In Arcelormittal Tubular Products Roman S.A. v Fluor Canada Ltd. et. al, 2013 ABCA 279 (leave to appeal to the SCC dismissed), Fluor made an application, under Rule 3.68 of the Alberta Rules of Court to have third party notices issued against it (in two separate but related lawsuits) to be struck out in whole or in part.

The Issue: Determining Limitation Period under the Tort-Feasors Act

Fluor contracted with Canadian Natural Resources Limited (CNRL) to provide engineering, procurement and construction services in relation to an oil sands project. CNRL purchased large amounts of steel pipes from EMCO and BHD, two steel pipe suppliers. Both of these companies had bought the pipe from Vass Pipe and Steel (Vass) that had in turn bought the pipe directly from its Romanian manufacturer Arcelormittal Tubular Products Roman S.A (Arcelormittal) and Arcelormittal’s North American representative, Mittal Steel North America (Mittal).

Eventually, defects were discovered in some of the pipe which CNRL then replaced and removed. CNRL started two separate actions against EMCO and BHD in 2007, both of which also included Vass, Arcelormittal and Mittal as Defendants (the “Primary Actions”). Several months later, CNRL started an action against Fluor, but discontinued the action a month later. Approximately three years later, the Defendants of the Primary Actions served party notices against Fluor.

Specifically, the Defendants alleged that Fluor: (i) failed to warn, (ii) failed to help CNRL mitigate its loss, (iii) breached its contract with CNRL and (iv) breached duties of care owed to CNRL for which the other defendants sought contribution under the Tort-feasors Act (TFA).

Fluor was unsuccessful in its application to strike out third party notices under Rule 3.68 before the case management judge and appealed to the Alberta Court of Appeal (ABCA). At the ABCA, Fluor argued that, in the context of an action brought under Section 3(1)(c) of the TFA, CNRL’s limitation period against Fluor had expired, therefore CNRL could not meet the test under Section 3(1)(c). The TFA provides tort-feasors (someone committing a tort) an ability to "recover contribution from" (emphasis added) another third party (the second tort-feasor) in respect of the same damage that the tort-feasor is alleged to have committed.

ABCA Decision a Key Lesson for Defendants Seeking to Add Third Parties to Lawsuits as Contributing Tort-feasors

The court discussed the test under the TFA, namely that the contribution alleged must be from a tort-feasor who “is or would, if sued, have been liable in respect of the same damage” (italics added). The court summarized that the third party notice, itself, was not out of time, but rather that the Defendants were out of time with respect to a contribution claim under the TFA.

In other words, by the time the third party notices were issued to Fluor (some three years after the commencement of the Primary Actions), CNRL was unable to file a claim against Fluor due to limitations. The original tort-feasors (the Defendants) were unable to seek contribution from Fluor because Fluor could not be sued by CNRL due to the lapse in time. Therefore, Section 3(1)(c) of the TFA effectively shielded Fluor.

The ABCA has clarified that the test under Section 3(1)(c) is strict and unforgiving. A defendant seeking to add third parties to its lawsuit as contributing tort-feasors under the TFA needs to be careful to file and issue third party notices in accordance with Section 3(1)(c). This means analyzing the original basis for the plaintiff’s claim and ensuring that third party notices are drafted, filed and served well within the limitation period that exists as between the plaintiff and the party that the tort-feasors are seeking contribution from.