Jumbo Motors Express Ltd. v. François Nolin Ltée, [1985] 1 S.C.R. 423

Jumbo Motors Express Limited Appellant;

and

François Nolin Ltée Respondent.

File No.: 17501.

1984: December 20; 1985: April 24.

Present: Beetz, Chouinard, Lamer, Wilson and Le Dain JJ.

on appeal from the court of appeal for quebec

Prescription ‑‑ Interruption ‑‑ Party to action ‑‑ Action between co‑defendants arising from same source as demand ‑‑ Whether interruption caused by plaintiff's action can benefit one defendant against another ‑‑ Civil Code, art. 2224.

A highway accident involving two vehicles, one owned by appellant and the other by respondent occurred on November 13, 1974. Property belonging to the Wajax company was being carried by respondent and was damaged in the accident. In August 1976, Wajax brought an action for damages against appellant and respondent. On November 18, 1976, over two years after the event, respondent in its turn initiated an action against appellant for the damages to its vehicle; appellant replied and filed a cross‑demand. In November 1980, respondent withdrew its action and filed an exception to dismiss the cross‑demand, alleging that appellant's claim was prescribed. The Superior Court allowed this exception and a majority of the Court of Appeal affirmed the judgment. This appeal is to determine whether, under para. 2 of art. 2224 C.C., the interruption of prescription resulting from Wajax's action can work to the advantage of one defendant against another.

Held: The appeal should be allowed.

Respondent's exception to dismiss must be dismissed. Under para. 2 of art. 2224 C.C., a defendant may benefit from the interruption of prescription caused by a plaintiff against his co‑defendant. The language used by the legislator is clear and unambiguous and there is no basis for limiting it. The paragraph provides that an interruption "shall continue until final judgment and shall be effective for every party to the action for any right and recourse arising from the same source as the demand". There is no doubt that the co‑defendants are "parties to the action", and that the words "for any right and recourse arising from the same source as the demand" take in rights and recourses of co‑defendants arising out of the accident not only against the plaintiff but against each other.

Though the action by Wajax was settled out of court, this solution does not have the effect of making interruption of the prescription continue indefinitely. Transaction has the effect of res judicata between the parties and is the equivalent of a judgment. The interruption of prescription therefore ceased in the case at bar on the date of the transaction.

Finally, if the principal demand is dismissed, the interruption of prescription which has not applied in favour of a plaintiff (art. 2226 C.C.) would still apply between co‑defendants. As in the case of a cross‑demand, there is no reason why actions between co‑defendants may not subsist independently of the principal demand.

Cases Cited

Bégin v. Rodrigue Roussel & Co. Ltée, S.C. Rimou­ski, No. 100‑05‑000498‑76, February 28, 1978, approved; Girard v. Danis, [1975] C.S. 813; Beauchamp v. Poirier, [1976] C.P. 187; Treitel v. Standard Structural Steel Ltd., [1982] C.S. 1075, not followed; Arnault v. Jacques, [1969] C.S. 77, considered; Marquis v. Lussier, 1960 CanLII 66 (SCC), [1960] S.C.R. 442; Paraschuk v. Zuliani, [1971] R.P. 415; Durand v. Fraser, [1964] C.S. 640; Le Gars v. Francana Real Estate Ltd., [1968] R.P. 233; Mailhot v. Ville de Richmond, [1969] R.P. 365; Lussier v. Anders, [1971] R.P. 313; Continental Casualty Co. v. O’Neill, [1971] C.A. 703; Lapierre v. Prévoyance Compagnie d’assurance, [1977] C.A. 287, referred to.

Statutes and Regulations Cited

Civil Code, arts. 1918, 1920, 2183, 2224, 2226, 2232.

Code of civil procedure, art. 172.

Authors Cited

Larouche, Angers. "Droit des obligations" (1978), 9 R.G.D. 73.

Mignault, Pierre Basile. Le droit civil canadien, t. 9, Montréal, Théorêt, 1916.

Reid, Hubert et Denis Ferland. Code de procédure civile annoté du Québec, vol. 1, Montréal, Wilson & Lafleur, 1979.

Reid, Hubert et Denis Ferland. Code de procédure civile annoté du Québec, vol. 4, Montréal, Wilson & Lafleur, 1983.

