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Full text of "Report on contribution among wrongdoers and contributory negligence"

REPORT 

ON 

CONTRIBUTION AMONG WRONGDOERS AND 
CONTRIBUTORY NEGLIGENCE 

ONTARIO LAW REFORM COMMISSION 




Ministry of the 1988 

Attorney 

General 



Digitized by the Internet Archive 

in 2011 with funding from 

Osgoode Hall Law School and Law Commission of Ontario 



http://www.archive.org/details/reportoncontribuOOonta 



REPORT 

ON 

CONTRIBUTION AMONG WRONGDOERS AND 
CONTRIBUTORY NEGLIGENCE 

ONTARIO LAW REFORM COMMISSION 




Ministry of the 1988 

Attorney 

General 



The Ontario Law Reform Commission was established by the Ontario 
Law Reform Commission Act for the purpose of reforming the law, legal 
procedures, and legal institutions. The Commissioners are: 



James R. Breithaupt, CStJ, CD, QC, MA, LLB, Chairman 

H. Allan Leal, OC, QC, LSM, LLM, LLD, DCL, Vice Chairman 

Earl A. Cherniak, QC 

J. Robert S. Prichard, MBA, LLM 

Margaret A. Ross, BA (Hon.), LLB 



M. Patricia Richardson, MA, LLB, is Counsel to the Commission. The 
Commission's office is located on the Fifteenth Floor at 18 King Street East, 
Toronto, Ontario, Canada, M5C 1C5 



The Commission wishes to acknowledge the contribution of four 
former Commissioners: Dr. Derek Mendes da Costa, QC, SJD, LLD, 
former Chairman of the Commission, Hon. Richard A. Bell, PC, QC, LLD, 
Mr. William R. Poole, QC, and Mr. Barry A. Percival, QC, whose tenure at 
the Commission extended through much of this Project. 



ISBN 0-7729-3815-6 



TABLE OF CONTENTS 

Page 

Letter of Transmittal ix 

Chapter 1 Introduction 1 

Recommendation 6 

Chapter 2 Joint and Several Liability 7 

L Introduction 7 

2. Present Law 7 

(a) Joint Tortfeasors and Several Tortfeasors 7 

(b) Joint Contractors and Several Contractors 19 

3. Reform and Proposals for Reform in Other Jurisdictions ... 20 

4. Conclusions 23 

(a) The Judgment Bar and Release Bar Rules and Offers 

of Settlement 23 

(b) The Single Judgment Rule 27 

Recommendations 29 

Chapter 3 In Solidum Liability 31 

1. Introduction 31 

2. The Debate Regarding In Solidum Liability 33 

(a) The "Fairness" Argument 33 

(b) The Insurance Argument 36 

(c) Deterrence 38 

(d) Other Ramifications for the Tort System 39 

3. The Law in the United States 40 

(a) Introduction 40 

(b) Reform in the Context of Comparative Fault 41 

(c) An Assessment of Recent Reforms in the United 

States 43 

4. Conclusions 46 

Recommendations 48 

Chapter 4 The Nature and Scope of the Right to 

Contribution 49 

1. Introduction 49 

2. Contribution and Related Claims: Common Law, Equity, 

and the Principle of Unjust Enrichment 49 

[iii] 



IV 



3. The Scope of the Right to Contribution 55 

(a) Torts 55 

(i) Should the Right to Contribution Be 

Abohshed? 55 

(ii) The Present Law 59 

(iii) The Case for Expansion 61 

(iv) Other Jurisdictions 63 

(v) Conclusions 65 

(b) Other Kinds of Civil Liability 65 

(i) The Present Law 66 

(ii) The Case for Expansion 70 

(iii) Other Jurisdictions 71 

(iv) Conclusions 73 

a. Concurrent Wrongdoers 73 

b. Concurrent Debtors 74 

(c) Existing Rights of Contribution and Indemnity ...... 75 

(d) Remedies Available to the Claimant for Contribution 81 

(e) Binding the Crown 82 

Recommendations 82 

Chapter 5 Settlements and Contribution Claims 85 

1. Introduction 85 

2. The Present Law 85 

3. Reform of the Law 90 

(a) Should There be a Right of Contribution Following a 

Full Settlement? 90 

(b) Dl's Liability to P: Its Relevance to Contribution 

Claims 91 

(c) Partial Settlements and the Right to Contribution 96 

(i) Introduction 96 

(ii) Alternatives for Reform 98 

a. No Change in the Law 98 

b. No Right of Contribution 99 

c. One Way Contribution 104 

(iii) Conclusions 105 

Recommendations 108 



Chapter 6 Defences to Contribution Claims: Liability to 

THE Injured Person Ill 

1. Introduction Ill 

2. Liability of Dl to P 112 

3. Liability of D2 to P 117 

(a) General 117 

(b) The Present Law 121 

(c) Alternatives for Reform 124 

(i) No Change in the Law 124 

(ii) Reduction of Damages of Injured Person .... 126 

(iii) Exemption Clause No Defence to 

Contribution Claim 127 

(d) Conclusions 128 

(i) Contractual Defences to Claims for 

Contribution 128 

a. Exemption Clauses 128 

b. Limited Liability Clauses 129 

(ii) Non-Contractual Defences to Claims for 

Contribution 135 

a. Contributory Negligence 136 

b. Other Defences 138 

Recommendations 139 

Chapter 7 Defences to Contribution Claims: Subsequent 

Immunities 141 

1. Introduction 141 

2. Contribution and Limitation Periods 144 

(a) The Present Law 144 

(b) Alternatives for Reform 150 

(c) Conclusions 157 

3. The Effect of a Judgment in Favour of D2 in Proceedings 
Instituted by P 160 

(a) Introduction 160 

(b) The Present Law 161 

(c) Alternatives for Reform 165 

(d) Conclusions 168 



VI 



4. The Effect Upon the Right to Contribution of a Settlement, 

Release, or Waiver by P of D2's Liability 169 

Recommendations 170 

Chapter 8 The Assessment of Contribution 173 

1. Introduction 173 

2. The Contributable Sum 173 

(a) General 173 

(b) Settlements 175 

(i) General 175 

(ii) The Present Law 177 

(iii) Other Jurisdictions 178 

a. Final Settlement 178 

b. Partial Settlement 180 

(iv) Conclusions 180 

a. Final Settlement 180 

b. Partial Settlement 181 

(c) Successive Judgments 183 

3. The Division of the Contributable Sum: Who Must 
Contribute? 186 

4. The Division of the Contributable Sum: Quantifying the 
Portions 188 

(a) The Present Law 188 

(b) Reforming the Law 190 

(i) General 190 

(ii) Approaches to Reform 192 

(c) Conclusions 195 

Recommendations 198 

Chapter 9 Some Procedural Aspects of Contribution 

Claims 201 

1. Introduction 201 

2. Proceedings for Claiming Contribution 202 

(a) The Present Law 202 

(i) Claims Against Co-Defendants 202 

(ii) Claims Against a Plaintiff 203 

(iii) Claiming Contribution by Adding a Party to 

the Action 204 



Vll 



(iv) Claiming Contribution in an Independent 

Action 206 

(v) The Rule in Cohen v. S. McCord & Co. Ltd . . 209 

(b) Alternatives for Reform 211 

(c) Conclusions 215 

3. Contribution Claims and Limitation Periods 217 

(a) Introduction 217 

(b) The Present Law 218 

(c) Alternatives for Reform 220 

(d) Conclusions 222 

4. Enforcing the Right to Contribution 223 

Recommendations 227 

Chapter 10 Contributory Negligence 229 

1. Introduction 229 

(a) The Common Law Background 229 

(b) Apportionment Legislation 230 

2. Legal Wrongs Subject to Apportionment 233 

(a) Introduction 233 

(b) Torts 233 

(i) Nominate Torts Involving Negligence 233 

(ii) Torts of Strict Liabihty 234 

(iii) Intentional Torts 234 

a. Assault and Battery 235 

b. Trespass and Nuisance 237 

c. Fraud 238 

d. Conversion and Related Torts 239 

e. Defamation 239 

(c) Breach of Contract 240 

(i) Present Law 240 

(ii) Should All Breaches of Contract be Affected? 242 

a. General 242 

b. Possible Approaches to Apportionment 

for Breach of Contract 245 

(1) Breach of Warranty and Physical 

Damage 245 



Vlll 



(2) Reliance on Promised Performance . . 246 

(3) Deliberate Breach 248 

c. Conclusions 248 

(d) Breach of Statutory Duty 249 

(e) Breach of Fiduciary Duty 249 

(f) Losses Subject to Apportionment 252 

3. Set Off and Counterclaim 253 

4. Costs 255 

5. Contributory Negligence and Multiple Wrongdoers 257 

(a) Absent or Insolvent Wrongdoer 257 

(b) P Liable to Dl and D2 on Counterclaims, and Dl and 

D2 Liable to Each Other 258 

(c) P Contributorily Negligent Vis-d-Vis Dl But Not 
Vis-d-Vis D2 258 

6. Doctrine of Last Clear Chance 259 

7. Imputed Contributory Negligence 260 

8. Fact and Law 261 

9. Existing Rights of Apportionment 262 

Recommendations 264 

Summary of Recommendations 267 

Conclusion 279 

Appendix Draft Bill: An Act to revise the Law respecting 
comparative Fault and Contribution among 

Wrongdoers 281 



I 




Ontario 
Law Reform 
Commission 



The Honourable Ian G. Scott, QC 
Attorney General for Ontario 



Dear Mr. Attorney: 

We have the honour to submit herewith our Report on Contribution 
Among Wrongdoers and Contributory Negligence . 



{ ix ] 



CHAPTER 1 



INTRODUCTION 



This Report is concerned principally with the rights and obligations, as 
between themselves, of persons whose wrongful conduct has caused a single 
loss to another. Such persons are commonly called "concurrent wrong- 
doers", since their wrongful acts concur, or coincide in some way (although 
not necessarily contemporaneously), to give rise to a single loss, that is, a loss 
that cannot be divided so that part may be attributed to one wrongdoer and 
part to another wrongdoer. The bundle of rights and obligations of concur- 
rent wrongdoers as between themselves— or, more accurately, the right of 
one concurrent wrongdoer, who has paid more than his lawful share of the 
damage award, to obtain compensation from the other wrongdoer— is 
referred to generally as the "right to contribution". 

Our review of rights of contribution and related matters has revealed a 
number of deficiencies in the present law. Given their importance, brief 
mention of the most critical issues seems appropriate here. 

Before doing so, however, we wish to emphasize the fundamental, 
unifying principle that lies behind contribution and other allied rights, 
namely, the restitutionary principle of unjust enrichment, which compels 
the non-paying concurrent wrongdoer to pay for the benefit he received as a 
result of the full or partial satisfaction of the injured person's judgment by 
another concurrent wrongdoer. Our assessment of the utility of the present 
law, and of various alternatives for reform, is influenced largely by the 
centrality of this restitutionary principle. 

Bearing this overarching principle in mind, the Commission examines 
in some detail the nature and scope of existing rights to contribution among 
concurrent wrongdoers. 

One of the most substantial defects in existing law is the limited, and 
ambiguous, scope of the Negligence Act^—Xht main legislative enactment 
governing contribution— whose purview is restricted to concurrent tortfea- 
sors (and perhaps not even all tortfeasors). In the Commission's view, the 
general absence of a right of contribution in the case of non-tortious conduct 
unjustifiably allows the injured person to choose one concurrent wrongdoer 
to bear the entire loss. 



• Negligence Act, R.S.O. 1980, c. 315. 

[1] 



Tested against prevailing restitutionary principles, this exclusion of 
other kinds of civil liability— for example, breach of contract— is untenable. 
Having regard to the restrictions and uncertainties in existing law, the 
difficulties experienced by courts in establishing a coherent set of rules on a 
case-by-case basis, and the likelihood of discrepancies between the statutory 
rights of tortfeasors and the non-statutory rights of other wrongdoers, there 
is a compelling case for a legislative solution. 

Once it has been concluded that a right of contribution ought to exist 
among all concurrent wrongdoers, it becomes essential to grapple with the 
many complex intricacies of contribution law. While existing law may well 
deal satisfactorily with one or more aspects of contribution, substantial 
reform in many areas is needed, particularly in light of the expansion of the 
right of contribution discussed above. Difficult and controversial issues- 
involving, for example, the relationship between settlements and contribu- 
tion claims, contractual and other defences to such claims, the effect of 
Hmitation periods vis-d-vis each concurrent wrongdoer, the assessment of 
contribution, the legal basis of apportioning loss between concurrent wrong- 
doers, and the execution of contribution orders— must, we beUeve, be re- 
examined and resolved. 

While this Report focuses mainly on the right to contribution among 
concurrent wrongdoers, it considers three further, related matters. The first 
pertains to the rights, not of the wrongdoers as between themselves, but of 
the injured person whose loss has been caused by two or more concurrent 
wrongdoers. From this perspective, we shall discuss the two classes of 
concurrent wrongdoers, namely, "joint" concurrent wrongdoers, "where 
there is not only a concurrence in the chain of causation leading to the single 
damage but also. . .mental concurrence in some enterprise",^ and "several" 
concurrent wrongdoers, "where the concurrence is exclusively in the realm 
of causation".^ 

At common law, four consequences flowed from the distinction 
between joint and several concurrent liability. Most of these distinctions 
have now been superseded by legislation. However, one of them continues 
to apply and, as well, some further anomahes still exist. The holdovers from 
the common law are, in our view, entirely unjustifiable and ought no longer 
to govern. 

A second critical issue, also relating to the rights of an injured person 
against concurrent wrongdoers, concerns the liability in solidum of each 
joint or several concurrent wrongdoer. A fundamental principle of the 
common law is that a plaintiff's right to recover damages for the whole loss 
caused by the wrongful conduct of one concurrently Uable defendant is not 
diminished by the fact that the plaintiff may also be entitled to sue another 
concurrently Uable defendant for that loss. Hence, each concurrent wrong- 



Williams, Joint Torts and Contributory Negligence (1951), at 1. 
3 Ibid. 



doer is liable in solidum, for the whole loss, as if there were no other 
wrongdoer against whom the injured person has a claim (although clearly 
the injured person may not recover damages that exceed the total amount of 
the loss). Liability in solidum, which existed at common law and continues 
today in Ontario under the Negligence Act ,^ gives rise to claims for contribu- 
tion by one concurrent wrongdoer against another, the principal subject 
matter of this Report. 

A heated debate has raged for some time concerning the desirability of 
retaining the principle of in solidum liability, particularly in the context of 
the so-called liability insurance "crisis" in Ontario. But commentators assail 
or justify the principle also from the perspective of "fairness" to defendants 
(especially where all but one of the concurrently liable wrongdoers are 
insolvent), the deterrence of activity that may harm others, and the opera- 
tion of the tort system as a whole. 

With respect to the insurance issue, detractors argue that the operation 
of the principle has broad socio-economic consequences. It is said that 
injured persons seek out "deep pocket" defendants— that is, those who are 
the most solvent or best insured— which in turn allegedly compels such 
defendants to settle, well in excess of their proportionate hability. Such 
settlements are reflected in higher insurance premiums, which then affect 
the provision of goods and services to the public by increasing their cost and 
reducing their availability. It is the legitimacy of this argument, as well as 
others, to which we direct our attention. 

The third topic that relates to, but is not directly concerned with, the 
right of contribution is the effect of the plaintiff's contributory negligence or 
"fault" on the liability to the plaintiff of a single wrongdoer or concurrent 
wrongdoers. 

Section 4 of the Negligence Act provides for a power of apportionment 
in the case of a plaintiff and a defendant. However, its coverage is limited, 
since it speaks only in terms of the "fault or negligence" of both parties. Just 
as in the case of contribution, then, there is a need to re-examine the scope of 
the legislation: consideration must be given to the role, if any, of apportion- 
ment in the context of intentional torts, defamation, fraud, breach of 
contract, and breach of a statutory or fiduciary duty. 

In considering the various issues that arise in our study of contribution 
and related matters, particular attention is paid to the 1984 Uniform 
Contributory Fault Act, adopted by the Uniform Law Conference of 



^ Supra, note 1, s. 2. In this connection, see Williams, supra, note 2, at 3-4 and 5, and 
Cheifetz, Apportionment of Fault in Tort (1981), at 7. Section 2 of the Negligence Act is 
somewhat confusing on this point, since it provides that, "where two or more persons 
are found at fault or negligent, they are Jointly and severally liable"' to the injured party. 
As we shall see infra, ch. 2, sec. 2(a), this language was intended simply "to declare that 
the liability of concurrent tortfeasors is in solidum, and no operation should be given to 
the legislation beyond this": Williams, supra, note 2, at 6. 



Canada.^ We do so both in order to take full advantage of the research of the 
Alberta Institute of Law Research and Reform, on which the Uniform Act is 
based,^ and because, in the interests of uniformity, the provisions of that Act 
ought, at the very least, to be given serious consideration. 

Our review of the law governing the rights and obligations, as between 
themselves, of concurrent wrongdoers, as well as the rights of the injured 
person vis-d-vis such wrongdoers and the effect of the injured person's 
contributory negligence, reveals a tension between the desire to protect the 
interests of injured persons and the need to deal fairly with concurrent 
wrongdoers. This tension inevitably gives rise to dramatically different 
perspectives on each issue; it also serves to explain the often highly sophisti- 
cated and subtle arguments marshalled on behalf of one alternative for 
reform or another. 

More frequently than not, a perfect solution, which meets to the full the 
interests of all parties, cannot be reached. We believe, however, that the 
reform measures fashioned in this Report strike a reasonable and equitable 
balance between competing objectives. 

In some instances, statutory reform of existing common law is envis- 
aged; in other instances, where existing legislation— mainly the Negligence 
Act— is seen to be inadequate, statutory change of that legislation is pro- 
posed. In any event, whether a legislative solution is recommended, or 
whether the law would be allowed to develop on a case-by-case basis, 
without express statutory assistance, the Commission is of the view that the 
law in this area must be rationalized. As part of this process, we recommend 
the repeal of the Negligence Act and the enactment of a new Contribution 
and Comparative Fault Act to deal comprehensively with the matters 
referred to above. ^ 

Before turning to our discussion of the law and our proposals for 
reform, two matters relating to terminology need to be addressed. 



5 



6 



Uniform Law Conference of Canada, Proceedings of the Sixty-Sixth Annual Meeting 
(1984), Appendix F, Uniform Contributory Fauh Act . 

The Uniform Act was first adopted in 1924 and revised in 1935 and 1953. See 
Proceedings of the Seventh Annual Meeting of the Conference of Commissioners on 
Uniformity of Legislation in Canada (1934), Appendix B; Proceedings of the Eighteenth 
Annual Meeting of the Conference of Commissioners on Uniformity of Legislation in 
Canada (1935), Appendix E; and Proceedings of the Thirty-Fifth Annual Meeting of the 
Conference of Commissioners on Uniformity of Legislation in Canada (1953), Appen- 
dix I. 

See Alberta, Institute of Law Research and Reform, Contributory Negligence and 
Concurrent Wrongdoers, Report No. 31 (1979). See, also, the Institute's Working Paper: 
Contributory Negligence and Concurrent Tortfeasors (1975). 

It should be noted that the former Uniform Act (see supra, note 5) remains in 
force in Alberta. See the Alberta Contributory Negligence Act, R.S.A. 1980, c. C-23. 

The proposed Contribution and Comparative Fauh Act (hereinafter referred to as 
"Draft Act") appears as an Appendix of this Report. See, especially, s. 23, which deals 
with the application of the Act, and s. 24, which repeals the Negligence Act . 



As we shall see in chapter 4, rights of contribution may arise by statute, 
at common law, in equity, or by contract. In many instances— indeed, under 
the Ontario Negligence Act— a. right of "contribution" is juxtaposed in the 
same section with a right to "indemnity".^ Where the statutory or contrac- 
tual provision referring to "contribution and indemnity" is intended to 
provide for the case where one concurrent wrongdoer may recover a sum 
from another concurrent wrongdoer after the former has paid to the injured 
person more than his lawful share of the damages, the reference to an 
"indemnity" is simply a reference to full, or 100 percent, contribution. In 
these cases, the terms "contribution" and "indemnity" are both used where 
one concurrent wrongdoer is more at fault or more negligent than another, 
and where the determination of the rights of the wrongdoers, as between 
themselves, involves a comparison of their respective degrees of fault or 
negligence. In this Report, the Commission will use the term "contribution" 
to refer to cases of this sort, including where a court orders one wrongdoer to 
pay 100 percent contribution, or no contribution, to another. In this context, 
therefore, we shall not refer to "indemnity" to mean simply 100 percent 
contribution.^ 

The term "indemnity" has, however, a meaning other than the one 
discussed above. More narrowly defined, it refers to the case where two 
persons are liable for the same debt or damages, but the liability of one is 
primary and the liability of the other is secondary. Where the person 
primarily liable defaults in his obligation, and the person secondarily liable 
pays in his stead, as in the classic case of a guarantee, the payor may 
normally seek "indemnity" from the other; that is, in the absence of any 
contractual provision to the contrary, for example, the payor may recover 
full compensation from the person primarily Uable. Unlike in the case of 
contribution, the determination of indemnity claims is based not on com- 
parative fault or negligence, but on the nature of the relationship between 
the parties. It is in the above sense, then, that we shall use the term 
"indemnity" in this Report. We shall return to the right to indemnity in 
chapter 4, where we discuss, among other things, the application of our 
recommendations to such a right. ^^ 

The second terminological point concerns the short-hand designation 
of the parties to whom our reform proposals relate. Throughout this Report, 

^ Under s. 2 of the Negligence Act , each concurrent tortfeasor is Hable "to make contribu- 
tion and indemnify each other". Section 2(4) of the Dog Owners' Liability Act, R.S.O. 
1980, c. 124, for example, refers to a right "to recover contribution and indemnity". 
Other statutory, and contractual, examples may be found. 

^ See Williams, supra, note 2, at 80: "Where the contribution is of the whole of the sum so 
paid it is referred to specifically as an indemnity". Williams continues as follows (ibid., 
n. 1): "It is convenient to take 'contribution' to include indemnity, and the word is so 
used in the Tortfeasors Act. Some judges and writers, however, treat them as distinct;. . . 
It is frequently convenient to speak of 'contribution or indemnity,' here using the word 
contribution in the narrower sense". 

With respect to the power of a court to order 100%, or no, contribution, see Draft 
Act, s. 9(2). 



10 



See Draft Act, s. 7(3). 



the person sustaining the loss is designated as "P"; the person against whom 
P may have a cause of action in respect of that loss, and who claims 
contribution, is designated as "Dl"; and the person against whom P may 
have a cause of action for the loss, and against whom Dl claims contribu- 
tion, is designated as "D2". 

The Commission wishes to express its gratitude to the Project Director, 
Professor John M. Evans, of Osgoode Hall Law School, York University. 
Professor Evans' deep understanding of this difficult and important area of 
the law is evident throughout this Report, and his cooperation and patience 
during all stages of the Project is most sincerely appreciated. We also wish to 
record our thanks to Professor Stephen M. Waddams and Professor J. Bruce 
Dunlop, both of the Faculty of Law, University of Toronto, for their 
preparation of material relating to the effect of a plaintiff's contributory 
fault on the liability of single and concurrent wrongdoers. 

In order to understand more fully the debate concerning in solidum 
liability, we commissioned a research paper from Professor George L. Priest, 
the John M. Olin Professor of Law and Economics, Yale Law School. In 
March, 1987, the Commission met to discuss the paper and, more generally, 
to consider the question whether the current rule of in solidum liability 
should be abolished or modified. The Commission was greatly assisted by 
the participation of a number of prominent academics in the field of tort 
law, to whom we wish to express our appreciation. These participants were 
Professor Priest; Professor Marc Galanter, of the School of Law, University 
of Wisconsin; Professors Michael J. Trebilcock, Stephen M. Waddams, and 
Ernest J. Weinrib, of the Faculty of Law, University of Toronto; and the 
Project Director, Professor John Evans. 

Finally, the Commission wishes to acknowledge the invaluable contri- 
bution of Mr. Arthur N. Stone, Q.C., former Senior Legislative Counsel for 
Ontario. Mr. Stone drafted the Commission's proposed Contribution and 
Comparative Fault Act. 

Recommendation 

The Commission makes the following recommendation: 

The Negligence Act should be repealed and a new Contribution and 
Comparative Fault Act should be enacted to deal comprehensively with the 
rights and obligations, as between themselves, of concurrent wrongdoers, 
the rights of the injured person vis-a-vis such wrongdoers, and the effect of 
the injured person's contributory fault on the issue of liability. 



CHAPTER 2 



JOINT AND SEVERAL 
LIABILITY 



1. INTRODUCTION 

While "[t]he modern tendency has been to assimilate to a considerable 
extent the position of joint tortfeasors and several tortfeasors whose acts 
concur to produce the same damage, . . . some differences remain". • This 
chapter describes the characteristics of joint concurrent wrongdoers and 
several concurrent wrongdoers, whether the damage was caused by a tort, or 
a breach of contract or trust, or some combination. It then discusses the 
essential differences between these two classes of concurrent wrongdoers, 
and proposes recommendations for reform. 

In the following section, we begin with an examination of the law 
pertaining to joint and several tortfeasors. It bears noting at the outset that 
the law in this area, as well as the law relating to concurrent contract 
breakers, is dominated almost exclusively by common law principles. Until 
recently, few legislative inroads have been made. 

2. PRESENT LAW 

(a) Joint Tortfeasors and Several Tortfeasors 

At common law, two or more tortfeasors whose conduct has caused 
damage to another person may be concurrently liable (either jointly or 
severally) or non-concurrently, and therefore only severally, liable. Glanville 
Williams, the leading commentator on concurrent wrongdoing, describes 
these three classes of tortfeasors as follows:^ 

The term 'joint tortfeasor' is, in essence, well understood. Two or more 
tortfeasors are joint tortfeasors (a) where one is the principal of or vicariously 
responsible for the other, or (b) where a duty imposed jointly upon them is not 
performed, or (c) where there is concerted action between them to a common 
end. Except in the case of nonfeasance in breach of a joint duty, parties cannot 
be joint tortfeasors unless they have mentally combined together for some 
purpose. 



' Williams, Joint Torts and Contributory Negligence (1951), at 1. 
2 Ibid. 

[ 7 1 



Where tortfeasors are not joint they are necessarily 'several', 'separate', or 
'independent'. Several {i.e. separate or independent) tortfeasors are of two 
kinds: several tortfeasors whose acts combine to produce the same damage, and 
several tortfeasors whose acts cause different damage. 

As indicated, this Report is concerned with the rights, as between 
themselves, of concurrent tortfeasors— that is, persons whose conduct causes 
a single loss to another; it is not concerned with non-concurrent, several 
tortfeasors, whose acts produce different damage to the same individual. 
Nevertheless, in order to highlight the nature of the liability of concurrent 
tortfeasors, two essential differences between concurrent tortfeasors (both 
joint and several), on the one hand, and non-concurrent, several tortfeasors, 
on the other, should be noted. ^ 

First, each of two or more concurrent wrongdoers, whether joint or 
several, is liable in solidum for the whole of the loss suffered by P."* However, 
in the case of non-concurrent, several tortfeasors, whose acts have produced 
different damage, each tortfeasor is liable to P only for the damage he has 
caused. P's "total damage must therefore be apportioned between the 
defendants" who are severally, but not concurrently, liable.^ Secondly, 



3 



Williams distinguishes between concurrent tortfeasors and others in the following way 
{supra, note 1, at 3-4): 

(1) Concurrent tortfeasors are, unlike other tortfeasors, liable in full for damage 
done by all, and it does not matter whether the concurrence is joint or merely 
several. 



(2) Concurrent tortfeasors may generally be joined as co-defendants in an 

action In proper circumstances other tortfeasors may similarly be joined; but 

the general principle is that non-concurrent tortfeasors must be sued separately. 

(3) Since concurrent tortfeasors are responsible for the same damage, satisfac- 
tion by one discharges all This is not true for other tortfeasors. 

(4) There is a certain right of contribution between concurrent tortfeasors, but 
not generally between others 

See Williams, ibid., at 1 and 5, discussing the common law position, and Negligence Act , 
R.S.0. 1980, c. 315, s. 2. See supra, ch. 1, note 4, and, in more detail, infra, ch. 3. 

Williams, supra, note 1, at 20, and, generally, at 20-23. 

The question whether several tortfeasors are or are not concurrently liable, and 
therefore the question whether the damages can be divided, or apportioned, is one of 
fact. It appears that no clear test as to when damages will be considered divisible has 
been developed by either the courts or academic commentators in Britain, Canada, or 
the United States. Fleming states that "[wjhether injury is susceptible to apportionment 
seems to depend on pragmatic, rather than theoretical, considerations" (Fleming, The 
Law of Torts (5th ed., 1977), at 187). Prosser and Keeton are of the view that the question 
of divisibility of harm is not primarily one of causation, "but of the feasibility and 
practical convenience of splitting up the total harm into separate parts which may be 
attributed to each of two or more causes" (Dobbs, Keeton, and Owen (eds.), Prosser and 
Keeton on the Law of Torts (5th ed., 1984) (hereinafter referred to as "Prosser and 
Keeton"), at 345). 



because concurrent tortfeasors are responsible for the same damage, satis- 
faction by one discharges them all.^ Accordingly, as we shall see in chapter 4, 
there may be rights of contribution between such wrongdoers. In the case of 
non-concurrent, several wrongdoers, on the other hand, no issue of contri- 
bution can arise, since neither defendant is legally responsible for the 
damage caused by the other. 

We now turn to the main focus of our discussion, the distinction 
between joint and several concurrent tortfeasors. It will be recalled that the 
essential difference between the two is that, while in both cases there is a 
coincidence in the chain of causation leading to the same damage, in the 
case of joint tortfeasors it has been said that generally there is, in addition, 
some type of mental concurrence in some enterprise.^ The injured party has 
the same cause of action against joint tortfeasors, but different, independent 
causes of action against several, concurrent tortfeasors. 

The distinguishing features of the three classes of joint (as opposed to 
several) concurrent tortfeasors referred to by Williams, and reproduced 
above, need not detain us unduly.^ The general principle of joint liability in 
the context of vicarious liability, including principal and agent and master 
and servant, has not created much difficulty, despite occasional authority to 
the contrary. Nor has the notion that, where a breach of a statutory or other 



Williams, neming, and Prosser and Keeton all rely on illustrative examples from 
various cases to indicate in what circumstances finders of fact, whether judges or juries, 
have determined that a certain damage is or is not divisible. Prosser and Keeton are less 
than illuminating when they state that "[t]he distinction is one between injuries which 
are reasonably capable of being separated, and injuries which are not" (ibid., at 314). 
Nevertheless, Williams refers to the following illustration by Prosser of the notion or 
process of divisibility (Williams, supra, note I, at 17, quoting from Prosser, Handbook of 
the Law of Torts (1941), at 328): 

If two defendants, struggling for a single gun, succeed in shooting the plaintiff, 
there is no reasonable basis for dividing the injury, and each will be liable for all of 
it. If they shoot him independently, with separate guns, and he dies, there can still 
be no division, for death cannot be apportioned except by an arbitrary rule. If they 
merely inflict separate wounds, and the plaintiff survives, a basis for division exists, 
because it is possible to regard the two wounds as separate injuries. There will be 
obvious difficulties of proof as to the apportionment of certain elements of 
damages, such as physical and mental suffering and medical expenses, but such 
difficulties are not insuperable, and it is better to attempt some rough division than 
to hold one defendant [liable] for the wound inflicted by the other. Upon the same 
basis, if two defendants each pollute a stream with oil, it is possible to say that each 
has interfered to a separate extent with the plaintiff's rights in the water, and to 
make some division of the damages. It is not possible if the oil is ignited, and burns 
the plaintiff's barn. 

Williams, supra, note 1, at 3, reproduced supra, note 3 (para. 3). 

Williams states that "[e]xcept in the case of nonfeasance in breach of a joint duty, parties 
cannot be joint tortfeasors unless they have mentally combined together for some 
purpose" (supra, note 1, at 1). 



7 



See, generally, ibid. , at 6- 16. 



10 



duty imposed on two or more persons is a tort, the wrongdoers are joint 
tortfeasors.^ However, difficulty has occasionally arisen in determining 
whether there has been a joint purpose or "concerted action to a common 
end",*^ and not merely "a coincidence of separate acts which by their 
conjoined effect cause damage".'^ 

Williams indicates that concerted action to a common end means, 
broadly speaking, a "conspiracy where all the conspirators are active in the 
furtherance of the wrong". ^^ In a commonly cited case,'^ where the plaintiff 
was set upon by three men, one of whom committed battery, one of whom 
committed false imprisonment, and one of whom committed robbery, all 
were held liable for the entire damage. 

However, Williams cautions that the term "conspiracy" does not 
necessarily mean that the tortfeasors realize they are committing a tort, let 
alone that there be an express agreement to do so.^"^ An example of a joint 
negligent tort would be a case in which two drivers are racing on a highway 
and one driver kills a third person. Williams states that, under these 
circumstances, the second driver "probably" would be liable for the damage 
caused by the act of the first, even though the second driver had retained 
control of the car at all times and injured no one. '^ Another commonly cited 
example of a joint negligent tort involved a landlord and the landlord's 
tenant, both carrying candles, looking for a gas leak. The tenant struck a 
match, causing an explosion. The landlord and the tenant were held jointly 
liable for the damage, since they were acting together and assisting each 
other in attempting to locate the leak. ^^ 



^ Ibid., at 6-9. 

^^ TheKoursk, [1924] P. 140, at 151, [1924] All E.R. Rep. 168 (C.A.) (subsequent reference is 
to [1924] R). 

^' //7/flf., at 160. 

^^ Williams, supra , note 1, at 10. The principle appears to have been first stated in Heydon 's 
Case (1612), 11 Co. Rep. 5a, 77 E.R. 1150, at 1151 (K.B.), where it was said that "all 
coming to do an unlawful act, and of one party, the act of one is the act of all of the same 
party being present". 

^^ Smithson v. Garth (1691), 3 Lev. 324, 83 E.R. 711 (K.B.), cited by Williams, supra, note 1, 
at 3. See, also, Fleming, supra, note 5, at 238, and Prosser and Keeton, supra, note 5, at 
323. 

^^ Williams, supra, note 1, at 10. 

^^ Ibid., at 13. See McDonald v. Dalgleish, [1973] 2 O.R. 826, 35 D.L.R. (3d) 486 (H.C.J.). 

'^ Brooke v. Bool, [1928] 2 K.B. 578. For a recent example, see Bushell v. Hamilton (1980), 
39 N.S.R. (2d) 691, 113 D.L.R. (3d) 498 (S.C, App. Div) (defendants liable as joint 
tortfeasors for damage caused by a fire lit in the course of a joint venture). See, also, 
Beecham v. Henderson and Houston, [1951] 1 D.L.R. 628 (B.C.S.C.); Harpe v. Lefebvre, 
Belcourt and Meunier (1976), 1 C.C.L.T. 331 (Alta. Dist. Ct.); and Q. v. Minto Manage- 
ment Ltd (1985), 49 O.R. (2d) 531 (H.C.J.), at 543-44, aff'd (1986), 57 O.R. (2d) 781 
(C.A.). 



11 



Other examples, involving various kinds of tort, may, of course, be 
given. Suffice it here to repeat Williams' conclusion that, "at the present day 
there is no tort that is incapable of being committed jointly".'^ 

More frequently, however, tortfeasors who cause the same damage are 
only severally liable to the injured person. For example, an infant (P) is run 
down in the street by a car negligently driven by Dl, at a time when D2 (P's 
nursery school teacher) had negligently allowed P to wander out of the 
nursery premises. Or, P, a passenger in Dl's car, is injured in an automobile 
collision caused by the negligence of Dl and the driver of the other vehicle, 
D2. 

At common law, four important legal and practical consequences flow 
from the distinction between joint and several concurrent liability. These 
may be summarized as follows: (1) judgment against one joint tortfeasor 
bars any action against the other joint tortfeasors (the "judgment bar rule"); 
(2) release of, or accord with, one joint tortfeasor discharges the others (the 
"release bar rule"); (3) where joint tortfeasors are sued together, only one 
judgment can be given against them, and damages cannot be severed or 
apportioned (the "single judgment rule"); and (4) joint tortfeasors, but not 
several, concurrent tortfeasors, may be joined in a single action as co- 
defendants. As we shall see, all but the single judgment rule have been 
superseded by section 149 of the Courts of Justice Act, 1984 J^ 

We turn first to the judgment bar rule. It should be noted that the 
rationale of the rule, first established in Brinsmead v. Harrison , '^ was not 
that P would otherwise recover twice for a single loss. The rule barred P 
from suing D2, even though the defendant who had been sued (Dl) turned 
out to be insolvent and the judgment in P's favour was not satisfied. The 
rationale of the rule was that P had a single cause of action against joint 
tortfeasors, which merged in the judgment. Indeed, the judgment bar rule 
could prevent P from recovering anything at all. On the other hand, if Dl 
and D2 were only several, concurrent tortfeasors, P could proceed against 
D2 and recover from D2 the balance of any loss that P was unable to secure 
when judgment was executed against Dl. 

Prior to the enactment of section 149 of the Courts of Justice Act, 
1984,^^ discussed below, the rule in Brinsmead v. Harrison had been 
modified in some respects by the former Ontario Rules of Practice.^^ Rule 



^^ Williams, supra, note 1, at 14. 

'^ Courts of Justice Act, 1984, S.O. 1984, c. 11. 

•^ (1872),L.R.7C.P547(Ex.). 

^^ Supra, note 18. 

2' R.R.O. 1980, Reg. 540. 



12 



54^^ of the Rules of Practice enabled a plaintiff to sign default judgment 
without prejudice to his right to proceed against any other defendant. Rule 
65^^ of the Rules of Practice provided that, on any motion for judgment, 
judgment could be awarded against any defendant without prejudice to the 
plaintiff's right to proceed against another. 

However, these provisions in the former Rules of Practice far from 
exhausted the possible effects of the rule in Brinsmead v. Harrison?'^ For 
example, it was unclear whether the Rules enabled the plaintiff to proceed 
against a joint tortfeasor who was not a party to the proceedings when the 
default judgment or motion for judgment was obtained. In addition, since 
Rule 54 required that the writ be specially endorsed, it would not avail the 
victim of a breach of contract or tort. Nor would Rule 65 assist a plaintiff 
suing for unliquidated damages where the plaintiff could secure a judgment 
only after trial. 

A second consequence at common law of characterizing the liability of 
concurrent tortfeasors as joint, rather than merely several, was that if P 
settled his claim against Dl and released him, this had the effect of releasing 
any others who might be joint tortfeasors with Dl. Even though the amount 
paid to P under the release was less than the damage that P had suffered, P 
would be unable to maintain an action for the balance against the other joint 
tortfeasors. The explanation for this rule that was given in the earlier cases 
was that the release was regarded as a "satisfaction in law", although later 
cases also relied upon the notion that, since the cause of action was single, 



22 



23 



24 



Rule 54 provided as follows: 

54. Where the plaintiff is entitled to sign default judgment, the judgment may 
be signed notwithstanding that the writ may be endorsed with any other claim and 
any such judgment shall be without prejudice to his right to proceed against any 
other defendant for the same relief or against any defendant for any other relief. 

This Rule did not apply when the liability of the defendants was alternative rather than 
joint and several: Kohn v. Devon Mortgage Ltd. (1983), 3 D.L.R. (4th) 466 (Alta. Q.B.), 
interpreting a similar provision in the Alberta Rules of Court (R. 148). 

Section 149(1) of the Courts of Justice Act, 1984, supra, note 18 (discussed infra, 
this sec), made former R. 54 redundant. New r. 19.08 of the Rules of Civil Procedure, O. 
Reg. 560/84, simply preserves the plaintiff's right to proceed against the same defend- 
ant for any other relief where a default judgment has been obtained against the 
defendant. 

Rule 65 provided: 

65. On any motion for judgment, judgment may be awarded against any 
defendant and any such judgment shall be without prejudice to the plaintiff's right 
to proceed against any other defendant for the same relief or against any defendant 
for any other relief. 

The new Rule corresponding to former R. 65— r. 20.07 of the Rules of Civil 
Procedure, supra, note 22— provides that "[a] plaintiff who obtains summary judgment 
may proceed against the same defendant for any other relief". 

Supra, note 19. For examples of the operation of these rules, see Capital Carbon and 
Ribbon Co. Ltd. v. West End Bakery, [1948] O.W.N. 815 (C.A.), and G. Solway & Sons 
Ltd. V. Pearlman andEzrin, [1964] 1 O.R. 1 (H.C.J.). 



13 



when it was barred against one it was barred against all. Interestingly, 
however, a mere settlement of P's claim against Dl, without a release, did not 
bar subsequent proceedings against D2. 

The potential for injustice of the common law rule respecting releases 
could, however, be mitigated. Thus, it is clear that if the release contained an 
express reservation of P's rights against other joint wrongdoers, P's action 
against them was not barred. And if the court construed the transaction 
between P and Dl as a release of Dl alone, this would not release the other 
joint tortfeasors.^^ In either event, D2's liability to compensate P was 
reduced by the amount that P received from Dl. 

A settlement of a joint liability made in one of these ways would 
therefore have the same effect as either a release, with or without an express 
reservation of rights against others, or a covenant not to sue, made between 
P and one of merely several, rather than joint, tortfeasors; that is, this type of 
settlement would not in fact bar an action against the other concurrent 
wrongdoer. When a settlement was made between the injured person and 
one concurrent wrongdoer in a way that did not bar an action against 
another, the settling wrongdoer would normally seek an indemnity from the 
injured person against any liability to pay contribution to any concurrent 
wrongdoer who was held liable for the plaintiff's loss. 

The common law rule that an action against the remaining joint 
tortfeasors was barred by a release of one was thus easily avoided in most 
cases where the injured person received proper legal advice. Over the years, 
it had become little more than a technical trap for the unwary, and was 
criticized by Lord Denning M.R. His Lordship concluded that the courts 
should abandon the rule that a release barred further action, where this was 
not what the parties intended and the plaintiff had not been fully satisfied.^^ 

We wish to note one apparently anomalous situation concerning the 
distinction between joint and several concurrent tortfeasors. This con- 
cerned the effect of a plaintiff's acceptance of a payment into court made by 
one of many defendants to an action. In such a situation, it has been held in 
cases like Reaney v. National Trust Co. ^"^ that the plaintiff's action against 
the non-paying defendants should be dismissed, whether their concurrent 



^^ See, for example, Dixon v. The Queen in right of British Columbia (1979), 12 B.C.L.R. 
1 10, 99 D.L.R. (3d) 652 (S.C), aff'd (1980), 24 B.C.L.R. 382, 128 D.L.R. (3d) 389 (C.A.) 
(subsequent reference is to 99 D.L.R. (3d)). 

26 Bryanston Finance Ltd. v. de Vries, [1975] Q.B. 703, at 723, [1975] 2 All E.R. 609 (C.A.) 
(subsequent reference is to [1975] Q.B.). 

2^ Reaney v. National Trust Co. , [1964] 1 O.R. 461, 42 D.L.R. (2d) 703 (H.C.J.). See, also, 
Cassimjee v. Jarrett (1975), 8 O.R. (2d) 726, 59 D.L.R. (3d) 174 (H.C.J.). 

The reasoning in these cases has been trenchantly criticized: see Teplitsky and 
Gomberg, "Acceptance of Money Paid into Court by One of Several Defendants: 
Lawyer Beware" (1977-78), 1 Advocates' Q. 123. An English case, Beadon v. Capital 



14 



liability was joint or merely several. Accepting the payment was deemed to 
satisfy the plaintiff's claim against all the defendants to the action, even 
though the sum might not fully compensate the plaintiff for his recoverable 
loss. One possible explanation was that the terms of the payment indicated 
that it was intended to be in satisfaction of the plaintiff's action against the 
payor and all other defendants. However, since the plaintiff wished to 
proceed against the non-paying defendants, it must be at least doubtful 
whether a total satisfaction of all the plaintiff's claims was intended. 

An important change to the common law respecting the judgment bar 
rule and the release bar rule was effected in 1984 by the Courts of Justice Act, 
1984?^ Section 149(1) of the Act provides as follows:^^ 

149.— (1) Where two or more persons are jointly liable in respect of the same 
cause of action, a judgment against or release of one of them does not preclude 
judgment against any other in the same or a separate proceeding. 

Section 149(1) has the effect of abrogating the judgment bar rule and the 
release bar rule, both of which prejudicially affected plaintiffs who success- 
fully sued or released one of several joint wrongdoers.^^ 

In order to discourage an injured person, who may have claims against 
two or more persons for the same damage, from bringing unnecessary 
multiple proceedings, section 149(2) of the Act provides as follows: 

149.— (2) Where a person who has suffered damage brings two or more 
proceedings in respect of the damage, the person is not entitled to costs in any of 
the proceedings, except the first proceeding in which judgment is obtained, 
unless the court is of the opinion that there were reasonable grounds for 
bringing more than one proceeding. 

It should be noted that the "single award of costs" rule applies irrespective of 
whether the defendants' liability is joint or merely several. 



Syndicate (Ltd.) (1912), 28 T.L.R. 394 (K.B.), aff 'd 28 T.L.R. 427 (C.A.), relied upon in 
Reaney, apparently concerned the joint liability of the defendant for the tort of 
conspiracy. But its relevance to a case where the defendants' liability is merely several is 
highly dubious. Moreover, the money paid into court was the amount claimed by the 
plaintiff in her action; therefore, its acceptance may well have satisfied in full the 
plaintiffs' claims against all the defendants. 

2^ Supra, note 18. 

2^ See Royal Bank of Canada v. Metcalfe (1985), 3 C.P.C. (2d) 228 (Ont. Dist. Ct.). 



30 



With respect to the effect of s. 149 on the payment into court rule enunciated in Reaney 
V. National Trust Co. , supra, note 27, see discussion infra, this ch., sec. 4(a). 

It bears noting here that the repeal of the common law rule by s. 149 of the Courts 
of Justice Act, 1984 is not restricted to joint liability in tort, but includes any case in 
which the plaintiff has a "single cause of action" against two or more persons. See infra, 
this ch., sec. 2(b). 



15 



A third consequence at common law of characterizing concurrent 
tortfeasors as joint, rather than merely several, and one that was not 
addressed by section 149 of the Courts of Justice Act, 1984, is that only a 
single award of damages may be made in respect of a loss or debt for which 
two or more defendants are jointly liable. Where, today, such defendants are 
pursued in separate proceedings, the plaintiff is restricted to the maximum 
damages awarded in the first action in which judgment was obtained. 
Where jointly liable defendants are sued together, only one judgment is 
possible and, therefore, the award of damages can only be for a single sum. 
Thus, if D2 is liable to pay punitive damages to P, but Dl is not, judgment 
must be entered for the lowest common figure for which both are liable.^' 

Since, as a result of section 149, joint tortfeasors can now be sued in 
successive actions, a plaintiff must calculate whether it is in his interest to 
commence proceedings against joint tortfeasor Dl, who may be liable to pay 
punitive damages, but whose liability may be more difficult to establish or 
whose ability to satisfy a judgment against him may be dubious. On the 
other hand, P may conclude that, even though D2 will be liable to pay a 
smaller sum, his liability is easy to establish and his ability to pay beyond 
doubt. No such quandary faces the person who has been injured by 
tortfeasors who are severally liable: separate assessments can be made 
against different tortfeasors, and they can be sued in successive actions. 

The final consequence of the distinction between the two classes of 
concurrent tortfeasors was that, at common law, joint tortfeasors could, but 
need not, be joined by the injured party as co-defendants in the same 
action. ^2 While joint tortfeasors could be sued separately, several concurrent 
tortfeasors had to be sued separately, although, as we have seen, they too 
were liable to the plaintiff /« solidum}^ 

The rule prohibiting joinder of several concurrent tortfeasors applied in 
Ontario until 1913. Under Rule 186 of the 1897 Consolidated Rules of 
Practice and Procedure,^"^ it was held that, for concurrent tortfeasors to be 



^' Cassell& Co. Ltd. v. Broome, [1972] A.C. 1027, at 1062-64, [1972] 1 All E.R. 801 (H.L.), 
and Bryanston Finance Ltd. v. de Vries, supra, note 26, at lll-ll). 

^^ Williams states that the common law rule respecting the joinder of several tortfeasors 
has gone through a "curious evolution" {supra, note 1, at 51). He notes that while, 
theoretically, the rule has always been that several tortfeasors could not be sued in the 
same action, there did develop a line of cases that allowed a plaintiff to succeed in his 
action, and to recover separate, apportioned damages against each of the several 
tortfeasors, if the plaintiff believed or alleged in his writ (although erroneously) that the 
defendants were in fact joint tortfeasors. However, the decision of the House of Lords in 
Sadler v. The Great Western Railway Co., [1896] A.C. 450 (H.L.), reaffirmed the 
original rule that claims for damages against two or more defendants, in respect of their 
liability for separate, concurrent torts, could not be joined in one action. 

^^ Williams, supra, note 1, at 51. 

'^^' See Holmested and Langton, The Judicature Act of Ontario and the Consolidated Rules 
of Practice and Procedure of the Supreme Court of Judicature for Ontario (2d ed., 1898), 
at 307-08. 



16 



joined, "however numerous the defendants, there must be only one claim 
for relief, based on one injuria in which all are alleged to be implicated". ^^ 

In 1913, the Consolidated Rules of Practice and Procedure were 
amended,^^ replacing former Rule 186 with Rule 67, which provided as 
follows: 

67.— (1) Where the plaintiff claims that the same transaction or occurrence, 
or series of transactions or occurrences, give him a cause of action against one 
or more persons, or where he is in doubt as to the person from whom he is 
entitled to redress, he may join as defendants all persons against whom he 
claims any right to relief, whether jointly, severally, or in the alternative; and 
judgment may be given against one or more of the defendants according to their 
respective liabilities. 

(2) The court may order separate trials or make such other order as may be 
deemed expedient, if such joinder is deemed oppressive or unfair. 

Rule 67 remained essentially unaltered^^ until replaced in 1984 by rule 
5.02(2) of the current Rules of Civil Procedure.^^ Rule 5.02(2) provides as 
follows: 

5.02(2) Two or more persons may be joined as defendants or respondents 
where, 

(a) there are asserted against them, whether jointly, severally or in the 
alternative, any claims to relief arising out of the same transaction or 
occurrence, or series of transactions or occurrences; 

(b) a common question of law or fact may arise in the proceeding; 

(c) there is doubt as to the person or persons from whom the plaintiff or 
applicant is entitled to relief; 

(d) damage or loss has been caused to the same plaintiff or applicant by 
more than one person, whether or not there is any factual connection 
between the several claims apart from the involvenient of the plaintiff 



^^ Vachon v. Crown Reserve Mining Co. (1910), 2. O.W.N. 378 (Master S.C.O.), at 379. See, 
also, Hinds v. The Corp. of the Town ofBarrie (1903), 6 O.L.R. 656 (C.A.). 

It bears repeating here that, in the case of several concurrent tortfeasors, the 
""damnum is single, but each commits a separate injuria'' (Williams, supra, note 1, at 
16). 

^^ See Holmested, The Judicature Act of Ontario and the Consolidated Rules of Practice 
and Procedure of the Supreme Court of Judicature for Ontario (4th ed., 1915), at 419. See, 
generally, Gale and Mintah (eds.), Holmested and Gale on the Judicature Act of Ontario 
and Rules of Practice (Annotated) (1983), at 873-82. 

