Ontario Employers’ Ability to Claim Indemnification from Their Employees for Employee Negligence

(c) istock/nomangarden

Can an employee be sued by his employer if, by his own negligent actions, he causes his employer to suffer a financial loss? In legalese, at Ontario common law, if an employer is found vicariously liable for the negligent actions of its employee, in which negligence the employer was no way contributorily negligent, can the employer successfully make claim for indemnification from its employee?

Employers Must Sue for Indemnification Within Two Years: ONCA

What is the limitation period applicable to a claim for indemnification, where the right to indemnification is contained within an employment contract? According to the Court of Appeal for Ontario, two years from the date upon which the original claim is served on the employer.

As reported earlier by this blog in the post Limitation Period Applicable to a Claim for Indemnification in October of last year the Honourable Madam Justice Heidi Polowin of the Ontario Superior Court of Justice sitting at Ottawa found that the limitation period applicable to a claim for indemnification pursuant to an employment contract was not affected by section 18 of the Ontario Limitations Act, 2002.

In my January 2013 post, mentioned above, I argued that the decision was incorrect and contradicted two earlier decisions from 2010, one from the Court of Appeal for Ontario and one from the Superior Court.

Yesterday, June 7, 2013 the Court of Appeal released its decision, Canaccord Capital Corporation v. Roscoe, 2013 ONCA 378. The Court of Appeal reached the same conclusion as did this author.

Limitation Period Applicable to a Claim for Indemnification

What is the limitation period applicable to a claim for indemnification, where the right to indemnification is contained within an employment contract? According to a recent decision from the Honourable Justice Heidi Polowin, Canaccord Capital Corporation v. Roscoe, 2012 ONSC 5714 (CanLII), two years from the date upon which the employer is found liable to a third-party plaintiff.

[EDIT: The Superior Court decision was overturned by the Court of Appeal for Ontario on June 7, 2013. For a summary of that decision see: Employers Must Sue for Indemnification Within Two Years: ONCA.]

The case raises the issue of the rights of third parties and the ability to add third parties after the expiry of limitation dates, especially those set out in section 18 of the 2002 Limitations Act.