The Saskatchewan Court of Appeal has ruled that the one-year limitation period under The Cities Act applies to wrongful dismissal claims against a city-controlled corporation but does not necessarily extend to claims against its individual directors.
The decision partially overturns a lower court ruling that had dismissed a wrongful dismissal lawsuit in its entirety on limitation grounds.
The case involved G.E., a former general manager of Moose Jaw Downtown and Soccer/Field House Facilities Inc. (DFHF), a non-profit corporation established by the City of Moose Jaw. G.E. was dismissed for cause during his probationary period and later sued DFHF and its directors for wrongful dismissal. He alleged that his termination was not based on misconduct but was instead retaliation for launching an internal investigation into harassment allegations.
The directors, he claimed, had breached their duty to act honestly and in good faith.
A judge struck the entire lawsuit on the basis that it was filed after the one-year limitation period prescribed in The Cities Act. However, the Court of Appeal ruled that while the claim against DFHF was indeed time-barred, the same limitation period did not necessarily apply to the claims against the directors.
Background
DFHF was incorporated by the City of Moose Jaw to manage municipal real estate and public facilities. Its board of directors included three elected city councillors — B.S., S.M., and C.F.—as well as T.S., the city’s Director of Parks and Recreation, who served as an ex officio board member.
G.E. was hired as DFHF’s general manager on January 15, 2018, but was dismissed on May 24, 2018, for “incompatibility with staff and relationships with third-party groups.” DFHF continued to pay his salary until June 15, 2018. Nearly two years later, on April 15, 2020, he filed a lawsuit against DFHF and its directors.
The defendants sought to strike the claim, arguing that it was statute-barred under section 307(1) of The Cities Act, which states that actions seeking damages against a city must be brought within one year of the event giving rise to the claim. The Chambers judge agreed and dismissed the case without considering additional allegations that the defendants had intentionally concealed documents that could have affected the limitation period.
Appeal decision
The Court of Appeal upheld the dismissal of the claim against DFHF, confirming that the one-year limitation period applied. However, it found that the lower court had erred in summarily striking the claims against the individual directors.
The court examined whether section 307(1) of The Cities Act should extend to directors of a city-controlled corporation. While it was undisputed that DFHF, as a controlled corporation, fell within the definition of a “city” under the Act, the directors were not automatically covered by the same limitation period.
The Chambers judge had relied on a prior Saskatchewan case, Platana v Saskatoon (City), which found that limitation periods applying to municipalities could extend to municipal employees in cases where the city was vicariously liable for their actions. However, the Court of Appeal distinguished this case, noting that:
- The directors of DFHF were not employees but appointees to a separate legal entity.
- The wrongful dismissal allegations against them were based on their actions as directors, not as city officials.
- The city’s vicarious liability for its employees under section 318(1) of The Cities Act was conditional on the individual being personally liable, which was disputed in this case.
Given these distinctions, the Court of Appeal ruled that it was not “plain and obvious” that the limitation period applied to the directors. As a result, striking the claims against them was premature.
Implications
The Court of Appeal’s decision means that claims against the directors will now proceed, unless the lower court determines they should be dismissed on other grounds. The court remitted the case to the Chambers judge for further consideration, including whether the directors had acted in bad faith and whether document production should be ordered.
While the ruling reaffirms the one-year limitation period for wrongful dismissal claims against city-controlled corporations, it clarifies that individual directors may not necessarily be shielded by the same restriction.
For more information, see Edge v Moose Jaw Downtown and Soccer/Field-House Facilities Inc., 2025 SKCA 17 (CanLII).
