Introduction
In this recent case about limitation periods, the Ontario Court of Appeal found that the two-year limitation period to bring third-party claims is subject to the discoverability principle.
Background
Prior to when the Court of Appeal weighed in on this issue, the two-year limitation period was strictly construed as beginning to run from the date the defendant was served with a claim.
When the appellants, the Yungs, were sued under personal guarantees for the financing of a real estate development project, they alleged that their lawyer had been retained to obtain Releases of their personal guarantees.
More than two years after being served with the claim, the Yungs brought a third party claim against their lawyer, Mega International Commercial Bank (Canada).
The lawyer went on to bring forth a successful motion for summary judgment on the basis that the two-year limitation period set out in the Limitations Act had effectively expired.
Result
In the end, the Court of Appeal overturned the judge’s decision that found the Yungs only discovered their cause of action against their lawyer years after they had been served with the Claim.
After reviewing the jurisprudence to date on the issue of an absolute limitation period of 2 years for contribution and indemnity claims, the Court of Appeal determined that the discoverability principles applied to such cases as well.
With this, the Yungs’ claim against their lawyer was not statute-barred.
The article in this update provides general information and should not be relied on as legal advice or opinion.
The decision referenced above is cited at Mega International Commercial Bank (Canada) v Yung, 2018 ONCA 429 (CanLII).