Tancelin, Maurice. Des obligations, contrat et responsabilité, Montréal, Wilson & Lafleur/Sorej Ltée, 1984.

Tancelin, Maurice. Jurisprudence sur les obligations, t. 3, 2^e éd., Québec, P.U.L., 1981.

APPEAL from a judgment of the Quebec Court of Appeal, [1982] C.A. 523, affirming a judgment of the Superior Court, J.E. 81‑226. Appeal allowed.

Denis Boudrias, for the appellant.

David Wood, for the respondent.

English version of the judgment of the Court delivered by

1. Chouinard J.‑‑This appeal concerns extinctive prescription and its interruption.

2. The essential facts are not at issue. They are summarized as follows by Jacques J.A., dissenting in the Court of Appeal, [1982] C.A. 523, at pp. 529‑30:

[TRANSLATION] On November 13, 1974 a highway accident occurred involving a Jumbo truck and a Nolin truck.

At the time Nolin was carrying a cargo owned by Wajax Industries Ltd., which was damaged in the accident.

Wajax brought an action against Jumbo and Nolin in August 1976.

On November 18, 1976, and so over two years after the accident, Nolin initiated an action against Jumbo in the Provincial Court for damages to its truck; on February 15, 1977, Jumbo filed a cross‑demand which was within the jurisdiction of the Superior Court, and on April 20, 1977 the case was transferred to the Superior Court.

On November 13, 1980, Nolin withdrew its action against Jumbo, leaving only the cross‑demand by Jumbo still pending.

On November 25, 1980 the cross‑demand by Jumbo and the action by Wajax were joined, and the same day Nolin filed an exception to dismiss the cross‑demand, alleging that Jumbo's claim was prescribed.

Jumbo argued that prescription had been interrupted by the action brought by Wajax.

Finally, on April 30, 1981 Wajax's action was settled by Jumbo and Nolin "without prejudice to the rights of any other party".

Jacques J.A. identified the issue at p. 530:

[TRANSLATION] The question therefore is whether para. 2 of art. 2224 of the Civil Code can be interpreted so that the action by Wajax interrupted prescription for the recourse which the two defendants in this action, Jumbo and Nolin, may have against each other.

3. Article 2224 C.C., as amended in 1972 (1972 (Que.), c. 68, s. 10), provides in its first two paragraphs:

4. The filing of a judicial demand in the office of the court creates a civil interruption provided that demand is served within sixty days of the filing in accordance with the Code of Civil Procedure upon the person whose prescription it is sought to hinder.

Such interruption shall continue until final judgment and shall be effective for every party to the action for any right and recourse arising from the same source as the demand.

4. Before 1960 there was a lively controversy in Quebec as to when prescription that had been interrupted began to run again, and so as to whether a plaintiff who had brought an action in due time could, after the extinctive period of prescription had expired, add to his claim by amendment or a cross‑demand.

5. At the time the relevant portion of art. 2224 read as follows:

A judicial demand in proper form, served upon the person whose prescription it is sought to hinder, or filed and served conformably to the Code of Civil Procedure when a personal service is not required, creates a civil interruption.

6. This controversy was resolved in favour of the plaintiff by a decision of this Court, Marquis v. Lussier, 1960 CanLII 66 (SCC), [1960] S.C.R. 442. It was held that the prescription only began to run from the date of the final judgment. Taschereau J., as he then was, wrote for the Court at p. 451:

[TRANSLATION] With all possible respect for those who hold the contrary opinion, I consider that when an action in damages is brought in due time it interrupts prescription, and the latter does not start to run again until the date of the final judgment. It follows that during the proceeding the plaintiff may, by cross‑demand or amendment as the case may be, claim additional damages resulting from the same cause of action.

7. The controversy was also resolved by legislation at the same time. Article 2224 (1959‑60 (Que.), c. 98, s. 4) was introduced, para. 2 of which reads:

Such interruption shall continue until final judgment and shall be effective for any right and recourse arising from the same source as the demand.

8. In Marquis v. Lussier, supra, Taschereau J. wrote at p. 446:

[TRANSLATION] However, this controversial question which has created confusion in the legal world because of these two contradictory judgments by the Court of Queen's Bench, and prior judgments of various jurisdictions in the province of Quebec, is not now as significant in view of the amendment to the Code in art. 2224, during the last session, which provides that the judicial interruption shall continue until the final judgment, and affects any rights and recourses arising from the same source as the demand. This long‑awaited amendment removes the conflicts and hesitations which had earlier existed.