^^ The word "deemed" was deleted and the word "considered" substituted: see ibid., at 
873. 

^* 5M/7ra, note 22. 



17 



or applicant, and there is doubt as to the person or persons from 
whom the plaintiff or applicant is entitled to relief or the respective 
amounts for which each may be liable; or 

(e) it appears that their being joined in the same proceeding may pro- 
mote the convenient administration of justice. 

Rule 5.02(2) simplifies the language of former Rule 67 and broadens 
somewhat the right to join parties in a single action. ^^ 

The purpose of former Rule 67 and present rule 5.02(2) was and is 
procedural convenience:"^^ 

[Rule 67] was introduced to get over the difficulties and inconveniences found 

in the old practice [N]ow, if the same series of transactions, etc., gives a cause 

of action against more than one, they can all be sued in the same action, though 
the causes of action be not the same. 

It is not necessary that each cause of action should be identical; several 
wrongdoers liable for distinct damages can be joined, since "[t]he object of 
the rule is to avoid, if possible, the expense and delay of bringing two actions, 
if relief without inconvenience, expense or embarrassment can be given in 
one action".'*' Claims sounding in contract and in tort can be joined where 
they arise from the same transaction or occurrence or series of transactions 
or occurrences.'*^ 

As we have said, joinder of defendants at common law was permissive, 
not mandatory.'*^ At common law, a plaintiff could choose to sue joint 
tortfeasors severally, subject to the single judgment rule, discussed above. 
This permissive joinder was not changed by rules 67 or 5.02(2), and a 



^^ It should also be noted here that the court appears to have an expanded power under 
current r. 5.03 to join persons who have not been joined by the parties. Rule 5.03(1) of 
the Rules of Civil Procedure, supra, note 22, provides that "[e]very person whose 
presence is necessary to enable the court to adjudicate effectively and completely on the 
issues in a proceeding shall be joined as a party to the proceeding". In addition, r. 5.03(4) 
provides that "[tjhe court may order that any person who ought to have been joined as a 
party or whose presence as a party is necessary to enable the court to adjudicate 
effectively and completely on the issues in the proceeding shall be added as a party". 
Conversely under the Rules of Civil Procedure, the court retains a discretion to sever 
joinder of parties where joinder is "required" under R. 5 (r. 5.03(6)) or "[w]here it 
appears that the joinder of multiple claims or parties in the same proceeding may 
unduly complicate or delay the hearing or cause undue prejudice to a party" (r. 5.05). 

'*0 Campbell Flour Mills Co. Ltd. v. Bowes (1914), 32 O.L.R. 270 (App. Div), at 282. 

"*' Canadian Steel Corp. Ltd. v. Standard Lithographic Co. Ltd. , [1933] O.R. 624 (C.A.), at 
630. 

"^2 Tellier v. Bank of Montreal (1982), 32 C.PC. 17 (Master S.C.O.). 
"^^ Williams, supra, note 1, at 50 and 53. 



18 



plaintiff can pursue joint or several concurrent tortfeasors severally if he 
chooses to do so, provided that the successive actions are not vexatious or an 
abuse of the court's process."^"* However, as indicated earlier, pursuing 
separate actions may now have significant costs consequences, as a result of 
section 149(2) of the Courts of Justice Act, 1984 J^^ 

In connection with the distinction between joint and several concur- 
rent tortfeasors, now (as we have seen) rendered irrelevant in Ontario except 
in one particular, one further point should be made. It has been suggested 
that section 2 of the Negligence Act,^^ first enacted in 1930,'^'' makes all 
concurrent wrongdoers joint wrongdoers. Section 2 provides as follows: 

(2) Where damages have been caused or contributed to by the fault or 
neglect of two or more persons, the court shall determine the degree in which 
each of such persons is at fault or negligent, and, where two or more persons are 
found at fault or negligent, they are jointly and severally liable to the person 
suffering loss or damage for such fault or negligence, but as between themselves, 
in the absence of any contract express or implied, each is liable to make 
contribution and indemnify each other in the degree in which they are 
respectively found to be at fault or negligent. 

If section 2 does, in fact, transform several concurrent wrongdoers into 
joint concurrent wrongdoers, then, prior to the legislative changes described 
earlier, a plaintiff who released or obtained judgment against one concur- 
rent tortfeasor would be barred from proceeding against another, even 
though at common law their liability was merely several, and not joint. The 
latter argument was made in Reaney v. National Trust Co. ^^ and apparently 
rejected. In Dodsworth v. Holt,^^ the similarly worded Alberta statute was 
held not to have made all concurrent tortfeasors jointly liable, in the sense 
that a release of one barred the plaintiff's action against other concurrent 
defendants who, at common law, would have been severally liable to the 
plaintiff. 

The argument that section 2 turns all concurrent tortfeasors into joint 
tortfeasors, thereby prejudicing plaintiffs injured by the acts of concurrent 



"^ Ibid., at 53. See Thomson v. Lambert, 11938] S.C.R. 253, [1938] 2 D.L.R. 545. 

'^^ Supra, note 18. While there was no equivalent express costs sanction to discourage a 
multiplicity of actions under the former Rules of Practice, supra, note 21, such a power 
may have been exercised under the court's general discretion as to costs: Williams, 
supra, note 1, at 53, and Standard Industries Ltd. v. E-F Wood Specialties Inc. (1977), 16 
O.R. (2d) 398 (H.C.J.). 

^^ Supra, note 4. 

^ Section 2 first appeared, in slightly different form, as s. 3 of The Negligence Act, 1930, 
S.O. 1930, c. 27. This legislation created a right of contribution among concurrent 
wrongdoers. 

^* Supra, novt 21. 

"^^ (1964), 44 D.L.R. (2d) 480, 47 W.W.R. 243 (Alta. S.C, T.D.). See, also, Dixon v. The 
Queen in right of British Columbia, supra, note 25, at 661. 



19 



tortfeasors who are merely severally liable, does not appear to have been 
accepted in any reported Ontario judgment, although it is noted by Williams 
as a possible, although unfortunate, effect of the wording of that section. ^^ In 
any event, the argument has, as we have seen, been rendered largely 
academic by the enactment of section 149 of the Courts of Justice Act, 1984^^ 
and by the Rules of Civil Procedure,^^ especially rule 5.02(2). Its relevance is 
now confined to the one remaining consequence of the distinction between 
joint and several concurrent tortfeasors, namely, the single judgment rule. 

With respect to the somewhat confusing language of section 2 of the 
Negligence Act, Williams states that the "intention [of legislation like 
section 2] was merely to declare that the liability of concurrent tortfeasors is 
in solidum, and no operation should be given to the legislation beyond 
this".^^ As noted earlier in this chapter and in chapter 1, each concurrent 
wrongdoer is liable in solidum for the whole of the plaintiff's loss, as if no 
other wrongdoer existed, whether the concurrent wrongdoer is jointly liable 
or merely severally liable. The provision in section 2 that concurrent 
wrongdoers are "jointly and severally liable" likely reflects the not uncom- 
mon use of that phrase, both in the past and today, to mean liability in 
solidum. 



(b) Joint Contractors and Several Contractors 

At common law, many of the consequences of joint liability in tort 
appUed equally to defendants who were joint promisors. Thus, in Kendall v. 
Hamilton, ^"^ the House of Lords held, by analogy with the rule for joint 
tortfeasors, that judgment against one joint promisor barred P from suing 
the others. Similarly, a release of one joint promisor released the others. This 
latter proposition was examined in Canadian Imperial Bank of Commerce 
V. Vopni,^^ where a release effected with the knowledge and consent of the 
other promisors, who were sureties, was held not to bar recovery. Nonethe- 
less, the continued vitality of the release bar rule was not doubted. 

In addition, these same common law rules respecting joint liability in 
contract generally applied as well to what is called "joint and several" 
liability, an intermediate category of liability in contract between joint 



^^ Williams, supra, note 1, at 5-6. See, also, Cheifetz, Apportionment of Fault in Tort (1981), 
at 8 and 20. 

^^ Supra, note 18. 

^^ Supra, note 22. 

^^ Williams, supra, note 1, at 6. Cheifetz also uses the "jointly and severally liable" 
language (supra, note 50, at 8). 

5^* (1879), 4 App. Cas. 504, 3 CRD. 403 (H.L.). 

55 (1978), 86 D.L.R. (3d) 383, 11978] 4 W.W.R. 76 (Man. Q.B.). 



20 



liability and purely several liability. ^^ Accordingly, when contractors were 
jointly and severally liable, the cause of action might be extinguished in the 
safne circumstances as it would have been if they had been only jointly 
liable. Consequently, the release of one released the others.^^ However, the 
liability of trustees, which is also joint and several, was not barred by a 
judgment against or a release of one.^^ 

It will be recalled that section 149(1) of the Courts of Justice Act, 1984^^ 
abolished the common law judgment bar and release bar rules "[w]here two 
or more persons are jointly liable in respect of the same cause of action". 
Accordingly, the repeal of the judgment bar and release bar rules is not 
restricted to joint liability in tort, but extends, for example, to joint debts 
and joint liability (as well as "joint and several" liability) for breach of 
contract. Moreover, the single award of costs rule in section 149(2) applies 
irrespective of the legal basis of the liability, so long as the plaintiff has 
suffered "damage". 

3. REFORM AND PROPOSALS FOR REFORM IN OTHER 
JURISDICTIONS 

In addition to the recent reform in Ontario, various aspects of the 
common law relating to joint liability have attracted attention in other 
jurisdictions. For instance, in the United Kingdom, the Law Reform (Mar- 
ried Women and Tortfeasors) Act, 1935^^ abolished the judgment bar rule 
for joint tortfeasors. However, in order to discourage unnecessary litigation, 
where a plaintiff had sued concurrent tortfeasors (whether their liability was 
joint or merely several) in separate proceedings, the Act provided that costs 
would not be awarded to the successful plaintiff in any suit brought after he 
had obtained judgment against one defendant, unless there were reasonable 
grounds for his failure to join the defendants in one action.^* Moreover, a 
plaintiff could not be awarded damages in subsequent proceedings that 
exceeded in aggregate the sum awarded to the plaintiff in the first action.^^ 

The 1935 Act was amended by the Civil Liability (Contribution) Act 
1978.^^ The first change effected by the 1978 legislation abolished the rule 



^^ Williams, Joint Obligations (1949), ch. 1, esp. at 33-41. 

^^ Ibid., at 135-37. However, whether judgment against one promisor bars the action 
against other co-promisors is less clear {ibid., at 103-04). 

^^ Ibid., at 159-60. 

^^ Supra, note 18. 

^^ Law Reform (Married Women and Tortfeasors) Act, 1935, c. 30, s. 6(1 )(a). 

^' Ibid., s.6{\){b). 

^2 Ibid. 

^^ Civil Liability (Contribution) Act 1978, c. 47. 



21 



limiting the maximum amount of damages recoverable in subsequent 
proceedings.^'* This was partly because the reason for its inclusion in the 
1935 Act— namely, the fear that plaintiffs might be encouraged to sue 
defendants separately in the hope of obtaining a greater sum from another 
jury— had largely disappeared, presumably as a result of the virtual elimina- 
tion in England of jury trials in civil litigation. 

The second change made by the 1978 Act extended the abolition of the 
judgment bar rule by enabUng P, even though he has obtained judgment 
against Dl, to sue "any other person who is (apart from any such bar) jointly 
liable with him in respect of the same debt or damage".^^ While, under the 
1935 Act, the judgment bar rule was abolished in respect of joint liability for 
damages in tort, the rule is now effectively abolished for all causes of action 
for damages and debt. 

Thirdly, the costs sanction contained in the 1935 Act was extended to all 
actions in respect of the same debt or damage brought successively against 
concurrent wrongdoers. However, costs may still be awarded where the 
court is of the opinion that it was not unreasonable to bring more than one 
action. ^^ 

The judgment bar rule has also been abolished in most jurisdictions in 
the United States, although some states limit the amount that the plaintiff 
may recover in subsequent litigation to the sum awarded in the first suit.^^ 

The Irish Civil Liability Act, 1961^^ allows all concurrent wrongdoers 
to be sued in separate proceedings, but, like the English Act of 1935, provides 
that damages awarded in subsequent proceedings may not exceed the sum 
awarded in the first action, and that a plaintiff who had no reasonable 
ground for instituting more than one action is not entitled to costs in a 
subsequent action.^^ 



^^ Section 6(l)(b) of the Law Reform (Married Women and Tortfeasors) Act, 1935, supra, 
note 60, was repealed by s. 9(2) of the Civil Liability (Contribution) Act 1978, supra, 
note 63. See, now, s. 4 of the 1978 Act. For a similar proposal, see New Zealand, 
Contracts and Commercial Law Reform Committee, Working Paper on Contribution in 
Civil Cases i\9S3), at 2\-22. 

^^ Supra, note 63, s. 3. The Privy Council has held that the abolition extended to a 
situation where P sued Dl and D2 in a single action and obtained judgment first against 
Dl: Wah Tat Bank Ltd v. Chan Cheng Kum, [1975] A.C. 507, [1975] 2 All E.R. 257 
(PC). 

^^ See s. 4 of the 1978 Act, supra, note 63. See, also, the similar recommendations of The 
Law Reform Commission of Hong Kong in its Report on the Law Relating To 
Contribution Between Wrongdoers, Topic 5 (1984), paras. 9.1-9.2, at 45. 

^^ See Prosser, supra, note 5, at 330-32. 

^^ Civil Liability Act. 1961, No. 41. 

^^ Ibid.,s. 18(l)(b). 



22 



The rule has also been abolished in some Canadian provinces, includ- 
ing Alberta^^ and Manitoba,^' and in a number of other Commonwealth 
jurisdictions.^^ The Uniform Contributory Fault Act, adopted by the Uni- 
form Law Conference of Canada in 1984^^ abolishes the judgment bar rule 
in respect of damages (although not debt)7^ subject to the two limitations 
contained in the English Act of 1935, namely, that costs may be awarded to 
the plaintiff only in the first action,^^ and that the plaintiff may not obtain 
judgment against concurrent wrongdoers for an amount that exceeds the 
damages awarded against another who is concurrently liable with them.^^ 

By way of contrast, the release bar rule has received less legislative 
scrutiny. It has remained untouched by statute in the United Kingdom, 
although the Rules of the Supreme Court provide that in an action for 
defamation against defendants who are allegedly jointly liable, a plaintiff 
who accepts a payment into court by a defendant is not thereby barred from 
pursuing other joint wrongdoers, whose liability is reduced pro tanto by the 
amount so accepted.^^ However, the rule has been abolished in the Republic 
of Ireland by section 17 of the Civil Liability Act, 1961,^^ as it has been in 
Tasmania^^ and most jurisdictions in the United States.^^ In Canada, the 
Alberta Institute of Law Research and Reform has recommended that a 
release should not bar action against joint tortfeasors,^* and the Uniform 
Contributory Fault Act also contains a provision abolishing the release bar 
rule.^^ 



"^^ The Tort-FeasorsAct, R.S.A. 1980, c. T-6,s. 3(l)(a),issimilartotheEnglish Actof 1935, 
supra, note 60. 

^' The Tortfeasors and Contributory Negligence Act, R.S.M. 1970, c. T-90, s. 3(l)(a). 

^^ See Fleming, supra, note 5, at 240, n. 30. 

^^ Uniform Law Conference of Canada, Proceedings of the Sixty-Sixth Annual Meeting 
(1984), Appendix F, Uniform Contributory Fault Act, s. 15(b). 

^^ Ibid., s. 15(b). 

^5 Ibid,s. 16(2). 

^^ Ibid.,s. 16(1). 

^^ R.S.C. 1965, O. 82, r. 4. In other instances of joint liability, acceptance of a payment by 
one party stays proceedings against the others: R.S.C. 1965, O. 22, r. 3(4). 

^^ Supra, note 6S. 

^^ Tortfeasors and Contributory Negligence Act 1954, No. 4 of 1954, s. 3(3). This Act may 
be found in Tasmanian Statutes 1826-1959 (Reprint), Vol. 6. 

^^ Prosser and Keeton, supra, note 5, at 301-05. See, also. National Conference of 
Commissioners on Uniform State Laws, Uniform Comparative Fault Act, Uniform 
Laws Annotated, Vol. 12 (1987 Pocket Part), §6. The Act was approved by the Commis- 
sioners in 1977. 

^' Alberta, Institute of Law Research and Reform, Contributory Negligence and Concur- 
rent Wrongdoers, Report No. 31 (1979), at 27-30, recommendation 6. See, also, The Law 
Reform Commission of Hong Kong, supra, note 66, paras. 4.8-4.9, at 17. 

^2 Supra, note 73, s. 15(a). 



23 



4. CONCLUSIONS 

(a) The Judgment Bar and Release Bar Rules and Offers 
OF Settlement 

When section 149 of the Courts of Justice Act, 1984 was enacted, the 
Commission had already decided to recommend the abolition of the com- 
mon law rules that prevented an injured person from suing a joint wrong- 
doer or debtor simply because he had already obtained judgment against, 
settled with, or released another who was jointly liable for the same damage 
or debt. We are of the view that to distinguish so sharply between joint and 
several liability for concurrent wrongdoers perpetuates a technical distinc- 
tion from a much earlier pciiod in legal development and can lead to 
injustice. The Commission had also decided that a costs sanction of the kind 
now contained in section 149(2) should be imposed in order to discourage 
the unnecessary institution of multiple litigation in respect of a single loss or 
debt, and that it should apply irrespective of whether the liability was joint 
or only several. 

The Commission, therefore, welcomes the reforms that have been 
effected by section 149 of the Courts of Justice Act, 1984, although we would 
place the provisions dealing with joint liability, as amended in accordance 
with the following recommendations, in the Commission's proposed Con- 
tribution and Comparative Fault Act. The Commission agrees that the 
abolition of the judgment bar and release bar rules should apply to both 
joint debt and joint liability for wrongdoing, including breach of contract, 
and recommends that the new Act so provide.^^ 

However, notwithstanding the recent statutory changes, a few points 
may still be appropriately made. We deal first with settlements. In this 
connection, we recommend that legislation should make it clear that, if a 
person who settles with a concurrent wrongdoer or debtor expressly gives up 
his right to sue any person who is liable for the damage or debt, he should 
not subsequently be able to institute a proceeding in respect of the damage 
or debt against a concurrent wrongdoer or debtor who was not a party to the 
settlement.^"^ 

Where P does not expressly give up his right to proceed against the non- 
settling concurrent wrongdoer, the law remains, in part, unclear. It will be 
recalled that, at common law, a mere settlement with Dl, without a release, 
did not preclude P from proceeding against D2. However, where P settled by 
accepting money paid into court by Dl, it was held in Reaney v. National 



^^ See the Commission's proposed Contribution and Comparative Fault Act (hereinafter 
referred to as "Draft Act"), ss. 5(1) and 6. The Draft Act appears as an Appendix of this 
Report. 

^'^ Draft Act, s. 6. 



24 



Trust Co.^^ that P's action against the non-paying defendants should be 
dismissed, whether the defendants were jointly or severally liable.^^ 

The effect of section 149(1) of the Courts of Justice Act, 1984 on the 
payment into court rule enunciated in Reaney is problematic. Section 149(1) 
is a rather narrowly circumscribed provision and refers, among other things, 
to a release of a jointly liable wrongdoer. The payment into court rule 
encompasses a somewhat different, although related, situation; under that 
rule, no judgment has been obtained and no release has necessarily been 
provided. Moreover, the payment into court rule precludes P from pursuing 
any non-paying defendant, whether jointly or severally liable, whereas 
section 149(1), even if otherwise relevant, removes a prohibition against only 
joint wrongdoers, leaving severally liable co-defendants immune from suit 
under the rule in Reaney. 

The Rules of Civil Procedure^^ have been significantly recast in this 
area, and provide for offers to settle, replacing, and to some extent 
integrating,^^ the former payment into court rules. They are silent on the 
problem considered in Reaney. ^^ 

The rule in Reaney is unsatisfactory in a number of respects if, and to 
the extent that, it prevents the plaintiff from continuing his action against 
the non-paying defendants, whether or not the terms of the payment 
expressly exclude the plaintiff's suing the other defendants to judgment, and 
whether or not the amount paid into court fully compensates the plaintiff 
for his loss. First, it may discourage the plaintiff from accepting a payment 
by one defendant in partial satisfaction: a plaintiff will not be able to accept 
a defendant's estimate of his own share of the concurrent liability of the 
defendants in the action if the plaintiff is thereby barred from continuing the 
action against other co-defendants. 

Secondly, it seems anomalous to bar a plaintiff who settles a claim by 
accepting money paid into court by one defendant from proceeding against 
the other defendants, when, today, neither a judgment against, a release of, 
nor an out-of-court settlement with, one defendant has this effect (unless, in 
the latter situation, this was clearly the parties' intention).^^ Thirdly, the rule 



^^ Supra, note 27. 

^^ See supra, this ch., sec. 2(a). 

^"^ Supra, note 22, R. 49. 

^^ Ibid., T. 49.07(3H4). 



89 



90 



Although, to the extent that, under R. 49, a plaintiff may settle a claim by accepting 
money paid into court by one joint co-defendant, and then release that defendant, 
s. 149(1) of the Courts of Justice Act, 1984 may be invoked by the plaintiff to permit him 
to proceed against the other, non-paying joint defendants. 

A plaintiff to whom an offer to settle his own share of the liability is made by one 
defendant could presumably preserve his right to proceed against the other defendants 



25 



does not operate fairly, for it is likely to prejudice only the plaintiff who is 
unrepresented or who has not been properly advised of the consequences of 
accepting money paid into court by one of many co-defendants.^' 

The Commission is of the view that statutory reform is needed in this 
area in order to clarify the law. Accordingly, we recommend that legislation 
should abolish the rule in Reaney v. National Trust Co. and provide 
expressly that an offer of settlement made pursuant to Rule 49 of the Rules 
of Civil Procedure should be treated like any other settlement; that is, it 
should not prevent the injured person from pursuing his claim against 
others who may be concurrently liable to him in respect of the same loss, 
unless, of course, the offer of settlement extends to any claim that the 
plaintiff may have against other defendants.^^ 

Another aspect of the release bar rule, aside from the payment into 
court anomaly considered above, concerns the release of concurrent debtors 
(as opposed to wrongdoers). In this connection, the Commission is of the 
view that section 149(1) of the Courts of Justice Act, 1984 may cast too wide 
a net. We have in mind circumstances under which the release of one debtor 
also releases security that that debtor has provided in respect of the debt, 
where the release of the security would prejudice the other co-debtor by 
preventing the latter from resorting to it. For the sake of fairness to the latter, 
we recommend that a person who has released a debtor should be barred 
from proceeding against any other joint or joint and several debtor^^ if the 
release of the first debtor has prejudiced the second debtor.^"^ 

A third matter concerning the scope of section 149 of the Courts of 
Justice Act, 1984 pertains to costs. Even though section 149(1) repeals the 
judgment bar rule for all causes of action in respect of which two or more 
persons are jointly liable, the costs sanction contained in section 149(2) 
seems not to deal with cases in which the plaintiff has proceeded in separate 



by proposing a settlement outside R. 49 of the Rules of Civil Procedure. The settling 
wrongdoer would then cease to be a defendant, and the plaintiff could proceed against 
the other defendants. 

^' See Teplitsky and Gomberg, supra, note 27. 

The relevant rules in force when these decisions were made were Rr. 306, 311, and 
315 of the former Rules of Practice, supra, note 21. The analogous English Rules of the 
Supreme Court have recently been held to prevent a continuation of the action against 
those jointly liable or those sued in the alternative: Townsend v. Stone Toms & Partners 
(a firm), [1981] 1 W.L.R. 1153, [1981] 2 All E.R. 690 (C.A.). The acceptance of payment 
made by one defendant does not, however, bar the plaintiff from continuing the 
proceedings against other defendants severally liable for the same loss. 



^2 Draft Act, s. 6. 

See discussion, supra, this ch., sec. 2(b). 
^'* Draft Act, s. 6. 



26 



actions against concurrent debtors, since the latter provision applies only 
where the plaintiff is a person who has suffered "damage". The Commission 
therefore recommends that the costs sanction rule should apply to all cases 
of concurrent liability for which the plaintiff institutes separate pro- 
ceedings.^^ 

Finally, we wish to deal with the effect of the Federal Court Act,^^ which 
has added a new complication to proceedings against joint wrongdoers. The 
federal Crown can be sued only in the Federal Court, while servants of the 
federal Crown must normally be sued in a court in a province.^^ As a result, 
in most cases a person cannot sue the servant and the Crown in the same 
proceeding. If, for example, judgment is obtained first against the servant, 
who is unable to satisfy the judgment, proceedings against the Crown, on the 
basis that it is vicariously and, therefore, jointly liable, will be barred, since 
there is no equivalent in Federal Court proceedings to section 149(1) of the 
Courts of Justice Act, 1984. 

The Commission is of the view that the law in this area is anomalous 
and ought to be reformed. Accordingly, we recommend that the Parliament 
of Canada should be requested to enact legislation that would abrogate the 
judgment bar and release bar rules respecting proceedings in the Federal 
Court. 



^^ Ibid., s. 5(2). See, also, s. 24, which repeals s. 149 of the Courts of Justice Act, 1984. 

^^ S.C. 1970-71-72, c. 1. 

^^ Although s. 17(4)(b) confers concurrent jurisdiction upon the Federal Court over suits 
against servants of the federal Crown, if liability is not founded upon existing and 
applicable federal law the Court cannot constitutionally be given jurisdiction over the 
action: Tomossy v. Hammond, [19791 2 EC. 232 (T.D.), and Pacific Western Airlines 
Ltd. and Canadian Acceptance Corp. Ltd. v. The Queen in right of Canada, [1980] 1 EC. 
86 (C.A.). On the difficulties created by the Act and the constitutional limitations upon 
federal jurisdiction, see, generally, Evans, "Federal Jurisdiction— A Lamentable Situa- 
tion" (1981), 59 Can. B. Rev. 124. 

Recent decisions in the Trial Division of the Federal Court have attempted to 
expand the jurisdiction of the Federal Court in certain circumstances over the whole 
cause of action. It has been said that, in order to justify this assumption of jurisdiction, 
the facts of the case must be "so intimately intertwined. . .as to cry out for common trial 
and ultimate final resolution, [and] it would matter not if in some aspect, an issue 
bearing upon a party impinges upon provincial law, so long as in its pith and substance, 
the issue is a necessary incidence or consequence of a valid federal law and of the relative 
position of the parties with respect to it": Roberts v. Canada, [1987] 1 EC. 155 (T.D.), at 
167. 

See, also, ibid., at 161 and 165-66, and Marshall v. The Queen, [1986] 1 EC. 437 
(T.D.), at 447-48. However, on the appeal in the Roberts case {sub nom. Wewayakum 
Indian Band v. Canada and Wewayakai Indian Band (1987), 73 N.R. 234 (FC.A.)), only 
MacGuigan J. of the Federal Court of Appeal agreed that the Federal Court Act 
conferred jurisdiction on the Federal Court over the whole cause of action, despite 
impingement on provincial law, where the claims in the action were "intimately 
intertwined". 



27 



(b) The Single Judgment Rule 

In one respect, the Commission believes that the Courts of Justice Act, 
1984^^ does not go far enough in abolishing the common law distinctions 
between joint and merely several concurrent liability. This is in connection 
with the rule that only a single award of damages may be made in respect of 
a loss or debt for which two or more defendants are jointly liable. 

A case may be made for extending the single judgment rule to all 
concurrent wrongdoers, that is, for recommending a reform in the law that 
would restrict plaintiffs who pursue concurrent wrongdoers in separate 
actions, whether jointly or severally liable, to the maximum damages 
awarded in the first action in which they obtained judgment. Such a rule 
would undoubtedly provide a strong incentive to institute a single action, 
and would prevent relitigation of the same or very similar issues. This 
solution has found acceptance in a number of jurisdictions, and its recent 
rejection in the United Kingdom may be less persuasive in Ontario, where 
many civil actions continue to be tried by juries that may be more prone to 
differ in their assessment of damages than are judges. Moreover, in Canada, 
the Uniform Contributory Fault Act^^ provides that when a judgment has 
determined "an amount of damages against one or more concurrent wrong- 
doers, the person suffering the damage is not entitled to have the damages 
determined in a higher amount by a judgment in the same or any other 
actions against any concurrent wrongdoer". 

On the other hand, to impose an artificial restriction upon the maxi- 
mum damages that may be awarded in the subsequent litigation may work 
injustice on the plaintiff by preventing his recovering from a wrongdoer the 
full amount of the loss for which that defendant would have been liable had 
the plaintiff not already obtained judgment in a previous action.*^ If the 
present single judgment rule were extended to all cases of concurrent 
liability, then a plaintiff who had obtained judgment against one defendant 
could not be awarded a greater sum against a severally liable wrongdoer in 
the following circumstances: where his injury turned out to be more serious 
than was apparent when he obtained judgment in the first action; where the 
court in the later action assessed the plaintiff's damages higher than the 
court in the first action had done; where the defendant in the first action had 
a defence that was not available to the defendant in subsequent actions 
(contractually limited liability, for example);'^' or where the defendant in 



^^ Supra, note 18. 

^^ Supra, note 73, s. 16(1). 

'^ For a criticism of the single judgment rule, see Williams, supra, note 1, at 63-72. Cheifetz 
suggests that the effect of s. 2 of the Negligence Act, supra, note 4, is that, where 
concurrent tortfeasors are sued in one action, a single award of damages must be made 
since the Act states that they are jointly and severally liable {supra, note 50, at 20 and 
128). But see discussion supra, this ch., sec. 2(a). 

'^' However, this rule may not apply when P obtains judgment against Dl for less than P's 
full loss because Dl's liability is limited by statute or contract: see Plant v. Calderwood, 
[1969] N.Z.L.R. 752 (S.C), rev'd on other grounds [1970] N.Z.L.R. 296 (C.A.). 



28 



the second action was liable to pay exemplary or punitive damages, which 
the defendant in the first action was not. 

On balance, the Commission does not recommend that a plaintiff's 
right to recover his full loss should be restricted to the amount awarded in 
the plaintiff's first action. ^^^ jj^g absence of any such ceiling from the 
present law in the case of several concurrent wrongdoers does not appear to 
occasion serious inconvenience, and the recent abolition of the judgment 
bar rule for joint liability is unlikely to add significantly to the number of 
cases in which a plaintiff will pursue his claim against concurrent wrong- 
doers in separate actions. 

Moreover, under the present law, it remains open to a severally liable 
defendant to seek to establish that the plaintiff's loss was less than that found 
by a court in an earlier proceeding by the plaintiff against a concurrent 
wrongdoer. To introduce, in effect, the controversial principle of non- 
mutual issue estoppel in this one area of the law does not seem to be 
warranted by any pressing difficulty in the operation of the law as it is at 
present. '^^ The Commission believes that the costs sanction under section 
149(2) of the Courts of Justice Act, 1984, as expanded by our earlier 
recommendation, should prove a sufficient inducement to plaintiffs to join 
concurrent wrongdoers in a single action without imposing the further and 
often arbitrary penalty of limiting the amount that they can recover. The 
Commission therefore recommends that the present law with respect to 
separate awards of damages against defendants who are severally liable 
should be extended to those whose liability is joint. A plaintiff should always 
be able to prove the extent of the loss for which a particular defendant is 
liable, without regard to the sum awarded to the plaintiff against another, 
concurrently liable defendant. '^'^ 



102 



103 



104 



The importance currently attached to the plaintiff's right to choose his defendants is 
aptly illustrated by the refusal of the courts to allow a defendant to join as a party- 
defendant a person against whom the defendant claims contribution if that person was 
not already a party to the action and the plaintiff has not consented to that person being 
so joined. See, for example, Cameron v. Murray, [1931] O.R. 83 (H.C. Div.), and 
Terminal Warehouses Ltd. v. Byam, [1946] O.W.N. 382 (Master S.C.O.), where it was 
held that the plaintiff's right to choose his defendants was not overridden by a provision 
similar to what is now s. 6 of the Negligence Act, supra, note 4. Section 6 provides that 
"[w]herever it appears that a person not already a party to an action is or may be wholly 
or partly responsible for the damages claimed, such person may be added as a party 
defendant to the action upon such terms as are considered just. . .". See, also, Cheifetz, 
supra, note 50, at 261-64. 

For a recent decision on the scope of this principle, see Parklane Hosiery Co.. Inc. v. 
Shore, 439 U.S. 322 (1979). In England, the House of Lords has held that "issue 
estoppel" is restricted to civil actions between the same parties, although the courts' 
power to strike out actions as an abuse of process may in some cases address a similar 
issue: Hunter v. Chief Constable of the West Midlands Police, [1982] A.C. 529, [1981] 3 
AllE.R. 727(H.L.). 

Draft Act, s. 5(3). 



29 

Recommendations 

The Commission makes the following recommendations: 

1. The provisions currently contained in section 149 of the Courts of 
Justice Act, 1984, as modified in accordance with the following recom- 
mendations, should be placed in the proposed new Contribution and 
Comparative Fault Act . 

2. A person who has obtained judgment against a defendant should not 
thereby be precluded from instituting or continuing an action against 
another in respect of the same debt or damage for which the defendants 
are jointly liable. 

3. (1) Subject to paragraphs (2) and (3), a person who releases a person 

should not thereby be barred from proceeding against any other 
person who is concurrently liable in respect of the same debt or 
damage. 

(2) Where a person who settles with a concurrent wrongdoer or debtor 
expressly gives up his right to sue any person who is liable for the 
damage or debt, he should not subsequently be able to institute a 
proceeding in respect of the damage or debt against a concurrent 
wrongdoer or debtor who was not a party to the settlement. 

(3) A person who has released a debtor should not be entitled to 
proceed against another who is concurrently liable in respect of the 
debt if the second debtor has been prejudiced by the release of the 
first. 

(4) The payment into court rule, enunciated in Reaney v. National 
Trust Co. , should be abolished. An offer of settlement made under 
Rule 49 of the Rules of Civil Procedure should be treated like any 
other settlement. That is, a person who accepts an offer of settle- 
ment should not be precluded from continuing or instituting an 
action against any other person who is or may be concurrently 
liable for the debt or damage in respect of which the offer of 
settlement was made, unless the settlement is expressly made in 
respect of the claim that the plaintiff may have against other 
persons. 

4. The Parliament of Canada should be requested to enact legislation that 
would abrogate the judgment bar and release bar rules respecting 
proceedings in the Federal Court. 

5. The single judgment rule should be abolished, so that the present law 
with respect to separate awards of damages against concurrent defen- 
dants who are severally liable would be extended to those whose 
liability is joint. A plaintiff should always be able to prove the extent of 



30 



the loss for which a particular defendant is liable, without regard to the 
sum awarded to the plaintiff against another, concurrently liable 
defendant. 

A person who proceeds in separate actions against two or more persons 
who are concurrently liable in respect of the same damage or debt 
should be entitled to costs only in the first action, unless that person 
satisfies the court that there were reasonable grounds for bringing more 
than one action. 



CHAPTER 3 



INSOLIDUM LIABILITY 



1. INTRODUCTION 

As discussed in chapter 2, wrongdoers whose acts concur to cause a 
single, indivisible harm' are each liable to the injured person for the entire 
amount of the damage suffered. While the injured person is not entitled to 
recover an amount in excess of the total damage incurred, she can obtain 
judgment for the full amount of damage against one or all of the wrong- 
doers, either in a single action or in separate, successive actions. Since each 
concurrent wrongdoer is liable for the entire loss, each is said to be liable in 
solidum. 

In this chapter, we shall discuss the rationale for, and the criticisms of, 
the principle of z/i solidum liability, and consider whether any reform of the 
rule is warranted. As discussed below, the issue of in solidum liability is 
central to the whole area of contribution among wrongdoers, and the 
necessity for reform of the rule was considered by the Commission at the 
outset of this Project. Subsequent to the Commission's initial deliberations 
and recommendations with respect to in solidum liability, this issue gained 
prominence in the context of the liability insurance "crisis" in Ontario that 
had resulted in the appointment of the Ontario Task Force on Liability 
Insurance. The Final Report of the Task Force identified the principle of /« 
solidum Uability as a reform issue, and recommended that this Commission 
should give consideration to the question of its retention, modification, or 
abolition.^ At the same time, it became apparent that the question of reform 
of the principle of in solidum liability had been recently addressed by a 
number of American jurisdictions, as one aspect of a wide variety of tort 
reform legislation being implemented in response to the liability insurance 
crisis. 

While we were confident that, as a matter of principle, we had fully 
considered the issue of in solidum liability, we decided, in light of these 
subsequent developments, to recanvass the issue, having particular regard 
to recent developments in the United States. In order to do so, we requested, 
from every American legislature, copies of all legislation, including bills and 
statutes, relating to reform of the rule of m solidum liability, as well as copies 



' For discussion of the concept of "divisible" and "indivisible" damage or harm , see 
supra, ch. 2, note 5. 

^ Ontario, Ministry of Financial Institutions, Final Report of the Ontario Task Force on 
Insurance (1986) (hereinafter referred to as "Slater Report"), at 90. 

[ 31 ] 



32 



of any empirical studies, reports, and legal policy analyses that had 
informed such reform measures. Furthermore, we commissioned a 
research paper from one of the leading American academics in this field, 
Professor George L. Priest, the John M. Olin Professor of Law and Econom- 
ics, Yale Law School. Professor Priest provided a summary of the current 
academic analysis of the issue of m solidum liability, as well as a synopsis of 
the major American reports and studies that had considered the reform of 
the rule. 

In March, 1987, the Commission met to reconsider the question 
whether the current rule of in solidum liability should be abolished or 
modified. The Commission was greatly assisted in its deliberations by the 
participation of a number of prominent academics in the field of tort law. 
These participants were Professor Priest; Professor Marc Galanter, of the 
School of Law, University of Wisconsin; Professors Michael J. Trebilcock, 
Stephen M. Waddams, and Ernest J. Weinrib, of the Faculty of Law, 
University of Toronto; and the Project Director, Professor John Evans. We 
are grateful for their invaluable advice and assistance. We feel confident 
that, with the benefit of their extensive experience in and knowledge of this 
area, the various legal, economic, and practical aspects of the operation of 
the rule of in solidum liability, as well as the issues of principle, were fully 
explored. 

Before proceeding, a matter of terminology should be clarified. In 
Ontario, in solidum Uability is more commonly referred to as "joint and 
several" liability.^ However, used in this way, the latter term is a misnomer. 
The term more accurately refers to essentially procedural matters: as we 
discussed in chapter 2,"^ at common law four important legal and practical 
consequences flowed from the distinction between joint liability and several 
concurrent liability, all but one of which has now been superseded by section 
149 of the Courts of Justice Act, 1984.^ For the purposes of the present 
chapter, this facet of the law respecting joint and several liability has nothing 
to do with in solidum liability and is, therefore, irrelevant. We need repeat 
only that all concurrent wrongdoers, whether jointly or severally Hable, are 
liable in solidum. Accordingly, we shall use the more precise, if less famiUar, 
term "/« solidum hability" when referring to the liability of each concurrent 
wrongdoer for the plaintiff's entire loss. 

The principle of in solidum liability is clearly of great benefit to an 
injured person. At a minimum, the rule provides a plaintiff with control of 
her action; as we have said, a plaintiff can choose to sue only one or each of 
the wrongdoers, in a single action or in separate, successive actions. The rule 
also facilitates satisfaction of a plaintiff 's judgment, which, if the plaintiff so 
chooses, may be fully satisfied by execution against only one wrongdoer, 
presumably the best insured or most solvent. 



^ See, for example, Negligence Act, R.S.O. 1980, c. 315, s. 2. 
^ Supra, oh. 2, sec. 2(a). 
5 S.0. 1984,0. 11. 



33 



Prior to the development of the principles of contribution among 
wrongdoers, discussed in chapter 4, this procedural advantage enjoyed by an 
injured person was particularly controversial, since it allowed a plaintiff "to 
determine the incidence of loss distribution between co-tortfeasors at his 
own uncontrolled discretion, allowing him to throw the whole loss, if he was 
so minded, on one of them and completely exempt the other".^ Now it is 
generally a matter of procedural convenience only, since, as we shall see 
below, a concurrent wrongdoer who has satisfied a plaintiff's judgment can 
usually recover contribution from the other wrongdoer. 

However, a scheme of contribution can benefit one wrongdoer only 
where the other wrongdoer is available and capable of satisfying her portion 
of the liability. Under the current law, the most significant advantage to an 
injured person of the principle of /« solidum liability is that it imposes on a 
concurrent wrongdoer the risk that the other wrongdoer may be insolvent or 
otherwise unavailable to satisfy her share of the liability to the injured 
person. The principle operates primarily to ensure full compensation to the 
injured person, to the occasional detriment of a solvent wrongdoer who is 
required to satisfy the entire liability, regardless of her degree of fault. 

It is this latter effect of in solidum liability that remains controversial, 
giving rise to criticism of the rule and calls for its modification or abolition. 
A variety of arguments have been raised by those advocating change, some 
based on principle and others based on pragmatic or practical concerns. 
These include arguments regarding the relative fairness of the operation of 
the rule as between an injured party and a solvent wrongdoer, the impact of 
the rule on the cost and availability of liability insurance and on the goals of 
deterrence and risk management, and the potential ramifications for the 
tort system generally of change to the existing rule. Each of these arguments 
will be canvassed briefly in this chapter. 

Before considering the debate about the retention, abolition or modifi- 
cation of the principle of in solidum liability, an important, although 
perhaps obvious, point should be re-emphasized. It is the rule of in solidum 
liability that makes necessary the principle of contribution among wrong- 
doers; if every wrongdoer, concurrent or otherwise, were liable only for that 
portion of the damages equal to her degree of fault, there would be no need 
for a scheme of recovery— that is, contribution— from other wrongdoers. 
Accordingly, the question whether in solidum liabihty should be retained is, 
in effect, the starting point of this Report. 

2. THE DEBATE REGARDING IN SOLIDUM LIABILITY 

(a) The "Fairness" Argument 

The central rationale offered for the principle of in solidum liability is 
that, since the conduct of each concurrent wrongdoer was a cause of the 
indivisible damage suffered by the injured person, it is fundamentally just 



^ Heming, The Law of Torts (6th ed., 1983), at 232-33. 



34 



that each should be fully liable to the injured person for the consequences. 
The fact that the conduct of another wrongdoer may have also contributed 
to the same injury should not prejudice the right of the injured person to 
obtain full compensation for the damage; rather, it should merely be a 
matter for resolution as between concurrent wrongdoers themselves. Pro- 
ponents of this view acknowledge that there may be some unfairness where a 
solvent wrongdoer is required to satisfy the entire liability without contribu- 
tion from the other concurrent wrongdoer. However, they emphasize that 
the unfairness would be much greater if an injured person were undercom- 
pensated for the single indivisible harm caused by the fault of that same 
wrongdoer.^ 

Opponents of in solidum liability disagree that this concern with 
providing full compensation to an injured person should override con- 
siderations of fairness to defendants. In their view, a plaintiff should have no 
greater claim to the sympathy of the court than a defendant. They observe 
that, where there is only one defendant, a plaintiff must bear the risk that she 
may be insolvent, and they ask why a plaintiff should be in a better position 
merely because the damage suffered was caused by more than one person.^ 

Moreover, critics of in solidum liability point out that circumstances 
have changed since the rule was developed. The principle was originally of 
benefit only to a completely innocent plaintiff; at common law, a person 
who had contributed to her own injury, even to a minor degree, was 
completely barred from recovering against any other person whose fault was 
also a cause of the injury. However, the abolition of the rule of contributory 
negligence^ allowed a plaintiff who was also at fault to recover from other 
wrongdoers, even though such wrongdoers remained liable in solidum . This 
modification of the common law has given rise to circumstances in which 



7 



9 



For an excellent discussion of the rationale for in solidum liability, see the decision of the 
California Supreme Court in American Motorcycle Association v. The Superior Court of 
the State of California for the County of Los Angeles , 20 Cal. 3d 578, 578 P. 2d 899 (Sup. 
Ct. 1978) (subsequent references are to 20 Cal. 3d). See, generally, Adler, "Allocation of 
Responsibility After American Motorcycle Association v. Superior Court" (1978), 6 
Pepperdine L. Rev. 603; Reming, "Report to the Joint Committee of the California 
Legislature on Tort Liability on the Problems Associated with American Motorcycle 
Association v. Superior Court"" (1979), 30 Hastings L.J. 1465; Pearson, "Apportionment 
of Losses under Comparative Fault Laws— An Analysis of the Alternatives" (1980), 40 
La. L. Rev. 343; and Bachrach, "Damage Apportionment in Maine: A Proposal for 
Reform" (1982), 34 Maine L. Rev. 367. 

These arguments were made in the following American cases that abolished in solidum 
liability: Laubach v. Morgan, 588 P 2d 1071 (Okla. Sup. Ct. 1978); Brown v. Keill, 224 
Kan. 195, 580 P 2d 867 (Sup. Ct. 1978) (subsequent references are to 224 Kan.); and 
Bartlett v. New Mexico Welding Supply Inc., 9% N.M. 152, 646 P 2d 579 (Ct. App. 1982) 
(subsequent references are to 646 P. 2d). See, further, infra, this ch., sec. 3(b). 

The contributory negligence rule was abolished in Ontario in 1930 and replaced by a 
scheme of comparative fault. Under this scheme, the plaintiff may recover damages, but 
the award is reduced by an amount proportional to the plaintiff's degree of fault: The 
Negligence Act, 1930, S.O. 1930, c. 27, s. 5, now Negligence Act, supra, note 3, s. 4. 



35 



the operation of the rule of in solidum Habihty is most severely criticized for 
unfairness to defendants, that is, where a plaintiff's degree of fault is equal 
to, or exceeds, that of the solvent wrongdoer. Take, for example, a case 
where the respective degrees of fault of P, Dl, and D2 are 25, 60, and 15 
percent, respectively. By operation of the rule of in solidum liability, where 
Dl is insolvent, D2, whose degree of fault was 15 percent, would be liable for 
75 percent of the entire damage, although P's degree of fault was almost 
twice that of D2. 

Opponents of /« solidum liability assert that the retention of the rule is 
inconsistent with the principle underlying comparative fault, '^ which, they 
argue, contemplates each party being liable only in proportion to her 
respective degree of fault. In their view, the introduction of a regime of 
comparative fault essentially realigned the equities between plaintiffs and 
defendants and, accordingly, should have involved a change of the rule of m 
solidum liability.^' The contention is that the abolition of in solidum 
liability, to the benefit of defendants generally, should have been the quid pro 
quo for the abolition of the contributory negligence rule, which expanded 
the scope of recovery for all plaintiffs. ^^ 

The response to these arguments of those who favour in solidum 
liability is twofold. First, it is said that the abolition of the rule would 
prejudice not only the negligent, but also the completely innocent, plaintiff; 
it would be anomalous if reform of the doctrine of contributory negligence 
were achieved at the expense of the rights of a plaintiff who was completely 
without fault. ^^ Secondly, it is argued that the nature of the fault attributed to 
an injured person differs qualitatively from that of defendants; a plaintiff's 
fault merely constitutes failure to take care of herself, while the defendants' 
fault lies in failure to take care to avoid danger to others. ^^ Moreover, the 
percentage attributed to the plaintiff's failure to take care is sometimes a 
conventional figure, ^^ which is applied automatically, even where defen- 
dants are grossly negligent; such a figure may bear little relationship to the 
actual relative fault of the plaintiff. Proponents of in solidum liability say 
that a reduction of the plaintiff's claim in proportion to her degree of fault is 
a sufficient penalty to reflect the plaintiff's lack of care, and that abolition of 
in solidum liability is unwarranted. 



*^ Laubach v. Morgan, supra, note 8, at 1074. 

'' Brown v. Keill, supra, note 8, at 203. 

^^ Bartlett v. New Mexico Welding Supply, Inc. , supra, note 8, at 582. 

'^ American Motorcycle Association v. The Superior Court of the State of California for the 
County of Los Angeles , supra, note 7, at 589-90. 



14 



Ibid. 



'^ For instance, in Ontario, between 10% and 30% is generally deducted from an award for 
failure to wear a seat belt. Some have suggested that the degree of contributory 
negligence in such cases is determined arbitrarily See infra, ch. 10, sec. 1(b). 



36 



(b) The Insurance Argument 

The issue of in solidum liability has arisen most recently for debate in 
the context of dramatic changes in the liability insurance market in the past 
few years. These changes, characterized by some as an insurance "crisis", 
have resulted in sharply increased costs, and shrinking availability, of 
liability insurance to the public, particularly to businesses and public 
entities. As a result, beneficial goods and services have become more costly 
and less widely available, as those who provide such goods and services are 
required either to pass on the higher premium costs, or to withdraw goods 
and services for which the cost of insurance has become prohibitive. 

While the cause or causes of this insurance "crisis" have been the 
subject of heated debate, it is alleged by some, particularly public and 
private corporations and their insurers, that the operation of the principle of 
in solidum liability is a key contributing factor to these recent 
developments. '^ Critics of in solidum liability say that the rule has its most 
significant impact on what have become commonly known as "deep 
pocket" defendants, that is, defendants or potential defendants who are the 
most solvent or best insured. It is said that, because such defendants are the 
most likely source of full recovery by an injured person, they are often 
joined in an action even if they are only marginally Uable, or not liable at all. 
It has been suggested that sympathetic finders of fact may attribute small 
degrees of fault to innocent deep pocket defendants in order to ensure 
compensation to a victim who might not otherwise recover. ^^ Moreover, it is 
argued that the prospect of being found liable to pay the entire award of 
compensation to the plaintiff, even where the percentage of fault attribut- 
able to the deep pocket defendant is very small, or non-existent, places 
intense pressure on such defendants to settle for amounts well in excess of 
the amount proportional to their actual share of fault— payments that must 
be reflected ultimately in higher insurance premiums. 

In addition, opponents of /« solidum liability suggest that the impact of 
the rule on premiums is not simply a reflection of increases in actual 
payouts, either by way of settlement or judgment. They say that the 
uncertainty created by the rule also leads to increased premiums. Critics of 
the rule argue that in solidum liability, in effect, requires deep pocket 
defendants to insure not only against their own negligence but also against 



16 



17 



See, generally, Slater Report, supra, note 2, at 53-55; Insurance Brokers Association of 
Ontario and Toronto Insurance Conference, "Response to Slater Task Force" (1986), at 
4; Lilly, "Professional Liability Insurance" (1986), Appendix 10 to the Slater Report, at 
19-20; Rorida, Senate Committee on Commerce, A Review of Historical Analysis- 
Current Perspectives of the Doctrine of Joint and Several Liability (1986) (hereinafter 
referred to as "Rorida Report"), at 36-46; United States, Justice Department, Report of 
the Tort Policy Working Group on the Causes, Extent and Policy Implications of the 
Current Crisis in Insurance Availability and Affordability (1986); and New York, 
Insuring Our Future: Report of the Governor's Advisory Commission on Liability 
Insurance (1986) (hereinafter referred to as "New York Report"), at 129-32. 

Slater Report, supra, note 2, at 62. 



