Court File and Parties

COURT FILE NO.: CV-10-410508

DATE: 20210113

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: JOE MAIO and LIDIA MAIO, Plaintiffs/Moving Parties

AND: KAPP CONTRACTING INC., MER MECHANICAL INC. and THE CORPORATION OF THE CITY OF VAUGHAN, Defendants/Respondents

AND: LORI MORRIS DESIGN INC., B.K. CONSULTING INC., AMATI PLUMBING SUPPLY LTD. and HOURUS S.A.S., Third Parties

AND: ROSS H. BARBER & ASSOCIATES, Fourth Party

BEFORE: S.F. Dunphy J.

COUNSEL: Michael Kestenberg, for the plaintiffs/moving parties Dana Eichler, for the Third Party, Hourus S.A.S. Joel Cormier, for the defendant, Mer Mechanical Inc. Geoff Mens for the fourth party, Ross H. Barber & Associates

HEARD at Toronto via video: January 13, 2021

REASONS FOR DECISION

[1] This motion on its face is a motion under Rule 21 of the Rules of Civil Procedure seeking a determination of the effect of a Pierringer Agreement dated August 28, 2017 “on the remaining claims against Mer Mechanical Inc. and the third and fourth party claims”.

[2] As framed, the motion was puzzling. While the plaintiffs are of course parties to the Pierringer Agreement by which the main action was settled in part, the other party to that agreement – in this case the former defendant City of Vaughan – is no longer a party to this proceeding. None of the responding parties to this motion (the response was led by Third Party Horus S.A.S.) are parties to the Pierringer Agreement or even direct parties to the action brought by the plaintiff since the remaining defendant Mer is taking no position on this motion.

[3] While couched as a Rule 21 motion to determine rights, this motion actually appears to be the result of a misunderstanding of the parties’ respective positions that emerged at a pre-trial conference last year. I characterized the matter as a misunderstanding because by the end of the hearing, all of the parties appeared to be quite vociferously taking the same position, albeit using different words.

[4] The relevant facts can be simply stated as follows.

[5] In 2010, the plaintiffs sued (i) City of Vaughan, (ii) Kapp Contracting; and (iii) Mer Mechanical. The subject matter of the lawsuit is an accident that occurred on a project site that each of the defendants was alleged to have had a role in. The accident in question was a November 2009 flood that caused extensive damage to the plaintiffs’ property.

[6] The plaintiffs were under no obligation to sue every person on the face of the earth who might bear some responsibility for the incident. The plaintiffs selected the three parties that they selected for reasons sufficient to them. As mentioned, those three were the City, Knapp and Mer.

[7] Following the issuance of the statement of claim, the defendants preserved their rights to contribution from each other by of cross-claims where each sued the other. As well, the defendants elected to sue other parties whom they concluded had a reason to bear a part of the potential load of paying for the damages claimed by the plaintiffs. They did so with third party claims which in turn engendered various fourth party claims.

[8] All of this is fairly typical for claims of this sort. A drop of oil on the surface of a pond and construction litigation have this in common: both spread swiftly and seemingly without limit. Unfortunately, it is also fairly typical that such claims can become entangled in their own complexity, a fact that is eloquently demonstrated by the age of this claim (over ten years and counting).

[9] In 2017, the plaintiffs elected to settle with the City of Vaughan and accepted an undisclosed amount of money from the City to let the City out of the action. The settlement included what is known as a “Pierringer Agreement”. While there are differences between them and each such agreement is customized to a degree, they are well-known to our courts in concept.

[10] As is typically the case, the only parties to the Pierringer Agreement were the City and the plaintiffs. Such an agreement cannot purport to impose responsibilities on non-parties and this one does not. Acting on that agreement, however, the plaintiffs and the City took certain steps which did affect the third parties to some degree, directly or indirectly.

[11] One such step occurred when the plaintiffs sought and received an order from this Court dated September 20, 2017 by which (i) the claim against the City was dismissed and (ii) the cross-claims of Kapp and Mer against the City were also dismissed. The reason Mer and Kapp agreed to their cross-claims against the City being dismissed becomes apparent in the third paragraph of the order which reads as follows:

This Court Further Orders that the Plaintiffs forthwith amend their Statement of Claim to restrict their claims against Kapp Contracting and Mer Mechanical to each Defendant’s several liability.. [Emphasis added.]