He went on to say at p. 452:

[TRANSLATION] The recent amendment made by the legislature to art. 2224 C.C. in essence sanctions what in my opinion has always existed.

9. All the problems were not resolved by this means and debate began on the question of whether the new paragraph extended to a cross‑demand. Could a defendant sued within the deadlines, by a cross‑demand or a separate action brought after the deadlines had expired, bring a claim against the plaintiff?

10. With only one exception, namely Paraschuk v. Zuliani, [1971] R.P. 415, the courts held that the defendant did not have this right. See, in particular, Durand v. Fraser, [1964] C.S. 640; Le Gars v. Francana Real Estate Ltd., [1968] R.P. 233; Mailhot v. Ville de Richmond, [1969] R.P. 365; Lussier v. Anders, [1971] R.P. 313.

11. As already mentioned, the article was again amended in 1972:

(a) by replacing the first paragraph by the following:

"2224. The filing of a judicial demand in the office of the court creates a civil interruption provided that demand is served within sixty days of the filing in accordance with the Code of Civil Procedure upon the person whose prescription it is sought to hinder.";

(b) by inserting after the word "effective" in the second line of the second paragraph the words "for every party to the action".

12. Since an interruption caused by a plaintiff shall now "be effective for every party to the action for any right and recourse arising from the same source as the demand", writers and the courts have been unanimous in their conclusion that a defendant may now proceed against a plaintiff even after the deadlines, but before the final judgment, by a cross‑demand or even by a separate action. Counsel for the respondent suggested a more limiting interpretation, to which I will return; but for this exception however opinions are all along the lines indicated.

13. Where opinion is divided, however, is on the question of whether the interruption can work to the advantage of one defendant against another, as in the case at bar.

14. In Girard v. Danis, [1975] C.S. 813, Chevalier J. of the Superior Court held that the interruption made by plaintiff's action did not benefit one of the defendants who had not sued the other within the specified time.

15. Chevalier J. first reviewed the basic principles as stated in arts. 2232 and 2183 C.C.:

16. Prescription runs against all persons, unless they are included in some exception established by this code, or unless it is absolutely impossible for them in law or in fact to act by themselves or to be represented by others.

17. ...

Extinctive or negative prescription is a bar to, and in some cases precludes, any action for the fulfilment of an obligation or the acknowledgment of a right when the creditor has not preferred his claim within the time fixed by law.

16. Chevalier J. wrote at pp. 814‑15:

[TRANSLATION] These provisions lead to a preliminary conclusion: as the right to the benefit of extinctive prescription is of public order, the exceptions contained in the Code for the purpose and effect of interrupting it must be given a limiting interpretation and their existence must be apparent in the text through the use of express and specific language.

It is clear that, even before 1960, the filing of a judicial demand in accordance with the procedure specified fell within this category of exceptions to art. 2232 and constituted a civil interruption.

The 1960 amendment had two effects, inter alia: first, it extended the duration of the interruption until the final judgment; second, it made that interruption valid for any right or recourse arising from the same source as the demand.

By adding the words "for every party to the action" in 1972, did the legislator intend to alter the meaning of the article as it had existed till that time?

17. After referring to the report of the committee on the law of prescription of the Civil Code Revision Board, dated May 1, 1970, on which the legislator relied, Chevalier J. wrote:

[TRANSLATION] In the circumstances, it is apparent that the 1972 amendment did not make any change in the meaning of the article. On the contrary, it indicated that the interruption applies only in favour of parties to the action and no one else.

18. Chevalier J. then wrote, at pp. 815‑16, and this was the gist of his judgment:

[TRANSLATION] Does this mean that this interruption must take place within the framework of the action itself as instituted, to the exclusion of any other as yet non‑existent proceeding, even if the parties are the same in that other proceeding?

The Court answers this question in the affirmative, for the following reasons.

