Court File and Parties

COURT FILE NO.: CV-17-0036-00 DATE: 2022-03-04

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

EDWIN ARTHUR SEVERANCE, SHANNON RAE SEVERANCE, KENNEDY JENNIFER SEVERANCE by Her Litigation Guardian Shannon Rae Severance and EDWINA SEVERANCE Plaintiffs

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BRADY O'HANLEY, KATHERINE ANNE O'BRIEN, ROBERT HORYCHUK, ENTERPRISE RENT-A-CAR CANADA COMPANY, CARILLION CANADA INC. and MINISTRY OF TRANSPORTATION Defendants

HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF ONTARIO AS REPRESENTED BY THE MINISTER OF TRANSPORTATION FOR THE PROVINCE OF ONTARIO and CARILLION CANADA INC. Plaintiffs by Counterclaim

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EDWIN ARTHUR SEVERANCE and SHANNON RAE SEVERANCE Defendants by Counterclaim

Counsel: Roy D. MacGillivray, for the Plaintiffs Brian M. Bangay, for the Defendant Brady O’Hanley Bruce S. Chambers, for the Defendant, Katherine Anne O’Brien Ian D. Kirby, for the Defendants Robert Horychuk and Enterprise Rent-A-Car Canada Company Todd Wasserman, for the Defendants Carillion Canada Inc. and Ministry of Transportation; and for the Plaintiffs by Counterclaim, Her Majesty the Queen in Right of the Province of Ontario as represented by the Minister of Transportation for the Province of Ontario and Carillion Canada Inc. (Responding Parties) Jennifer L. Huneault, for the Defendants by Counterclaim (Moving Parties)

HEARD: November 22, 2021 at Thunder Bay, Ontario

Regional Senior Justice B. R. Warkentin

Reasons on Motion

[1] The Moving Parties, Edwin Arthur Severance and Shannon Rae Severance (“the Severances”), bring a motion for:

a) An Order striking the Counterclaim of the Plaintiffs by Counterclaim, Her Majesty the Queen in Right of the Province of Ontario as represented by the Minister of Transportation for the Province of Ontario and Carillion Canada Inc. in its entirety, without leave to amend pursuant to Rule 21 of the Rules of Civil Procedure; or

b) In the alternative, an Order granting summary judgment pursuant to Rule 20 of the Rules of Civil Procedure on the basis that there is no genuine issue requiring a trial.

Background

[2] The action is the result of a motor vehicle accident and a pedestrian accident that occurred on February 20, 2015, at approximately 6:55pm near Marathon, Ontario.

The Accident

[3] The accident occurred on Highway 17, in Coldwell Township, at Red Sucker Hill, west of the community of Marathon, Ontario. This is a two-lane highway with a speed limit of 90 km per hour. A large rock face runs parallel to the road on one side with a steep embankment on the other that is protected with a wire-post guardrail. The road heading west, descends an incline and around a corner at this location.

[4] At the time of the accident it was snowing with blowing snow and was -22 degrees Celsius. The visibility was poor with whiteout conditions and it was nighttime (after 6:00 pm) with no ambient light.

[5] The accident involved a Chevrolet Cobalt (the “Chevrolet”) owned by Katherine Anne O’Brien, and operated by Brady O’Hanley (“O’Hanley”); a Ford Fusion (the “Ford”), owned by Shannon Rae Severance and operated by Edwin Severance (“Severance”); and a Buick Regal (the “Buick). The Buick was owned by Enterprise Rent-A-Car Company Canada (“Enterprise”) and operated by Robert Horychuk (“Horychuk”). Robert O’Brien (“O’Brien”) was a passenger in the Chevrolet.

[6] O’Hanley was travelling west on Highway 17 and as he reached the location of the accident, while descending the hill around a corner, he lost control and crossed the centre line into the eastbound lane. The Chevrolet struck a snowbank and the guardrail on the shoulder and became stuck, butted against the guardrail, facing east.

