T-2272-72
The Queen (Plaintiff)
v.
F. E. Cummings Construction Co. Ltd. and
Canadian Surety Co. (Defendants)
Trial Division, Collier J.—Ottawa, May 24 and
29, 1974.
Practice and procedure—Third party notice—Extension of
time for notice—No jurisdiction over third party proceed-
ings—Federal Court Act, s. 17(1)-(4)—Rules 3(1)(c),
402(2)(a), 1729—Limitations Act, R.S.O. 1970, c. 246.
The plaintiff sought damages for defects in a building
constructed by the defendant Cummings for the plaintiff.
The defendant Cummings issued third party notices directed
to sub-contractors and others, against whom it claimed
indemnity. The same defendant then moved (1) to extend
the time for filing and serving the third party notice on
Ingram and Pye, one of the proposed third parties; (2) for
third party directions. Ingram and Pye moved to strike out
the third party notice or alternatively, for particulars.
Held, 1. The objection to the extension of time, on the
ground that the provincial Limitations Act had come into
play, should not be considered before pleadings between the
defendant Cummings and the proposed third parties and in
the absence of agreement as to facts. As no prejudice would
be caused to any party concerned, the time should be
extended, in the exercise of the Court's discretion.
2. The objection that the Court had no jurisdiction over
third party proceedings should be sustained, in accordance
with the decisions under the Exchequer Court Act, as there
was no substantial difference between the position under
that Act and the Federal Court Act, section 17(1)-(4). The
motion for directions is dismissed and, as a result, the third
party proceedings are stayed.
The King v. Consolidated Distilleries Ltd. (Consolidated
Exporters Corporation Limited—Third Party) [1929]
Ex.C.R. 101, affirmed [1930] S.C.R. 531 sub nom.
Consolidated Distilleries Limited v. Consolidated
Exporters Corporation Ltd; The King v. Bank of Mont-
real (The Royal Bank of Canada—Third Party) [1933]
S.C.R. 311; The King v. Sauvageau [1947] Ex.C.R. 16;
The Queen v. Hochelaga Warehouses Ltd. [1972] F.C.
1395; The Queen v. The J. B. & Sons Co. Ltd. [1970]
S.C.R. 220, applied. Johannesson v. Municipality of
West St. Paul [1952] 1 S.C.R. 292, considered.
MOTIONS.
COUNSEL:
I. Whitehall and M. Kelen for plaintiff.
Peter D. Rasmussen for the defendant
Cummings.
B. Hebert, D. McWilliam and G. Potvin for
proposed third parties.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Hewitt, Hewitt & Co., Ottawa, for defend
ant Cummings.
The following are the reasons for judgment
delivered in English by
COLLIER J.: There are three motions in this
matter.
1. A motion by the defendant F. E. Cummings
Construction Co. Ltd. (hereafter "the defend
ant") for an order extending the time within
which it may file and serve a third party
notice against Ingram and Pye.
2. A motion by the defendant for third party
directions pursuant to Rule 1729.
3. A motion on behalf of Ingram and Pye
dated March 1, 1974, as amended by a further
motion dated May 15, 1974, for an order
striking out the third party notice as against
Ingram and Pye or, alternatively, requiring the
defendant to provide particulars of the allega
tions contained in the third party notice.
Other relief as well is claimed.
It is necessary to set out some of the history
of the proceedings in this action and some of
the facts. The action was commenced by state
ment of claim dated August 10, 1972. It was
served on the defendant on August 28, 1972. By
agreement between the plaintiff and the defend
ant, the defendant was not required to file a
defence within the usual time. In fact, examina
tions for discovery were held prior to the filing
of the defence.
The statement of claim is based on a contract
between the plaintiff and the defendant, dated
November 17, 1965, for the construction by the
defendant of an aircraft parts storage building
and related works at Ottawa International Air
port. The statement of claim alleges the defend
ant went on to construct the building, and an
engineer's final certificate of completion was
issued on January 25, 1967. The statement of
claim then alleges that on or about September
21, 1967, defects or faults in respect of the roof
of the building appeared. The defendant, it is
said, failed to rectify or make good the defects
(pursuant to its contract) and the plaintiff claims
a substantial sum which was laid out to effect
repairs.
•
The defence was filed on January 24, 1974.
By the provisions of Rule 402(2)(a), a defence
may be filed within 30 days from the service of
the statement of claim. Counsel appear to be in
agreement that, under normal circumstances,
any third party notices ought to have been filed
and served on or before October 2, 1972, or
certainly before January 24, 1974.
