Taylor v. Canada (Minister of Health)

95 O.R. (3d) 561

Court of Appeal for Ontario,

Laskin, Gillese and Blair JJ.A.

June 17, 2009

Torts -- Negligence -- Contribution and indemnity -- Plaintiff's claim against defendant limited to damages attributable to defendant's degree of fault -- Defendant's third-party claim against others for contribution and indemnity disclosing no reasonable cause of action -- Contribution rights arising only where defendant is required to pay more than its proportionate share of plaintiff's damages -- Court having jurisdiction to apportion fault among potential tortfeasors even if only one of them is party to action.

The plaintiff brought a class action against Health Canada for damages for injuries allegedly suffered as a result of the surgical implantation of a device in her jaw. She claimed that Health Canada's negligent regulation of those devices caused her injuries. Her claim against the defendant was limited to those damages that were attributable to its proportionate degree of fault. The defendant brought a third-party claim against the dental surgeon who performed the implant surgery and the hospital where the surgery took place, alleging that those third parties might be liable for part or all of the plaintiff's injuries and seeking contribution from them for their proportionate degrees of fault. The third parties brought a motion under rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to dismiss the third-party claim as disclosing no reasonable cause of action. The motion was granted. The defendant appealed.

Held, the appeal should be dismissed.

Contribution rights arise only where a defendant is required to pay more than its proportionate share of a plaintiff's damages. In this case, the plaintiff was not seeking all of her damages from the defendant; she was seeking only the portion of her damages attributable to the defendant's neglect. To ensure that the defendant's exposure was limited to the damages attributable to its fault, the court might have to apportion fault among the three potential tortfeasors. The court had jurisdiction to do so even though neither the doctor nor the hospital was a party to the action.

APPEAL from the order of Cullity J. of the Superior Court of Justice dated April 1, 2008 granting a motion to dismiss a third-party claim.

Cases referred to Athey v. Leonati, 1996 CanLII 183 (SCC), [1996] 3 S.C.R. 458, [1996] S.C.J. No. 102, 140 D.L.R. (4th) 235, 203 N.R. 36, [1997] 1 W.W.R. 97, 81 B.C.A.C. 243, 31 C.C.L.T. (2d) 113, 66 A.C.W.S. (3d) 578; Holthaus v. Bank of Montreal, 2000 CanLII 5665 (ON CA), [2000] O.J. No. 951, 131 O.A.C. 119, 95 A.C.W.S. (3d) 841 (C.A.); M. (J.) v. B. (W.) (2004), 2004 CanLII 8541 (ON CA), 71 O.R. (3d) 171, [2004] O.J. No. 2312, 240 D.L.R. (4th) 435, 187 O.A.C. 201, 47 C.P.C. (5th) 234, 131 A.C.W.S. (3d) 557 (C.A.); Martin v. Listowel Memorial Hospital (2000), 2000 CanLII 16947 (ON CA), 51 O.R. (3d) 384, [2000] O.J. No. 4015, 192 D.L.R. (4th) 250, 138 O.A.C. 77, 48 C.P.C. (4th) 195, 100 A.C.W.S. (3d) 869 (C.A.); Misko v. Doe (2007), 87 O.R. (3d) 517, [2007] O.J. No. 3615, 2007 ONCA 660, 286 D.L.R. (4th) 304, 229 O.A.C. 124, [2007] I.L.R. I-4644, 51 M.V.R. (5th) 206, 160 A.C.W.S. (3d) 738, consd [page562]

Other cases referred to Ontario New Home Warranty Program v. Chevron Chemical Co. (1999), 1999 CanLII 15098 (ON SC), 46 O.R. (3d) 130, [1999] O.J. No. 2245, 99 O.T.C. 384, 37 C.P.C. (4th) 175, 88 A.C.W.S. (3d) 1138 (S.C.J.)

Statutes referred to Negligence Act, R.S.O. 1990, c. N.1, ss. 1, 5

Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 21.01(1)(b)

Paul J. Evraire and James Max Soldatich, for appellant Attorney General of Canada. Patrick J. Hawkins, for respondent University Health Network. Margaret L. Waddell, for respondent Dr. W. Dobrovolosky. Grace Tsang, for plaintiff Kathryn Anne Taylor.