37 



the possible insolvency of a concurrent wrongdoer. The risk of insolvency of 
an unknown co-defendant is one that is said to be extremely difficult to 
predict or insure against. In calculating an insurance premium, an insurer 
must make a prediction of not only the likely average judgment or claim 
over a specified period, but also the range of potential outcomes. As the 
range of outcomes increases or decreases, so premiums increase or decrease. 
It is said that, because the operation of in solidum liability makes these 
predictions more difficult, an additional, sometimes substantial, risk pre- 
mium must be added to the cost of liability insurance. 

Critics of in solidum liability contend that imposing the risk of poten- 
tial insolvency of a concurrent wrongdoer on defendants is inefficient, and 
that it is unfair that the costs of such inefficiency should be borne by society 
generally in the form of higher costs and diminished availability of goods 
and services. They suggest that, from an economic perspective, it would be 
more efficient for a plaintiff to absorb that risk, for which she could insure 
on a first party basis. 

Proponents of in solidum liability are skeptical regarding these claims 
by deep pocket defendants and their insurers about the impact of the rule on 
insurance premiums. They acknowledge that the in solidum rule creates 
some risk that marginally liable defendants will be held liable for the entire 
loss, and thereby encourages settlement. However, they assert that such 
defendants cannot seriously be considered to be "held for ransom" since, in 
most cases where a defendant is marginally liable, there is an equally strong 
incentive for the plaintiff to settle for a reasonable amount, roughly com- 
mensurate with the likely degree of fault, or face the risk that no liability will 
be attributed to that defendant at trial. On this argument, the impact of in 
solidum liability cannot be significant, because an insurer need establish 
premiums based on Uability for the full award of damages only in respect of 
the very small percentage of cases that are actually litigated. 

Advocates of m solidum Uability also dispute the occasional allegations 
of intellectual dishonesty attributed to triers of fact. It has been denied that 
there is any evidence that judges or juries in Ontario, or indeed elsewhere, 
are finding Uability where none exists, in order to compensate victims.'^ 
Moreover, it is argued that, even if judges or juries were disposed to ascribe 
Uability where none existed, the appropriate response should be to control 
such conduct, and not to abolish a just and valid legal principle. 

Those who favour retaining in solidum liability emphasize that there is 
little evidence that the rule is an element, let alone a major cause, of the 
insurance crisis. Such evidence as exists is, in fact, largely anecdotal. It 
appears that there have been no empirical studies done in Canada with 



'^ Canadian Bar Association-Ontario, Submission to the Minister of Financial Institutions 
in Response to the Ontario Task Force on Insurance (July, 1986), at 28-29, and The 
Committee for Fair Action in Insurance Reforms, A Report in Response to the Ontario 
Task Force on Insurance (1986), at 13-14. 



38 



respect to the impact of the rule. In the United States, where there has been 
a flurry of legislative reforms of the principle of in solidum liability, •^ only 
two studies appear to have produced any empirical data relating to the 
operation of the rule, and their findings are general and inconclusive.^^ The 
data that might provide reliable empirical evidence of the impact of the rule, 
such as the magnitude of the incidence of insolvency, is in the hands of the 
insurers. It has been suggested that the failure of the insurance industry to 
provide such "hard" evidence renders the claims suspect. ^^ 

While arguments can be marshalled on either side of the insurance 
issue, it is apparent to us that, without further empirical evidence, conclu- 
sions respecting this aspect of the debate regarding in solidum liability will 
remain speculative, and, therefore, provide an unsatisfactory basis on which 
to amend, much less aboUsh, the present rule. 

(c) Deterrence 

The arguments regarding issues of fairness and insurance canvassed 
thus far are concerned with one of the central aims of the tort system, which 
is compensation of the injured party. This section considers arguments 
about in solidum liability in relation to another widely acknowledged 
purpose of the tort system, namely, deterrence of activity that may cause 
harm to others. ^^ Simply stated, our system of tort Uability requires people 
to take responsibility for their actions, that is, to be safety conscious. It is 
expected that people who know that they will be held accountable for their 
actions will take precautions in order to avoid liability, and that optimal 
precautions will be taken where the cost of prevention is less than the cost of 
potential liability. The greater the potential liability, the greater the resources 
that will be allocated to accident prevention. 



^^ See infra, this ch., sec. 3(c). 

^^ The first is a study made for the State of New York, which estimated that 9% of annual 
claims payouts of the City of New York were attributable to the operation of the doctrine 
of joint and several liability: New York Report, supra, note 16, at 131. The Report gives 
no details of how the study arrived at this figure. 

The second study was prepared for the Florida Senate Committee on Commerce 
in December, 1985: Dimento, Harrison and Belsky, "Joint and Several Liability: A 
Study of the Fiscal and Social Impact of Change in the Doctrine" (University of Florida, 
College of Law, mimeograph, December, 1985). Comparing information and data from 
five states that had abolished the doctrine, five states that had limited the doctrine, and 
seven states in which the doctrine operated, the authors tentatively concluded that 
insurance coverage and rates appeared to be increasing in all the jurisdictions studied. 
Moreover, they found that a greater percentage of respondents from states that had 
abolished the doctrine reported insurance increases than those that had modified or 
retained the doctrine. However, in a recent conversation with a representative of the 
Commission, one of the authors of the study cautioned against placing much reliance on 
the findings of the study. The study also contained broad disclaimers of its reliability. 

^' Florida Report, supra, note 16, at 51 and 61. 

For a legal-economic analysis of the tort system and accident prevention, see Posner, "A 
Theory of Negligence" (1972), 1 J. Legal Stud. 29. 



39 



As with the insurance issue, there is disagreement regarding the impact 
that aboHtion of in solidum liability would have on the goal of deterrence. It 
has been argued that abolition probably would not affect the risk manage- 
ment behaviour of potential defendants.^^ The argument is that any poten- 
tial party to an accident will take optimal precautions to prevent an 
accident, if that party expects that it might bear the entire cost of the 
accident. According to this argument, because no person could know, in 
advance, that the negligent conduct of another might also be a cause of the 
same damage, a person will always have the necessary incentive to take 
optimal precautions to avoid the risk of accident. 

However, advocates of in solidum liability assert that exposing concur- 
rent wrongdoers to potential liability for the entire award of damages 
motivates potential defendants, particularly deep pocket defendants, to 
implement safety measures that otherwise might be considered 
uneconomical. 2"^ They suggest that decreasing such potential liability by 
abolishing the in solidum rule would necessarily reduce the incentive for 
effective accident prevention. For example, assume that a highway autho- 
rity negligently fails to clear a spill on the highway caused by another, 
unidentified person. Under the present in solidum rule, the highway autho- 
rity could be liable for 100 percent of the damage caused by its failure to 
clean the spill. If the rule were abolished, the highway authority might be 
held liable for only a small percentage. Advocates of in solidum liability say 
that, if the rule were abolished, the highway authority would clearly have 
diminished incentive to allocate resources to ensure the safety of highways. 

Unfortunately, as with the insurance issue, we are without reliable data 
and persuasive empirical evidence. Accordingly, the aspect of the debate 
that focuses on the effect of in solidum liability on deterrence also will 
remain theoretical and speculative. 

(d) Other Ramifications for the Tort System 

Competing arguments have also been made regarding the effect that a 
change to the doctrine oUn solidum Uability would have on the operation of 
the tort system as a whole, including such aspects of that system as settle- 
ment behaviour, litigation strategy, defence costs, and the administration of 
the courts. 25 For example, it has been suggested that, because defendants' 



^^ Rea, "The Economics of Comparative Negligence" (University of Toronto, unpub- 
lished mimeograph, April 10, 1986). See, also, Easterbrook, Landes and Posner, "Contri- 
bution Among Antitrust Defendants: A Legal and Economic Analysis" (1980), 23. J.L. 
& Econ. 331, and Polinsky and Shavell, "Contribution and Claim Reduction Among 
Antitrust Defendants: An Economic Analysis" (1981), 33 Stan. L. Rev. 447, in which this 
analysis has been applied in the context of contribution. 

^^ Dimento, Harrison and Belsky, supra. , note 20, at 30-33. 

^^ See, generally Dimento, Harrison and Belsky ibid., at 24-28, and Rorida Report, 
supra, note 16, at 56-61. 



40 



liability would be lower and more easily predicted if the doctrine were 
abolished, it is possible that more settlements would be reached.^^ 

Others have argued that abolition of in solidum liability could result in 
fewer settlements, with resulting increased costs of litigation to the parties 
and a further burden on the already overtaxed resources of the civil justice 
system. The fact that the potential liability of each defendant would be lower 
and more predictable is seen as reducing significantly the defendant's risk at 
trial, thereby reducing her incentive to settle.^^ Similarly, it is argued, a 
plaintiff would be less inclined to settle because of uncertainty with respect 
to the degree of liability of a settling defendant, and concern that the 
remaining defendants would successfully argue that the absent, settling 
defendant was primarily at fault.^^ Advocates of in solidum liability also 
caution that abolition of the rule would result in longer and more compli- 
cated trials, and increased defence costs, as plaintiffs would feel compelled 
to join every possible defendant in order to ensure full recovery. ^^ 

Once again, these arguments are speculative. While abolition or modi- 
fication of the principle of in solidum liability would undoubtedly have 
ramifications for the operation of the tort system as a whole, without further 
study it is not possible to predict whether the overall impact would be 
beneficial, or to whom. 

3. THE LAW IN THE UNITED STATES 

(a) Introduction 

In the United States, in solidum liability, uniformly called "joint and 
several Uability", applies to what are referred to as "joint torts" and "joint 
tortfeasors". Although American principles governing joint and several 
concurrent wrongdoers developed from the English common law principles 
described in chapter 2, it has been noted that the American concept of joint 
torts and joint tortfeasors, through "loose usage", have become uncertain 
and confused. ^^ It appears that the term "joint tortfeasor" includes not only 
persons acting in concert, but also independent, concurrent wrongdoers.^* 
Further, the term has been defined to mean two or more persons joined in 
the same action. ^^ This latter definition appears to have given rise to the 



^^ See the discussion in the Florida Report, ibid., at 60. 

^^ Dimento, Harrison and Belsky, supra, note 20, at 24-27. 

28 Ibid., at 27. 

2^ Florida Report, supra, note 16, at 56-59. 

^^ Dobbs, Keeton, and Owen (eds.), Prosser andKeeton on the Law of Torts (5th ed., 1984) 
(hereinafter referred to as "Prosser and Keeton"), at 322. 

^* Ibid., ai 323. 

^2 Ibid., at 324. 



41 



unfortunate possibility that independent, non-concurrent wrongdoers, 
liable for different, distinct damages, but joined for procedural convenience 
in the same action, may be held "jointly and severally" liable for the entire 
amount of damages awarded in the action, a clearly unwarranted extension 
of the doctrine. ^^ 



(b) Reform in the Context of Comparative Fault 

The question whether the principle of in solidum liability should be 
abolished or retained in the United States was first debated in the context of 
the widespread abolition of the doctrine of contributory negligence and the 
implementation of a scheme of comparative fault by the majority of states.^'* 
Most American lawmakers agreed that the contributory negligence rule, 
under which contributory negligence operates as a complete bar to recovery, 
often worked hardship, particularly with respect to a plaintiff whose fault 
was slight. However, many jurisdictions believed that it was unfair that a 
plaintiff whose fault was equal to, or exceeded, that of a particular defendant 
should recover damages for the loss incurred. As a result, two types of 
comparative fault system developed. ^^ Under the first type, "pure" compar- 
ative negligence, a plaintiff's recovery is reduced, but not eUminated, by her 
share of fault. For example, a plaintiff who is 99 percent at fault nevertheless 
may recover 1 percent of her loss from a defendant. The second type, 
"modified" comparative fault, takes one of two general forms: a plaintiff is 
barred from recovery where her fault is (1) equal to, or (2) greater than, that 
of one or more of the defendants. 

Certain states in which a scheme of comparative fault was implemented 
failed to address expressly the question whether the doctrine of in solidum 
liability continued to apply in the context of comparative fault, and, 
accordingly, the issue arose for judicial determination. A number of state 
courts decided that the doctrine was no longer appropriate under a regime of 
comparative fault. ^^ In abolishing the doctrine, these courts relied on 



^^ Ibid., at 329. This extension of the doctrine was raised as part of the discussion of the 
need for reform in an unpublished memorandum by Stephen Saltzman to the American 
Trial Lawyers Task Force on Litigation Issues (June 8, 1986), at 190. Prosser and Keeton, 
supra, note 30, at 329, indicate that this tendency to confuse liability for the entire 
damages with joinder of parties has resulted in a reluctance on the part of American 
courts to allow joinder in cases where cleariy it would be procedurally convenient to do 
so, in order to avoid imposition oUn solidum liability on defendants otherwise liable for 
different damages. 

^^ In some jurisdictions, such as California, the reform was implemented by the courts: see 
Li V. Yellow Cab. Co. of California, 119 Cal. Rptr. 858, 532 P. 2d 1226 (Sup. Ct. 1975). 
However, in most states, the reform was by legislation. See, generally, Schwartz, 
Comparative Negligence (2d ed., 1986), at 11-28. 

^^ See, generally, Woods, Comparative Fault (2d ed., 1983), and Schwartz, supra, note 34. 

^^ See, for example, Laubach v. Morgan, supra, note 8; Brown v. Keill, supra, note 8; and 
Bartlett v. New Mexico Welding Supply, Inc., supra, note 8. 



42 



various arguments, discussed above, ^^ to the effect that the principle of 
comparative fault called for a realignment of the equities between plaintiffs 
and defendants. Perhaps most significantly, these courts rejected the notion 
that a plaintiff has any greater claim upon the sympathy of the court than 
defendants, or that concern with compensation of victims should override 
concerns of fairness to defendants. ^^ 

However, in a leading case a contrary view was expressed and the 
doctrine of in solidum liability was upheld, primarily on the ground of a 
"pragmatic policy determination" that "from a reaUstic standpoint. . .[the] 
suggested abandonment of the joint and several liability rule would work a 
serious and unwarranted deleterious effect on the practical ability of negli- 
gently injured persons to receive adequate compensation for their 
injuries". ^^ 

Ultimately, the doctrine was retained in most American states. Never- 
theless, it was apparent that both abolition and retention of the doctrine of 
in solidum liability could give rise to some unfairness to either plaintiffs or 
defendants. Many commentators argued that, while assurance of full com- 
pensation for an innocent victim might well outweigh claims of fairness of a 
solvent defendant whose conduct was a cause of the loss, the force of a 
plaintiff's claim is diminished where she was also a cause of the loss, and 
particularly if the degree of fault of the plaintiff exceeded that of the 
defendant against whom the entire judgment would be satisfied.^^ These 
commentators advocated a third alternative, a form of "risk-sharing", 
which in their view was more consistent with the poUcy underlying compar- 
ative fault than either outright abolition or retention of full wrongdoer 
liability. 

This reallocation alternative provides for sharing of the liability of an 
insolvent or absent defendant by all remaining parties, including the plain- 
tiff, in proportion to their respective degrees of fault. For example, if the 
proportional fault of P, Dl, and D2 was 25, 50, and 25 percent, respectively, 
and D2 was insolvent, P's share of fault would be increased by one-third and 
Dl's share by two-thirds. If Dl was insolvent, the share of P and D2 would 
increase equally. Such a reallocation scheme was adopted in section 2(d) of 
the Uniform Comparative Fault Act,"^^ the Comment to which explains that 
the reallocation "avoids the unfairness both of the common law rule of 
joint-and-several liability, which would cast the total risk of uncoUectibility 



^^ Supra, this ch., sec. 2(a). 

^^ Laubach v. Morgan, supra, note 8; Brown v. Keill, supra, note 8; and Bartlett v. New 
Mexico Welding Supply, Inc., supra, note 8. 

^^ American Motorcycle Association v. The Superior Court of the State of California for the 
County of Los Angeles , supra, note 7, at 589-90. 

^^ Fleming, supra, note 7, at 1492; Bachrach, supra, note 7, at 396; and Pearson, supra, 
note 7, at 364-65. Fleming indicates that the originator of this alternative was Gregory: 
see Legislative Loss Distribution in Negligence Actions (1936), at 77-79. 

^ National Conference of Commissioners on Uniform State Laws, Uniform Comparative 



43 



upon the solvent defendants, and of a rule abolishing joint-and-several 

liability, which would cast the total risk of uncollectibility upon the 
claimant".'^2 

(c) An Assessment of Recent Reforms in the United States 

As in Ontario, more recent calls in the United States for the abolition or 
modification of the doctrine of in solidum liability have been founded 
almost invariably on the operation of the doctrine on "deep pocket" 
defendants and the consequential effects on the public. The Preamble to 
recent legislation in California that modified the doctrine articulates the 
central concerns underlying such reform:"*^ 

The People of the State of California find and declare as follows: 

(a) The legal doctrine of joint and several liability, also known as 'the 
deep pocket rule', has resulted in a system of inequity and injustice 
that has threatened financial bankruptcy of local governments, other 
public agencies, private individuals and businesses and has resulted in 
higher prices for goods and services to the public and in higher taxes to 
the taxpayers . 

(b) Some governmental and private defendants are perceived to have 
substantial financial resources or insurance coverage and have thus 
been included in lawsuits even though there was little or no basis for 
finding them at fault. Under joint and several liability, if they are 
found to share even a fraction of the fault, they often are held 
financially liable for all the damage. The People— taxpayers and 
consumers alike— ultimately pay for these lawsuits in the form of 
higher taxes, higher prices and higher insurance premiums . 

(c) Local governments have been forced to curtail some essential police, 
fire and other protections because of the soaring costs of lawsuits and 
insurance premiums. 

Therefore, the People of the State of California declare that to remedy 
these inequities, defendants in tort actions shall be held financially liable in 
closer proportion to their degree of fault. To treat them differently is unfair and 
inequitable. 



Fault Act, Uniform Laws Annotated, Vol. 12 (1987 Pocket Part). Section 2(d) provides 
as follows: 

(d) Upon motion made not later than [one year] after judgment is entered, the 
court shall determine whether all or part of a party's equitable share of the 
obligation is uncollectible from that party, and shall reallocate any uncollect- 
ible amount among the other parties, including a claimant at fault, according 
to their respective percentages of fault. The party whose liability is reallo- 
cated is nonetheless subject to contribution and to any continuing liability to 
the claimant on the judgment. 

^^ Ibid., 1987 Pocket Part, at 43. 

"^^ Cal. Civ. Code, §1431.1 (West Supp. 1988). 



44 



The People of the State of CaHfornia further declare that reforms in the 
liability laws in tort actions are necessary and proper to avoid catastrophic 
economic consequences for state and local governmental bodies as well as 
private individuals and businesses. 

It seems apparent from this Preamble that the "inequity and injustice" 
that this legislation is intended to address is the consequential impact of the 
operation of the doctrine on the cost and availability of socially beneficial 
goods and services to the public; it is less concerned with the relative equities 
between plaintiffs and defendants. The legislation is premised on the 
assumption that the rule of in solidum liability has been a major contribut- 
ing factor to the recent increases in the cost, and diminished availability, of 
liability insurance. However, as we have discussed,^'* this assumption, which 
seems to be widely held in the United States, is based largely on anecdotal 
evidence; it appears that no satisfactory studies have been conducted to 
estimate the economic or social impact of the doctrine. 

Most American states that have enacted or proposed reform measures 
provide for the modification, rather than outright abolition, of the doctrine 
of in solidum liability. These reform measures are of four general kinds. 

The first type of reform abolishes in solidum liability with respect to 
non-economic losses, that is, losses attributable to such matters as pain and 
suffering."*^ This kind of measure would continue to ensure full compensa- 
tion to the plaintiff for actual out-of-pocket expenses, including loss of 
future income and costs of future care. Such a measure would presumably 
be of greater significance in the United States, where very large awards for 
non-economic losses have been made, than in Ontario, where there is an 
upper limit on the amount of damages that may be awarded for non- 
economic loss.^^ 

The second type of reform abolishes or modifies the doctrine with 
respect to several types of defendant who might be particularly vulnerable as 
"deep pockets", such as public bodies or certain professionals."*^ This kind of 
measure is probably intended to encourage the continued provision of social 



44 
45 
46 



47 



Supra, this ch., sec. 2(b). 

See, for example, the California legislation, supra, note 43. 

In 1978, the Supreme Court of Canada established a "rough upper limit" of $100,000 for 
an award of damage for non-economic loss. Allowing for inflation, the current limit is 
approximately $190,000. S,Qt Andrews v. Grand iSc Toy Alberta Ltd. , [1978] 2. S.C.R. 229, 
83 D.L.R. (3d) 452; Thornton v. Board of School Trustees of School District No. 57 
(Prince George), [1978] 2 S.C.R. 267, 83 D.L.R. (3d) 480; and Arnold v. Teno, [1978] 2 
S.C.R. 287, 83 D.L.R. (3d) 609. In ch. 3 of the Commission's recent Report on 
Compensation for Personal Injuries and Death (1987), the Commission has recom- 
mended retention of the present law represented by these cases. 

In West Virginia, the legislation modifies joint and several liability in medical malprac- 
tice suits: W. Va. Code, §55-7B-9 (1986 Supp.). In New Jersey, the legislation abolishes 
the rule with respect to public employees and public entities: S.B. 375 (1986). 



45 



services, such as playgrounds, daycare centres, or medical services, that 
might otherwise be withdrawn because of the high cost of liability insurance. 
The policy choice here would appear to be between the occasional hardship 
to a plaintiff, even a totally innocent plaintiff, and the denial of socially 
beneficial services. Of course, the efficacy of such measures depends on 
whether deep pocket defendants are being unduly affected, a question 
which, as we have seen, is debated by proponents of in solidum liability. 

A third type of reform measure would retain in solidum liability with 
respect to an innocent plaintiff, but would abolish or modify the doctrine 
where the plaintiff's fault exceeds a specified degree— for example, 50 
percent— or is greater than the fault of each defendant."*^ This type of reform 
proposal is concerned with the relative degrees of fault between the plaintiff 
and defendant, and appears to reflect the concerns of fairness as between a 
defendant and a negligent plaintiff that animated the "modified" compara- 
tive fault schemes. 

A fourth type of measure focuses on the degree of fault of the defendant 
and abolishes the doctrine where the degree of fault is small, for example, 
less than 25 percent."^^ Such a measure would reduce the impact of the rule 
on deep pocket defendants who are marginally at fault. 

The criticism of the third and fourth types of reform measure is that 
they may operate arbitrarily and perhaps illogically. For example, where in 
solidum liability would be abolished if the plaintiff's fault is greater than 50 
percent, a plaintiff who is 49 percent at fault would recover fully, while a 
plaintiff who is 51 percent at fault would not. To quote the Prefatory Note on 
the concept of "modified" comparative fault in the American Uniform 
Comparative Fault Act, "a difference of a single point in the percentage of 
fault allocated to the claimant may determine whether he can recover [in 
full]. It is unreaUstic to expect a [fact finder] to reach a decision this 
precise. . .".^^ 

Finally, a fifth type of reform measure^ • involves a reallocation scheme 
of the kind provided for by the American Uniform Comparative Fault Act, 
the rationale for which has been discussed above.^^ 

Reallocation schemes are subject to criticisms similar to some of those 
directed at abolition of in solidum liability. "Risk-sharing" between the 



^^ Fla. Tort Reform and Insurance Act of 1986, 1986, §768.81(3), and La. Civ. Code, art. 

2324. 

^^ 111. Rev. Stat., ch. 110, §§2-1117 and 2-1118 (Smith-Hurd Supp. 1987). 

^^ Supra, note 41, 1987 Pocket Part, at 38. 

^' In Michigan, the legislation abolishes joint and several liability where a plaintiff has 
been contributorily negligent, but provides for reallocation if the plaintiff is unable to 
recover from any one defendant: Mich. PA. 178, 1986, §6304(6). 

^^ Supra, this ch., sec. 3(b). 



46 



injured person and wrongdoer is said to be inappropriate because the nature 
of the injured person's negligence differs from that of the wrongdoer: the 
conduct of the injured person has endangered herself only, while the 
wrongdoer's conduct has jeopardized the safety of others. Furthermore, it is 
unclear what effect a scheme of reallocation would have on the operation of 
the tort system as a whole, including such matters as settlement and 
litigation behaviour. 

4. CONCLUSIONS 

Any proposal for reform of the principle of in solidum hability raises a 
fundamental question: who should bear the risk of the insolvency or 
absence of a concurrent wrongdoer, the injured person or the other wrong- 
doer? As we have discussed, the principle of in solidum liability helps to 
assure the goal of full compensation to an injured person for losses attribut- 
able to the fault of others, a goal that the Commission regards as fundamen- 
tally just. Abolition of the rule would mean that some injured persons, 
including those who are completely innocent, would remain undercompen- 
sated for their losses. In our view, the burden of justifying change clearly lies 
with those who propose reforms that would give rise to such a result. 

We have not been persuaded that there is a sufficiently strong economic 
argument to support the abolition or modification of in solidum liability. 
From our review of the current debate in the context of the insurance 
"crisis", it seems apparent that, at this time, there exists no persuasive 
empirical evidence to support the contention that the principle of in 
solidum liability constitutes a significant contributing factor in respect of 
the escalating costs and diminished availability of liability insurance. It may 
be that reliable data is available, from the insurance industry or elsewhere, 
from which conclusions could be drawn concerning the dimensions of the 
alleged dysfunctional impact of the rule. However, without such hard 
evidence, economic arguments relating to insurance remain necessarily 
theoretical and speculative. Moreover, while competing arguments have 
been raised regarding the impact of the principle of /« solidum liability on 
the goal of deterrence, and on the operation of the tort system as a whole, we 
have no sound basis upon which to anticipate the overall effect that 
abolition or modification of the rule would have on these aspects of the 
existing regime of tort compensation. 

As we have discussed,^^ arguments have also been made, in principle, 
for the abolition or modification of the principle of in solidum liability on 
the grounds of fairness to defendants. However, we have come to the 
conclusion that these arguments, like those discussed above, do not weigh 
sufficiently in favour of any change to the existing rule. 



^^ Supra, this ch., sec. 2(a). 



47 



With respect to an innocent plaintiff, the Commission believes that 
there is no reason, in principle, to deny full compensation to a person who 
has been injured through the fault of another person, and through no fault of 
her own. We share the view, often expressed, that whatever unfairness the 
operation of the principle of /« solidum liability might create for a concur- 
rent wrongdoer who is required to satisfy more than her share of liability, the 
inequity would be much greater if a completely innocent victim were to be 
undercompensated. 

We recognize that the operation of the principle of /« solidum liability 
raises more concern where the plaintiff has contributed to her own loss and 
where one of the wrongdoers is either insolvent or absent. Arguably, as the 
plaintiff's degree of fault increases, the force of claims concerning the 
unfairness of incomplete compensation diminishes, particularly where the 
degree of fault of the plaintiff exceeds that of the defendant against whom 
the entire judgment would be satisfied. It has been suggested that the rule of 
in solidum liability should be modified to require an injured person and the 
remaining solvent wrongdoer to share the risk of the insolvency or absence 
of the other wrongdoer.^"* Our response to this proposal is twofold. 

First, we share the view that in many, although not all, instances, the 
fault of the injured person and that of the wrongdoer differ in quality and 
not just in degree; the negligence of a passenger in failing to wear a seatbelt 
differs from that of the careless driver whose conduct caused the accident. In 
such a case, the reduction of the plaintiff's claim in an amount proportional 
to her contributory negligence may fairly be regarded as a sufficient penalty. 

The second response is based on practical considerations. Although the 
Commission recognizes some merit in the argument in favour of risk 
sharing, we are concerned that a scheme for proportional reallocation of an 
insolvent or absent wrongdoer's share of liability could create new uncer- 
tainty and potential unfairness. We do not know, for example, what effect 
the possibility of reallocation would have on settlement behaviour and 
litigation strategy. The degree of fault of the insolvent or absent wrongdoer 
could become a new issue to be litigated, as the solvent wrongdoer attempts 
to shift part of the burden of the insolvency or absence to the plaintiff We 
are concerned that plaintiffs would be encouraged to join all possible 
defendants, in order that the degree of fault of a wrongdoer who has not been 
made a party not be overestimated. The overall result could be increasingly 
complex litigation, with its attendant delay and costs. Moreover, where it is 
necessary to make further applications to the court for reallocation of an 
uncollectible amount, the result would be additional costs to the parties and 
an increased burden on an already overtaxed court system. In our view, the 
potential inconvenience and uncertainty that could result from a modifica- 
tion of the existing rule of in solidum liability outweighs the occasional 
benefit it might offer to concurrent wrongdoers. 



54 



See supra, this ch., sec. 3(b). 



48 



For the foregoing reasons, the Commission recommends that there 
should be no change in the law respecting the in solidum liability of 
concurrent wrongdoers to a plaintiff, even where the plaintiff is contribu- 
torily negligent.^^ 

We do, however, wish to address the issue of how the risk of insolvency 
or absence on the part of one concurrent wrongdoer should be shared 
among a number of solvent concurrent wrongdoers. Where there are more 
than two wrongdoers, and one wrongdoer is insolvent or otherwise unavail- 
able to satisfy her share of liability, the Negligence Act^^ is silent regarding 
how the burden of the insolvent or unavailable wrongdoer's portion of 
liability is to be absorbed as between the remaining solvent wrongdoers. In 
such a case, we believe it would be equitable, and we therefore recommend, 
that the liability of a concurrent wrongdoer who is unable to satisfy her share 
of liability should be divided between the remaining concurrent wrongdoers 
in proportion to their respective degrees of fault, without discharging the 
liability to contribute of the defaulting concurrent wrongdoer. ^^ 

Recommendations 

The Commission makes the following recommendations: 

1. There should be no change in the law respecting the in solidum liability 
of concurrent wrongdoers to a plaintiff, even where the plaintiff is 
contributorily negligent. 

2. Where there are more than two concurrent wrongdoers, and one 
wrongdoer is insolvent or otherwise unavailable to satisfy her share of 
liability, that share should be divided between the remaining wrong- 
doers in proportion to their respective degrees of fault, without dis- 
charging the liability to contribute of the defaulting concurrent 
wrongdoer. 



^^ See the Commission's proposed Contribution and Comparative Fault Act (hereinafter 
referred to as "Draft Act"), s. 4. The Act appears as an Appendix of this Report. 
Contributory negligence is considered infra, ch. 10. 

^^ Supra, note 3. 

^^ Draft Act, s. 9(6). 



CHAPTER 4 



THE NATURE AND SCOPE 
OF THE RIGHT TO 
CONTRIBUTION 



1. INTRODUCTION 

This chapter considers the nature, as well as the present and appropriate 
scope, of a right to contribution among concurrent wrongdoers, including 
contract breakers, and those whose civil liability depends upon a common 
debt. We shall consider first the common law and equitable background 
against which a right of contribution among concurrent tortfeasors was first 
introduced in Ontario in The Negligence Act, 1930} In doing so, the 
restitutionary principles upon which the right to contribution and other 
similar rights are based will become clear. In the next section we examine 
the types of liability that currently give rise to the right of contribution and, 
after considering the principal objections to and justifications for retaining 
the right, we recommend new legislation to extend the range of civil 
liabilities from which a right to contribution can arise. Also addressed 
briefly are the remedies that should be available to a person who is entitled 
to contribution from another. 

2. CONTRIBUTION AND RELATED CLAIMS: COMMON LAW, 
EQUITY, AND THE PRINCIPLE OF UNJUST ENRICHMENT 

We turn first to consider the common law and equitable foundations of 
contribution and other related claims.^ While contribution claims are the 
primary focus of this Report, related claims involving the discharge of D2's 
liability to P by Dl form an important part of the backdrop to our later 
discussion of the scope of the right to contribution. Moreover, as we shall 
see, the fundamental, unifying principle that underlies all these claims— 
and, indeed, that forms the basis of the present statutory right to contribu- 
tion among tortfeasors— is essentially the same. 

The common features of the several kinds of right to which reference 
has just been made are that they enable a person (Dl), who is subject to a 
common legal demand with another (D2) to a third person (P), to recover 
from D2 the whole or part of a payment made by Dl to P that discharges all 



' S.O. 1930,c. 27,s. 3. 

^ See, generally, Goff and Jones, The Law ofRestitulion (2d ed., 1978), chs. 12, 13, and 14, 
and Fridman and McLeod, Restitution (1982), chs. 11 and 12. 

[49 ] 



50 



or part of the liability of D2 to P. In the case of contribution, Dl is entitled to 
recover from D2 the amount that Dl paid to P that, as between Dl and D2, 
exceeded the proportionate share of Dl's liability. Both Dl and D2 are, in 
this sense, "equally" responsible for the discharge of the common liability to 
P. This is to be distinguished from what has been called "recoupment"; in 
the latter case, while both Dl and D2 are liable to P, Dl's right against D2 
arises from the fact that D2 is primarily liable and that, under compulsion of 
law, Dl has made a payment to P that has discharged fully D2's primary 
liability. In the recoupment cases, Dl always seeks total reimbursement, 
whereas in the contribution cases Dl seeks to recover only his proportionate 
share. 

In the case of both contribution and recoupment, D2 has received a 
benefit by Dl's payment, since D2's liability to P has been discharged. Put 
another way, it may be said that D2 has been unjustly enriched by Dl's 
payment discharging D2's liability, whether the extent of the unjust enrich- 
ment is merely as to the portion of the payment attributable to D2's share of 
the liability (in the case of contribution) or as to the total amount of the 
payment (in the case of recoupment). This restitutionary principle of unjust 
enrichment forms the basis of nearly all contribution and related claims at 
common law and in equity, and provides the underlying rationale of the 
right to contribution among concurrent tortfeasors found in the Negligence 
Act} 

The classic restitutionary analysis, distinguishing contribution from 
recoupment and other restitutionary claims, illustrates a somewhat tangled 
skein of common law and equitable rules. While, for the most part, these 
rules are unified by the governing principle of unjust enrichment, they 
depend to some extent on the particular nature of the relationship between 
Dl and D2. Indeed, the very distinction between contribution claims and 
recoupment claims rests on this factor. We now turn briefly to a considera- 
tion of these two sets of claims, beginning with the right to contribution. 

Subject to any contractual provision to the contrary, rights of contribu- 
tion have been granted by the courts between sureties, joint contractors, 
trustees, company directors, partners, co-insurers, mortgagors, and joint 
tenants, where one of the parties has paid more than her proportionate share 
of the common obligation. 

It has been said that it was in the surety cases, especially Deering v. The 
Earl ofWinchelsea,^ that the nature of the right to contribution was first 
determined.^ Before the start of the nineteenth century, it appears that a 
claim to contribution had to be founded upon equitable principles, for the 



^ Negligence Act, R.S.0. 1980, c. 315. 

^ {\m), 2 Bos. & Pul. 270, 126 E.R. 1276 (Ex.). 

^ Goff and Jones, supra, note 2, at 211. See, also, ibid., at 212-21. 



51 



early common law basically rejected such claims.^ The principles developed 
initially by equity for the surety cases— principles that became dominant 
after 1873^— were soon extended to the types of relationship noted in the 
preceding paragraph. While "[c]omplete consistency of principle has not, of 
course, been achieved", the divergences that arose from certain unique 
attributes in the various types of relationship were, and remain, "compara- 
tively insignificant".^ The governing equitable principle of unjust enrich- 
ment permitted the courts to do justice where Dl conferred a benefit on D2 
by discharging all or part of the latter 's liability to P, whether Dl and D2 were 
jointly or only severally liable.^ The analogy of the surety cases continues to 
prevail in almost all cases where concurrently liable obligors are involved. 

A notable exception was in the case of concurrently liable tortfeasors. 
As a general proposition, at common law no right of contribution was given 
to a concurrent tortfeasor (Dl) who had discharged her liability to P 
(whether as a result of an out-of-court payment or an adverse judgment) and 
thereby satisfied, in whole or in part, P's cause of action against another (D2) 
whose tortious conduct caused the same loss to P. The prohibition began in 
the case of joint tortfeasors,'^ but was later said to govern the rights of 
several, concurrent tortfeasors. •' At first blush, one would have expected 
equity, animated by the restitutionary principle of unjust enrichment, to 
have extended its reach to concurrent tortfeasors; but, somewhat surpris- 
ingly in light of its expansion elsewhere, no such development took place. 

The general refusal of the common law to countenance claims for 
contribution among concurrent tortfeasors is usually traced to the decision 



^ Ibid., Sit23l 

'' Ibid., at 2\3. 

^ Ibid., Sit 2n. 

^ This is not to suggest that the law is completely satisfactory. For example, the equitable 
doctrine of contribution applies in the case of trustees where they are both wrongdoers. 
Trustees are liable in solidum to the beneficiaries for any loss caused by a breach of trust. 
A trustee can claim by way of contribution from her co-trustees any sum that she has 
paid to a beneficiary in respect of a breach of trust, for which all the trustees are liable, 
that exceeds the total liability divided by the number of solvent trustees (see Waters, Law 
of Trusts in Canada (2d ed., 1984), at 1006-08). However, the courts have generally 
refused to investigate the comparative responsibility of the trustees. Thus, apart from 
some exceptional circumstances in which one trustee is entitled to a complete indem- 
nity from a co-trustee, the general rule is that the court can only order the trustees to 
contribute in equal shares. In its Report on the Law of Trusts (1984), Vol. II, at 374-86, 
this Commission recommended that courts be given a much greater discretion to 
apportion the liability of trustees inter se. 

•^ Merryweather v. Nixan (1799), 8 TR. 186, 101 E.R. 1337 (K.B.); Sutton v. Town of 
Dundas (1908), 17. O.L.R. 556 (C.A.); and McGlade v. Pashnitzky and Macey Sign Co. 
Ltd (1921), 50 O.L.R. 547, 64 D.L.R. 592 (App. Div). 

•• Horwell v. London General Omnibus Co. Ltd (1877), 2 Ex. D. 365, at 379; Till v. Town of 
Oakville (1914), 33 O.L.R. 120, 21 D.L.R. 113 (App. Div); and Esten v. Rosen, [1929] 1 
D.L.R. 275 (Ont. App. Div). See, generally, Goff and Jones, supra, note 2, at 231 et seq. 



52 



in Merryweather v. Nixan.^^ The principal rationale of the rule was that the 
law should not allow a person to found a cause of action upon his own 
wrongdoing: ex turpi causa non oritur actio. Since the tort involved in 
Merryweather v. Nixan was conversion, one might have thought that the 
application of the reasoning in that case would be limited to intentional or 
similar wrongdoing. However, the rule has been extended to unintentional 
torts and, according to Goff and Jones, appears to have been "rapidly and 
uncritically accepted"'^ as part of the law until the advent of statutory 
reform.'^ 

The vice of the rule— which was said to have had a "baneful influence 
on English law" '^— was that it enabled the injured person not only to select 
which concurrently liable defendant to sue, but also by that choice to ensure, 
if the plaintiff's action was successful, that the defendant against whom she 
proceeded would bear the entire loss. Thus, the effect of the rule in 
Merryweather v. Nixan was to prevent the person being sued from shifting 
part of the loss to others who were equally liable to the plaintiff, and, indeed, 
who might be more culpable than the party who had been required to 
compensate the injured person. We shall return to a fuller consideration of 
the common law position at a subsequent juncture. '^ Suffice it to note here 
that the rule in Merryweather v. Nixan appeared increasingly anachronistic 
as fault emerged as the fundamental notion upon which the law of torts 
rested. As we have seen, the common law rule was abolished in Ontario in 
1930. '7 

We noted earlier in this section that the issue of compensation to Dl in 
respect of Dl's payment to P may arise not only in the case of contribution, 
where Dl has paid more than her proportionate portion of the common 
liability shared with D2, but also in the case of recoupment, where Dl, who 
is only secondarily liable to P, pays P under compulsion of law and thereby 
discharges the full liability of D2, who is primarily liable to P. 

The classic statement respecting recoupment appears in Moule v. 
Garrett, ^^ where Cockburn C.J. stated:'^ 



1 9 

Supra, note 10. 

'^ Goff and Jones, supra, note 2, at 231. 

^^ But see Williams, Joint Torts and Contributory Negligence (1951), at 83. Williams 
discusses several exceptions to the rule in Merryweather v. Nixan and states that, "[i]n 
view of these cases, and other American cases to the same effect, the view may be taken 
that, even at common law, the rule. . .applies only as between conscious, wilful, 
malicious or intentional tortfeasors". Goff and Jones note that the common law 
exceptions to the rule were few {supra, note 2, at 231). 



15 
16 



Ibid. 

See infra, this ch., sec. 3(a)(i). 



^^ See supra, note 1. 

'^ (1872), 7-8 L.R. Exch. 101. See, generally, Goff and Jones, supra, note 2, ch. 14. 

19 



Supra, note 18, at 104. 



53 



Where the plaintiff has been compelled by law to pay, or being compellable by 
law, has paid money which the defendant was ultimately liable to pay so that 
the latter obtains the benefit of the payment by the discharge of his liability; 
under such circumstances the defendant is held indebted to the plaintiff in the 
amountJ^^l 

Unlike the right to contribution, the origins of which may be traced to 
equity, the "right to claim money paid as on the compulsory discharge of 
another's liability has its roots in the common law action of money paid".-^' 
This right to recoupment has been described as being a quasi-contractual 
right,^^ often said to rest on the implied promise by D2 to reimburse Dl. 
This latter notion has not been finally dispelled in England. Canadian 
courts, on the other hand, have been much quicker to recognize that D2's 
obligation to reimburse Dl is often imposed by operation of law, and that 
whether the law will impose an obligation has much more to do with 
restitutionary principles of unjust enrichment than with the presumed 
intention of the parties.-^^ 

Viewed in this light, there are obvious similarities between the equit- 
able right to contribution and the common law rule that enables Dl to 
recover compensation from D2 where Dl has been compelled by law to 
discharge an obligation that, as between Dl and D2, rested primarily or 
ultimately upon D2. Even in England, the leading commentators state 
unequivocally that the "basis of this right [to recoupment] is similar to that 
which underlies the right to contribution". ^^^ Moreover, the English Court of 
Appeal has recently noted the resemblance between the statutory right to 
contribution among tortfeasors and the common law claim for money paid 
to the use of the defendant who has, pro tanto, been relieved of a liability to 
a third party. ^^ The principal difference is that a right to contribution 
generally enables Dl to shift to D2 part of the cost of Dl's payment to P, 
whereas under the common law rule respecting recoupment, Dl is normally 
entitled to be reimbursed by D2 for the whole amount. 

Despite the broad restitutionary basis of the claim to recoupment, the 
types of case in which the rule in Moule v. Garrett has been applied have 



^^ It bears noting here that another prerequisite to a successful claim for recoupment is that 
Dl must not have officiously exposed herself to liability to P in order to make the 
payment. 

^' Fridman and McLeod, supra, note 2, at 348. 

^^ Goffand Jones, supra, note 2, at 258. 

^^ The decision in Deglman v. The Guaranty Trust Co. of Canada and Constant ineau, 
[1954] S.C.R. 725, [1954] 3 D.L.R. 785, contains the first important statement of general 
principle in this area of the law by the Supreme Court of Canada. 

^'^ Goffand Jones, supra, note 2, at 244. 

25 Ronex Properties Ltd v. John Laing Construction Ltd. , [ 1983] Q.B. 398, at 407, [ 1982] 3 
All E. R. 961 (C.A.). 



54 



been relatively restricted. ^^ However, it has also been said that the very 
nature of the principles governing recoupment means that the existing 
categories of cases are not, in fact, closed.^^ 

Before we turn to an assessment of the present law, brief mention 
should be made of one further, and related, type of restitutionary relief, 
namely, subrogation, which has been said to be similar to a claim for 
recoupment.^^ 

Although the extent to which the courts recognize a generalized right to 
subrogation to prevent unjust enrichment is as yet unclear,^^ the situations 
in which such a right is already accepted may be rationalized as follows. 
Subject to contractual terms, a right to subrogation may be given where a 
payment by Dl to P, which Dl is generally required by law to make, has 
conferred a benefit upon D2— often by discharging a liability to P— and 
where it is just to allow Dl the benefit of any rights or property available to P 
against D2. In other words, Dl essentially stands in the shoes of P to enforce 
P's rights against D2. 

While the "actual origins of the doctrine of subrogation are unclear. . . 
[t]he doctrine. . .appears to have originally developed in both law and 
equity" and "can be regarded as a doctrine of general application through- 
out the law of restitution".^^ One of the most familiar situations in which a 
right to subrogation arises is when a surety has been required by the creditor 
to pay on the surety's guarantee. The surety is entitled to enforce any 
security that the creditor has taken from the principal debtor. An indemnity 
insurer also has a right to be subrogated to the assured's cause of action 
against a person who is legally liable to the assured for the loss.^' In addition. 



^^ Goff and Jones, supra, note 2, at 245. The most familiar situations include the right of 
the original lessee of premises to recover from the assignee of the lease any sum that the 
former has been required to pay to the lessor for a breach of covenant committed while 
the assignee was in possession. Other cases concern a person whose goods have been 
distrained by a lessor while they were, with the consent of the tenant, on the leased 
premises. Since the tenant has the ultimate obligation to pay the rent, the owner of the 
distrained goods can recover from the tenant what the owner was required to pay to the 
lessor in order to obtain the goods. The owner's payment will have discharged the 
tenant's arrears in rent. A surety's right to indemnity from the principal debtor may also 
be explained on similar principles. Finally, recoupment has been allowed in cases of 
abatement of nuisances. 



27 



Ibid. 



^^ At one point, Fridman and McLeod state that there is a similarity at a "definitional 
level" (supra, note 2, at 347, n. 3). At another point, the authors say that the "doctrine 
[of subrogation] is similar to the rules regulating the compulsory discharge of another's 
liabihty" (ibid., at 385). 

For a conservative view of the applicability of subrogation, see Orakpo v. Manson 
Investments Ltd., [1978] A.C. 95, [1977] 3 W.L.R. 229 (H.L.). See, generally, Goff and 
Jones, supra, note 2, ch. 27. 

^^ Fridman and McLeod, supra, note 2, at 386. 

•^' But here, it should be noted, the insurer's payment does not discharge the wrongdoer's 
liability to the assured. 



55 



subrogation has been used in bills of exchange cases, trust cases, and "other 
cases not falling within these subject areas where the general policy con- 
siderations which led to the invocation of the doctrine in such areas were 
also present". ^^ 

As in the case of contribution and recoupment, the principles in one 
area of the law of subrogation are not always entirely consistent with those 
developed in the other areas. However, a great deal of similarity exists, 
particularly in respect of basic philosophy. Not surprisingly, it has been 
observed that "the doctrine [of subrogation] is imposed to prevent an unjust 
enrichment". ^^ 

As we said at the outset, recoupment, subrogation, and contribution 
(including the statutory right to contribution among tortfeasors)^"^ exhibit 
certain broad, common features that make it possible, despite certain 
doctrinal differences, to identify a uniform rationale, namely, the restitu- 
tionary principle of unjust enrichment. We shall return to this theme in the 
following sections, where we consider the adequacy of existing rights to 
contribution. 



3. THE SCOPE OF THE RIGHT TO CONTRIBUTION 

(a) Torts 

(i) Should the Right to Contribution Be Abolished? 

As we have seen, in Ontario, as in other common law jurisdictions, 
rights of contribution among tortfeasors are the product of statute. When 
reform was under active consideration in the United States, a spirited 
defence of the rule in Merryweather v. Nixan,^^ but not its original rationale, 
was made in a short article written in 1941 by Professor Fleming James Jr. of 
the Yale Law School. ^^ James' main argument is that an essential function 
of the law of torts is the efficient and equitable distribution of loss. An 



^^ Fridman and McLeod, supra, note 2, at 386. The authors comment that "[w]hether the 
cases falhng outside the estabhshed heads of subrogation are classed as examples of 
subrogation or a right akin to subrogation is in large part a matter of semantics" {ibid.). 
See, also, ibid., at 408. 



33 



Ibid. 



^^ Goff and Jones state {supra, note 2, at 231) that, while "a tortfeasor's claim to 
contribution is sui generis [in that it is statutory]. . .the broad principles governing it are 
not dissimilar from the equitable principles which were established in Peering v. The 
Earl of Winchelsea [supra, note 4]". For a similar view, sec Fridman and McLeod, 
supra, note 2, at 378. 

^^ Supra, note 10. 

^^ James, "Contribution Among Joint Tortfeasors: A Pragmatic Criticism" (1940-41), 54 
Harv. L. Rev. 1156. For a reply, see Gregory, "Contribution Among Joint Tortfeasors: A 
Defense" (1940-41), 54 Harv. L. Rev. 1170. Further sallies by these commentators are 
contained ibid., at 1 178 (James) and 1 184 (Gregory). 



56 



injured person who may have a claim for a loss against more than one 
person will normally pursue the person from whom she is most sure of 
recovering. Thus, the injured person will often seek a corporate defendant or 
a person who is insured against the loss. To allow the defendant who is sued 
by the plaintiff to claim contribution will often have the effect of redistribut- 
ing the plaintiff's loss to those who are likely to be less well placed to pass it 
on. Typically, this will be from an insurance company to an uninsured 
individual, a result, James argues, that is economically inefficient and 
socially unjust. He also points out that as the incidence of insurance 
increases, the absence of a right to contribution will have no serious adverse 
effects upon insurance premiums, since, over time, insurance companies 
are likely to be the beneficiaries as often as they are the "victims" of a 
defendant's inability to redistribute the loss for which the defendant is liable 
to the plaintiff. 

A well-known illustration of the argument that a right to contribution 
or indemnity may well work hardship or frustrate policies of fair and 
efficient loss distribution is provided by the decision of the House of Lords 
in Lister v. Romford Ice and Cold Storage Co. Ltd. ^^ In that case, the insurer 
of an employer, who had been held vicariously liable for personal injuries 
caused by an employee, required the employer to sue for an indemnity from 
the employee-tortfeasor.^^ The duties owed by parents to take reasonable 
care to protect their children from injury may also give rise to contribution 
claims from insured drivers who negligently injure a child. ^^ 

In addition to the arguments based upon equitable loss distribution, 
opponents of a right to contribution among tortfeasors argue that the 
addition of third parties from whom the party-defendant wishes to claim 
contribution may make the litigation more lengthy, costly and complex, and 



^■^ [1957] A.C. 555, [1957] 1 All E.R. 125 (H.L.). 

^^ It should be noted, however, that in all probability this case would have been decided in 
the same way even had the rule in Merryweather v. Nixan, supra, note 10, still existed. 
The employer was able to rely not only upon his statutory right to contribution, but also 
upon an implied term in the contract of employment that the employee would 
indemnify the employer against any liability that the employer incurred as a result of the 
employee's negligence. 

After this decision, which was widely criticized, the insurance industry in England 
agreed that insurance companies would generally not exercise any right of subrogation 
when the employer was vicariously liable for an injury caused by one of the employees 
to a co-employee. For a case that arose out of a situation not covered by this "under- 
standing", see Morris v. Ford Motor Co. Ltd., [1973] Q.B. 792, [1973] 2 All E.R. 1084 
(C.A.) (insurer refused a right to be subrogated to employer's right of action against 
employee for injury done to an employee of another company). But see Greenwood 
Shopping Plaza Ltd v. Beattie and Pettipas , [1980] 2 S.C.R. 228, 111 D.L.R. (3d) 257, 
where an insurer was subrogated to the rights of its assured, a lessor, for damage to the 
demised premises that was caused by the negligence of the tenant's employees. 



