​Do judges get tired of having to figure out what Ontario's Limitations Act 2002 actually means? As well they might; the legislation seems to have created more confusion than it has cleared up. One such area of confusion has been section 18, which governs claims for contribution and indemnity brought by one wrongdoer against another. Justice Sharpe of the Ontario Court of Appeal has shed some light on the provision in Canaccord Capital Corp v Roscoe, 2013 ONCA 378.

Roscoe was an investment adviser at Canaccord, and his contract of employment contained a provision under which he agreed to indemnify his employer for any claim against it that arose from Roscoe's acts or omissions. Two customers of the firm, Mr and Mrs Cavanagh, alleged that Roscoe and Canaccord had caused them losses for failing to assess their risk tolerance properly and for not being duly diligent in recommending investments. Canaccord funded the defence and did not claim against Roscoe under the indemnity clause in the employment contract. The firm entered into settlement discussions with the Cavanaghs, but Roscoe maintained that he had done nothing wrong and would resist any claim for indemnity. Canaccord settled, but did not sue Roscoe on the indemnity until almost 3 years after the original claim had been made against the firm and Roscoe. Roscoe argued that this was a claim for contribution and indemnity that was barred by the limitation period in section 18 of the Limitations Act: Canaccord needed to have served the claim against him 2 years from the date it had been served with the Cavanagh claim. The firm argued that its claim was one that arose from an alleged breach of Roscoe's employment contract, with a limitation period that ran from the date Canaccord settled with the Cavanaghs.

The trial judge agreed with Canaccord, but has been reversed by the Court of Appeal. Justice Sharpe considered the legislative history and policy behind section 18, concluding that its objective was to shorten limitation periods for contribution claims and not to create a multiplicity of exceptions to that general rule. In substance, the claim against Roscoe was one for contribution and indemnity; to characterise it as a claim for breach of contract was inconsistent with the over-all policy of the statute. The judgment does, however, leave open the possibility that not all contractual indemnity language will be caught by section 18 (the Canaccord language closely tracked the legislative provision).   

http://www.ontariocourts.ca/decisions/2013/2013ONCA0378.pdf