The Court of Appeal held that the motion judge erred in holding that section 18 of the Act creates an absolute two-year limitation period for claims for contribution and indemnity. It made clear that the presumption that the limitation period for contribution and indemnity claims is triggered by the date on which the defendant is served still exists, and that such claims are statute barred two years from that date. However, the court held that the presumption can be displaced if the party proves that the claim for contribution and indemnity was not discovered, and was not capable of being discovered through the exercise of due diligence until some later date.

In making its decision, the Court of Appeal applied various principles of statutory interpretation, reasoning that properly interpreted, section 18 works with other provisions of the Act to create a presumed start date for the running of the limitation period. The Court noted that in other sections of the Act, clearer language is used where finite limitation periods are established, whereas section 18 does not use such language. It also noted that section 18 expressly incorporates section 5(2) and section 15 in its opening phrase “For the purposes of subsection 5(2) and section 15” and thus cannot be read as dispensing with those provisions.

This decision is certainly favourable to defendants with possible claims for contribution and indemnity, as they are no longer faced with a rigid 2 year limitation period from the date of service of a claim. Evidently, defendants will still be required to exercise their due diligence in commencing claims for contribution and indemnity within an appropriate timeframe, but they will be able to argue discoverability if they truly did not discover the claim at an earlier date.

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