SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Ryan Hengeveld, Susan Hengeveld, Matthew Hengeveld, a minor by his litigation guardian, Susan Hengeveld, Benjamin Hengeveld, a minor by his litigation guardian, Susan Hengeveld, Erin Hengeveld, a minor by her lititgation guardian, Susan Hengeveld, Andrew Hengeveld, a minor by his litigation guardian, Susan Hengeveld, Bernard Hengeveld and Lutsche Bakker, plaintiffs
AND:
The Personal Insurance Company, defendant
AND:
James Dallyn Virture and Rasha Mohamed Said El-Tawil, third parties
BEFORE: McArthur J.
COUNSEL: T. Kasi, for the defendant
D. Williams and J. Butkus, for the third parties
HEARD: June 18, 2018
ENDORSEMENT
Introduction
1The plaintiff, Ryan Hengeveld, was significantly injured in a motor vehicle accident. A Statement of Claim was issued for damages. This is the First Action.
2A Second Action involves a Statement of Claim that was subsequently issued. The plaintiffs plead that the defendants failed to preserve the motor vehicle involved in the accident relevant to product liability issues in the amended First Action. The defendant served a Statement of Defence dated March 16, 2018 and soon after issued a Third Party Claim that named legal counsel for the plaintiffs as Third Party defendants.
3The Third Party defendants move to strike the Third Party Claim and/or request that this be stayed or dismissed.
4There is also a motion to consolidate this Second Action indexed as Court File 2357/17 with the First Action indexed as Court File 21/16. That motion has been adjourned pending this decision.
The Legal Issues
5The legal issues are whether (a) the Third Party Claim should be struck pursuant to Rule 21.01(1) (b) of the Rules of Civil Procedure on the basis that it discloses no reasonable cause of action and/or (b) whether the Third Party Claim should be stayed or dismissed pursuant to Rule 21.01(3) (d) on the basis that it is an abuse of the process of the court.
Factual Background & Position of the Parties
6The plaintiff, Ryan Hengeveld, was seriously injured in a motor vehicle accident that occurred on January 27, 2014. He commenced an action for damages in Court File 21/16 (First Action). An amendment was granted on October 25, 2017 to add to that action the vehicle manufacturer and auto dealer that sold the vehicle.
7The defendant had issued an automobile policy with respect to the plaintiff’s motor vehicle to the benefit of the plaintiff, Ryan Hengeveld.
8The non-existence of side-impact airbags as contributing to the plaintiff’s injury is an issue in the First Action.
9In this Second Action, the plaintiffs plead that there was an agreement with the defendant where the defendant undertook to preserve safe storage and not to dispose of the plaintiff’s motor vehicle involved in the collision. The plaintiffs also plead that the defendant disposed of this motor vehicle without notice or warning on approximately October 23, 2015 and that such disposal impairs the ability to prove liability against some of the defendants in the First Action. The plaintiffs allege that the defendant was in breach of contract or negligent in failing to preserve and destroyed the motor vehicle.
10The defendant served a Statement of Defence denying the plaintiffs were entitled to the relief claimed and, if the plaintiffs did sustain damages, these were caused or contributed to by the plaintiff’s own negligence that included lack of due diligence to make enquiries, preserve, take possession or conduct a timely examination of the vehicle.
11The defendant soon after issued a Third Party Claim naming legal counsel for the plaintiffs as third party defendants. The defendant pleads that the plaintiffs retained legal counsel to represent them, secure and preserve documents and evidence, pursue the plaintiff’s claims and take all reasonable and necessary steps. The defendant seeks contribution and indemnity from the third parties as a result of various particulars of negligence as stipulated in the Third Party Claim.
12The third parties served a Notice of Intent to Defend dated April 11, 2018.
Third Parties’ Position
13The Third Party does not dispute the retainer and the underlying duties and obligations to the plaintiffs. They submit that any negligence for the failure to preserve the vehicle is attributed to the plaintiffs themselves. In these circumstances, the defendant can have full remedy against the plaintiffs from its ability to assert the defence of the plaintiff’s own negligence in the failure to preserve. Accordingly, they submit the claim is unnecessary, cannot succeed and should be struck.
The Defendant’s Position
14The defendant maintains the Third Party Claim discloses a cause of action against the third party lawyers based on negligence, that it is immaterial that the plaintiff’s not bring a claim against their own solicitors and that a duty of care need not be owed for the claim to continue. The defendant’s submit that this is not a failure to mitigate the plaintiff’s losses. Without the Third Party Claim, the defendant submits that the third parties are effectively absolved and that this leaves the defendant open to damages caused or contributed to by the third parties.
Analysis and Commentary
15For reasons that follow, the Third Party Claim of the defendant in this proceeding shall be struck as disclosing no reasonable cause of action.
Reasonable Cause of Action
16Rule 21.01(1) of the Rules of Civil Procedure permits a party to move to strike out a pleading if it discloses no reasonable cause of action.
17For the purposes of this motion, I have adopted the principles established in R. v. Trillium Power Wind Corp v. Ontario (Natural Resources), 2013 ONCA 683 (Ont. C.A.) at para 13.
18The court assumes that every fact as plead by the defendant is true.
19The test, assuming the facts plead are true, is as follows: Is it plain and obvious that no reasonable cause of action is disclosed? This must not involve extraneous facts in the circumstances.
20In the case of claims that are certain to fail, the claim or relevant portions of the claim should be struck out: See Hunt v. Carey, [1990] 2 S.C.R. 45 (S.C.C.) at paras. 19 and 20.
