INTRODUCTION

Over the last thirty years, courts and legislatures across Canada have embraced the discoverability principle when considering limitations periods: that, generally speaking, a limitation period should not begin until a loss is discovered rather than starting at the time the wrong occurred regardless of whether the loss is recognized at that time or not.

Saskatchewan, for the most part, has been no different and embraced discoverability with The Limitations Act.¹ The Limitations Act fundamentally altered limitations law in Saskatchewan when it came into force on May 1, 2005. The changes it introduced ranged from consolidating a range of applicable limitation periods in numerous statutes into a comprehensively applicable two year period from the date that the loss or injury was discovered.

However, the Limitations Act also states that claims of contribution and indemnity (such as third party claims, cross claims, and counter claims) are “deemed discovered” as of the date of receipt of the plaintiff’s statement of claim. This change in a time that courts and legislatures embraced discoverability created some uncertainty as to whether “discoverability” would apply to third party claims or whether third party claims could be introduced as amendments to proceedings as well as threatened an overriding general practice that had been established in Saskatchewan for defendants to avoid cross claims or third party claims against co-defendants.

With Winacott Spring Western Star Trucks v. Moore Industrial,² the Saskatchewan Court of Appeal has definitively stated that the Limitations Act places a strict limitation period of two years on third party claims with the clock starting to run from the date of the service on a defendant of a statement of claim. The Court confirmed that the Limitations Act does not allow for “discoverability” and a third party claim cannot be introduced as an amendment to pleadings after the limitation expires.

As such, in light of Winacott, defendants dealing with claims in Saskatchewan have two years from receipt of the statement of claim to determine and make all available claims for contribution and indemnity. While the legislation is at odds with the discoverability principle stated at the core of limitations law in Saskatchewan, it reflects the new trend emphasizing the need to move litigation ahead in a timely and efficient manner.

THE EVOLUTION OF THE LAW

The basis of limitations law is to extinguish ancient obligations, to avoid cases based on stale evidence and eroding memory, and ensure claimants act in a timely fashion. As stated by LaForest J. in M. (K.) v. M. (H.)³ at pp. 29-30:

…In order to determine the time of accrual of the cause of action in a manner consistent with the purposes of the Limitations Act, I believe it is helpful to first examine its underlying rationales. There are three, and they may be described as the certainty, evidentiary, and diligence rationales…

Statutes of limitations have long been said to be statutes of repose; see Doe on the demise of Count Duroure v. Jones (1791), 4 T.R. 301, 100 E.R. 1031, and A‘Court v. Cross(1825), 3 Bing. 329, 130 E.R. 540. The reasoning is straightforward enough. There comes a time, it is said, when a potential defendant should be secure in his reasonable expectation that he will not be held to account for ancient obligations…

The second rationale is evidentiary and concerns the desire to foreclose claims based on stale evidence. Once the limitation period has lapsed, the potential defendant should no longer be concerned about the preservation of evidence relevant to the claim…

Finally, plaintiffs are expected to act diligently and not “sleep on their rights”; statutes of limitation are an incentive for plaintiffs to bring suit in a timely fashion.

Limitations law in Saskatchewan was patchwork affair prior to May 1, 2005. There were many limitations periods set out in various laws with varying expiry dates, with the old principle of the time period starting at the time of the act colliding with the new concept of discoverability of the loss.

Before the Limitations Act became law, there were over 100 limitations periods set out in provincial statutes in Saskatchewan.⁴ The main limitations legislation, The Limitations of Actions Act,⁵ dated back to 1931 and was largely a collection of individual provisions from English statutes enacted between 1623 to the late 1800s.⁶ Many different limitations periods were applied to a variety of causes of action and different specific parties as well.