39 



The facts o^ Arnold v. Teno, [1978] 2. S.C.R. 287, provide an illustration, although, as it 
happened, the parent was not found to have been negligent. 



57 



that this can only be to the detriment of the plaintiff.'*^ The plaintiff's 
procedural and tactical advantages that flow from being in control of the 
action should not, it is argued, be lightly dissipated. Moreover, many 
contribution schemes contain provisions that prejudice the plaintiff's rights, 
in the sense that the plaintiff may be worse off than she would have been had 
one of the defendants been the sole tortfeasor. For instance, under the 
American Uniform Comparative Fault Act, approved by the National 
Conference of Commissioners on Uniform State Laws,'*' a plaintiff (espe- 
cially if contributorily negligent) may be required to bear part of the risk of 
the insolvency of one defendant; or if the plaintiff makes a poor settlement 
with Dl, she may be unable to obtain full satisfaction from 02.^*2 

Finally, it is argued, the reason contribution makes such a strong appeal 
to our notions of justice is that we imagine the individual defendant having 
to bear what might be a single, crippling loss as a result of one, perhaps 
isolated, negligent act that has produced grave injurious consequences for 
the plaintiff. To force this hapless individual to meet the entire loss, while 
another equally negligent person walks away scot free, is intolerable. But this 
image of the typical tortfeasor is but a caricature of reality, which is that, in a 
great and increasing number of cases, defendants are insured; indeed, if they 
are owners of vehicles they are legally required to carry insurance. The true 
"defendants" are insurance companies who have exacted premiums for the 



^^ Another commentator, writing more than forty years after Commonwealth jurisdic- 
tions first abolished the rule in Merryweather v. Nixan, supra, note 10, sums up his 
position as follows (Weir, Int'l Enc. Comp. L. XI Torts (1983), ch. 12 (Complex 
Liabilities), at 78): 

The right of recourse is born of the fear that the victim [P] will act arbitrarily and 
the desire to promote equality between all those liable, an increasing number, by 
bringing the loss home to those responsible. But the institution [that is, the right to 
contribution], as developed, leads not only to complexities beyond the tolerable, 
but also to unfairness at every step. Thanks to this device, prompted as it is by 
powerful ideals, the victim finds his rights curtailed, their vindication complicated 
and their settlement impeded. Thanks to this device also, the contributor finds 
himself liable when he would not otherwise be liable for longer than he would 
otherwise be, and liable to be sued a second time. That all this should be done at the 
instance and for the benefit of one who was ex hypothesi liable to the victim seems 
really excessive. 

It is also worth noting that Dean Cecil A. Wright's attitude to the statutory abolition of 
the common law rule prohibiting contribution amongst tortfeasors was somewhat 
skeptical: 

Apart from fundamental questions of policy, the contribution statutes certainly 
open a number of new problems whose very complexity may in the end, outweigh 
the theoretical value of spreading liability according to fault. 

Wright, Cases on the Law of Torts (4th ed., 1967), at 393. The matter is discussed ibid., at 
392-93. 

"*' National Conference of Commissioners on Uniform State Laws, Uniform Comparative 
Fault Act, Uniform Laws Annotated, Vol. 12 (1987 Pocket Part), §2(d). The Act was 
approved by the Commissioners in 1977. 

^'^ See, for example, the Irish Civil Liability Act. 1961, No. 41, s. 17(2). 



58 



policies and then try, through subrogation and contribution, to shift onto 
other shoulders the cost of the risk that they have bargained with the assured 
that they will bear. To allow the loss to lie where it falls will, in the long run, 
benefit insurers as often as it harms them. 

There are a number of ways in which these objections to contribution 
may be met. First, the argument assumes that the primary function of the 
law of torts is to distribute loss to those best able to bear it. But this ignores 
the importance of fault, which, for better or worse, still permeates the law of 
torts. Even if it is accepted that our law should be moving towards an 
insurance-based no-fault system of liability, it has not yet done so. To 
attempt to give partial effect to this ideal indirectly through the law of 
contribution seems less than satisfactory. The issue needs to be met head on 
by reforming, if necessary, the primary rights and obligations between the 
injured person and the wrongdoer. The tail of secondary obligation should 
not wag the dog of primary hability. 

Secondly, simply to abolish the right to contribution among wrong- 
doers would be an unsatisfactory way of achieving the goals of the abolition- 
ists. For it would leave decisions about the optimal distribution of loss to the 
plaintiff when she exercises her choice of defendants. It does not necessarily 
follow that a plaintiff will always select as defendant the institution or person 
who can most efficiently distribute the loss that the plaintiff has suffered. 
For instance, one wrongdoer may be selected by the plaintiff because the 
other is out of the jurisdiction. And what if the plaintiff selects, in error 
perhaps, a defendant who is not insured? Or what if all possible defendants 
carry insurance? Moreover, a right to contribution does not necessarily shift 
a loss from the financially strong to those less well endowed, because lack of 
resources may as effectively insulate a person from a claim for contribution 
as from a claim for compensation by the injured person. 

Thirdly, it is also possible that the abolition of a right to contribution 
may discourage those who engage in risk-creating activities from insuring 
against injury to another, in the hope that someone else will be insured and, 
consequently, more likely to be sued by the injured person. By exposing all 
who engage in activities that entail a risk of injury to others to the possibility 
that they will have to bear a portion of any losses caused by their activities, 
the law encourages the taking of proper care and the purchase of insurance. 
A right of contribution thus may well promote the proper allocation of loss 
by "internalizing" the risk. 

Despite the attractiveness of some of the arguments advanced against a 
right to contribution among tortfeasors, the Commission does not recom- 
mend its abolition. Under the present fault-based tort regime, the Commis- 
sion is firmly of the view that, as a matter of fairness, a right to contribution 
is essential in order to preclude the unjust enrichment of the non-paying 
concurrent wrongdoer. It may well be that a right to contribution would not 
be efficacious or desirable under another type of legal regime. Accordingly, 
the existence of such a right should be considered in the context of any 



59 



fundamental re-examination of the bases of primary liability for personal 
injuries and the merits of extending compulsory insurance to a much wider 
range of risk-creating activities. More limited solutions to the problem 
illustrated by Lister v. Romford Ice and Cold Storage Co. Ltd. could include, 
for example, amendments to the Insurance Act^^ to extend the benefit of the 
policy to all whose activities are covered by it. 

(ii) The Present Law 

Having rejected, as a matter of policy, the abolition of a right of 
contribution among tortfeasors, we now turn to consider the scope of the 
present right of contribution under the Negligence Act. 

Section 2 of the Ontario Negligence Act^^ provides for a right of 
contribution "[w]here damages have been caused or contributed to by the 
fault or neglect of two or more persons": the court is to determine the degree 
in which each is "at fault or negligent" and make an order for contribution 
accordingly. Later sections of the Act, which deal with more specific points 
of the scheme, refer simply to a "tort feasor". Thus, section 3 provides for a 
right to contribution after one person has made a settlement with the injured 
party. "^^ The person claiming contribution and the person from whom it is 
claimed are designated as "tort feasors". The same terminology is used in 
section 9,^^ which provides for the effect upon a contribution claim of the 
expiry of a limitation period within which P must sue D2. 

^'^ R.S.0. 1980, c. 218. 

^^ Supra, note 3. A specific right of contribution is provided by the Securities Act, R.S.O. 
1980, c. 466, s. 126(8), among those liable under s. 126(1) for misrepresentations in a 
company prospectus. 

"^^ Section 3 reads: 

3. A tort feasor may recover contribution or indemnity from any other tort 
feasor who is, or would if sued have been, liable in respect of the damage to any 
person suffering damage as a result of a tort by settling with the person suffering 
such damage, and thereafter commencing or continuing action against such other 
tort feasor, in which event the tort feasor settling the damage shall satisfy the court 
that the amount of the settlement was reasonable, and in the event that the court 
finds the amount of the settlement was excessive it may fix the amount at which 
the claim should have been settled. 

^^ Section 9 reads: 

9. Where an action is commenced against a tort feasor or where a tort feasor 
settles with a person who has suffered damage as a result of a tort, within the 
period of limitation prescribed for the commencement of actions by any relevant 
statute, no proceedings for contribution or indemnity against another tort feasor 
are defeated by the operation of any statute limiting the time for the commence- 
ment of action against such other tort feasor provided, 

(a) such proceedings are commenced within one year of the date of the 
judgment in the action or the settlement, as the case may be; and 

(b) there has been compliance with any statute requiring notice of claim 
against such tort feasor. 



60 



A literal construction of the Negligence Act might support an argument 
that, although the scope of section 2 is limited to those torts that involve 
"fault or negligence", the scope of sections 3 and 9 extends to all torts. Such 
an interpretation would, however, produce serious anomalies. For instance, 
it could mean that a right to contribution would be available following a 
settlement between the injured person and any type of tortfeasor, but that 
there would have been no such right had the injured person obtained 
judgment against a tortfeasor who was not "at fault or negligent". Nor 
would it make any sense to say that section 9 enables a right of contribution 
to be claimed after the expiry of a limitation period, but that if the tort on 
which the claim depends is not one involving "fault or neglect", then no 
claim could have been made if a limitation period had not expired, so that 
resort to section 9 would have been unnecessary. 

The better interpretation is to treat section 2 as the principal section 
and to read the reference to "tort feasors" in the later sections as limited to 
those who have committed torts that fall within section 2. This raises the 
more important question of what torts are included within section 2. It 
should also be noted that the availability of the partial defence of contribu- 
tory negligence provided by section 4^^ is similarly limited to "any action for 
damages that is founded upon ihQ fault or negligence of the defendant if fault 
or negligence is found on the part of the plaintiff that contributed to the 
damages". "^^ 

At times, the courts have taken a narrow view of the scope of these 
sections and limited them to cases in which the plaintiff's action was for the 
tort of negligence.'*^ Indeed, the very title of the Negligence Act may seem to 
support this conclusion. ^^ A slightly more expanded version of this 
approach can be found in some cases in which the Act has been held to apply 
to tortfeasors who may not actually have been sued for the tort of negli- 
gence, but whose conduct could have supported such an action.^' More 
recently, however, the Ontario Court of Appeal has adopted a significantly 
wider interpretation of the word "fault" and stated that it includes "a breach 



48 
49 



'^^ Section 4 reads: 

4. In any action for damages that is founded upon the fault or negligence of the 
defendant if fault or negligence is found on the part of the plaintiff that contrib- 
uted to the damages, the court shall apportion the damages in proportion to the 
degree of fault or negligence found against the parties respectively. 

Contributory negligence is discussed infra, ch. 10. 

See Cheifetz, Apportionment of Fault in Tort (1981), at 24-36, where the author also 
draws attention to dicta that seem to limit s. 2 to joint tortfeasors, but which he 
convincingly demonstrates do not correctly state the law. 

^^ See, in particular, Aselstine v. McAnallv, [19501 O.W.N. 229 (H.C.J. ); Hollehone v. 
Barnard, [1954] O.W.N. 235, [1954] 2 D.L.R. 278 (H.C.J. ); Acker v. Kerr (1973), 2 O.R. 
270, 42 D.L.R. (3d) 514 (Co. Ct.); and Chernesky v. Armadale Publishers Ltd. (1974), 53 
D.L.R. (3d) 79, [1974] 6. W.W.R. 162 (Sask. C.A.). 

^' See, for example, Parmley v. Parmlev, [1945] S.C.R. 635, at 650, [1945] 4 D.L.R. 81, and 
Albion V. Cochrane, [1969] 2 O.R. 184, 4 D.L.R. (3d) 667 (Co. Ct.). 



61 



of statute or other act or omission giving rise to a liability in tort whether 
negligent or not".^^ It has also expressly disapproved earlier cases that had 
confined the Act to the tort of negligence, and has endorsed the following 
statement of its scope:^^ 

Fault and negligence, as these words are used in the statute, are not the 
same thing. Fault certainly includes negligence, but it is much broader than 
that. Fault incorporates all intentional wrongdoing, as well as other types of 
sub-standard conduct. 

It would thus seem clear that, at the level of the Court of Appeal at least, the 
Ontario Negligence Act provides for a right of contribution in respect of 
torts that are based on some blameworthy conduct, including intentional 
torts,^"^ and may even, perhaps, extend to torts of strict liability. ^^ 

(iii) The Case for Expansion 

If it is accepted that rights of contribution are given in order to prevent 
the unjust enrichment of D2, whose liability to P has been discharged by the 
payment by Dl to P, then there is little reason to limit contribution by 
reference to the kind of tort committed by Dl.^^ However, one possible 
situation in which contribution may be thought inappropriate is where Dl's 
tort is intentional, especially if it also amounts to a criminal offence. For 



52 Dominion Chain Co. Ltd. v. Eastern Construction Co. Ltd. (1976), 12 O.R. (2d) 201, at 
206, 68 D.L.R. (3d) 385 (C.A.), per Jessup J.A., aff'd {sub nom. Giffels Associates Ltd. v. 
Eastern Construction Co. Ltd.) [1978] 2 S.C.R. 1346, 84 D.L.R. (3d) 344 (subsequent 
references are to [1978] 2 S.C.R.). The Court of Appeal reversed the decision of the High 
Court of Justice (1974), 3 O.R. (2d) 481, 46 D.L.R. (3d) 28 (H.C.J.). 

53 Bell Canada v. Cope (Sarnia) Ltd (1980), 31. O.R. (2d) 571 (C.A.), at 572, quoting from 
the judgment of Linden J. below ((1980), 1 1 C.C.L.T. 170 (Ont. H.C.J.), at 180), which the 
Court of Appeal upheld. See Long v. Gardner (1983), 144 D.L.R. (3d) 73 (Ont. H.C.J.), 
where s. 4 of the Negligence Act, supra, note 3, was held to apply to the tort of 
intentional assault. See, also, Anderson and G. W. Anderson Holdings Ltd. v. Stevens 
(1981), 29 B.C.L.R. 355, 125 D.L.R. (3d) 736 (S.C), where contribution was allowed 
between fraudulent and negligent tortfeasors. 

5"* In Parmley v. Parmley, supra, note 51, the Supreme Court of Canada did not affirm the 
statement in the British Columbia Court of Appeal that the statute applied to inten- 
tional as well as negligent trespass. 

55 Only the dictum of Jessup J.A. in the Dominion Chain Co. Ltd. case, supra, note 52, 
supports this view, although Dokuchia v. Domansch, [1945] O.R. 141, [1945] 1 D.L.R. 
757 (C.A.) would also seem to be to this effect. Inconsistent with this view is Pickin v. 
Hesk and Lawrence, [1954] O.R. 713, [1954] 4 D.L.R. 90 (C.A.), in which a claim for 
contribution was made by an employer against a person for whose tortious conduct he 
had been held vicariously liable. See, however, Lang v. Hooey, [1932] O.R. 363, [1932] 2 
D.L.R. 778 (C.A.), and Flamant v. Knelson (1971), 21 D.L.R. (3d) 357 (B.C.S.C). 

5^ That there are no general reasons of public policy for denying a right to contribution in 
respect of strict liability is indicated by the Dog Owners' Liability Act, R.S.O. 1980, 
c. 124. Under this Act, a person may be liable for personal injuries caused by her dog, 
irrespective of any fault on the part of the owner (s. 2(3)), and a right of contribution 
(s. 2(4)) can arise even though the defendant was not at fault. 



62 



instance, should a thief, who has been held liable to P for the conversion of 
P's goods, recover contribution from the innocent purchaser to whom the 
thief sold them, who, in turn, may well also be liable to the true owner for 
conversion or detinue? In most cases, it is suggested, a court will be able to 
take into account any dishonesty or other form of intentional wrongdoing 
by Dl by the exercise of its discretion to apportion the amount of contribu- 
tion payable in accordance with the defendants' respective degrees of fault. 
In the hypothetical suggested above, the quantum of D2's contribution 
would almost certainly be nil. 

What then of the case where the torts of both Dl and D2 amount to 
criminal offences for which a guilty intention is required? Should a thief be 
entitled to contribution from the thief's accomplice who disposed of the 
property in full knowledge that it had been stolen? There is a natural 
reaction against requiring the courts to adjust the mutual rights and obliga- 
tions of those who have deliberately broken the law. It is tempting to fall 
back upon the maxims ex turpi causa non oritur actio and in pari delicto 
potior est conditio possidentis. In addition, a right to contribution will 
undermine any punitive or deterrent aspects of liability for intentional torts, 
including cases in which the conduct in question is criminal. ^^ 

More careful analysis strongly suggests, however, that the above max- 
ims do not always provide a satisfactory solution. First, there is the difficulty 
of defining the tortious conduct that would be excluded from a right to 
contribution; to exclude torts that are also crimes is unsatisfactory because 
this could include minor offences or offences of strict liability. To define the 
exception in terms of "serious crimes" or "crimes of moral blameworthi- 
ness" may be unduly vague. Alternatively, a defendant could be denied a 
right to contribution if the defendant has committed an intentional tort. But 
this is also likely to be an inadequate method of screening out those persons 
who ought not to be allowed to profit from their own wrong. Is it so clear 
that the intentional trespasser to land, for example, is obviously less entitled 
to relief, than, say, the grossly negligent driver who kills a pedestrian? 

Secondly, it might be argued that the punishment of wrongdoing is 
principally the function of the criminal law, with its special evidentiary rules 
and procedural protections. It is not easy to see why D2, who may be as 
morally blameworthy as Dl, should reap the benefit of a rule designed to 
penalize Dl. Nor is it inherently likely that an absolute denial of contribu- 
tion will deter potential wrongdoers: such a regime offers one wrongdoer the 
chance of keeping the fruits of her crime. ^^ Experience suggests that a high 
probability of detection and punishment is a more effective deterrent than a 



C-7 

These considerations appear to have been influential in the decision of the Supreme 
Court of the United States to deny a right to contribution to those found guilty of anti- 
competitive conduct and liable to pay treble damages: see infra, notes 71-73. 

Criticisms along these lines have also been levelled at the common law rule that a party 
to an illegal contract is generally barred from recovering any money paid or benefit 
conferred under it: see Goff and Jones, supra, note 2, at 340-42. 



63 



low probability of suffering a Draconian penalty. In any event, each wrong- 
doer will normally be required to bear part of the loss caused by the unlawful 
conduct. 

Thirdly, whatever policy is sought to be achieved by excluding certain 
torts from an accompanying right to contribution is always at the mercy of 
the plaintiff's choice of defendant. If Dl and D2 are both blameworthy, then 
it seems somewhat capricious to allow P to choose upon whom the entire 
burden of the loss is to fall. The loss that could fall upon Dl may be quite 
disproportionate to the seriousness of Dl's wrong, especially if the other 
wrongdoer escapes. 

A further question is whether a defendant who has been held liable to 
pay punitive damages to the injured person should be able to claim contri- 
bution from other persons who are concurrently liable to the plaintiff. Of 
course, the issue arises only where D2 is (or would, if sued) be liable to pay a 
sum that is at least as great, and in respect of the same loss, as Dl. If D2 is not 
so liable, then Dl's payment confers no benefit upon D2, for Dl's payment 
has not discharged a liability that D2 would otherwise have had to bear.^^ 

It may be argued that the purpose of imposing punitive damages is to 
punish and deter, and that these purposes will be frustrated if the defendant 
is allowed to pass on part of her "punishment" to another. It is submitted, 
however, that the reasoning here is no more attractive than the arguments 
considered above for excluding from potential contribution claims inten- 
tional tortfeasors or those whose torts constitute crimes. The deterrent effect 
of refusing contribution must be, at best, equivocal. And to concentrate on 
the justice of Dl's "taking her punishment" ignores the fact that another 
wrongdoer is escaping. Again, if there were no right of contribution, then the 
plaintiff's choice of defendant would determine which wrongdoer was to be 
punished. 

(iv) Other Jurisdictions 

Statutes in other jurisdictions differ quite markedly in their approach to 
the range of torts that can give rise to a right to contribution. For instance, 
section 6(1) of the English Law Reform (Married Women and Tortfeasors) 
Act, 1935^^ provided that a right to contribution arose "[w]here damage is 
suffered by any person as a result of a tort (whether a crime or not). . .". 
Although the words in parenthesis are not included in the more recent Civil 
Liability (Contribution) Act 1978,^^ there is no indication that Pariiament in 



^^ See, generally, infra, ch. 8, sec. 2, dealing with the calculation of the sum to be paid by D2 
toDl. 

^^ Law Reform (Married Women and Tortfeasors) Act, 1935, c. 30 (U.K.). 

^^ Civil Liability (Contribution) Act 1978, c. 47 (U.K.). Section 9(2) of this Act repealed 
s. 6 of the 1935 Act. 



64 



any way intended to impose a narrower scope to the wrongs capable of 
giving rise to a claim to contribution. Indeed, since the 1978 Act has given a 
right to contribution in respect of a much wider range of civil liabilities than 
that contemplated by the earUer statute,^^ it is unlikely that the omission of 
any specific mention of intentional wrongs should be regarded as signalling 
a legislative intention to limit the availability of contribution. The Irish Civil 
Liability Act, 1961^^ specifically includes in the definition of "wrongdoer" a 
"person who commits or is otherwise responsible for a wrong", "whether or 
not the act is also a crime, and whether or not the wrong is intentional".^"^ 
The Report prepared by the Alberta Institute of Law Research and Reform 
also recommends that a reformed contribution statute should not exclude 
intentional torts,^^ and the Uniform Contributory Fault Act, adopted by the 
Uniform Law Conference of Canada,^^ includes intentional torts within the 
"wrongful act" that may give rise to contribution.^^ 

On the other hand, many jurisdictions in the United States, and 
elsewhere, exclude intentional tortfeasors from contribution claims. ^^ The 
1955 American Uniform Contribution Among Tortfeasors Act^^ provided: 

1.— (c) There is no right of contribution in favour of any tortfeasor who has 
intentionally [wilfully or wantonly] caused or contributed to the injury or 
wrongful death. 

However, the American Uniform Comparative Fault Act,^^ approved in 
1977, does not contain this explicit exclusion. It is also interesting to note in 
this context that at one time some Circuit Courts of Appeals in the United 
States favoured a right of contribution among those liable to pay treble 
damages for breach of the anti-trust laws.^^ Such breaches are always 
intentional. However, the Supreme Court has recently held that no right of 



Those whose liability may expose them to a claim for contribution are not confined to 
tortfeasors, but include those liable for breach of contract and breach of trust {ibid., 
s. 6(1)). See infra, this ch., sec. 3(b). 

^^ Supra, noXtAl. 

^"^ Ibid., $.2(1). 

^^ Alberta, Institute of Law Research and Reform, Contributory Negligence and Concur- 
rent Wrongdoers, Report No. 31 (1979) (hereinafter referred to as "Alberta Report"), at 
40, Recommendation 9. See, generally, ibid., at 37-40. 

^^ Uniform Law Conference of Canada, Proceedings of the Sixty-Sixth Annual Meeting 
(1984), Appendix F, Uniform Contributory Fauh Act . 

^^ Ibid., s. 1. 

^^ See Weir, supra, note 40, at 64-65. 

National Conference of Commissioners on Uniform State Laws, Uniform Contribution 
Among Tortfeasors Act, Uniform Laws Annotated, Vol. 12, §l(c). The Act was approved 
by the Commissioners in 1955. 

^^ Supra, note 41. 

71 

A claim was first allowed in Professional Beauty Supply Inc. v. National Beauty Supply 
Inc. , 594 E 2d 1 179 (8th Cir. 1979). For dicta to the same effect, see Heizer Corp. v. Ross, 



65 



contribution is available.'^^ It reasoned that since the purpose of the Sherman- 
Clayton Acts is to punish past violations and to deter future unlawful 
conduct, it would be inconsistent with the legislative policy to imply a right 
to contribution. It also held that the limited powers of the courts to develop 
federal common law did not authorize their creation of a non-statutory right 
of contribution among those liable for a breach of the anti-trust legislation. 
However, the Senate Judiciary Committee and the Anti-Trust Law Section 
of the American Bar Association have recommended the legislative adop- 
tion of contribution provisions in such suits.^^ 

(v) Conclusions 

The Commission has concluded, and therefore recommends, that the 
right to contribution among concurrent tortfeasors should be available in 
respect of any tort committed by more than one defendant whose conduct 
has contributed to a single loss sustained by the plaintiff. ^"^ The criminal 
nature of the tort, the fact that it was committed intentionally or that the 
damages paid by a defendant include a penal or punitive element, should 
not automatically bar a right of contribution.^^ Such factors will be relevant, 
however, to the court's exercise of discretion over the quantum of contribu- 
tion awarded, a topic discussed in chapter 8 of this Report. 

(b) Other Kinds of Civil Liability 

The next question is whether wrongdoers who are not tortfeasors but 
who have caused a single loss to an injured person should enjoy the same 



601 F. 2d 330 (7th Cir. 1979). For an analysis of Professional Beauty Supply Inc., see 
Stevenson, "Contribution Among Antitrust Violators: Professional Beauty Supply Inc. 
V. National Beauty Supply Inc.'' (1979-80), 21. B.C.L. Rev. 969. A claim was subse- 
quently denied in Wilson P. Abraham Construction Corp. v. Texas Industries Inc. , 604 E 
2d 897 (5th Cir. 1979). The issues are well discussed in Schwartz, Simpson and Arnold, 
"Contribution in Private Actions under the Federal Antitrust Laws" (1979), 33 Sw. L.J. 
799. See, also, Note, "Contribution in Private Antitrust Actions" (1980), 93 Harv L. 
Rev. 1540. 

"^2 Texas Industries, Inc. v. Radcl iff Materials, Inc. 451 U.S. 630 (1981). See, also, British 
Airways Board V. Laker Airways Ltd , [1984] Q.B. 142, [1983] 3 All E.R. 375, at 385, and 
[1983] 3 All E.R. 395 (C.A.), at 407, rev'd [1985] A.C. 58, [1984] 3 All E.R. 39 (H.L.). 

^^ See Millstein, "Contribution under Antitrust Laws: Is Consensus Emerging?", Nat. L.J. 
(November 19, 1979), at 22 et seq. And see Polden and Sullivan, "Contribution and 
Claim Reduction in Antitrust Litigation: A Legislative Analysis" (1983), 20 Harv J. 
Legis. 397. 

Also of interest in this context is the Report of Consumer and Corporate Affairs 
Canada, Proposals for a Securities Market Law for Canada (1979), which includes a 
right to contribution among those who violate the provisions of the proposed draft 
Canada Securities Market Act (see s. 13.18). For commentary on the recommendations 
contained in this Report, see Vol. 2, at 279-80. 

'^^ See the Commission's proposed Contribution and Comparative Fault Act (hereinafter 
referred to as "Draft Act"), s. 3(l)(a). The Act appears as an Appendix of this Report. 

^5 Draft Act, s. 7(1). 



66 



rights of contribution inter se as are afforded by statute to tortfeasors. The 
principles of restitution suggest an affirmative answer, for whether the 
liability of Dl or D2 to P arises from a tort, a breach of a contract, or a breach 
of a statutory or fiduciary duty, Dl's legally required payment to P will 
benefit D2 by discharging an obligation that D2 owes to P, thus saving D2 an 
expense she would otherwise have had to bear. It is difficult to see why the 
particular type of civil liability discharged should determine whether D2 has 
thereby been unjustly enriched by retaining, without paying for, the benefit 
that Dl has incidentally conferred upon her. 

(i) The Present Law 

It is now quite clear that a person whose liability to the injured person 
sounds solely in contract cannot rely upon the Ontario Negligence Act as the 
legal source of any right to contribution against another,^^ whether tortfea- 
sor or contract breaker, whose wrongful conduct has also caused the damage 
for which Dl has compensated P, even though Dl's payment will have 
discharged or pro tanto reduced D2's liability to P. This was one of the issues 
considered by the Supreme Court of Canada in Giffels Associates Ltd. v. 
Eastern Construction Co. Ltd. ^^ In this case, P, the owner of a building, had 
entered into a contract with Dl, a firm of architects and engineers, to design 
and supervise the construction of a roof. P made another contract with D2, 
general building contractors, who were to do the work. The roof proved 
defective, and P sued Dl and D2 for his loss. The trial judge found that the 
damage had occurred as a result of the carelessness of both Dl and D2, and 
that, as between the defendants, D2 was 75 percent at fault. However, P 
failed to recover against D2, because a clause in the contract between P and 
D2 barred P from making a claim after Dl had issued the final certificate. In 
addition, D2's guarantee was limited in time, and P sued after the guarantee 
period had expired. The trial judge, nonetheless, ordered D2 to contribute to 
Dl for 75 percent of the damages that Dl had been required to pay P. D2's 
appeal against this part of the judgment was successful. 

For present purposes, two aspects of the judgments delivered by the 
Ontario Court of Appeal and the Supreme Court of Canada are important. 
First, the Court of Appeal held, by a majority, that Dl and D2 were, prima 
facie, tortfeasors who had damaged the plaintiff as a result of a breach of 
their common law duty to exercise due Care. The fact that there was a 
contractual relationship between the parties— and one that included a duty 
of care— did not exclude the possibility of their also being liable in tort.^^ 



^^ See Cheifetz, supra, note 49, at 24-26. However, if P could have sued in either tort or 
contract, Dl will be able to obtain contribution even though P chooses to allege only a 
breach of contract. See Aselstine v. McAnally, supra, note 50. One would expect a 
similar result where Dl's liability amounted to both a tort and a breach of trust. Tortious 
liability based on breach of statutory duty is covered by the Negligence Act: Jordan 
House Ltd. v. Menow, [1974] S.C.R. 239. 

^^ Supra, note 52. 

^^ See, also, Viscount Machine & Tool Ltd v. Clarke (1981), 34 O.R. (2d) 752, 126 D.L.R. 
(3d) 160 (H.C.J. ), where a land surveyor's negligence in preparing a plan of survey was 



67 



Wilson J.A., in a lengthy dissent, concluded, after reviewing the many 
authorities, that the parties' liability arose solely from their contractual 
relationship with the plaintiff. The defendants were not in a position 
analogous to those exercising a "common calling"; moreover, the "indepen- 
dent tort" test was not satisfied here."^^ Because the Supreme Court held that 
the expiry of the time Umit upon D2's liability to P precluded any possible 
right of contribution that Dl might otherwise have had against D2, it did not 
have to decide whether the defendants' liability was tortious or exclusively 
contractual. Nonetheless, the judgments of the Court of Appeal in Giffels 
indicate how uncertain, and arbitrary, the line can be between tortious and 
contractual liability. 

This observation leads us to the next point to note about Giffels, and 
that is the consequences for rights of contribution that follow from the 
distinction between tortious and contractual liability. Relying upon earlier 
authority, ^^ Jessup J.A. stated quite categorically that what is now section 2 
of the Ontario Negligence Act was limited to claims for contribution by 
tortfeasors, and that, had the Hability of Dl to P been based solely upon a 
breach of its contractual duty of care, no statutory right to contribution 
could have arisen. This was the view of all members of the Ontario Court of 
Appeal. The Supreme Court did not have to decide this question, although 
Laskin C.J.C. was inclined to agree with the Court of Appeal on this point.^' 

This interpretation of the scope of the Ontario Negligence Act, and 
similarly worded statutes in other jurisdictions, has been adopted in a 
majority of decisions in Canada,^^ although authority the other way is not 
totally lacking. ^3 An interesting intermediate position has recently been 

held to be actionable, both as negligence and as a breach of a contractual duty of care. 
However, the plaintiff's contractual claim was barred because the action was com- 
menced more than 6 years after the defendant was retained; but because less than 6 years 
had elapsed since the plaintiff sustained the damage, the action in tort was not time- 
barred. 

There is a trend in the case law to regard a breach of an implied contractual duty of 
care as giving rise concurrently to liability in both tort and contract: see, for example, 
John Maryon International Ltd. v. New Brunswick Telephone Co., Ltd. (1982), 43 
N.B.R. (2d) 469, 141 D.L.R. (3d) 193 (C.A.), leave to appeal to the Supreme Court of 
Canada refused (1982), 43 N.B.R. (2d) 468, 113 A.P.R. 468 (S.C.C), and Attorney 
General of Nova Scotia v. Aza Avramovitch Associates Ltd. (1984), 63 N.S.R. 181, 11 
D.L.R. (4th) 588 (S.C, App. Div). 

^^ J. Nunes Diamonds Ltd. v. Dominion Electric Protection Co., [1972] S.C.R. 769. 

^^ Particularly Allcock Laight & Westwood Ltd. v. Patten, Bernard and Dynamic Displays 
Lf^.,[1967]10.R. 18(C.A.). 

^^ Supra, note 52, at 1354. See, also, dicta in Waterloo County Board of Education v. Mark, 
Musselman, Mclntyre, Coombe (1982), 35 O.R. (2d) 664 (Master S.C.O.), at 666-67, 
aff'd (1982), 38 O.R. (2d) 61 (H.C.J.). 

^2 See, for example, Sealand of the Pacific Ltd. v. Robert C McHaffie Ltd, [1974] 6 
W.W.R. 724 (B.C.C.A.), and Ma Wai Kay v. McGay Ltd., [1979] 5 W.W.R. 279 (Man. 
Q.B.). 

^^ Groves-Raffin Construction Ltd v. Bank of Nova Scotia (1974), 51 D.L.R. (3d) 380, 
[1975] 2 W.W.R. 97 (B.C.S.C), varied [1976] 2 W.W.R. 673 (B.C.C.A.). Pointing in the 



68 



advanced by Lambert J.A., in a dissenting judgment, when he said of the 
British Columbia statute:^"^ 

[I]t may be that if the word 'fault' in the Negligence Act were treated as if it 
referred either to a breach of an obligation imposed by implication of law or to 
a breach of an obligation contractually substituted by the parties for an 
obligation imposed by implication of law, as opposed, in both cases, to an 
obligation wholly arising under a contract, that would go some way to setting 
the Hmits on the application of the Negligence Act to breach of contract. 

The question appears not to have been decided by an English court, 
although the Court of Appeal of Northern Ireland has held that a statute that 
was worded identically to the English Act of 1935 did not provide for 
contribution between those who had caused loss to P as a result of a breach 
of their separate contracts. ^^ 

The inapplicability of the Negligence Act to non-tortious wrongdoers, 
however, does not necessarily exhaust the possibilities for apportioning a 
single loss among those concurrently liable for it. First, if Dl and D2 are 
joint contractors, a right to contribution or indemnity may be either 
expressly provided by a term in their contract or, if the contract is silent, 
implied by a court. This approach will, of course, be of assistance only if 
there is a contractual relationship between Dl and D2. In many instances, 
however, as in Giffels itself, Dl and D2 will have entered into separate 
contracts with P. But even in a case where it is not possible to find an express 

same direction are those cases in which statutory provisions that empower the court to 
apportion damages between the defendant and a contributorily negligent plaintiff have 
been interpreted to apply to actions by the plaintiff for breach of contract: West Coast 
Finance Ltd. and Booth v. Gunderson, Stokes, Walton & Co. (1974), 44 D.L.R. (3d) 232, 
[1974] 2 W.W.R. 428 (B.C.S.C.), varied [1975] 4 W.W.R. 501 (B.C.C.A.); City of Red Deer 
V. Canadian Tennis Association Ltd. (1977), 5 A.R. 330 (S.C., T.D.); and Truman v. 
Sparling Real Estate Ltd. (1977), 3 C.C.L.T. 205 (B.C.S.C.). See, also, the dissenting 
judgment of Pigeon J. in Smith v. Mclnnis, [1978] 2 S.C.R. 1357, 91 D.L.R. (3d) 190, 
where his Lordship held that breach of contract was the only proper cause of action 
available to a client against her negligent solicitor, but that, as in civil law jurisdictions, 
contributory negligence should be a partial defence. 

Australian authorities, on the other hand, have denied that contributory negli- 
gence is a partial defence to an action for breach of contract. See, for example, A.S. 
James Pty. Ltd. v. CB. Duncan, [1970] V.R. 705 (S.C), and Harper v. Ashtons Circus Pty. 
Ltd , [1972] 2 N.S.W.L.R. 395 (C.A.). For dicta to this effect, see Mitchell v. Jolly, [1960] 
O.R. 470, 25 D.L.R. (2d) 18 (C.A.). 

In a recent decision by the Supreme Court of Canada, Carl B. Potter Ltd. v. The 
Mercantile Bank of Canada, [1980] 2 S.C.R. 343, 112 D.L.R. (3d) 88, the Court refused 
to reduce a beneficiary's damages for the defendant's breach of trust, on the ground that, 
while "fault" in the Nova Scotia Contributory Negligence Act , R.S.N.S. 1967, c. 54, s. 1, 
might be wider than negligence, it does involve breach of a legal duty. The Court held 
that there was no authority for the proposition that "a cestui que trust owes a duty to its 
trustee to ensure that the terms of its trust are observed" (at 352). 



84 



Rempel and Rempel v. Parks (1984), 10 D.L.R. (4th) 52, at 66, [1984] 4 W.W.R. 689 
(B.C.C.A.). 



^^ McConnellv. Lynch-Robinson, [1957] N.L 70(C.A.). 



69 



or implied contractual right to contribution or indemnity, a court may 
nonetheless resort to the equitable doctrine of contribution.^^ 

Alternatively, a court may apply the common law rule respecting 
recoupments^ in favour of a person who is compelled by law to discharge an 
obligation owed to a third party, which incidentally discharges a separate 
obligation owed by another, and where, as between the two, the latter is 
ultimately liable to pay. There is no logical reason why the rules developed 
for co-debtors should not be equally applicable to those liable to pay a single 
amount of damages as a result of a breach of their separate contracts. 
Despite the absence of clear authority to this effect,^^ in Giffels Laskin 
C.J.C. seemed to hint at such a possibility when he said:^^ 

I am prepared to assume, for the purposes of this case, that where there are two 
contractors, each of which has a separate contract with a plaintiff who suffers 
the same damage from concurrent breaches of those contracts, it would be 
inequitable that one of the contractors bear the entire brunt of the plaintiff's 
loss, even where the plaintiff chooses to sue that one and not both as in this case. 

The potential of the common law for developing in this direction has 
been explored by Professor Ernest Weinrib, who has vigorously maintained 
that separate contract breakers who cause the same loss to the plaintiff 
do have a non-statutory right to contribution or, where appropriate, 
indemnity.^^ This position is derived from the restitutionary principles, set 
out earlier, that underpin those rights of contribution that have already been 
judicially developed without statutory aid. Professor Weinrib's point may be 
bolstered by recalling that the principal justification for the refusal of the 
common law to provide for a right to contribution among tortfeasors, the 
maxim ex turpi causa non oritur actio, is generally inapplicable to those 
whose only "wrong" is breach of a contractual promise. Moreover, he 
argues, a court may find in the statutory right to contribution among 



86 

87 



See supra, this ch., sec. 2. 

Ibid. 

See, however, Harries Hall & Kruse v. South Sarnia Properties Ltd. (1928), 63 O.R. 597, 
[1929] 2 D.L.R. 821 (App. Div.), where damages were apportioned between concurrent 
contract breakers. 



89 



Supra, note 52, at 1355. 

^^ Weinrib, "Contribution in a Contractual Setting" (1976), 54 Can. B. Rev. 338, at 339-45. 
For an opposing view, see Weir, supra, note 40, at 240, where the absence of a right to 
contribution in common law jurisdictions is contrasted with the position in civil law 
countries. 

Further support for an extension of the right to contribution to concurrent 
contract breakers is given in Morgan, "The Negligent Contract-Breaker" (1980), 58 Can. 
B. Rev 299, at 310: 

It is almost indisputable that contribution should be available in such situations. 
Its absence would be a lonely exception to the general trend of increasing precision 
in the fixing of responsibility for compensation or restitution when loss is suffered. 



70 



tortfeasors a statement of public policy in favour of apportionment, from 
which, by analogy, to develop apportionment rules in contractual 
contexts.^^ 

If the law appears to be settled that the Negligence Act does not confer a 
right of contribution between those whose only legal wrong is a breach of 
contract, then it would seem equally clear that the statutory right of 
contribution does not extend to trustees and other fiduciaries whose non- 
tortious breach of their equitable obligations exposes them to concurrent 
liability. However, as we have seen, equity long ago developed contribution 
rules to apportion the burden of hability for breach of trust among trustees, 
although these non-statutory rules do not have the same flexibility as the 
right to contribution created by the Negligence Act !^^ 

(ii) The Case for Expansion 

From the foregoing description of the scope of the right to contribution 
among tortfeasors and other wrongdoers, two general criticisms of existing 
law emerge. First, the very reasons that made the rule in Merryweather v. 
Nixan^^ unfair apply with equal force to situations where Dl and D2 are 
concurrent contract breakers, or where one is a contract breaker and the 
other a tortfeasor. The absence of a right to contribution allows the injured 
person to choose the defendant who is to bear the entire loss for which two or 
more defendants are legally responsible. If the person sued by the plaintiff 
has no claim to contribution, the other will have obtained a benefit that it is 
unjust to retain. It has been precisely to avoid this kind of injustice that, in 
other contexts, equity, the common law, and statutes have provided rights of 
contribution and indemnity. The particular legal categories into which the 
primary liabilities of Dl and D2 to P fall ought to be of no relevance to the 
secondary legal rights and duties arising between Dl and D2. 

Secondly, there is ample judicial evidence that the line dividing tortious 
from contractual liability is notoriously difficult to draw, and that the 
principles upon which damages are awarded in tort and contract may be 
moving closer together. ^^ There would seem to be little justification for 
making the distinction determinative of the existence of a contribution 
claim between those who are liable for causing the same loss to the injured 
party. 



^^ It may also be noted that the contribution provision in s. 13.18(2) of the draft Canada 
Securities Market Act, supra, note 73, is broad enough to cover concurrent breaches of 
contract that cause a single loss. 



92 
93 
94 



See supra, note 9, and accompanying text. 

Supra, note 10. 

See Irvine, "Contract and Tort: Troubles Along the Border" (1979), 10 C.C.L.T 281, and 
Morgan, supra, note 90. That differences remain is illustrated by Cardinal Construction 
Ltd. V. The Queen in right of Ontario (1981), 32 O.R. (2d) 575, 122 D.L.R. 703 (H.C.J.), 
aff'd 38 O.R. (2d) 161, 128 D.L.R. (3d) 662 (C.A.), where the rule was affirmed that 
punitive damages will not be awarded for a breach of contract that did not amount to an 
independent tort. 



71 



(iii) Other Jurisdictions 

Legislative activity in other jurisdictions both suggests the existence of a 
widespread dissatisfaction with the existing law and provides a wealth of 
experience from which the Commission has been able to inform its own 
proposals. A common feature of these reforms has been to establish, or to 
propose, a common statutory framework within which to work out contri- 
bution claims among concurrent wrongdoers, irrespective of the nature of 
the primary obligations owed to the injured party by the wrongdoers. 

An early, and influential, model is provided by the Irish Civil Liability 
Act, 1961 ,^^ the provisions of which were drawn in large part from the terms 
of a draft bill suggested by Professor Glanville Williams.^^ In this statute,^^ a 
"concurrent wrongdoer" who may make, or be subject to, a contribution 
claim is defined as a person who has committed 

a tort, breach of contract or breach of trust, whether the act is committed by the 
person to whom the wrong is attributed or by one for whose acts he is 
responsible, and whether or not the act is also a crime, and whether or not the 
wrong is intentional. 

The Act also specifically provides that wrongs are concurrent if they cause 
the same damage to the injured person, whether they are contemporaneous 
or successive.^^ Thus, an architect who negligently designs a building or 
negligently supervises or inspects its construction may be a concurrent 
wrongdoer with the builder who negligently constructs it, even though their 
respective wrongs that caused the same damage may not have been commit- 
ted contemporaneously. 

In the United Kingdom, the scope of the application of the Civil 
Liability (Contribution) Act 1978^^ is defined in section 1(1) as follows: 

1.— (1) Subject to the following provisions of this section, any person liable in 
respect of any damage suffered by another person may recover contribution 
from any other person liable in respect of the same damage (whether jointly 
liable with him or otherwise). 

The interpretation section goes on to provide: 

6.— (1) A person is liable in respect of any damage for the purposes of this Act 
if the person who suffered it (or anyone representing his estate or dependants) is 
entitled to recover compensation from him in respect of that damage (whatever 
the legal basis of his liability, whether tort, breach of contract, breach of trust or 
otherwise). 



^^ Supra, note 42. 

^^ Williams, Joint Torts and Contributory Negligence (1951), ch. 22. 

^^ 5'w/7ra,note42,s. 2(1). 

^^ Ibid.,s. ll(2)(c). 

^^ Supra, note 61. 



72 



For our purposes, there are two limitations upon the scope of the right 
to contribution created by the English statute that should be noted. First, by 
limiting contribution claims to the defendant's liability in respect of any 
damage suffered by the injured person, the Act excludes any claims that 
may arise between concurrent debtors, whether jointly or severally liable in 
the same sum to the plaintiff. '^^ Accordingly, any right to contribution 
arising from the discharge of a debt continues to be governed by the non- 
statutory law relating to contribution, indemnity, and subrogation. The 
Report of the English Law Commission, on which the 1978 Act is largely 
based, limited its recommendations for reform in this way, on the ground 
that the law was generally satisfactory in those areas. '^' The Act, therefore, 
does not apply to an indemnity insurer's right to be subrogated to the rights 
of the assured, nor to a surety's right to be subrogated to the rights of the 
creditor against the principal debtor, nor to a claim to contribution by co- 
sureties, nor to maritime general average. It may be noted that the Report of 
the Alberta Institute of Law Research and Reform did not directly address 
this issue, although by limiting the scope of its recommendations to 
"wrongdoers", •^^ it may be taken to have intended to follow the English 
statute on this point. 

The second limitation upon the statutory right to contribution con- 
tained in the English Civil Liability (Contribution) Act 1978 is that the Act 
does not affect either an express contractual provision made by the parties 
that regulates or excludes contribution, or an express or implied contractual 
or other right to indemnity. ^^^ 

The Uniform Contributory Fault Act,^^^ adopted by the Uniform Law 
Conference of Canada, has endorsed the recommendation of the Alberta 
Institute of Law Research and Reform •^^ that contribution among wrong- 
doers should be extended beyond tortfeasors to include concurrent contract 
breakers and those who have breached a statutory duty. The Act does not 
apply, however, to a breach of trust: the Alberta Institute's Report stated that 
this matter should be dealt with in connection with a reform of the Trustee 
Act}^^ 



'^^ However, the Act extends the aboHtion of the judgment bar rule to joint liabiUty for debt 
or damage {s. 3). 

'^^ The Law Commission, Law of Contract: Report on Contribution, Law Com. No. 79 
(1977) (hereinafter referred to as "Law Commission Report"), esp. para. 29, at 8-9. 

'^^ Supra, note 65, at 36, Recommendation 8. 

^^^ Supra, note 61, s. 7. See, further, infra, this ch., sec. 3(c). 

'^■^ Supra, note 66, s. 1(c). 

'^^ Supra, note 65, at 51, Recommendation 10. See ibid., at 40-51, where the issue is 
discussed by the Institute. 

'"° See ibid., at 52, where the Institute decided to defer consideration of this matter to a later 
report on the law of trusts. 



73 

(iv) Conclusions 

a. Concurrent Wrongdoers 

There are, no doubt, a number of problems, some quite difficult, that 
are likely to arise if the right of contribution is extended by statute to all 
concurrent wrongdoers, irrespective of the kind of liability owed to the 
injured person. It would be important to decide, for example, how rights of 
contribution should be affected by contractual limitation periods, exemp- 
tion and limited liability clauses, and the possibly differing availability of the 
partial defence of contributory negligence to actions for breach of contract 
and tort. Professor Weinrib regarded complexities of this kind as so formida- 
ble that he urged that statutory provision should not be made for contribu- 
tion among non-tortious wrongdoers: '^^ 

Where one can envisage many variations in the kinds of contractual relation- 
ships and in their terms, the difficulties would best be solved by the kind of case- 
by-case elaboration which is the common law's vaunted strength. 

Despite this warning, the Commission has concluded that statutory 
reform is both desirable and necessary. Even if there already exists a right to 
contribution among concurrent wrongdoers who are not tortfeasors, the 
state of doctrinal development is, at best, uncertain. The virtual absence of 
any cases in which a court has applied general restitutionary principles to 
give reUef is likely to mean that the law in this rather difficult and technical 
area will evolve slowly and piecemeal. Moreover, it is highly probable that 
anomalies will emerge respecting the statutory rights available to concurrent 
tortfeasors, those rights previously recommended by the Commission for 
contribution among trustees, '^^ and the common law and equitable rights of 
other wrongdoers. The alarmingly large number of recent cases in which our 
courts have experienced difficulties in their application of restitutionary 
principles'^^ provides cogent evidence against the view that legislatures 
should abstain in this area. Moreover, there appears to be very little 
evidence upon which to base an assumption that the courts will use the 
principles embodied in the Negligence Act as a springboard for extension 
into areas with which it does not expressly deal. 

Accordingly, the Commission, like law reform bodies in England, 
South Australia, Victoria, New Zealand, and Hong Kong, has decided to 
recommend that there should be a right to contribution not only among all 
concurrent tortfeasors, as previously recommended, but among all concur- 
rent wrongdoers, whatever the legal nature of their liability to the injured 
person. '1^ As in the case of tortious conduct, we further recommend that the 



•^^ Weinrib, supra, note 90, at 342. 

'^^ Ontario Law Reform Commission, Report on the Law of Trusts, supra, note 9, Vol. II, 
ch.6. 

^^^ See Weinrib, supra, note 90, at 343. 

•'^ Draft Act, s. 3(1). 



74 



criminal nature of the wrongdoing, the fact that it was committed intention- 
ally or that the damages paid by a defendant include a penal or punitive 
element, should not automatically bar a right of contribution. ••^ We wish to 
emphasize our view that the uncertainties in the present law, the practical 
importance of clarity in this area, the difficulties experienced by the courts 
in assembling a coherent set of legal rules on a case-by-case basis from the 
somewhat abstract restitutionary principle of unjust enrichment, and the 
likelihood that discrepancies will emerge between the statutory rights of 
tortfeasors and the non-statutory rights of other wrongdoers, make a legisla- 
tive solution attractive in Ontario, as, indeed, they have in other jurisdic- 
tions. It is by no means obvious that the varieties of contract will provide 
more insuperable barriers to appropriate statutory reforms than the vari- 
eties of torts. 

b. Concurrent Debtors 

Having decided to recommend enlarging the scope of contribution 
beyond tortfeasors, the next question is whether it should include only those 
whose civil liability depends upon a concurrent wrong, as opposed to a debt. 
The Irish and English legislation has, as we have seen, been limited in this 
way. The Uniform Contributory Fault Act, adopted by the Uniform Law 
Conference of Canada, like the proposals of the Alberta Institute of Law 
Research and Reform, is similarly confined. 

We also have concluded, and accordingly recommend, that the pro- 
posed statutory right to contribution should not extend to those liable for a 
debt.'^^ While it is difficult to justify in principle an assertion that there is 
some fundamental distinction between apportioning, as between them- 
selves, the liability of wrongdoers and debtors, two practical considerations 
support this limitation. First, there appears to be no significant dissatisfac- 
tion with the present law respecting the existing rights to contribution 
among those who owe debts to another. Although cases on guarantees 
appear quite regularly in the law reports, the contentious issues do not seem 
to relate to questions of contribution or indemnification. Secondly, the 
omission of contribution among concurrent debtors avoids overburdening 
proposals for law reform in an area that already contains a fair share of 
complexity. 

