ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12182
DATE: 2013-06-4
BETWEEN:
JIMMIE RAYMOND JAMES and BRENDA LEE JAMES
Plaintiffs
– and –
MILLER GROUP INC., SMITH CONSTRUCTION (division of The Miller Group), SERNOSKIE BROS. LIMITED and ALAN JOSEPH SERNOSKIE
Defendants
Jaime Wilson, for the Plaintiffs
Ryan Garrett, for the Defendants, Miller Group Inc., and Smith Construction (Division of Miller Group)
Craig O’Brien, for the Defendants Sernoskie Bros. Limited and Alan Joseph Sernoskie
HEARD: June 3, 2013
MOTION TO AMEND – PIERRINGER AGREEMENT
T.D. RAY, J
[1] The plaintiffs move to amend their Statement of Claim pursuant to rule 26 of the Rules of Civil Procedure to delete Sernoskie Bros. Limited and Alan Sernoskie (“Sernoskie”) from the title of the proceeding, and any claims against them from the body of the statement of claim. They also seek to amend their claims against the surviving defendants to delete their claims for negligence leaving only a claim for nuisance.
[2] The claim arises out of a fly-rock incident on August 27, 2007, whereby blasting in the defendants’ quarry caused rock to leave the quarry and strike the plaintiffs’ house which is located immediately adjacent to the quarry. The plaintiffs’ claim is for $250,000 in damages. In an agreed statement of fact filed in proceedings in the Ontario Court of Justice, Sernoskie took full responsibility for the damage caused by the fly-rock incident. While Miller owned and operated the quarry in question, it did no blasting or rock removal itself but engaged contractors for that purpose. In this quarry Miller had retained Sernoskie as contractor for the past approximately 25 years. It is on the basis of the relationship over the past several years plus the scope and nature of the work by Sernoskie, that Miller claims an implied contract of indemnity.
[3] The plaintiffs and Sernoskie entered into an agreement In July, 2012, to settle the plaintiffs claim against them for $35,000 in a Pierringer Agreement or ‘proportionate share agreement’, the terms of which require the plaintiffs to obtain the foregoing amendment.
[4] A proportionate share agreement is a device that is increasingly used in multi-party litigation whereby a plaintiff settles with one or more of the defendants, but continues the action against the non-settling defendants but only for the ‘several’ damages against those defendants. The agreement typically provides that the plaintiff will amend its statement of claim to delete any reference to the settling defendant. It has been recognized by the courts as a vehicle to encourage early settlement, and by giving finality to the settling defendants without further expense.
[5] Miller Group Inc., and Smith Construction (Division of Miller Group) (“Miller”) move under rule 21 for judgement to dismiss the plaintiffs’ claim on the ground that the agreement between Sernoskie and the plaintiffs contains a term that they may not commence or continue proceedings against a party (such as Miller) who claims contribution or indemnity against them. Miller has a cross-claim for contribution and indemnity against Sernoskie. Miller contends that the bar to action under these circumstances constitutes a waiver; and that the action against it should be dismissed.
[6] Miller’s claim for contribution and indemnity against Sernoskie is based on an implied oral agreement between them. If the amendment were granted the plaintiffs’ claim against the surviving defendant, Miller, would be in nuisance only.
[7] The Plaintiffs are entitled to their order to amend their statement of claim as requested providing there is no prejudice which cannot be compensated in costs.[^1] The onus is upon Miller, as the responding party, to show prejudice. Abridgement or interference with its procedural or substantive rights in this litigation may well amount to prejudice which cannot be compensated in costs.
[8] The terms of the agreement include the following:
And whereas the Plaintiffs and the settling Defendants agree that the final resolution of all issues between and among themselves shall result in the settling Defendants not participating as parties in the trial of this action;
THE PLAINTIFFS SHALL RECEIVE from the settling Defendants the sum of $30,000.00 for all claims for damages against the settling Defendants. In addition the Plaintiffs shall receive from the settling Defendants the sum of $5,000.00 for all claims for interest and costs against the settling Defendants.
THE PLAINTIFFS AND THE SETTLING DEFENDANTS AGREE AND CONSENT to the dismissal of the action commenced in the Superior Court of Justice at Ottawa under Court File No. 08-CV-42701 on a without costs basis as against the settling Defendants. It is understood and agreed that, should the Plaintiffs so choose. The Plaintiffs will continue to pursue their claims against the Defendants, Miller Group Inc. and Smith Construction (division of The Miller Group), solely with respect to the several liability, if any, of the Defendants, Miller Group Inc. and Smith Construction (division of The Miller Group).