The examinations for discovery referred to
took place in December 1972. On January 31,
1973, the defendant's solicitors wrote Ingram
and Pye, the plaintiff's architects on the con
struction project, expressing an intention to add
that firm as a party. Some meetings and further
correspondence took place, all of which is set
out in Mr. McGee's affidavit, sworn April 17,
1974. On the material before me, nothing fur
ther happened between the defendant and
Ingram and Pye, and no further legal steps were
taken until February 18, 1974.
On that date, the defendant issued five third
party notices directed to the following persons:
Ingram and Pye, T. P. Crawford Limited,
George Hannaford & Sons Limited, Miner
Rubber (The Miner Company Limited (?)) and
F. Hyde & Company.
Proceedings against the last-named third party
have been abandoned. Certain third parties
entered appearances, conditional and uncondi
tional, to the notices. In view of subsequent
events, those particular appearances are no
longer relevant, except in the case of Ingram
and Pye.
That firm launched a motion (number 3
above, before amendment) on March 1, 1974
for an order:
(a) striking out the third party notice directed
to it;
(b) alternatively, requiring particulars of the
notice;
(c) extending the time within which Ingram
and Pye might enter an appearance.
On April 17, 1974, the defendant's solicitors
filed a motion for an order extending the time
"for filing and serving the Third Party Notice
filed herein ..." (motion number 1 above). The
particular third party notice in mind is not speci
fied, but counsel for Ingram and Pye and the
defendant, before me, treated the motion as
applying to the Ingram and Pye third party
notice.
Motions 1 and 3 (before amendment) came
before me on April 23, 1974. The question of
the jurisdiction of this Court to entertain the
various third party proceedings arose. It seemed
desirable to everyone, including me, to try and
bring some order into what had gone on before
so that any objections to all the third party
proceedings, including any objections going to
jurisdiction, be heard at the same time. Accord
ingly, an order was pronounced on April 25:
(a) extending the time for filing and serving
new third party notices against the proposed
third parties earlier listed, except Ingram and
Pye;
(b) the proposed third parties were given
leave to enter, once served, conditional
appearances;
(c) the defendant was directed to issue a
motion for third party directions;
(d) notice of any objections to the third party
proceedings was to be given;
(e) Ingram and Pye's motion (number 3) was
to be brought on at the same time as the
motion for directions. (There is an obvious
error in paragraph 5 of my order of April 25);
(f) the rights of the third parties to object to
the extension of time granted in (a) were
preserved.
By oversight on my part, motion number 1
was not dealt with in the order of April 25, but
nothing turns on that. It was brought on again at
the date of the present hearing.
I propose now to set out the essence of each
third party notice, all of which claim indemnity:
Ingram and Pye: in respect of the contract
(between plaintiff and defendant) on the
grounds there were defective specifications,
supplied by them, in that contract.
George Hannaford & Sons Limited: it is
alleged this company, by a sub-contract dated
March 2, 1966, supplied and installed a con
crete roof deck. Presumably there were
defects in that construction, which are the
basis of the main action.
The Miner Company Limited: it allegedly
undertook to specify certain adhesive ma
terial to be used to bond a rubber membrane
to the concrete deck of the roof.
T. P. Crawford Limited: it is alleged this
company, by a sub-contract dated November
30, 1965, undertook to supply all roofing, etc.
in accordance with the specifications of the
main contract.
Another affidavit of Mr. McGee, sworn May
2, 1974, elaborates somewhat on the relation
ships, contractual and otherwise, between the
third parties and the defendant. Reference is
made to certain conditions of the main contract
having been incorporated into the sub-contracts
with George Hannaford & Sons Limited and T.
P. Crawford Limited, but there is no suggestion
that there was some legal relationship, expressly
or by implication, created between those two
third parties and the plaintiff. According to Mr.
McGee's affidavit, the roofing adhesive was
specified in the main contract—"as recommend
ed by roofing material manufacturer (The Miner
Rubber Company Limited)". It is further stated
in the affidavit that the Miner Company sup
plied the rubber roofing membrane called for in
the main contract. Finally, the affidavit alleges
that Ingram and Pye prepared the plans and
specifications contained in the main contract,
and that the roof design was defective.
I shall now deal with the motions:
Motion 1
It is convenient to consider at the same
time the objections advanced by the other
three third parties to the order already made
extending the time for filing and serving the
notices against them. The objections are the
same as those made on behalf of Ingram and
Pye. It is submitted the Court should not
exercise its discretion under Rule 3(1)(c) and
extend time in the circumstances here
because the limitations set out in the Limita
tions Act, R.S.O. 1970, c. 246 have come into
play. It is said that any cause of action by the
defendant against the third parties arose no
later than September 21, 1967, the date on
which the defects in the roof came to light.