In most cases, there will be no difficulty in distinguishing a claim for 
damages ^^^ that arises as a result of a civil wrong, which is capable of giving 
rise to a statutory right of contribution, from a claim for a debt, for which the 



HI 

112 

113 



Ibid.,s.l{\). 

See ibid., s. 3, which effectively precludes a statutory right to contribution from arising 
where the liability is for a debt. 

We recommend that liability to restore a chattel to the injured party should, for this 
purpose, be regarded as equivalent to liability to pay damages. Thus, a person who 
returns to the rightful owner a chattel, which that person has purchased from someone 



75 



parties must resort to the common law or equity for an apportionment of 
liability among the concurrent debtors. A debt is a right to be paid a sum 
certain in particular circumstances, whereas the victim of a civil wrong will 
generally sue for an unliquidated amount of damages as compensation for 
the wrong suffered. Parties to a contract are free to predetermine the 
amount payable in the event of breach, subject to the equitable doctrine of 
penalties. '^^ A person whose liability has been effectively regulated by a 
liquidated damages clause would be potentially able to assert, or to be liable 
to, the Commission's proposed statutory right of contribution, because the 
liability remains one for damages arising from a breach of contract. 

(c) Existing Rights of Contribution and Indemnity 

The critical issue to be considered in this section is the effect that the 
Commission's proposed new statutory right of contribution should have 
upon any other right to contribution or indemnity '^^ that the parties may 
already have at common law, by statute, by virtue of either an express or 
impUed contractual arrangement made between them, or as a result of any 
other legal obligation. ^^^ 

Section 2 of the Negligence Act provides, in part, that concurrent 
tortfeasors are liable to pay contribution or indemnity in proportion to their 
respective degrees of fault or negligence "in the absence of any contract 



who had no authority to sell it, should be able to claim contribution from others whom 
the owner could have sued in conversion. 

We further recommend that other decrees of specific relief that discharge or 
reduce the liability of a concurrent wrongdoer should be capable of founding a claim for 
contribution. See Draft Act, s. 9(7). 

^^^ In the Commission's Report on Amendment of the Law of Contract (1987), at 147, the 
Commission recommended that agreements to pay a stipulated sum on a breach of 
contract should be governed by statutorily enacted principles of unconscionability, 
rather than the doctrine of penalties. 

^^^ It bears re-emphasizing the distinction made in this Report between "contribution" and 
"indemnity". The term "contribution" has been used by the Commission to refer to a 
case where one concurrent wrongdoer (Dl), who has paid all, or more than his 
proportionate share, of the injured person's damages, seeks payment from another 
concurrent wrongdoer (D2) of the amount that exceeds Dl's proportionate share. The 
determination of contribution claims is based, at present, on comparative fault or 
negligence as between the concurrent wrongdoers. 

The term "indemnity", on the other hand, has been used in this Report to refer to 
the case where two persons are liable for the same debt or damages, but the liability of 
one is primary and the liability of the other is secondary The determination of 
indemnity claims is based not on comparative fault or negligence, but on the nature of 
the relationship between the parties. 

For a more detailed discussion of this distinction, see supra, ch. 1. 

^^^ Concerning the applicability of the proposed new Act in the context of apportionment 
rights as between a plaintiff and a defendant, see infra, ch. 10, sec. 9. 



76 

express or implied". A contrary or different contractual arrangement 
respecting contribution or indemnity therefore supersedes the statutory 
scheme. 

Even where a contract does not expressly provide for a right of contri- 
bution or indemnity, such a right may be implied from the nature of the 
relationship. Thus, in Lister v. Romford Ice and Cold Storage Co. Ltd.,^^'^ the 
plaintiff-employer relied not only upon statutory rights, but also upon an 
implied term of the contract to be indemnified by an employee whose 
negligence had rendered the plaintiff vicariously liable to a third party. In 
McFee v. Joss,^^^ a prQ-Negligence Act decision, the Ontario Court of 
Appeal held that a contract for the hire of a car should be construed to 
include an implied contractual right in the owner to be indemnified by the 
hirer for any liability incurred by the owner as a result of the hirer's 
negligence. 

The right to indemnity may arise not only from an express or implied 
contractual provision, but also at common law, where the parties are not in 
a contractual relationship. For instance, if Dl and D2 are subject to a 
common demand from P, and a payment to P by Dl thereby discharges the 
liability of Dl and D2, Dl is entitled to be indemnified by D2 if, as between 
them, D2 was primarily responsible for the payment. '^^ Older cases 
described Dl's action for money paid to the use of D2 as based on an imphed 
contract, or quasi-contract, even where there was no contractual relation- 
ship between Dl and D2. Today, one would expect a court to characterize 
D2's liability to indemnify Dl as being a restitutionary obligation imposed 
by operation of law, rather than one stemming from a fictional, implied 
contract. In other situations, a wrongdoer may be legally required to 
indemnify another who was concurrently liable to a third party where the 
legal duty has never been regarded as resting on notions of contract at all. 
One example is the right of a trustee to be indemnified in some cir- 
cumstances by a co-trustee whom the beneficiary could have sued for 
breach of trust. 

Finally, there exists in Ontario a number of statutory provisions dealing 
with rights of contribution or indemnity, or, in several instances, both. In 
some cases, such as the Dog Owners' Liability Act ,^^^ for example, the very 
brief legislation simply permits "contribution and indemnity" in more or 
less general terms. In other cases, however, particularly the Environmental 
Protection Act,^^^ the legislation is relatively comprehensive. 



^^^ Supra, note 37. 

^^^ (1925), 56 O.L.R. 578, [1925] 2 D.L.R. 1059 (App. Div.). 

119 



See Moule v. Garrett, supra, note 18. 
'^^ Supra, note 56, s. 2(4). 
^21 R.S.0. 1980, c. 141, s. 87. 



77 



In connection with statutory enactments providing for a right of 
contribution or indemnity, mention should also be made of the proposals in 
the Commission's Report on the Law of Trusts .^^^ In that Report, we offered 
recommendations concerning several aspects of the law in this area. We also 
considered, and rejected, the United Kingdom approach, which would have 
the effect of placing the Commission's proposed trustee contribution provi- 
sions in a single Act dealing with contribution among all classes of wrong- 
doers, including trustees. Rather, we endorsed the approach of the Alberta 
Institute of Law Research and Reform and recommended that the proposed 
new provisions dealing with contribution and indemnity among trustees 
should be incorporated in the Commission's revised Trustee Act J^^ How- 
ever, it does bear emphasizing that the proposed trustee provisions do not, in 
fact, form a comprehensive statutory code governing contribution and 
indemnity between co-trustees. They were intended to effect changes only 
in certain areas; for example, the legislation would provide for a new test for 
allocation of liability as between trustees in breach of trust and would 
abolish a trustee's common law right to indemnity from another trustee. 

In its 1977 Report on contribution, the English Law Commission 
recommended a number of statutory changes to existing law, but proposed 
that "rights of contribution and indemnity founded in contract or quasi- 
contract should, for the most part, continue to be regulated by the common 
law". ^2"^ The subsequent United Kingdom Civil Liability (Contribution) Act 
1978,^^^ which is based largely on the work of the English Law Commission, 
contains a section that deals specifically with the application of that Act, 
and, more particularly, with the effect of the Act on existing contractual and 
other rights of contribution and indemnity. Section 7(3) provides as follows: 

7.— (3) The right to recover contribution in accordance with section 1 above 
supersedes any right, other than an express contractual right, to recover 
contribution (as distinct from indemnity) otherwise than under this Act in 
corresponding circumstances; but nothing in this Act shall affect— 

(a) any express or implied contractual or other right to indemnity; or 

(b) any express contractual provision regulating or excluding contribu- 
tion; 

which would be enforceable apart from this Act (or render enforceable any 
agreement for indemnity or contribution which would not be enforceable apart 
this Act). 



'22 Supra, note 9, Vol. II, ch. 6. 

'2^ For a discussion of this question, see ibid., at 382-83. 

'24 Supra, note 101, para. 80(a), at 23. See, also, ibid., paras. 26-29, at 7-9, and The Law 
Commission, Contribution, Working Paper No. 59 (1975), paras. 15-23, at 9-14, and 
para. 45(b), at 26. 



125 



Supra, note 61. 



78 



This Commission has come to the conclusion and, accordingly, recom- 
mends that, subject to the exceptions discussed below, the contribution 
provisions of the proposed new Contribution and Comparative Fault Act 
should govern in all cases and, therefore, should supersede any other right to 
contribution (as distinct from indemnity), whether that right arises by 
statute or by any other means (including common law and equity). ^^^ 

The Commission believes that, as a general principle, the proposed new 
Act represents an equitable and workable statutory scheme of contribution 
that ought to be made applicable to all cases of concurrent wrongdoing. 
However, as indicated above, we do appreciate that certain exceptions 
should be made to the otherwise universal scope of our Act. 

We turn first to consider the applicability of other statutes that may deal 
with rights of contribution. In this connection, the Commission recom- 
mends that the proposed Contribution and Comparative Fault Act ought to 
supersede all other statutory rights of contribution, as proposed above, 
unless it is specifically provided in the other statute that the contribution 
provisions of that statute apply notwithstanding the provisions in the 
Contribution and Comparative Fault ActJ^'^ This exception to our general 
proposal means that, should our proposed legislation be enacted, those 
governmental officials responsible for the administration of other relevant 
Acts should review those Acts in light of the new Contribution and Compar- 
ative Fault Act in order to determine whether the provisions in such Acts 
ought to be made to apply notwithstanding the Contribution and Compara- 
tive Fault Act, and we so recommend. We further recommend that the 
proposed review of existing legislation should include a consideration of the 
precise meaning of any provisions concerning the right to "indemnity", 
having regard to the distinction made in this Report between "contribu- 
tion" and "indemnity" and the not infrequent use of the latter term in two 
different ways in the legislation of Ontario. 

The second exception to the proposed general rule relating to the 
applicability of our new Act concerns contribution and indemnity between 
co-trustees and other fiduciaries. With respect to trustees, we wish to re- 
emphasize our view that, in certain particulars at least, this area of the law 
manifests unique characteristics that should be dealt with in a separate and 
distinct manner. As indicated earlier, it is for this reason that, in our Report 
on the Law of Trusts, the Commission recommended the incorporation of 
the proposed new contribution and indemnity provisions in respect of 
trustees into the Commission's proposed Trustee Act, rather than into a 
more general statute governing contribution among wrongdoers. The Com- 
mission sees no reason to depart from its earlier views on this matter. 
Accordingly, we recommend that the contribution provisions of the new 
Contribution and Comparative Fault Act should apply in the case of trustees 
and other fiduciaries, except as otherwise specifically provided by the 

^2^ Draft Act, s. 23(1). 
•27 Ibid. 



79 



proposed Trustee Act J^^ Unlike the case of statutory enactments other than 
the proposed Trustee /lc7— where we have recommended that the new 
legislation should govern unless the other statutes expressly state, by means 
of a non obstante clause, that it does not— we believe that the special, 
although limited, contribution provisions of the proposed Trustee Act ought 
to supersede the new Contribution and Comparative Fault Act without the 
requirement of inserting in the proposed Trustee Act an express non 
obstante clause. 

The third exception pertains to the relationship between the proposed 
contribution legislation and the Workers' Compensation Act}^^ In chapter 6 
of this Report, the Commission will consider the comprehensive compensa- 
tion scheme set forth in that Act. Our conclusion is that nothing in the 
Commission's Contribution and Comparative Fault Act should affect the 
scheme established under the Workers' Compensation Act}^^ 

The fourth exception to the general rule relates to contractual provi- 
sions dealing with the right to contribution. As we have seen, section 2 of the 
Negligence Act provides for liability to pay contribution on the basis of 
comparative fault or negligence "in the absence of any contract express or 
implied". The Commission is of the view that concurrent wrongdoers 
should continue to have the right to establish their own regime governing 
rights of contribution as between themselves. Accordingly, we recommend 
that the provisions of the proposed new Contribution and Comparative 
Fault Act governing contribution should be subject to any express or 
implied contractual agreement relating to contribution made by the concur- 
rent wrongdoers. '^' 

We turn now to existing rights to indemnity— as narrowly defined in 
this Report— arising between two persons, one of whom is primarily liable 
for the debt or damages, the other of whom is secondarily liable. In 
connection with a right to indemnity arising from contract, whether express 
or implied, the Commission takes the same position as it did with respect to 
express or implied contractual provisions concerning contribution; that is, 
we believe that concurrent wrongdoers ought to be able to regulate their own 
affairs by an agreement made between themselves. Moreover, like the 1978 
United Kingdom Act, we would not have our proposed Contribution and 
Comparative Fault Act affect any non-contractual right to indemnity, 
whether that right arises by statute or at common law Accordingly, we 
recommend that the proposed legislation should not affect any express or 
implied contractual or other right to indemnity. '^^ However, we should 



'28 //7/"^.,s. 3(l)(d). 

'2^ R.S.O. 1980, c. 539. 

'^^ See infra, ch. 6, sec. 3(d)(ii)b. See Draft Act, s. 23(2). 

'^' Ibid., s. 7(3). 

'^2 Ibid. 



80 



stress again that, bearing in mind the distinction made in this Report 
between contribution and indemnity, we do not intend by the preceding 
recommendation to curtail the power of a court determining a contribution 
claim to conclude that, in an appropriate case, the claimant is entitled to 
contribution of 100 percent or to no contribution at all. 

Finally, we wish to deal with the situation where Dl seeks contribution 
from D2, who, in turn, is entitled to be indemnified by Dl for the damages in 
respect of which contribution is sought. 

As we have seen, section 7(3)(a) of the English Civil Liability (Contribu- 
tion) Act 1978, as well as the analogous provision in the Commission's 
proposed legislation, ^^^ provides that nothing in the Act shall "affect" any 
express or implied contractual or other right to indemnity. It may be argued 
that, as a result of such a provision, a wrongdoer who is obliged, quite apart 
from this Act, to indemnify another, cannot seek contribution under the 
Act, since to do so would "affect" the existing right to an indemnity. 
Nevertheless, we do not consider the matter to be free from doubt. The 
wording of section 3(3) of the draft contribution Bill appended to the 
English Law Commission Report— a section that reproduced a provision in 
section 6(l)(c) of the 1935 United Kingdom Act— was clearer, since it 
provided expressly that "[n]o person shall be entitled to recover contribu- 
tion under this section from any person entitled to be indemnified by him in 
respect of the liability in respect of which the contribution is sought", a 
provision that the Alberta Institute has supported. •^'^ The Canadian Uni- 
form Contributory Fault Act also contains a section to this effect. '^^ 

The Commission endorses the type of legislation just described. 
Accordingly, we recommend that the Commission's proposed legislation 
should provide specifically that no person should be entitled to claim 
contribution from a person who is entitled to be indemnified by the 
claimant for the damages in respect of which contribution is sought. ^^^ 

We believe that the proposals recommended above concerning the 
application of the Commission's proposed new Contribution and Compara- 
tive Fault Act strike a practical and appropriate balance between, on the one 
hand, producing a uniform statutory scheme of contribution applicable to 
all concurrent wrongdoers, and, on the other hand, protecting both the 
express or implied contractual arrangements made by wrongdoers for the 
regulation of contribution rights as between themselves and any rights to 
indemnity that arise by law in particular situations. 



'33 Ibid. 

'3^* Law Commission Report, supra, note 101, at 34, and Alberta Report, supra, note 65, at 
81, Recommendation 20. See ibid., at 79-81, for a discussion of this issue. 

'3^ Supra, note 66, s. 10. 

'36 Draft Act, s. 7(3). 



81 



(d) Remedies Available to the Claimant for Contribution 

Normally, a person entitled to contribution from a concurrent wrong- 
doer will be entitled to judgment in which the person who is liable to 
contribute is ordered to pay to the claimant a sum that represents the 
contributor's fair portion of the total liability to the injured party. The 
principles upon which the apportionment between them is made are 
considered in a later chapter of this Report. '^^ 

However, this may not exhaust the possibilities, especially if the right to 
contribution is extended beyond concurrent tortfeasors. Suppose, for exam- 
ple, that Dl has been held liable to P, and that D2, who has broken a contract 
with P that has also contributed to P's loss, is insolvent. D2, however, had 
been required by P to deposit a security for due performance of D2's 
contract. Would it not be just that Dl should have the benefit of that security 
up to the amount of the sum that it was found appropriate for D2 to 
contribute? This would not work hardship on D2's unsecured creditors, 
whether D2 had become indebted to them before or after D2 contracted 
with P. Dl is simply avaiUng herself, in part, of the security to which P 
would have been entitled if P had chosen to press her claim against D2, 
rather than Dl. 

Nor, it should be noted, is it any objection that the effect of Dl's 
payment is to discharge D2's liability Sureties are in exactly the same 
position when they discharge the principal debt, and are entitled to be 
subrogated to any security deposited by the debtor with the creditor. 
Moreover, the surety who pays the debt is also entitled to the benefit of any 
security given by a co-surety to the creditor, and thus herself becomes 
secured up to the limit of the sum to which she is entitled by way of 
contribution. Of course, if P still has a claim against D2, P's interest in the 
security should rank ahead of DTs. 

Finally, it also seems appropriate that the claimant for contribution 
should enjoy any personal priority that the injured person would have had 
over the general unsecured creditors of D2. This will tend to limit the 
adverse consequences for Dl of P's decision to sue Dl alone. D2's creditors 
will be in exactly the same position they would have occupied if D2 had been 
required to pay to P an amount equal to D2's due share of responsibility for 
P's loss. Because P's claim against D2 is extinguished by Dl's payment, the 
analogy of the insurer's right to be subrogated to the personal rights of the 
assured against third parties is inappropriate. However, if in principle it 
seems fair to give Dl this advantage, there is a technical explanation for the 
result, namely, that on Dl's payment, P's rights against D2 are fictionally 
assigned to Dl. 



'-''^ See/Vra,ch. 8. 



82 



The Commission has come to the conclusion and, therefore, recom- 
mends that a person who has a right to contribution under the proposed 
Contribution and Comparative Fault Act should be subrogated to any right 
that the injured person has against the concurrent wrongdoer from whom 
contribution is claimed. '^^ 



(e) Binding the Crown 

The Commission recommends that the proposed new statutory provi- 
sions for contribution among concurrent wrongdoers should expressly 
apply to the Crown in the right of Ontario and, insofar as it is constitution- 
ally permissible, to the Crown in the right of Canada. '^^ 

Recommendations 

The Commission makes the following recommendations: 

1. (1) Subject to the following recommendations, a right to contribution 

should be capable of arising among wrongdoers who cause a single 
loss to an injured person, irrespective of the nature of the legal 
obligation that gives rise to their liability in damages, and of the 
form of the relief that the wrongdoer has been required to provide 
to the injured party. 

(2) The criminal nature of the wrongdoing, the fact that it was com- 
mitted intentionally or that the damages paid by a defendant 
include a penal or punitive element, should not automatically bar 
a right of contribution. (See, also, chapter 8, Recommendation 
7(4).) 

(3) For the purpose of this recommendation, liability to restore a 
chattel to the injured party should be regarded as equivalent to 
hability to pay damages. In addition, other decrees of specific relief 
that discharge or reduce the liability of a concurrent wrongdoer 
should be capable of founding a claim for contribution. 

2. The proposed statutory right should not extend to those liable for a 
debt. 

3. (1) Subject to the exceptions recommended below, the contribution 

provisions of the proposed new Contribution and Comparative 
Fault Act should govern in all cases and, therefore, should super- 
sede any other right to contribution (as distinct from indemnity), 
whether that right arises by statute or by any other means (includ- 
ing common law and equity). 



^^^ Draft Act, s. 7(2). 
^39 Ibid., s. 20. 



83 



(2) (a) The proposed Contribution and Comparative Fault Act ought 

to supersede all other statutory rights of contribution, as 
recommended in paragraph (1), unless it is specifically pro- 
vided in the other statute that the contribution provisions of 
that statute apply notwithstanding the provisions in the Con- 
tribution and Comparative Fault Act. 

(b) Should the proposed legislation be enacted, those governmen- 
tal officials responsible for the administration of other rele- 
vant Acts should review those Acts in light of the new 
Contribution and Comparative Fault Act in order to deter- 
mine whether the provisions in such Acts ought to be made to 
apply notwithstanding the Contribution and Comparative 
Fault Act. 

(c) The proposed review of existing legislation should include a 
consideration of the precise meaning of any provisions con- 
cerning the right to "indemnity", having regard to the distinc- 
tion, made in chapter 1 of this Report, between "contribution" 
and "indemnity" and the not infrequent use of the latter term 
in two different ways in the legislation of Ontario. 

(3) The contribution provisions of the new Contribution and Compar- 
ative Fault Act should apply in the case of trustees and other 
fiduciaries, except as otherwise specifically provided by the revised 
Trustee Act proposed by the Commission in its Report on the Law 
of Trusts (1984). 

(4) The provisions of the proposed new Contribution and Compara- 
tive Fault Act governing contribution should be subject to any 
express or implied contractual agreement relating to contribution 
made by the concurrent wrongdoers. 

4. The proposed legislation should not affect any express or implied 
contractual or other right to indemnity, as defined in chapter 1 of the 
Report. 

5. No person should be able to claim contribution from a person who is 
entitled to be indemnified by the claimant for the damages in respect of 
which contribution is sought. 

6. A person who has a right to contribution under the proposed Contribu- 
tion and Comparative Fault Act should be subrogated to any right that 
the injured person has against the concurrent wrongdoer from whom 
contribution is claimed. 

7. The proposed new statutory provisions for contribution among wrong- 
doers should expressly apply to the Crown in right of Ontario and, 
insofar as it is constitutionally permissible, to the Crown in right of 
Canada. 



CHAPTER 5 



SETTLEMENTS AND 
CONTRIBUTION CLAIMS 



1. INTRODUCTION 

This chapter examines a number of difficult issues concerning rights of 
contribution and settlements. The first question is whether a right of 
contribution should be granted in favour of a person who has settled with 
the injured person. If an affirmative answer is given to this question, then it 
is necessary to consider whether it should be a defence for the person from 
whom contribution is claimed (D2) to establish that the claimant (Dl) was 
not in fact liable to the injured person (P), but mistakenly settled or 
compromised P's claim. It should be noted that D2 may resist the contribu- 
tion claim on the ground that he had a total or partial defence to any claim. 
The more general question of the relevance to the success of a contribution 
claim of the fact that D2 was never, or has ceased to be, liable to P is 
considered in chapters 6 and 7. 

Finally, this chapter considers contribution issues arising out of a 
partial settlement between P and Dl. 

2. THE PRESENT LAW 

Until recently, Ontario was one of the few jurisdictions that had 
specifically provided by statute for claims for contribution or indemnity to 
be made following a settlement by one tortfeasor with the injured person. 
Elsewhere, courts have had to imply a right in favour of a person who had 
compensated the plaintiff without being sued to judgment. • The relevant 
provision of the Ontario Negligence Act, '^ section 3, states: 

3. A tort feasor may recover contribution or indemnity from any other tort 
feasor who is, or would if sued have been, liable in respect of the damage to any 
person suffering damage as a result of a tort by settling with the person suffering 
such damage, and thereafter commencing or continuing action against such 



See, for example, Stott v. West Yorkshire Road Car Co. Ltd., [1971] 2 Q.B. 651 (C.A.), 
where the Court allowed an appeal on the ground that the wording in the Law Reform 
(Married Women and Tortfeasors) Act, 1935, c. 30 (U.K.), s. 6(l)(a), which conferred a 
right to contribution upon "any tortfeasor liable in respect of that damage. . ." should 
not be restricted to those held liable in litigation, but could include a tortfeasor who had 
settled the injured person's claim. 

Negligence Act, R.S.O. 1980, c. 315. 

[ 85] 



86 



other tort feasor, in which event the tort feasor settling the damage shall satisfy 
the court that the amount of the settlement was reasonable, and in the event 
that the court finds the amount of the settlement was excessive it may fix the 
amount at which the claim should have been settled. 

The case law produced by this section is comparatively small. ^ This fact 
is presumably an indication that the section works reasonably smoothly, 
although the absence of litigation does not necessarily speak to the effective- 
ness of the section in encouraging fair settlements of claims made by those 
who have been injured by the tortious conduct of others. The language of 
section 3 makes it plain that it does not extend to those whose conduct is not 
tortious, but amounts only to a breach of contract or of a fiduciary duty: 
subject to an exception discussed below, contribution may be claimed only 
by and from tortfeasors whose conduct has concurrently caused a loss to the 
injured person. Whether section 3 extends to all tortfeasors, whatever the 
nature of the particular tort, depends on the considerations that were 
canvassed in chapter 4. 

A distinctive feature of section 3 is that it enables a tortfeasor who has 
made a settlement with the injured person to institute an independent 
action for contribution; tortfeasors who have been successfully sued by the 
injured person normally may not institute an independent claim for contri- 
bution, but are required to vindicate their right to contribution by serving a 
third party notice upon any person from whom contribution is sought to be 
recovered."^ The section provides that a tortfeasor who has settled may 
commence an action for contribution against other tortfeasors. The section 
also provides that a settling tortfeasor may continue such an action, which 
suggests that an action for contribution may be instituted before the settle- 
ment has been made.^ 

The fact that different procedural consequences depend upon whether 
the claimant settled with, or was sued by, the injured person may require a 
sharp distinction to be made between a settlement and a judgment. It has 
been held that the procedure provided by section 3 can be used by a person 
who has been successfully sued in a foreign jurisdiction whose law did not 
permit contribution to be claimed against a concurrent tortfeasor.^ It might 
be expected that a similar result would be reached where, as a result of the 
constitutionally limited jurisdiction of the Federal Court of Canada, it is not 



5 



6 



It is comprehensively reviewed in Cheifetz, Apportionment of Fault in Tort (1981), ch. 2. 

Cohen v. S. McCord& Co. Ltd. , [1944] O.R. 568, [1944] 4 D.L.R. 753 (C.A.). For further 
discussion of this rule and other procedural aspects of contribution claims, see chapter 9 
of this Report. 

See Glass v. Avenue Dodge Chrysler (1979), 26 O.R. (2d) 592, 10 C.C.L.T. 69 (Co. Ct.), 
where it was held that proceedings could be instituted under s. 3 at a time when the 
claimant for contribution was still a defendant in an action commenced by the injured 
party, but which was settled soon thereafter. 

Kraft V. The Queen in right of the Province of Ontario, [1972] 3 O.R. 684, 29 D.L.R. (3d) 
275 (H.C.J.). 



87 



possible for a defendant who has been sued in that Court to serve a third 
party notice upon a concurrent tortfeasor.^ The term "settlement" may also 
include settlements the terms of which are incorporated into a judgment,^ 
and the acceptance of money paid into a court by one of the parties to the 
litigation.^ 

It is clear that a settlement that extinguishes the liability of concurrent 
wrongdoers enables the settling tortfeasor to claim contribution under 
section 3.^^ Despite the apparent absence of authority on the point, the 
wording of section 3 does not suggest that it is not equally applicable to 
partial settlements, so that a tortfeasor who has settled, without barring the 
injured person's claim against other concurrent tortfeasors, is also entitled 
to contribution, at least in respect of any sum paid over and above his fair 
share of the total liability. •• 

A significant extension of the categories of persons eligible to claim 
contribution beyond those who are strictly speaking "tort feasors" has been 
made in the context of section 3. In Marschler v. G. Masser's Garage, ^^ the 
owner of a truck (Dl) settled the claim of a person with whom he had 
collided (P); Dl subsequently instituted proceedings for contribution against 
D2, who had negligently failed to repair the brakes of Dl's truck. It was held 
that D2 was solely liable for P's injury. Nonetheless, Lebel J. held that Dl was 
entitled to an indemnity from D2 by virtue of section 3, even though Dl was 
not a tortfeasor whom P could have successfully sued for his injury. The 
learned judge was prepared to give a generous interpretation to the term 
"tort feasor", so as to include "a person who impliedly assumes or admits 
liability when he enters into a settlement".'^ 

The virtue of this interpretation is that it encourages those against 
whom claims are made to settle; the possibility that, whether or not they 
could be successfully sued by the injured person, they may be able to shift 
some or all of the amount paid under the settlement to a party who was 
liable for the damage provides an obvious incentive to avoiding the hazards, 

^ See The Queen v. Thomas Fuller Construction Co. (1958) Ltd., [1980] 1 S.C.R. 695, 
(1979), 106 D.L.R. (3d) 193. But see the discussion supra, ch. 2, note 97. 

^ Morello v. Henderson, [1959] O.W.N. 121 (H.C.J.). 

^ Reaney v. National Trust Co., [1964] 1 O.R. 461, 42 D.L.R. (2d) 703 (H.C.J.). This will 
presumably also hold true under the provisions for offers of settlement under R. 49 of 
the current Rules of Civil Procedure, O. Reg. 560/84. 

'^ Nesbitt V. Beattie, [1955] O.R. Ill, [1955] 2 D.L.R. 91 (C.A.). 

"in Dixon and Dixon v. The Queen in right of British Columbia and British Columbia 
Hydro and Power Authority i\919), 99 D.L.R. (3d) 652, [1979] 4 W.W.R. 289 (B.C.S.C), 
aff'd (1980), 128 D.L.R. (3d) 389 (B.C.C.A.), Dl settled with P on the eve of the trial in 
which Dl and D2 were co-defendants. Although third party proceedings by D2 against 
Dl were adjourned, the Court gave no indication that they could not be sustained 
because Dl had made a partial settlement with P 

'2 [1956] O.R. 328, 2 D.L.R. (2d) 484 (H.C.J.) (subsequent reference is to 2 D.L.R. (2d)). 
'^ Ibid., at 490. 



88 



delays, and costs of litigation. Nonetheless, in some other jurisdictions 
courts have taken a narrower view of the circumstances in which a claim for 
contribution can be made. For instance, in Baylis v. Waugh,^^ Dl made a 
payment into court, while at the same time denying his liability to P. 
P accepted the payment in, and Dl claimed contribution from D2. The New 
Zealand Court held that it was open to D2 to defend this claim by showing, 
not only that he had a defence to P's claim, but also that Dl had. In the 
English Court of Appeal, Lord Denning M.R. has also stated, in Stott v. West 
Yorkshire Road Car Co. Ltd.,^^ that in order to claim contribution Dl must 
have been sued to judgment by P, or admitted liability to P. If he made a 
settlement with P without admitting liability, contribution could only be 
claimed if, in the course of the proceeding in which contribution was 
claimed, Dl were to establish or admit his liability to P.^^ This view has 
recently been reaffirmed in the English Court of Appeal, where Donaldson 
L.J. stated that a person who settles in the mistaken belief that he is liable for 
the damage cannot claim contribution, because the Law Reform (Married 
Women and Tortfeasors) Act, 1935 •^ confined the right to tortfeasors. ^^ 

It may be possible to reconcile the decision in Marschler with the 
statements in these English cases: the wording of the English and the Ontario 
statutes differed,'^ and in any event Lebel J. found that Dl had, in the 
circumstances in which the settlement was made, admitted or implicitly 
assumed liability for P's injury. In a recent decision, however, an Alberta 
Court has expressed a clear preference for Marschler over Lord Denning's 
dicta in Stott. In this case, Hannigan v. City of Edmonton .^^ the plaintiff 



'"* [1962]N.Z.L.R.44(S.C.). 
^^ Supra, note 1. 



^^ Ibid., at 657. Salmon L.J. agreed with Denning M.R. He held that Dl's statement that it 
had settled "without admitting liability" did not preclude it from claiming contribution, 
since the mere fact of settlement indicated a belief in liability. However, Salmon L.J. said 
that if Dl had paid P without any liability to do so, "there could, in no event, be any 
liability upon [D2]" {ibid., at 659). 

Megaw L.J. expressed a similar view when he stated: "No doubt if the alleged joint 
tortfeasor [D2] does not admit the existence of liability on the part of the defendant [Dl] 
towards the plaintiff [P] on grounds either of fact or law, the defendant must establish 
the existence of such liability towards the plaintiff as a condition of establishing his 
claim to contribution from the alleged joint tortfeasor [D2]" {ibid., at 660). 

^^ Supra, note 1. 



18 



19 



20 



Acrecrest Ltd v. W.S. Hattrell & Partners, [1983] Q.B. 260, at 280, [1983] 1 All E.R. 17 
(C.A.), overruled on other grounds by Governors of the Peabody Donation Fund v. Sir 
Lindsay Parkinson & Co. Ltd., [1985] 1 A.C. 210, [1984] 3 W.L.R. 953 (H.L.). 

In particular, s. 3 of the Negligence Act, supra, note 2, refers to the claimant for 
contribution simply as a "tort feasor", whereas the English statute spoke of the claimant 
as a "tortfeasor liable in respect of that damage". It should also be noted that prior to 
Stott, supra, note 1, it was unclear whether a person who had not been sued to judgment 
could ever be aptly described as a tortfeasor who was liable for the injured person's loss, 
even if he had admitted liability in an out-of-court settlement. 

(1983), 1 D.L.R. (4th) 397, [1983] 6 W.W.R. 644 (Alta. Q.B.). 



89 



sued the city for damages sustained by his vehicle when he drove it into the 
vehicle of a third party in order to avoid a bus owned by the city. The 
plaintiff included in his claim for damages the amount that he had paid to 
the third party in settlement of the latter's claim for the damage caused to his 
vehicle by the plaintiff. The city admitted that it was solely liable for the 
damage caused to the plaintiff and the third party; it resisted the plaintiff's 
claim to be indemnified against the third party on the ground that the 
plaintiff was not "a tortfeasor" in respect of the third party. The Court held 
that this was not a defence to the plaintiff's claim for indemnity: any other 
view would unduly discourage settlements. The decision in Marschler was 
followed and, relying upon the judgment of Salmon L.J. in Stott,^^ the 
learned judge held that a person who settled a claim made by an injured 
person would be denied contribution only if he thought that there was no 
chance of his being held liable for the injured person's loss. 

As indicated, section 3 of the Negligence Act does not distinguish 
between a settlement that has the effect of protecting other concurrent 
wrongdoers from any claim against them by the injured person in respect of 
the loss to which the settlement related, and a settlement by one wrongdoer 
that keeps alive the possibility of an action by the injured person against 
others who are concurrently liable for his injury. A settlement between the 
injured person and one concurrent wrongdoer could bar a claim by the 
injured person against other concurrent wrongdoers if the terms of the 
settlement expressly released the liability of others for the loss to which the 
settlement related, or if the payment to the injured person completely 
satisfied that person's claim. That the latter type of settlement entitles the 
settlor to contribution is evident from the decision of the Ontario Court of 
Appeal in Nesbitt v. Beattie?^ 

Partial settlements raise more difficulties. Since a person has a right to 
be paid contribution only when one wrongdoer has become obligated to pay 
more than his fair share of the loss, it is not every partial settlement by a 
concurrent tortfeasor that will entitle him to contribution. ^^ Whatever the 
injured person receives under a settlement with one tortfeasor must be taken 
into account in any proceedings against others who are concurrently liable 
for the loss; the plaintiff's recoverable loss will be diminished by the amount 
of any settlement made with one tortfeasor. ^^ While it will normally be most 
satisfactory to secure a settlement that concludes the injured person's claims 
against all those who are liable to him in respect of the loss, this is not always 



^' Quaere, though, whether Wachowich J. was correct to think that Salmon L.J. would 
have allowed contribution if D2 was able to establish that Dl was under no liability to P: 
set supra, note 16. 



22 



Supra, note 10. 



^^ This is not to say, however, that quia timet proceedings cannot be instituted, and 
entitlement to contribution litigated before the claimant has actually paid anything. 

^"^ See Dixon and Dixon v. The Queen in rif^ht of British Cohunhia and British Cohanhia 
Hydro and Power Authority, supra, note 11. See, also, Brvanston Finance Ltd. v. de 
Vries, [1975] Q.B. 703, at 723, [1975] 2 All E.R. 609 (C.A.). 



90 



possible. The present law encourages partial settlements between the 
injured person and one tortfeasor by allowing the injured person to sue 
others for any amount of his loss for which the settlement did not fully 
compensate him,^^ and by permitting the settling tortfeasor to recover from 
others who are concurrently liable any amount in excess of the share of the 
loss that he fairly ought to bear.^^ 

The disadvantage of the present law, however, is that a person who 
purports to settle only his own share of the liability cannot thereby ensure 
that he will be immune from other legal proceedings. If the injured person 
sues the other tortfeasors, they may serve a third party notice upon the 
tortfeasor who had settled, and seek contribution from him.^^ Such a claim 
will succeed if the settlement figure was based on too low an estimate of 
either the injured person's loss or the settling wrongdoer's degree of respon- 
sibility for it. To allow a claim for contribution against a tortfeasor who has 
settled would seem seriously to limit the incentives that tortfeasors have for 
settling their own portion of the injured person's claim. However, the 
settling tortfeasor can often adequately protect himself from being required 
to make further payments by way of contribution by obtaining an indem- 
nity from the injured person. 

3. REFORM OF THE LAW 



(a) Should There be a Right of Contribution Following a 
Full Settlement? 

The first question is whether Dl should be able to claim contribution 
from D2 following a settlement between Dl and P that is in full satisfaction 
of P's claim. It will be recalled that section 3 of the Negligence Act specifi- 
cally provides that a claim for contribution may be made by a tortfeasor who 
has settled with the person who has suffered damage for which the claimant 
and other tortfeasors are concurrently liable. 

This is eminently sensible. Were the law otherwise, out-of-court settle- 
ments would be discouraged.^^ A person may properly be regarded as 
obliged by law to pay a sum of money whether or not that liability was 
established in litigation. Moreover, Dl's payment will have conferred a 
benefit upon D2 by extinguishing D2's liability to P. The Commission 



2^ Courts of Justice Act, 1984, S.O. 1984, c. 11, s. 149(1), discussed supra, ch. 2, sec. 2(a). 
^^ Negligence Act, supra, note 2, s. 3. 
^^ ^Qt supra, note 11. 



28 



The English Law Reform (Married Women and Tortfeasors) Act, 1935, supra, note 1, 
was much less explicit on the right of a settling tortfeasor to claim contribution. 
However, principally for the reason given in the text, the Court of Appeal was prepared 
to stretch the language of the Act somewhat to cover the settlement situation: Stott v. 
West Yorkshire Road Car Co. Ltd. , supra, note 1. The Civil Liability (Contribution) Act 
1978, c. 47 (U.K.), s. 1(4), confirms this. 



91 



recommends, therefore, that a concurrent wrongdoer should be entitled to 
claim contribution from another concurrent wrongdoer where the former 
has settled with the injured person in full satisfaction of that person's 
claim. 2^ 



(b) Dl's Liability to P: Its Relevance to Contribution 
Claims 

As we have already seen, there is authority in Ontario for the proposi- 
tion that the right to contribution extends to those who settle their supposed 
liability to the injured person, even if it subsequently transpires that they 
could not have been successfully sued by the injured person. ^^ If the 
Commission's proposal that the right to contribution should be generalized 
so as potentially to include all concurrent wrongdoers, whether the conduct 
that caused the loss was a tort, a breach of contract, or a breach of a fiduciary 
or statutory duty, then situations in which settlements are made by those 
who could not be sued by the injured person may well increase. For 
example, a supplier of defective goods may decide to compensate an 
important purchaser in order to preserve goodwill, even though he may 
effectively have excluded his liability by inserting an exemption clause in the 
contract. Should the suppher in these circumstances be able to claim 
contribution from the negligent manufacturer whom the purchaser could 
successfully have sued in tort for his loss? Even where there is no contractual 
exemption clause, it may make commercial sense to compromise a claim 
rather than to litigate, notwithstanding that the person making the compro- 
mise does not believe that he would be held liable in a proceeding brought 
against him by the claimant. 

To return to the restitutionary framework within which we have 
considered the appropriateness and extent of contribution claims among 
concurrent wrongdoers, the legal liability of the claimant for contribution to 
the injured person is relevant in two respects. First, it will not always be clear 
that a person who has settled a claim for which he was not legally liable 
thereby confers any benefit upon a person who is liable to the injured 
person. Thus, an ex gratia payment made for reasons of friendship, sympa- 
thy, or moral obligation is likely to be regarded as a collateral benefit for 
which P will not be required to account in his action against the person who 
is legally responsible for his injury.^' In Dawson v. Sawatzky .'^'^ a neighbour, 



^^ See the Commission's proposed Contribution and Comparative Fault Act (hereinafter 
referred to as "Draft Act"), s. 17(1). The Draft Act appears as an Appendix of this 
Report. Concerning the calculation of the sum payable by D2 to Dl, see infra, ch. 8, 
sec. 2(b). 

^^ Marschler v. G. Masser's Garage, supra, note 12. 

^' A payment may, of course, constitute a collateral benefit even if the payor was legally 
required to make it. Payments made by insurers under indemnity insurance contracts 
are an obvious example. 

^2 [1946] 1 D.L.R. 476, [1946] 1 W.W.R. 33 (Sask. C.A.). 



92 



who was being taken to hospital by the plaintiff, altruistically paid money to 
the plaintiff to compensate him for the damage caused to his vehicle in the 
course of the journey by the negligence of the defendant. The damages 
recoverable by the plaintiff from the defendant were not reduced by this 
sum. 

In addition, there is a common law rule that a stranger's voluntary 
payment of another's debt does not necessarily prevent the creditor from 
suing the debtor. ^^ If a person mistakenly settles a claim in circumstances 
where the payment does not satisfy or reduce the injured person's claim 
against others, then there would seem to be little to be said in favour of 
granting any right of contribution. It should be noted that the rule respecting 
the unauthorized payment of the debts of others evolved at a time when 
choses in action were less capable of assignment than they now are, and may 
therefore appear somewhat anomalous. However, the law still does not 
generally permit the assignment of claims to unliquidated damages.^"* 

Even if the settlement does confer a benefit upon those who are liable to 
the injured person by discharging or reducing their liability, the fact that the 
settlement was made by a person who was not legally liable may require 
consideration of the principle that those who officiously confer benefits 
upon persons who have not requested them should not be entitled to 
restitution. A wrongdoer may thus argue that, while the settlement con- 
ferred a benefit upon him by reducing his liability, since the settlement was 
made by a person who was not otherwise under any obligation to the injured 
person, the payment was purely voluntary.^^ 

There are certainly good arguments for confirming by legislation the 
position adopted in Marschler's case,^^ and extending it to other heads of 
alleged civil liability. First, it obviously encourages the settlement of claims 
by allowing Dl to claim contribution from those who are liable for P's loss 



" Goff and Jones, The Law of Restitution {26 td., 1978), at 15, «. 91, and 250-51. However, 
when payment is made in full satisfaction of another's debt, the creditor may be 
prevented from suing his debtor because to do so would be a "fraud" on the payor, or a 
"breach of trust": Hirachand Punamchand v. Temple, [1911] 2 K.B. 330 (C.A.). 

^^ The right to sue for damages for a tort or breach of contract may be assigned if it is 
connected with a property or some analogous interest: see Megarry and Baker (eds.), 
Snell's Principles of Equity (27th ed., 1973), at 72. 



35 



36 



For an example, see Owen v. Tate, [1976] Q.B. 402, [1975] 2 All E.R. 129 (C.A.), where 
the plaintiff became a surety for a debt without the request of the debtor. The plaintiff 
was required to pay the creditor, but was refused an indemnity from the debtor on the 
ground that he had officiously exposed himself to liability to the creditor. Compare 
Norton v. Haggett, 85 A. 2d 571 (Vt. Sup. Ct. 1952), where the plaintiff was denied 
restitution of money that he had paid to discharge a mortgage that secured a debt owed 
by the defendants. One reason for the decision was that the plaintiff had not told the 
mortgagee that he intended to take an assignment of the debt which, the mortgagee 
alleged, he would not have been willing to assign to the plaintiff. 

Supra, note 12. 



93 



even though Dl is not liable. Secondly, it seems contrary to common sense 
for D2 to be able to defeat Dl's claim by establishing that D2 was exclusively 
liable to P, whereas Dl's claim may succeed if he establishes that he was 
indeed liable to P, no matter how small his fair share of responsibility is 
ultimately determined to be. Thirdly, the benefit to D2 will normally be 
quite clear; he has been saved from having to pay a sum to P that he could 
otherwise have been legally compelled to pay. This is not the kind of 
"unrequested" benefit for which it is unfair to require D2 to pay: Dl's 
payment has not deprived D2 of any real choice about the way in which D2 
will allocate his resources. ^^ 

The issue has been considered in a number of other jurisdictions. The 
Report published by the Alberta Institute of Law Research and Reform 
recommends that a person who has settled another's claim should not be 
deprived of a right to contribution on the ground that he was not liable to the 
injured person.^^ The Report states that Dl is not required to establish that 
he had reasonable grounds for believing that he was liable to P; it is not made 
clear, however, whether contribution is available to a person who settled, 
correctly beheving that he was not liable. The Institute may have intended 
this situation to be covered by its recommendation that a settlement must 
not be for an "excessive" amount. It could certainly be argued that any 
amount paid by a person who correctly believed that he was not liable at all 
is excessive, and that the sum recoverable in a contribution claim should be 
nil, as "the amount at which the claim should have been settled" by Dl.^^ 

Section 12(3) of the Uniform Contributory Fault Act, adopted by the 
Uniform Law Conference of Canada,"*^ also provides for the recovery of 
contribution by a person who gave valuable consideration for a release of all 
those concurrently liable for the injured person's loss, whether the claimant 
for contribution "is a wrongdoer or not". The amount of the contribution 
recoverable is based on the lesser of the value of the consideration actually 
given and the amount that "in all the circumstances it would have been 
reasonable to give for the release". This latter provision could be used to 
deny any contribution at all to a person who settled despite his correct belief 
that he was not Hable. 



■^^ There may, of course, be situations in which D2 may be prejudiced by being obligated to 
Dl, rather than to P. He may, for example, have been able to reduce his liability to P by 
bargaining from a position of strength, or the relationship between P and D2 may be 
such as to make it unlikely that P would press his claim against D2 to litigation. These 
considerations justify retaining an "officiousness" defence. 

^^ Alberta, Institute of Law Research and Reform, Contributory Negligence and Concur- 
rent Wrongdoers, Report No. 31 (1979) (hereinafter referred to as "Alberta Report"), at 
54, Recommendation 11. See discussion ibid., at 53-54, 

^^ Ibid., at 56, Recommendation 12. See discussion ibid., at 55-56. 

^^ Uniform Law Conference of Canada, Proceedings of the Sixty-Sixth Annual Meeting 
(1984), Appendix F, Uniform Contributory Fault Act. 



94 



A similar result is reached by the Irish Civil Liability Act, 1961 /' which 
provides for the recovery of contribution following a settlement by one of 
the wrongdoers.'^^ Section 29(1) provides as follows: 

29.— (1) In any proceeding for contribution, the contributor [D2] shall not be 
entitled to resist the claim on the ground that the claimant who has paid the 
injured person [P] was not liable to such person 

The provision in section 22(1) that if the amount of the settlement was 
excessive the court "may fix the amount at which the claim should have 
been settled", may also enable a court to reduce to zero the amount 
recoverable by way of contribution if the knowingly non-liable settlor 
should not have settled at all. 

Section 4 of the American Uniform Comparative Fault Act"^^ is not 
altogether clear whether a settlement between P and Dl gives rise to a right 
to contribution only if Dl can establish that he was liable to P for the injury 
at the time that he settled. For while subsection (1) confines the right of 
contribution to persons who are "liable" for a single loss, subsection (2), 
which specifically deals with contribution following a settlement by one 
person, does not include in the conditions precedent to a successful claim a 
requirement that Dl establish his liability to P. However, in those states in 
which a right to contribution among concurrent wrongdoers is recognized, 
the weight of authority favours allowing a person who has settled with the 
injured person, under a mistaken belief that he is liable, to recover contribu- 
tion, provided only that if D2 has reasonably refused to join in the settle- 
ment he can contest the reasonableness of the amount paid by Dl and, of 
course, his own liability to P.^"^ 

In a recent Working Paper,^^ the New Zealand Contracts and Commer- 
cial Law Reform Committee has recommended that Dl should be able to 
claim contribution after settling with P, and that it should not be open to D2 
to defend the claim on the ground that Dl was not liable to P. In order to 
protect D2 from being adversely affected by a settlement to which he was 
not a party, the Committee has recommended that the compromise must be 
"reasonable having regard to all the factors that influenced the 
settlement".'^^ 



"*' Civil Liability Act, 196L No. 41. 

^2 Ibid., s. 22(1). 

National Conference of Commissioners on Uniform State Laws, Uniform Comparative 
Fault Act, Uniform Laws Annotated, Vol. 12 (1987 Pocket Part). The Act was approved 
by the Commissioners in 1977. 

"^"^ Palmer, The Law of Restitution (1978), Vol. II, s. 10.6(a), at 398-401. 

"^^ New Zealand, Contracts and Commercial Law Reform Committee, Working Paper on 
Contribution in Civil Cases (1983), at 15-17. The Committee was also tentatively of the 
view that a wrongdoer who had settled the injured person's claim should not be 
subsequently liable to pay contribution to a concurrent wrongdoer {ibid., at 17-18). 

"^^ Ibid., at 17. 



95 



The English Civil Liability (Contribution) Act 1978^'^ enables a person 
to claim contribution after entering into a bona fide settlement with the 
injured person. The relevant section provides as follows: 

L— (4) A person who has made or agreed to make any payment in bona fide 
settlement or compromise of any claim made against him in respect of any 
damage (including a payment into court which has been accepted) shall be 
entitled to recover contribution in accordance with this section without regard 
to whether or not he himself is or ever was liable in respect of the damage, 
provided, however that he would have been liable assuming that the factual 
basis of the claim against him could be established. 

The inclusion of both the requirement that the settlement must have been 
made bona fide and the emphasized words was presumably intended to 
exclude claims for contribution by those who have settled a claim for their 
own extraneous reasons that may be unconnected with any belief in their 
Hability and claims for contribution by those whose conduct could not in 
law have exposed them to liability. 

A common feature of the above proposals for reform and of legislation 
that has dealt with the issue expressly, is that a person who has settled an 
injured person's claim should not be prevented from seeking contribution 
solely because that claimant could have successfully defended litigation 
instituted against him by the injured person. The Commission is of the view, 
and accordingly recommends, that, in order to encourage the settlement of 
disputed claims, a person from whom contribution is claimed should not be 
able to defend the claim merely on the ground of Dl's non-liability to R"*^ 
There seems little reason why D2 should be entitled to the windfall of a 
reduction of his liability to P as a result of a mistakenly settled claim between 
P and Dl. The production of evidence by D2 that Dl might have been able to 
persuade P not to enforce his claim against him should not in itself suffice to 
relieve D2 of liability to Dl. Nor should Dl's right to contribution depend 
upon whether P's claim against him would fail on the facts, as opposed to a 
question of law: the distinction between mistakes of law and of fact is often 
difficult to draw, and the significance that it has assumed in the law of 
restitution has been much criticized."^^ It would be unfortunate if it were to 
be made a critical element in the context of contribution claims. A benefit 
that is conferred as a result of a mistake, whether of fact or law, should not be 
regarded as officiously thrust upon the recipient. 

