HSBC Securities (Canada) Inc. v. Davies, Ward & Beck, 2005 CanLII 1626 (ON CA)

HSBC Securities (Canada) Inc. v. Davies, Ward & Beck

HSBC Securities (Canada) Inc. v. Davies, Ward & Beck; Lindquist Avey Macdonald Baskerville Inc. et al., Third Parties; KPMG LLP (formerly known as Peat Marwick Thorne) et al., Third Parties [Indexed as: HSBC Securities (Canada) Inc. v. Davies, Ward & Beck]

74 O.R. (3d) 295

[2005] O.J. No. 277

Docket: C41118

Court of Appeal for Ontario,

MacPherson and Cronk JJ.A. and Lane J. (ad hoc)

January 31, 2005

Limitations -- Negligence -- Contribution and indemnity -- Claim for contribution or indemnity brought by defendant against third party after expiry of statutory limitation period between plaintiff and third party -- Client having claim against law firm for negligence with respect to handling of claim against insurance company -- Client and law firm entering into tolling agreement pending determination of client's action against insurer -- Client's claim against insurer dismissed and client suing law firm for negligence -- Law firm commencing third party proceedings for contribution and indemnity -- Third parties having limitation period defence to any direct claim by client against them -- Defendant's claim for contribution and indemnity from third parties also statute barred -- Negligence Act, R.S.O. 1990, c. N.1, ss. 1, 2, 5, 8.

Negligence -- Contribution and indemnity -- Limitations -- Claim for contribution or indemnity brought by defendant against third party after the expiry of statutory limitation period between plaintiff and third party -- Client having claim against law firm for negligence with respect to handling of claim against insurance company -- Client and law firm entering into tolling agreement pending determination of client's action against insurer -- Client's claim against insurer dismissed and client suing law firm for negligence -- Law firm commencing third party proceedings for contribution and indemnity -- Third parties having limitation period defence to any direct claim by client against them -- Defendant's claim for contribution and indemnity from third parties also statute barred -- Negligence Act, R.S.O. 1990, c. N.1, ss. 1, 2, 5, 8.

In June 1991, Gordon Capital Corporation ("Gordon"), now HSBC Securities Canada Inc., retained Davies, Ward & Beck ("Davies") to provide legal advice with respect to the activities of one Eric Rachar, who was a Gordon employee. Gordon was an investment dealer, and it had found irregularities in client accounts that were being managed by Rachar. Gordon also retained KPMG to report on the failure of internal controls to discover the irregularities and for the Lindquist Group within KPMG to perform a forensic investigation of Rachar's activities. Craig Malcolm was an employee working with the Lindquist Group.

In March 1992, as a result of Rachar's activities, Gordon filed a proof of loss with its insurer under a fidelity insurance policy. The policy required that all proceedings to recover losses be brought within 24 months of the discovery of the loss. The proof of loss identified June 26, 1991 as the date of discovery. However, Gordon did not commence proceedings until after that date, and the insurer took the position that Gordon's claim was barred by the contractual limitation period. Gordon commenced an action, but the insurer moved to have it dismissed. In February 1998, while the outcome of the insurer's motion was under appeal, Gordon and Davies entered into a Tolling Agreement, and it was agreed that Gordon would await the outcome of the proceedings against the insurer before bringing [page296] proceedings against Davies. Neither KPMG nor Malcolm was a party to the Tolling Agreement.

Ultimately, the Supreme Court of Canada dismissed Gordon's action against its insurer and, in April 2000, Gordon sued Davies for negligence and breach of contract for failing to assist Gordon properly with its claim against the insurers. In turn, relying on the Negligence Act, Davies commenced third party proceedings in October 2001, seeking contribution and indemnity from KPMG and Malcolm. They, however, moved for a summary judgment to have the third party claim dismissed. KPMG and Malcolm submitted that a precondition to their liability for contribution of indemnity was having liability to Gordon but there could be none because the six-year limitation period prescribed in s. 45(1)(g) of the Limitations Act, R.S.O. 1990, c. L.15 had run. Relying on the judgment of the Supreme Court of Canada in Giffels v. Eastern Construction Ltd., Spence J. granted summary judgment. Davies appealed.

Held, the appeal should be dismissed.

The appeal should be dismissed, although for reasons different from those of the motion judge. Whether a third party claim for contribution or indemnity can be brought after the expiry of the statutory limitation period between the plaintiff and the third party must be resolved based on a statutory interpretation analysis of the Negligence Act. Section 1 creates the right to contribution and indemnity. Section 2 sets out how a tortfeasor who settles with a tort victim can claim contribution from any other tortfeasor who, if sued, is or would have been liable to the injured party. Section 5 sets out the procedure for adding a joint tortfeasor to an existing action, ensuring that a defendant can maintain an action for contribution against a joint tortfeasor, even if the plaintiff does not sue the joint tortfeasor. Section 8 provides that no action for contribution against another tortfeasor will be defeated by the expiry of any statutory limitation period for starting an action against that other to rtfeasor, provided that certain conditions are met, including that the main action be commenced within the applicable statutory limitation period.

Claims for contribution or indemnity may be brought under s. 5 or s. 8 of the Negligence Act, and s. 8 also prescribes the conditions when a claim for contribution under these sections survives the expiry of a statutory limitation period. The legislative history and the case law relating to the evolution of the contribution provisions, as well as a textual analysis, lead to the conclusion that s. 8 applies to all contribution claims, including those brought under s. 5. Davies' claim was brought under s. 5, but the claim did not meet the conditions of s. 8. Section 8 requires that the main action between the plaintiff and the defendant must be started within the applicable limitation period, which was not the situation in the immediate case, and so the third party action was properly dismissed. In enacting s. 8, the legislature demonstrated both an awareness that there were existing statutory limitation periods that could affect the right to contribution, and also an intention to prevent rights to contribution from failing due to statutory limitation periods, provided that the main action had been commenced in a timely way.

Even if Davies was correct that the expiry of the statutory limitation period between Gordon and KPMG and Malcolm did not by itself extinguish Davies' right to contribution under s. 1 of the Act, s. 8 circumscribed that right. Having failed to meet the conditions set out in s. 8 for bringing a contribution claim outside the expiry of the statutory limitation period applicable to KPMG and Malcolm, Davies was precluded from seeking contribution from these two parties. [page297] Given this conclusion, it was unnecessary to address the motion judge's conclusion, challenged by Davies on this appeal, that the Tolling Agreement transformed Gordon's action against Davies into one grounded in contract.

APPEAL from the judgment of Spence J. of the Superior Court of Justice, reported at (2003), 2003 20888 (ON SC), 68 O.R. (3d) 289, [2003] O.J. No. 4895 (S.C.J.).

