ONTARIO
SUPERIOR COURT OF JUSTICE
Court File No.: 09-44625A
Date: 2012/03/27
BETWEEN:
The Wedgewood Brockville Inc. Plaintiff/Defendant by Counterclaim – and – Paul Daoust Construction Canada Ltd. Defendant/Plaintiff by Counterclaim – and – Genivar Ontario Inc. Third Party/Moving Party
Shawn J. O’Connor, for the Plaintiff/ Defendant by Counterclaim
P. Donald Rasmussen, for the Defendant/Plaintiff by Counterclaim, Not a Party to this Motion
J. Stephen Cavanagh, for the Third Party
Heard: March 22, 2012
DECISION ON MOTION
McNAMARA J.
Nature of the Motion
[ 1 ] This is a motion by the third party, Genivar Ontario Inc. (“Genivar”) brought pursuant to rule 21.01(1)(b) of the Rules of Civil Procedure seeking the dismissal of the third party claim against it on the basis that it discloses no reasonable cause of action.
General Background Facts
[ 2 ] In the main action, the plaintiff, The Wedgewood Brockville Inc. (“Wedgewood”), has sued the defendant, Paul Daoust Construction Canada Ltd. (“Daoust”), alleging breach of a construction management contract with respect to the construction of a retirement residence in the city of Brockville. Wedgewood alleges that Daoust failed to properly perform the services required of it under the contract, resulting in cost overruns and various other expenses.
[ 3 ] Daoust delivered a Statement of Defence that included a counterclaim against Wedgewood for damages. The counterclaim was also framed as one for breach of contract. Wedgewood has denied that it owes any money to Daoust and has also commenced a third party claim seeking contribution and indemnity from Genivar, alleging that if it is liable to Daoust as a result of any delays, it is because Genivar failed to deliver the required drawings within a reasonable period of time.
Position of the Moving Party
[ 4 ] Genivar argues firstly that it had no contract with Daoust and because Daoust’s claim against Wedgewood is based in contract, Daoust could not have advanced a claim against Genivar. They argue further that there is no basis for a claim by Daoust against Genivar in negligence and hence there are no circumstances in which Genivar could be liable to Daoust. They submit the case law supports the argument that contribution claims will not be allowed in cases where the third party is not liable to the plaintiff, in this case the plaintiff by counterclaim, Daoust.
[ 5 ] Secondly they argue that a claim for contribution and indemnity can only be advanced if it is for the same damages and that is not the case in this claim.
Analysis
[ 6 ] This motion is brought under rule 21.01(1)(b). It is common ground that under that rule a claim will be struck only if it is plain and obvious, assuming the facts plead to be true, that the pleading discloses no reasonable cause of action. The approach must be generous and err on the side of permitting a novel but arguable claim to proceed. In other words the threshold for sustaining a pleading is not a high one.
[ 7 ] It is also important to this analysis to review the provisions of rule 29.01 which outlines where third party claims are available. That rule reads as follows:
29.01 A defendant may commence a third party claim against any person who is not a party to the action and who,
(a) is or may be liable to the defendant for all or part of the plaintiff’s claim;
(b) is or may be liable to the defendant for an independent claim for damages or other relief arising out of,
(i) a transaction or occurrence or series of transactions or occurrences involved in the main action, or
(ii) a related transaction or occurrence or series of transactions or occurrences; or
(c) should be bound by the determination of an issue arising between the plaintiff and the defendant.
[ 8 ] On a plain reading of that language it authorizes the assertion by way of third party claim of an independent claim a defendant may have against a third party, provided it arises out of the transactions or occurrences involved in the main action, or a related series of transactions or occurrences.
[ 9 ] The third party claim in this litigation references the counterclaim of the defendant, Daoust, and its allegations that Daoust incurred costs or losses as a result of the failure of the mechanical, electrical, structural, and civil engineers to produce adequate drawings and information in a timely fashion. The third party claim also pleads that Genivar was retained by Wedgewood to perform the mechanical, electrical, structural, and civil engineering work for the project that is the subject matter of both the main action and the third party claim. The claim states further that if the allegations being made by Daoust are proven at trial, Genivar is the party Wedgewood alleges is responsible for the losses related to the timely provision of competent drawings. Thus it is plead Genivar is liable to Daoust for those losses and Wedgewood pleads it is entitled to contribution or indemnity from Genivar in those circumstances.
[ 10 ] Daoust chose to sue Wedgewood in contract only. It is also true that there is no contract between Daoust and Genivar. I am not persuaded, however, that Daoust could not have sued Genivar in negligence had it chosen to do so. Genivar and Daoust were both part of a team retained by Wedgewood on this project. It is certainly arguable that that gave rise to a duty of care between Genivar and Daoust, and that an action in negligence could be advanced if that duty was breached as alleged. It is true that the third party claim could have been much more specific in terms of the relationship between the parties and the specifics of negligence, but that can be cured by way of an amendment.
[ 11 ] It is also arguable in my view that Genivar may be liable to Wedgewood for an independent claim for damages or other relief arising out of the transaction or occurrence or series of transactions or occurrences involved in the main action within the meaning of rule 29.01(b).
[ 12 ] It is also not plain and obvious that the damages sought in the main action and third party claim do not relate to the same loss. Wedgewood pleads in the third party claim that if Daoust’s allegations are proven at trial, the engineering work on the project caused delays and that triggered a right in contract to claim certain damages from Wedgewood. Wedgewood is thus arguably entitled to claim contribution or indemnity for those same damages.
[ 13 ] Counsel seemed to agree during submissions that Wedgewood is at liberty to sue Genivar for breach of contract and negligence in a separate action. Were that to occur, there is little doubt that the two actions would be ordered to be tried together. Rule 1.04 provides that the rules “shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” That would be best accomplished, in my view, in allowing the third party claim to continue.
[ 14 ] It is also worth noting that rule 29.01(c) provides that a defendant may commence a third party claim against any person, not a party to the action, and who “should be bound by the determination of an issue arising between the plaintiff and the defendant.” It is arguable that that is the situation that exists in this case.
[ 15 ] Upon a consideration of the pleading in this matter and the arguments of counsel, it is not in my view plain and obvious that the third party claim discloses no reasonable cause of action. The motion is therefore dismissed.
Costs
[ 16 ] I can think of no reason why costs should not follow the event. Mr. O’Connor delivered at the conclusion of his submissions a Costs Outline seeking costs and disbursements, on a partial indemnity basis, in the amount of $2,507.00. That seems very reasonable and they are allowed at that amount.
The Honourable Justice J. McNamara
Released: March 27, 2012
2012 ONSC 1944
COURT FILE NO.: 09-44625A
DATE: 2012/03/27
ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: The Wedgewood Brockville Inc. Plaintiff/Defendant by Counterclaim – and – Paul Daoust Construction Canada Ltd. Defendant/Plaintiff by Counterclaim – and – Genivar Ontario Inc. Third Party DECISION ON MOTION McNamara J.
Released: March 27, 2012