Court File and Parties
CITATION: Searle v. McCabe, 2011 ONSC 6344
DIVISIONAL COURT FILE NO.: 417/11
DATE: 2011-10-27
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: Janet Mackenzie Searle, Plaintiff/Respondent
AND:
McCabe, Filken & Garvie LLP Barristers and Solicitors and Kenneth F. McCabe, Defendants
AND:
Edward Morris Searle, Third Party
BEFORE: Pardu J.
COUNSEL: Robert Centa, for the Plaintiff/Respondent
Bruce Hutchison, for the Defendants
HEARD: October 21, 2011
Endorsement
Pardu J.
[1] The Defendant solicitors move for leave to appeal from a decision of Matlow J. dismissing their motion for a stay of a solicitor’s negligence action against them. Janet Searle, the plaintiff, had retained the Defendants to pursue her husband for his failure to comply with the terms of a separation agreement. She grew dissatisfied with their services, changed solicitors, and settled with her husband. She signed a release promising not to claim over against any person who might claim contribution or indemnity against her husband “under the provisions of the Negligence Act or under the Rules of Civil Procedure or otherwise.”
[2] The Defendant solicitors issued a third party claim against the husband claiming contribution and indemnity from him and moved for a stay of the Plaintiff’s action because of the release she had signed in favour of her husband.
[3] The motion judge refused the stay on the ground that the solicitors were not signatories to the release and could not therefore derive any benefit from the release. All parties agree that the order cannot be sustained on this basis, but the issue before me is whether there is reason to doubt the correctness of the order refusing the stay and whether the moving parties have met the test for obtaining leave to appeal an interlocutory order under Rule 62.02 (4) of the Rules of Civil Procedure.
[4] I have concluded that the dismissal of the application for the stay was correct, on the ground that there is no legal basis for the third party claim against the husband. No basis was advanced upon which it could be argued that the husband owed any duty to his wife’s solicitors. It is not alleged that they were joint tortfeasors who would be entitled to contribution and indemnity under the Negligence Act. It is obvious that the husband would owe no fiduciary duty to his wife’s solicitor, and there is no contractual basis for any right to indemnity.
[5] In Ukrainian (Fort William) Credit Union Ltd. (In Liquidation) v. Nesbitt, Burns Ltd. (1997), 1997 1411 (ON CA), 152 D.L.R. (4th) 640 (Ont. C.A.), leave to appeal granted, (1998), 111 O.A.C. 198 (S.C.C.), declared moot, (1999), 161 O.A.C. 199 (S.C.C.), Osborne J.A. described contribution claims as “essentially a remedy for the unjust enrichment that arises when a concurrent tortfeasor bears a disproportionate share of the plaintiff’s claim,”[^1] [emphasis added]
“Contribution (which I think is essentially what it sought in Nesbitt's third party claim), falls generally under the broad ambit of the law of restitution. See The Law of Restitution, Peter D. Maddaugh, John D. McCamus (Aurora, Ont.: Canada Law Book, 1990) at p. 189, and Dan B. Dobbs, Handbook on the Law of Remedies: Damages – Equity – Restitution, 2nd ed., vol. 1 (St. Paul, Minn.: West Publishing Co.) at pp. 607-08.
The law of restitution provides an array of proprietary and non-proprietary remedies (including constructive trust, tracing, subrogation, the equitable lien and equitable accounting), all directed to remedying what would otherwise be unjust enrichment. See Pettkus v. Becker, 1980 22 (SCC), [1980] 2 S.C.R. 834, 117 D.L.R. (3d) 257; LAC Minerals Ltd. v. International Corona Resources Ltd., 1989 34 (SCC), [1989] 2 S.C.R. 574, 61 D.L.R. (4th) 14.
[6] Section 1 of the Negligence Act provides,
Extent of liability, remedy over
- 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. R.S.O. 1990, c. N.1, s. 1.