Cases referred to

Bill Thompson Transport Inc. v. Scarborough (City), [1993] O.J. No. 506, 14 M.P.L.R. (2d) 278 (Gen. Div.); Canada v. Thomas Fuller Construction Co. (1958), 1979 187 (SCC), [1980] 1 S.C.R. 695, 106 D.L.R. (3d) 193, 12 C.P.C. 248, affg 1978 3694 (FCA), [1979] 1 F.C. 877, 25 N.R. 466, 8 C.P.C. 78 (C.A.); Giffels v. Eastern Construction Co., 1978 39 (SCC), [1978] 2 S.C.R. 11346, 84 D.L.R. (3d) 344; Gravel v. St- Léonard (City), 1977 9 (SCC), [1978] 1 S.C.R. 660, 17 N.R. 486; Hordern Richmond Ltd. v. Duncan, [1947] 1 All E.R. 427, [1947] K.B. 545; Martin v. Listowel Memorial Hospital (2000), 2000 16947 (ON CA), 51 O.R. (3d) 384, [2000] O.J. No. 4015, 192 D.L.R. (4th) 250, 48 C.P.C. (4th) 195 (C.A.); MacKenzie v. Vance, 1977 1868 (NS CA), [1977] N.S.J. No. 463, 74 D.L.R. (3d) 383 (C.A.); O'Neil v. Van Horne (2002), 2002 41072 (ON CA), 59 O.R. (3d) 384, [2002] O.J. No. 1528, 212 D.L.R. (4th) 558 (C.A.); Paquette v. Batchelor (1980), 1980 1616 (ON SC), 28 O.R. (2d) 590, 111 D.L.R. (3d) 642, 13 C.C.L.T. 237 (H.C.J.); Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27 , [1998] S.C.J. No. 2, 36 O.R. (3d) 418n, 154 D.L.R. (4th) 193, 221 N.R. 241, 50 C.B.R. (3d) 163, 33 C.C.E.L. (2d) 173, 98 C.L.L.C. 210-006 (sub nom. Ontario Ministry of Labour v. Rizzo & Rizzo Shoes Ltd., Adrien v. Ontario Ministry of Labour)

Statutes referred to

Limitations Act, R.S.O. 1990, c. L.15, s. 45(1)(g) Limitations Act, 2002, S.O. 2002, c. 24, Sched. B., ss. 4, 25.16 Negligence Act, 1930, S.O. 1930, c. 27, s. 3 Negligence Amendment Act, 1948, S.O. 1948, c. 61, s. 3 Negligence Act, R.S.O. 1970, c. 296, ss. 2, 9 Negligence Act, R.S.O. 1990, c. N.1, ss. 1, 8, 25 Public Authorities Protection Act, R.S.O. 1970, c. 374 Public Authorities Protection Act, R.S.O. 1990, c. P.38 Statute Law Amendment Act, 1939, S.O. 1939, c. 47, s. 23

Authorities referred to

Cheifetz, D., Apportionment of Fault in Tort (Toronto: Canada Law Book, 1981) Cheifetz, D., (2004) 28 Advocates' Q. 177 Cheifetz, D., "Postscript 2: The Retreat Continues" (2004), 29 Advocates' Q. 276 Driedger, E., The Construction of Statutes (Toronto: Butterworths, 1974) Sullivan, R., Sullivan and Driedger on the Construction of Statutes, 4th ed. (Toronto: Butterworths, 2002) Watson, G., Canadian Civil Procedure: Cases and Materials, 2nd ed. (Toronto: Butterworths, 1977)

Julia C. Barss, for respondent. Earl A. Cherniak, Q.C. and George S. Glezos, for appellant. William G. Horton and Matthew Horner, for respondent Craig Malcolm and for respondents KPMG LLP (formerly known as Peat Marwick Thorne), Peat Marwick Thorne, KPMG Peat Marwick Thorne, KPMG Inc. (formerly known as Peat Marwick Thorne Inc.) [page298]

The judgment of the court was delivered by

1LANE J. (ad hoc): -- The appellant, Davies, Ward & Beck ("Davies"), appeals from the decision of Spence J. allowing the summary judgment motion brought by the respondents, KPMG LLP, Peat Marwick Thorne, KPMG Peat Marwick Thorne, KPMG Inc. (collectively referred to as "KPMG") and Craig Malcolm ("Malcolm"). Spence J. dismissed Davies' third party claims for contribution against KPMG and Malcolm on the basis that KPMG and Malcolm had no liability to the plaintiff when Davies commenced its contribution proceedings against them. For the reasons that follow, I would dismiss the appeal, although my reasons differ from those of the motion judge.

A. Overview

2The plaintiff, HSBC Securities (Canada) Inc., formerly Gordon Capital Corporation ("Gordon"), sued Davies for alleged negligence in relation to a claim by Gordon against its fidelity insurers. Before Gordon started its action against Davies, it entered into an agreement with Davies ("the Tolling Agreement") to toll the statutory limitation period applicable to its claim against Davies until the legal proceedings between Gordon and its fidelity insurers were at an end. Ultimately, the Supreme Court of Canada dismissed Gordon's claim against its fidelity insurers. Gordon then commenced the main action ¹ against Davies, which the Tolling Agreement permitted it to do notwithstanding the expiry of the statutory limitation period.

3Davies in turn commenced third party actions seeking contribution and indemnity from KPMG and Malcolm for Gordon's losses. By the time Davies commenced the third party proceedings, the six-year limitation period prescribed by s. 45(1)(g) of the Limitations Act, R.S.O. 1990, c. L.15 ("Limitations Act, 1990") governing any action by Gordon against KPMG and Malcolm had expired. KPMG and Malcolm were not parties to the Tolling Agreement, nor did they enter into any equivalent agreement. KPMG and Malcolm moved for summary judgment dismissing Davies' third party actions based on the expiry of the statutory limitation period applicable between Gordon and them. [page299]

4The motion judge allowed the summary judgment motion and dismissed Davies' third party actions against KPMG and Malcolm. In reaching this decision, he relied on the decision of the Supreme Court of Canada in Giffels v. Eastern Construction Co. ², concluding that it is a precondition of the right to resort to contribution that the party from whom contribution is sought be liable to the plaintiff. Thus Davies was precluded from asserting a cause of action for contribution and indemnity against KPMG and Malcolm because these parties were no longer liable to Gordon as a result of the expiry of the statutory limitation period applicable to any claim by Gordon against them. The motion judge also concluded that Davies could not assert a cause of action against KPMG and Malcolm due to the operation of the Tolling Agreement, which, in his view, transformed the main action into a contract claim to which the Negligence Act, R.S.O. 1990, c. N.1 ("Negligence Act, 1990") and the statutory right to contribution and indemnity contained therein no longer applied.

5At the heart of this appeal is whether the expiry of the statutory limitation period protecting KPMG and Malcolm from a negligence action by Gordon precludes Davies from seeking contribution to the very damages that Gordon can no longer recover from KPMG and Malcolm directly. As will be discussed below, it is my view that s. 8 of the Negligence Act, 1990, which prescribes when a claim for contribution or indemnity will not be defeated by the expiry of a statutory limitation period, applies whether the claim for contribution is brought procedurally under s. 5 or s. 8 of the Act ³. Davies' third party claims for contribution against KPMG and Malcolm, brought under s. 5 of the Negligence Act, 1990, do not meet the conditions prescribed by s. 8 and so were properly dismissed by the motion judge. Given this conclusion, it is unnecessary to address the motion judge's conclusion, challenged by Davies on this appeal, that the Tolling Agreement transformed Gordon's action against Davies into o ne grounded in contract and no more reference is made to this ground of appeal. [page300]

B. Facts

6For the purpose of the summary judgment motion only, Davies accepted the facts set out in the paragraphs that follow.

1. The original loss

7In 1991, Gordon was an investment dealer that held fidelity coverage under insurance bonds issued by Guarantee Company of North America, Chubb Insurance Company of Canada and Laurentian General Insurance Company of Canada (the "insurers").

