T-462-73
Peterson Steels, Inc. (Plaintiff)
v.
Arctic Steamship Line, Ito-International Termi
nal Operators Ltd. and the ship Nina Kukoverova
and her owners (Defendant)
T-3439-72
Stora Kopparberg Corp. (Plaintiff)
v.
Arctic Steamship Line, March Shipping Limited,
Ito-International Terminal Operators Ltd. and the
ship Nemirovich Danchenko and her owners
(Defendants)
Trial Division, Addy J.—Montreal, May 26;
Ottawa, June 26, 1980.
Practice — Defendants move for leave to proceed in third
party proceedings against co-defendant for indemnity —
Whether limitations on claims run from date of alleged
damage or breach of contract in main action or from date
when claim against defendants is ascertained by judgment or
otherwise — Motions allowed.
County and District Properties Ltd. v. C. Jenner & Son
Ltd. [1976] 2 Lloyd's Rep. 728, referred to. Bosma v.
Larsen [1966] 1 Lloyd's Rep. 22, referred to. Huntley v.
Sanderson (1833) 1 Cr. & M. 467, referred to. Collinge v.
Heywood (1839) 9 Ad. & El. 633, referred to. M'Gillivray
v. Hope [1935] A.C. (H.L.) 1, referred to. Reynolds v.
Doyle (1840) 1 Man. & G. 753, referred to. Robinson v.
Harkin [1896] 2 Ch. 415, referred to. Wolmershausen v.
Gullick [1893] 2 Ch. 514, referred to. N. M. Paterson &
Sons Ltd. v. St. Lawrence Corp. Ltd. [1974] S.C.R. 31,
referred to. Federal Commerce & Navigation Co., Ltd. v.
Calumet Harbor Terminals, Inc. 1976 AMC 2568,
referred to. Amtraco Corp. v. S.S. "Snow Storm" 1978
AMC 1007, referred to. MacKenzie v. Vance (1977) 74
D.L.R. (3d) 383, referred to.
MOTION.
COUNSEL:
G. P. Barry for plaintiff.
R. Cypihot for defendants Arctic Steamship
Line and the owners of the ship Nina
Kukoverova.
E. Baudry for defendant Ito-International
Terminal Operators Ltd.
SOLICITORS:
McMaster Meighen, Montreal, for plaintiff.
Brisset, Bishop, Davidson & Davis, Montreal,
for defendants Arctic Steamship Line and the
owners of the ship Nina Kukoverova.
Lavery, O'Brien, Montreal, for defendant Ito-
International Terminal Operators Ltd.
The following are the reasons for order ren
dered in English by
ADDY J.: In these two actions the defendants
other than Ito-International Terminal Operators
Ltd. have moved for leave to proceed in third party
proceedings against the latter defendant and for
directions.
The claims for indemnity against Ito-Interna
tional Terminal Operators Ltd. would, in each
case, be statute barred if limitations on those
claims run from the date of the alleged damage or
breach of contract in the main action rather than
from the date when the claim against the defend
ants is ascertained by judgment or otherwise
against the defendants. A claim over against a
co-defendant for indemnity is, of course, akin to a
normal third party proceeding against a person
who is not a party to the main action in the sense
that it also is a separate action.
The weight of jurisprudence establishes that
limitation in a claim of indemnity over does not
commence to run until the amount and nature of
the claim against the person seeking indemnity has
been determined. The view expressed in County
and District Properties Ltd. v. C. Jenner & Son
Ltd. 1 is much to be preferred to that in Bosma v.
Larsen 2 . The former view was adopted also in the
following cases: Huntley v. Sanderson 3 ; Collinge
v. Heywood 4 ; M'Gillivray v. Hopes; Reynolds v.
Doyley; Robinson v. Harkin'; and Wolmershausen
v. Gullick 8 . It is worthwhile noting the judgment
of the Supreme Court of Canada expressed by
[ 1976] 2 Lloyd's Rep. 728.
2 [1966] 1 Lloyd's Rep. 22.
3 (1833) 1 Cr. & M. 467.
4 (1839) 9 Ad. & El. 633.
5 [1935] A.C. (H.L.) 1.
6 (1840) 1 Man. & G. 753.
7 [1896] 2 Ch. 415.
8 [1893] 2 Ch. 514.
Pigeon J. in the case of N. M. Paterson & Sons
Ltd. v. St. Lawrence Corporation Limited 9 ,
although this case did refer to an "action récur-
soire" under the Civil Code and not to a common
law claim. Pigeon J. stated at page 40 of the
report:
The applicable principle is well established as stated in Trem-
blay v. Bouchard ([1964] Que. Q.B. 681). The prescription of a
right of action does not begin to run until this right has come
into existence. While an "action en garantie simple" may be
instituted before judgment on the principal action, there is no
obligation to resort to such a proceeding. The remedy claimed
here is the "action récursoire" which does not lie until a final
decision has been reached in the principal action by judgment
or by transaction. Whether the settlement effected in this case
is to be looked upon as a judgment or as a transaction does not
matter because this action was instituted less than one year
later.
This is also the view taken by American courts
(see Federal Commerce & Navigation Co., Ltd. v.
Calumet Harbor Terminals, Inc. 10 and Amtraco
Corporation v. S.S. "Snow Storm"").
As stated in the case of MacKenzie v. Vance 12
any other conclusion would be illogical and might
lead to grave injustice where, for instance, by
reason of the nature of the two claims, the limita
tion period running against the right to be indem
nified is shorter than that which runs against the
plaintiff in the main action. In such event the
action against the third party defendant might be
barred before the third party claimant has been
sued or even has had notice of any proposed
action. An injustice could also occur where the
plaintiff in the main action chooses to sue at the
very last moment.
The better view seems to be that the right to
claim indemnity arises only after judgment against
the person claiming indemnity has been rendered
or the nature and extent of the claim has been
otherwise determined. It is to be noted, however,
that this principle does not prevent the third party
claimant from issuing a third party claim in the
main action and joining therein, in other words,
taking action before judgment has actually been
obtained to determine the validity of the claim and
9 [1974] S.C.R. 31.
10 1976 AMC 2568.
" 1978 AMC 1007.
12 (1977) 74 D.L.R. (3d) 383.
the amount of the liability (see County and Dis
trict Properties Ltd. v. C. Jenner & Son Ltd.,
supra, at page 738, column 2).
The two motions will, therefore, be allowed and
permission to proceed with the claim over against
the defendant Ito-International Terminal Opera
tors Ltd. in each case will be granted.
As the question of settling the conditions of
these indemnity proceedings was not considered by
counsel at the hearing, a new motion will have to
be launched by the applicants to have the proce
dures settled. If the parties can agree on the
procedure, an application in writing pursuant to
Rule 324 for a consent order might be considered.
It is to be noted that the draft order already
submitted applies to a case where the claim is
against a regular third party rather than against
the co-defendant. The required changes should be
made to any draft order to ensure that it conforms
to the present situation. The style of cause shall be
amended to include the claim for indemnity with
proper identification of the parties in that claim.
The costs of this application shall be costs to the
plaintiff in the cause against the defendants or the
third party as determined by the Trial Judge and
costs to the other defendants in the cause against
Ito-International Terminal Operators Ltd. in the
indemnification issue.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.