[7] The right to contribution under the Negligence Act has been confined to tortious responsibility. In Giffels v. Eastern Construction Co. Ltd., 1976 41 (ON CA) the Court of Appeal noted at paragraph [19],
[19] In Allcock Laight & Westwood Ltd. v. Patten, Bernard and Dynamic Displays Ltd., 1966 282 (ON CA), [1967] 1 O.R. 18, this Court held that s. 2(1) of the Negligence Act permits contribution and indemnity only as between tortfeasors and I think it was clearly right in so doing. In considering the question, I do not think it is helpful to consider statutes of other jurisdictions which, while in pari materia, employ different language in their provisions. The dictionary meaning of “fault” is probably wide enough to include a breach of contract: “something wrongly done: (a) a misdeed, transgression, offence” (Shorter Oxford English Dictionary). And while the maladroit draftsmen who have tinkered with the statute over the years have employed such diverse terms as “persons”, “defendant”, “parties” and “person” in various of the sections, I think the ambit of s. 2(1) is disclosed by the words “tort feasor” in ss. 3 and 9. There could be no sensible reason for confining the operation of those sections to tortfeasors if s. 2(1) equally permitted contribution and indemnity between those guilty of a breach of contract. Moreover, s. 2(1) would be virtually impossible to apply to a defendant tortfeasor and a defendant who had breached a contract because of the probable difference in the measure of damages for which they would be respectively liable to the plaintiff. No doubt “fault” includes a breach of statute or other act or omission giving rise to a liability in tort whether negligent or not.
[8] The very difficulty foreseen by Jessup J.A. in Giffels v. Eastern Construction arises in this case. The Defendant solicitors are sued for negligence. If liable, they are obligated to restore the Plaintiff to the position she would have been in had they not been negligent. This will necessitate a determination of what the solicitors would reasonably have recovered for the Plaintiff from her husband for his breaches of their separation agreement, had they not been negligent.
[9] The husband was sued for breach of contract. If liable he would be obliged to put the Plaintiff in the same position she would have been in had he performed his obligations under the agreement.
[10] These damage claims are related, but need not be the same. If the husband was insolvent, no damages might flow from solicitor’s negligence, even if established.
[11] Here there is the further complication that the wife settled her claims for breach of contract with her husband, so the damage claim will also involve a determination of whether the amount which the defendant solicitors could have reasonably recovered from the husband for his breach of contract differs from the amount recovered by the wife’s new solicitors.
[12] The husband’s obligations were essentially to pay money due under a contract. His default did not cause loss of the same nature as that flowing from solicitor’s negligence, if proven.
[13] Even where a right to contribution is implied between contracting parties, the loss which they share must be the same loss. In Giffels v. Eastern Construction 1978 39 (SCC), [1978] 2 SCR 1346 Laskin C.J.C. noted at p.1355,
“I am prepared to assume, for the purposes of this case, that where there are two contractors, each of which has a separate contract with a plaintiff who suffers the same damage from concurrent breaches of those contracts, it would be inequitable that one of the contractors bear the entire brunt of the plaintiff’s loss, even where the plaintiff chooses to sue only that one and not both as in this case.”
[14] It is obvious that the husband could not claim contribution for the damages he was obligated to pay as a result of his breach of contract from the defendant solicitors, and I see no sustainable basis for a claim for contribution in the reverse direction. Contribution is about sharing responsibility for the same loss.
[15] There being no viable legal basis to the third party claim against the husband, the promise by the wife to not make a claim against anyone who might claim indemnity from her husband does not justify a stay of proceedings against her solicitor. (See Ieradi v. Gordin [2007] O.J. No. 4357 S.C.J., at para [25] and Owen v. Zosky [2000] O.J. No. 4838, at para [4])
[16] The Plaintiff concedes that the Defendants may argue at trial that she made an improvident settlement with her husband, and that this together with her husband’s actions caused her loss, rather than any negligence on the solicitor’s part.
[17] In any event, I am not satisfied that this issue transcends the interests of the parties nor that it raises issues of broad public importance which would justify appellate review of an interlocutory order. For the same reason, I am not persuaded that it is desirable that leave to appeal be granted.
[18] Accordingly, the motion for leave to appeal the order of Matlow J. dated January 4, 2011 is dismissed. Costs should follow the result, and counsel have agreed that $2,700.00 is the appropriate amount. The Respondent on the motion, the Plaintiff, is awarded costs of this motion payable by the Defendants, and fixed at $2,700.00.
Pardu J.
Date: October 27, 2011
[^1]: See Placzek v. Green 2009 ONCA 83 at para [38].