[7] Severance, a volunteer firefighter, stopped at the scene to aid O’Hanley and O’Brien. He stopped the Ford partially within the eastbound thru lane of the Highway, behind the Chevrolet.

[8] O’Hanley, O’Brien and Severance had all exited their vehicles and were standing near them, within the eastbound lane. This was at approximately 6:53 pm.

[9] Horychuk, the driver of the Buick, also driving westbound on Highway 17 was a few minutes behind O’Hanley and O’Brien. Like O’Hanley, Horychuk lost control as he came around the same downhill corner. He too crossed the centre line into the eastbound lane and struck both O’Brien and Severance.

[10] O’Brien died and Severance sustained serious injuries.

The Litigation

[11] There were two separate lawsuits started regarding this accident.

The Barrie, Ontario Action, CV-17-25

[12] On January 5, 2017, an action was commenced in the Ontario Superior Court at Barrie, Ontario by Katherine O’Brien and Landen O’Brien, a minor by his Litigation Guardian Katherine O’Brien, bearing action number CV-17-25 (the “Barrie Action”) seeking damages relating to the death of Robert O’Brien.

[13] The defendants in the Barrie Action are Horychuk, Enterprise, O’Hanley, the Minister of Transportation and Carillion Canada Inc. Neither Shannon Rae Severance nor Edwin Arthur Severance were named as defendants in the Barrie Action.

[14] The defendants responded to the plaintiffs’ claims in the Barrie Action by delivering their statements of defence as well as certain crossclaims and counterclaims. The pleadings in this action were completed in late May 2017.

The Thunder Bay, Ontario Action, CV-17-36-00

[15] On January 23, 2017, Edwin Arthur Severance, Shannon Rae Severance, Kennedy Jennifer Severance (by her Litigation Guardian Shannon Rae Severance), and Edwina Severance (collectively the “Plaintiffs”), commenced action no. CV-17-36-00, at Thunder Bay, Ontario (the “Subject Action”) seeking damages for the injuries sustained by Severance.

[16] The defendants in the Subject Action are O’Hanley, Katherine Ann O’Brien, Horychuk, Enterprise, Carillion Canada, and the Ministry of Transportation. While the plaintiffs in the Subject Action named Katherine Ann O’Brien as a defendant, the plaintiffs in the Barrie Action did not name the Severances as defendants in that action. With those exceptions, the defendants in the Subject Action are the same as in the Barrie action.

[17] The defendants in the Subject Action also responded and included various crossclaims.

[18] The issue in this motion is the counterclaim brought by the Minister of Transportation, represented by Her Majesty the Queen in Right of Province of Ontario and Carillion Canada Inc. (hereafter collectively referred to as “HMQ”, because Carillon is no longer in business and not participating in this litigation) against the Severances. The counterclaim seeks contribution, indemnity, relief over and set-off from the Severances in favour of HMQ in the Barrie Action, notwithstanding that the Severances are not parties in the Barrie Action.

[19] The Counterclaim of HMQ against the Severances in the Subject Action seeks:

• “contribution, indemnity and other relief over in respect of claims asserted against These Defendants by the persons who are plaintiffs in Ontario Superior Court of Justice action no. 17-25 (commenced at Barrie) between “Landen O’Brien, a minor by his Litigation Guardian, Katherine O’Brien and the said Katherine O’Brien personally” as Plaintiffs - and - “Robert Horychuk, Enterprise Rent-A-Car Canada Company, Brady O’Hanley, Ministry of Transportation and Carillion Canada” as Defendant”;
• costs of defending the Barrie Action;
• “prejudgment and post-judgment interest as may be applicable...”;
• “a declaration that any amounts that may be awarded pursuant to this counterclaim may be set off by These Defendants against any liability which either of These Defendants may be found to have to Edwin Arthur Severance and/or Shannon Rae Severance (which liability is not admitted but denied by These Defendants)”; and
• costs of the counterclaim in the Subject Action.