THE RELEASORS CONFIRM AND AGREE to restrict their claims to those sums for which the Defendants, Miller Group Inc. and Smith Construction (division of The Miller Group), may be severally liable and for which the Defendants, Miller Group Inc. and Smith Construction (division of The Miller Group), cannot be held jointly liable with the settling Defendants, or cither of them. This means that the Releasors confirm and agree to only pursue as against the Defendants, Miller Group Inc. and Smith Construction (division of The Miller Group), those claims for which the Defendants, Miller Group Inc. and Smith Construction (division of The Miller Group), shall have no basis to seek contribution, indemnity, relief over or relief by way of equitable subrogation, declaratory relief or otherwise against the settling Defendants. (italics and bold for my emphasis).
[9] The plaintiffs and Sernoskie confirmed during argument that the foregoing final sentence of paragraph 9 of the Pierringer Agreement is to be interpreted to mean that the plaintiffs will only pursue a claim against Miller for its several liability to the plaintiffs, if any, MINUS any award of contribution or indemnity, if any, as against Sernoskie by Miller.[^2] Paragraph 4 of the agreement obliges Sernoskie to cooperate in giving evidence at the trial if any party considers their evidence is required. I take from this that Miller’s substantive right to seek a reduction of its own liability if any to the plaintiff by virtue of an assessment of contribution or indemnity by Sernoskie, if any, is preserved. In other words, its right to a reduction of its exposure to the plaintiffs by any amount it can assert against Sernoskie by way of contribution or indemnity remains. Miller says not having Sernoskie present at trial as a party will raise questions in the minds of the jury and will be a detriment to its claim for contribution or indemnity. While that may be true, if the amendment is granted, Sernoskie will not be present to counter Millers arguments. That may be to Miller’s benefit. I consider this balancing as part of the necessary assessment of prejudice which Miller has raised in order to determine whether the amendment should be granted.
[10] All discovery including examinations have been concluded and it has been set for trial. The parties have confirmed there are no outstanding procedural issues. No consideration is therefore necessary for Miller’s discovery rights as against Sernoskie. [^3]
[11] I see no prejudice to Miller which cannot be compensated in costs, and the amendment is granted. The plaintiffs will deliver a ‘fresh as amended’ statement of claim. I would add that in order to give effect to Miller’s rights, and since Sernoskie will no longer be a party, that when Miller delivers its amended statement of defence that it seek a declaration for contribution and indemnity to replace its cross claim against Sernoskie, so that all claims are clear in the pleadings.[^4]
[12] By reason of the above, Miller’s motion for judgement fails. The above order protects its rights. The plaintiffs have not waived their claim as against Miller.
[13] Two of the parties filed costs outlines at the conclusion of argument. If the parties cannot agree on costs, they may make submissions of two pages or less within fourteen days. They have a further five days for reply.
Honourable Justice Timothy Ray
Released: June 4, 2013
COURT FILE NO.: CV-12182
DATE: 2013-06-4
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JIMMIE RAYMOND JAMES and BRENDA LEE JAMES
Plaintiffs
– and –
MILLER GROUP INC., SMITH CONSTRUCTION (division of The Miller Group), SERNOSKIE BROS. LIMITED and ALAN JOSEPH SERNOSKIE
Defendants
REASONS FOR Decision
Honourable Justice Timothy Ray
Released: June 4, 2013
[^1]: Rule 26.01, Rules of Civil Procedure.
[^2]: This interpretation may be a bit strained but it is a fair position and consistent with the position taken by Hollinger in Hollinger Inc. (Re), 2012 ONSC 5107 @ paragraph 33. Also note to the same effect Amoco Canada Petroleum Co. v. Propak Systems Ltd. 2001 CarswellAlta 575, 2001 ABCA 110, 4 C.P.C. (5th) 20 @ paragraph15-16.
[^3]: Hollinger Inc. (Re), @ paragraph 67, 110-113. This was under the CCAA, not rule 26, but the same principles were canvassed by Campbell, J.
[^4]: British Columbia Ferry Corp. v. T & N pic, 1995 1810 (BC CA), 1995 CarswellBC 1060,16 B.C.L.R. (3d) 115,65 B.C.A.C. 118 ,27 C.C.L.T. (2d) 287 (BCCA) This was the procedure adopted to preserve the non-settling defendant’s right to claim against the settling defendant for contribution and indemnity.