8All of the bonds were subject to a contractual limitation period that required that all proceedings to recover losses under the bonds be brought within 24 months of the discovery of the loss.

9In June 1991, Gordon discovered some irregularities in transactions in some of its client accounts, all of which were managed by an employee, Eric Rachar ("Rachar"). On June 19, 1991, Gordon retained Davies to provide legal services and advice with respect to those accounts.

10Around this time, Davies, as agent for Gordon, retained KPMG to review and report on the failure of Gordon's internal controls to prevent or detect certain of Rachar's activities. Davies further retained the Lindquist Group within KPMG to perform a forensic investigation of Rachar's activities. Malcolm was an employee of KPMG working within the Lindquist Group.

11In or about March 1992, Gordon filed a proof of loss in connection with Rachar's activities. That proof of loss identified June 26, 1991 as the date of Gordon's discovery of the loss.

12Gordon, however, did not commence legal proceedings to recover under the bonds before June 27, 1993, the contractual limitation date.

13Towards the end of June 1993, one of the insurers advised Gordon that any legal proceeding that Gordon might commence was now barred as a result of the 24-month limitation period set out in the bonds.

14Davies was notified of the insurers' reliance on the contractual limitation period prior to July 15, 1993.

15Gordon subsequently attempted to recover from its insurers under the bonds.

16In February 1998, Gordon and Davies entered into a Tolling Agreement. It was agreed that Gordon would await the outcome of the proceedings against the insurers before proceeding with any litigation against Davies. Neither KPMG nor Malcolm was a party to that agreement.

17Gordon entered into similar tolling agreements with Reed Stenhouse and Lindquist Avey. [page301]

18The Supreme Court of Canada ultimately dismissed Gordon's claim against its insurers on the basis of the contractual limitation period.

2. Present litigation

19On April 19, 2000, Gordon sued Davies, alleging that Davies was negligent and in breach of its contract with Gordon in failing to assist Gordon properly with its claim against the insurers. In particular, Gordon claims that Davies failed to warn Gordon that any proceeding against the insurers had to be commenced before the expiry of the contractual limitation period in June 1993.

20On October 18, 2001, Davies commenced these third party proceedings seeking contribution and indemnity from KPMG and Malcolm. Davies alleges that KPMG and Malcolm were negligent in failing to assist Gordon properly with its claim against its insurers, and thereby caused or contributed to any damages suffered by Gordon and claimed from Davies in the main action.

21In its third party claims, Davies relies solely on duties owed by KPMG and Malcolm to the plaintiff. Davies does not allege that KPMG and Malcolm owed any duties to it. The claims, therefore, are brought exclusively under the Negligence Act, 1990.

C. Judgment Below

22As already stated, the motion judge relied on Giffels v. Eastern Construction Co. ⁴ as the basis for granting KPMG and Malcolm summary judgment and dismissing Davies' third party claims against them.

23The motion judge noted that the parties did not dispute that the right to claim contribution or indemnity under the Negligence Act, 1990 is a separate cause of action from the cause of action giving rise to the main action. He reviewed s. 5 and s. 8 of the Negligence Act, 1990 and framed the parties' competing positions as follows (at para. 50): "Considered in terms of their essential differences, the contention of the third parties is that the cause of action for contribution and indemnity created by s. 1 of the Negligence Act may be asserted under s. 5 of the Act only by complying with the requirements of s. 8 as well as s. 5, and the opposing contention of the defendant is that it is entitled to proceed under s. 5 of the Act without complying with s. 8." [page302]

24Having framed the dispute as focused on which statutory provision applied, the motion judge then turned to a review of the case law relied on by the parties. Davies relied on the decision of Osborne J. (as he then was) in Paquette v. Batchelor ⁵ as establishing that a cause of action for contribution arises once there is a judgment against the defendant in the main action, and that the limitation period for contribution claims only begins to run once the defendant has been found liable to the plaintiff in the main action. Based on this view, Davies' third party claims against KPMG and Malcolm are not statute barred, because the limitation period applicable to Davies' third party claims will not begin to run until it is found liable to Gordon in the main action.

25In contrast, the motion judge relied on Giffels, in which the Supreme Court of Canada overturned the trial judge's contribution award in favour of one defendant against a co- defendant on the basis that the co-defendant had no liability to the plaintiff as a result of the expiry of the applicable limitation period between the plaintiff and the co- defendant. As already noted, KPMG and Malcolm (as a result of the expiry of the statutory limitation period) had no liability to Gordon at the time that Davies commenced its contribution claims against them.

26The motion judge resolved the apparent inconsistency between the two cases in favour of KPMG and Malcolm, concluding as follows (at paras. 89-90):

The decision in Giffels is a decision of the Supreme Court of Canada. The position that there must be liability on the part of the third party to the plaintiff seems to accord with the terms of s. 1 of the Act (despite the contrary analysis in the English case of Morgan). The position however does not fit well with s. 8 of the Act. And the position in effect arguably endorses fairness to the third party over fairness to the defendant. But Paquette on the other hand, makes the reverse endorsement. It is not apparent on general principles why the Act should be interpreted to favour one party over the other. Section 1 is evidently open to the interpretation placed on it in Giffels.

For the above reasons, I would be disposed to conclude that, based on Giffels, the conclusion should be that the defendant may not assert a claim against the third parties, despite Paquette.

D. Relevant Statutory Provisions

27Four sections of the Negligence Act, 1990 are relevant to the disposition of this appeal. Section 1 creates a statutory right of contribution between joint tortfeasors. It directs the court to apportion fault between two or more tortfeasors, who are made [page303] jointly and severally liable to the injured person. However, as between themselves, the tortfeasors are liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent. Section 1 reads as follows:

1. Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.

28While s. 1 creates the right to contribution and indemnity, s. 2, s. 5 and s. 8 prescribe the rules for exercising this right. Section 2 sets out how a tortfeasor who settles with a tort victim can claim contribution from any other tortfeasor who is, or would if sued have been, liable to the injured party. This right to contribution may be enforced by continuing or commencing an action against the other tortfeasor. Section 2 reads as follows:

2. A tortfeasor may recover contribution or indemnity from any other tortfeasor who is, or would if sued have been, liable in respect of the damage to any person suffering damage as a result of a tort by settling with the person suffering such damage, and thereafter commencing or continuing action against such other tortfeasor, in which event the tortfeasor settling the damage shall satisfy the court that the amount of the settlement was reasonable, and in the event that the court finds the amount of the settlement was excessive it may fix the amount at which the claim should have been settled.

29Section 5 sets out the procedure for adding a joint tortfeasor to an existing action, prescribing that a joint tortfeasor can be added as a party to an action either as a defendant or a third party. This ensures that a defendant can maintain an action for contribution against a joint tortfeasor, even if the plaintiff does not sue that joint tortfeasor. Section 5 reads as follows:

5. Wherever it appears that a person not already a party to an action is or may be wholly or partly responsible for the damages claimed, such person may be added as a party defendant to the action upon such terms as are considered just or may be made a third party to the action in the manner prescribed by the rules of court for adding third parties.

