BC defendants take note: Court confirms procedural option of claiming contribution and indemnity by filing of parallel Notice of Civil Claim
It comes as no great surprise to anyone that construction claims generally involve many defendants that participated in the subject construction project. Defence counsel acting for the various construction trades and professionals are, therefore, no stranger to claims for contribution and indemnity.
Over the past two years, the Court in British Columbia has clarified that, pursuant to the Limitation Act, defendants have two years from later of the date they are served with a claim giving rise to a claim for contribution and indemnity, or the date they discover a claim for contribution and indemnity to initiate the claim. Please see our earlier November 2019 blog post, “Two Years Means Two Years: Judicial Clarification on the Limitation Periods for Third Party Contribution and Indemnity Claims”.
In Prime Time (Abby Lane) Inc. v. DGBK Architects, 2022 BCSC 1799, the BC Supreme Court considered whether a defendant in an action may elect to file a contribution and indemnity claim by filing a separate Notice of Civil Claim instead of first filing or seeking leave to file a Third-Party Notice in the existing action under Rule 21-9(1)(b) of the Supreme Court Civil Rules [the “Rules”].
Rule 21-9(1)(b) effectively states that a defendant who claims contribution and indemnity under the Negligence Act from another person who is not a plaintiff, whether or not the person is already a party to the action, must do so by issuing a third-party notice.
The underlying action involved a claim by Prime Time (Abbey Lane) Inc. against various construction consultants in relation to the construction of a building in Surrey (the “Prime Time Action”). Facing an impending limitation period, two defendants, Eckford Tyacke + Associates (“Eckford”) and DGBK Architects (“DGBK”), filed separate Notices of Civil Claim seeking contribution and indemnity against other defendants in the Prime Time action, including the applicant, Nemetz (S/A) & Associates Ltd. (“Nemetz”).
Nemetz applied to have the Eckford and DGBK’s contribution and indemnity actions consolidated with the Prime Time Action by requiring Eckford and DGBK file Third Party Notices in the Prime Time Action. Nemetz argued that Eckford and DGBK’s actions constituted non-compliance with Rule 21-9(1)(b) because where an action has been brought by a plaintiff, a defendant to that action must first apply to commence a third-party proceeding in the extant action prior to the expiry of the limitation period before filing a separate Notice of Civil Claim.
Justice Stephens dismissed Nemetz’s application, concluding that a defendant may file a fresh notice of contribution and indemnity without filing or seeking leave to file a third-party claim in the extant action.
First, Justice Stephens relied on Sohal v. Lezama, 2021 BCCA 40 (“Sohal”), in which the BC Court of Appeal noted in Sohal that claims for contribution and indemnity could be brought in more than one way, including by way of commencing a new parallel proceeding.
Secondly, Justice Stephens noted that a claim for contribution and indemnity is a substantive cause of action flowing from section 4(2) of the Negligence Act. Nemetz’s interpretation of Rule 21-9 would restrict a defendant’s right to exercise this substantive cause of action, contrary to the principle that procedural rules cannot extinguish the exercise of a substantive cause of action. When interpreted in light of the text and context of this principle, Rule 21-9(1)(b) mandates the procedural course that a defendant in an action must take if it wishes to claim contribution and indemnity in that action. It does not set out the two-step procedure Nemetz proposed. Justice Stephens indicated that clear statutory language would be required, and nothing in the language of Rule 21-9 prevented the defendant from bringing its contribution and indemnity claim by filing a Notice of Civil Claim without first seeking leave to file a Third-Party Notice.
Finally, the relief Nemetz sought would require the Court to permit Ekford and DGBK to file Third-Party Notices in the Prime Time Action, even though their respective limitation periods had expired. Sohal made it clear that the Court has no authority to do that, And Justice Stephens declined to rely on the Court’s inherent jurisdiction to control its own process as this would undermine the statutory scheme governing limitation periods.
Key takeaway: a defendant to an action may file a fresh Notice of Civil Claim for contribution and indemnity without having to first file or seek leave to file a Third-Party Notice in the extant action.
Please contact a member of our Construction + Engineering Insurance Group if you have any questions regarding the above.
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