Most settlements of asserted liability are presumably made by those 
who believe that their conduct has indeed exposed them to liability to the 
claimant, or at least who think that the claimant's allegations are sufficiently 
plausible that there is a risk that legal proceedings may be taken against 
them, which may result in a finding of liability. To permit persons who settle 



^'^ Supra, note 28, s. 1(4). 
^^ Draft Act, s. 17(2). 



'^^ GofTand Jones, supra, note 33, at 91-92. 



96 



in these circumstances to seek contribution will effectively dispose of most 
cases. However, there may well be some situations that are not covered. 
These include cases in which a person who has no connection at all with the 
injury settles the injured person's claim, whether for reasons of altruism, 
friendship, or moral obligation. ^^ Similarly, a person who knows that he has 
a cast-iron defence to any proceedings that P might institute may nonethe- 
less decide to pay in order to avoid the bother of defending litigation or to 
preserve his commercial reputation or goodwill with P. Assuming that any 
payment by Dl in these circumstances does reduce or discharge D2's 
liability to P, should Dl be able to advance a claim for contribution on the 
theory that it would be unjust not to require D2 to pay Dl for the benefit that 
Dl's payment to P has conferred upon D2? 

To confer a right upon anyone who has paid money to an injured 
person to claim what amounts to an indemnity from those legally respon- 
sible for the injury, regardless of whether the payor either had any connec- 
tion with P's loss or believed that he was or might be held liable, would 
seriously undermine the principle that claims for unliquidated damages are 
not freely assignable. A less friendly claimant may thus be thrust upon D2 to 
his detriment. On the other hand, to attempt in advance to specify 
comprehensively the circumstances in which claims for contribution will or 
will not be permitted is unlikely to succeed. 

The Commission has come to the conclusion and, accordingly, recom- 
mends that the court should be empowered to refuse contribution if the 
person claiming contribution made the settlement without believing that he 
was or might be liable and without regard to any legal proceedings that 
might be instituted against him by the injured person for the claim settled.^ ^ 

(c) Partial Settlements and the Right to Contribution 

(i) Introduction 

The problems considered in this section arise whenever a person settles 
a claim by the injured person in such a way that other concurrent wrong- 
doers remain liable to P, although the sum that they may be required to pay 
to the successful plaintiff will be reduced by the amount of the settlement. 
The important questions are, first, whether the settling wrongdoer should be 
able to claim contribution from the others, and secondly, whether a wrong- 
doer who has been sued to judgment by P, or who has settled P's claim, 
should be able to recover contribution from a person who had ceased to be 
liable to P because he had already settled with the injured person. 

Although these questions raise their own particular problems, they 
ought initially to be considered together. The reason is that, if a person who 
settles for more than his fair share of P's loss is entitled to contribution, it 



See, for example, Dawson v. Sawatzky, supra, note 32. 
^' Draft Act, s. 17(2). 



97 



might be expected that a wrongdoer who is able to purchase his immunity 
from suit by the plaintiff for a price that is less than his fair share should be 
liable to contribution claims from other concurrent wrongdoers. The 
difficulty with this argument, of course, is that it effectively prevents a 
wrongdoer from settling his own estimated share of P's loss in the knowledge 
that he will be immune from suit from both P and other concurrent 
wrongdoers. This, as we have noted, may deter early settlements for less 
than P's full claim by one of a number of possible defendants. 

The evenness of the balance of the competing policy considerations 
that bear upon this problem is indicated by the range of solutions that have 
been recommended or actually adopted in jurisdictions that have dealt with 
it. Before examining the possibilities, it may be helpful to set out the 
principal policy concerns that any solution must attempt to address. First is 
the interest in encouraging the settlement of hability without resort to 
litigation. It is obviously good policy to minimize the occasions on which the 
expenses and delays of litigation are incurred by individuals, and to ensure 
that judicial resources are not spent wastefuUy. Any satisfactory rules should 
not discourage settlements by either imposing unduly severe consequences 
upon parties who make an unfavourable settlement, or withholding finality 
from a settlement made in order to avoid the possibility of litigation. The 
law should seek to uphold the legitimate expectations of those who have 
entered into settlement agreements. 

A second relevant concern is that the injured party should be able to 
recover proper compensation for those legal wrongs that have caused his 
loss. The injured person may also be in immediate need of cash, which a 
settlement would provide. Third is the consideration that those who are not 
parties to a settlement should not be prejudiced by an agreement made 
between the injured person and one of the wrongdoers. Fourth is the need to 
provide clear and workable rules by which the rights and duties of the parties 
are regulated. It will become apparent that it is extremely difficult to satisfy 
all these interests to the fullest extent, and that the task of reformers is to 
strike the best balance in as many situations as possible. 

Most of the difficulties discussed below will be avoided if the injured 
party and all those against whom he has a claim in respect of his loss join in 
the settlement, and agree to the sum that each is to pay to the injured person 
in final settlement of the claim. There will, however, be instances in which P 
and only one of the possible concurrent wrongdoers settle for less than P's 
legally recoverable loss: for instance, P may not know at the time of the 
settlement that others may also be legally liable for the loss; they may refuse 
to settle because they doubt the validity of P's claim; they may believe that 
difficulties of proof will deter P from suing them; or they may think that P 
will not pursue his claim against them if he receives some compensation 
from one of the wrongdoers. 

We now turn to consider several possible solutions to the problems that 
arise where a partial settlement is entered into with one concurrent wrong- 
doer. 



98 

(ii) Alternatives for Reform 

a. No Change in the Law 

The first possibility is to leave the law as it probably already is, so that 
the liability of D2 to P is reduced by the amount paid under a settlement 
between P and Dl. If D2 is subsequently sued by P, he may join Dl as a third 
party and claim contribution for any amount by which the judgment 
against D2 exceeds D2's fair share of the liability Similarly, if Dl has settled 
for what he believes to be more than Dl's fair share, he may institute 
proceedings against D2 for contribution for the excess. 

This approach was recommended by the English Law Commissions^ 
and appears to have been adopted by the English Civil Liability (Contribu- 
tion) Act 1978.^^ Indeed, the issue arose in the recent case of Logan v. 
Uttlesford District Council, ^^ in which it was held that a person (D2) who 
had settled P's claim in a way that did not bar P from suing a concurrent 
wrongdoer (Dl) could be brought into the litigation by a third party notice 
served by Dl, and made subject to a claim by Dl for contribution. It was no 
defence that by the time P sued Dl, D2 had ceased to be liable to P by virtue 
of having partially settled P's claim. 

The advantages of this solution are that it is already familiar to Ontario 
lawyers and courts, appears not to have caused dissatisfaction, and 
encourages settlement by P, who can always sue D2 if the amount for which 
P settled with Dl falls short of P's total recoverable loss. Moreover, it 
encourages Dl to settle by enabling him to recover contribution from a 
concurrent wrongdoer if the settlement figure exceeds his fair share of their 
liability. 

The principal disadvantage of this solution is that it prevents Dl from 
effecting a final settlement of his liability because he may be deprived of the 
benefit of a good settlement by remaining liable to claims for contribution 
from others who are concurrently liable for P's loss. Since the most impor- 
tant reason for entering a settlement is to avoid the expense and aggravation 
of litigation, Dl is denied the principal benefit of his bargain. From Dl's 
point of view, a third party notice, or a separate action, by D2 for contribu- 
tion is as troublesome as a further suit by P. And since it will often be 
difficult for Dl accurately to estimate his own proper share of liability for a 
claim to unliquidated damages, contribution claims after the settlement will 
be far from uncommon. However, Dl can minimize this hazard by obtain- 
ing an undertaking from P to indemnify him against claims for contribution 
successfully made by concurrent wrongdoers. Of course, Dl may still have to 



^^ The Law Commission, Law of Contract: Report on Contribution, Law Com. No. 79 
(1977). 

^^ Supra, note 28. 

^^ The Times, London (February 21, 1984). 



99 



defend the contribution claim, and will have the burden of recovering from 
P the amount covered by the indemnity. 

b. No Right of Contribution 

The most radical solution to the contribution difficulties produced by a 
partial settlement made by one concurrent wrongdoer is to deny him any 
right of contribution, and to protect him from any subsequent claim for 
contribution by a concurrent wrongdoer who has either been found liable to 
P or made a settlement with P. The key feature of this alternative is that, in 
litigation between P and D2, the court determines whether D2 is hable to P, 
assesses P's recoverable loss, but gives judgment against D2 only for the 
amount of P's loss that is proportionate to D2's degree of fault. This involves 
a departure from the principle of Uability in solidum, which the Commis- 
sion has endorsed in chapter 3, and requires the court to allocate responsibil- 
ity for P's loss among D2 and the concurrent wrongdoers who have settled, 
although they will not be parties to the litigation. The most significant 
difference that this makes to the litigation between P and D2 is that any 
settlement between P and Dl is ignored for the purpose of quantifying D2's 
liability. 

An example will illustrate the way in which the above alternative 
operates. Suppose that P, a cyclist, is injured when Dl's car collides with him. 
Dl had swerved in order to avoid D2's small child who had run into the road. 
P calculates that his loss is $5,000; Dl accepts this figure, estimates that, as 
between himself and the parent of the child, he was no more than 50 percent 
to blame, and offers to settle P's claim. Suppose, further, that neither P nor 
Dl has been able to identify D2, the parent in charge of the child, or that D2 
refuses to settle because he does not think he is liable. Dl offers P $2,500 in 
final settlement of P's claim against Dl. P needs the money, and, in order to 
avoid the expense, delay, and uncertainties of litigation, accepts Dl's offer. If 
P subsequently sues D2, the court might find that D2 was negligent, and that 
P's recoverable loss is $5,000. However, it might conclude that Dl was more 
at fault than D2, and that D2 was only 25 percent to blame. Judgment 
would be given in P's favour against D2 for the proportion of P's recoverable 
loss ($5,000) that D2 should fairiy bear (25% x $5,000 = $1,250). P will thus 
have recovered in all only $3,750. This will be because he underestimated 
the extent of Dl's share of the liability. P would also fail to recover his total 
loss if his settlement with Dl underestimated the total amount of P's loss for 
which a court subsequently held the concurrent wrongdoers liable. 

If this proposal requires P to bear the cost of a poor bargain with Dl, it 
also enables P to retain the benefit of a good one. To use the above example 
again, if a court were to conclude in the litigation between P and D2 that 
D2's share of the responsibility for P's loss was 75 percent, then judgment 
would be entered in P's favour for $3,750 (75% x $5,000). P would thus have 
recovered $6,250 under the settlement with Dl and the judgment against 
D2, even though if he had not settled, but had sued either Dl or D2, or both, 
he would only have been awarded $5,000. P has thus benefited from making 



100 



a shrewd settlement with Dl. P would also benefit similarly if the settlement 
with Dl had been based on an estimate of P's recoverable loss that was higher 
than the amount for which a court later assessed P's loss in proceedings 
against D2. 

The Alberta Institute of Law Research and Reform has recommended 
this solution,^^ which has been adopted in section 12(2) of the Canadian 
Uniform Contributory Fault Act.^^ The American Uniform Comparative 
Fault Act^^ now contains a similar provision: section 4(b) states that a 
person whose settlement with the injured person does not discharge the 
liability of concurrent wrongdoers has no right to contribution. Conversely, 
section 6 protects the settling tortfeasor from any subsequent liability to pay 
contribution to a concurrent wrongdoer who has been required to compen- 
sate the injured person. In order to protect D2 from being prejudiced by the 
terms of the settlement between P and Dl, to which he was, ex hypothesi, 
not a party, section 6 reduces P's recoverable loss from D2 "by the amount 
of the released person's equitable share of the obligation". 

The advantages of this scheme are manifest. First, if a final settlement 
of the injured person's claims against all possible wrongdoers is not attain- 
able, removing the possibility that Dl may subsequently be confronted with 
a claim for contribution by another concurrent wrongdoer will encourage 
him to settle his own estimated share of the liability. Secondly, the proposal 
does not unduly strengthen or weaken P's bargaining position with Dl, 
because, by reducing D2's liability to his fair share, it makes P bear the cost 
of a poor settlement with Dl and allows him to keep the benefit of a good 
one. In other words, when bargaining with Dl, P is in much the same 
position as he would have been in if there had been no concurrent wrong- 
doer. Thirdly, the proposal leaves the liability of D2 unaffected by the terms 
of the settlement. Because D2's liability is quantified without regard to the 
settlement figure, D2 neither obtains a windfall as a result of P's extracting a 
particularly high settlement from Dl; nor is he prejudiced by some unduly 
low settlement, made perhaps as a result of collusion between P and Dl. It is 
simply unnecessary for a court to embark upon the difficult task of 



^^ Alberta Report, supra, note 38, at 61, Recommendation 13. See discussion ibid., at 57- 
61. 

^^ Supra, note 40. 



57 



Supra, note 43. It is instructive to note that this is the third solution adopted by the 
Uniform Act. The 1939 version (National Conference of Commissioners on Uniform 
State Laws, Uniform Contribution Among Tortfeasors Act, in Uniform Laws Anno- 
tated, Vol. 12, at 57) allowed a claim for contribution to be made against a tortfeasor who 
had too cheaply settled his own share of the liability to P. It was criticized for 
discouraging settlements. As a result, in 1955 (ibid.) the settling tortfeasor's liability to 
contribution was abolished, and the liability of other concurrent tortfeasors was reduced 
by the amount for which P's liability had been bona fide settled. The problem with this, 
however, was that the difficulty that D2 would have in establishing lack o( bona fides in 
the settlement between P and Dl was likely to cause D2 to be prejudiced by a settlement 
to which he was not party. See Reming, "Report to the Joint Committee of the 
California Legislature on Tort Liability on the Problems Associated with American 
Motorcyle Association v Superior Court" (1979), 30 Hastings L.J. 1465. 



101 



attempting to determine whether the settlement between P and Dl was 
reasonable, bona fide, or collusive: the terms of the settlement cannot 
prejudice D2 in any way. 

Nonetheless, there are serious drawbacks against which these advan- 
tages must be balanced. The most obvious is that the proposal purchases the 
benefits of the finality of the settlement between P and Dl, and achieves 
equity between Dl and D2, at the price of derogating from the principle that 
the purpose of civil litigation is to ensure that the injured person is fully 
compensated, no more and no less, for the loss that is attributable in law to 
the wrongful conduct of the defendant. As we have seen, the proposal under 
consideration can produce a judgment in P's favour against D2 that either 
fails to compensate P to the full extent of his legally recoverable loss, or that, 
when the amount of the settlement is taken into account, awards him a sum 
greater than he could have obtained in litigation if there had been no 
settlement.^^ By denying a right of contribution to Dl, and reducing P's 
recovery against D2 to the latter's proper share, the scheme puts a premium 
on the stronger party to the settlement exerting maximum pressure upon 
the other in order to obtain the most favourable settlement. 

In some circumstances, this might mean that the insurance company of 
a tortfeasor would bring pressure to bear upon an injured person to accept a 
low settlement, pressure to which the victim might be all too vulnerable if he 
is in immediate need of money, is not legally advised, or has not fully 
recovered from the effects of his injuries. ^^ The proposal to abolish rights of 
contribution following settlement and to reduce the amount of the plain- 
tiff's damages against D2 to the latter's own share would prevent the injured 
person from recovering from a bad bargain by suing other concurrent 
wrongdoers for the full amount of his loss minus the sum paid under the 
settlement. 

In other situations, it may be the injured person who is in the stronger 
position, and thus able to extort a particularly generous settlement from one 
wrongdoer. This may especially be the case if the right of contribution is 
extended, as the Commission has recommended, to include other heads of 
civil liability in addition to torts. For instance, suppose that the Ministry of 
Transportation has engaged a firm of civil engineers in connection with the 
design and supervision of the construction of a new highway The highway 
soon requires extensive repairs because of a design defect, and because one 
of the construction companies employed by the Ministry on the project 



^^ Williams, Joint Torts and Contributory Negligence (1951), at 153, states that the scheme 
was objectionable because "it ignores the rather strong feeling that one has against 
allowing the plaintiff to recover double damages". That the scheme may prevent the 
plaintiff from recovering in full against D2 is a more serious weakness, particularly in 
cases of death or personal injury. It seems paradoxical that P should fare less well against 
D2 than he would have done if there had been no Dl with whom P had settled. 

^^ In extreme cases of overreaching, the injured person may be able to resile from a 
settlement that was extorted by unconscionable abuse of power, fraud, or misrepresen- 
tation. 



102 



executed the work carelessly. If the engineering firm is heavily dependent 
upon government contracts for its business, it is likely to be willing to settle 
the Ministry's claim generously in order to preserve commercial goodwill. It 
may seem unjust that if the settlement is less than complete satisfaction, the 
Ministry can still sue the construction company for its share of the responsi- 
bility, and not account for the compensation that it has already obtained 
under the settlement. 

One answer to these objections may be that as long as the law permits 
an injured person to make a final settlement of his claim against someone 
whom he believes to be legally liable, it is inherently likely that the settle- 
ment figure will be either greater or smaller than the amount that a court 
would have awarded. Why, then, should it be offensive if the injured person 
settles with one wrongdoer but has to sue another? The person sued is not 
prejudiced by the settlement; indeed, he is given the full benefit of the 
existence of another wrongdoer. The appropriate reply to this may be that 
while there are sound reasons of policy for enabling parties to settle for 
whatever sum they can, it does not necessarily follow that the effects of 
freedom of contract should be extended to court-determined liability. In this 
latter context, full compensation for wrongfully caused injuries is the 
overriding policy. 

A second objection to the Alberta Institute's scheme and to section 
12(2) of the Uniform Contributory Fault Act is that to deny any right to 
contribution where Dl's settlement does not completely discharge D2's 
liability to P, but to allow contribution where it does, may produce arbitrary 
results. Thus, when faced with an injured person who is able to drive a hard 
bargain, a wrongdoer might well be advised to settle the whole of P's claim in 
order to retain the opportunity of passing some on to a concurrent wrong- 
doer. In order to ensure that he has done so with any degree of certainty, the 
wrongdoer will have to agree to a settlement figure that is at least the amount 
that P could recover in litigation, a matter that will be difficult to predict 
with precision. Alternatively, Dl must seek to insert into the settlement a 
clause providing that the injured person is releasing not only Dl, but any 
other person against whom he may have a claim in respect of the loss. 
However, if the injured person is in the stronger bargaining position, he is 
unlikely to agree to this. 

A third difficulty with the proposal concerns the conduct of the 
litigation between P and D2. The burden of establishing D2's liability and 
proportionate responsibility for the loss will be upon P. In order to discharge 
this burden, it will generally be necessary for P to call Dl as a witness in an 
attempt to minimize Dl's degree of fault. This may provide an occasion for 
collusion between P and Dl to underestimate Dl's responsibility for the 
injury.^^ 



^^ The Law Reform Commission of Hong Kong initially thought that the fact that the 
settling wrongdoer would not be a party to the litigation brought by the injured person 
against other concurrent wrongdoers was a fatal objection to the adoption of a scheme of 



103 



Another possible solution is to couple a denial of any contribution 
following a partial settlement with a provision that when P sues D2, P's 
damages will be calculated by subtracting from his full recoverable loss the 
amount of the settlement between P and Dl or Dl's proportionate share of 
the liability, whichever is less. Suppose, for example, that P's loss is $1,000, 
and Dl settles his share of the liability for $300. If D2 is then found to be 
liable to P, and his due portion of the liability to be 50 percent, then P will 
recover $700. P is not thereby penalized in his litigation with D2 for a poor 
settlement with Dl; D2 is the one who bears the loss. If, on the other hand, 
P's settlement with Dl proves very favourable because D2 is found 90 
percent to blame, then P will be awarded $900 in damages against D2. D2 
pays his proper share, but if the amount of the settlement with Dl is added to 
the judgment against D2, P will have received more than his recoverable 
loss. 

The advantages of this scheme are that it makes the settlement between 
P and Dl final and, by ensuring that however unfavourable the settlement is 
for P, P is able to receive full compensation from D2, it does not elevate 
considerations of fairness between Dl and D2 over the aim of allowing P full 
recovery. Its disadvantage, however, is that it regulates the quantum of D2's 
Uability by the amount of the settlement, and thus exposes D2 to the risk of 
having to pay P more than his fair share of the loss, without giving him an 
opportunity of obtaining contribution from the other concurrent wrong- 
doer. The possibility of a collusive settlement between P and Dl, under 
which Dl settles for a minimal figure and P recovers the remainder from D2, 
is all too real. The difficulties of defining improper collusion in this context, 
and of producing the necessary evidence to prove it, are likely to be 
immense. 

Moreover, it seems objectionable in principle that D2's liability to P— 
which he cannot apportion among those concurrent wrongdoers who have 
settled— can be increased beyond his fair share by the terms of a settlement 
to which he was not a party. In short, this proposal comes all too close to the 
vice of the common law rule in Merryweather v. Nixan:^^ it gives the injured 
person power to choose which wrongdoer will ultimately bear the burden of 
compensating him for the loss. 



61 



this kind. However, the Commission received representations from the Bar that this was 
unlikely to be a problem. The settling wrongdoer could be subpoenaed either by the 
plaintiff, who would be anxious to minimize the responsibility of the settling wrongdoer, 
or by the defendant, who would wish to maximize it. It was also pointed out that there 
would be many instances in which the degree of responsibility to be attributed to the 
defendant could be established by evidence other than that provided by the wrongdoer 
who had settled. 

The Commission ultimately rejected this solution, however, because of its poten- 
tially harmful consequences for plaintiffs. See The Law Reform Commission of Hong 
Kong, Report on the Law Relating to Contribution Between Wrongdoers, Topic 5 ( 1984), 
paras. 4.10-4.18, at 17-21. 

(1799), 8 TR. 186, 101 E.R. 1337 (K.B.). See supra, ch. 4, sec. 2. 



104 



c. One Way Contribution 

A variation on the scheme considered above is contained in the Irish 
Civil Liability Act, 1961 ,^^ which, Uke much of the rest of the statute, is 
based upon a proposal and draft bill of Professor Glanville Williams.^^ This 
scheme differs from the Alberta proposal and the Canadian Uniform 
Contributory Fault Act in that it prevents the injured person from recover- 
ing, as a result of a partial settlement with Dl and a judgment against D2, 
more than the amount that he would have recovered if he had not settled 
with Dl. This is achieved by section 17(2), which provides that if P settles 
with Dl and then sues D2, P's damages will be the difference between P's 
total loss and the amount of either P's settlement with Dl or Dl's proper 
share of the liability, whichever is the greater. D2 has no right of contribution 
against Dl, but Dl may claim contribution from D2. 

An example illustrates the operation of this scheme. P has suffered a 
loss of $1,000 as a result of an automobile accident for which Dl and D2 are 
concurrently liable. P and Dl settle for $400 on the assumption that Dl is 50 
percent to blame. If P institutes proceedings against D2 in which D2 is held 
liable, but is found to be only 30 percent responsible, judgment will be given 
in P's favour for only $300. This is the difference between P's total loss and 
the amount of Dl's fair share of responsibility. If, on the other hand, D2 is 
found to be 70 percent responsible, then P will recover $600, because on 
these facts the settlement figure is greater than Dl's proper share. As these 
examp}es show, the effect of the Irish Act's solution is to prevent P from ever 
obtaining more than his legally recoverable loss; however, it makes P pay for 
a poor settlement with Dl by identifying him with the fair share of Dl's 
responsibility. 

This scheme would seem less likely to promote settlements than that 
proposed by the Alberta Institute and the American Uniform Comparative 
Fault Act. This is because if the injured person underestimates the degree of 
fault of Dl and settles for too low a figure, he bears the shortfall; but this risk 
is not offset by the possibility that if he settles favourably with Dl, he can 
keep the benefit of a good bargain. 

On the other hand, the Irish Act allows Dl to recover contribution from 
D2 if Dl settles for more than his proportionate share; thus, Dl can afford to 
settle on fairly generous terms with P in the knowledge that he can claim 



^^ Supra, note 41. 



63 



See Williams, supra, note 58, at 152-55 and 207. See, also, Tasmania's Tortfeasors and 
Contributory Negligence Act 1954, No. 14 of 1954, s. 3(3) (found in Tasmanian Statutes 
1826-1959 (Reprint), Vol. 6). Section 3(3) renders contribution unnecessary by provid- 
ing that if a plaintiff who has settled with one concurrent tortfeasor subsequently sues 
another, the damages recoverable in this action are reduced by the amount paid for the 
release, or any amount or proportion by which the release stipulates that the total claim 
against the settling tortfeasor shall be reduced, or the proper share of the liability that the 
settling tortfeasor should bear, whichever of these amounts is the greatest. 



105 



contribution for any excess. By protecting Dl from the possibility of a later 
contribution claim in the event that Dl settles for less than his proportionate 
share, the Act gives finality to the settlement and thus provides an incentive 
to Dl to reach a settlement with P. The scheme also prevents D2 from being 
unfairly affected by the settlement between P and Dl because D2 can never 
be made liable for more than his judicially determined share of the liability 

(iii) Conclusions 

It should be apparent from the preceding consideration of the principal 
solutions to the contribution problems posed by partial settlements that 
each has its own strengths and weaknesses. It is difficult to produce a rule 
that will encourage the making of fair and final settlements, ensure that the 
injured person is fully compensated, but no more, and produce equity 
among concurrent wrongdoers. It seems that some policy objectives can be 
attained only by sacrificing others. It thus becomes necessary to decide 
whether some policy objectives are more important than others. 

There is obviously much to be said for retaining the present law, based 
on the view that the overriding consideration should be to ensure that the 
injured person is properly compensated, and that, if he makes a poor 
bargain with one wrongdoer, he should be able to take full advantage of the 
existence of another wrongdoer whose conduct also caused his loss. Since 
the object of civil proceedings for breach of an obligation is generally to 
compensate the injured person, his recovery against D2 will be reduced by 
the amount for which Dl settled P's claim. If the present law achieves this 
result, it is a very considerable strength. To allow contribution policy to 
determine the primary rights of the injured person is to permit the tail to 
wag the dog.^"^ 

On the other hand, the inability of one wrongdoer to make a final 
settlement of his own estimated share of responsibility may well discourage 
some settlements from being made. However, the extent to which the 
present law discourages settlements should not be overemphasized, particu- 
larly in the absence of empirical data: the fact that under the present law P's 
claim against D2 is not prejudiced by a poor settlement with Dl, and that Dl 
may seek to recover contribution if he settles too generously, may well 
provide ample incentives to settle by giving each party a further opportunity 
to recover from a bad bargain. Finally, despite the complications that may 
theoretically arise from giving rights of contribution after a partial settle- 
ment, this is a system with which lawyers in Ontario have become familiar. 
It appears to have provoked few allegations of injustice or inconvenience. 



^'^ It should be noted, however, that the practical effect of Dl's extracting an indemnity 
from P against further liability is to reduce the amount of the damages for his loss that P 
will be able to retain. It would be a mistake, therefore, to overemphasize the practical 
differences between the Canadian Uniform Contributory Fault Act, supra, note 40, and 
the position taken by the Commission in this Report. 



106 



Nor is it without significance that the English Law Commissioners and the 
British Parliament have recently decided to retain it.^^ 

Nonetheless, in addition to both statutory reforms and recent recom- 
mendations for reform, there is considerable academic and some practi- 
tioner support^^ for a regime that immunizes the settling wrongdoer from 
claims for contribution and achieves justice between Dl and D2 by placing 
the cost of a poor settlement upon the injured person. The Canadian 
Uniform Contributory Fault Act and the American Uniform Comparative 
Fault Act illustrate the adoption of this option, as does, with some variation, 
the Irish Civil Liability Act, 1961 . Recent Reports of the Alberta Institute of 
Law Research and Reform and the New Zealand Contract and Commercial 
Law Reform Committee^^ have recommended its adoption. In addition, 
Professors Glanville Williams^^ and John G. Fleming, among others, have 
given it their support. Addressing himself to the objection that the version of 
the scheme ultimately accepted by the American National Conference of 
Commissioners on Uniform State Laws (and the Alberta Institute) allows an 
injured person to recover more than his total loss, Fleming has written :^^ 

Nor does the windfall aspect present a serious argument to the contrary. The 
purpose of the one-satisfaction rule is to prevent the plaintiff from unjustly 
enriching himself at the expense of the defendants, but here that principle is not 
violated: the non-settling defendants will still not be required to pay any more 
than their apportioned shares and the settlor has bought his peace. 

In addition to encouraging final settlements, preventing the bargaining 
strengths of the parties from being skewed by the presence of a concurrent 
wrongdoer who has not joined in the settlement, and achieving justice 
between Dl and D2, the abolition of rights of contribution would simplify 
the law. It will be recalled that the complications of contribution, and 
especially their possible adverse effect upon the efficient vindication by the 
injured person of his rights, have been used to justify the denial of contribu- 
tion among wrongdoers altogether. 

Moreover, it can be argued that to subject a person who has settled his 
portion of the loss to a claim for contribution, if it turns out that he paid less 
than a fair share of his liabiUty, not only removes an incentive for settling, 
but also is inconsistent with the restitutionary premises upon which rights of 



See supra, notes 52 and 53 and accompanying text. 



In addition to the writers whose views are noted in the text, see, also, Larson, "A 
Problem in Contribution: The Tortfeasor with an Individual Defense against the Injured 
Party", [1940] Wis. L. Rev. 467; MacPherson, "Contribution and the Distribution of 
Loss among Tortfeasors" (1975-76), 25 Am. U.L. Rev 203; and Teplitsky and Gomberg, 
"Acceptance of Money Paid into Court by One of Several Defendants: Lawyer Beware" 
(1977-78), 1 Advocates' Q. 123. 

^"^ ^wpra, note 45, at 17-18. 

^^ Supra, note 58, at 152 et seq. 

Supra, note 57, at 1497-98. But see Williams, supra, note 58. 



69 



107 



contribution are based. For if Dl has already settled, albeit cheaply, by the 
time that D2 is held liable to the injured person, Dl derives no benefit from 
D2's satisfaction of the judgment because Dl is no longer liable to P. An 
essential element of the claim for contribution is therefore absent: Dl has 
not been unjustly enriched at D2's expense. 

The argument that a person who was once liable to P, but whose liability 
had ceased by the time that a concurrent wrongdoer is required to compen- 
sate P, should not be subject to a claim for contribution can be applied in 
other situations. This issue has often surfaced in connection with limitation 
periods. Suppose, for example, that DFs prima facie right to contribution 
arises when D2 can no longer be successfully sued by P because the 
limitation period governing P's cause of action against D2 has lapsed. Or D2 
may have become immune from suit by P because P has already instituted 
legal proceedings against him and has been unsuccessful. These difficult 
questions are explored more fully in chapter 7 of this Report. 

For present purposes, it suffices to note that the fact that Dl has become 
immune from suit by P by virtue of his settlement is not necessarily a 
conclusive argument against D2's subsequently claiming contribution. It 
can be argued, for instance, that by settling his liability for a sum that is 
smaller than his comparative degree of fault, Dl has undeniably received a 
benefit. The benefit has been conferred upon him by the injured person. 
The key policy question posed is whether Dl should be able to retain this 
benefit. If the answer is that he should, because he has bargained for it, then 
no claim for contribution ought to be allowed against him. However, this 
conclusion prompts a further question: if Dl is to keep the benefit without 
paying for it, upon whom should its cost fall? One possibility is that since the 
benefit was conferred by the injured person, he should pay for it by a 
reduction in the damages that he can recover from D2. As we have seen, this 
can be accomphshed by Umiting P's recovery to D2's share of the fault. The 
alternative is that the cost should be borne by D2 who remains liable to P for 
the full amount of P's loss, less the figure at which P and Dl settled. For 
reasons already discussed, neither alternative is entirely satisfying. 

After weighing the various alternatives for reform, the Commission has 
concluded that Dl should not be able to retain the benefit of a favourable 
settlement with the injured party. He should remain liable to a claim for 
contribution from a concurrent wrongdoer who is required to pay more 
than his fair share of P's loss. We are also of the view that, if the wrongdoer 
who has partially settled the injured person's claim is under a duty to 
contribute when he has settled well, it is only fair that he should have a right 
to contribution when he has made a poor settlement. The liability for 
contribution of the wrongdoer who has settled has generally been regarded 
as a more unattractive feature of the present law than his right to contribu- 
tion where he pays P more than his proper share. 

Accordingly, the Commission recommends that a person should be 
entitled to institute or continue a claim for contribution if he settles the 



108 



injured person's claim in such a way as to reduce, but not extinguish, the 
liability of other wrongdoers concurrently liable for the injured person's 
loss.^^ The amount of contribution would be in respect of the consideration 
given by the settling wrongdoer that exceeds his proportionate share of the 
responsibility for the damage. We further recommend that if an injured 
person obtains judgment against a wrongdoer, his damages should be 
reduced by any consideration already given to him under a settlement by 
another concurrent wrongdoer.^' Finally, we recommend that, where, fol- 
lowing a settlement between the injured person and a concurrent wrong- 
doer, another concurrent wrongdoer has been held hable to the injured 
person or has settled the injured person's claim for an amount that exceeds 
his proportionate share of the liability, he should be entitled to claim 
contribution from the first concurrent wrongdoer for the excess, even 
though the first concurrent wrongdoer has ceased to be liable to the injured 
person by virtue of his own settlement with that person.^^ 

Some other questions remain concerning the sum to which a wrong- 
doer who has settled may require a concurrent wrongdoer to contribute. In 
particular, it may well be unfair to make the settlement figure determina- 
tive. D2 is entitled to be protected from having to contribute to a sum that 
exceeds an amount for which it was reasonable for Dl to settle P's claim. 
These matters are considered in chapter 8. 

Recommendations 

The Commission makes the following recommendations: 

1. Where a person who has settled the claim of an injured person claims 
contribution from another who he alleges is liable for the injured 
person's loss, it should be no defence to the contribution claim that the 
claimant could never have been successfully sued by the injured person. 
However, the court should be empowered to refuse contribution if the 
person claiming contribution made the settlement without believing 
that he was or might be liable and without regard to any legal proceed- 
ings that might be instituted against him by the injured person for the 
claim settled. 



^0 Draft Act, s. 17(1). 

^^ Ibid., s. 16. Our recommendation, unlike s. 1(4) of the English Civil Liability (Contribu- 
tion) Act 1978, supra, note 28, does not require that the consideration for the settlement 
must take the form of a "payment" of money by the wrongdoer to the injured person. 
Instead, a contract price may be reduced, services rendered, or goods delivered. For a 
brief discussion of the issue in relation to the 1978 English Act, see Dugdale, "Statutes [:] 
The Civil Liability (Contribution) Act 1978" (1979), 42 Mod. L. Rev. 182, at 185. 



72 



Draft Act, s. 15(d). 



109 



2. A person who settles a claim made against him by the injured person 
should be entitled to institute or continue a claim for contribution from 
those concurrently liable if the settlement provides for the discharge or 
reduction of the liability of the other concurrent wrongdoers to the 
injured person. 

3. If an injured person obtains judgment against a wrongdoer, his dam- 
ages should be reduced by any consideration already given to him 
under a settlement by another concurrent wrongdoer. 

4. Where, following a settlement between the injured person and a con- 
current wrongdoer, another concurrent wrongdoer has been held liable 
to the injured person or has settled the injured person's claim for an 
amount that exceeds his proportionate share of the liability, he should 
be entitled to claim contribution from the first concurrent wrongdoer 
for the excess, even though the first concurrent wrongdoer has ceased to 
be liable to the injured person by virtue of the settlement. 



CHAPTER 6 



DEFENCES TO 
CONTRIBUTION CLAIMS: 
LIABILITY TO THE 
INJURED PERSON 



1. INTRODUCTION 

The preceding chapters of this Report have been concerned principally 
with the ingredients of a claim for contribution made by a person (Dl) who 
has been held liable to, or who has settled with, the injured person (P). So far, 
little attention has been paid to the defences to the claim for contribution 
that may be available to the person from whom contribution is sought (D2). 
However, in chapter 4, we recommended that the legal nature of the liability 
that resulted in a single loss to the injured person should not defeat a claim 
for contribution. In this chapter and the next, we shall focus upon the 
possible defences that may be raised against a claim for contribution made 
by a person who has prima facie established an entitlement. This chapter 
considers, first, whether, in separate proceedings instituted against D2 by 
Dl, D2 should be able to assert that the court that found Dl liable to P erred 
in its conclusion, either in fact or in law, or that the court in the earlier 
proceedings wrongly assessed the quantum of the loss suffered by P that 
could properly be attributed to Dl's wrongdoing. ' 

Secondly, the chapter examines situations in which D2 could at no time 
have been held liable to P for the loss sustained as a result of the conduct of 
Dl and of D2. Should it invariably be a defence to a contribution claim that 
D2 was never liable to P for the loss in respect of which Dl has been held 
liable or has settled? Chapter 7 considers the relevance to a claim for 
contribution of events that occurred after P's loss was sustained, as a result of 
which D2 may have become immune from a successful suit by P. These 
events include the expiry of a limitation period within which P must sue D2, 
and entry of judgment in favour of D2 in proceedings instituted by P 



' Somewhat similar issues may arise when Dl has paid compensation to P under a 
settlement: should D2, when sued for contribution by Dl, be able to assert that Dl was 
not in fact liable to P at all, or that had the matter been litigated, P would not have 
obtained judgment against Dl? This, and other aspects of contribution claims following 
a settlement between the injured party and one concurrent wrongdoer, were the subject 
of chapter 5 of this Report. 

[ 111] 



112 



2. LIABILITY OF Dl TO P 

In this section, we are concerned with whether the existence of a 
judgment in favour of an injured party against a wrongdoer should in itself 
be sufficient to support a right to contribution, where the concurrent 
wrongdoer against whom contribution is claimed alleges that the court in 
the earlier litigation erred in its finding of liabiUty or quantum. Because, 
under the rule in Cohen v. S. McCord & Co. Ltd. } the present law of Ontario 
does not normally permit a person v^ho has been sued successfully by an 
injured party to claim contribution in a separate action, the problem has not 
had to be considered by our courts. However, the creation of the Federal 
Court of Canada, with exclusive jurisdiction over suits against the federal 
Crown, but apparently no constitutional competence over claims for dam- 
ages against others, including concurrent wrongdoers whose liability is not 
founded on applicable federal law, may give rise to these problems in the 
future.^ An abolition or modification of the rule in Cohen v. S. McCord & 
Co. Ltd. would have a similar effect. On the other hand, we believe that it 
would be a mistake to overemphasize the practical importance of this 
problem. The cases in which D2 resists a contribution claim on the ground 
that Dl was not truly Uable to P are likely to be rare. 

A point at which to start thinking about the question is to recognize that 
the principle of res judicata would not prevent D2 from contesting a finding 
made in the earlier litigation between P and Dl that Dl was liable to P, or that 
the amount of P's recoverable loss was not as it was found to be by the court 
that decided the case brought by P against Dl."^ The situation with which this 
section is concerned must be distinguished, then, from the case where P sues 
Dl and D2 as co-defendants, or where D2 is added as a third party in P's 
action against Dl. In such circumstances, the court's apportionment of 
liability between Dl and D2 clearly is binding upon both of them for the 
purpose of determining their rights to contribution as between themselves.^ 
The Commission sees no need to change the latter rule. Accordingly, we 
recommend that, if D2 was a party to the litigation between P and Dl, or was 



2 [1944] O.R. 568, [1944] 4 D.L.R. 753 (C.A.) (subsequent references are to [1944] O.R.). 

^ See, in particular, The Queen v. Thomas Fuller Construction Co. (1958) Ltd., [1980] 1 
S.C.R. 695, (1979), 106 D.L.R. (3d) 193. For a comment on this unsatisfactory area of 
the law, see Evans, "Federal Jurisdiction— A Lamentable Situation" (1981), 59 Can. B. 
Rev. 124. See, also, Kraft v. The Queen in right of the Province of Ontario, [1972] 3 O.R. 
684, 29 D.L.R. (3d) 275 (H.C.J.) (main action instituted in jurisdiction where contribu- 
tion not available), and supra, ch. 2, sec. 4(a). With respect to recent cases that would 
expand the jurisdiction of the Federal Court, see discussion supra, ch. 2, note 97. 

^ See Inglis Ltd. v. South Shore Sales and Service Ltd. (1978), 31 N.S.R. (2d) 562, at 567- 
68, 8 C.P.C. 58 (S.C, T.D.), rev'd on other grounds (1979), 31 N.S.R. (2d) 541 (S.C, App. 
Div.). See, further, Cheifetz, Apportionment of Fault in Tort (1981), at 116-20. 

5 See Kirk v. Faugh, [1951] O.W.N. 745 (H.C.J.). 



113 



joined as a third party, both she and Dl should continue to be bound by the 
findings of the court in that litigation.^ 

Despite the apparent absence of Ontario judicial authority directly on 
point, it may be noted that in Marschler v. G. Masser's Garage,'^ Lebel J. 
held that a claim for contribution made by Dl, following a settlement that he 
had made with P, could not be defeated by an allegation by D2 that Dl had 
settled under the mistaken belief that he was liable to P. His Lordship 
interpreted the reference in section 3 of the Negligence Act to a "tort feasor" 
who had settled her liability with P to include a person who mistakenly 
believed herself to be liable. One might think, therefore, that a person who 
had paid P, following a judgment in which she had been held liable, would a 
fortiori not be debarred from recovering contribution, even if D2 could 
establish that the facts in P v. Dl had been wrongly found, or that Dl had 
failed to raise a material legal defence to P's action. 

The different wording of contribution legislation in other jurisdictions 
whose statutes are based upon the English Law Reform (Married Women 
and Tortfeasors) Act, 1935^ diminishes the relevance of decisions in which 
courts have had to consider whether, in contribution proceedings brought 
by Dl against D2, D2 is able to challenge the findings made against Dl in the 
previous litigation that resulted in judgment against Dl in favour of P^ It 
would seem that the legislation in these jurisdictions does not enable D2 to 
defeat Dl's contribution claim on the basis that Dl is not liable to P or that 
the court erred in assessing the quantum of P's loss vis-a-vis Dl, although, 
bearing in mind the prevailing test for apportioning liability between 
wrongdoers, it has been held that the court may have regard to Dl's conduct 
of the litigation with P in determining the amount of contribution to be 
awarded. In the Australian case o^ Bitumen and Oil Refineries (Australia) 
Ltd. V. Commissioner for Government Transport, ^^ the High Court stated as 
follows:" 



^ See Rules o{ Civil Procedure, O. Reg. 560/84, r. 29.05(2)(b) and (5), which makes 
determinations in the main action binding upon a third party whether or not a 
statement of defence to the main action was delivered. 

^ [1956] O.R. 328, 2 D.L.R. (2d) 484 (H.C.J.). 

^ Law Reform (Married Women and Tortfeasors) Act, 1935, c. 30 (U.K.). 

^ In particular, s. 6(1 )(c) of the 1935 Act provided that "any tortfeasor liable in respect of 
that damage may recover contribution. . .". It would have been difficult to argue that a 
claimant who had been held liable in the action brought against him by P was not 
"liable". 



10 



(1955),92C.L.R. 200(H.C.). 

Ibid., at 212-13. See, also, Inglis Ltd. v. South Shore Sales and Service Ltd. (1978), 31 
N.S.R. (2d) 562, 8 C.PC. 58, at 64 (S.C, T.D.), where the defendants to a claim for 
contribution were said to be entitled to contest the quantum of damages awarded 
against the plaintiff in an eariier action by the injured person to which the defendants in 
the contribution action had not been joined as third parties. The decision was reversed 
on other grounds: (1979), 31 N.S.R. (2d) 541, 11 C.PC. 127 (S.C, App. Div.). 



114 



No doubt the Court. . .must accept the assessment [made in proceedings 
brought by P against Dl] as conclusive as to the existence and the amount of the 
Hability of the plaintiff claiming contribution [Dl]. The Court, however, is 
required to find what is just and equitable as an amount of contribution having 
regard to the extent of the responsibility for the damage of the tortfeasor against 
whom the claim is made [D2]. There does not seem to be any valid reason why 
that tortfeasor may not say to the tortfeasor making the claim, if he has 
improvidently agreed to pay too large an amount or by unreasonable or 
negligent conduct in litigation has incurred or submitted to an excessive 
verdict, that the excess is due to his [Dl's] fault and not to that of the tortfeasor 
resisting the claim [D2]. It would be a matter for the Court to consider under 
the heading of 'just and equitable'. 

However, in James P. Cony & Co. Ltd. v. Clarke, ^^ 3. claimant for contribu- 
tion was held not to have established that he was a tortfeasor, who was as 
such entitled to contribution, merely by proving that he had submitted to a 
consent judgment in favour of P and had paid the amount due under it. 

Section 29(1) of the Irish Civil Liability Act, 1961 '^ specifically provides 
that D2 may not resist Dl's claim "on the ground that the claimant who has 
paid the injured person was not liable to such person". However, the section 
also provides, among other things, that D2 "may resist the claim on the 
ground that he himself is not liable to such person and, for this purpose, may 
dispute any question of law or fact even though that question arises also on 
the liabihty of the claimant to the injured person; and the contributor may 
in the same way dispute the amount of the damage suffered by the injured 
person".^"* 

There are several arguments in favour of an approach that would make 
any finding in P v. Dl binding on D2 in a subsequent contribution action. 
First, to the extent that Dl has satisfied the judgment against her, she will 
have conferred a benefit upon D2— who, it should be re-emphasized, is 
liable to P— by removing or reducing that liability. Secondly, Dl cannot be 
said to have benefited D2 officiously, because the payment was made 
pursuant to a legal obligation. Thirdly, since D2 will be able to raise against 
Dl's claim for contribution any defence that would have enabled her to 
defeat or reduce P's claim against her, she is not prejudiced by being bound 
by the outcome of litigation to which she was not a party-defendant, or, 
indeed, a third party. Finally, to prevent D2 from reopening the issue 
decided in P v. Dl is an efficient use of judicial time and public funds, and 
since D2 would have had to pay P in any event, she is not substantially 
prejudiced by this extension of issue estoppel. 



'2 [1967] N.I. 62 (C.A.). 

•^ Civil Liability Act, 1961, No. 41. 

^^ Reference should also be made to the exception in s. 29(3) of the Act. Section 29(3) 
provides that D2 is estopped from "disputing the propriety or amount of the judgment 
obtained by the injured person on any question of law or fact common to [Dl's] liability 
to the injured person and [D2's] liability to the injured person", if D2 "had knowledge of 
an action brought by the injured person against [Dl], and unreasonably failed to make a 



115 



On the other hand, if D2 is not able to defend Dl's claim for contribu- 
tion by establishing that Dl ought not to have been held liable to P in the 
original litigation, then she will have been deprived of a defence that she 
could have raised if she had been brought into the original action as a party- 
defendant or by Dl's service of a third party notice upon her, even though it 
might have been legally impossible to join D2 to P's action in either of these 
ways. '^ 

The Commission has recommended in chapter 5 that, if Dl claims 
contribution after settling with P, D2 should not be able to defend the claim 
on the ground that Dl ought not to have settled because Dl was not liable to 
P. The purpose of this recommendation was to encourage settlements. 
However, the Commission has come to the conclusion that, in the present 
context, such a high value should not necessarily be given to the public 
interest in the finality of all issues decided in the litigation between P and Dl. 
Rather, subject to one significant exception, we believe in the basic principle 
that a person should not be bound by an issue decided in an action to which 
she was not a party. 

With respect to the existence of Dl's liability to P— the central fact on 
which Dl's right to contribution against D2 is predicated— the Commission 
favours an approach that would make the earlier finding against Dl conclu- 
sive in a subsequent contribution action. We see no policy justification for 
permitting D2 to open up the issue of Dl's liability in that action. By 
hypothesis, D2 is liable to P. Accordingly, as a general proposition, the 
payment of money by Dl in satisfaction of her judgment debt to P confers a 
benefit on D2 (although the extent of the benefit depends on the quantum of 
P's loss, a matter to which we turn below). It would be unjust, therefore, to 
allow D2 to relitigate the issue of Dl's liability. In this respect, then, we 
endorse the position taken in the Irish Civil Liability Act, 1961 . 

We also wish to adopt the principle enunciated in that Act in respect of 
D2's right to prove, in the contribution action, that the court erred in 
assessing the quantum of the injured person's loss in Pv. Dl . The Commis- 
sion believes that there is an important distinction between relitigating the 
issue of Dl's liability to P and relitigating the issue of quantum. As we have 
said, since D2 is, by definition, a wrongdoer, she is not prejudiced by being 
compelled to accept the fact of Dl's liability. Such is not the case where the 
quantum of P's loss is in issue. Here, the inability to contest the earlier 

proposal for assisting [Dll in the defence of the action. . .". The reason for this provision 
is clear. It is to discourage the multiplicity of proceedings in respect of a single loss, 
although precisely what "assisting" in the defence of the action by the injured person is 
meant to encompass is not at all clear. It also t)ears mentioning that, under s. 29(3), D2 
"shall not be so estopped where the claimant submitted to judgment in fraud of the 
contributor". 

'^ The complications of the Federal Court Act, S.C. 1970-71-72, c. 1, provide the most 
obvious example: see text accompanying note 3, supra. Whether Dl ought to have 
known that D2 was a possible concurrent wrongdoer, or whether D2 deliberately 
concealed D2's potential liability so that it was not practically possible for D2 to be 
joined to P's action, should not be regarded as decisive factors. 



116 



finding may be of critical importance to D2, who may wish to argue in the 
contribution claim that, since P's loss is actually less than that determined in 
Pv. Dl , not all of Dl's payment to P has, in fact, benefited D2. Moreover, it 
bears emphasizing that, where P's judgment against Dl has not been 
satisfied or where P believes that her loss is more than the court held in her 
suit against Dl, P may commence an action against D2. In such an action, 
the court would have to deal with the quantum of the damage suffered by P, 
obviously without reference to the results reached on the same issue in P v. 
Dl . Accordingly, the Commission cannot see why that very issue ought not 
to be justiciable in the contribution action. 

For the reasons advanced above, the Commission recommends that, 
where a claim for contribution is made in a legal proceeding independent of 
that in which judgment was awarded in favour of the injured person against 
the claimant for contribution, it should be no defence for the person against 
whom the claim for contribution is made to show that the court erred in 
holding the claimant liable to the injured person, except where the judgment 
was obtained by collusion or fraud. '^ We further recommend that this 
proposal should apply even where the judgment against Dl in favour of P 
was on consent. As a matter of principle, in this context we are of the view 
that there is no real distinction between a settlement— which, under our 
proposals, could not be opened up by D2— and a consent judgment. 

However, insofar as the assessment of P's loss is concerned, we recom- 
mend that, in the independent contribution action, D2 should be entitled to 
show that the court wrongly assessed that loss in the earlier litigation 
between P and Dl. •^ Accordingly, the sum to which D2 should be required to 
contribute should be determined by the court before which the contribution 
claim is made. Its decision will be made on the basis of the evidence 
admissible and introduced in that litigation, which, of course, may include 
evidence not available in the eariier action between P and Dl. This is 
consistent with the principle that, if P herself had sued D2 at this time, such 
new evidence would be admissible. 