30Section 8 provides that no action for contribution against another tortfeasor will be defeated by the expiry of any statutory limitation period for starting an action against that other tortfeasor provided certain conditions are met, including that the main action be commenced within the applicable statutory limitation period. Section 8 reads as follows: [page304]

8. Where an action is commenced against a tortfeasor or where a tortfeasor settles with a person who has suffered damages as a result of a tort, within the period of limitation prescribed for the commencement of actions by any relevant statute, no proceedings for contribution or indemnity against any other tortfeasor shall be defeated by the operation of any statute limiting the time for the commencement of action against such other tortfeasor provided,

(a) such proceedings are commenced within one year of the date of the judgment in the action or the settlement, as the case may be; and (b) there has been compliance with any statute requiring notice of claim against such tortfeasor.

31Davies' third party claims for contribution against KPMG and Malcolm were brought under s. 5 of the Negligence Act, 1990.

E. Positions of the Parties

1. The appellant

32Davies' position on this appeal is that the motion judge erred in interpreting Giffels ⁶ as holding that a defendant's right to claim contribution from a joint tortfeasor depends upon the joint tortfeasor being liable to the plaintiff at the time the claim for contribution is made. Davies submits that it is sufficient for a defendant to claim contribution if the joint tortfeasor was potentially liable to the plaintiff at some time after the plaintiff sustained its damages. Davies distinguishes Giffels on the basis that the joint tortfeasor in Giffels had no liability to the plaintiff at the time that the plaintiff suffered its damages because of the expiry of a contractual limitation period.

33Further, Davies points out that a defendant's action for contribution and indemnity is entirely separate and distinct from the plaintiff's cause of action against the third party, and submits that a defendant can maintain an action for contribution and indemnity against a third party despite the prior expiry of the limitation period as between the plaintiff and the third party.

34Davies also takes the position that s. 8 of the Negligence Act, 1990 is an independent route to obtain contribution and its conditions do not apply to actions for contribution brought under s. 5. A defendant seeking contribution from a joint tortfeasor who has not been sued by the plaintiff may add the joint tortfeasor as a third party under s. 5, or may await the judgment in the main action and then commence contribution proceedings under s. 8. Because these are independent rights, Davies submits that a claim for contribution or indemnity brought under s. 5 need not [page305] meet the conditions prescribed in s. 8. Davies argues that the fact that its third party claims against KPMG and Malcolm do not meet the conditions prescribed by s. 8 for bringing a contribution claim does not preclude such claims under s. 5.

2. The respondents

35Before us, KPMG and Malcolm did not seek to support the decision below on the basis that the motion judge properly interpreted Giffels. Rather, they focused their submissions on s. 5 and s. 8 of the Negligence Act, 1990, arguing that s. 8 applies to all claims for contribution, whether brought under s. 5 or s. 8. KPMG and Malcolm take the position that where a defendant's claim for contribution against a third party is based on a duty alleged to be owed by the third party to the plaintiff, as opposed to a duty alleged to have been owed by the third party to the defendant, the defendant cannot bring such a claim after the expiry of any limitation period applicable as between the plaintiff and the third party, unless the third party action meets the conditions prescribed by s. 8.

36The respondents submit that the main action was commenced after the expiry of the applicable statutory limitation period and, therefore, the third party claims brought by Davies cannot stand. KPMG and Malcolm submit that, if Davies succeeds in maintaining its claim, this would be the first case in which a defendant who is sued outside a statutory period of limitation would have been able to maintain a claim for contribution under the Negligence Act, 1990.

F. Analysis

37Whether a third party claim for contribution or indemnity can be brought after the expiry of the statutory limitation period between the plaintiff and the third party must be resolved based on a statutory interpretation analysis of the Negligence Act, 1990.

38Elmer Driedger first formulated the modern rule of statutory interpretation in the first edition of his book The Construction of Statutes ⁷, and it now appears on the first page of Professor Sullivan's fourth edition of this work ⁸. [page306]

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

39This approach to statutory interpretation has been declared to be the preferred approach by the Supreme Court of Canada in Re Rizzo & Rizzo Shoes Ltd. ⁹ and other cases. Such an approach acknowledges the multifaceted nature of the task of interpreting an Act, which includes textual analysis, the discovery of legislative intent from the scheme and object of the Act and the consideration of the context, including those existing legal norms that form the background against which the Act has been enacted.

1. Giffels v. Eastern Construction Co. ¹⁰

40As the motion judge disposed of the summary judgment motion based on Giffels, I will first review the application of that authority to the third party proceedings brought by Davies.

41At paras. 88 to 90 of his reasons for judgment, the motion judge refers to "the competing positions" that result from Giffels and Paquette v. Batchelor ¹¹, where, as he characterizes it, the former case asserts that the defendant may not claim contribution from the third parties because the third parties are not now liable to the plaintiff; and the latter asserts that such a claim may be brought even though the third parties are not now liable to the plaintiff. The motion judge, noting that Giffels is a decision of the Supreme Court of Canada, relied on that decision to conclude that Davies could not assert its claims for contribution against the respondents, despite the decision in Paquette.

42In Giffels, an owner retained an engineering firm and a general contractor in connection with the construction of a new building. The contract between the contractor and the owner contained a one-year guarantee period, after which the contractor was not liable for any defects. The roof of the building buckled a few years later due to defective construction practices. The owners sued the engineering firm and the general contractor.

43The trial judge found that the engineering firm and the general contractor were both responsible for the defective roof. He gave judgment against the engineering firm, but dismissed the owner's action against the general contractor on the basis [page307] that the one-year guarantee agreed to by these parties had expired. However, the trial judge awarded the engineering company contribution from the general contractor, relying on s. 2 of the Negligence Act, R.S.O. 1970, c. 296 ("Negligence Act, 1970") (now s. 1) as authorizing him to apportion liability as between joint tortfeasors.

44The Supreme Court of Canada held that the general contractor could not be liable for contribution to the engineering firm because the general contractor, as a result of the expiry of the one-year guarantee period, had no liability to the plaintiff owner. Laskin J., writing for the unanimous court, stated, regarding the scope of the substantive right to contribution under s. 2 (now s. 1) of the Negligence Act, 1970 (at p. 1354 S.C.R.):

Similarly, I am of the view that it is a precondition of the right to resort to contribution that there be liability to the plaintiff. I am unable to appreciate how a claim for contribution can be made under s. 2(1) by one person against another in respect of loss resulting to a third person unless each of the former two came under a liability to the third person to answer for his loss. Hence, even assuming that a tort claim in negligence was open to the plaintiff against Giffels and Eastern in the present case -- and I need not come to a determination on this issue here -- there are two considerations which are preclusive against Giffels' right to contribution under s. 2(1). They are, first, the giving of the final certificate under article 28 of Eastern's contract and, second, the finding by the trial judge that the guarantee period fixed by article 17 of that contract has run in Eastern's favour.

45Davies submitted that the motion judge erred in interpreting Giffels as holding that liability of a joint tortfeasor to the plaintiff is a precondition to a defendant seeking third party contribution from that joint tortfeasor. Davies takes the position that Giffels precludes third party contribution claims only where the third party was not liable to the plaintiff at the time it sustained its damages. In Giffels, the third party general contractor was no longer liable to the plaintiff owner at the time the plaintiff owner sustained its losses because the contractual limitation period between these parties had expired well before that time. In contrast, in the present case, there was no limitation period protecting KPMG and Malcolm from potential liability to Gordon at the time Gordon sustained its losses as KPMG's and Malcolm's liability to Gordon did not expire until much later, after the expiry of the six-year limitation period prescribed by the Limitations Act, 1990.