The judgment of the court was delivered by

LASKIN J.A.: --

A. Overview

[1] This appeal raises the question whether a defendant in a negligence action can maintain a third-party claim for contribution and indemnity against alleged joint tortfeasors if the plaintiff has limited her claim to those damages attributable to the defendant's degree of fault.

[2] The plaintiff, Kathryn Taylor, began a class action in which she alleges that she suffered injuries as a result of the surgical implantation of a device in her jaw. She claims that Health Canada's negligent regulation of these devices caused her injuries. She has sued only the Attorney General of Canada, which represents the Minister of Health and Health Canada. After several amendments to her statement of claim, she now seeks from Health Canada only "those damages that are attributable to its proportionate degree of fault".

[3] The Attorney General, however, brought a third-party claim against the dental surgeon (Dr. Dobrovolosky) who performed the implant surgery on Ms. Taylor and against the hospital (University Health Network) where the surgery took place. The Attorney General alleges that these third parties [page563] may be liable for part or all of Ms. Taylor's injuries. He seeks contribution from them for their proportionate degrees of fault.

[4] The third parties brought a motion under rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to dismiss the third-party claim on the ground that it discloses no reasonable cause of action. Cullity J. granted the motion. He held that in view of the amendment to the statement of claim, "the exposure of the Crown is limited to damages for which it would have no right to contribution from any person who may have caused or contributed to the damages suffered by the plaintiff and any of the class members". The third-party claim was thus "untenable".

[5] The Attorney General appeals on three grounds: (1) The plaintiff's injuries are indivisible. If the Attorney General cannot bring a third-party claim, Health Canada may unfairly be held liable for the negligent acts of the doctor and the hospital. (2) A court cannot apportion fault under the Negligence Act, R.S.O. 1990, c. N.1 against a person who is not a party to the action. If the third-party claim is struck, Health Canada potentially may bear 100 per cent of the plaintiff's damages. (3) Even if the motion judge was right to strike the third-party claim, he erred by failing to order that the Attorney General is entitled to production of documents from and discovery of the proposed third parties.

[6] For the reasons that follow, I would not give effect to the first two grounds of appeal. On the third ground, whether production and discovery are required to prevent any unfairness to the Attorney General, this is a matter best addressed by the judge case-managing the class action.

B. Procedural History

[7] This litigation has had a protracted history. Many of the details are unnecessary to decide this appeal.

[8] In brief, the action was begun in 1999. Ms. Taylor claims that her injuries resulted from the insertion of a Vitek Propast Temporomandibular ("TMJ") implant in her jaw. She contends that Health Canada's negligent regulation of TMJ implants caused her injuries. She says either that Health Canada was negligent in even permitting these implants or that it was negligent in failing to properly regulate them. Her claim has been [page564] certified as a national class action (except in British Columbia and Quebec).

[9] The statement of claim has been amended several times. In an amendment in 2006, Ms. Taylor tried to preclude the Attorney General's attempt to assert a third-party claim by limiting her claim to the "several liability" of the Crown. Still the Attorney General brought a third-party claim against the doctor and the hospital. In July 2007, a motion to strike the third-party claim was dismissed by Cullity J., who found the 2006 amendment to be ambiguous. In Cullity J.'s view, Ms. Taylor still seemed to be claiming that the Crown was liable for all the damages she had suffered from the implant. Thus, the Attorney General had the right to seek contribution. However, at para. 57 of his ruling, he commented on how the defendant's right to contribution might be eliminated:

The difference between a claim that the defendant is liable for all the damages suffered by the plaintiff, and a claim that is limited to the part of the damages caused solely by the defendant is, I believe, critical. While the latter cannot entitle the defendant to contribution, the former can if the plaintiff is unsuccessful in establishing that no other person's negligence or fault was involved.