If, in the contribution action, the court assesses P's recoverable loss as 
less than the figure determined by the court when P sued Dl, then Dl may be 
required to pay a sum that exceeds her due proportion of the common 
liability as determined in P. v. Dl . Thus, suppose that in P's action against 
Dl, P's damages were found to be $10,000, but that when Dl subsequently 
claims contribution from D2, the court finds that the common liability of 
the concurrent wrongdoers was only $5,000. If Dl and D2 are found to be 
equally responsible for the loss, Dl will recover from D2 only $2,500. This 
result flows from a restitutionary analysis of contribution, because D2 will 



'^ See the Commission's proposed Contribution and Contributory Fault Act (hereinafter 
referred to as "Draft Act"), ss. 8(1) and 14(2). The proposed Act appears as an Appendix 
of this Report. 

'^ Draft Act, s. 8(1). 



117 



have been unjustly enriched only to the extent that she has to bear less than 
half of the amount for which she was liable to pay P. 

D2 will, of course, challenge the amount of the common liability only if 
she believes that judgment was given against Dl in P's action for too high a 
figure. Suppose, however, that D2 is mistaken, and that the court adjudicat- 
ing the contribution claim decides that the common liability is greater than 
that found by the court that heard P's action? Assume that judgment had 
been entered for P against Dl for $10,000, but in the contribution action the 
common liability of the parties was found to be $15,000. Dl may argue that 
the contributable sum should be the higher figure. This, after all, was the 
sum for which D2 has been held liable, and that Dl's payment to P has 
discharged: if Dl and D2 are found to be equally responsible for the loss, 
then Dl should recover half of the amount for which D2 has been held liable. 

The argument on the other side is that Dl has already had an opportu- 
nity to litigate the amount of her liability in the action brought against her by 
P. It would not be unfair, therefore, to hold Dl to that determination, not 
only against P, but against D2 as well. Dl is not prejudiced by this result 
because she will be required to bear a part of the liability, as assessed in the 
action in which she was defendant, that is proportionate to her degree of 
fault. There is no reason why she should have a second chance of decreasing 
her ultimate share by trying to persuade a court that the judgment entered 
against her underestimated her liability. She should be no better off than she 
would have been if she had served a third party notice on D2 in the action 
brought against her by the injured person. Accordingly, the Commission 
recommends that the claimant for contribution should be estopped from 
asserting that her liability to P was greater than the figure at which it was 
assessed in P's action. 

Finally, we recommend that, if the judgment in favour of P ordered 
specific relief against Dl —such as the delivery of goods or performance of a 
service by Dl —the court before which the claim for contribution is brought 
should be required to place a value on such delivery or performance in order 
to determine the amount of contribution recoverable.'^ 

3. LIABILITY OF D2 TO P 

(a) General 

In this section, we shall examine the question whether it should 
invariably be a defence to a contribution claim that D2 was never liable to P 
for the loss in respect of which Dl has been held liable or has settled. 

At one time, the common law doctrine of spousal immunity gave rise to 
an example of the contribution consequences of an initial immunity of D2 



18 



Ibid., s. 9(7). 



118 



from an action in tort by P.^^ Thus, if P was injured as a result of the 
negligence of her spouse (D2) and a third party (Dl), should Dl be entitled to 
obtain contribution from D2 even though D2 could never have been sued 
successfully by P?^^ Another example, again now of historical interest only, 
was provided by the statutory provision that a gratuitous passenger in a 
motor vehicle who was injured in the course of the journey could only sue 
the owner or driver of the vehicle if it was established that the defendant had 
been guilty of gross negligence.^' If the passenger's injury was caused by the 
negligence of a third party and the driver, should the third party be entitled 
to claim contribution from the negligent driver, even though the latter's 
conduct could not be characterized as so grossly negligent as to expose her to 
liability to the passenger?^^ 

The Legislature has removed these problems by making the necessary 
reforms in the defective state of the law of primary obligation from which 
they arose. However, other statutory protections from liability still exist. 
One of the most important is contained in the Workers' Compensation 
ActP which protects an employer from liability in tort to an employee who 



19 



20 



21 



The doctrine of spousal immunity to actions in tort has been abolished: Family Law 
Act, 1986, S.O. 1986, c. 4, s. 64(2). See, also, infra, note 20. 

In fact, s. 2(4) of the Ontario Negligence Act, R.S.O. 1970, c. 296, dealt with this 
problem by reducing the amount of damages recoverable by the injured person from the 
third party by an amount proportionate to the fault of the spouse whom the plaintiff 
could not sue. There was thus no need for any contribution claim against the wrong- 
doing, but immune, spouse. This section was repealed when spousal immunity was 
abolished in 1975: The Family Law Reform Act, 1975, S.O. 1975, c. 41, s. 7. 

The Highway Traffic Act, R.S.O. 1970, c. 202, s. 132(3). The much criticized limitation 
upon the injured person's right of recovery was repealed by The Highway Traffic 
Amendment Act, 1977 (No. 3), S.O. 1977, c. 54, s. 16(1). 

22 Again, s. 2(2) and (3) of the Ontario Negligence Act, R.S.O. 1970, c. 296, "solved" the 
problem by reducing the damages otherwise recoverable by the injured person from the 
driver of the other vehicle by an amount proportionate to the fault or neglect of the 
immune driver of the vehicle in which the injured person was being carried. Section 1(2) 
of The Negligence Amendment Act, 1977, S.O. 1977, c. 59, repealed this restriction upon 
the in solidum liability principle when the requirement that the guest or passenger must 
establish gross negligence on the part of the host was abolished. 

The repealed si2^.u\QS-The Highway Traffic Act, R.S.O. 1937, c. 288, s. 47(2), and 
The Negligence Act , R.S.O. 1937, c. 115, s. 2(2)— had been described as "two of the most 
vicious pieces of legislation which an active insurance lobby was able to foist on an 
unsuspecting public": Anon., "Motor Cars and Gratuitous Passengers— Statutory 
Exemption from Liability of Car Owner Qua Owner— Liability as Master for Driver's 
Negligence" (1945), 23 Can. B. Rev. 344, at 347. This distaste was also shared to an 
extent by the courts, which were prepared to give the statutes a tortuous interpretation 
in order to limit the injustice that they were capable of causing: see Weiler, "Groping 
Towards a Canadian Tort Law: The Role of the Supreme Court of Canada" (1971), 21 U. 
Toronto L.J. 267, at 288-92, and Linden, Canadian Tort Law (1977), at 515-26. 

For one of the last reported cases illustrating the operation of these provisions, see 
Bates V. Illerburn (1976), 12 O.R. (2d) 721, 70 D.L.R. (3d) 154 (C.A.). 

2^ R.S.O. 1980, c. 539, s. 8(9). The Act contains a scheme of statutory benefits, and, to that 
extent, eliminates claims in tort against the employer of the injured worker in respect of 
injuries sustained in the course of the employee's employment. 



119 



has been injured in the course of her employment. If the employee's injury 
has been caused by the negligence of the employer and of a third party (the 
manufacturer of a defective tool with which the employee was working, for 
example), should the employer be able to defeat the third party's contribu- 
tion claim by relying upon the employer's immunity to suit by the 
employee?^'^ 

Other contemporary illustrations of this problem are provided by a 
common law defence that D2, but not Dl, may have against P. Suppose, for 
instance, that the promoters (D2) of a sporting event have, by the conditions 
of admission, successfully excluded their liability for injuries sustained by 
spectators as a result of D2's negligence. A spectator (P) is injured as a result 
of the negligence of one of the participants (Dl) and the inadequate safety 
precautions taken by D2. If P successfully sues Dl in negligence for her 
injuries, should Dl have a right of contribution from D2, even though D2 
had contractually exempted herself from liability to P? If the Commission's 
recommendation is adopted that a right of contribution may arise between 
parties whose liability to the injured person arose from an alleged breach of 
contract, then the relevance to the contribution claim of an exemption 
clause in the contract between P and D2 is likely to assume considerable 
practical significance. 

A variation on the examples considered above is provided by the 
existence of a partial defence that may be available to D2, but not to Dl, 
against the injured person. For example, D2's liability to P may be reduced 
because P was contributorily negligent vis-a-vis D2, a defence that will not 
necessarily be available against all other concurrent wrongdoers.^^ Alterna- 
tively, a term in the contract between D2 and P may limit the damages 
recoverable by P for a breach by D2 to a sum less than the amount that 
would otherwise have been recovered by P. Should either of these limitations 
on D2's liability to P be relevant to a claim for contribution made by Dl 
against D2? 



^'^ The Ontario Legislature has once more foreseen the contribution consequences of the 
employer's immunity and has adopted a solution identical with that found in the 
repealed provision of the Negligence Act, dxscusstd supra, note 22. Section 8(11) and ( 12) 
of the Workers' Compensation Act, supra, note 23, reduces the damages recoverable by 
the employee from the third party by the amount otherwise attributable to the 
employer, at least to the extent that the damages payable by the third party would have 
exceeded the statutory benefits recoverable by the employee. 

For a recent survey of the variety of solutions to this problem that have been 
adopted in the United States, see Larson, "Third-Party Action Over Against Workers' 
Compensation Employer", [1982] Duke L.J. 483, at 484, where the issue is described as 
"the most evenly-balanced controversy in all of workers' compensation law". 

^^ Contributory negligence is generally not considered to be a defence to a claim for 
damages for breach of contract, at least where the conduct cannot also be characleri/ed 
as a tort. If it were, the problem raised in the text would be less likely to arise. See text 
accompanying note 72, infra. See, further, chapter 10 of this Report. 



120 



The concept of unjust enrichment upon which the law of restitution is 
based has been used so far in this Report as the principal organizing concept 
around which various aspects of the right of contribution among wrong- 
doers have been examined. Applying the same principle to the problems 
considered in this section would lead to the conclusion that if D2 always had 
a complete defence to an action brought by P, then this should inevitably 
defeat Dl's claim for contribution. The reason for this is that if D2 was never 
liable to P, then any payment made to P by Dl in respect of P's loss conferred 
no benefit upon D2 because no liability owed by D2 was thereby discharged. 
On this reasoning, the precise nature of D2's defence to P's claim is 
irrelevant: it should make no difference whether the immunity arose from a 
contractual exemption clause, a defence based upon the conduct of the 
injured party (such as assumption of risk), or a statutory protection from 
liability. We have assumed that the fact that Dl has satisfied P's claim in full 
does not constitute a benefit to D2, even though it provides an additional 
reason why P would not institute proceedings against D2, which in any 
event would, ex hypothesi, not succeed. 

Similar reasoning would apply if D2 has a partial defence, whether by 
virtue of P's contributory negligence or a limited liability clause. Arguably, 
Dl should not be able to claim from D2 by way of contribution a sum greater 
than that for which D2 could be held liable to P. Payment by Dl to P can only 
benefit D2 up to the amount for which D2 could have been successfully 
sued by P. 

Matters may not, however, be quite this simple, particularly when the 
source of D2's immunity from suit by, or limited liability to, P is an 
exemption or limited liability clause in a contract. It can be argued that it is 
unfair to Dl that her prima facie right to claim contribution from a person 
whose wrongful conduct has contributed to P's loss should be jeopardized by 
a term in a contract to which Dl was not a party. While the cost to P of the 
contractual exemption may be reflected elsewhere in the contract with D2, 
Dl can in no sense be said to have purchased D2's immunity from liability to 
her. The argument might be put in a restitutionary framework by stating 
that D2's immunity is certainly a benefit conferred at Dl's expense, but it has 
been conferred by P, who should therefore pay for it by a reduction in the 
damages that she can recover against Dl. Indeed, this approach to the 
problem has found favour with the Ontario Legislature in some situations 
where D2 enjoyed an immunity as a result of the operation of a rule of 
common law or statute.^^ 

These two ways of analyzing the consequences of the immunity from or 
limitation upon the liability of D2 to P permeate the concern to determine 
how a single loss, suffered by one party as a result of the concurrent wrongs 
of two or more other persons, should be distributed among them. As we 
have already had cause to note, the resolution of the problem ultimately 
depends upon some important policy choices and priorities. 



^^ See supra, notes 20, 22, and 24. 



121 



(b) The Present Law 

Section 2 of the Negligence Act^'^ currently provides that "[w]here 
damages have been caused or contributed to by the fault or neglect of two or 
more persons, the court shall determine the degree in which each of such 
persons is at fault or negligent'', and that the liability of such persons shall be 
apportioned by contribution or indemnity "in the degree in which they are 
respectively found to be at fault or negligent''. Before an amendment made 
to the Act in 1935,^^ the section provided that contribution was available 
among those "found jointly and severally liable". Despite the apparent 
abandonment of the statutory requirement that a person from whom 
contribution is claimed must have been found liable, the courts have 
consistently held that a person who could at no time have been held legally 
liable for the loss sustained by the injured person is not liable under the 
Negligence Act to pay contribution. 

In two cases decided before 1935, it was held that there was no right of 
contribution against a person whose careless conduct had undoubtedly 
caused the plaintiff's injury, because the person from whom contribution 
was claimed could not have been sued successfully by the claimant for 
contribution. In Macklin v. Young, ^^ a claim for contribution was denied 
because of D2's common law defence of spousal immunity from suit by the 
injured person. A similar result was reached in Wilson v. Hamilton Hydro- 
Electric Commission,^^ where P's cause of action against D2 was barred by 
the The Workmen's Compensation Act ?^ 

The deletion of the word "liable" from the Negligence Act in 1935 made 
it possible to argue that a person was required to contribute if her fault or 
neglect was a cause of P's injury, even though she could not be held liable to 
P in legal proceedings by virtue of a common law or statutory immunity 
Nonetheless, in the overwhelming majority of cases, the courts have contin- 
ued to hold that the liability of D2 to P is a necessary condition to Dl's right 
of contribution. ^2 Indeed, since section 2 provides that those found to be at 
fault or negligent are jointly and severally liable to the plaintiff, this is a 



2^ Negligence Act, R.S.O. 1980, c. 315. 

^^ S.O. 1935, c. 46. 

2^ [1933] S.C.R. 603. See, also, McDonald v. Adams {1932), 41 O.W.N. 145 (C.A.), and Bird 
V. Armstrong, [1950] 4 D.L.R. 824 (N.B.S.C, App. Div.), at 846. Similar results were 
reached in other Commonwealth jurisdictions: see, for example, C^hant v. Read, [1939] 2 
K.B. 346; Drinkwater v. Kimher, [1952] 2 Q.B. 281 (C.A.); Walsh v. Fair weather, [1937] 
N.Z.L.R. 855 (S.C); and Murphy v. Colhron (1956), 73 N.S. W.W.N. 468 (S.C). 

^^ (1930), 40 O.W.N. 545, [1932] 3 D.L.R. 799 (H.C.J. ). Lappin v. Morrison (1932), 41 
O.W.N. 104 (H.C.J.) is one of the very few cases decided the other way. 

^^ R.S.O. 1927, c. 179. 

^^ See Cheifetz, supra, note 4, at 37-41. 



122 



reasonable conclusion. Thus, in Cohen v. S. McCord & Co. Ltd.,^^ Laidlaw 
J.A. said: 

'Where two or more persons are found at fault or negligent'. . .does not change 
the construction which ought to be put on the enactment. Liability of two or 
more persons continues to be a condition precedent to the right of contribution 
and indemnity created by the statute. 

This approach has been applied in cases where the Workers' Compensation 
Act excluded the liability to P of D2.34 

It has also been held that the words "fault or neglect" are limited to 
breach of a legal duty that exposed D2 to a potentially successful suit by P. 
Thus, in Cowle and Cowle v. Filion,^^ a claim for contribution against the 
parent of a child (D2) who had been injured by Dl failed because Dl was 
unable to establish that D2 had been in breach of any legal duty of care owed 
to the child. A mere failure by D2 to discharge properly the moral obligation 
of parents to protect their child from injury was an insufficient basis upon 
which to build a claim for contribution. 

The Supreme Court of Canada has affirmed that P's ability to recover 
damages from D2 is a condition precedent to a successful claim by Dl for 
contribution under the Negligence Act. In Giffels Associates Ltd. v. Eastern 
Construction Co. Ltd.,^^ a case in which a contractual exemption clause 
rendered D2 immune from liability at the instance of P, Laskin C.J.C. said:^^ 

I am unable to appreciate how a claim for contribution can be made under 
s. 2(1) by one person against another in respect of loss resulting to a third person 
unless each of the former two came under a liability to the third person to 
answer for his loss. 

Giffels thus appears to have put the proper interpretation of this aspect of 
the Negligence Act beyond doubt. In addition, if there is at common law a 



■^^ Supra, note 2, at 580. 

^"^ Sinkevitch and Beaudoin v. Canadian Pacific Railway Co., [19541 O.W.N. 21 (H.C.J.). 
An amendment to what is now the Workers' Compensation Act, supra, note 23, reversed 
an earlier holding to the contrary in Healy v. Runny mede Iron and Steel Co. , [19411 0.R. 
133, [19411 3 D.L.R. 325 (C.A.). 

^^ [1956] O.W.N. 881, 6 D.L.R. (2d) 258 (Co. Ct.). Compare Peter v. Anchor Transit Ltd. 
and Turner (1979), 100 D.L.R. (3d) 37, [1979] 4 W.W.R. 150 (B.C.C.A.), where a claim 
for contribution succeeded because the parent was held to have been in breach of a legal 
duty of care owed to the child. See, also, Arnold v. Teno, [1978] 2 S.C.R. 287, 83 D.L.R. 
(3d) 609. 

^^ [1978] 2 S.C.R. 1346, 84 D.L.R. (3d) 344 (subsequent reference is to [1978] 2 S.C.R.). 
See, also, Armak Chemicals Ltd. v. Canadian National Railway Co. (1980), 29 O.R. (2d) 
259, 112 D.L.R. (3d) 560 (C.A.). 

^"^ Supra, note 36, at 1354. 



123 



right of contribution among concurrent contract breakers who cause a 
single loss to the plaintiff— a point left open by the Supreme Court— it is 
probable that D2 would be able to rely upon an exemption clause in her 
contract with P in order to defeat Dl's claim for contribution. 

One other possibiHty should, however, be considered. Professor Glan- 
ville Williams, who regarded the courts' interpretation of the Negligence Act 
as unjust, has argued that the law of tort may, in some circumstances, 
provide Dl with a way of distributing to D2 part of the damages for which Dl 
was liable to P^^ He argues that, even though D2 may have excluded by 
contract her liability to P, D2 may still be under a duty of care to Dl, a duty 
that can include an obligation not to expose Dl negligently to a liability to P 
for which Dl is unable to claim contribution from D2. Dl may thus be able to 
claim as tortious damages whatever she had been required to pay P, less an 
amount that represents Dl's proportionate fault. In such a case, a question 
might arise about the scope of the exemption clause in the contract between 
D2 and P. If it was drafted so as to exempt D2 from liability to P and to 
indemnify D2 with respect to any other claim that might be made against 
her arising from P's loss, then P would be required to indemnify D2 for the 
sum that D2 had been held hable to pay Dl. P would thus not be able to 
retain the full amount of the damages recovered from Dl.^^ 

This possible method of redistributing to P the loss attributable to D2's 
wrongful conduct for which she could not be sued by P rests upon the law of 
tort, and will not be explored further in this chapter. The abolition of 
spousal immunity and of the requirement that gratuitous passengers could 
only recover from their driver if the latter were shown to be grossly negligent 
removed the principal sources of difficulty in this area of the law. The 
statutory bar provided by the Workers' Compensation Act will be discussed 
briefly below although, since this is an integral part of a special statutory 
regime of compensation, it would be inappropriate to make recommenda- 
tions for its reform in this Report. 

It is in the context of contractual exemptions or limitations of liability 
that the present law is likely to be most strenuously challenged, particularly, 
of course, if a statutory right to contribution is extended so that it includes 
all concurrent wrongdoers. Accordingly, this is the problem to which the 
remainder of this chapter principally addresses itself. 



^^ Williams, Joint Torts and Contributory Negligence (1951), at 1 15 and 425. 

^^ This argument is based upon an analogy with The Cairnbahn, [1914] P. 25 (C.A.), a 
decision of the English Court of Appeal interpreting the Maritime Conventions Act, 
1911 , c. 57, s. 3( 1). Williams argues that if Dl can establish a duty of care owed to him by 
D2 in accordance with general principles of the tort of negligence, and a breach of that 
duty, it should be irrelevant whether Dl has also suffered physical injury as a result of 
D2's negligence or whether Dl's only damage is the economic loss involved in his having 
been held liable to compensate P for P's injuries. 



124 



(c) Alternatives for Reform 

As long as the law allows parties to contract out of or limit their liability, 
or statutes exempt wrongdoers from liability, there would seem to be three 
principal methods of dealing with the contribution consequences. 

(i) No Change in the Law 

One possibility is to regard the present law as satisfactory and not in 
need of reform. Some of its strengths have already been indicated. The first 
is that it is consistent with the notion that the law of contribution is 
restitutionary in nature, and that rights of restitution are generally granted 
only for the purpose of preventing one person from retaining, without 
payment, a benefit conferred upon her by another in circumstances where 
the recipient of the benefit would thereby be unjustly enriched at the 
expense of the person who conferred it. Since Dl's payment to P did not 
discharge a liability owed by D2 to P, D2 received no benefit from P's 
payment, and should therefore not be required to pay contribution. The fact 
that Dl's payment to P may have persuaded P not to launch proceedings 
against D2— which, in any event, could not have resulted in a judgment 
against D2 in P's favour— does not constitute a "benefit" the conferral of 
which could support a restitutionary claim for contribution. 

Secondly, to prevent Dl from passing on to D2 any of the liability for the 
payment made to satisfy P's claim is not necessarily unjust to Dl: for one 
thing, Dl would have been liable in the same amount if she alone had caused 
P's loss, and for another, there is no reason why Dl should benefit from the 
existence of a stipulation in the contract between P and D2 for which D2 
bargained with P. The price of the exemption clause may well be reflected 
elsewhere in the terms of the contract between P and D2; to allow Dl to 
claim contribution from D2 would be to give Dl a benefit for which she has 
paid nothing. 

Thirdly, to allow the injured person to recover fully from the non- 
immune defendant, while protecting the immune defendant from suit, is 
consistent with one of the policies underlying a right to contribution, 
namely, that the plaintiff should not be able arbitrarily to select how a single 
loss should be distributed between two wrongdoers, against both of whom 
she had a cause of action. 

A number of recent reforms of the law of contribution among wrong- 
doers appear to have retained the requirement that contribution may be 
claimed only if D2 was, at the time when P suffered the loss, at least 
potentially liable for it. Thus, section 1(1) of the English Civil Liability 
(Contribution) Act 197 S'^^ provides that a claim for contribution may be 



40 



Civil Liability (Contribution) Act 1978, c. 47 (U.K.). 



125 



made against any person who is or would if sued have been "liable in respect 
of the same damage". It would seem clear that this section was not intended 
to change the construction of the former legislation, the Law Reform 
(Married Women and Tortfeasors) Act, 1935, "^^ which made D2's liability to 
P a condition precedent to a successful claim for contribution by DL^^^ The 
1978 Act does, as we shall see, modify the rule that Dl's claim to contribution 
is barred if D2 ceases to be liable to P after the damage has occurred. Indeed, 
the express provision in section 1(3) that a person shall be liable to make 
contribution "notwithstanding that he has ceased to be liable in respect of 
the damage in question since the time when the damage occurred" clearly 
assumes that there is no liability to contribute if D2 was at no time liable for 
the damage suffered by the injured person.^^ 

Section 4(a) of the American Uniform Comparative Fault Acf*"* limits 
liability for contribution claims to those "who are jointly and severally liable 
upon the same indivisible claim for the same injury, death, or losses, 
whether or not judgment has been recovered against all or any of them". 
Again, there seems little doubt that it would be a defence under this Act for 
D2 to establish that she was not and never had been liable to P, in the sense 
that P could never have obtained judgment against D2 for the loss in respect 
of which Dl has been held liable to, or has settled with, P. 

The Report of the Alberta Institute of Law Research and Reform'*^ 
does not expressly consider whether D2's potential liability to P should 
always be required before D2 can be held liable to contribute to Dl, but the 
discussion of the effect upon contribution of at least one factor that has 
caused D2 to cease to be liable to P certainly implies that, unless D2 had 
been liable to P at some time, contribution cannot be claimed from her."^^ 
Section 10 of the draft statute appended to the Report states as a basic 
principle that "a concurrent wrongdoer is entitled to contribution from any 
other concurrent wrongdoer". Section 1(a) defines "concurrent wrong- 
doers" as persons whose wrongful acts contributed to the same damage and 



41 



Supra, note?. 



^^ It is implicit in all the judgments in George Wimpey & Co. Ltd. v. British Overseas 
Airways Corp. , [1955] A.C. 169, [1954] 3 All E.R. 661 (H.L.) that there was no liability to 
contribute if D2 could never have been successfully sued by P. 

'*^ The English Law Commission's Report does not even discuss this issue: Law of 
Contract: Report on Contribution, Law Com. No. 79 (1977). However, in its Working 
Paper {Contribution, Working Paper No. 59 (1975), para. 34, at 21), the Commission 
rejected the philosophy of the Irish Civil Liability Act, 1961, supra, note 13, which here, 
and elsewhere, throws the burden of D2's defence upon P by reducing the amount of 
damages that she can recover from Dl. 

^^ National Conference of Commissioners on Uniform State Laws, Uniform Comparative 
Fault Act, Uniform Laws Annotated, Vol. 12 (1987 Pocket Part). The Act was approved 
by the Commissioners in 1977. 

^^ Alberta, Institute of Law Research and Reform, Contributory Negligence and Concur- 
rent Wrongdoers, Report No. 31 (1979). 

^^ Ibid., sii 62 etseg. 



126 



any other person liable for the wrongful act of any of those persons. 
Although these provisions do not, perhaps, put the matter beyond all 
argument, it would seem tolerably clear that they were not intended to 
extend liability to pay contribution to those who were never legally liable to 
the injured person. This interpretation is supported by section 11(2), which 
provides that a person whose liability to the injured person is limited by 
contract or statute cannot be required to pay contribution to Dl in excess of 
this sum. It would be extremely odd to give to D2 the benefit in contribution 
proceedings of a partial defence that she always enjoyed against P, but to 
deny D2 the benefit of a total defence. 

The Law Reform Committee of South Australia has examined the 
problem, and has concluded that it is right to retain the present conse- 
quences for the law of contribution that flow from the fact that one of the 
"wrongdoers" has negotiated an exemption or limited liability clause with 
the injured person:^^ 

The Committee recognises that clauses limiting or excluding liability for breach 
of contract generally form part of carefully considered commercial agreements 
which are entitled to considerable respect and agrees with the principle. . .that 
the liability to contribute should not exceed the limits on liability established by 
prior contract or agreement between the plaintiff and a defendant. 

(ii) Reduction of Damages of Injured Person 

A different approach has been taken in the Uniform Contributory Fault 
Act, adopted by the Uniform Law Conference of Canada.^^ This Act 
provides that the damages recoverable by the injured party are reduced by 
the share of the responsibility that would otherwise have been borne by the 
concurrent wrongdoer whom the injured person cannot sue because of a 
clause in an agreement that excludes her liability to pay damages.'*^ This 
approach of apportioning to the injured person the part of the loss that D2 
would have had to bear vis-d-vis Dl if there had been no exemption clause in 
the contract between P and D2, had earlier been taken in South Africa^^ and 
Ireland. The origin of the relevant section of the Irish Civil Liability Act, 



'^'^ Law Reform CommiUee of South Australia, Forty-Second Report of the Law Reform 
Committee of South Australia to the Attorney-General— Relating to Proceedings Against 
and Contributions Between Tortfeasors and Other Defendants (1977), at 12. 



48 



49 

50 



Uniform Law Conference of Canada, Proceedings of the Sixty-Sixth Annual Meeting 
(1984), Appendix F, Uniform Contributory Fault Act. See ss. 1(d) and 12(1) and (2). 
Section 11 provides for a similar solution in those instances of statutory exemptions 
from liability that provincial legislatures wish to include (for example, exemptions 
under workers' compensation legislation). 

See, further, text following note 58, infra. 

See the South Africa Apportionment of Damages Act, 1956, 1956 S.S.A., No. 34, s. 2(10). 



127 



1961 ,^' section 35(1)(0, is a proposal by Professor Glanville Williams.^^ x^e 
section provides that 

where the plaintiff's damage was caused by two or more persons and such 
persons would have been concurrent wrongdoers were it not for a contract by 
the plaintiff with one of such persons before the occurrence of the damage 
exempting that person from liability the plaintiff shall be deemed to be 
responsible for the acts of that person. 

The attraction of this solution is that the injured party is made to pay 
for the presumed benefit that she has obtained by entering into a contract 
with an exemption clause. If the parties bargained from positions of rela- 
tively equal strength, then the injured party could be expected to have 
obtained the goods or services more cheaply than would have been the case 
had the supplier not excluded her contractual liability. To allow P both to 
recover in full from Dl (who cannot redistribute any of the loss to D2), and 
to have obtained D2's contractual performance at a discount is, it may be 
argued, to let P have her cake and eat it too. 

Another advantage claimed for this solution is that it does not alto- 
gether deprive the plaintiff of the benefit of the existence of Dl, who will 
normally be liable for at least part of the loss. Thus, if P's loss is $1,000, for 
which Dl and D2 would have been Hable if D2 had not excluded her liability, 
then, on the assumption that inter se Dl and D2 would otherwise have 
borne it equally, P will recover $500 from Dl. Dl also benefits from the 
presence of D2, because the hability that Dl would have had to bear if she 
had been the only "wrongdoer" is reduced by the amount that D2 would 
have had to pay if D2 had not bargained with P for her exemption from 
liability. 

(iii) Exemption Clause No Defence to Contribution Claim 

The converse of the present law has apparently been adopted in West 
Germany, which limits the effect of the exemption clause to the parties to 
the contract.^^ The result is that in proceedings by P against D2, the 



^' Supra, note 13. 

^2 Williams, supra, note 38, at 115, and Williams' Draft Bill, s. 25(1), ibid., at 518. See, also, 
Larson, "A Problem in Contribution: The Tortfeasor with an Individual Defense 
Against the Injured Party", [1940] Wis. L. Rev. 467, where the author states that, "where 
one tortfeasor has acquired the defense of assumption of risk as against the plaintiff, the 
plaintiff's recovery should simply be diminished by the amount of that tortfeasor's 
contributive share" {ibid., at 499-500). 

^^ See Weir, Int'l Enc. Comp. L. XI Torts (1983), ch. 12 (Complex Liabilities), at 52. This 
was also the view adopted by Lerner J. at first instance in Dominion Chain Co. Ltd. v. 
Eastern Construction Co. Ltd. (1974), 3 O.R. (2d) 481 (H.C.J.), at 504-05, and supported 
by Cheifetz, "Recent Developments under the Ontario Negligence Act" (1977), 25 
Chitty's L.J. 145, at 148 et seq. This decision was subsequently reversed by the Ontario 
Court of Appeal ((1976), 12 O.R. (2d) 201 (C.A.)), whose decision was affirmed by the 



128 



exemption clause provides D2 with an absolute defence, but its existence is 
ignored in a claim for contribution made against D2 by Dl. This approach is 
based on the notions that it is unfair to Dl that a clause in a contract between 
P and D2, to which Dl was not a party, should destroy the right to 
contribution that Dl would otherwise have had against D2, and that P 
should benefit in full from the presence of Dl, a wrongdoer who had not 
been exempted from liability to P. 

(d) Conclusions 

(i) Contractual Defences to Claims for Contribution 

The Commission has concluded that, in the context of contractual 
defences to claims for contribution, neither the Irish Act's solution nor that 
adopted in West Germany provides a sufficient justification for modifying 
the principles that the plaintiff should not be prevented from recovering in 
full against one wrongdoer because of the existence of another, and that a 
person who could never have been held liable to P should not be made 
indirectly liable for the injured person's loss by being exposed to a claim for 
contribution. Both solutions are based upon a somewhat nebulous notion of 
"fairness" between Dl and D2, which runs counter to the more principled 
concept of unjust enrichment that underlies the restitutionary framework 
within which contribution is most easily accommodated. The price at which 
each scheme is prepared to purchase "fairness" is, in our view, unacceptably 
high. 

a. Exemption Clauses 

Two more specific objections may be raised against adopting, in the 
context of exemption clauses, a solution similar to that in the Irish Act, 
which, in effect, identifies the injured person with the "wrong" of D2 for 
which D2 cannot be sued by P. First, if we presume that P has given value for 
the exemption clause in order to obtain the goods or services supplied by D2 
at a cheaper price than she would have otherwise had to pay, it is difficult to 
see why the price paid by P should be increased, beyond that for which P 
bargained with D2, by reducing the value of P's right of recovery against Dl. 
If Dl wished to reduce or ehminate her liability to P, she, too, could have 
made a bargain with P in which she could have offered P some benefit in 
return for Dl's immunity from liability. 



Supreme Court of Canada in Giffels Associates Ltd. v. Eastern Construction Co. Ltd., 
supra, note 36. 

As was suggested supra, this ch., sec. 3(b), there may already be situations where 
Dl could establish an action in tort against D2 and allege that her loss (including the sum 
in which Dl was liable to P and which Dl cannot recover by way of contribution), was a 
foreseeable consequence of D2's breach of a duty of care owed to Dl. 



129 



Secondly, to analyze exemption clauses in terms of truly consensual 
bargaining is often totally unrealistic. The injured person may well not have 
fully appreciated the meaning and consequences of the exemption clause, 
nor may she have had any genuine opportunity to "bargain". Exemption 
clauses are often contained in "take it or leave it" standard form contracts, 
which are accepted by consumers who do not possess the necessary skills or 
time to "shop around" or to bargain for better terms. Viewed in this light, a 
decision to extend the effects of exemption clauses so as to reduce the 
injured person's rights against those who have wrongfully caused her loss, 
but with whom she has not agreed, even in a legally formal sense, to accept 
the exemption clause, seems quite retrogressive. It would be somewhat 
ironic if a reformed contribution statute were to add a new dimension to the 
effect of exemption clauses at a time when their operation between the 
parties to the contracts in which they are contained has given rise to critical 
comment. ^"^ It is far from clear why Dl should obtain a windfall in the form 
of a reduction of her liability to P. 

The suggestion that the exemption clause should be disregarded in 
contribution claims is also open to the objection that it replaces restitution- 
ary principles with a vague notion of fairness. Admittedly, this proposal, in 
attempting to solve a perceived unfairness in the way that the secondary 
rights and obligations of Dl and D2 are worked out, does not reduce the 
plaintiff's right to recover from Dl the full amount of her loss. It does, 
however, deprive D2 of the substance of her bargain with P by subjecting her 
to a potential liability to pay Dl a sum that might be 100 percent of P's 
recoverable loss. It seems unjustifiable indirectly to set aside a contract and 
to give Dl a windfall for which she had not paid. Accordingly, the Commis- 
sion recommends that a person who, because of the existence of an exemp- 
tion clause contained in a contract made with the injured person, could at 
no time have been successfully sued by the injured person should not be 
liable to pay contribution to another person in respect of the injured 
person's loss.^^ 

b. Limited Liability Clauses 

The existence of a contractual limitation upon the liability of one 
wrongdoer (D2) to compensate the injured party (P) produces difficulties in 
adjusting the contribution rights of Dl and D2 similar to those that arise 
when an exemption clause gives D2 a complete defence against P There is, 
however, an important difference: because D2 has only a partial defence 



^"^ See, for example, the Commission's Report on Consumer Warranties and Guarantees in 
the Sale of Goods (1972), at 49, and its Report on Sale of Goods (1979), Vol. 1, at 227-34. 
See, also, the Unfair Contract Terms Act 1977, c. 50 (U.K.). 

^5 Draft Act, s. 14(l)(a). It will be noted that s. 14(l)(a) is not limited to exemption clauses. 
Although, as indicated above, the issue arises primarily in the context of contractual 
exemptions of liability, the Commission is of the view that it should be a defence to a 
contribution claim that D2 could not, for any reason, be held liable to the injured 
person. 



130 



against P's claim for all the loss that she would have recovered had there 
been no limitation upon D2's liability, any payment made by Dl to P in 
respect of the loss will reduce or discharge D2's liability to P, and thus will 
have conferred a benefit upon D2. One of the essential elements for a 
restitutionary claim will therefore be present, and it is not disputed that D2 
should be required to pay contribution up to the amount specified in the 
limited hability clause. 

There are two issues that should be addressed here. The first concerns 
the apportionment among P, Dl, and D2 of that amount of P's loss that 
exceeds D2's contractually limited liability. If this issue is dealt with in a 
manner similar to that proposed for total exemption clauses, then a second 
question will arise. This concerns the method of calculating the sum, up to 
the ceiling imposed by the limited liability clause, to which D2 should be 
required to contribute. 

The arguments on the apportionment of any loss over and above the 
figure to which D2 had limited her liability are identical to those already 
considered in the case of a contract that effectively excludes D2's liability 
altogether. Thus, the present law, despite the absence of authority, would 
seem clearly to prevent D2 from having to pay to Dl a sum greater than that 
for which P could have successfully sued D2. Section 2(3) of the English 
Civil Liability (Contribution) Act 1978^^ expressly provides that where the 
damages payable by D2 to an injured person are "subject to any limit 
imposed. . .by [an] agreement made before the damage occurred", D2 shall 
not be required to pay by way of contribution a sum that exceeds the 
amount so stipulated. A similar recommendation has been made in the 
Report of the Alberta Institute of Law Research and Reform.^^ 

The Canadian Uniform Contributory Fault Act^^ does not deal with this 
issue discretely. Section 12(2) provides that, following a release of one 
concurrent wrongdoer, the damages recovered by the injured person from 
another are to be reduced to the amount attributable to the fault of the 
person sued. This provision seems to apply to a contractually hmited 
liability: section 12(1) states that section 12(2) applies to a release entered into 
before or after the injured person's damage occurred, and section 1 defines a 
"release" to include "a settlement or any other agreement limiting the 
liability of a person for damages, either in whole or in part". 

The effect of the Act would thus seem similar to that produced by the 
Irish Civil Liability Act, 1961 , which, consistent with its approach to total 
exemption clauses, identifies P with the amount of the loss she is prevented 



^^ Supra, note 40. 

^^ Supra, note 45, at 72-73, Recommendation 15. See, also. The Law Reform Commission 
of Hong Kong, Report on the Law Relating to Contribution Between Wrongdoers, Topic 
5 (1984), at 37-39. 

^^ 5w/7ra, note 48. 



131 



from recovering from D2 by virtue of D2's contractually limited liability. 
Thus, section 35(l)(g) of the Irish Act provides that 

where the plaintiff's damage was caused by concurrent wrongdoers and before 
the occurrence of the damage the liability of one of such wrongdoers was 
limited by contract with the plaintiffs to a sum less than that wrongdoer's just 
share of Uability between himself and the other wrongdoer as determined under 
section 21 apart from such contract, the plaintiff shall be deemed to be 
responsible for the acts of that wrongdoer. 

The operation of this provision can be illustrated as follows. Suppose that P 
has suffered a loss of $1,000 as a result of breaches of separate contracts by 
Dl and D2. Dl and D2 are equally at fault, but the contract broken by D2 
Hmits D2's liability to P to $400. If P sues Dl who is found liable for the loss, 
judgment will be entered against Dl for $900: this figure is reached by 
subtracting from P's total loss the amount that Dl will be unable to recover 
by way of contribution from D2 because of the limited liability clause. 

A third possibility, of course, would be to allow D2 to rely upon her 
hmited liability in any action brought against her by the injured person, but 
not in a contribution claim by Dl.^^ 

The Commission prefers the first solution, which probably represents 
the present law, for reasons identical to those canvassed in the context of 
exemption clauses. It is recommended, therefore, that the existence of a 
Hmited liability clause should not reduce the damages recoverable by P from 
Dl, and should enable D2 to use it to fix the maximum sum that D2 can be 
required to pay by way of contribution to Dl. 

As indicated, the second issue that arises when the person from whom 
contribution is sought h^s<i partial defence to the injured person concerns 
the method of calculating the amount of D2's contribution. If D2 is liable to 
contribute only up to the amount of her contractually limited liability, how 
should the sum to which D2 is required to contribute be calculated? There 
seem to be three principal alternatives. 

First, in calculating the liability to contribute of the wrongdoer (D2) 
whose Uability to P is limited, the existence of the limitation could be 
ignored until a sum is claimed by Dl that is in excess of D2's liability to P 
D2's liability to contribute would then be reduced to the contractual 
maximum, and any excess over that amount would be borne by Dl. Thus, 
suppose that P has suffered a loss of $1,500 for which Dl and D2 are both 
liable and, inter se, equally responsible, but that D2's liability to P is 
contractually limited to $500. Under this proposal, the first step is to 
calculate DVs prima facie entitlement to contribution. On these facts it will 
be $750, that is, the damage caused by the wrongful conduct of Dl and D2 
distributed between them in proportion to their respective degrees of fault. 



5^ Draft Act, s. 9(4)(b). 



132 



The second step is to see whether the resuhing Hability of D2 exceeds the 
sum for which she is liable to P. If it does, as is the case here, it must be 
reduced to that amount. The difference is then reallocated to Dl. The extra 
$250 is thus borne by Dl alone: Dl bears $1,000 and D2, $500. The effect of 
D2's limited liability clause under this proposal is, therefore, that Dl cannot 
recover by way of contribution the $250 to which she would have been 
entitled if there had been no limited liability clause in favour of D2 in the 
contract between D2 and P. 

If the hypothetical were changed, so that P's loss is only $400, then, if 
Dl is held liable for this sum, she is entitled to a contribution from D2 in the 
amount of $200. Suppose, though, that P's loss was $750. The solution 
advanced here would entitle Dl to recover from D2 a contribution of $375. 
This result is fair if the most important consideration is that Dl and D2 
should bear the loss according to their respective degrees of fault up to the 
maximum of D2's liability to P. 

This solution was favoured by the English Law Commissions^ and by 
the Alberta Institute of Law Research and Reform.^' However, neither the 
English Civil Liability (Contribution) Act 1978^^ nor the Canadian Uniform 
Contributory Fault Act^^ contains an express provision to this effect, per- 
haps because it was thought to be the law already. ^"^ 

The objection to this method of distributing the loss between Dl and 
D2 is that where P's loss is more than the contractual limit of D2's liability, it 
requires D2 to bear a portion oiher liability ($500 maximum) that exceeds 
her share of fault (50 percent). For example, where P's loss is $750, D2 
would be required to pay $375— less than her $500 maximum but more 
than 50 percent of that maximum amount. It may be noted that a similar 
objection was disregarded by the Supreme Court of Canada in a rather 
different context. In Burkhardt v. Beder,^^ the plaintiff claimed $20,000 in 
general damages from the defendant in an action brought under The Fatal 
Accidents Actf'^ The jury found the defendant Hable and the deceased 50 
percent contributorily negligent. The jury assessed general damages at 
$26,000 and the trial judge entered judgment for the plaintiff for $13,000, 



^^ See Working Paper, supra, note 43, paras. 49-51, at 29-31, and subsequent Report, 
supra, note 43, paras. 70-74, at 20-21. 

^^ See, generally, supra, note 45, at ll-ll, and esp. at 73, Recommendation 15. 

^^ Supra, note 40. 

^^ Supra, note 48. 

^"^ See Unsworth v. Commissioner for Railways (1958), 101 C.L.R. 73 (H.C.), and Plant v. 
Calderwood, 11969] N.Z.L.R. 752 (S.C), rev'd on other grounds [1970] N.Z.L.R. 296 
(C.A.). 

^5 [1963] S.C.R. 86, 36 D.L.R. (2d) 313. 

^6 R.S.0. 1960, c. 138. 



133 



plus half of the funeral expenses. The plaintiff's request to amend the 
statement of claim following the jury's verdict was refused by the trial judge, 
whose decision on this point was upheld by the Court of Appeal. The 
Supreme Court upheld the jury award, without, however, having to deal 
with the question whether the amendment should have been allowed. 
Provided that the sum awarded did not exceed the sum claimed by the 
plaintiff, the plaintiff was entitled to recover her actual loss as found by the 
jury, less the sum attributable to the deceased's own fault. The fact that this 
meant that the defendant was liable to pay more than half of the sum for 
which the defendant could have been held liable, even though he was only 
50 percent at fault, was not regarded as objectionable. 

A second approach to calculating liability is to determine the extent of 
D2's liability to contribute on the basis only of the amount of common 
Uability between Dl and D2. In other words, regard is had to the limitation 
upon D2's liability to P before an apportionment is made between Dl and 
D2. Under the first alternative, on the other hand, the existence of the 
Umitation is disregarded until after the apportionment is made, when its 
only effect is to reduce D2's Uability to an amount that is no greater than the 
maximum sum to which D2 has contractually limited her liability to P. 

Because, in each of the examples considered above, D2's maximum 
Uability to P is $500, the common liability of Dl and D2 is $500; therefore, 
since each is equaUy at fault, D2 can never be required to contribute more 
than $250 to Dl. Of course, if P's loss is less than $500, D2's share will only 
be half of P's actual loss. The result of this proposal is that if P's loss is $1,000, 
Dl must bear $750 and D2, $250; and if P's loss is $10,000, D2 will still only 
be required to contribute $250, the remaining $9,750 falUng upon Dl. 

The merit of this scheme is that it gives to D2 the full benefit of the 
presence of another wrongdoer, Dl, and allows D2 the total, logical advan- 
tage of the limited Uability for which she has bargained with P, presumably at 
the cost of a reduction in the price paid for the goods or services supplied or 
rendered under the contract. The reason why Dl is bound to bear a higher 
portion of the loss suffered by P is because Dl has not bargained with P for a 
Umitation upon her liability. 

However, the result reached seems unduly harsh on Dl, who obtains 
little benefit from the presence of D2; Dl may be required to bear a portion 
of the total liability to P far in excess of her share of fault. To increase D2's 
portion up to her contractually limited liability— as under the first alterna- 
tive—would not expose D2 to a loss against which she had protected herself 
by her contract with the injured person. 

A third method of apportioning the loss seeks to avoid the extremes of 
the first two alternatives and to ensure that D2's limited liability to P is 
respected in contribution proceedings by confining D2's liability to contrib- 
ute to a proper proportion of the greatest sum that P could have recovered 



134 



from her. It has been suggested^^ that any satisfactory basis for apportion- 
ment should ensure that the wrongdoers benefit proportionately from the 
presence of each other. According to this proposal, if P's loss is $750, D2's 
limited liability is $500, and Dl and D2 are equally at fault, then the amount 
of contribution should be calculated as follows:^^ 

Dl's share would be ^^J^^^^^ x 750 = 450 
750 + 500 

D2's share would be ^J^^^^^ x 750 = 300 
750 + 500 

A further refinement of the formula would be required if Dl and D2 were 
not equally at fault. 

A fourth alternative is to leave the calculation of the amount to be 
contributed by the parties to the discretion of the court, subject to a 
provision that a person should never be required to contribute a sum greater 
than that for which she could have been successfully sued by the injured 
party. This seems to be the choice made in the United Kingdom. Section 2(1) 
of the Civil Liability (Contribution) Act 1978^^ states that, subject to the 
limitation just mentioned, 

the amount of the contribution recoverable from any person shall be such as 
may be found by the court to be just and equitable having regard to the extent of 
that person's responsibility for the damage in question. 

This section is of general application with respect to all claims for 
contribution made under the Act. How the courts will apply it when one 
party's liability to the injured person is contractually limited is unclear. The 
section might be construed to mean that each wrongdoer is liable to 
contribute in proportion to her degree of fault (or causation) up to the 
contractual limit. This would mean that the first alternative discussed above 
had been adopted. But the words "damage in question" could mean the 
damage for which both are liable in common; if this were the case, then the 
section would have embodied the second alternative. 

Apart from its ambiguity, the English solution of leaving the matter to 
judicial discretion is not recommended. The problem presents a clear choice 
between two competing principles that can appropriately be made by the 



^"^ Weinrib, "Contribution in a Contractual Setting" (1976), 54 Can. B. Rev. 338, at 345-46, 
esp. n. 34. The first alternative, Professor Weinrib argues, is unduly harsh on D2 because 
it gives too little weight to her limited liability and may require her to bear a portion of 
the loss that is well in excess of her share of fault. The second alternative, in his view, is 
objectionable because it unduly penalizes Dl. 



68 



69 



The formula is adapted from that used to apportion liabilities in certain insurance 
contexts. 

Supra, note 40. 



135 



Legislature. The choice is between the principle that those whose wrongful 
conduct has injured another should bear the cost of compensation in 
proportion to their respective degrees of fault (up to any contractual limit), 
and the principle that a person who has limited her liability by contract 
should be entitled to benefit from the clause in contribution proceedings 
both within and beyond the amount so stipulated. 

The Commission has concluded that the first of these principles is to be 
preferred. There is much to be said for the proposition that if Dl's payment 
to P confers a benefit upon D2, as it will until it exceeds the contractually 
fixed maximum of D2's liability to P, then Dl should not be prejudiced by 
the terms of the contract between D2 and P. Moreover, at a time when a 
more critical view is being taken of exemption and limited liability clauses, 
especially those contained in standard form consumer contracts, it may 
seem somewhat odd to endow them with an added vitality by giving limited 
liability clauses an efficacy against a third party (Dl) that is not clearly 
justified by the parties' expressed intentions. D2 has, after all, contemplated 
that she may be liable up to the stipulated limit. In this context, therefore, 
justice would seem to require allocation on the basis of comparative fault up 
to the point that Dl's payment actually benefits D2. Accordingly, the 
Commission recommends that the fact that a wrongdoer's liability to the 
injured person is limited should be ignored for the purpose of calculating the 
amount that she is liable to pay by way of contribution, except for the 
purpose of ensuring that her liability to contribute does not exceed the 
amount in which her liability to the injured person was limited. ^^ 

(ii) Non-Contractual Defences to Claims for Contribution 

We have so far considered the effect upon a contribution claim of a total 
or partial defence available to one wrongdoer by virtue of the terms of a 
contract with the injured party. In other cases, however, one party may, as a 
result of the operation of a general rule of law, either be wholly immune from 
liability or have a partial defence to P's claim for damages. Spousal immu- 
nity and the gratuitous passenger rule, mentioned earlier in this chapter,^' 
provided a common law and a statutory example. Two familiar contempo- 
rary examples are the partial defence of contributory statutory negligence 
and the statutory bar in the Workers' Compensation Act on an employee 
suing her employer for an injury sustained in the course of employment. 
This Act prescribes the contribution consequences of the immunity, but 
other statutes may not. 

The question considered here is whether the reasoning and recommen- 
dations of the earlier parts of this chapter are equally applicable to non- 
contractual defences that one wrongdoer may have to an action brought 
against her by the injured person. One possibility, of course, is that not all 



^0 Draft Act, s. 9(5). 

^^ See text accompanying notes 19-22, supra. 



136 



non-contractual defences should be treated in the same way, and that while 
the recommendations made earlier in respect of contractual defences should 
apply to some non-contractual defences, they ought not to be applied to 
others. 



a. Contributory Negligence 

The operation and scope of contributory negligence upon the liability 
of a wrongdoer to the injured person is considered in chapter 10 of this 
Report. The aspect of the defence that is relevant to this chapter is its effect 
upon rights of contribution between concurrent tortfeasors who are liable 
for a single loss suffered by P, but where the damages recoverable by P 
against one concurrent wrongdoer (D2) will be reduced because of P's 
contributory negligence. As with the limited liability problem considered 
earlier, the issue is how best to distribute the loss among defendants whose 
liability to the injured person is in different amounts. Suppose, for instance, 
that P has been injured as a result of a collision between P's car and a vehicle 
negligently driven by D2. P's own carelessness is found to have been greater 
than that of D2, so that of P's $1,000 loss, she can only recover $300 from 
D2. However, P is able to prove that the accident was also caused by a defect 
in her brakes, which Dl had undertaken to correct, but did not. If Dl would 
otherwise be liable for breach of contract to P for $1,000, what effect should 
P's contributory negligence vis-d-vis D2 have upon P's recovery against Dl, 
or how should it affect Dl's right of contribution against D2? 