46In support of its position, Davies relies upon a passage from Apportionment of Fault in Tort ¹² as follows: "The distinction [page308] between a tortfeasor who was never liable and a tortfeasor who is not liable when sued, but who was once potentially liable, is seminal to the right of contribution."

47As already noted, KPMG and Malcolm did not urge us to uphold the motion judge's decision that Davies' contribution claim ought to be dismissed simply on the basis of Giffels. In this regard, KPMG and Malcolm asserted in their joint factum that the parties did not raise Giffels as a basis for dismissing the contribution claim before the motion judge. On the merits, KPMG and Malcolm have not contradicted Davies' submission that Giffels is restricted to cases where a third party never had liability to the plaintiff. Instead, they submit that s. 8 is a statutory exception to any general rule that a third party who is sued for contribution will not be liable to the defendant if the third party could not be liable to the plaintiff. In Giffels, Laskin J. did not consider whether s. 8 could resurrect the contribution claim, no doubt because the limitation period at issue was contractual, and s. 8 only protects contribution claims from the expiry of statutory limitation p eriods.

48I agree with Davies on the applicability of Giffels; the result in that case is the product of its particular facts. Clearly, the third party's liability to the plaintiff in Giffels differed from KPMG's and Malcolm's liability to the plaintiff Gordon in the present case. The third party in Giffels had no liability for the plaintiff's damages when they were incurred by virtue of its contract with the plaintiff. On this basis Laskin J. concluded (at p. 1355 S.C.R.) that: "it does not then lie in the mouth of the other [tortfeasor] to claim contribution in such a case". Here, Davies' contribution claim ought not to fail on the basis of Giffels alone, given that KPMG and Malcolm were potentially liable to Gordon at the time it sustained its damages.

49In my view, however, even if Davies is correct that the expiry of the statutory limitation period between Gordon and KPMG and Malcolm did not by itself extinguish Davies' right to contribution under s. 1 of the Negligence Act, 1990, s. 8 of that Act circumscribed that right. For the reasons that follow, I conclude that, having failed to meet the conditions set out in s. 8 for bringing a contribution claim outside the expiry of the statutory limitation period applicable to KPMG and Malcolm, Davies is precluded from seeking contribution from these two parties.

2. Interpretation of s. 5 and s. 8 of the Negligence Act, 1990

50In support of its submission that s. 8 of the Negligence Act, 1990 sets out a procedure for bringing a third party claim for [page309] contribution that is independent of s. 5, Davies refers to the legislative history of the Negligence Act, 1990 and to certain case law. In my view, the legislative history and the referenced case law do not support Davies' submission that s. 5 and s. 8 provide separate, independent avenues for bringing claims for contribution or indemnity. On the contrary, the legislative history and the case law relating to the evolution of the contribution provisions in the Negligence Act, 1990, as well as a textual analysis of these provisions, lead me to conclude that s. 8 applies to all contribution claims, including those brought under s. 5, and that contribution claims cannot be brought under the Negligence Act, 1990, if such claims do not meet the conditions prescribed in s. 8 regarding the expiry of statutory limitation periods.

(a) Legislative evolution and history

51The history of the various amendments leading up to the Negligence Act, 1990 is a useful source of assistance in discerning the meaning of this legislation ¹³. In addition, it is useful to have regard to such aids as explanatory notes and Ministers' statements to discern the background and purpose of the legislation, provided one bears in mind the limited reliability and weight to be given to such evidence ¹⁴. I will review the evolution of s. 5 and s. 8 of the Negligence Act, 1990, and also the explanatory notes provided to the legislature with each amendment as an aid to the understanding of the purpose of the legislation.

52At common law there is no right to contribution among joint tortfeasors ¹⁵. The passage of the first Negligence Act in 1930 changed the law to provide a statutory right of contribution among joint tortfeasors ¹⁶.

53Until 1939, the Negligence Act provided that a joint tortfeasor could be added to an action only as a party defendant. In 1939, s. 5 was amended to its current wording, which permits a tortfeasor to be added to an action either as a defendant or as a third party. ¹⁷ [page310]

54The explanatory note relating to the s. 5 amendment indicates that the legislators at that time were concerned with a defendant losing his or her contribution rights because a plaintiff might choose not to bring any claim against the added defendant. The explanatory note read as follows:

Under existing law whenever it appears that any person not already a party to an action may be wholly or partly responsible for the damages claimed in the action, he may be added as a party defendant. However, if such person is so added at the instance of the original defendant the addition is abortive unless the plaintiff makes a claim against the added defendant. The amendment permits any such person to be added as a third party instead of as a defendant so that the original defendant may claim against him as a third party.

55By amending s. 5, the legislators ensured that a defendant could exercise his or her contribution rights against a joint tortfeasor, regardless of whether the plaintiff chose to sue that person.

56It appears that it later became clear that the expiry of limitation periods could be another factor that might render meaningless the statutory right to contribution; particularly if a plaintiff sued one tortfeasor after the limitation period had expired for the bringing of a claim against another joint tortfeasor. In 1948, s. 8 was added to the Negligence Act ¹⁸. The relevant explanatory note makes it clear that the purpose of adding s. 8 was to provide a framework for determining when a defendant's contribution rights against a joint tortfeasor could proceed in the face of an expired limitation period for bringing a tort claim against that joint tortfeasor.

57The s. 8 explanatory note identifies a situation where a defendant driver in a motor vehicle accident is precluded from seeking contribution from a municipality for the non-repair of a road because the plaintiff served the proceedings on the defendant driver outside the time within which an action could be commenced against the municipality. The explanatory note goes on to state:

Under the amendment, the driver of the second car would not be so precluded [from suing the municipality] provided he had anticipated the bringing of the action and had served the municipality with the notice in writing of his intention to make a claim as required by the statute.

58The introduction of s. 8 created a fresh limitation period in relation to the joint tortfeasor against whom a contribution claim is to be made, but only if certain prescribed conditions are met. These include the requirement that the main action between the plaintiff and the defendant must be started within the applicable limitation period, which is not the situation in the case before us. [page311]

59Davies submits that the enactment of s. 8 established an independent, separate route by which a defendant can bring a contribution claim after judgment has been awarded against that defendant. Because of the independent nature of that route, Davies submits that it follows that contribution claims brought under s. 5 need not meet the conditions prescribed in s. 8.

60I do not accept that submission. While the introduction of s. 8 does permit a defendant to wait until his own liability in the main action has been determined before starting separate contribution proceedings, the language of s. 8 is not confined to that purpose. Rather, the purpose and language of s. 8 protect contribution claims generally against the expiry of statutory limitation periods applicable to the potential contributor. If the purpose of s. 8 is to protect contribution claims from the expiry of statutory limitation periods, there is no principled reason why s. 8 should not also apply to s. 2 and s. 5 as well, thus ensuring that all contribution claims receive the same protection from the expiry of statutory limitation periods regardless of which procedural provision of the Negligence Act, 1990 is invoked.

