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Torts - Negligence - Contributory Negligence
MORE CASES
Part 2
OVERVIEW
'Contributory negligence' and 'contribution' are confusing. Properly used, the term 'contributory negligence' (the subject of this file) is when either a plaintiff or other (real or potential) defendants are partly to blame (or allegedly to blame) for damage. 'Contribution', properly used, is a claim - regardless of tort - that a person has to recover funds already paid, typically by an indemnifier. The term 'contribution' is often used to refer to a contributory negligence claim brought by a defendant against another defendant (a third party claim).
Ontario's Negligence Act is concerned with contributory negligence, but has an element of 'contribution' when a co-defendant pays (ie. has collected against them) more than their proportionate 'share' of a judgment, and pursues another co-defendant for their contribution.
. Ontario v. Madan
In Ontario v. Madan (Ont CA, 2023) the Court of Appeal considered an ambitious fraud defence of contributory negligence, here one that amounts to the accusation that the victim left themselves open to the fraud:[18] The contributory negligence defence advanced by the appellants is predicated on Ontario’s alleged failure to take adequate steps to protect itself from the fraud perpetrated against it. The defence, as framed in the statements of defence, applies to all of the claims advanced by Ontario, including the fraud, theft, and conversion claims: see e.g., Shalini’s Statement of Defence, at paras. 30-33, 35.
[19] The proposition that a fraudster’s liability for damages flowing from its fraud should be reduced to reflect a victim’s failure to protect itself from the fraud would, if accepted, strongly suggest that if perpetrated against the right victim, crime would indeed pay. Thankfully the law is to the contrary. As the motion judge held, a victim’s negligence or carelessness affords no defence, partial or otherwise, to an allegation of dishonesty: Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 S.C.R. 678, at paras. 67-71; Man Financial Canada Co. v. Keuroghlian, 2008 ONCA 592, 47 B.L.R. (4th) 190, at paras. 44-46.
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[25] Apart from the state of the case law, the appellants’ claim fails on a first principles analysis. The appellants maintain that even if they are in possession of assets that are the indirect proceeds of the frauds perpetrated against Ontario, and even though the appellants have no legitimate claim to any part of the proceeds of those frauds, they should be entitled to keep the assets, or at least part of the assets, which are the indirect proceeds of the fraud, presumably to “punish” Ontario for not taking adequate steps to protect itself from the fraud.
[26] On this approach, the appellants become the beneficiaries of what can only be described as a windfall, occasioned by Ontario’s failure to protect itself from Sanjay’s fraud. I am unaware of any equitable principle which justifies this result. Indeed, the result, a permanent financial loss for Ontario, the victim of the fraud, and a windfall gain for the appellants, bystanders to the fraud, seems the antithesis of equity. . Ontario v. Madan
In Ontario v. Madan (Ont CA, 2023) the Court of Appeal states the policy underlying contributory negligence:[42] Nothing alleged in the pleadings could support a finding that Ontario should be held vicariously liable for Sanjay’s invasion of the appellants’ privacy. In Bazley v. Curry, 1999 CanLII 692 (SCC), [1999] 2 S.C.R. 534, McLachlin J. dealt at length with the nature and scope of an employer’s vicarious liability for the actions of its employees. She observed, at para. 37:Underlying the cases holding employers vicariously liable for the unauthorized acts of employees is the idea that employers may justly be held liable where the act falls within the ambit of the risk that the employer’s enterprise creates or exacerbates. Similarly, the policy purposes underlying the imposition of vicarious liability on employers are served only where the wrong is so connected with the employment that it can be said that the employer has introduced the risk of the wrong (and is thereby fairly and usefully charged with its management and minimization). The question in each case is whether there is a connection or nexus between the employment enterprise and that wrong that justifies imposition of vicarious liability on the employer for the wrong, in terms of fair allocation of the consequences of the risk and/or deterrence. [Emphasis added.] [43] The risk that Sanjay would misuse the private banking information entrusted to him by his family was not a risk “that the employer’s enterprise creates or exacerbates.” Nor was the violation of the appellants’ privacy rights by Sanjay’s misuse of their private banking information “so connected with the employment that it can be said that the employer has introduced the risk of the wrong”. In fact, there is no connection between Sanjay’s employment with Ontario and the wrong underlying the intrusion upon seclusion claim.