First, the fundamental principle to be borne in mind is that extinctive prescription is based essentially on failure by the beneficiary of an obligation to act to assert his right during the time provided for the purpose. Such neglect by him carries with it its own penalty, and once the time limit for bringing an action has expired, it does not appear to be either logical or legally acceptable to restore to this negligent beneficiary a right which he has allowed to lapse, and enable him to benefit from the diligence shown by another beneficiary of a similar obligation.

This reasoning is in keeping with, and applies, the rule stated by Mignault:

". . . the effects of interruption do not extend from one person to another: De persona ad personam non fit interruptio civilis."

Clearly, para. 3 of art. 2224 adds that "Seizures, set‑off, interventions, oppositions are considered as judicial demands", which means both a limitation on the persons who may benefit from this interruption and a specific and thus exclusive description of the beneficiaries of the interruption.

For example, a person sued in damages may claim his own damages himself from the plaintiff by a cross‑demand, and as such prescription will be interrupted in his favour against the party which initiated the principal action. One may even go so far as to say that the defendant enjoys the privilege of prescription being interrupted so he can bring a separate action for damages against the party who sued him, since the sole purpose of the cross‑demand is to simplify the proceeding and, apart from the question of costs, it does not preclude the right to bring a separate action. However, it must be remembered that in that case it is the plaintiff and defendant who are against each other. That is clearly a different case from one in which a defendant decides to sue a co‑defendant separately, as happened in the case at bar. Prescription will then continue to apply in favour of that co‑defendant, and it does not seem possible by an intervention to vest in the principal defendant a right already acquired in favour of a third person.

Second, the philosophy underlying the concept of extinctive prescription is the fundamental right which a litigant has to know within a reasonable time what will be the consequences for him of an incident which has created a right of action against him. To think otherwise and make the notion of prescription depend entirely on the hazards of the judicial process might give rise to abuses and excessive or extreme situations which would place the litigant in an intolerable position.

19. M. Tancelin comments favourably on this judgment in Jurisprudence sur les obligations, t. 3, 2nd ed., 1981, p. 927, No. 257. A. Larouche, in "Droit des obligations" (1978), 9 R.G.D. 73, at p. 209, is of the same opinion.

20. MM. Tancelin appears to have subsequently changed his views. Commenting on Girard v. Danis in his recent text, Des obligations, contrat et responsabilité (1984), he writes at No. 1166, p. 550:

[TRANSLATION] In the case of a co‑defendant, however, it might be thought that the first action had interrupted the prescription in favour of the defendant who has become a plaintiff in the second. In our view the only possible support for this negative solution is to be found in art. 2226, para. 4 C.C., and such a solution is in itself contrary to the 1972 amendment.

I will deal with art. 2226 C.C. below.

21. In Beauchamp v. Poirier, [1976] C.P. 187, Brassard J. of the Provincial Court, relying on Girard v. Danis, came to the same conclusion. Turmel J. adopted the same interpretation in Treitel v. Standard Structural Steel Ltd., [1982] C.S. 1075.

22. In Bégin v. Rodrigue Roussel & Co. Ltée, S.C. Rimouski, No. 100‑05‑000498‑76, February 28, 1978, on the other hand, Doiron J. arrived at the opposite conclusion. He based himself on the actual wording of para. 2 of art. 2224, and the applicable portion of his judgment is as follows:

[TRANSLATION] By this petition, therefore, the Court is being asked to exclude the co‑defendants from the benefit of interruption of the prescription.

There is no doubt that they are both parties to the action, and in order to deny them the right to benefit from the interruption there must be either in the legislation or in the general principles of law a limitation preventing the Court from allowing it.

The wording adopted by the legislator is certainly clear and does not contain any limitation.

There is no basis in the existing law or precedent for limiting or restricting the general scope of the words used by the legislator.

It must clearly be given the extension which the legislator manifestly intended it should have, by including every party to the action in the benefit of interruption of the prescription as the result of an action at law, and this includes the two defendants.

23. With respect, I consider that the latter interpretation is the better one. The Code says "for every party to the action". There is no doubt that the co‑defendants are parties to the action; and when the Code says "for any right and recourse arising from the same source as the demand", in my opinion that takes in rights and recourses of co‑defendants not only against the plaintiff, but against each other. If the legislator had wanted to limit the rights and recourses of co‑defendants to the cross‑demand or in some other way, it would have been quite simple to adopt a different wording. If on the other hand the legislator intended to extend the scope of the interruption to every party to the action, and so unquestionably to a defendant, and in fact for any right or recourse arising in his favour from the same source, including any right or recourse against a co‑defendant, in my view he could not have said it better than he did. Where one is dealing with such direct and broad language, I do not see what basis there can be in the enactment for limiting it. In short, the Code is clear and unambiguous regarding the point before the Court: I cannot find any authority for not applying it.