(b) Textual analysis

61Although the Negligence Act, 1990 is the product of a series of amendments, it must be viewed as a coherent whole, with the various avenues to claiming contribution or indemnity reconciled to the largest extent the legislative language will permit. In working toward this objective, it is necessary to keep in mind that at the various times the legislature enacted these provisions, it would have been aware of the multitude of legislative provisions limiting the time within which actions of various types may be brought. No claims in tort, and very few other classes of claim, were free from some sort of limitation period under either the Limitations Act or specific legislation.

62Section 5 of the Negligence Act, 1990 does not create the right to contribution; that is done by s. 1. In approaching the interpretation of these sections, it is important to observe that they are all dealing with the same right: the right to contribution created by s. 1. Section 1 is substantive law; sections 5 and 8 are procedural ¹⁹. [page312] Section 5 provides a procedure for the advancement of a contribution claim in an existing action by adding potential contributors as defendants or third parties. Sections 1 and 5 are silent on any time limitation on the rights that they provide, but if the legislature had intended the right to add persons as defendants or third parties to be free from existing statutory limitation periods, it would surely have said so expressly.

63In subsequently enacting s. 8, the legislature demonstrated both an awareness that there were existing statutory limitation periods that could affect the right to contribution, and also an intention to prevent rights to contribution from failing due to statutory limitation periods, provided that the main action had been commenced in a timely way. Protecting contribution rights only where the main action is timely makes sense for two reasons: first, because it will be rare, to say the least, for an action commenced after the expiry of a relevant statutory limitation period to result in a judgment or settlement against a defendant; and second, because long-standing public policy requires the timely exercise of rights by imposing limitations on the bringing of legal proceedings.

64In my view, the operative part of s. 8 ends just before the provisos in subsections (a) and (b) begin. The operative part can be summarized this way: if the main action was started, or the claim settled, within the applicable statutory limitation period, no proceedings for contribution or indemnity are defeated by any other limitation period. In my view, that clearly applies to all contribution proceedings, whether commenced under s. 2, s. 5 or s. 8.

65The idea that the operation of s. 8 is separate from s. 5 arises from the language found in subsection (a) of s. 8. The question of interpretation presented by the phrase "within one year of the date of the judgment in the [main] action or the settlement, as the case may be" in subsection (a) is this: does this language confine the application of s. 8 to cases where there has been a judgment or settlement in the main action, so that the condition that the main action be commenced within the applicable statutory limitation period does not apply to contribution proceedings begun under s. 5, before judgment in the main action? In my view, it does not. Such a reading would do violence to the role of s. 8 in the overall scheme of the Negligence Act, 1990, and is not consonant with the language employed in the operative part of s. 8 itself.

66The purpose of s. 8 is the protection of the right to contribution from defeat by statutory limitation periods, which may, in many conceivable circumstances, expire before the claimant for contribution is even aware of the main action. Suppose the [page313] plaintiff sues the defendant on the last day that it is possible to do so. If the statutory limitation period applicable to the contribution claim by a defendant against an unsued joint tortfeasor were the same as, or shorter than the limitation period that is applicable to the main action, the defendant's contribution claim would be defeated before the defendant knows of his jeopardy. The purpose of s. 8 is to protect a defendant's right to claim contribution despite the expiry of any limitation, save only the extended time limit provided in subsection (a). There is no principled reason why this protection should not be accorded to parties enforcing their contribution right by the procedure authorized by s. 5 as well as to those using t he contribution procedure authorized by s. 8.

67Nor does the language in subsection (a) compel limiting the protection against the expiry of statutory limitation periods afforded by s. 8. Where the main action is commenced within the applicable statutory limitation period, subsection (a) extends the limitation period for contribution claims provided "such proceedings are commenced within one year of the date of the judgment in the [main] action or the settlement, as the case may be". The word "within", when used to express temporal limits, has several shades of meaning ²⁰:

4. Expr. Temporal limits: (a) before the end (of a period) (b) between the beginning and end of (a period) and

5. not beyond

68In my view, in order to have s. 8 work harmoniously with the other sections of the Negligence Act, 1990 to achieve complete protection of contribution claims where the main action has been brought within the applicable statutory limitation period, "within" should be given the meaning of "before the end of the year following the judgment" and not the meaning of "between the day of judgment and the day a year later". Thus contribution proceedings brought prior to judgment in the main action would share in the protection of s. 8, including those brought under s. 5.

69This reading is not in conflict with the principle that the cause of action for contribution accrues only when the defendant who seeks contribution is found to be liable to the plaintiff. That principle has not been generally abrogated, but s. 5 of the Negligence Act, 1990 has already indicated a legislative intention that contribution proceedings can be brought in Ontario before the cause of action for contribution has accrued. There is [page314] no reason not to accept that intention in reading s. 8 in order to forward the scheme of the Negligence Act, 1990.

70Nothing in s. 8 is inconsistent with this objective nor does anything in the Negligence Act, 1990 suggest that those employing the s. 5 contribution procedure are otherwise exempt from the ordinary operation of the limitation provisions in other statutes.

71The relationship between s. 2 of the Negligence Act, 1990 and s. 8 also supports the view that s. 8 applies to all contribution proceedings, and not just to those commenced under s. 8 itself. The second clause of the introductory language of s. 8 states: "or where a tortfeasor settles with a person who has suffered damage as a result of a tort". This clearly refers to s. 2, which deals with contribution when one tortfeasor settles with the potential plaintiff. Section 2, like s. 5, is silent on any time limits for commencing an action for contribution. This gap is filled by s. 8. There is no reason to deprive those relying on s. 2 of the extended statutory limitation period prescribed by s. 8.

72In my view, s. 2, s. 5 and s. 8 of the Negligence Act, 1990 are meant to fit together to provide a comprehensive scheme that enables claims for contribution to be dealt with either at or after the trial of the main action, and to prevent the failure of such claims by reason of the expiry of statutory limitation periods, other than the limitation period prescribed by s. 8 itself ²¹.

(c) Case law

73At the heart of Davies' position on this appeal is its assertion that, as a matter of general principle, s. 5 of the Negligence Act, 1990 permits a defendant to bring a third party contribution action against a joint tortfeasor as long as that joint tortfeasor was potentially liable to the plaintiff in the main action at some time after the plaintiff sustained its damages, and regardless of whether the conditions for bringing a contribution claim under s. 8 are met. Davies relies on a number of cases that it submits support its view that s. 5 and s. 8 create independent contribution procedures, and establish that it is entitled to bring a third party claim for contribution against KPMG and Malcolm under s. 5, notwithstanding that KPMG and Malcolm no longer are liable to Gordon as a result of the expiry of a statutory limitation period and Davies cannot rely on s. 8 to extend the limitation period applicable to claims against them. [page315]

74In my view, this jurisprudence does not assist Davies' position, nor change my conclusion that s. 8 applies to all contribution claims. The cases cited by Davies and discussed below address, for the most part, the expiry of a limitation period between the defendant and the third party from whom the defendant seeks contribution. As that is not the issue in this case, they are of limited, if any, assistance in resolving the central issue on this appeal, which is whether the expiry of a limitation period between a plaintiff and a third party precludes a contribution claim against that third party.

75In Paquette ²², a motorcycle and a car crashed, resulting in various actions. All the defendants in these actions brought third party actions for contribution against a police officer who was directing traffic at the time of the crash. The Public Authorities Protection Act ²³, prescribed a six-month limitation period for bringing actions against police officers. The issue before Osborne J. was (at p. 594 O.R.) "whether the claims of the various defendants claiming contribution from Constable Polie are defeated as a result of the proceedings for contribution having been commenced more than six months after the accident". In other words, Osborne J. had to decide if the limitation period between the defendants and the third party police officer had expired, and if so, whether the defendants could maintain their third party contribution claims.