[44] The appellants rely on Evans v. Bank of Nova Scotia, 2014 ONSC 2135, 55 C.P.C. (7th) 141, leave to appeal to Div. Ct. refused, 2014 ONSC 7249. In that case, however, the employee, in respect of whom the employer was potentially vicariously liable, had misused private customer information made available by the employer to the employee in the course of his employment. On those allegations, the employer could potentially be held vicariously liable for the employee’s use of the private information of the bank’s customers entrusted to the employee by the bank in the course of his employment with the bank. On the facts alleged here, Ontario did not provide any information to Sanjay in respect of the private affairs of the appellants. It was the appellants who provided their private information directly to Sanjay, not because he worked for Ontario, but because, as their husband and father, they trusted him to look after their financial affairs. . Tokarz v. Selwyn (Township)
In Tokarz v. Selwyn (Township) (Ont CA, 2022) the Court of Appeal considered an issue of apportionment of liability:[30] Sections 1 and 3 of the Negligence Act, R.S.O. 1990, c. N.1, provide that:1 Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.
3. … the court shall apportion the damages in proportion to the degree of fault or negligence found against the parties respectively. [31] Apportionment of liability is an inquiry into which party failed most markedly to live up to their expected standard of care: Parent v. Janandee Management Inc., 2017 ONCA 922, at para. 15. The court in Ingles at para. 57 held that,The apportionment of liability is primarily a matter within the province of the trial judge. Appellate courts should not interfere with the trial judge’s apportionment unless there is demonstrable error in the trial judge’s appreciation of the facts or applicable legal principles. [Emphasis added] [32] Likewise, this court in Banihashem-Bakhtiari v. Axes Investments Inc. (2004), 2004 CanLII 36112 (ON CA), 69 O.R. (3d) 671 (C.A.), leave to appeal refused, [2004] S.C.C.A. No. 145, at para. 8, held that, “A re-apportionment of liability sought on appeal will only be granted in strong and exceptional cases.”
[33] In Ingles, the court held that when conducting a building inspection pursuant to the Building Code, the city was “not required to discover every latent defect” in construction; it is, however, “required to conduct a reasonable inspection in light of all of the circumstances” and it will be “liable for those defects that it could reasonably be expected to have detected and to have ordered remedied”: Ingles at paras. 20 and 40.
[34] In this case, the trial judge held that “a proper inspection would have staunched the issue of the poor construction”; in other words, had the Township performed an inspection to the standard required of it, it would have detected the construction defects that gave rise to the respondents’ damages. Instead, the Township failed to properly inspect the property and Cleave was never faced with Orders to Comply or to render the installation safe.
[35] A township falls “well below the required standard of care” when it fails to properly review an application for a building permit, thereby completely failing to discharge its duty to enforce the Building Code “for the health and safety of the public”: Breen v. The Corporation of the Township of Lake of Bays, 2021 ONSC 533 (CanLII), 2021, 153 O.R. (3d) 514, at paras. 92-93 and 115. The failure to properly review building plans in circumstances like these is a “marked departure” from the standard of care: Mortimer v. Cameron (1994), 9 M.P.L.R. (2d) 185 (Ont. Gen. Div.); rev’d in part (1994) 1994 CanLII 10998 (ON CA), 17 O.R. (3d) 1 (C.A.); leave to appeal refused, [1994] S.C.C.A. No. 150.
[36] In such cases, trial judges are afforded wide discretion in apportioning damages . Parent v. Janandee Management Inc.
In Parent v. Janandee Management Inc. (Ont CA, 2017) the Court of Appeal clarifies that when considering apportionment of liability under the Negligence Act, that the operative terms 'fault or negligent' should not be conflated with that of 'causation':[12] The next issue raised by Janandee, and which appears to be the central one in this appeal, is whether the trial judge properly instructed the jury on the principles of apportionment of liability.
[13] The difficulty revolves around references to causation, both directly in the questions given to the jury, and indirectly in the charge to the jury as it related to apportionment. Janandee submits that the trial judge confused the issue of causation, which is relevant to the breach of the duty of care, with the issue of fault that is relevant to the apportionment exercise. Janandee says that this error may explain why the jury arrived at the somewhat unusual split of 94/6. Janandee says that this error is sufficiently serious that this court should intervene by setting aside the jury’s verdict and reapportioning the liability 75% to Upright Signs and 25% to Janandee.