24. I adopt the following passage from the reasons of Jacques J.A., dissenting in the Court of Appeal (at p. 531):

[TRANSLATION] The second amendment further widens the effect of interruption and introduces a new concept. Formerly, interruption applied only in favour of the party bringing an action and benefited him only, subject to special provisions as to joint and several claims and indivisible claims.

The new concept is that an interruption caused by one of the parties benefits the others. The first example that comes to mind is the right to base a cross‑demand on the same source as the principal action.

Should the words "every party" be limited to opposing parties alone, however?

The words "every party" should be interpreted in their usual sense. The word "party", as defined in Petit Robert, means "a person engaged in litigation".

This definition coincides with the meaning of the word "party" which emerges from the provisions of the Code of Civil Procedure. "Party" is there applied to a plaintiff, defendant, intervenor by voluntary or forced, aggressive or conservatory intervention, and a person objecting to a seizure. The usual meaning of the word "party" is therefore in no way limited by the provisions of the Code of Civil Procedure.

When the legislator used the expression "every party" in art. 2224 C.C., one must presume that in the absence of any indication to the contrary, and there is none, he was using this expression in the same sense as in the Code of Civil Procedure.

I therefore consider that the parties to the action are at a minimum those named in the writ or subsequently joined thereto before the prescription becomes applicable, and that it is now no longer necessary for parties other than the plaintiff to ask that interruption of the prescription shall benefit them as well by a separate demand brought by each of them. (I make no comment on the possibility that the word "party" may include a virtual party, that is someone who is not expressly named in the action.)

Accordingly, a defendant may benefit from the interruption caused by the plaintiff not only against the plaintiff himself but also against his co‑defendant, since the co‑defendants are parties to the action.

25. The principal arguments that might be made against such a solution are contained in the passages from judgments cited. First, the rules of prescription are to be restrictively interpreted, including the rule that the effects of an interruption do not extend from one person to another: De persona ad personam non fit interruptio civilis. Second, it would not be right for the diligence of one person to confer a right on someone else who has been negligent.

26. With respect, this is not the first time that the legislator has altered a rule of the civil law by means of a statute.

27. Moreover, when a defendant was allowed to take advantage of interruption by a cross‑demand, an exception was undoubtedly made to the rule regarding the relative effect of a civil interruption. This was an extension of the interruption from the plaintiff to the defendant, in which the latter benefits from the diligence of the former.

28. Counsel for the respondent argued that the key to interpretation lay in the word "source", to which he gave a limiting meaning. He cited certain judgments of the Court of Appeal in which the latter explained and limited the word "source", giving it such a limiting meaning. In particular, he cited Continental Casualty Co. v. O’Neill, [1971] C.A. 703, and Lapierre v. Prévoyance Compagnie d’assurance, [1977] C.A. 287. In the first of these cases, a plaintiff bringing an action in delict was not allowed to amend the pleadings after the prescription deadline and add a claim that was contractual in nature. In the second case, a plaintiff bringing an action pursuant to a clause in an insurance policy was not allowed to amend after the prescription deadline and add a claim under another clause in the same policy. With respect, I see no analogy between these cases and the one at bar.

29. In my opinion, the source in the case at bar is the accident. In Arnault v. Jacques, [1969] C.S. 77, there was an action against the owner of a hotel by a customer who had fallen into an opening made in the floor. The plaintiff wanted to amend his statement of claim after the prescription deadline to allege fault by the defendant's employees. Mayrand J., as he then was, wrote at pp. 80‑81:

[TRANSLATION] Defendant argued that the amendment requested by the plaintiff cannot be allowed because it tends to revive an action extinguished by the yearly prescription. The Court considers that plaintiff's right of action, based on the fault of defendant's employees, arises from the same source as the initial action, which was itself based on defendant's personal fault. The common source of the action is the accident complained of by plaintiff. For this reason, service of the action on defendant less than a year after the accident interrupted the prescription.

