SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: C-771A-11
DATE: 2015-12-11
RE: James Cowan and Shauna Cowan - Plaintiffs
AND:
General Filters Inc., Canadian General Filters Limited, Lippert & Wright Fuels Ltd., also known as Dave Lippert Fuels Ltd., K&S Climate Control, Oil Tech Plus Ltd., and John Doe Company, and the Dominion of Canada General Insurance Company – Defendants
AND
Dana Canada Inc. Filter Division – Third Party Defendant
BEFORE: The Honourable Mr. Justice James W. Sloan
COUNSEL:
Christopher Morrison - Counsel, for the Dominion of Canada General Insurance Company
Irwin Duncan – Agent for Counsel, for the Third Party Defendant
HEARD: December 3, 2015
ENDORSEMENT
[1] This motion involves an unusual situation under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[2] Both counsel have been unable to find any case law to assist the Court with the interpretation of the Rules as they applies to the facts of this case.
[3] The facts of the case are essentially not in dispute.
[4] On August 21, 2009, the plaintiffs had an oil spill in their home.
[5] The plaintiffs sued all of the defendants except for The Dominion of Canada General Insurance Company (Dominion), who had themselves added as a defendant on June 20, 2013.
[6] K&S Climate Control (K&S) is not a legal entity, but this was the name of the business operated by one Steve Gingrich. Mr. Gingrich’s whereabouts are unknown, he has never been served personally with any court documents in this lawsuit and it is likely that he is not aware of this lawsuit.
[7] Service of the Statement of Claim was affected by Court Order dated October 4, 2012, which allowed the Plaintiffs to serve Dominion.
[8] Dominion was the insurance company for K&S and added itself so that it would be in a position to defend the action of the plaintiffs against K&S.
[9] Several of the defendants have brought action by way of crossclaims against each other, including against K&S for contribution and indemnity.
[10] Only Canadian General Filters Inc. (Canadian General) has initiated an action against Dana for contribution and indemnity. This claim was action is by way of a third party claim.
[11] The third party, Dana Canada Inc. Filter Division (Dana), issued crossclaims against Canadian General Filters and Lippert & Wright Fuels Ltd. along with K&S, however Dana’s claim has never been personally served on K&S.
[12] Dana’s claim against K&S was not done using the procedure for claiming against a fourth party, but rather by a crossclaim, in their Third Party Statement of Defense and Crossclaim.
[13] The plaintiffs and all defendants who have crossclaimed against K&S now want to consent to having their claims against K&S dismissed without costs. The motion is being spearheaded by Dominion, and all other parties consent to it, except Dana who opposes it.
[14] At this point in time, the court is not being asked to assess the validity of any claims.
[15] Dominion concedes that if Dana were able to fourth party K&S it would be back into the lawsuit.
The Moving Party’s Position
[16] The claim against Dana by Canadian General is a claim for their percentage, of any negligence that may be found against Canadian General.
[17] Dana’s claim against K&S is for contribution and indemnity.
[18] Dominion submits:
a) That if the motion is allowed it would not be res judicata with respect to any claims between Dana and K&S;
b) That a party cannot be forced against its will to maintain a claim against another party;
c) If the plaintiff’s action and the crossclaims of the defendants against K&S are dismissed, Dana can bring a fourth party action against K&S;
d) If a third party (Dana) has a right of action it should assert it and not be allowed to make someone else enforce that right for it.
[19] A third party has a right under the rules to defend the main action and that is because the third party is bound by the action between the plaintiff and the defendant. In other words, if the defendant is not liable to the plaintiff then the third party will not be liable to the defendant. Therefore, the rules give a third party the right to defend the main action, which Dominion submits makes sense, particularly in the event a defendant disappears or otherwise does not partake in the action.
Dana’s Position
[20] Dominion added itself as a defendant and now wants to take itself and its insured out of the action.
[21] Dana does not object if Dominion wants to remove itself from the action.
[22] However if K&S is out of the action Dana will no longer be able to maintain its contribution and indemnity claim against K&S because it will become a nonparty.
