Hengeveld v. Personal Insurance Co., 2019 ONCA 497

Hengeveld et al. v. The Personal Insurance Company; Virtue et al., Third Parties

[Indexed as: Hengeveld v. Personal Insurance Co.]

Ontario Reports Court of Appeal for Ontario Hoy A.C.J.O., Lauwers and Zarnett JJ.A. June 17, 2019

146 O.R. (3d) 182 | 2019 ONCA 497

Case Summary

Torts — Negligence — Contribution and indemnity — Plaintiffs suing insurer for negligence in failing to preserve car that might have helped them prove their case in personal injury action — Insurer bringing third party claim against plaintiffs' personal injury action lawyers for contribution and indemnity on basis that lawyers breached their duty to plaintiffs to see that evidence was preserved — Motion judge correctly striking third party claim as disclosing no reasonable cause of action — Allegations in third party claim attributable in law to plaintiffs as they related to conduct falling within scope of lawyers' retainer — No cause of action for contribution and indemnity existing against third party where that party's negligence is attributable to plaintiff.

The plaintiffs sued the defendant insurer for damages for negligence based on the insurer's failure to preserve a car that might have helped the plaintiffs prove their case in a personal injury action. The insurer brought a third party claim for contribution and indemnity against the plaintiffs' personal injury action lawyers, alleging that they breached their duty to the plaintiffs to see that evidence necessary for the personal injury action was preserved. The lawyers moved successfully to strike out the third party claim as disclosing no reasonable cause of action. The insurer appealed.

Held, the appeal should be dismissed.

Because the allegations in the third party claim related to conduct falling within the scope of the lawyers' retainer, it was conduct that was attributable in law to the plaintiffs. Where the negligence of a third party is attributable to the plaintiff, no cause of action for contribution and indemnity exists against that third party. The lawyer's alleged negligence could be raised by the insurer in its defence to the plaintiffs' claim, so the third party claim was unnecessary.

Authorities Cited

Key Cases:

• Adams v. Thompson, Berwick, Pratt & Partners
• Davy Estate v. CIBC World Markets Inc., 2009 ONCA 763
• Macchi s.p.a. v. New Solution Extrusion Inc., 2008 ONCA 586
• Taylor v. Canada (Minister of Health), 2009 ONCA 487

Other Cases Referred to:

• 478649 Ontario Ltd v. Corcoran
• Athey v. Leonati
• Endean v. St Joseph's General Hospital, 2019 ONCA 181
• R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42
• Spasic Estate v. Imperial Tobacco Ltd.

Statutes Referred to:

• Negligence Act, R.S.O. 1990, c. N.1, ss. 1, 2, 3, 5

Rules and Regulations Referred to:

• Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21, 21.01(1)(b), (3)(d), 29.01(a)

Authorities Referred to:

• Cheifetz, David, Apportionment of Fault in Tort (Aurora: Canada Law Book, 1981)

Counsel

Appeal from the judgment of McArthur J., [2018] O.J. No. 4098, 2018 ONSC 4712 (S.C.J.) striking out a third party claim.

For the Appellant (Personal Insurance): Sandra G. Zilli and Sachin Kumar

For the Respondents (Lawyers): David B. Williams and Jennifer P. Butkus

Judgment

The judgment of the court was delivered by ZARNETT J.A.:

Introduction

1Individuals pursuing a lawsuit learn that evidence that might assist in proving their case has been destroyed. They start a second lawsuit against the insurance company they say should have preserved the evidence. The company alleges that any failure to preserve evidence is the result of faulty arrangements made by the plaintiffs' lawyers. May the company bring third party proceedings for contribution and indemnity against the plaintiffs' lawyers? That is the issue raised on this appeal.

2The plaintiffs, Ryan Hengeveld and his family, sued the appellant The Personal Insurance Company for failing to preserve the car that Mr. Hengeveld was driving when he was seriously injured in a motor vehicle accident. They allege this might impair their ability to prove their case in a separate personal injury action against those the Hengevelds allege caused the accident and injuries.