[14] Janandee correctly points out that the Negligence Act, R.S.O. 1990, c. N.1 provides, in s. 1, that where damages are caused or contributed by two or more persons “the court shall determine the degree in which each of such persons is at fault or negligent”. Fault is different than causation. In commenting on s. 1 of the Negligence Act in Rizzi v. Mavros, 2008 ONCA 172 (CanLII), Lang J.A. said, at para. 48:A plain reading of this provision requires apportionment based on the "fault or negligence" of each party, rather than on the basis of causation. It would be in error to apportion liability on the degree to which the appellant or the respondents caused the damages. [15] The notion of fault involves a consideration of the blameworthiness of the actions of each of the defendants who have contributed to the damages suffered. As Professor Klar says in his text (L. N. Klar, Tort Law, 5th ed, (Toronto: Carswell, 2012)), at p. 582:[A]ssessing degrees of fault or the extent of a person’s responsibility must relate to the relative culpability or blameworthiness of the parties. The apportionment decision depends upon which of the defendants failed most markedly to live up to the standards of conduct expected. . J.K. v. Ontario
In J.K. v. Ontario (Ont CA, 2017) the Court of Appeal elaborates on the important issue of what non-negligence causes of action may be subject to contribution and indemnity under the Negligence Act (and here includes breach of fiduciary duty):[27] I agree with the Crown that it is not plain and obvious that J.K.’s claim that the Crown breached its fiduciary duty could not also support a third party claim. It is possible that the damages suffered by J.K. were caused concurrently by the Crown’s breach of its fiduciary duty and the Third Parties’ negligence.
[28] In concluding that J.K.’s claims for breach of fiduciary duty could not support a third party claim, the motion judge relied on Johnston v. Sheila Morrison Schools, 2012 ONSC 1322 (CanLII), 20 C.P.C. (7th) 103. In that case, the Divisional Court held that there can be no right of contribution and indemnity on account of a breach of fiduciary duty because such liability is not subject to apportionment. It did not cite authority for this proposition.
[29] However, in Ault v. Canada (Attorney General), 2011 ONCA 147 (CanLII), this court apportioned liability between one group of wrongdoers who were found liable for negligent misrepresentation and breach of fiduciary duty, and the Attorney General of Canada, who was found liable for negligent misrepresentation. Ault illustrates that one party’s breach of fiduciary duty and another’s negligence may contribute to a plaintiff’s loss.
[30] The indemnity clause in the service contracts might permit the Crown to seek indemnity for any damages for which it is found liable as a result of its breach of fiduciary duty if the damages were also “occasioned by or attributable to” the Third Party’s negligence.
[31] Further, the right to contribution under s. 1 of the Negligence Act has been held to apply not only to negligence, but to other fault-based causes of action: Pet Valu Inc. v. Thomas, [2004] O.J. No. 497, 2004 CanLII 23785 (ON SC), 2004 CanLII 23785, at para. 24, citing Bell Canada v. Cope (Sarnia) Ltd. (1980), 11 C.C.L.T. 170 (Ont. H.C.), at 179-80, affirmed (1981), 1980 CanLII 1868 (ON CA), 119 D.L.R. (3d) 254 (Ont. C.A.) As a result, it is not plain and obvious that the Crown would not have a claim under that Act in such a situation. . Hengeveld v. The Personal Insurance Company
In Hengeveld v. The Personal Insurance Company (Ont CA, 2019) the Court of Appeal held that where negligence of a third party is due to the plaintiff, no cause of action for contribution and indemnity exists against that third party:(1) Where Negligence of a Third Party is Attributable to the Plaintiff No Cause of Action for Contribution and Indemnity Exists Against That Third Party
[18] Rule 29.01(a) permits a defendant to commence a third party claim against any person not already a party to the action who “is or may be liable to the defendant for all or part of the plaintiff’s claim”.