[20] The counterclaim references the Barrie Action and HMQ’s defence, crossclaims and counterclaims in that action as the basis for the counterclaim in the Subject Action. HMQ seeks to rely on its defences and claims in the Barrie Action in support of their counterclaim in the Subject Action.

[21] In their defence to the counterclaim, the Severances denied liability on the basis that the counterclaim by HMQ is procedurally improper and should be struck in its entirety.

[22] The pleadings in the Subject Action were completed in April 2018. HMQ did not reply to the defence to the counterclaim.

Communication by Counsel for the Severances regarding HMQ’s Counterclaim

[23] On May 25, 2017, Jennifer Huneault, representing the Severances in the counterclaim (the Severances have separate litigation counsel as plaintiffs in the Subject Action), wrote to counsel for HMQ advising of her retainer and that the counterclaim against the Severances in the Subject Action was procedurally improper.

[24] Ms. Huneault informed counsel for HMQ that the proper process by which HMQ could seek contribution, indemnity, and set-off from the Severances in favour of HMQ in the Barrie Action, would be to add the Severances as third parties to the Barrie Action and discontinue the counterclaim against them in the Subject Action. Counsel further advised that if HMQ intended to commence a third party claim, that it be done as soon as possible.

[25] Ms. Huneault received no response to her correspondence of May 25, 2017. As such, she followed up on November 15, 2017, March 19, 2018, and April 10, 2018. HMQ never responded to her correspondence nor did HMQ take steps to add the Severances as third parties to the Barrie Action.

Pleadings are Closed and Examinations for Discovery are Complete

[26] The Pleadings stage in both the Subject Action and in the Barrie Action closed after delivery of the final pleadings. Examinations for Discovery were completed by August 2020.

[27] On October 6, 2020, Justice F.B. Fitzpatrick granted an order that the Barrie Action and Subject Action would be tried together, or one after the other.

Issues and Analysis

[28] The Severances move to strike the counterclaim under both Rule 20 (Summary Judgment on the basis that there is no genuine issue for trial) and Rule 21.01(1)(b) (Determining an Issue before Trial, in this case seeking to strike the counterclaim on the basis that it discloses no reasonable cause of action).

[29] For the reasons that follow, I find that HMQ’s counterclaim in the Subject Action shall be struck without leave to amend on the ground that it discloses no reasonable cause of action in the Subject Action, under Rule 21,01(1)(b). This finding is without prejudice to HMQ to seek leave to amend their pleadings in the Barrie Action to add the Severances as third parties.

Test under Rule 21 of the Rules of Civil Procedure

[30] The test to be met in a Rule 21 motion requires the moving party to demonstrate that it is “plain and obvious” that the claim sought to be struck cannot succeed. This test will be met where:

a) A party alleges allegations that do not give rise to a recognized cause of action;

b) A party fails to plead a necessary element of a recognized cause of action; or

c) The allegations in the pleading are simply conjecture, assumptions or speculation unsupported by material facts, or in other instances, mere conclusions of law are asserted. (Tongtae v. Her Majesty the Queen (Ontario), 2021 ONSC 1613, at para 17)

[31] Leave to amend should not be granted in cases where the underlying legal foundations of the claim proceed on an erroneous interpretation of statutory obligations. (Meekis v. Ontario, 2019 ONSC 2370, [2019] O.J. No. 2041 at para. 163.)

[32] Counsel for the Severances argued that the allegations against the Severances in the counterclaim do not give rise to a recognized cause of action in that proceeding. They submitted that the only means by which HMQ would have a cause of action for contribution, indemnity and relief over as against the Severances for damages assessed against HMQ in the Barrie Action would be if the Severances were added as third parties to the Barrie Action.

[33] Counsel for HMQ maintained that the counterclaim against the Severances was both proper and necessary. It was their position that the Severances would be unjustly enriched by a judgment in their favour in the Subject Action as against HMQ if there is a finding that the Severances were contributorily negligent for the damages suffered by the O’Brien plaintiffs.

