Case reference: Allianz Global Risks US Insurance Co. V. Nalco Chemical Co. (2014) ONSC 4302
This historical case summary discusses the decision identified above. Later decisions and legislative changes may affect how it applies today. Obtain legal advice about your circumstances.
Contribution & Indemnity
Contribution rights of a party only arises where the party could be required to pay more than its proportionate share of a plaintiff’s damages.
The Court of Appeal’s decision in Taylor v. Canada (2009), 95 O.R. (3d) 561, (2009) O.J. No. 2490 (C.A.) makes it clear that contribution rights only arise where a defendant is required to pay more than its proportionate share of the plaintiff’s damages. Where a plaintiff limits its claim to losses attributable only to certain defendants, those defendants cannot maintain claims for contribution and indemnity against other potential tortfeasors.
If the fourth parties are not being sued as concurrent tortfeasors by the third parties, the Ontario Court of Appeal’s decisions in O. (A.) v. V. (J.) (2002), 59 O.R. (3d) 384, (2002) O.J. No. 1528 (C.A.) and Lawson v. Viersen (2012), 108 O.R. (3d) 771, (2012) O.J. No. 109 (C.A.) establish that there cannot be a claim for contribution and indemnity between non-concurrent tortfeasors.
Rule 21.01(1)(b) of the Rules of Civil Procedure provides that,
” A party may move before a judge……to strike out a pleading on the ground that it discloses no reasonable cause of action or defence”.
The test under Rule 21 is whether it is plain and obvious that the party claim discloses no reasonable cause of action. “Plain and obvious” in this context has been interpreted by the Supreme Court of Canada to mean “beyond doubt”. For the purpose of the motion, the facts pleaded in the statement of claim must be taken as proven.
Section 5 of the Negligence Act provides as follows:
“Where ever it appears that a person not already a party to an action is or may be wholly or partly responsible for the damages claimed, such person may be added as a party defendant to the action upon such terms as are considered just or may be made a third party to the action in the manner prescribed by the rules of court for adding third parties”.
Any damages claimed in the third party claim are only attributable to the third parties’ proportionate degree of fault, the fourth parties cannot be “wholly or partly responsible” for them.
In Johnston v. Sheila Morrison Schools, (2012) O.J. No. 915, 2012 ONSC 1322 (Div. Ct.), the Ontario Divisional Court held that a claim for contribution and indemnity cannot be advanced in such a case. At para. 13, Swinton J. held as follows: “ In Taylor, Cullity J. determined that a third party was unnecessary in circumstances where the plaintiff was limiting her claim to the several liability of the defendant……Put differently, the plaintiff was only seeking that portion of the damages that was attributable to the named defendant. The Court of Appeal upheld Cullity J.’s decision. Writing for the Court, Laskin J. stated that apportionment of fault in negligence among parties and non-parties is possible and where a plaintiff limits himself or herself to a several claim, a third party is unnecessary. Indeed, in those circumstances, a right of contribution and indemnity does not arise. Accordingly, in that case, the defendant could not advance a third party claim for contribution and indemnity”.
In Corcoran, the purchaser of real property sued the vendor and the real estate agent who sold the land, alleging that they had misrepresented the extent to which the land could be developed. The real estate agent commenced a third party claim for contribution and indemnity against the purchaser’s lawyer alleging the lawyer should have given proper advice to the purchaser regarding the development potential of the property. the Court of Appeal allowed the third party claim to proceed. Laskin J.A. stated in part as follows, at p. 7 (QL): “The appellant has alleged that the plaintiff’s damages were caused or contributed to by its solicitors. If this is established at trial, then under s. 1 of the Act the solicitor would be liable to “make contribution and indemnify” the appellant. In such a case, s. 5 of the Act permits the appellant to make the solicitor a third party. Equally, it is no bar to the third party claim that the negligence alleged by Stellar is subsequent to the negligence alleged against it by the plaintiff”.
The Ontario Court of Appeal distinguished Corcoran in Davy Estate v. CIBC World Markets Inc. (2009), 97 O.R. (3d) 401, (2009) O.J. No. 4554 (C.A.). In Davy Estate, the defendant alleged that the plaintiff failed to mitigate her damages. The plaintiff asserted that she relied on the legal advice of her solicitor. The defendant commenced a third party claim for contribution and indemnity against the solicitor. The claim was struck under Rule 21 by the motion judge as disclosing no cause of action. The Court of Appeal upheld the decision. At Paras. 22 and 23, Sharpe J.A. held as follows: “The decision of this court in 478649 Ontario Limited v. Corcoran (1994), 20 O.R. (3d) 28 (C.A.), where a third party claim against the plaintiff’s solicitor was allowed, is distinguishable. In Corcoran, the plaintiff sued the vendor and a real estate agent for negligent misrepresentation in relation to the purchase of a commercial property. In their third party claim against the plaintiff’s solicitors, the defendant alleged that the solicitors had been negligent in reviewing the agreement of purchase and sale and failing to protect the interests of the plaintiff. That was not a plea in mitigation of damages that the defendants could advance against the plaintiff but rather an allegation that the solicitors were implicated in the very events that gave rise to the loss and were jointly and severally liable to the plaintiff for any loss suffered. As the plaintiff had not sued the solicitors, the only way the defendants could protect their position and avoid being held liable for the entire loss was to claim contribution and indemnity from the solicitors. The cases cited by the appellants where third party claims were allowed to proceed, like Corcoran, involve claims of this nature. That is, they are 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 thereby jointly and severally liable with the defendant for the entire loss”.
In this case (Allianz Global Risks US Insurance Co. V. Nalco Chemical Co. (2014) ONSC 4302), the third parties are not implicated in the events giving rise to the plaintiff’s loss and cannot be jointly and severally liable with the fourth parties for the entire loss. The Third party cannot, therefore, claim contribution and indemnity against the fourth parties.
The Ontario Court of Appeal has also made it clear in two other decisions that there cannot be claims for contribution and indemnity between non-concurrent tortfeasors. In O. (A.) v. V. (J.) (2002) 59 O.R. (3d) 384, (2002) O.J. No. 1528, 212 D.L.R. (4th) 558, 158 O.A.C. 188, 113 A.C.W.S. (3d) 236 (C.A.), the court upheld the motion judge’s refusal to add third parties from whom the defendants wished to claim contribution and indemnity because they were not concurrent wrongdoers. Carthy J. held in part as follows, at paras. 10 and 11: “….but the subsequent wrongdoers are no more jointly responsible for the full damages flowing after their acts than they would be for the plaintiff’s damages, if any, suffered before they committed torts. They are each answerable for their individual conduct but not for that of others. That is why the wrongdoers must be acting concurrently to attract the application of s. 1 the Negligence Act. And that is why s. 1 has no application to this case and why the third party notices should not issue”.
In Lawson v. Viersen (2012), 108 O.R. (3d) 771, (2012) O.J. No. 109, 2012 ONCA 25, 287 O.A.C. 107346 D.L.R. (4th) 518, 15 C.P.C. (7th) 275, 211 A.C.W.S, (3d) 275, the Ontario Court of Appeal held that only concurrent tortfeasors can seek contribution and indemnity from other tortfeasors. Rouleau J.A. held in part, at para. 35 as follows: “in summary, the Negligence Act makes concurrent tortfeasors, that is persons whose conduct causes a single loss to another, jointly and severally liable. It also provides for the right of concurrent tortfeasors to claim contribution and indemnity from another tortfeasor provided the tortfeasor from whom he or she seeks contribution is, or could be if sued, liable to the plaintiff”.
*source: Ontario Reports