As an example, in the past Saskatchewan had a limitation period for claims based in contributory negligence which extended for a year after final judgment or settlement. See The Contributory Negligence Act⁷ at section 11 (repealed as of April 30, 2005):

11 Where an action is commenced against a tort feasor or where a tort feasor settles with a person who has suffered damage as a result of a tort, within the period of limitation prescribed for the commencement of actions by any relevant statute, no proceedings for contribution or indemnity against another tort feasor shall be defeated by the operation of any statute limiting the time for the commencement of action against that tort feasor if:

(a) such proceedings are commenced within one year of the date of the judgment in the action or the settlement, as the case may be; and

(b) there has been compliance with any statute requiring notice of claim against that tort feasor.

[Emphasis added]

This former limitation period likely assisted in giving rise to a general practice in Saskatchewan in which co-defendants in an action did not issue claims of contribution and indemnity against each other as there was no urgency to do so. It was expected that each co-defendant would share its responsibility for any eventual judgment award for even if in the unlikely event the plaintiff discontinued against one of the parties, that party could be added again to the action as a third party for up to a year after judgment.

At the same time, limitation periods had evolved from strict time limitations based on a certain incident to being when a loss was discovered. At first, the courts embraced this principle of “discoverability” as a common law rule used in the interpretation of limitations legislation, with the Supreme Court of Canada expressly adopting discoverability in Kamloops v. Nielsen⁸ and developing the concept as a general rule in Central Trust Co. v. Rafuse.⁹ The motive behind the adoption of discoverability was reflective of a concern of the courts that limitations defined strictly often led to a short time period available to initiate a claim that might expire before a loss could be discovered. In Desormeau v. Holy Family Hospital (Prince Albert),¹⁰ Sherstobitoff J.A., articulated this concern as follows at para. 7:

There is no principled reason why the same discoverability rule should not apply to the limitation period in this case, notwithstanding that the legislation in the cases above cited termed the starting date for calculation of the limitation period to be the date the cause of action arose, while the legislation in this case termed the starting date to be the date on which the damages were sustained. Exactly the same reasoning applies: the absurdity and injustice of an action being barred by a limitation period before the right of action is known to, or capable of being discovered with reasonable diligence by, the person suffering the loss requires the Courts to apply the discoverability rule.

[Emphasis added]

On May 12, 2004, Bill No. 51 (The Limitations Act) was introduced in the Saskatchewan legislature.¹¹ This bill was Saskatchewan’s response to 30 years of Canadian law reform commissions suggesting various charges to limitations law and reflected the goal of having as few limitations periods as possible in one act.¹² Among other things, it embraced the discoverability principle and imposed a two year limitation period for most actions.¹³ The limitation period and the discoverability period are set out in sections 5 and 6:

5 Unless otherwise provided in this Act, no proceedings shall be commenced with respect to a claim after two years from the day on which the claim is discovered.

6(1) Unless otherwise provided in this Act and subject to subsection (2), a claim is discovered on the day on which the claimant first knew or in the circumstances ought to have known:

(a) that the injury, loss or damage had occurred;
(b) that the injury, loss or damage appeared to have been caused by or contributed to by an act or omission that is the subject of the claim;
(c) that the act or omission that is the subject of the claim appeared to be that of the person against whom the claim is made; and
(d) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

(2) A claimant is presumed to have known of the matters mentioned in clauses (1)(a) to (d) on the day on which the act or omission on which the claim is based took place, unless the contrary is proved.

[Emphasis added]

The Limitations Act also continued to allow for amendments to pleadings after the expiry of the limitation period.¹⁴ See section 20:

20 Notwithstanding the expiry of a limitation period after the commencement of a proceeding, a judge may allow an amendment to the pleadings that asserts a new claim or adds or substitutes parties if:

(a) the claim asserted by the amendment, or by or against the new party, arises out of the same transaction or occurrence as the original claim; and

(b) the judge is satisfied that no party will suffer actual prejudice as a result of the amendment.

However, the Limitations Act, in repealing section 11 of the Contributory Negligence Act, imposed a strict limitation period of two years from the date of the service of the statement of claim on a defendant with respect to claims of contribution and indemnity.¹⁵ See section 14:

14(1) In the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim with respect to which contribution and indemnity is sought is deemed to be the day on which the act or omission on which that alleged wrongdoer’s claim is based took place.

