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CIVIL PROCEDURE - Parties - Third party procedure

Thursday, June 14, 2018 @ 8:58 AM  


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Appeal by the defendants from summary judgment dismissing their third party claims for contribution and indemnity against the respondent lawyer and law firm as statute-barred. The Bank sued the appellants on personal guarantees given to secure financing for a development property that the appellants were involved in. The appellants alleged that their lawyer was instructed to obtain releases from those personal guarantees, but failed to do so. The lawyer denied that the appellants ever asked him about the cancellation of the guarantees or that he told the appellants not to worry about the personal guarantees. The appellants argued that it was not until 2013 they were advised that they had a cause of action against the lawyer and his firm for failing to follow their instructions, for improper legal advice, and for acting in a conflict of interest. The appellants did not issue the third party claim until more than two years after the Bank served the wife with a claim against her on her personal guarantee. The motion judge held the two-year limitation period commenced when the wife was served with the claim in 2009.

HELD: Appeal allowed. The motion judge erred in his interpretation of s. 18 of the Limitations Act as establishing an absolute two-year limitation period for contribution and indemnity claims. Properly interpreted, that section did not displace the discoverability principles found in ss. 4 and 5 of the Limitations Act, 2002. As a result of his misunderstanding of s. 18, the motion judge did not have a full appreciation of the significance of the conflicting evidence and the facts central to the discoverability issue when he decided to grant summary judgment. Consequently, the findings of fact he made in his summary judgment could not be relied upon to resolve the s. 18 discoverability issue against the appellants. In spite of the deference owed to summary judgment motion judges, this might be one of those uncommon cases where, given the nature of the issues and the evidence required, the motion judge could not make the necessary findings of fact or apply the legal principles to reach a just and fair determination in a summary judgment motion. The finding that the appellants had knowledge of their causes of action against the lawyer was arrived at in a summary judgment motion held without a full appreciation of the complexity of the issues at stake. That finding of fact should therefore not be relied upon or equated to a finding that could dispose of the issue of discoverability for the purposes of the Limitations Act on summary judgment.

Mega International Commercial Bank (Canada) v. Yung, [2018] O.J. No. 2389, Ontario Court of Appeal, D.H. Doherty, D. Paciocco and I.V.B. Nordheimer JJ.A., May 7, 2018. Digest No. TLD-June112018007