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January 25, 2012

Advancing a claim for Contribution and Indemnity as Equitable Set-off

Goma v. Raghunanan [2011] O.J. No. 4916

Motion to amend Statement of Defence

This was a very clever motion by defendant’s counsel to add a claim for contribution and indemnity where the limitation period to start a counterclaim had passed.

This case involves a motor vehicle accident where there were two injured plaintiffs, the driver and a passenger. The defendants pleaded contributory negligence against the driver but neglected to counterclaim for contribution and indemnity against the passenger for her injuries.

When they realized the oversight, the plaintiff’s refused to consent to adding a counterclaim; the limitation period to counterclaim had passed.

The defendants decided to bring a motion to amend the statement of defence to add a claim for equitable set-off against the plaintiff. They assert that the s.18(1) Limitations Act limitation period does not apply.

Master Dash was bound by the decisive statements of a superior court, which held that claims for equitable set-off are not subject to limitation periods. See Canada Trustco Mortgage Co. v. Pierce Estate, [2005] O.J. No. 1886, 197 O.A.C. (C.A.) and Spiral Aviation Training Co. v. Attorney General of Canada, 2010 ONSC 2581.

However, after examining the test for equitable set-off and the case law presented by counsel, Master Dash held that the defendant’s could not meet the test. Specifically, the claim for contribution does not go to the root of the plaintiff’s claim for damages.

He concluded that a defendant cannot claim contribution and indemnity against one plaintiff for damages awarded to another plaintiff by pleading equitable set-off in the statement of defence; this must be done by counterclaim, and the defendants were out of time to advance a counterclaim.

Rule 26.01 allows for amendments that are “legally tenable”. Amendments must be granted “unless the claim is clearly impossible of success”. Master Dash determined that because the claim for equitable set-off cannot succeed, the motion must be denied.

- Alison McBurney

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