The prescription period is six years.
I am not disposed at this stage of the pro
ceedings to rule on questions of prescription.
That is, in effect, what I am being asked to
do. In my view, there should at least be
pleadings between the defendant and third
parties, and probably an agreement on evi
dence or facts, before the Court is invited to
determine whether or not limitation provi
sions apply. While on the face of the present
proceedings a prima facie prescription may
appear to have arisen, there might be, for
example, some agreement between one or all
of the third parties and the defendant,
expressly or by implication, waiving any limi
tation. That would then be a matter of plead
ing and evidence, with the point to be deter
mined at a stage later than this.
Setting aside, therefore, the problem of pre
scription, the Court has a discretion in proper
circumstances to extend time. It is true this
action was commenced in 1972, but apparent
ly the defendant was not required to file a
defence until recently. That cannot affect the
rights of the third parties but, on the material
before me, I cannot see the delay has caused
any prejudice to them.
There will, therefore, be an order extending
the time to and including March 1, 1974 (the
date motion 3 (before amendment) was filed)
for the filing and serving of the third party
notice against Ingram and Pye.
Motions 2 and 3
The remaining portion of motion 3 can be
considered along with motion 2. Ingram and
Pye, alternatively, seek an order requiring
that further particulars be provided of the
allegations in the third party notice. A third
party notice is the equivalent of a writ of
summons. It is not a statement of claim.
Counsel for Ingram and Pye contends the
detail in the present third party notice is so
scant that his client is not in a position to
decide whether or not to defend the proceed
ing, and therefore further particulars ought to
be ordered. I do not see any substance in this
argument. A copy of the statement of claim
was served with the third party notice. In my
view, Ingram and Pye can have no difficulty
in ascertaining the substance of their alleged
involvement in the litigation and in deciding
whether or not they should enter an
appearance.
It is almost unknown to order particulars of
a writ of summons or a third party notice. The
cause of action set out in either document is,
as a matter of course, elaborated upon in the
statement of claim in the main action, or in
the statement of claim filed in the third party
proceedings pursuant to an order for
directions.
The request for particulars is denied.
I now turn to the defendant's motion for
directions. The return date of that motion is the
proper stage at which objections to the third
party proceedings may be taken. The remaining
objection made on behalf of all the third parties
is that this Court has no jurisdiction to entertain
or hear the third party proceedings. In my view,
this objection is well-founded. I refer to: The
King v. Consolidated Distilleries Ltd. (Con-
solidated Exporters Corporation Limited—
Third Party) [1929] Ex.C.R. 101, affirmed
[1930] S.C.R. 531 sub. nom. Consolidated Dis
tilleries Limited v. Consolidated Exporters Cor
poration Ltd.; The King v. The Bank of Mon-
treal (The Royal Bank of Canada—Third Party)
[1933] S.C.R. 311; The King v. Sauvageau
[1947] Ex.C.R. 16; The Queen v. Hochelaga
Warehouses Ltd. [1972] F.C. 1395 and The
Queen v. The J. B. & Sons Co. Ltd. [1970]
S.C.R. 220, per Pigeon J. at pp. 232-233.
The first four cases all dealt with third party
proceedings in either the Exchequer Court or
the Federal Court, and in each case the particu
lar court held, in the circumstances, there was
no jurisdiction. In each of those cases the
Crown was the plaintiff, and the defendant was
a subject who sought, by third party procedure
against another subject, to obtain indemnity or
other relief in respect of the plaintiff's claim.
I see no distinction in the third party proceed
ings commenced in this case. Some suggestion
was made that the four cases referred to are
distinguishable on their facts, and that in the
instant case, jurisdiction can be found. It is said
the contract sued upon by the Crown for the
construction of the airport facilities falls within
the subject-matter of "aeronautics" which is
within the exclusive jurisdiction of Parliament 1 .
Because the claims for indemnity arise out of
and are related in some aspects to the contract
in the main action, then this Court, it is urged,
has jurisdiction.