[10] Cullity J. returned to this idea a few months later in his ruling on the certification motion [at para. 88]:

The possibility of third party claims will be obviated if the references to several liability of the Crown in the statement of claim are clarified in a manner referred to in the previous motion.

[11] Ms. Taylor then amended her statement of claim again, as well as her reply, to incorporate Cullity J.'s suggestion. Her current pleadings -- her further fresh as amended statement of claim and her fresh as amended reply -- expressly plead that her claim and the claim of each class member is limited to the "damages that would be apportioned to the defendant in accordance with the relative degree of fault that is attributable to the defendant's negligence". These pleadings are the subject of this appeal. The main amendments are contained in paras. 83 and 189 of the amended statement of claim and paras. 25 and 81 of the amended reply:

83. The Plaintiff pleads that the injuries, damages and losses set out in the Statement of Claim were caused or contributed to by the negligence of Health Canada.

84. The Plaintiff's claim, and the claim of each Class Member, is limited to the amount of the Plaintiff's or other Class Member's damages that would be apportioned to the Defendant in accordance with the relative degree of fault that is attributable to the Defendant's negligence. [page565]

85. The Plaintiff states and the fact is that the Defendant is liable in whole or in part for the damage to the Plaintiff and to the Class Members caused by the implantation of the Vitek TMJ implants, and the Plaintiff seeks on her own behalf and on behalf of the class those damages that would be apportioned to the Defendant in accordance with the relative degree of fault that is attributable to the Defendant's negligence.

86. The Plaintiff's claim is against the Defendant for those damages that are attributable to its proportionate degree of fault, and she does not seek, on her own behalf or on behalf of the Class, any damages that are found to be attributable to the fault or negligence of any other person, or for which the Defendant could claim contribution or indemnity.

[12] In Cullity J.'s view, which I share, these amendments made the Attorney General's third-party claim untenable.

C. Analysis

[13] A motion to strike a pleading under rule 21.01(1)(b) will succeed only if it is "plain and obvious" that the pleading does not disclose a reasonable cause of action. The Attorney General submits that the motion judge erred by holding that the third parties met this test.

(1) May Health Canada potentially be liable for the negligent acts of the doctor and hospital if the third-party claim is struck?

[14] The Attorney General contends that unless he can maintain a third-party claim, Health Canada may potentially be held liable for the negligent acts of the doctor and the hospital. In support of this contention, the Attorney General relies on the point made in Athey v. Leonati, 1996 CanLII 183 (SCC), [1996] 3 S.C.R. 458, [1996] S.C.J. No. 102, at para. 25, that where a plaintiff's injury is indivisible, any defendant who has negligently contributed to the injury will be fully liable for it.

[15] As Ms. Taylor has not sued either the doctor or the hospital, the Attorney General says he is entitled to exercise his right under s. 5 of the Negligence Act to add them as third parties, and, by so doing, enable the court to apportion liability for the damages to Ms. Taylor and the other class members among all three potential tortfeasors. He argues that this apportionment would allow the Attorney General to claim contribution for any portion of the plaintiff's total loss not attributable to his negligence. In my view, because of Ms. Taylor's circumscribed pleading, neither Athey v. Leonati nor s. 5 of the Negligence Act applies here. I can best show why this is so by an example.

[16] Take a case where a plaintiff is injured and three tortfeasors, T1, T2 and T3, caused the injuries. Assume that their respective [page566] degrees of fault are 20 per cent, 30 per cent and 50 per cent. If the plaintiff sues only T1, then even though T1 is only 20 per cent at fault, as between it and the plaintiff, it will be liable for 100 per cent of the plaintiff's damages. As Major J. said, at para. 25 of Athey v. Leonati, any tortfeasor who caused a plaintiff's injuries must fully compensate the plaintiff:

In the present case, there is a single indivisible injury, the disc herniation, so division is neither possible nor appropriate. The disc herniation and its consequences are one injury, and any defendant found to have negligently caused or contributed to the injury will be fully liable for it.