3In response to the Hengevelds' action against it, Personal Insurance brought third party proceedings for contribution and indemnity against the Hengevelds' lawyers, the respondents Mr. Virtue and Ms. El-Tawil, alleging they breached their duty to the Hengevelds to see that evidence necessary for their personal injury action was preserved.

4The lawyers moved successfully to strike out the third party claim on the basis that it disclosed no reasonable cause of action. The motion judge held that because the allegations in the third party claim related to conduct falling within the scope of the lawyers' retainer by the Hengevelds, it was conduct that was attributable in law to the Hengevelds. The lawyers' alleged negligence could therefore be raised by Personal Insurance in its defence to the Hengevelds' claim. The third party claim was unnecessary.

5Personal Insurance appeals. In my view, the motion judge correctly concluded that the third party claim should be struck. Accordingly, I would dismiss the appeal.

The Facts

6The plaintiff Ryan Hengeveld was injured in a motor vehicle accident on January 27, 2014, while he was operating a Hyundai automobile insured by Personal Insurance.

7Mr. Hengeveld and his spouse, children and parents retained the respondent lawyers to act for them in connection with their damages arising out of the accident.

8On January 6, 2016, the Hengevelds commenced the personal injury action for damages as a result of the injuries Mr. Hengeveld suffered in the accident. Personal Insurance is not a party to that action. The defendants to the personal injury action are the owner and operator of the other vehicle involved in the accident, the persons alleged to have been responsible for the safety and condition of the road where the accident occurred, the manufacturer of the Hyundai and the dealership at which it was purchased.

9On October 20, 2017, the Hengevelds commenced this action against Personal Insurance -- the action out of which the third party claim and this appeal arise. The thrust of the Hengevelds' claim is that Personal Insurance agreed, in 2014, to preserve the Hyundai in safe storage knowing it would be important to the resolution of liability issues in the personal injury action, but failed to do so. The Hengevelds allege that Personal Insurance disposed of the Hyundai, in breach of contract and/or negligently. They allege that this may impair their ability to prove liability against one or more of the defendants in the personal injury action.

10Personal Insurance defended. Its statement of defence asserts that, as insurer of the Hyundai, it fully indemnified the Hengevelds for the damage to the vehicle. In exchange, Personal Insurance became the owner of the Hyundai and was entitled to dispose of it for salvage. It denies that it had any obligation to preserve the Hyundai for any longer than it actually did, and states that "it was the [Hengevelds'] responsibility to secure and ensure the preservation of the vehicle as they intended to rely on it as evidence in [the personal injury action]". The statement of defence alleges that the Hengevelds were negligent in failing to ensure the preservation of the Hyundai, failing to make adequate inquiries of Personal Insurance to confirm whether the Hyundai was being preserved, failing to make a valid contract with Personal Insurance for preservation of the Hyundai and failing to send an expert to inspect the Hyundai in a timely manner, among other things. It is alleged that this caused or contributed to the Hengevelds' damages; Personal Insurance pleads and relies upon the Negligence Act, R.S.O. 1990, c. N.1.

11Personal Insurance then issued its third party claim against the lawyers. It claims contribution and indemnity from the lawyers for any amounts it must pay the Hengevelds.

12The third party claim incorporates by reference Personal Insurance's statement of defence, including the pleading of the Negligence Act, and alleges that the lawyers were retained by the Hengevelds following the January 2014 accident to pursue the damages arising out of it, and that retainer included securing and preserving the evidence required to pursue the Hengevelds' claims. It was the lawyers who contacted Personal Insurance in February 2014 about preserving the Hyundai, advising it that they had been retained by the Hengevelds; Personal Insurance told the lawyers where the Hyundai was so that it could be inspected, and the lawyers arranged an inspection in March 2014, but then secured no promises from Personal Insurance to keep the Hyundai. They also failed to arrange either to take possession of it themselves or for further inspection. Personal Insurance, having made no promises to preserve the Hyundai, sold it for salvage shortly after; it heard from the lawyers that they wanted another inspection some 19 months after the first inspection.