76Osborne J. ordered third party contribution on the basis that the six-month limitation period between the defendants and the third party did not run from the date of the crash, but rather, ran from the date that the defendants were found liable to the plaintiff. He wrote (at p. 601 O.R.) that "[T]he cause of action in the defendant against the third party [for contribution] will not arise until the defendant has been found liable to the plaintiff." As Osborne J. determined the defendants' liability at the same time as the third party's liability, the statutory limitation period governing the defendants' causes of action for contribution against the third party police officer had not yet expired. [page316]

77Osborne J. also relied on s. 9 of the Negligence Act, 1970 (now s. 8 of the Negligence Act, 1990). In his view, as long as the main action was commenced within the applicable statutory limitation period, a defendant could maintain a claim for contribution notwithstanding the expiry of any statutory limitation period such as that found in the Public Authorities Protection Act, R.S.O. 1990, c. P.38. In this context, Osborne J. quoted from G. Watson, Canadian Civil Procedure: Cases and Materials, 2nd ed. (Toronto: Butterworths, 1977) regarding the effect of s. 9 (now s. 8) as follows (at p. 602 O.R.):

Does it not in effect introduce the English rule, i.e. it recognizes that the claim asserted by the defendant against the third party is a statutory cause of action created by the Negligence Act, the operation of all other limitation periods is excluded, and it then provides a special limitation period and stipulates the date it commences? The period is one year and it starts to run from the date of the judgment in the main action.

78On this view, the defendants' third party contribution claims could not be defeated by the expiry of the statutory limitation period normally applicable to claims against public authorities. Rather, s. 9 (now s. 8) provided the defendants with one year from the date of judgment against them in the main action to bring their claims for contribution against the third party police officer.

79Paquette is helpful, but distinguishable from this case. The issue at the heart of the present appeal is a different issue, relating to whether the third party claim for contribution must fail because of the expiry of the limitation period between the plaintiff and the third party. On that point, however, Paquette bolsters the position of KPMG and Malcolm on this appeal. Osborne J. took the view that s. 9 (now s. 8) imposes limitations on the right to bring a third party contribution claim under s. 5. Osborne J. stated (at pp. 604-05 O.R.):

I do not take Wells, C.J.H.C., to have laid down the proposition that s. 9 [now s. 8] of the Negligence Act has no application to third party proceedings framed in negligence, and commenced under s. 6 [now s. 5] of the Negligence Act. [. . .] Third party proceedings result in a cause of action quite separate from the main action. Counterclaims and third party proceedings are dealt with differently under the Negligence Act, for s. 6 [now s. 5] speaks of "a person not already a party to an action". It seems to me that the Negligence Act has created a statutory right to enable a defendant to seek contribution and indemnity from "another tortfeasor". Section 9 [now s. 8] sets out the limitations on the implementation of that right. The Interpretation Act, R.S.O. 1970, c. 225, s. 10, provides that all statutes are to be deemed remedial. A restrictive interpretation of s. 9 of the Negl igence Act, or worse still, an interpretation that holds it not to apply at all to third party proceedings initiated under s. 6 [now s. 5] of the Negligence Act, would completely deny to a defendant a separate cause of action against a [page317] person that a defendant may validly allege to be "wholly or partly responsible for the damages claimed".

(Emphasis added)

80Davies also cites Hordern Richmond Ltd. v. Duncan ²⁴, an English decision, as authority for the proposition that a claim for contribution can be brought against a third party despite the third party having no liability to the plaintiff. In that case, a commercial truck and an army truck collided, resulting in personal injuries to the passengers of the army truck. The private trucking company brought an application within the applicable statutory limitation period seeking a declaration that it would be entitled to claim contribution against the army in the event that any of the passengers sued it (the private trucking company) for damages. The private trucking company's concern was that its potential claim for contribution not be defeated by the operation of the 12-month statutory limitation period for bringing actions against public authorities. The court allowed the application. In the court's view, the private trucking company's cause of action for contribution would not arise until its liab ility had been determined in any main action by passengers, and therefore the 12-month statutory limitation period would start to run only at that time.

81In my view, Hordern is of little assistance to the resolution of this appeal, because the court in Hordern considered the expiry of the statutory limitation period between the defendant and the third party, and not the effect of the expiry of a statutory limitation period between the plaintiff and the third party. Further, Hordern was decided in the absence of a statutory equivalent to s. 8 of the Negligence Act, 1990.

82In MacKenzie v. Vance ²⁵, the plaintiff patient brought a negligence action against the defendant doctor, who sought leave to add the hospital and a nurse as third parties. The plaintiff had sued the defendant doctor within the applicable statutory limitation period. The issue was whether the expiry of the statutory limitation period applicable to the plaintiff's potential claim against the proposed third parties precluded the defendant's claim against the same third parties.

83The motion judge denied the doctor's application on the basis that the limitation period for the plaintiff to commence an action against the proposed third parties had expired. The doctor's appeal was allowed and he was permitted to proceed with [page318] the third party actions. In reaching this conclusion, the Nova Scotia Court of Appeal relied on Hordern, adopting the view that a defendant's cause of action for third party contribution accrues when that defendant's own liability to the plaintiff has been ascertained. Accordingly, any statutory limitation provisions governing an action by the plaintiff against the third parties did not bar the defendant's claim for third party contribution. The court noted that to hold otherwise would mean that a defendant could lose his or her right to claim contribution because of a plaintiff's delay, and through no fault of the defendant.

84However, in MacKenzie, as in Hordern, the court did not have recourse to any legislative equivalent to s. 8 of the Negligence Act, 1990 prescribing if, and when, a third party contribution claim can be maintained in the face of an expired limitation period applicable to a potential contributor. Rather, the court was obliged to develop its own principles for balancing a tortfeasor's right to the protection afforded by statutory limitation periods against a defendant's right to contribution in circumstances where a plaintiff may have delayed bringing the main action. In the case before us, s. 8 of the Negligence Act, 1990 provides this balance, and prescribes the circumstances under which courts in Ontario can provide relief from statutory limitation periods in the context of contribution claims, whether the contribution claim is brought under s. 5 or s. 8.

85In Bill Thompson Transport Inc. v. Scarborough (City) ²⁶, the motion judge relied on s. 8 of the Negligence Act, 1990 to determine whether the expiry of a statutory limitation period between the plaintiff and one defendant precluded a third party claim for contribution against that defendant. The plaintiff's transport truck got stuck under a railway bridge. The plaintiff trucking company sued Canadian Pacific in negligence, and also sued the City of Scarborough for damages relating to inadequate signage. The plaintiff failed to begin its action against Scarborough within the applicable three-month statutory limitation period. Canadian Pacific brought a crossclaim for contribution against Scarborough. Scarborough applied for summary judgment dismissing both the main action, and the crossclaim for contribution.

86The motion judge concluded that Scarborough was not liable to the plaintiff in the main action because of the expiry of the statutory limitation period, and he dismissed the main [page319] action against Scarborough. The motion judge, however, declined to dismiss the contribution crossclaim against Scarborough, notwithstanding that Scarborough was not liable to the plaintiff.

