Court of Appeal for Ontario

Citation: NFC Acquisition L.P. v. Centennial 2000 Inc., 2011 ONCA 43

Date: 2011-01-19

Docket: C51693

Between:

NFC Acquisition L.P. and NFC Acquisition Corp.

Plaintiffs (Appellants)

and

Centennial 2000 Inc., CIC Foods Inc. and Centennial Foods Partnership

Defendants (Respondents)

Counsel:

James C. Tory and Andrew Gray for the appellants

L. David Roebuck and Samuel M. Robinson for the respondents

Heard: January 7, 2011

On appeal from the judgment of Justice Donald R. Cameron of the Superior Court of Justice dated January 29, 2010.

Endorsement

[1] This is an appeal from a summary judgment dismissing the appellants’ claim on the ground that the appellants failed to give timely notice in compliance with a notice provision in the agreement sued upon.

[2] We see no error in the motion judge’s interpretation of the agreement as requiring notice of the claim within 18 months as a condition precedent to triggering the contractual right to indemnification. Section 6.4(a) makes the right of indemnity asserted by the appellants subject to the notice requirements specified in s. 3.5. As the right of indemnity asserted does not fall within any of the specified categories enumerated in ss. 3.5 (a), (b), (c), it falls within the default provision, s. 3.5(d).

[3] The appellants submit that as the opening words of s. 3.5 and the closing words of s. 3.5(d) refer only to “representations and warranties”, and as the appellants do not assert a breach of warranty or breach of representation claim, s. 3.5 and, specifically, s. 3.5(d) do not apply. We disagree. Section 6 deals with all rights to indemnity, including the rights asserted by the appellant in this action, and s. 6(4)(a) incorporates the notice provisions of s. 3.5. In our view, when ss. 3.5 and 6(4)(a) are read together and when the agreement is read as a whole, it is apparent that the intention of the parties was to subject all rights of indemnity covered by s. 6 to the notice requirement of s. 3.5. In our view, there is no ambiguity in the agreement so as to invoke any presumption against clauses limiting liability or imposing time bars on the assertion of claims.

[4] We do not agree that the notice requirement imposed by s. 3.5 was of no force and effect by virtue of the Limitations Act, 2002, s. 22. S.O. 2002, c. 24, Sch. B that provided that a limitation period prescribed by the act “applies despite any agreement to vary or exclude it”. (Section 22 was amended, S.O. 2006, c. 21, Sch. D, s. 2 with respect to permit the variation of statutory limitation periods in business agreements but this case is governed by the earlier provision.) The notice provision at issue did not vary or exclude the limitation period prescribed by the Limitations Act. The right of indemnity was purely contractual in nature in a commercial agreement between sophisticated parties. The various indemnity rights granted were, by agreement, time limited. The timely notice requirement was a mutually agreed contractual condition precedent for triggering a right of indemnity. Once a timely notice is given, the cause of action accrued and at that point, the statutory limitation period begins to run. Notice provisions of this kind are acceptable in the context of commercial agreements between sophisticated parties.

[5] We agree with the respondents that Doré v. Verdun (City), 1997 CanLII 315 (SCC), [1997] 2 S.C.R. 862 is distinguishable as, unlike the Limitations Act, 2002, s.22, the provision of the Quebec Civil Code that was held to override a notice provision in an earlier statue dealt specifically with “the requirement that notice be given prior to bringing the action”.

[6] As the appeal can be decided on these two grounds we find it unnecessary to consider whether the motion judge erred in finding that in any event the action was barred by the Limitations Act.

[7] Accordingly, the appeal is dismissed with costs to the respondents fixed in the amount agreed to by the parties, namely, $15,000 inclusive of disbursements and applicable taxes.

“Robert J. Sharpe J.A.”

“H.S. LaForme J.A.”

“Paul Rouleau J.A.”