13The third party claim states that if Personal Insurance is found liable to the Hengevelds, the lawyers are liable for contribution and indemnity because they breached their duties to the Hengevelds as the Hengevelds' lawyers. The particulars of the lawyers' alleged negligence include failing to take adequate steps to ensure preservation of the Hyundai; failing to cause it to be inspected by an engineer or other expert in a timely way; and failing to communicate adequately with, make proper inquiries of, or establish a proper contract with Personal Insurance about the preservation of the Hyundai. The particulars of negligence asserted against the lawyers in the third party claim overlap significantly with the particulars of the Hengevelds' negligence asserted in the statement of defence.

The Motion Judge's Decision

14The lawyers moved successfully under rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to strike out the third party claim as disclosing no reasonable cause of action. The motion judge described the test for striking out a claim under that rule as whether it was plain and obvious that the third party claim was certain to fail, assuming the facts alleged in it to be true. He noted that this was not a case where Personal Insurance and the lawyers were both involved in the initial loss (by which he appears to have meant the motor vehicle accident of January 2014 that is the subject of the personal injury action). He held that, because the negligent acts and omissions alleged against the lawyers fell within the scope of their agency on behalf of the Hengevelds, they were not the proper subject of a third party claim: the Hengevelds would be responsible for anything done or not done by their lawyers acting as their agents. He stated, at para. 24:

In such situations where the plaintiff is responsible, Third Party Claims are unnecessary since the defendant could plead those matters in defence and, if the plaintiff was found at fault, damages would be reduced. Any neglect on part of the solicitors would be attributable to the plaintiff and make a third party proceeding unnecessary.

The Appellant's Position

15Personal Insurance argues that the motion judge erred in treating the initial loss as the January 2014 motor vehicle accident, and therefore in approaching the matter on the basis that Personal Insurance and the lawyers were not involved in the initial loss. Both Personal Insurance and the lawyers were involved in the loss complained of in the Hengevelds' action against Personal Insurance, namely the disposal of the Hyundai and whatever detrimental effect that may have on the Hengevelds' claim in the personal injury action. Personal Insurance submits that this is the relevant "initial loss". Since its third party claim is not about the lawyers' failure to assist the Hengevelds in mitigating their damages, this court's decision in 478649 Ontario Ltd. v. Corcoran should have been applied for the proposition that, where the plaintiff's lawyer and the defendant are both involved in the initial loss (that is, where it is alleged they each caused or contributed to the plaintiff's initial loss) a defendant may take third party proceedings against the lawyer.

16Personal Insurance also argues that the cause of action underlying the Hengevelds' claim against it is spoliation. Since that is a novel cause of action, matters related to it are not amenable to disposition on a Rule 21 motion.

Analysis

17In my view, the resolution of the issue on this appeal does not turn upon what constitutes the "initial loss". It turns upon whether the negligence alleged against the lawyers in the third party claim is attributable to the Hengevelds as plaintiffs. I begin by explaining why attributing the fault of a third party to a plaintiff matters to whether there is a cause of action by a defendant against that third party. I then discuss two situations in which the negligence of a plaintiff's lawyer is attributable to the plaintiff. Finally, I discuss how those principles apply in this case.

(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

18Rule 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".

19A 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.

20The 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.

21A 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 O.R.

22The 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] 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 per cent 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, at para. 48.

23However, a plaintiff's own contributory negligence will reduce its claim for damages against a defendant. Section 3 of the Negligence Act provides:

3. 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.

24Accordingly, 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 per cent liable to the plaintiff but may obtain indemnity from the third party according to the third party's relative degree of fault.

25But 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 per cent 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.