(2) Subsection (1) applies whether the right to contribution and indemnity arises with respect to a tort or otherwise.

[Emphasis added]

Notably, on July 1, 2013, Saskatchewan adopted a new set of rules of court. The new Queen’s Bench Rules place an emphasis on moving matters efficiently and in a timely fashion and place the responsibility to do so on all parties.¹⁶ While not specifically relating to limitation periods, these rules cast a new set of obligations on parties to litigation and provided the context in which Winacott was decided.

BACKGROUND OF WINACOTT

The facts in Winacott are straightforward.¹⁷ On June 18, 2004, the plaintiff Casbohm fell off of a ladder provided to the plaintiff by the defendant Winacott. The ladder was previously sold by Moore to Winacott and was allegedly manufactured or distributed by Sturdy. On May 1, 2005, the Limitations Act came into force, changing the limitation period for claims of contribution and indemnity. The statement of claim, issued on June 16, 2006, was served on Winacott on April 11, 2007. The third party proceedings against

Moore and Sturdy were not initiated by Winacott until November 2010 and leave was granted on January 11, 2011.

Moore and Sturdy were on different footing. Moore had never been part of the proceedings before leave to initiate a third part claim was granted in January 2011. Sturdy meanwhile was a defendant from 2007 until the plaintiff discontinued against them in September 2010.

In Casbohm v. Winacott Springs Western Star Trucks,¹⁸ the Court heard an application Moore and Sturdy for a determination of whether Winacott’s third party claim was barred by the Limitations Act as Winacott had prepared and filed a Statement of defence in September 2007 but had not taken any steps to initiate a third party claim, a claim of contribution and indemnity, until November 2010.¹⁹ Winacott responded that as the plaintiff’s claim arose before the date the Limitations Act came into force, the former limitation period applied and not section 14.²⁰

The Court held the time limit to issue Winacott’s claim had expired.²¹ Winacott did not have a claim of contribution and indemnity against Sturdy and Moore or any party until after it was served the statement of claim. As the service of the statement of claim occurred after the Limitations Act came into force, the previous limitation period did not apply to Winacott’s claim and it was governed by section 14 of the Limitations Act. As Winacott’s claim was initiated well after the latest possible expiry date of September 2009, Winacott’s claim against Sturdy and Moore was barred.

SUMMARY OF DECISION


In its decision, the Saskatchewan Court of Appeal determined several issues, including the following:

1. the applicability of the transitional rules;
2. the nature of third party claims;
3. the limitation periods of third party claims; and
4. whether allows for a third party claim to be added if out of time.

With respect to the applicability of the transitional rules, the Court accepted the Queen’s Bench decision that section 31(2) must first be considered for what claims will have the Limitations Act apply and what claim will have the prior limitations period apply. In sum, while the plaintiff’s claim would be subject to the previous limitations period as it arose in 2004, any claim arising after May 1, 2005 will be governed under the Limitations Act.²²

Winacott’s claim for contribution and indemnity against Moore and Sturdy arose only after the service of the statement of claim on April 11, 2007. The Court held, following precedent, that third party claims are claims of contribution and indemnity and “grafted” onto proceedings.²³ As claims of contribution, they are governed by section 14 of the Limitations Act which places a hard cap of 2 years from the date of the service of the statement of claim.²⁴ See para. 32:

[32]    … Winacott’s claim is one for contribution. Winacott seeks to share proportional responsibility for any future award of damages to the plaintiff. Winacott’s claim for contribution is deemed by s. 14 to have been discovered on April 11, 2007. Winacott never had a claim for contribution before that date and would not have had one if the plaintiff had not issued and served a claim.