[19] A third party claim, like any action, must have a substantive component — it must assert a cause of action. Here the third party claim does not rely on any duty allegedly owed by the lawyers to Personal Insurance. It relies on the contribution and indemnity provisions of the Negligence Act (ss. 1, 2 and 5) to claim that the lawyers should be liable to Personal Insurance for all or part of the Hengevelds’ claim. But Personal Insurance also relies on the contributory negligence provision of the Negligence Act (s. 3) to assert that the Hengevelds themselves are responsible for all or part of their own claimed damages. The interaction of those provisions is therefore important.
[20] The Negligence Act provides, in s. 1, that where damages have been caused or contributed to by the fault or neglect of two or more persons, each is jointly and severally liable to the plaintiff who has suffered those damages, but as between themselves “each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.” Section 2 permits a defendant who has settled with the plaintiff for more than its proportionate share of the plaintiff’s damages to make a claim for contribution and indemnity against another person “who is, or would if sued have been, liable” for those damages. Section 5 of the Act contemplates the situation where a defendant has been sued but believes there is another wrongdoer who caused or contributed to the plaintiff’s injury and has not yet been sued. It allows a defendant to pursue a right of contribution and indemnity against that person by third party claim, according to the rules of court for adding third parties.
[21] A third party claim based on the contribution and indemnity provisions of the Negligence Act does not require that the third party owe a duty of care to the defendant. It is sufficient that the third party owe a duty of care to the plaintiff, making the third party someone who, if sued by the plaintiff, would have been liable in respect of the damage the plaintiff suffered: Corcoran, at pp. 35-36.
[22] The contribution and indemnity provisions of the Negligence Act must be understood in light of the purpose they serve. As a general rule a wrongdoer who caused or contributed to a plaintiff’s injury is liable to compensate that plaintiff in full, even if another wrongdoer caused or contributed to the plaintiff’s injury: Athey v. Leonati, 1996 CanLII 183 (SCC), [1996] 3 S.C.R. 458, at para. 22. The contribution and indemnity provisions allow a wrongdoer not solely at fault but at risk of being held liable for 100% of the plaintiff’s injury to recover indemnity from another wrongdoer to the extent of the latter’s relative degree of fault: Endean v. St. Joseph’s General Hospital, 2019 ONCA 181 (CanLII), at para. 48.
[23] However, a plaintiff’s own contributory negligence will reduce its claim for damages against a defendant. Section 3 of the Negligence Act provides:In any action for damages that is founded upon the fault or negligence of the defendant if fault or negligence is found on the part of the plaintiff that contributed to the damages, the court shall apportion the damages in proportion to the degree of fault or negligence found against the parties respectively. [24] Accordingly, under the Negligence Act’s contributory negligence provision, a defendant may raise fault or negligence on the part of the plaintiff that caused or contributed to the plaintiff’s damages as a defence. If successful, the plaintiff’s claim against the defendant will be reduced according to the plaintiff’s relative degree of fault. Under the Negligence Act’s contribution and indemnity provisions, a defendant may raise a third party’s fault or negligence that caused or contributed to the plaintiff’s damages as a third party claim. If successful, the defendant will remain 100% liable to the plaintiff but may obtain indemnity from the third party according to the third party’s relative degree of fault.
[25] But a defendant may not double dip. Where the fault or neglect which a defendant argues caused or contributed to the plaintiff’s injury is fault or neglect that will reduce the plaintiff’s claim, there is no risk that a defendant will have to pay 100% of the plaintiff’s loss notwithstanding that fault or neglect. The basis for a claim under ss. 1, 2 and 5 of the Negligence Act — to allow a wrongdoer to obtain indemnity for a payment to the plaintiff that exceeded the wrongdoer’s degree of fault — does not exist in such circumstances because of the direct reduction of the plaintiff’s claim.
[26] This principle was applied in Taylor v. Canada (Health), 2009 ONCA 487 (CanLII), 95 O.R. (3d) 561. In that case, a defendant to a class action sought to add third parties from whom the defendant wished to claim contribution on the basis that they may have been liable for part or all of the class members’ injuries. But in order “to preclude the [defendant’s] attempt to assert a third-party claim” and with the intention that “[t]he possibility of third party claims will be obviated”, the plaintiff amended her statement of claim to specifically plead that her claim against the defendant was limited to the defendant’s proportionate share of fault: at paras. 9-10. In the circumstances, it was clear that she was prepared to reduce the damages claimed by the proportion of fault that would be attributed to the proposed third parties.