[17] To limit the amount of its loss, T1 is entitled to exercise its statutory right to apportionment of fault by adding T2 and T3 as third parties under s. 5 of the Negligence Act:

5. Wherever 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 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.

[18] The court will apportion fault under s. 1 of the Negligence Act, so that among themselves, T1, T2 and T3 will indemnify each other in accordance with their respective degrees of fault:

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.

[19] In this example, T1 may still have to pay the plaintiff 100 per cent of the plaintiff's damages, but it can recover 80 per cent of that amount from T2 and T3. It has a right to contribution from T2 and T3 under the Negligence Act.

[20] However, contribution 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 Health Canada's negligence. In other words, she is not seeking all of her damages from Health Canada; she seeks only the portion of her damages attributable to Health Canada's neglect and not the portion of her damages that may be attributable to the neglect of the doctor or the hospital. In my example, if Health Canada is T1, in this action Ms. Taylor is seeking only 20 per cent of her damages. Because she is not seeking 100 per cent of her damages, the full compensation principle [page567] articulated in Athey v. Leonati does not apply; equally, resort to s. 5 of the Negligence Act is unnecessary.

[21] The decision of this court in Holthaus v. Bank of Montreal, 2000 CanLII 5665 (ON CA), [2000] O.J. No. 951, 131 O.A.C. 119 (C.A.) is directly on point. There, the plaintiff sued the Bank of Montreal and another for their role in the improper cancellation of some share certificates. The plaintiff, however, limited its claim to those damages attributable to the Bank's negligence. Nonetheless, the Bank issued a third-party claim against the securities dealer, RBC Dominion Securities Ltd., for contribution and indemnity. The motion judge struck out this third-party claim and his decision was upheld by this court. In its brief endorsement, this court said, at para. 9:

As the statement of claim is limited to the damages which can be attributed to the fault of the Bank, the Bank can have no claim-over against RBC with respect to these damages. Sections 1, 2 or 5 of the Negligence Act do not assist the appellants.

[22] Similarly, because Ms. Taylor has limited her claim to those damages attributable to Health Canada's fault, Health Canada can have no claim over against the doctor or the hospital for the damages claimed by Ms. Taylor and the other class members. To ensure that Health Canada's exposure is limited to the damages attributable to its fault, the court may have to apportion fault among the three potential tortfeasors: Health Canada, the doctor and the hospital. The next question is whether the court is entitled to do so if neither the doctor nor the hospital is a party to the action.

(2) Can the court apportion fault against a person who is not a party to the action?

[23] The Attorney General submits that even if Ms. Taylor has limited her claim, the court has no jurisdiction to apportion fault against the doctor and the hospital unless they are parties to the action. He relies on the judgment of this court in Martin v. Listowel Memorial Hospital (2000), 2000 CanLII 16947 (ON CA), 51 O.R. (3d) 384, [2000] O.J. No. 4015 (C.A.), where, at para. 32, the court said that "[t]here is no basis in s. 1 [of the Negligence Act] or anywhere in the Act for a judge to attribute a portion of fault to a non-party". The court repeated this limit on the judge's jurisdiction when it discussed the effect of s. 1 at para. 48 of its reasons, a paragraph the Attorney General says is decisive of this appeal:

In our view, the effect of s. 1 of the Act is to define the legal effect of a finding of fault by concurrent wrongdoers. The effect is to change the common [page568] law, and impose on concurrent wrongdoers joint and several liability to the plaintiff. It is the only section of the Act which imposes liability, as opposed to apportioning fault. The section is substantive, not procedural. Therefore, when applying the section to any specific action, it is understood that joint and several liability to the plaintiff can and will attach only to a party defendant, although others who may also have been at fault could potentially have been found jointly and severally liable had they been sued by the plaintiff. Because procedurally the section only affects defendants, under this section the court is to apportion degrees of fault only to defendants. The court must also apportion fault to the other parties, the plaintiff and third parties, not under s. 1 of the Act but rather pursuant to ss. 3 and 4 of the Act, and in accordance with the requirements of the pleadings.

[24] I do not accept the Attorney General's submission. In my view, the excerpts from Martin v. Listowel to which I have referred are not dispositive of this appeal.