26This principle was applied in Taylor v. Canada (Minister of Health), 2009 ONCA 487. 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.

27This 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.

28Taylor was a case where the attribution to the plaintiff of the proposed third parties' negligence came about by the plaintiff's express wish. 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.

29Accordingly, 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

30Several 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; and Macchi s.p.a. v. New Solution Extrusion Inc., 2008 ONCA 586. Those cases adopt, as their starting point, the decision of McLachlin J.A. (as she then was) in Adams v. Thompson, Berwick, Pratt & Partners.

31In 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 B.C.L.R.:

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.

32McLachlin J.A. describes two situations in which a lawyer's negligence will be attributed in law to the plaintiff. 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.

33The 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 B.C.L.R.:

In so far as the solicitors were retained to file and amend the prospectus and otherwise deal with others on the [plaintiffs'] behalf, they were clearly [page192] 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".

34The 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.

35Wilton-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.. 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].

36This 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

37In 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.

38On 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

39The 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.

40Even 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 B.C.L.R. This underscores the point that where there is an agency situation, it bars the third party claim on its own.

41Davy 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.

42It 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.

43The 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 O.R.:

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[.]

44In 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.

(5) The novelty of the Hengevelds' cause of action against Personal Insurance is immaterial

45Finally, Personal Insurance argues that the foundation of the action against it is spoliation, a cause of action which has been described as not fully settled in the jurisprudence and not something which should be dealt with under Rule 21: Spasic Estate v. Imperial Tobacco Ltd., at para. 12. That submission is not germane. Regardless of how well-founded or novel the Hengevelds' cause of action against Personal Insurance may be, Personal Insurance's ability to bring a third party claim is foreclosed under fully established legal principles. It is plain and obvious that the third party claim discloses no reasonable cause of action -- it has no reasonable prospect of success and was properly struck: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, at para. 17.

Conclusion

46In Davy Estate, at para. 28, the court referred to the "obvious mischief" that could arise from allowing one party to sue another party's lawyer. That concern will not prevail where the defendant has a valid legal claim against the lawyer. Here, for the foregoing reasons, there is no valid legal claim. The policy discouraging such mischief coincides with the result the law requires.

47I would dismiss the appeal with costs to the respondents fixed at $7,500, inclusive of disbursements and applicable taxes.

Appeal dismissed.

Notes

1 Conduct that is attributed to a plaintiff by some applicable principle of law is also referred to as conduct that is "imputed" to the plaintiff: see David Cheifetz, Apportionment of Fault in Tort (Aurora: Canada Law Book, 1981) at 212.

2 The lawyers also moved to have the third party claim dismissed or stayed under rule 21.01(3)(d) as an abuse of process of the court. In light of the motion judge's ruling that the third party claim should be struck as disclosing no reasonable cause of action under rule 20.01(1)(b), he concluded that it was not necessary to make a determination as to abuse of process.

3 Attributing a proposed third party's negligence to the plaintiff can also come about through a settlement in which a plaintiff agrees with the settling party that any negligence that would have been attributed to the settling party at trial will be attributed to the plaintiff. This can occur through a Pierringer agreement or order, which requires the plaintiff to restrict its claim to the damages arising from the allegedly negligent acts of the defendants who are not part of the settlement, among other things: see Endean, at paras. 52-53.

4 These two situations may not be exhaustive. It is not necessary to decide the point here.

5 There are certain duties a plaintiff has that cannot be avoided by delegating them to another party such as its lawyers, including the duty to mitigate. Where the plaintiff did not fulfill its duty to mitigate its loss, that failure will be attributed to the plaintiff even if the failure was because it received poor advice about how to do so from its lawyers. Deficient advice about how to mitigate a loss cannot form the basis of a third party claim against the plaintiff's lawyers by the party who caused the loss: Adams, at p. 56 B.C.L.R.; Corcoran, at p. 34 O.R.; Davy Estate, at para. 18.