[34] Counsel for HMQ also submitted that because the Subject Action and the Barrie Action are now being tried together it should make no difference whether their claim for contribution, indemnity and relief over against the Severances is determined in the Subject Action or the Barrie Action.

[35] The Rules of Civil Procedure (the Rules) set out when parties may advance a counterclaim (Rule 27.01) and when they should advance a third party claim in an action (Rule 29.01).

[36] Rule 27.01 states:

A defendant may assert, by way of counterclaim in the main action, any right or claim that he or she may have against the plaintiff including a claim for contribution or indemnity under the Negligence Act in respect of another party's claim against the defendant. (Emphasis added).

[37] There is nothing in Rule 27.01 (1) that provides that a defendant may assert a counterclaim in one action for damages alleged in another action against a non-party to that other action.

[38] The Rules do provide the process for making the claims asserted by HMQ in their counterclaim by adding a party to an action. Rule 29.01 sets out the process for a defendant to commence a third party claim against any person who is not a party to the action:

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.

[39] Justice Penny in the case of Huachangda Canada Holdings Inc. v. Solcz Group Inc., 2018 ONSC 7373 at para. 19 noted that: “Thus, on a plain reading of Rules 27.01 and 29.01, only a perpetrator of the wrongdoing alleged in a counterclaim can be joined as a necessary or proper party to that counterclaim; anyone not falling in that category must be considered under the third party rule.”

[40] Counsel for HMQ argued that because the two actions have been ordered to be tried together, there is little risk of a multiplicity of proceedings or contradictory or inconsistent findings. They also submitted that the cost of continuing the counterclaim would not be significantly greater than had they commenced a third party claim in the Barrie Action.

[41] HMQ’s claims for contribution, indemnity and relief over as against the Severances should not have be asserted by counterclaim. They are properly made by third party claims in the Barrie Action. (Mid-Range Technical Services Inc. v. Sentia Solutions Inc. 2010 ONSC 5182 at para. 42.)

[42] It is unfortunate that counsel for HMQ did not correct their procedural error when it was brought to their attention in 2017. I do not accept that the fact the two actions are now being tried together as sufficient to resolve the fact that there is no cause of action by way of counterclaim against the Severances for relief over for alleged contribution and indemnity and a set off in a different action. HMQ was invited to correct that error and failed to do so when they knew or ought to have known that the counterclaim was procedurally improper.

[43] The fact that three years later, in 2020, a judge ordered that the two actions be tried at the same time does not serve to correct the improper pleading. Notwithstanding the damages sought in both actions arise from the same accident, the actions are different claims.

[44] HMQ proposed that if this court finds they should have advanced their claim for contribution and indemnity and relief over as a third party claim in the Barrie Action, that this court should order the counterclaim proceed as a third party claim in the Barrie Action or grant leave for HMQ to amend their pleadings in the Barrie Action to add a third party claim.

[45] I have indicated that my decision is without prejudice to HMQ seeking leave to amend their pleadings in the Barrie Action to add a third party. I am not prepared to order that the counterclaim in the Subject Action proceed as a third party claim in the Barrie Action nor am I prepared to grant leave for HMQ to amend their pleadings in the Barrie Action to add the Severances as third party’s for the following reasons:

a) The only parties who participated in this motion were counsel for the Severances in the counterclaim (not the main action) and for HMQ. It would be inappropriate to make the orders requested by HMQ without providing counsel in the Barrie Action and counsel for the Severance plaintiffs in the Subject Action to make submissions on a motion seeking leave to amend the pleadings in the Barrie Action;

b) HMQ knew or ought to have known in 2017 that their counterclaim was incapable of success in the Subject Action and took no steps to rectify their error; and

c) Notwithstanding the two actions are being tried together, they still remain two different actions.

[46] The counterclaim is therefore dismissed with costs, without prejudice to HMQ to seek leave to add the Severances as third parties to the Barrie Action. If the parties are unable to agree on costs, they shall provide brief written submissions within 30 days.

Regional Senior Justice B. R. Warkentin Released: March 4, 2022