CITATION: Johnston v. The Sheila Morrison Schools, 2012 ONSC 1322

DIVISIONAL COURT FILE NO.: 304/11

DATE: 20120224

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

SWINTON, PEPALL, HARVISON YOUNG JJ

BETWEEN:

GREG JOHNSTON and TIM WILLIAMSON Plaintiffs/Appellants

– and –

THE SHEILA MORRISON SCHOOLS and SCOTT MORRISON Defendants/Respondents

Kirk M. Baert and Celeste Poltak, for the Appellants

Steven Stieber and Elizabeth Bowker, for the Respondents

HEARD at Toronto: February 6, 2012

ENDORSEMENT

[1] This is an appeal of a July 7, 2011 decision of Perell J. in a class action in which he granted leave to the Respondent/Defendants to issue third party claims for contribution and indemnity against the parents and guardians of students in two of the Plaintiff Classes.

[2] The Respondent School was a day and residential educational facility for students with learning disabilities and behavioural problems and the Respondent, Scott Morrison, was its headmaster. The School operated for about 22 years until 2009. The Appellant/Plaintiffs were students enrolled at the School. They allege that they were abused at the School and that the Respondents were negligent and breached fiduciary duties owed to the Plaintiffs.

[3] The action was certified as a class proceeding, on consent, by the Motions Judge on June 7, 2010. There are three sub-classes: (i) the Resident Class, comprised of boarding students; (ii) the Day Student Class, comprised of students who went home each evening; and (iii) the Family Class, comprised of the parents, spouses, children and siblings of the Resident Class. The student sub-classes are estimated to include about 1,650 people.

[4] On May 19, 2011, the Respondents sought leave to commence third party claims for contribution and indemnity against the parents and guardians of the student sub-classes, naming the proposed third parties as “G. Wilson, John Doe 1-200 and Jane Doe 1-200”. They argue that the parents and guardians of the students in the Resident and Day Student Classes knew and approved of the formal discipline system in place in the Schools, and that the Schools had regular contact with the parents and guardians with respect to student discipline.

[5] The Motions Judge permitted the third party claims to proceed but stayed them until after the common issues trial. He also granted leave to amend the Statement of Defence. In addition, he gave directions that notice regarding these issues be given to Class members and that the opt out deadline be extended. Lastly, he directed that the notice contain a recommendation that members of the Resident and Day Student Classes obtain independent legal advice with respect to the liability, if any, of their parents and guardians. Only the third party claims are in issue on this appeal.

[6] On September 23, 2011, Hoy J. (as she then was) granted leave to appeal to the Divisional Court.

[7] The Appellants submit that the Motions Judge erred in law in that he:

• permitted third party claims to be advanced even though the Appellants only claim several liability as against the Respondents and this is contrary to the Court of Appeal’s decision in Taylor v. Canada (Minister of Health), 2009 ONCA 487, [2009] O.J. No. 2490 (C.A.);

• permitted untenable claims for contribution and indemnity by the alleged abusers against the parents and guardians of those alleged to have been abused;

• permitted third party claims against “hundreds, if not thousands” of unnamed persons; and

• applied an improper procedure by permitting third party claims against individuals who were already parties to the action when the proper procedure is a counterclaim.

[8] The Appellants submit that the effect of the Motions Judge’s order is to discourage class participation, encourage opt outs and necessitate the retention of separate counsel in light of the resultant conflict of interest between the Plaintiff students and their proposed third party parents and guardians.

[9] The Respondents submit that there is no basis to interfere with the Motions Judge’s decision. Firstly, the Statement of Claim has not been amended to claim several liability. Secondly, the jurisprudence establishes that there is a tenable claim for contribution and relief over against the parents and guardians of the students. The Respondents state that their investigation suggests that the parents and guardians were aware of, consented to, acquiesced in, or encouraged their children’s treatment and education at the School. The allowance of the third party claims was an appropriate exercise of the Motions Judge’s discretion. Lastly, the Respondents submit that it was not an error of law to permit members of an already certified Plaintiff Class to also be named as third parties in the same proceeding and to name unknown parties as John and Jane Doe as allowed by the Rules of Civil Procedure.

[10] The standard of review on a question of law is that of correctness: Housen v. Nikolaisen, 2002 SCC 33.

[11] The Taylor decision of the Court of Appeal is not referred to in the Motions Judge’s decision and it is not clear that it was cited to him. When the Motions Judge’s decision is considered in light of Taylor, one must conclude that he erred in law in permitting the third party claim.

[12] The Appellants’ Notice of Appeal requests leave to amend the Statement of Claim in order to limit their claims to the several liability of the Respondents although counsel for the Appellants submitted that amendment was unnecessary. In our view, and as submitted by counsel for the Appellants, the unamended Statement of Claim may already be read as so limiting the Appellants’ claims. For instance, paragraphs 33 and 35 speak of the Respondents as being solely responsible and of the students as being in the entire and exclusive power and control of the Respondents. The Appellants have also consistently taken the position that they are limiting their claims to the several liability of the Respondents. This was the case in the hearings before the Motions Judge, Hoy J. (as she then was) and before us.

[13] In Taylor, Cullity J. determined that a third party claim 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.A. 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 claim 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.

[14] The Respondents submit that Taylor is distinguishable from the case before us. Taylor involved a claim against the Government of Canada for failing to regulate the use of certain implant devices. The disallowed third party claim was as against the hospital and the plaintiff’s surgeon. The Respondents argue that in that case, the degree of fault attributable to the Government was easily quantified and the conduct of the Government and the proposed third parties took place at different times. Here, in contrast, the damages are not the same, are not the result of one causal event and there is not one identifiable, separate negligent act for which the proportionate liability of the various parties can be identified. They argue that the claims are dependent on the degree of knowledge or fault of each parent and guardian and apportionment would be difficult. The alleged conduct took place concurrently. The Respondents submit that the parents and guardians are necessary parties to this action and the limitation proposed by the Appellants is unworkable. Furthermore, the limitation of the Appellants’ claim to several liability changes the nature of the common issues.

[15] In our view, the Taylor decision is fatal to the Respondents’ position on this appeal. The Appellants seek only that portion of their damages attributable to the Respondents’ degree of fault and not the portion that may be attributable to the degree of fault of their parents or guardians. In circumstances where the Appellants limit their negligence claim to the damages caused solely by the Respondents, there is no right to claim contribution and indemnity. An exercise of discretion is not engaged.

[16] Furthermore, there can be no right to contribution and indemnity on account of a breach of fiduciary duties. Liability for breach of a fiduciary duty is not subject to apportionment. Accordingly, as a matter of law, the third party claim cannot be advanced. Also, as a matter of fairness, we would also note that the Respondents are not being asked to pay more than their proportionate share of the alleged losses.

[17] In light of our conclusion with respect to this ground of appeal, it is unnecessary to consider the other grounds advanced.

[18] The appeal is therefore allowed and the order of the Motions Judge permitting the third party claim is set aside. The parties agreed that the successful party would be entitled to costs of $12,500 on a partial indemnity scale consisting of $5000 for the motion before the Motions Judge, $2,500 for the leave motion before Hoy J. (as she then was), and $5000 for the appeal before us.

______________________________________ Swinton J.

______________________________________ Pepall J.

Harvison Young J.

DATE: February 24, 2012