[27] This court upheld the motion judge’s striking of the third party claim as disclosing no reasonable cause of action, stating at para. 20:[C]ontribution rights arise only where a defendant is required to pay more than its proportionate share of a plaintiff’s damages. In the present case, Ms. Taylor has limited her claim and those of the class members to those losses attributable to [the defendant’s] negligence. In other words, she is not seeking all of her damages from [the defendant]; she seeks only the portion of her damages attributable to [the defendant’s] neglect and not the portion of her damages that may be attributable to the neglect of the doctor or the hospital. ... Because she is not seeking 100% of her damages, the full compensation principle articulated in Athey v. Leonati does not apply; equally, resort to s. 5 of the Negligence Act is unnecessary. [28] Taylor was a case where the attribution to the plaintiff of the proposed third parties’ negligence came about by the plaintiff’s express wish.[3] But the same result flows from attributing negligence to the plaintiff as a matter of law, since s. 3 of the Negligence Act has the same effect in respect of the attributed negligence: it reduces the plaintiff’s claim so that the defendant is only at risk of being held liable for the portion of the plaintiff’s damages attributable to the defendant’s negligent conduct and to the distinct negligent conduct of other parties (i.e. negligent conduct that is distinct from the plaintiff’s negligent conduct). This makes contribution rights against third parties in respect of the negligence attributed to the plaintiff inapplicable.
[29] Accordingly, whether a claim by a defendant seeking contribution and indemnity from a third party for alleged negligence that caused or contributed to the plaintiff’s damages discloses a reasonable cause of action is a function of whether that negligence is attributable to the plaintiff. If it is attributable to the plaintiff, the defendant has no cause of action against the third party.
(2) When A Plaintiff’s Lawyer’s Negligence Will Be Attributed to the Plaintiff
[30] Several decisions of this court have considered the propriety of a third party claim under the Negligence Act where the third parties are the plaintiff’s lawyers: see Corcoran; Davy Estate v. CIBC World Markets Inc., 2009 ONCA 763 (CanLII), 97 O.R. (3d) 401; and Macchi S.P.A. v. New Solution Extrusion Inc., 2008 ONCA 586 (CanLII). Those cases adopt, as their starting point, the decision of McLachlin J.A. (as she then was) in Adams v. Thompson, Berwick, Pratt & Partners (1987), 1987 CanLII 2590 (BC CA), 15 B.C.L.R. (2d) 51 (C.A.).
[31] In Adams, property developers sued a firm of engineers alleging that their negligence in designing a subdivision delayed the sale of lots. The engineers issued third party proceedings against the plaintiffs’ lawyers alleging they had breached certain duties to the plaintiffs which, if fulfilled, would have allowed the plaintiffs to reduce the delays. In deciding the third party claim should be struck, McLachlin J.A. stated, at pp. 55-56:It thus may be stated with confidence, in my view, that a third party claim will not lie against another person with respect to an obligation belonging to the plaintiff which the defendant can raise directly against the plaintiff by way of defence. Where the only negligence alleged against the third party is attributable to the plaintiff, there is no need for third party proceedings since the defendant has his full remedy against the plaintiff. On the other hand, where the pleadings and the alleged facts raise the possibility of a claim against the third party for which the plaintiff may not be responsible, the third party claim should be allowed to stand.
…
Generally speaking, all acts falling within the scope of an agency between the proposed third party and the plaintiff fall into the category of acts for which the plaintiff is responsible and hence are not the proper subject [of] third party claims.
Another situation where a third party claim cannot be raised because the obligation is essentially that of the plaintiff is where the claim is one that the proposed third party should have advised or assisted the plaintiff to mitigate his damages. In that situation, like the situation of agency, third party proceedings are redundant because the defendant can obtain any relief to which he may be entitled by reduction of the plaintiff’s claim if he makes out the defence of failure to mitigate. [32] McLachlin J.A. describes two situations in which a lawyer’s negligence will be attributed in law to the plaintiff.[4] One is where the alleged negligence is committed by the lawyer as agent for the plaintiff, within the scope of the agency. A second, and different, situation is where the lawyer’s alleged negligence relates to advice about the plaintiff’s duty to mitigate a loss that has already occurred. Although both situations share the same result — the negligence will be attributed to the plaintiff and can be raised directly against the plaintiff by the defendant, making a third party claim redundant — it is important not to conflate them.