[12] It is worth noting that the order obtained by the plaintiffs was obtained in the style of cause of the main action only. It did not purport to involve or affect any other claims apart from those mentioned: the main action and the cross-claims issued within it.

[13] Subsequent to this order being made, the Plaintiff agreed to release Kapp from the action. Kapp is no longer a party and I am not being asked to make any determinations of the rights of anyone as regards Kapp.

[14] What then was the effect of this order?

[15] In my view, the order means exactly what it says. The plaintiff is only able to claim against Mer damages that Mer is at law severally responsible to the plaintiff for. Whereas all three defendants would normally be jointly liable to the plaintiffs for all damages proved for which they bore any responsibility, the order required the plaintiffs to amend their claim to restrict their claim to several liability. The claim in question is one that only ever named the City, Kapp and Mer and several liability refers to the universe of potentially liable parties in the claim as it existed when the order to amend it was issued.

[16] Prior to the settlement and the order of Myers J., the trial judge would have been tasked with apportioning responsibility – if any – as between all three parties to the main action. Mer’s total potential exposure did not grow with the departure of the City from the action. Instead of facing joint liability, however, Mer’s exposure became several and this is what paragraph 9 of the Amended Claim in fact provides. Of course, the only claim that the plaintiffs have is as against Mer – the degree of responsibility if any borne by parties downstream from Mer in the litigation chain is none of the plaintiffs’ concern.

[17] Mer’s ability to pursue contribution from whomever it can outside of the main action was completely unaffected by the order of Myers J. Mer’s rights of contribution from the City in the cross-claims were compromised by the order but they were also made irrelevant by paragraph 3 of the same order.

[18] The plaintiffs did not sue those third or fourth parties and will never receive a judgment in its favour naming them. The main action – the one that the plaintiffs are a party to – is not concerned with determining the degree of responsibility of any of those third and subsequent parties for the damages allegedly suffered by the plaintiffs. That is the object of the third and fourth party claims which are quite unaffected by the order of Myers J.

[19] If Mer is found liable for any amount in the main action, it may succeed in pinning all -or - none of that liability on those behind it in the chain in the third party claims. The questions are quite distinct from each other.

[20] In concrete terms, should the trial judge find that the City bore 10% of responsibility, with Kapp bearing 45% and Mer 45%, then the plaintiffs’ claim against Mer would be limited to the 45% so determined. As between Mer and third and subsequent parties, that 45% may be further sub-divided into smaller portions depending on the outcome of those third party and other actions.

[21] In my view, neither the Pierringer Agreement nor the order of Myers J. has any bearing whatsoever on the claims of Mer against third parties nor is the plaintiff’s’ claim against Mer impacted by the degree of responsibility if any that Mer may succeed in proving such third or subsequent parties bear.

[22] This motion came about at the direction of the pre-trial judge who found that clarity on the issue was required in order to proceed further with this action. Mer took no position on the motion and the plaintiffs initiated it because they were directed to do so.

[23] I am in no position to impose responsibility for costs on this motion. I can attribute no fault to the plaintiffs whose position was ultimately agreed to by the other parties after I restated it, but I do not feel that I can fairly impose that costs burden on any one party. Mr. Kestenberg was not counsel at the pre-trial and was quite appropriately cautious about attributing blame for the evident misunderstanding that made this motion necessary. As reluctant as I am to kick the matter of costs down the road for another to deal with, that appears to me to be the fairest outcome.

[24] I am referring the matter of costs of this motion to the pre-trial judge to determine or, should the pre-trial judge so order, for the trial judge to determine.

[25] General agreement having emerged on the outline of these reasons as I read them to the parties at the conclusion of this hearing, it seems to me that the parties should get back in front of a pre-trial judge as soon as possible to get this matter scheduled for a final hearing on the merits. It has clearly languished long enough in preliminaries.

[26] Orders accordingly.

S.F. Dunphy J.

Date: January 13, 2021