I am unable to accept that submission. In the
Bank of Montreal case (supra), the Crown sued
the Bank of Montreal, its banker, to recover
monies paid out of its account in respect of
cheques having forged or unauthorized endorse
ments. The Bank of Montreal, by third party
proceedings, in which it relied on section 50 of
the Bills of Exchange Act, claimed indemnity
against the Royal Bank of Canada. The cheques
in question had initially been negotiated by that
bank. Not only was the claim by the Crown
properly within the jurisdiction of the Excheq
uer Court, but it appears to have been based on
a matter within the legislative competence of
Parliament (Bills of Exchange). The third party
proceeding in its very terms was based on the
same statute. Duff C.J., rendering the judgment
of the Court, said at pp. 315-316:
We have no doubt that, notwithstanding the comprehen
sive language of these sections, they do not invest the
judges of the Exchequer Court with power, by promulgating
a rule, to enlarge the scope of the subject matters within the
jurisdiction of the Exchequer Court. The question of sub
stance is whether the claim of the appellant set forth in the
third party notice under section 50 of the Bills of Exchange
Act is a claim in respect of which the Exchequer Court has
jurisdiction. That jurisdiction is defined by section 30 of the
Act which, in so far as material, is in these words:
30. The Exchequer Court shall have and possess con
current original jurisdiction in Canada
(a) in all cases relating to the revenue in which it is
sought to enforce any law of Canada, including actions,
suits and proceedings by way of information to enforce
penalties and proceedings by way of information in rem,
See Johannesson v. Municipality of West St. Paul [1952]
1 S.C.R. 292.
and as well in qui tam suits for penalties or forfeiture as
where the suit is on behalf of the Crown alone;
* * * *
(cl) in all other actions and suits of a civil nature at
common law or equity in which the Crown is plaintiff or
petitioner.
The principal contention of counsel for the appellants was
that, the proceeding under the information being an action
or suit "of a civil nature * * * in which the Crown is
plaintiff * * * ," the Court has, by the explicit words of the
section, "concurrent original jurisdiction" with the courts of
the provinces,—in this case with the Supreme Court of
Ontario, in which province the cause of action arose. In
such an action, that court would have jurisdiction to try and
give judgment upon such a claim as that presented by the
third party notice, and it is argued therefore that the Ex
chequer Court is invested with a like jurisdiction.
We cannot accede to this ingenious argument. The
Supreme Court of Ontario has jurisdiction, by virtue of the
statutes and rules by which it is governed, to entertain and
dispose of claims in what are known as third party proceed
ings. Claims for indemnity, for example, from a third party,
by a defendant in respect of the claim in the principal action
against him, can be preferred and dealt with in the principal
action. But there can be no doubt that the proceeding
against the third party is a substantive proceeding and not a
mere incident of the principal action. These rules are in
essence rules of practice, not of law, introduced for the
purposes of convenience and to prevent circuity of proceed
ings. We think, therefore, that section 30, in virtue of the
sub-paragraph mentioned, by which the Exchequer Court
possesses "concurrent original jurisdiction * * * in * * *
actions * * * of a civil nature * * * in which the Crown is
plaintiff," does not make it competent to the Exchequer
Court to deal with the claim in question.
The remaining point concerns the language of sub-para
graph (a) by force of which the Court is given jurisdiction
in all cases relating to the revenue in which it is sought to
enforce any law of Canada * * *
We do not doubt that the words "to enforce any law of
Canada" would have, standing alone, sufficient scope to
include a claim under section 50 of the Bills of Exchange
Act. No doubt the principal action is strictly within the
words "cases relating to the revenue." There is also, no
doubt, a sense in which the third party claim relates to the
revenue since it is a claim to have the third party indemnify
the defendant in respect of a debt which the defendant is
called upon to pay to the Crown. There is a great deal to be
said also on grounds of convenience in favour of investing
the Court with jurisdiction to entertain such claims for
indemnity. On the whole, however, we think, having regard
to the context, that this claim is not within the intendment of
sub-paragraph (a).
I am unable to distinguish the Bank of Mon-
treal case. The sections of the Exchequer Court
there referred to by the Supreme Court are
somewhat different from the present sections of
the Federal Court Acte (see subsections
17(1)-(4)). I do not consider the differences to
be of substance, and so make inapplicable the
principles laid down by the Supreme Court.
The motion for directions is dismissed. As I
understand the practice, where an order for
directions is not obtained, or is refused, the
third party proceedings are, for practical pur
poses, stayed.
In the end result, the motion for an order
extending the time for filing and serving the
third party notice against Ingram and Pye is
granted. The motion by Ingram and Pye is dis
posed of as earlier set out in these reasons. The
motion for directions is, as I have said, dis
missed. In the circumstances, I think the equita
ble order as to costs should be that the defend
ant pay, in any event of the cause, the costs to
date of the various third parties.
2 R.S.C. 1970, c. 10 (2nd Supp.).
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.