21The function of striking claims that have no prospect of success promotes efficiency in the conduct of litigation and correct results. This focuses on litigation efficiency, avoids delays, reduces time and unnecessary costs and moves all parties onto the relevant evidence merits of the case. These principles all align with the concerns and efforts expressed most recently by the Supreme Court of Canada in R. v. Jordan 2016 SCC 27, [2016] S.C.J. No. 27 and are not confined to the criminal law context but mandate a more vigorous and vigilant effort by all participants in all courts.
22Although it is trite law, a lawyer can, like any other professional or person, be liable in negligence. This fact alone however, requires further consideration where lawyers for litigants are involved.
Scope of agency where lawyers involved
23Where legal counsels are implicated, it is important to determine the scope of agency. Acts falling within the scope of agency between a proposed third party and the plaintiff under the category of acts for which the plaintiff is responsible, are not the proper subject of Third Party Claims: See 478649 Ontario Limited v. Corcoran, 1999 CarswellOnt (Ont. C.A.) at para. 13 quoting Adams v. Thompson et al (1987), 1987 CanLII 2590 (BC CA), 39 D.L.R. (4th) 314 (B.C.C.A.) at para. 20.
24In such situations where the plaintiff is responsible, Third Party Claims are unnecessary since the defendant could plead those matters in defence and, if the plaintiff was found at fault, damages would be reduced. Any neglect on part of the solicitors would be attributable to the plaintiff and make a third party proceeding unnecessary.
25The underlying policy reason for this is expressed by the Ontario Court of Appeal in Davy Estate v. Egan 2009 ONCA 763 at para. 17:
“The defendant is, after all, the wrongdoer who caused the plaintiff’s loss, and a plea of mitigation does not excuse or justify the wrong, nor does it rest on the attribution of partial responsibility for the wrong to some other party. Obvious mischief arises from allowing one party to sue another party’s solicitor. Such claims invade the sanctity of the solicitor client relationship. The solicitor’s loyalty to the client is undermined. ….”
26Two situations arise where a plaintiff is responsible for the conduct of a third party: (1) where acts are within the scope of an agency relationship between the third party and the plaintiff and (2) where the claim is that the third party should have advised or assisted the plaintiff to mitigate damages: See Laidar Holdings Ltd. V. Lindt Sprungli (Canada) Inc., 2012 BCCA 22 at para 11.
27Where the conduct falls within the scope of counsel’s retainer and the pleading does not disclose events giving rise to the initial loss, but simply a failure to protect the interests of the client, then the obligation to act to protect itself only belongs to the party. This makes a third party claim unnecessary.
28In 478649 Ontario Ltd. V. Corcoran 1994 CanLII 219 (ON CA), [1994] O.J. 2103 the Ontario Court of Appeal held that a real estate agent could maintain a Third Party Claim against the plaintiff’s lawyer who was a part of the transaction. The lawyer was alleged to have provided negligent legal advice before an agreement of purchase and sale was entered into. The claim was that the solicitor contributed to losses sustained in that transaction.
29The defendant submits Cerullo v. Transworld Realty Inc. 2000 CanLII 22324 (ON SC), [2000] O.J. 179 is an analogous case upon which to maintain the Third Party Claim. In that case, the plaintiff purchased a property from a vendor who was also the real estate agent on the transaction. The plaintiff sued the vendor and broker in negligence for failing to disclose the previous purchase price of the property. The broker then brought a Third Party Claim against the plaintiff’s lawyer for negligent advice. This claim was allowed to stand on the solicitor’s conduct possibly caused or contributed to the plaintiff’s alleged initial loss and damages.
30Justice Shauhnessy in that case commented that the claim of the defendants was somewhat novel. Although there is no mention or explicit analysis as to the scope of agency, the main distinguishing feature from this case is that the pleading in Cerullo was that the lawyer was involved as part of the transaction with other persons where the initial loss arose.
31In this case, neither of the third party defendants as counsel were persons involved in the initial loss to the plaintiffs. Any the conduct by the third party defendants, as counsel, falls within the scope of counsels’ retainer. The pleadings do not and could not disclose events involving the third party defendants giving rise to the initial loss. Any allegation by the defendant against these counsel amounts to a failure to protect the interests of the plaintiffs. The obligation to act to protect plaintiff only belongs to the plaintiff. This makes the Third Party Claim unnecessary in this case.
Abuse of Process
32Rule 21.01(3) (d) permits a party may move to have an action stayed or dismissed if the action is an abuse of process of the court.
33The court has the inherent power to prevent the misuse of its procedure in a way that would be manifestly unfair to a party to the litigation or bring the administration of justice into disrepute. Proceedings brought that are demonstrably mere tactical moves or otherwise without merit are an abuse of process.
34The plaintiff pleads that the third parties were retained to, among other things, secure and preserve documents and evidence to advance the plaintiffs’ claims. Any steps taken fall clearly within the scope of agency.
35In the circumstances, it is not necessary to make any further determination in this regard based on the determination and disposition made in relation to the reasonable cause of action above.
Conclusion
36The Third Party Claim is unnecessary and shall be struck since it does disclose and raise a reasonable cause of action against the third parties.
37As to costs, if the parties cannot agree in this regard, each party shall provide written submissions of no longer than three pages, excluding any offers and bills of costs; within 15 days by the third parties and with the defendant’s responding materials served and filed within 15 days of receipt of the third parties submissions.
“Justice M.D. McArthur”
Justice M. D. McArthur
Date: August 2, 2018