30. Counsel for the respondent further cited certain other decisions of the Court of Appeal dealing with the phrase "related source" found in art. 172 C.C.P., amended together with art. 2224 C.C. (1972 (Que.), c. 70, s. 7), which provides:

31. The defendant may plead by defence any ground of law or fact which shows that the conclusions of the demand cannot be granted in whole or in part.

He may also in the same proceeding constitute himself cross‑plaintiff in order to urge against the plaintiff any claim arising from the same source as the principal demand, or from a related source. The court remains seized of the cross demand notwithstanding discontinuance of the principal demand.

31. This in my view is a completely different question, and what these cases indicate is the degree of relationship required if a cross‑demand is to be possible under art. 172 C.C.P. See H. Reid and D. Ferland, Code de procédure civile annoté du Québec, 1979, vol. 1, p. 219; 1983, Supplément, vol. 4, p. 59, and the cases cited.

32. Counsel for the respondent further maintained that the rights and recourses which other parties such as defendants might claim against plaintiff under the provisions of art. 2224, after the prescription periods have expired, are only the compensation which can be pleaded even without a cross‑demand, and whatever the source. With respect, I am as unable to subscribe to this proposition as to see what justification there is for it in para. 2 of art. 2224.

33. Counsel for the respondent also argued that if art. 2224 is given the interpretation suggested by appellant, in a case like this one interruption of the prescription would continue indefinitely, since it will endure until the final judgment. There was no final judgment in the case at bar, because the Wajax action was settled by appellant and respondent. He supported this reasoning on the fact that the Civil Code Revision Board had suggested the following as the wording:

Interruption which results from a judicial demand continues until final judgment or, as the case may be, until the settlement between the parties.

34. As he said, the legislator did not incorporate the second part of the sentence.

35. This argument is untenable, as it sufficed to mention the final judgment as the term. It was not necessary to mention the transaction, as this was covered by other provisions in the Civil Code. Transaction has the effect of res judicata between the parties and is the equivalent of a judgment. The interruption of prescription will not go beyond the date of a transaction, any more than the date of a final judgment.

36. Article 1918 C.C. defines transaction:

37. Transaction is a contract by which the parties terminate a lawsuit already begun, or prevent future litigation by means of concessions or reservations made by one or both of them.

38. Article 1920 states:

39. Transaction has between the parties to it the authority of a final judgment (res judicata).

40. Finally, counsel for the respondent submitted an argument based on para. 4 of art. 2226 C.C.:

41. Prescription is not interrupted:

If the plaintiff abandon his suit, except to avoid the exclusion provided for in article 1008 of the Code of Civil Procedure;

If the service or the procedure be null from informality;

If he allow peremption of the suit to be obtained;

If the suit be dismissed.

39. If the suit is dismissed the prescription is not interrupted. In the result, he submitted, that in the case of dismissal of an action the interruption of prescription which has not applied in favour of a plaintiff would still apply in favour of a defendant and between co‑defendants.

40. This provision applies to a plaintiff whose suit has been dismissed. It provides that in such a case, since there is no interruption, the plaintiff may not recommence if the prescription deadline has expired. P. B. Mignault, Le droit civil canadien, 1916, t. 9, pp. 422‑26, gives the example inter alia of a suit dismissed for a formal defect. As a consequence of para. 4 of art. 2226, the plaintiff will lose his recourse if the prescription deadline has expired.

41. However, the legislator has provided that a cross‑demand will subsist independently of the principal demand. Thus, article 172 C.C.P., cited above, provides that "The court remains seized of the cross demand notwithstanding discontinuance of the principal demand". In my view there is no reason why, if the principal demand is dismissed, although the plaintiff cannot recommence after the deadlines have expired, actions between co‑defendants may not subsist just as the cross‑demand may. This last argument does not appear to me to be valid.

42. For these reasons, I would allow the appeal, reverse the judgments of the Court of Appeal and the Superior Court, and dismiss the exception to dismiss by respondent, with costs in this Court and in the Court of Appeal and Superior Court.

Appeal allowed with costs.

Solicitors for the appellant: Boudrias, Fréchette, Gélinas & Associés, Montréal.

Solicitors for the respondent: Wood & Aaron, Montréal.