[25] As my colleague Rosenberg J.A. observed in the later case of Misko v. Doe (2007), 2007 ONCA 660, 87 O.R. (3d) 517, [2007] O.J. No. 3615 (C.A.), at para. 20, these excerpts are obiter statements and therefore, strictly speaking, not a precedent binding on this court. Indeed, in Martin v. Listowel itself, the court accepted the trial judge's apportionment against two doctors who had been sued but had settled before trial and therefore were not parties at the trial.

[26] Moreover, the statement in Martin v. Listowel that a court has no jurisdiction to apportion fault against a non-party has been overtaken by later decisions of this court. In different factual settings, this court held that a judge has jurisdiction under s. 1 of the Negligence Act to apportion fault against a person who is not a party to the action, and can exercise this jurisdiction in an appropriate case. See M. (J.) v. B. (W.) (2004), 2004 CanLII 8541 (ON CA), 71 O.R. (3d) 171, [2004] O.J. No. 2312 (C.A.), where Cronk J.A. discussed and distinguished Martin v. Listowel and Misko v. Doe.

[27] Both statutory interpretation and policy support the holdings in B. (W.) and Misko. I think it noteworthy -- although the panel in Martin v. Listowel did not -- that s. 1 of the Negligence Act speaks of apportioning fault between "persons", not between "parties". And s. 5 speaks of adding a "person" not already a party to the action. As a matter of statutory interpretation, it seems to me the Act itself recognizes that a court has jurisdiction to apportion fault against a person not a party to the action. Put differently, nothing in the language of s. 1 precludes a court from doing so.

[28] Interpreting s. 1 of the Negligence Act to permit a court to apportion fault against a non-party makes good sense. Interpreting s. 1 in this way promotes the streamlining of litigation, as in [page569] the present case, and, as in other cases, the settlement of parts of the litigation.

[29] In my view, this is an appropriate case for the court to determine whether to apportion fault against the doctor or the hospital, though neither is a party to the action. Permitting apportionment without insisting that they be parties will mean fewer parties at trial, a shorter trial and reduced costs. The remaining question is whether the Attorney General is entitled to procedural relief so he can pursue his claim to apportionment.

3. Did the motion judge err by failing to order that the Attorney General is entitled to production of documents from a discovery of the proposed third parties?

[30] The Attorney General submits that he cannot pursue his right to apportionment against the doctor and the hospital in a vacuum. If neither is to be a party to the action, then, he argues, he is at least entitled to production of documents from each of them and to examine each of them for discovery. Otherwise he is prejudiced in his defence of the main claim. He points to the order of Winkler J. in Ontario New Home Warranty Program v. Chevron Chemical Co. (1999), 1999 CanLII 15098 (ON SC), 46 O.R. (3d) 130, [1999] O.J. No. 2245 (S.C.J.) as a sensible practical solution to rectify this unfairness.

[31] In the Chevron Chemical case, certain defendants had settled a class action for damages for negligently designed and manufactured products, and other defendants had not settled. Because of the terms of the settlement agreement, which had to be approved by the court, Winkler J. precluded the non-settling defendants from taking third-party proceedings for contribution from the settling defendants. However, to protect the interests of the non-settling defendants in limiting their liability, he ordered that the settlement agreement be approved subject to the terms that the non-settling defendants could obtain from the settling defendants documentary and oral discovery, requests to admit and an undertaking to produce a representative to testify at trial.

[32] The Attorney General's request for procedural protection seems to have merit. However, this request was not made to Cullity J. on the motion to strike the third-party claim. I therefore do not think we should address it on this appeal. Instead, it is a proper matter to be considered by the judge case managing the class action. [page570]

D. Conclusion

[33] Because Ms. Taylor has limited her claim and the claim of the other class members to those damages attributable to the fault of Health Canada, the Attorney General's third-party claim against the doctor and the hospital for contribution and indemnity discloses no reasonable cause of action. Cullity J. correctly struck the claim. I would therefore dismiss this appeal, with costs to the respondents in the amount of $10,000, inclusive of disbursements and GST.

Appeal dismissed.