[33] The bulk of the third party claim in Adams was found to reflect an agency situation. The defendant engineers argued that the plaintiffs’ lawyers had been negligent in filing and amending, on the plaintiffs’ behalf, the prospectus required to qualify lots for sale. McLachlin J.A. said, at p. 57:Insofar as the solicitors were retained to file and amend the prospectus and otherwise deal with others on the [plaintiffs’] behalf, they were clearly acting as the plaintiffs’ agents, given that agency arises where one person “expressly or impliedly consents that the other, the agent, similarly consenting, should represent him or act on his behalf”. [Citations omitted.] [34] The agency situation also applied in Macchi. There the plaintiff sued to recover a loan and added as defendants persons it said had provided inaccurate information on which the plaintiff had relied in registering a financing statement, undermining its validity. The defendants issued third party proceedings against the lawyer who made the registration, alleging that he failed in his duties to make proper searches and enquiries required to effect a proper registration. The defendants also claimed that the plaintiff was contributorily negligent due to those same failures.
[35] Wilton-Siegel J. struck the third party claim, finding that the lawyer had acted as agent for the plaintiff in the registration: Macchi s.p.a. v. New Solution Extrusion Inc., 2007 CanLII 48653 (Ont. Sup. Ct.). At para. 21, he stated:First, [the plaintiff] … retained [the lawyer] to act as its agent in filing a valid registration statement in respect of a security interest under the PPSA. [The plaintiff] did not cease to bear the consequences of any negligence on the part of [the lawyer] by engaging him as its agent to attend to the registration. It remained responsible for the consequences of an invalid registration under the PPSA even if it resulted from negligence on the part of [the lawyer]. [36] This court upheld that decision, stating, at para. 1:On the pleadings as they stand, any negligence alleged against the proposed third party is attributable to the plaintiff. The statement of claim shows that [the plaintiff] has not distanced itself from responsibility for, or the consequences of, any negligence on the part of its counsel. (3) In This Case the Lawyers’ Alleged Negligence Was Committed as Agent for the Hengevelds
[37] In my view, the agency situation described in Adams is also present in this case. Here, the Personal Insurance pleadings make clear that the retainer of the lawyers included taking steps, on behalf of the Hengevelds, to preserve evidence, and that the lawyers’ dealings with Personal Insurance — what they did and failed to do — were dealings undertaken on the Hengevelds’ behalf. Personal Insurance specifically pleads the scope of the lawyers’ agency as embracing the lawyers’ alleged negligent conduct. There is no pleaded negligence arising from acts outside of the lawyers’ retainer. Personal Insurance itself attributes the lawyers’ conduct to the Hengevelds by alleging that the Hengevelds were negligent in making and failing to make arrangements about the Hyundai’s preservation and inspection: arrangements they allege were actually made by the lawyers on the Hengevelds’ behalves. Nor have the Hengevelds distanced themselves from responsibility for, or the consequences of, any negligence on the part of their counsel: Macchi (C.A.), at para. 1.
[38] On a fair reading of the motion judge’s decision, he found that this was a situation of agency. Whether or not his comment about the initial loss was correct, it does not affect the result. Even if the initial loss for these purposes is the disposal of the Hyundai and the alleged negligence is that the respondent lawyers, acting as the Hengevelds’ agents, caused or contributed to that loss — the same loss that Personal Insurance allegedly caused or contributed to — that negligence (i) is attributable to the Hengevelds, (ii) may be raised (as it has been) by Personal Insurance to obtain a reduction of the Hengevelds’ claim, and (iii) cannot support a third party claim.