[23] Since the facts which give rise to this lawsuit occurred in 2009, Dana will likely run afoul of the limitation period, if it now attempts to commence fourth party proceedings against K&S. In addition, no one had been able to locate Steve Gingrich the person who ran K&S since this action was commenced.
[24] Dana submits it is not forcing the plaintiff or the defendants to do anything with respect to K&S, and that they can simply do nothing further with respect to K&S if that is what they want to do.
[25] Dana relies in part on Rule 1.04 of the Rules, which reads: “These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.”
[26] It submits that everyone who needs to be at the trial, is now involved in the matter and the matter should proceed to be heard on its merits.
[27] Dana also relies on Rule 29.05(2)(a), which reads : “A third-party who delivers a statement of defence in the main action, (a) has the same rights and obligations in the main action including those in respect of discovery, trial and appeal, as the defendant in the main action…”
[28] Dana was third partied by Canadian General and has delivered a statement of defence to the main action. Dana therefore submits it stands in the shoes of the defendant, Canadian General, and has the same rights as Canadian General.
[29] Dana further submits that since Canadian General filed a crossclaim against K&S in the main action that it has the same rights to file a crossclaim against K&S. Therefore, Dana’s crossclaim against K&S is proper.
[30] Dana also submits that Dominion brought itself into the action approximately a year ago and now wants to leave and take K&S with it. They repeat that the plaintiff did not bring this motion.
[31] Dana is asking for validation of its crossclaim against K&S and for certain undertakings to be answered.
Reply by Dominion
[32] Dominion quotes Rule 29.05(1) which reads: “Where appropriate, the third party may defend against the plaintiff’s claim against the defendant by delivering a statement of defence in the main action, in which the third-party may raise any defence open to the defendant.”
[33] Dominion submits that nothing in the above Rule authorizes a third party to commence an action which would include a crossclaim.
[34] Dominion submits that Dana, if it wished to initiate a claim against K&S, had to use Rule 29.11 and initiate a fourth party claim. It further submits that crossclaims are not authorized in the Rules between a third party and a defendant.
Other Matters
[35] Although not vigourously pursued, Dana objects to Mr. Morrison appearing on this matter since he is the source of information in one of the affidavits relied upon.
[36] I would not dismiss the motion on this ground. This issue was not raised at the outset of the hearing. Further, none of the facts relied upon by Dominion in support of its motion, as it was argued in front of me, are in dispute. Finally, I was not directed to any prejudice that might result from Mr. Morrison appearing on the matter.
Findings
[37] The Rules lack explicit clarity on whether or not third parties, defending the main action can crossclaim against the defendants in the main action.
[38] Rule 29.11(1) states; “A third party may, by commencing a fourth party claim, assert against any person not already a party to the third party claim any claim that is properly the subject matter of the third party claim..” (emphasis added).
[39] Rule 29.11(2) states: “A fourth party claim need not be served personally on a fourth party who is a party to the main action…” (emphasis added).
[40] Rule 29.05(1) states: “A third party [defending the main action] may raise any defence open to the defendant” and Rule 29.05(2)(a) states, a third party defending the main action “has the same rights and obligations… as a defendant in the main action”.
[41] Rule 28 seems to make crossclaims only available between parties who are defendants at the same level of the action. Nowhere do the crossclaim rules state that third parties can crossclaim against the defendant to the main action.
[42] Rule 1.04 (1) states: “These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.”
[43] In this case, while a Fourth Party Claim would appear to have been procedurally correct, all parties and most notably Dana and K&S were already parties to the action when Dana filed its Third Party Statement of Defence and Cross-Claim.
[44] Assuming that Dana’s claim against K&S has some merit and if the moving party were successful it is likely that Dana would be unable to bring a fourth party proceedings at this late date because of the limitation period involved.
[45] In essence then, what may very well be a meritorious claim, would then be defeated by a procedural rule.
[46] While not condoning the procedure used by Dana I am not prepared to take away what might be a meritorious claim for this breach of a procedural rule.
[47] I therefore dismiss the Plaintiff’s motion, however under the circumstances I do so without costs.
J. W. Sloan J.
Date: December 11, 2015