In the alternative to the transitional rules argument, Winacott submitted on appeal that section 20 of the Limitations Act applied to amend pleadings and add new parties even if the limitation period had expired. The Court disagreed, stating that as a third party claim is “grafted” onto the original proceedings it is not a simple amendment to existing pleadings.25 See para. 46:

[46]    … the language of s. 20 necessarily limits its application to circumstances where a party amends its claim. In the present case, commencing a third party claim against a new party in a new proceeding unrelated to the plaintiff’s claim against Winacott, cannot be considered to be an “amendment”. In my view, Winacott is seeking to graft a “wholly new proceeding” onto the original action. Since this is beyond the permissible limits of s. 20(a) of the Act, I would not give effect to this ground of appeal.

As a result, the Queen’s Bench decision was upheld. Winacott’s claim was statute barred by section 14 of the Limitations Act. The claims of contribution and indemnity did not arise until after Winacott was served the statement of claim. Winacott had two years from the date of being served the statement of claim to make any claims of contribution and indemnity. It was served the claim on April 11, 2007 and failed to issue any claim of contribution and indemnity within two years. In addition, section 20 of the Limitations Act was confirmed to be restricted to amendment of existing pleadings.

CONCLUSION
 


The two year limitation for contribution claims starts with the service of a claim on a defendant. It does not allow for discoverability so any claim of contribution and indemnity must be determined and initiated within two years after the service of the claim. Section 20 does not provide any relief with respect to initiating third party proceedings as it only applies to existing pleadings.

While the “deemed discovered” in section 14 of the Limitations Act goes against the trend established by courts and legislatures of embracing discoverability, it accords well with the new Saskatchewan Queen’s Bench Rules. The Rules place an emphasis on moving litigation forward efficiently and in a timely fashion and place the responsibility to do so on all parties.

In sum, section 14 of the Limitations Act places a special onus on defendants who receive notice of a claim or are served with a claim to act quickly and determine any potential parties – including co-defendants – who may also owe responsibility for any alleged injury or loss. Moreover, there is a need to move forward with actions and have timely document discovery and examinations to fully determine whether there are any claims of contribution and indemnity against any other parties. This strict two year time period can pass quickly but the mutual rights and obligations established by initiating litigation and the emphasis of progressing in a timely fashion are key resources in ensuring any claims for contribution or indemnity are not missed.

1 S.S. 2004, c. L-16.1
2 2013 SKCA 88.
3 [1992] 3 S.C.R. 6
4 Saskatchewan, Legislative Assembly, Official Report of Debates (Hansard) (17 May 2004), on line: http://docs.legassembly.sk.ca/legdocs/Legislative%20Assembly/Hansard/25L1S/040517Hansard.pdf at p. 1139 (Hon. F. Quennell).
5 R.S.S. 1978, c. L-15.
6 Ibid.
7 R.S.S. 1978, c. 31.
8 [1984] 2 SCR 2.
9 [1986] 2 S.C.R. 147.
10 (1989), 76 Sask. R. 241 (C.A.).
11 Saskatchewan, Legislative Assembly, Official Report of Debates (Hansard) (12 May 2004), on line: http://docs.legassembly.sk.ca/legdocs/Legislative%20Assembly/Hansard/25L1S/040512Hansard.pdf at p. 1077 (Hon. F. Quennell).
12 Official Report of Debates (Hansard) (17 May 2004), supra note 4.
13 Ibid. An ultimate limitation period of 15 years was applied to the length of time available to “discover” the loss: see section 7 of the Limitations Act.
14 Section 30 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01 allowed for this prior to the Limitations Act.
15 Section 31 of the Limitations Act provides transitional rules to determine whether the Limitations Act or a prior limitation period applies.
16 See, for example, Rules 1-3, 3-41, 4-1, and 4-2 of the Queen’s Bench Rules.
17 Winacott, supra note 2, at paras. 3 to 4.
18 2012 SKQB 21.
19 Ibid., at paras. 3, 4, and 7. The date of service was not confirmed at the time of application. It was confirmed at the appeal to be April 11, 2007.
20 Ibid., at para. 8.
21 Ibid., at paras. 10 to 12.
22 Winacott, supra note 2, at paras. 22 to 24.
23 Ibid., at paras. 27 to 32.
24 Ibid.
25 Ibid., at paras. 39 and 43 to 46.