(4) The Appellant’s Arguments Do Not Take This Case Outside of the Agency Situation
[39] The arguments of Personal Insurance that it and the respondent lawyers were involved in the initial loss do not distinguish this case from the agency situation. They could only distinguish it from the second situation described in Adams, in which the plaintiff’s lawyer is alleged to have provided negligent advice respecting mitigation.[5]
[40] Even if Personal Insurance is right that this case does not involve a claim of negligent advice resulting in a failure to mitigate, that does not assist it. In Adams, McLachlin J.A. (as she then was) considered the consequence of an allegation of negligent mitigation advice only as an alternative, on the assumption that the situation was not one of agency: Adams, at p. 57. This underscores the point that where there is an agency situation, it bars the third party claim on its own.
[41] Davy Estate does not stand for the proposition that a third party claim falling outside of the negligent mitigation advice category will be allowed to proceed. In Davy Estate the issue was whether a third party claim against the plaintiffs’ lawyers for failing to give proper advice concerning mitigation could give rise to a claim for contribution and indemnity under the Negligence Act. The court held that it could not. In that context, the court distinguished the situation where two wrongdoers are involved in causing or contributing to the plaintiff’s initial loss from a claim of negligent advice resulting in a failure to mitigate, where the defendant who caused the initial loss wishes to third party the plaintiff’s lawyers on the basis that they failed to properly advise the plaintiff to minimize the loss after the initial loss was incurred. The court emphasized the importance of the distinction, at paras. 18-19:A plea of failure to mitigate is of an entirely different character. Such a plea arises after the loss has been suffered and relates to events or conduct unrelated to the cause of the initial loss. In my view, the defendant has no claim in law against the plaintiff’s solicitor for advice given to the plaintiff as to how to mitigate the loss caused by the defendant’s own wrong.
The Negligence Act does not diminish the amount that the plaintiff can recover from either wrongdoer on account of the fault of the other, but allows the wrongdoer named as a defendant to claim contribution by way of third party proceedings against the other wrongdoer based upon their respective degrees [of] fault. A plea that the plaintiff failed to mitigate is not embraced by [s. 1 of the Negligence Act]. It is a defence to the plaintiff’s initial claim that reduces the amount that the plaintiff may recover from the defendant by shifting some portion of the responsibility for the wrong to the plaintiff. [42] It was in that context, namely, to identify why an allegation of negligent mitigation advice cannot support a third party claim, that the distinction was drawn between that type of claim and “claims for contribution and indemnity against a party alleged to have been implicated in the events giving rise to the initial loss and who is therefore jointly and severally liable with the defendant for the entire loss”: Davy Estate, at para. 23. In drawing that distinction, the court in Davy Estate was not suggesting that a third party claim falling outside of the negligent mitigation advice category will necessarily be allowed to proceed. Davy Estate reaffirmed the principle set out in Macchi, that where the plaintiff has not distanced itself from responsibility for, or the consequences of, any negligence on the part of its counsel in the course of its agency, the agency situation in Adams applies such that no third party claim can be brought against counsel: at para. 23. Because the agency situation is present here, the argument of Personal Insurance must fail.
[43] The argument that the reasoning in Corcoran applies therefore also fails. In Corcoran, a realtor was sued for negligently misrepresenting the value and development potential of commercial property. The realtor commenced a third party claim against the plaintiff’s lawyer on the transaction, alleging that he was negligent in advising the plaintiff about the contents of the agreement of purchase and sale. In allowing the third party claim to stand, the court said, at p. 35:This may not be a case where the fault alleged against the third party is in fact the fault of the plaintiff, but rather a case where the plaintiff may not be responsible for the negligence alleged against its solicitor…The plaintiff may be able to say it acted reasonably in retaining the third party to advise it on the terms of the agreement and accordingly should not be responsible for any negligence on the part of its solicitor[.] [44] In Corcoran the plaintiff retained and received advice from two professionals — its lawyer and its realtor. There was no finding of the type of agency situation described in Adams, making the lawyer’s allegedly negligent conduct attributable to the plaintiff. There was no suggestion that the lawyer acted on behalf of the plaintiff in dealing with others in a manner analogous to filing a prospectus (as in Adams), filing a financing statement (as in Macchi), or dealing with Personal Insurance about the preservation of evidence (as in this case). Unlike in Corcoran, Personal Insurance here has not pointed to any alleged act of negligence which the Hengevelds could say was, although committed by their lawyers, not their responsibility vis-à-vis Personal Insurance. Corcoran was distinguished in Macchi, an agency situation case, and it is similarly distinguishable here.
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