87To reach this conclusion, the motion judge did not rely on the principle put forth by Davies; i.e. that a claim for contribution can be maintained against a joint tortfeasor where the joint tortfeasor is sued after the expiry of the limitation period between it and the plaintiff, as long as the joint tortfeasor was once liable to the plaintiff. Rather, the motion judge relied on s. 8 of the Negligence Act, 1990. The plaintiff's main action against Canadian Pacific being timely, the crossclaim for contribution against Scarborough fell within the scope of s. 8 and therefore could proceed, even though Scarborough was no longer liable to the plaintiff.

88In summary, the case law relied on by Davies is largely unhelpful on the issue whether a defendant is barred from seeking contribution against joint tortfeasors who have no liability to the plaintiff because of the expiry of the statutory limitation period applicable as between them and the plaintiff. To the extent that Ontario courts have specifically considered this issue, as opposed to considering the effect of an expired limitation period between the defendant and the other joint tortfeasor, they did so under s. 8. The English and Nova Scotia cases that Davies relies on were decided in the context of statutory regimes that lacked the equivalent of s. 8 and, therefore, must be regarded with caution.

3. Equities

89The equities of the situation before us also support the position advanced by KPMG and Malcolm on this appeal. If one of the joint tortfeasors in this case has to bear the risk of a statutory limitation period expiring during the passage of time permitted by the Tolling Agreement, it should be Davies. KPMG and Malcolm had nothing to do with the delay that gave rise to the expiry of the statutory limitation period in its favour. Further, Davies could have declined to enter into the Tolling Agreement with Gordon unless it or Gordon obtained a similar agreement from KPMG and Malcolm. By pursuing contribution against KPMG and Malcolm, Davies is attempting to have KPMG's and Malcolm's substantive legal rights under the Negligence Act, 1990 and the Limitations Act, 1990 forfeited for no reason other than that Davies voluntarily gave up its own similar rights when it signed the Tolling Agreement. [page320]

4. Conclusion

90Section 8 of the Negligence Act, 1990 is remedial legislation intended to preserve contribution rights notwithstanding the expiry of statutory limitation periods, and ought to be interpreted as applying to all contribution claims, whether commenced under s. 5 or s. 8. The legislative evolution and history of s. 5 and s. 8 of the Negligence Act, 1990, as well as a textual analysis of these provisions, support this conclusion. This conclusion also comports with the limited case law when properly read.

91KPMG and Malcolm, having been potentially liable to Gordon at the time Gordon suffered its losses, are exposed to contribution claims under the Negligence Act, 1990 subject to whatever conditions are prescribed therein. Section 8 prescribes when a contribution claim can proceed after a statutory limitation period has expired against the tortfeasor from whom contribution is sought. The statutory limitation period applicable to claims against KPMG and Malcolm in relation to the losses suffered by Gordon having expired by the time Davies sought contribution, Davies can only proceed with its contribution claims if it meets the conditions prescribed by s. 8. Davies' contribution claims against KPMG and Malcolm, however, fall outside the scope of s. 8 because the main action was started outside the applicable statutory limitation period. Accordingly, the motion judge properly dismissed Davies' contribution claim, albeit for different reasons.

G. Disposition

92For the reasons given, I would dismiss the appeal.

93The respondents are entitled to their costs of the appeal on a partial indemnity basis, fixed at $15,000, inclusive of disbursements and GST.

Appeal dismissed with costs.

Notes

Footnotes

1. 1In these reasons, I use the phrase "main action" specifically to refer to the action by Gordon against Davies. I also use this phrase more generally later on to refer to an action by a plaintiff against a defendant, as distinguished from a contribution claim by a defendant against a joint tortfeasor.
2. 21978 39 (SCC), [1978] 2 S.C.R. 1346, 84 D.L.R. (3d) 344.
3. 3Section 8 of the Negligence Act, 1990 was repealed by s. 25.16 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B. The Limitations Act, 2002 was proclaimed in force on January 1, 2004. It consolidates into one statute the various limitation periods found in different provincial statutes. Section 4 of the Limitations Act, 2002 prescribes a basic two-year limitation period for claiming contribution and indemnity.
4. 4Supra, note 2.
5. 5(1980), 1980 1616 (ON SC), 28 O.R. (2d) 590, 111 D.L.R. (3d) 642 (H.C.J.).
6. 6Supra, note 2.
7. 7(Toronto: Butterworths, 1974), at p. 67.
8. 8R. Sullivan, Sullivan and Driedger on the Constructions of Statutes, 4th ed. (Toronto: Butterworths, 2002), at p. 1.
9. 91998 837 (SCC), [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2, at para. 21.
10. 10Supra, note 2.
11. 11Supra, note 5.
12. 12D. Cheifetz, Apportionment of Fault in Tort (Toronto: Canada Law Book, 1981), at p. 40.
13. 13Sullivan and Driedger on the Construction of Statutes, supra, note 8, at p. 471. See also Gravel v. St. Léonard (City), 1977 9 (SCC), [1978] 1 S.C.R. 660, 17 N.R. 486.
14. 14Sullivan and Driedger on the Construction of Statutes, supra, note 8, at ch. 19, esp. 497-99. See also Rizzo, supra, note 9, at paras. 34 and 35.
15. 15O'Neil v. Van Horne (2002), 2002 41072 (ON CA), 59 O.R. (3d) 384, [2002] O.J. No. 1528 (C.A.), at para. 5.
16. 16Negligence Act, 1930, S.O. 1930, c. 27, s. 3.
17. 17Statute Law Amendment Act, 1939, S.O. 1939, c. 47, s. 23.
18. 18Negligence Amendment Act, 1948, S.O. 1948, c. 61, s. 3.
19. 19Canada v. Thomas Fuller Construction Co. (1958), 1979 187 (SCC), [1980] 1 S.C.R. 695, 106 D.L.R. (3d) 193, at pp. 712-13 S.C.R., p. 205 D.L.R,. per Pigeon J. For an academic view, see D. Cheifetz, Apportionment of Fault in Tort: 1981, supra, note 12, at pp. 39-40, 49-55; and D. Cheifetz, "Postscript 2: The Retreat Continues" (2004), 29 Advocates' Q. 276, at p. 289. See also Martin v. Listowel Memorial Hospital, 2000 16947 (ON CA), [2000] O.J. No. 4015, 51 O.R. (3d) 384 (C.A.), at para. 48.
20. 20New Shorter Oxford English Dictionary, 1993, s.v. "within", meanings 4 and 5.
21. 21See also the view on this point of D. Cheifetz, Apportionment of Fault in Tort, supra, note 12, at p. 311.
22. 22Supra, note 5. This decision had been criticized as a "mistake", but the criticism is in reference to the trial judge's apportionment of contributory fault and is not relevant to the decision as it relates to contribution claims and limitation periods: (2004) 28 Advocates' Q. 177 (Cheifetz).
23. 23R.S.O. 1970, c. 374.
24. 24[1947] 1 All E.R. 427, [1947] K.B. 545.
25. 251977 1868 (NS CA), [1977] N.S.J. No. 463, 74 D.L.R. (3d) 383 (C.A.).
26. 26[1993] O.J. No. 506, 14 M.P.L.R. (2d) 278 (Gen Div.). @H CIVT,COMT,INST,LEGT,LIMT,PROT,TRRT,