At present, contributory negligence is not a defence to a purely contrac- 
tual claim; if, as the Commission has recommended, a right of contribution 
is extended to all concurrent wrongdoers, irrespective of the legal characteri- 
zation of their wrong, then courts are likely to have to deal with this problem 
more regularly than they have so far. However, any extension of the 
availability of contributory negligence as a partial defence (to breach of 
contract, for example) would reduce the potential contribution difficulties, 
since, under the new regime, there would be fewer cases in which the liability 
of each of the concurrent wrongdoers to P differs. ^^ 

There are three principal approaches to resolving the contribution 
problem that arises where one concurrent wrongdoer's liability is reduced 
by the plaintiff's contributory negligence, but the other's liability is not. 
First, the amount recoverable by P from Dl could be reduced so as to 
represent only the degree of fault that, as among P, D2, and Dl, is fairly 
attributable to Dl's conduct. This is the solution adopted by the Irish Civil 
Liability Act, 1961 P Under the second approach, P could recover in full 
against Dl, but in proceedings for contribution the fact that P's carelessness 
reduced the quantum of D2's liability would be ignored. Thus, Dl would 



^^ See, further, chapter 10 of this Report. 

^^ Supra, note 13. The Act does so by providing, in s. 38(1), for apportioned judgments, 
and departing from the principle of in solidum liability. 



137 



recover contribution on exactly the same basis as if D2 had not had a partial 
defence to P's claim. Finally, P could recover in full against Dl, and D2 
would never be required to pay contribution to Dl in a sum greater than the 
amount recoverable from her by R This approach represents the present law, 
and has been specifically adopted in section 2(3)(b) of the Civil Liability 
(Contribution) Act 1978^^ in the United Kingdom.^^ 

If the third alternative is accepted, then, as discussed earlier in the 
context of limited liability clauses, there are several bases upon which 
contribution could be calculated up to the maximum of D2's liability to P. 
First, the fact that D2 is liable to P for a smaller sum than Dl might be 
ignored until the application of the normal apportionment principles results 
in D2's paying more than she was liable to pay P. Secondly, the amount for 
which D2 is liable to P could be regarded as the parties' common liability, 
and an apportionment made on the basis of that figure. Thirdly, some 
compromise between these two approaches might be made that better 
ensures that both Dl and D2 benefit proportionately from the presence of 
the other wrongdoer. Fourthly, the issue might simply be left to the exercise 
of judicial discretion on a case-by-case basis. ^^ 

The Commission has come to the conclusion that P's right to recover in 
full from Dl should never be prejudiced by the fact that there is another 
wrongdoer (D2) liable to P, even if P's contributory negligence vis-d-vis that 
person has reduced the amount that P can claim from D2. Nor should D2 be 
required to contribute a greater amount than that for which she was liable to 
P: any payments made by Dl to P that exceed this sum confer no benefit 
upon D2. Subject to this limitation, it is recommended that P's loss should 



74 



Supra, note 40. 



^^ The Law Reform Commission of Hong Kong "declined" to make a recommendation 
along these lines: supra, note 57, para. 8.11, at 43. Neither the Alberta Institute's Report 
nor the Uniform Contributory Fault Act specifically deals with this problem. 

In Unsworth v. Commissioner for Railways, supra, note 60, it was held that s. 5(c) 
of the Queensland Law Reform (Tortfeasors Contribution, Contributory Negligence and 
Division of Chattels) Act of 1952, No. 42 (found in Queensland Statutes 1828-1962, Vol. 
20), which provided that contribution could be recovered from any other tortfeasor 
liable in respect of the same damage, implicitly prevented Dl from recovering from D2 a 
sum greater than its statutorily limited liability. See, also. Plant v. Calderwood, supra, 
note 64. 

Section 2(3)(a) of the English Civil Liability (Contribution) Act 1978, supra, note 
40, also provides that D2 is not liable to contribute beyond a limitation "imposed by or 
under any enactment" upon his liability to the injured person. Although the earlier 
legislation had not expressly dealt with this matter, the courts had reached the same 
result: Acrecrest Ltd. v. W.S. Hattrell and Partners, [1983] Q.B. 260, at 281, [1983] 1 All 
E.R 17 (C.A.), overruled on other grounds by Governors of the Peabody Donation Fund 
V. Sir Lindsay Parkmson & Co. Ltd., [1985] 1 A.C. 210, [1984] 3 W.W.R. 953 (H.L.). 

''^ This seems to be the solution adopted by the English Civil Liability (Contribution) Act 
1978, supra, note 40, s. 2(1) and (3)(b). 



138 



be distributed between Dl and D2 without regard to the fact that D2 is Uable 
to P for a lesser sum than Dl.^^ 

The reasons for these recommendations are substantially similar to 
those considered in the context of contractually limited liability, and will not 
be reiterated. An additional reason exists, though, for protecting D2 from a 
contribution claim that exceeds D2's Uability to P: this is that the reason for 
D2's reduced liability is the result of P's conduct, and not an agreement to 
which Dl was not a party. Dl is unable to argue that it is unfair that she 
should be prejudiced by a contract between P and D2. Moreover, although P 
is at fault, if this is insufficient to reduce Dl's primary liability to P, there 
seems no reason why this result should be reached indirectly by reducing it 
in order to achieve "fairness" as between Dl and D2. In no sense can P be 
said to have conferred a benefit upon D2. 

b. Other Defences 

The most practically important statutory immunity to suit in Ontario 
is provided by the Workers' Compensation Act,'^^ which bars a suit against an 
employer by an employee who is injured in the course of employment in 
circumstances that give rise to a statutory claim for compensation. The 
injured worker, however, may have a claim against a third party whose 
wrongful conduct also caused the injury. The Act deals with the distribution 
of the Ipss among the worker, the employer or the compensation fund, and 
the third party, by reducing the damages recoverable against the third party 
to a sum that represents the portion of the fault attributable to the third 
party. This is a statutory abrogation of the normal principle that a wrong- 
doer is liable in solidum for any loss caused by her conduct and that of 
another person, and is a legislative adoption in this one context of the 
principle permeating the Irish Civil Liability Act, 1961 , namely, that the 
injured person should be identified with the wrongdoer whose liability is 
legally limited or removed. No question of contribution therefore arises 
between the third party and the employer or the compensation fund. 

This interpretation of the Workers' Compensation Act has recently been 
affirmed in DiCarlo v. DiSimoneJ^ In that case, the injured person sued a 
fellow employee and their employer, and the owner of a second vehicle that 
had collided with the vehicle in which the plaintiff was travelling with his co- 
employee. The action against the first two defendants was dismissed on the 
ground that the Workers' Compensation Board had ruled that the accident 
had occurred in the course of the injured worker's employment, and was 
therefore covered by the statutory compensation scheme. Having elected to 



^^ Draft Act, s. 9(4)(a). See, also, s. 9(5). This was the recommendation of the English Law 
Commission Report, supra, note 43, para. 77, at 22, but it was not incorporated into the 
Act. 

^^ Supra, note 23. 

"^^ (1982), 39 O.R. (2d) 445, 140 D.L.R. (3d) 477 (H.C.J.). 



139 



sue the third defendant, rather than claim under the Act, the plaintiff could 
only recover damages against the third defendant that were proportionate to 
that party's share of the fault. In the event that the third defendant was held 
liable, he could not subsequently claim contribution from the first two 
defendants. 

It will be recalled that Ontario adopted a similar policy in respect of 
both spousal immunity and the gratuitous passenger who was injured by the 
negligence of both the person in whose care she was travelling and a third 
party. ^^ 

It is not proposed to consider the merits of the provisions of the 
Workers' Compensation Act. These provisions are part of a comprehensive 
statutory scheme for compensating those injured at work, and properly fall 
outside the scope of the more general subject of this study. Suffice it to state 
that no recommendation made in this Report is intended to affect in any 
way the Workers' Compensation Act.^^ For the reasons already given, 
however, it is not recommended that this scheme should be generalized so as 
to reduce the liability of one wrongdoer to the injured person because 
another wrongdoer enjoys some partial or total statutory defence to a claim 
by the injured person. The Commission, therefore, does not recommend 
accepting the invitation apparently made by the Canadian Uniform Con- 
tributory Fault Act, which, in section 11, contemplates that the principle of 
identification adopted in workers' compensation legislation should be 
applied more generally to other statutory immunities. If the Legislature 
subsequently wishes, in particular instances, to depart from the general 
recommendation of the Commission, it should do so specifically. 



Recommendations 

The Commission makes the following recommendations: 

1. Where the injured person sues both the claimant for contribution and 
the person against whom the claim is made as co-defendants in a single 
action, or where, in the injured person's action against the claimant 
alone, the contributor is added as a third party by the claimant, both the 
claimant for contribution and the contributor should be bound by the 
findings of the court in that action. 

2. (1) Where a claim for contribution is made in a legal proceeding 

independent of that in which judgment was awarded in favour of 
the injured person against the claimant for contribution, it should 
be no defence for the person against whom the claim for contribu- 
tion is made to show that the court erred in holding the claimant 



^^ See supra, notes 19-22 and accompanying text. 
^' See Draft Act, s. 23(2). 



140 



liable to the injured person, except where the judgment was 
obtained by collusion or fraud. 

(2) The recommendation in paragraph (1) should apply even where 
the judgment against the claimant in favour of the injured person 
was on consent. 

(3) (a) In the independent contribution action, the person against 

whom the claim for contribution is made should be entitled to 
show that the court wrongly assessed the quantum of the 
injured person's loss in the earlier action between the injured 
person and the claimant for contribution. Accordingly, the 
sum to which the contributor should be required to contribute 
should be determined by the court before which the contribu- 
tion claim is made. 

(b) However, the claimant for contribution should be estopped 
from arguing that the injured person's loss was greater than the 
amount at which that loss was assessed by the court that 
decided the injured person's action against the claimant. 

(4) If the judgment in favour of the injured party ordered specific 
relief against the claimant for contribution— such as the delivery of 
goods or the performance of a service by the claimant— the court 
before which the claim for contribution is brought should be 
required to place a value on such delivery or performance in order 
to determine the amount of contribution recoverable. 

3. A person who could at no time have been successfully sued by the 
injured person should not be liable to pay contribution to another 
person in respect of the injured person's loss. 

4. A person whose liability to the injured person is less than that of 
another wrongdoer because of a contract made with the injured person 
before the cause of action arose, the contributory fault of the injured 
person, a statute, or any other reason, should never be required to pay 
by way of contribution a sum that exceeds the amount of her liability to 
the injured person. 

5. The fact that a wrongdoer's liability to the injured person is limited 
should be ignored for the purpose of calculating the amount that she is 
liable to pay by way of contribution, except for the purpose of ensuring 
that her liability to contribute does not exceed the amount in which her 
liability to the injured person was limited. 

6. No recommendation made in this Report is intended to affect in any 
way the Workers ' Compensation Act . 



CHAPTER 7 



DEFENCES TO 
CONTRIBUTION CLAIMS: 
SUBSEQUENT 
IMMUNITIES 



1. INTRODUCTION 

The last chapter considered principally the effect upon rights of contri- 
bution of a complete or partial defence available to one wrongdoer against 
the claim of the injured person. A common feature of those defences is that 
they Umit or exclude liability from the time the injured person suffered the 
loss or his cause of action accrued. In this chapter, we consider situations in 
which the person from whom contribution is claimed (D2) was at one time 
liable to compensate the injured person (P), but where subsequent events 
have rendered D2 immune from suit. The question is whether a concurrent 
wrongdoer (Dl) who has compensated P is entitled to claim contribution 
from D2, even though D2 has ceased to be liable to P. 

The three contexts in which this issue is most likely to arise are as 
follows. First, different time limitation periods may govern the enforcement 
of P's rights against Dl and D2. In the substantial number of cases in which 
this problem has arisen, the difficulty has been caused by differing statutory 
limitation periods, but if the recommendations in this Report are imple- 
mented, then the effect of a contractually limited time for suing may 
also have to be considered. • Secondly, D2 may have become immune 
from proceedings instituted by P because P has already sued D2 and has 
lost. Should this bar a subsequent contribution claim by Dl who settles with 
or is successfully sued by P after judgment has been given in D2's favour 
against P? 



^ In Giffels Associates Ltd. v. Eastern Construction Co. Ltd., [1978] 2 S.C.R. 1346, 84 
D.L.R. (3d) 344, aff'ing {sub nom. Dominion Chain Co. Ltd. v. Eastern Construction 
Co. Ltd ) 12 O.R. (2d) 201, 68 D.L.R. (3d) 385 (C.A.), rev'ing (1974), 3 O.R. (2d) 481, 46 
D.L.R. (3d) 28 (H.C.J. ), the Supreme Court of Canada held that D2 could not be 
required to contribute in respect of a liability of Dl to P for which D2 was not liable to P 
because the fault in the construction had appeared outside the contractually limited 
period of the guarantee. This, it is suggested, is a rather different case because, on the 
facts, D2 was at no time liable to P for the loss he sustained. This problem is, therefore, 
more properly considered as an exemption clause case. 

Since the hmitation period for breach of contract runs from the time when the 
breach occurred, whereas in tort it runs from the time when the plaintiff suffered his 
loss, the extension of the right of contribution to concurrent contract breakers may 
increase the frequency with which the problems considered in the text will arise. 

[141] 



142 



The third situation has already been encountered, and was examined in 
chapter 5 of this Report, where the effect upon contribution claims of a 
settlement between a wrongdoer and the injured person was considered. 
The Commission recommended that, even though a person had finally 
settled his share of the liability with P, if the settlement did not discharge 
other concurrent wrongdoers' liability, they should be entitled to claim 
contribution against the settling wrongdoer who settled for less than his fair 
share of the total Uability.^ One objection to this conclusion was that since 
the settling wrongdoer could not be sued by P, a later payment by Dl to P 
conferred no benefit upon D2, and therefore should not support a claim for 
contribution. 

Throughout this Report, we have emphasized the restitutionary nature 
of contribution claims and the importance of the concept of unjust enrich- 
ment as a rationalizing principle. However, a rigorous apphcation of this 
approach may seem a less satisfying solution to the difficult problems 
considered in this chapter. The argument would be that a contribution claim 
should only be permitted if a payment, or its equivalent, by one wrongdoer 
to the injured party conferred a benefit upon another wrongdoer. Thus, if at 
the time that the payment was made by Dl or Dl was held liable to P, the 
other wrongdoer (D2) could not be successfully sued by the injured party, 
then no part of Dl's payment should be recoverable, because it conferred no 
benefit upon the immune wrongdoer. It does not matter for the purpose of 
this argument precisely why the wrongdoer from whom contribution is 
claimed (D2) is immune from suit by the injured party, whether it is because 
the limitation period has expired within which P's rights against D2 must be 
enforced, or because P has already unsuccessfully sued D2 so that the 
question of D2's liability to P is res judicata, or because P has released D2 
from whatever claim he might have had against him. 

It ought to be emphasized for the sake of clarity that this analysis does 
not assume that Dl's right to contribution arises when P sustains his injury 
or when P's cause of action against the wrongdoers accrues. Thus, in the case 
of limitation periods, the argument is not that if P commences proceedings 
against Dl at a time when P could no longer sue D2, Dl's claim for 
contribution must fail because the limitation period governing the right to 
contribution runs from the time when P was injured. It is well established 
that a contribution claim is a cause of action that is independent of P's cause 
of action;^ the right to contribution is generally thought to arise when Dl has 
paid— or done something equivalent— a sum greater than his due share of 
the common liability to P of the concurrent wrongdoers.^ 



4 



Supra, ch. 5, sec. 3(c)(iii). 

For a recent affirmation of this principle by the Supreme Court of Canada in the context 
of federal jurisdiction, see The Queen v. Thomas Fuller Construction Co. (1958) Ltd., 
[1980] 1 S.C.R. 695, 106 D.L.R. (3d) 193. 

This is so in the case of sureties and other co-debtors: Williams, Joint Obligations (1949), 
at 167-69, and Goff and Jones, The Law of Restitution (2d ed., 1978), at 215-17. There is 
no reason to suppose that any different principle should generally apply to the statutory 



143 



Rather, the question is whether a payment by Dl to P that confers no 
benefit upon D2, because D2 could not at that time have been legally 
required to compensate P, is or should be capable, as a matter of substantive 
law, of giving rise to a claim for the restitutionary right to contribution. The 
expiry of the limitation period governing the enforcement of P's rights 
against D2 is thus relevant because it prevents Dl's payment from confer- 
ring a benefit upon D2 by discharging a liability enforceable against him 
by P. Determining what limitation period should govern the contribution 
claim itself, once it has arisen, is a different question, and is considered in 
chapter 9. 

Despite the logical attractiveness and simplicity of this restitutionary 
argument, it lacks the compelling quality that a strictly restitutionary 
analysis has when applied to situations in which D2 could at no time have 
been successfully sued by P. For it is difficult to resist the thought that, in a 
very real sense, Dl acquires at least an inchoate right to contribution when 
P's loss is sustained, and that this right should not be destroyed by subse- 
quent events over which Dl has no control.^ It may be argued that it is unfair 
that P should be able to defeat Dl's right by delaying the institution of 



right of contribution among tortfeasors created by the Ontario Negligence Act, R.S.O. 
1980, c. 315, although, by virtue of s. 6, a third party notice may be served upon D2 
before Dl's liability to P has been established in the main action. Indeed, this was made 
clear in Nesbitt v. Beattie, [1955] O.R. Ill, [1955] 2 D.L.R. 91 (C.A.). However, in some 
cases it has been stated that the right to contribution arises when the tort is committed; 
Glass V. Avenue Dodge Chrysler (1979), 26 O.R. (2d) 592, 10 C.C.L.T. 69 (Co. Ct.) is a 
recent illustration to this effect. For a criticism of the reasoning in this decision in which 
the relevant authorities on this point are cited, see the annotation by Cheifetz in (1979- 
80), 10 C.C.L.T. 70. 

See, also, Ronex Properties Ltd. v. John Laing Construction Ltd., [1983] Q.B. 398, 
[1982] 3 All E.R. 961 (C.A.) (subsequent reference is to [1983] Q.B.), where it was held 
that the actio personalis rule applied only to claims in tort, and not to a claim for 
contribution that arose against a concurrent tortfeasor in favour of a person who had 
been held liable to the plaintiff in tort. Sir Sebag Shaw said (at 407) that the statutory 
right to contribution is not tortious in nature, but 

derives from a liability in tort to some third party who could have sued any or all of 
the tortfeasors concerned. As between them, a claim for contribution resembles a 
claim by a plaintiff for money paid by him to the use of the defendant who has been 
relieved pro tanto of his direct liability to the victim of the tort. 

The "inchoate right" theory is advanced in Larson, "A Problem in Contribution: The 
Tortfeasor with an Individual Defense Against the Injured Party", [1940] Wis. L. Rev 
467, at 473-77. In Camp v. Bostwick, 5 Am. Rep. 669 (1870), at 693, an inchoate right to 
contribution was said to arise from the very existence of the relationship between co- 
sureties: 

This equity having once arisen between co-sureties, this reasonable expectation 
that each will bear his share of the burden is, as it were, a vested right in each, and 
remains for his protection until he is released from all his liability in excess of his 
ratable share of the burden. 

See, also, Weinrib, "Contribution in a Contractual Setting" ( 1976), 54 Can. B. Rev 338, 
at 347, who states that the problem is to determine the scope of protection which should 
be given to Dl from "the snuffing out of his existing rights by other parties". 



144 



proceedings against Dl until the time within which he had to sue D2 has 
expired, and that P and D2 should defeat Dl's claim by a settlement, release, 
or waiver of D2's liability, or by the result of litigation between P and D2. 

To permit P, without penalty, to delay proceedings against Dl until P 
can no longer enforce his rights against D2, thereby denying Dl a right to 
contribution, seems to revive one of the vices of the old rule in Merry- 
weather V. Nixan:^ it would give P an unjustifiable power to choose which of 
the wrongdoers will ultimately bear the loss. To bar Dl from claiming 
contribution because D2 has already been unsuccessfully sued by P burdens 
Dl with the result of litigation to which he was not a party, and that may 
have resulted in a verdict in D2's favour because it was incompetently 
conducted by P's counsel. 

Any resolution of these difficulties requires the relevant policies to be 
ranked in order of priority: the relevant considerations are Dl's interest (to 
use a neutral word) in obtaining contribution, D2's interest in effectively 
retaining the immunity from further claims arising out of P's loss, and P's 
interest in recovering no less compensation from Dl than that to which he 
would have been entitled if Dl had been the only wrongdoer. It is not 
surprising to find that these questions have produced controversy among 
commentators, inconsistencies in the case law, and divergent responses from 
those law reform bodies and legislatures that have addressed them. We have 
already considered the effect of a settlement upon contribution claims, and 
will not restate here the arguments that led the Commission to the recom- 
mendations made in chapter 5. Of the issues that are included in this 
chapter, the time limitation problem has proved the most important and 
difficult in practice, and is considered fully below. Whether a person can be 
sued for contribution after obtaining a favourable judgment in earlier 
litigation instituted by the injured person is the second topic discussed in 
this chapter. A third topic concerns the effect upon the right of contribution 
of a settlement, release, or waiver by P of D2's liability. 

2. CONTRIBUTION AND LIMITATION PERIODS 

(a) The Present Law 

Ontario was one of the first jurisdictions to include in its statutory 
provision governing a right of contribution among tortfeasors a section that 
deals specifically vsdth the effect upon contribution of the expiry of a period 
of limitation within which the injured party is required to institute proceed- 
ings against the person from whom contribution is claimed. Section 9 of the 
Negligence Act'' provides as follows: 

9. Where an action is commenced against a tort feasor or where a tort feasor 
settles with a person who has suffered damage as a result of a tort, within the 



^ (1799), 8 T.R. 186, 101 E.R. 1337 (K.B.). 
^ Supra, noit 4. 



145 



period of limitation prescribed for the commencement of actions by any 
relevant statute, no proceedings for contribution or indemnity against another 
tort feasor are defeated by the operation of any statute limiting the time for the 
commencement of action against such other tort feasor provided, 

(a) such proceedings are commenced within one year of the date of the 
judgment in the action or the settlement, as the case may be; and 

(b) there has been compliance with any statute requiring notice of claim 
against such tort feasor. 

A considerable body of case law has grown up around section 9. 
Unfortunately, many of the cases are not easy to reconcile and they contain 
a significant degree of confusion. This is attributable in part to the inherent 
difficulty of the issues and the lack of clarity in the legislation, which, as we 
shall see, has been made more opaque by the courts' interpretation of other 
provisions. Moreover, many of the judgments are shortly and inadequately 
reasoned. 

It should be recalled that the principal section of the Negligence Act is 
section 2, which creates a right of contribution where "damages" have been 
caused by the "fault or neglect of two or more persons", and states that 
where "two or more persons are found at fault or negligent, they are jointly 
and severally liable" to the person injured. It should be noted that section 2 
does not define those from whom contribution may be claimed as tortfea- 
sors who are liable to the injured person: the language of section 2 does not, 
therefore, plainly require that contribution may be recovered only from 
those who at the time that the claim for contribution is made could be 
successfully sued by the plaintiff. 

Claims for contribution following a settlement between P and Dl are 
dealt with in section 3 of the Negligence Act, which defines those from 
whom contribution may be claimed as "any other tort feasor who is, or 
would if sued have been, liable"" for the damage in respect of which the 
settlement was made. While section 3 limits the persons from whom 
contribution may be recovered to those who are or would if sued have been 
liable, it is ambiguous concerning whether D2 is liable to contribute if, at the 
time of the contribution claim, D2 could defend it successfully by showing 
that he had ceased to be liable to P by virtue of the expiry of a limitation 
period. The use of the past tense in the phrase, "would if sued have been 
liable", might simply allow contribution to be recovered when D2 had 
ceased to be liable to P because the settlement had satisfied P's claims against 
all other tortfeasors. Alternatively, it might mean that a person who at some 
time could have been held liable to P is required to contribute to Dl, the 
settling tortfeasor, irrespective of the reason why D2 may no longer be 
capable of being sued successfully by P. 

The ambiguities in sections 2 and 3 about the relevant time at which D2 
must be liable to P seem to have contributed to the difficulties in interpret- 
ing section 9. Before turning to the case law in which these provisions, and 
particularly section 9, have been considered, it will be helpful to attempt to 



146 



identify the more obvious meanings that they could bear. In cases where the 
same limitation period applies to P's cause of action against both Dl and D2, 
the meaning of section 9 is clear. It is a condition precedent to a successful 
claim for contribution that, when P commences proceedings against Dl, or 
P and Dl settle, Dl's liability must not have become statute barred. If it has 
not, then Dl may claim contribution by serving a third party notice, or by 
instituting an action against D2 under section 3, subject to the normal 
limitation provision governing such a claim. However, if between the time 
that P commenced proceedings against Dl, or they settled, and Dl claimed 
contribution from D2, D2's liability to P has become statute barred, Dl 
must claim contribution within a year. In addition, any statutory require- 
ment that D2 be given notice of P's claim must have been satisfied. 
Problems arise when different limitation periods apply to P's causes of 
action against Dl and D2 or when the relevant limitation periods start 
running at different times. The problem considered in this chapter is the 
effect upon Dl's prima facie right to contribution of the fact that D2's 
liability to P is statute barred when Dl claims contribution from D2. 

A narrow construction of the operation of the Negligence Act may lead 
to the view that, apart from section 9, D2 is liable to contribute only if, at the 
time when Dl was successfully sued by or settled with P, P could have 
enforced his right to compensation against D2. This is consistent with the 
notion that the right of contribution depends upon the conferral of a benefit 
upon D2 by Dl's payment: if, at that time, D2 has ceased to be liable to P, 
then Dl's payment to P will not have discharged any legal liability that D2 
then had to P. The effect of section 9 is simply to give Dl a year from the date 
of the judgment against him in P's favour, or from the date of Dl's settlement 
with P, within which to claim contribution, provided that notice has been 
served upon D2 in time. The fact that D2 has, at the time of the contribution 
claim, ceased to be liable to P by virtue of the expiry of a limitation period 
governing the enforcement of P's rights against D2 does not defeat Dl's 
claim. The requirement of section 9 that Dl must have been sued by, or 
settled v^th, the injured person "within the period of limitation prescribed 
for the commencement of actions by any relevant statute" should be taken 
to refer to the limitation period prescribed for P's action against Dl and P's 
action against D2. 

Thus, suppose that P has been injured by the concurrent negligence of 
Dl and D2. D2 is a police officer and entitled on the facts to the benefit of 
the six months' limitation period contained in the Public Authorities Protec- 
tion Act} P commences proceedings against Dl six months less one day after 
the accident. On the view of the Negligence Act described above, Dl could 
commence proceedings for contribution within one year of the date of the 
judgment in P's favour against Dl, even though, by that time, D2's liability 
to P had ceased to be enforceable by virtue of the special statutory limitation 
period. The purpose of section 9 is, on this view, to provide a specific 
limitation period within which the contribution claim must be made, in 
circumstances where the period within which P had to sue D2 has expired. 

^ R.S.0. 1980, c. 406, s. 11. 



147 



Section 9 negatives the notion that time runs against Dl's claim for contribu- 
tion from the moment when P's right of action arose: it gives Dl a year to 
enforce his claim against D2, whose liability to P has expired after the 
judgment against Dl. However, if P instituted proceedings against Dl six 
months and one day after the accident, Dl would have no right of contribu- 
tion against D2. 

The attractive aspects of this interpretation are that it is consistent with 
the restitutionary basis of contribution, and gives effect to what might have 
been a sensible compromise between Dl's right to contribution and D2's 
retaining the protection of a statutory limitation period that expired after P 
obtained judgment against Dl. One difficulty with it, however, is that it is 
settled law, at least at the level of the Ontario Court of Appeal, that there are 
very few circumstances in which Dl can commence proceedings for contri- 
bution after he has been held liable to P. By virtue of Cohen v. S. McCord & 
Co. Ltd.,'^ unless Dl's claim is based upon a payment that he made to P 
under a settlement, contribution must normally be claimed by serving a 
third party notice. Thus, if it is necessary that D2 must still be liable to P at 
the time when judgment is given in P's favour against Dl, there will be few 
occasions on which section 9 enables proceedings for contribution to be 
commenced at a time when D2 has ceased to be liable to P. For most 
purposes, section 9 will apply only when contribution is claimed following a 
settlement between Dl and P that was made when D2 was still liable to P. 
This may have been a factor in the courts' apparent rejection of the 
interpretation of section 9 discussed above. 

The relevant provisions of the Negligence Act are capable of a wider 
interpretation, which would enable Dl to recover contribution from D2 
even though, when P instituted proceedings against Dl or P and Dl settled 
P's claim, the limitation period governing D2's liability to P had already 
expired. The one restriction upon Dl's right is that he must have com- 
menced proceedings for contribution within a year of the judgment or the 
settlement. On this view, the Act overrides, for the purpose of contribution, 
the limitation period applicable to the enforcement of P's rights against D2, 
and departs from the restitutionary principles that in other respects regulate 
the right to contribution. This result may be reached solely on the basis of 
section 9, if it is assumed that a right of contribution does not otherwise arise 
under sections 2 and 3 if D2 has ceased to be liable at the time of the 
judgment against Dl or the settlement between P and Dl. When section 9 
refers to the commencement of the action against Dl by P, or the settlement 
between P and Dl, "within the period of limitation prescribed for the 
commencement of actions by any relevant statute", the period of limitation 
in question is only that governing P's claim against Dl. It has been argued 
that it is not necessary to find in section 9 any reference to the expiry, at the 



Cohen v. S. McCord & Co. L/J, [1944] O.R. 568, [1944] 4 D.L.R. 753 (C.A.). See, also, 
Rickwood V. The Town ofAylmer, [1957] O.W.N. 243, 8 D.L.R. (2d) 702 (C.A.), and 
infra, ch. 9, sec. 2(a)(v). It may well be argued, of course, that s. 9 should be regarded as 
authorizing claims for contribution to be made by way of a separate action, as well as by 
third party notice. 



148 



time of the judgment against Dl or the settlement between P and Dl, of the 
limitation period governing P's rights against D2, because sections 2 and 3 
only require that D2 must have been liable at some time to P.'^ 

On this view, the effect of section 9 is to reduce to one year the time 
within which the contribution claim must be made in order to give some 
recognition to the statutory policy of limiting the time within which P must 
sue D2. However, to the extent that contribution claims must generally be 
made before judgment is rendered against Dl,'^ the one year limitation 
period would seldom be relevant. 

Turning now to the case law, it is worth repeating our earlier observa- 
tion that it does not readily yield a particularly clearly reasoned analysis of 
the relevant statutory provisions. '^ Nonetheless, as discussed below, the 
weight of authority, and especially the more recent cases, seem to adopt the 
broader of the interpretations of the Negligence Act described above. Thus, a 
third party notice may be served upon a tortfeasor from whom the plaintiff 
can no longer recover damages because of the expiry of a limitation period 
and, it would seem, Dl can be awarded contribution in the event that the 
other elements of the right to contribution are satisfied. It should be noted 
that judges sometimes refer to the fact that the Negligence Act provides that 
a third party notice may be served upon a person who "is or may be wholly 
or partly responsible for the damages claimed".'^ A decision that a person 
may be joined as a third party, even though no longer liable to P, may 
therefore not be intended to decide conclusively that section 9 enables the 
court to award contribution. 

In PaulPapp Ltd. v. Fitzpatrick,^^ D2 appealed against a Master's order 
giving Dl liberty to add D2 as a third party to proceedings instituted by P 
against Dl. P had sustained injuries as a result of a collision in which vehicles 
driven by P and Dl were involved. Dl believed that the accident may have 
been caused in part by D2's negligence in failing properly to repair the 
brakes on Dl's car. Schroeder J.A. pointed out that it was sufficient for the 
service of a third party notice under section 6 that the person whom it is 
sought to serve " 'is or may be wholly or partly responsible' for the damages 
claimed", •^ and that even though P's claim against D2 may have been 
barred by The Highway Traffic Act ,^^ Dl's right of contribution against D2 



'^ Cheifetz, Apportionment of Fault in Tort (1981), at 49-55. On s. 9 generally, see infra, ch. 
9. This view was recently adopted in Re Urquhart and Hatt (1982), 132 D.L.R. (3d) 685 
(Ont. Co. Ct.). 

'^ Cohen v. S. McCord & Co. Ltd. , supra, note 9. 

Supra, this sec. 

^^ Negligence Act, supra, note 4, s. 6. 

•'^ [1967] lO.R. 565 (C.A.). 

'5 7/?/^., at 568. 

•^ R.S.0. 1960, c. 172, s. 147(1). Section 147(1) imposed a 12 month limitation period upon 
the recovery of damages occasioned by a motor vehicle. This provision was re-enacted 



149 



may be preserved by section 9 of the Negligence Act ^'' Similar conclusions 
appear to have been reached in Judson v. Vasilaras and Town of Lindsay '^ 
2ind Attorney-General of Ontario v. Kilbrick}"^ 

The question was discussed further in Paquette v. Batchelor,^^ in which 
Dl sought to serve a third party notice upon D2. When P commenced the 
main action against Dl the hmitation period governing D2's liabiHty to P 
had already expired. Osborne J. held that since the contribution claim was 
an independent action, the six months' limitation period did not start to run 
in D2's favour until Dl had been held liable to P. Moreover, he also stated 
that section 9 preserved Dl's rights from being extinguished by the lapse of 
time that barred P's claim against D2. A similar analysis of section 9 was 
adopted in Pek v. Levasseur?^ Courts in other provinces with legislation 
similar to section 9 have reached the same result as Ontario courts. 



in R.S.0. 1970, c. 202, s. 146(1), but amended by The Highway Traffic Amendment Act, 
1975 (No. 2), S.O. 1975, c. 37, s. 1, so as to extend the limitation period to 2 years. 



17 



Although not mentioned in the reasons for judgment, the result of this case may be 
explicable on another ground. The time limitation in s. 147(1) of The Highway Traffic 
Act was subject to s.s. (3), which provided that if proceedings were instituted within the 
limitation period, counterclaims or third party proceedings were not barred by the fact 
that they were instituted outside the period. Section 147(3) now appears, in the same 
terms, as s. 180(3) of the Highway Traffic Act, R.S.0. 1980, c. 198. 

Third party proceedings must still normally be instituted within the period 
prescribed by the applicable rules of civil procedure: hinder v. Hyla, [1962] O.W.N. 13 
(H.C.J. ). However, the court does have a discretion to allow the third party notice to 
stand despite the lapse of a limitation period and the fact that the notice is out of time: 
Boylan v. Red Barn System (Canada) Ltd. (1974), 7 O.R. (2d) 380 (Div Ct.), and Brock 
University v. Stewart Hinan Corp. Ltd. (1980), 27 O.R. (2d) 329, 108 D.L.R. (3d) 137 
(Div Ct.). On the factors to be considered by the judge in exercising his discretion to 
issue a third party notice outside the normal limitation period, see Pugliese v. National 
Capital Commission (1981), 32 O.R. (2d) 264 (Div Ct.); Waterloo County Board of 
Education v. Mark, Musselman, Mclntyre, Coombe (1982), 38 O.R. (2d) 61 (H.C.J.); 
and Ejsymont v. Toronto-Dominion Bank (1984), 47 O.R. (2d) 596 (S.C.O-). 

The current Rules of Civil Procedure, O. Reg. 560/84, make some significant 
changes to the law relating to third party proceedings. In particular, only the plaintiff in 
the main action may object to the issue of a third party claim on the ground that it is out 
of time. The court still retains a discretion to extend the period within which the claim 
must normally be issued. See, generally, Rules of Civil Procedure, R.29, especially rr. 
29.02 and 29.09. 

[197 1] 1 O.R. 290 (H.C.J. ). In this case, the person sought to be added as a third party was 
a municipal corporation. It objected to service on the ground that The Municipal Act, 
R.S.O. 1960, c. 249, s. 443(2), imposed a 3 month limitation period in respect of the 
liability alleged. The application by Dl was allowed without prejudice to the right of D2 
to rely at trial upon the statutory limitation period. Section 443(2) has been re-enacted 
in identical terms as s. 284(2) of the Municipal Act , R.S.O. 1980, c. 302. 

19 (1974), 4 O.R. (2d) 313 (C.A.). A recent decision, Brock University v. Stewart Hinan Ltd., 
supra, note 17, affirms this view of the law. See, d\so, Arnold v. Teno, [1978] 2 S.C.R. 287, 
83 D.L.R. (3d) 609. 

2^ (1980), 28 O.R. (2d) 590, 1 1 1 D.L.R. (3d) 642 (H.C.J.). 

2^ (1982), 38 O.R. (2d) 108 (Master S.C.O.), aff'd (1982), 38 O.R. (2d) 109n (H.C.J.). See, 
also, Ejsymont v. Toronto- Dominion Bank, supra, note 14. 



18 



150 



The courts have insisted, however, that the third party notice be served 
by the defendant within the period specified by the Rules of Civil 
Prbcedure,^^ although this may be extended with leave of the court.^^ 

On the other hand, it is quite clear that courts will not allow the 
Negligence Act to be used so as to revive a liability of D2 to P that has ceased 
to be enforceable as a result of lapse of time. And for this purpose it does not 
seem to matter whether D2 is sought to be made a party-defendant by P^'* or 
by D1.25 

(b) Alternatives for Reform 

The uncertainties in the present law and the difficulties of construing 
section 9 justify, in themselves, a re-examination of this aspect of the 
Negligence Act. In addition, as indicated, any extension of the right to 
contribution among wrongdoers to include those in breach of contract or of 
a fiduciary obligation is likely to give rise to new aspects of the time 
limitation problem. ^^ The Limitations Act^~' provides different limitation 
periods for different causes of action; limitation periods may start running 
from different points depending upon the nature of the cause of action; and 
actions based upon allegations of breach of a fiduciary obligation are also 
subject to the more flexible equitable doctrine of laches. While the best 
solution to many of the difficulties discussed in this part of the chapter could 
be resolved by reforming and simplifying the law relating to limitations,^^ 
short of this there are a number of possible reforms that could be made to 
the law of contribution with respect to the problem under consideration. 

One alternative would be to permit Dl to claim contribution regardless 
of the fact that D2's liability to P had become statute-barred. As we have 
seen, Ontario courts have adopted this approach, as has at least one English 
court. In Harvey v. R.G. O 'Dell Ltd., ^^ P instituted proceedings against Dl at 



Supra, note 17. 

See discussion ibid. 

'^^ Latiimor v. Heaps (1931), 40 O.W.N. 580 (H.C. Div.). 

25 Adams v. W.J. Hyatt Ltd, [1954] O.W.N. 895 (H.C.J.). See, also, Kane v. Haman, [1971] 
1 O.R. 294 (H.C.J. ), where it was also said that the fact that the time limitation on D2's 
liability to P had expired did not prejudice Dl's right to join D2 as a third party. 

See5M/7ra, note 1. 

2^ R.S.O. 1980, c. 240. 



28 



29 



See Ontario Law Reform Commission, Report on Limitation of Actions (1969); Ontario, 
Ministry of the Attorney General, Discussion Paper on Proposed Limitations Act 
(1977); and former proposed Limitations Act, 1983, Bill 160, 1983 (32d Legis. 3d Sess.). 

[1958] 2 Q.B. 78. See, also, Hordern-Richmond Ltd v. Duncan, [1947] K.B. 545. 



151 



a time when P's claim against D2 was statute-barred. McNair J. held that Dl 
was entitled to serve a third party notice upon D2 despite the fact that D2's 
liability to P had lapsed. The English Law Reform (Married Women and 
Tortfeasors) Act, 1935 ^^ contained no provision analogous to section 9 of the 
Ontario Act; the critical words in section 6(l)(c) of the English statute 
defined a person liable to a contribution claim as "any other tort feasor who 
is, or would if sued have been, liable in respect of the same damage. . .". 
McNair J. held that if D2 had not been sued by P, it was enough for Dl to 
establish that D2 would have been liable if sued at some time.^' He thought 
it contrary to Parliament's intention in repealing the rule in Merryweather 
V. Nixan^^ that P should be able to defeat Dl's ability to claim contribution 
by delaying proceedings against Dl until such time as D2 was no longer 
liable to P 

The High Court of Australia has placed the same interpretation upon 
the New South Wales statute that is identical to the English Act of 1935. 
Thus, in Brambles Construction Pty. Ltd. v. Helmers,^^ Windeyer J. said: "It 
is enough that there was a time, before the habihty of [Dl]. . .was actually 
ascertained, at which. . .[P] could have" sued D2. In those Canadian pro- 
vinces whose legislation on contribution among tortfeasors is derived from 
the English Act of 1935, there are a number of cases holding that it is enough 
that D2 was at one time liable to P, even though the limitation period 
governing P's claim against D2 had expired by the time that Dl was held 
liable to P.^"^ There are also cases that do not follow Harvey's case, and deny 
Dl a right to contribution in these circumstances.^^ 



^^ Law Reform (Married Women and Tortfeasors) Act, 1935, c. 30 (U.K.). 

^' In George Wimpey & Co. Ltd. v. British Overseas Airways Corp., [1955] A.C. 169, [1954] 
3 All E.R. 661 (H.L.) (subsequent reference is to [1955] A.C), the House of Lords had 
held that if D2 had been sued by P, and P's claim had failed because D2 could claim the 
protection of a short limitation period, then Dl had no right to contribution. It is 
anomalous that DTs success should depend solely upon whether P had instituted 
proceedings against D2. The reasoning in Wimpey was applied in County of Parkland 
No. 31 V. Stetar, [1975] 2 S.C.R. 884, to legislation worded similarly to s. 6(l)(c) of the 
English Act of 1935. See, also, Aleman v. Blair and Canadian Sugar Factories Ltd. 
(1963), 44 W.W.R. (N.S.) 530 (Alta. S.C, T.D.). 

^^ Supra, note 6. 

^^ (1966), 114 C.L.R. 213 (H.C.), at 221. 

^"^ See, for example, Clayton v. McNeill's Taxi Ltd., City of Edmonton and Crassland, 
[1946] 3 W.W.R. 218 (Alta. S.C, T.D.); British Columbia Hydro and Power .Authority v. 
Kees van Westen, [1974] 3 W.W.R. 20 (B.C.S.C); Scott v. Whitworth, [1974] 6 W.W.R. 
740 (Alta. S.C, App. Div.), leave to appeal to Supreme Court of Canada refused, [1974] 
S.C.R. vii; and MacKenzie v. Vance (1977), 74 D.L.R. (3d) 383 (N.S.S.C, App. Div.). 

^5 Cohhle V. Mills, [1947] 2 W.W.R. 790 (Alta. S.C, T.D.), and Johnson v. Vancouver 
General Hospital and Van Louie (1973), 44 D.L.R. (3d) 286, [1974] 1 W.W.R. 239 
(B.C.CA). 



152 



The English Civil Liability (Contribution) Act 1978^^ appears to have 
given statutory authority to the result in Harvey v. R.G. O 'Dell Ltd. Section 
1(3) provides as follows: 

1,— (3) A person shall be liable to make contribution. . .notwithstanding that 
he has ceased to be liable in respect of the damage in question since the time 
when the damage occurred, unless he ceased to be liable by virtue of the expiry 
of a period of limitation or prescription which extinguished the right on which 
the claim against him in respect of the damage was based. 

Despite the somewhat ambiguous drafting of the last clause of this subsec- 
tion, it would seem that D2 remains liable to contribute even though his 
liability to P had become statute-barred at some time before Dl claimed 
contribution.^^ This provision not only requires D2 to pay contribution, 
even though Dl's payment to P conferred no benefit upon him, but also 
continues D2's Uability to contribute for exactly the same length of time that 
governs all contribution claims. 

This approach, in effect, ignores, for the purposes of Dl's claim for 
contribution, the fact that D2 had ceased to be liable to P when Dl's right to 
contribution arose. A number of advantages can be claimed for it. First, Dl 
is not prejudiced by the selection by P of the time at which he commences 
proceedings against Dl. This, of course, is an event over which Dl has no 
control, and it is unfair to prejudice Dl by denying him a right to contribu- 
tion solely because P delayed bringing suit until the time within which he 
had to sue D2 had expired. To regulate the right of contribution in this way 
introduces into the distribution of P's loss among those whose wrongful 
conduct caused it an arbitrariness that the abolition of the rule in Mer- 
ryweather v. Nixan was intended to avoid. 

Secondly, the right to contribution is a claim that is independent of P's 
rights against the wrongdoers. It follows from this that the fact that D2 is no 
longer liable to P should not inevitably preclude Dl from claiming contribu- 
tion: Dl's right arises at the time that he is held liable to P or settles with P. 
The limitation period governing the contribution claim should run in D2's 
favour, and against Dl, from the time that the right to contribution arose, 
not from the time when P's rights accrued. This solution also avoids the 
absurdity of saying that, if D2 cannot be required to contribute where he had 
ceased to be liable to P when P sues Dl, Dl's right to contribution is statute- 
barred before it has even arisen. 



^^ Civil Liability (Contribution) Act 1978, c. 47 (U.K.). 



37 



To construe s. 1(3) as applying to all periods of limitation would, of course, produce the 
opposite result from that described in the text. The last clause of s. 1(3) probably only 
applies to claims for the recovery of land and goods, where D2 has acquired, or P has 
lost, title as a result of the lapse of time. In other contexts, the expiry of a limitation 
period is normally said to bar a plaintiff's remedy, not extinguish his right. 

The Law Commission's Working Paper {Contribution, Working Paper No. 59 
(1975)), paras. 31-35, at 18-22, canvassed the possible solutions to the problem without 



153 



There are, however, some serious objections to this solution. First, it is 
inconsistent with the restitutionary character of contribution claims: if Dl is 
held liable to or settles with P at a time when P's rights against D2 are statute- 
barred, Dl's payment to P discharges no legally enforceable liability of D2 
and thus confers upon D2 no benefit, the retention of which would unjustly 
enrich him at Dl's expense. The discharge of an unenforceable legal obliga- 
tion does not generally constitute a benefit in the law of restitution. 

Secondly, it may be argued that to require D2 to contribute to a liability 
discharged by Dl when P could no longer enforce D2's liability to him would 
deprive D2 of the protection that it was contemplated he should enjoy when 
P was statutorily required to enforce his rights against D2 within a shorter 
period than that applicable to P's rights against Dl. If the result is unsatisfac- 
tory, it is because the law of limitations is defective. Anomalies produced by 
that branch of the law should be redressed by reforming it directly, and not 
indirectly by tinkering with the principles underlying the law of contribu- 
tion. While it is true that for some purposes the right to contribution is 
independent of the rights of the injured party and arises from the time when 
Dl is held liable to or settles with P and not from the time when P's cause of 
action arose, nonetheless, if D2 remains potentially liable for contribution 
in respect of a payment made by Dl to P after D2 had ceased to be liable to P, 
D2 is, in substance, deprived of the protection afforded by the limitation 
period within which P must enforce his rights against D2. If D2 defends 
against the contribution claim by disputing his liability to P or the degree of 
fault that should be attributed to him, he will have to rely upon the same 
stale evidence upon which he would have had to rely if he had been sued out 
of time by P. Allowing Dl to claim contribution in these circumstances also 
prevents D2 from regarding any potential liability that he may have 
incurred as a result of P's injury as concluded at the expiry of the limitation 
period. 



making any provisional recommendation. In its Report, the Law Commission recom- 
mended no change in the law, but referred the problem to the Law Reform Committee 
for its consideration when reviewing the law relating to limitation periods: Law of 
Contract: Report on Contribution, Law Com. No. 79 (1977) (hereinafter referred to as 
"Law Commission Report"), para. 32, at 10. The final Report of that Committee 
{Twenty-First Report (Final Report on Limitations of Actions) (Cmnd. 6923, 1977)), 
para. 3.34, at 40, recommended that there should be no change in the law as it had been 
established in Harvey v. R.G. O'Dell Ltd., supra, note 29. It concluded that, despite the 
theoretical possibility that the present law exposed D2 to a claim for contribution long 
after his primary liability to P had expired, it "causes few problems in practice" because 
well advised plaintiffs sue all possible defendants at one time, and if they do not, the 
defendant who is sued will normally quickly bring them into the action by the service of 
a third party notice. 

The Law Reform Commission of Hong Kong recommended the adoption of the 
solution contained in the English Act of 1978, but was critical of the draftsmanship of 
s. 1(3) (Report on the Law Relatinf^ to Contribution Between Wrongdoers, Topic 5 
(1984), paras. 6.2-6.4, at 33 (hereinafter referred to as "Hong Kong Report")). 

The South Australian Wrongs Act, 1936-1975, s. 25(l)(a)(iv) and (3), operates in 
much the same way: see Monaghan v. Wardrope and Carroll Ptv. Ltd. (1970), S.A.S.R. 
575 (S.C), and Aakster v. HA. Chalmers Pty Ltd. (1972), 3 S.A.S.R. 519 (S.C). 



154 



The third objection is that if D2's UabiUty to P arose from a breach of 
contract, and the contract included a short Umitation period, to permit Dl 
to claim contribution from D2 in respect of a liability established outside 
this period would deprive D2 of part of the bargain that he had made with P. 
Contracts should not lightly be upset in order to prevent a third party (Dl) 
from suffering some "injustice". The Commission has already argued in the 
context of contractual exemption and limited liability clauses that Dl 
should not be given a windfall for which he had not bargained. ^^ 

A second approach to the issue under consideration would remove 
some of the force of the objections to the alternative considered above by 
providing for a short limitation period within which contribution must be 
claimed when D2's liability to P has become statute-barred at the date of 
either a settlement between P and Dl or the institution of proceedings by P 
against Dl. This may have been the kind of scheme originally contemplated 
by section 9 of the Negligence Act. It might be suggested, therefore, that, 
where D2's liability to P had expired at the time of the settlement between P 
and Dl or the institution of proceedings by P against Dl, D2 should remain 
liable to a contribution claim made within six months of either of these 
dates, even though the normal limitation period governing contribution 
claims would not otherwise expire until considerably later. ^^ 

This approach has been adopted by the Alberta Institute of Law 
Research and Reform, which has recommended that contribution should 
be given a limited priority over D2's security from suit outside the period 
governing his liability to P.^^ It has therefore proposed that contribution may 
be claimed from D2, even though he had ceased to be liable to P when P 
instituted proceedings against Dl, provided that Dl serves a third party 
notice within six months from the date when P served notice of his claim 
upon Dl. D2 would have six months from the time when he was served with 
notice by Dl to serve notice upon D3. The Institute also proposed that Dl 
should be able to continue his claim for contribution by way of an action if P 



^^ See supra, ch. 6, sees. 3(d)(i)a and b. See, also, infra, note 43, on the possible effect of the 
Uniform Contributory Fault Act on contractually imposed limitation periods. The 
Uniform Act was adopted by the Uniform Law Conference of Canada in 1984: see 
Proceedings of the Sixty-Sixth Annual Meeting (1984), Appendix F, Uniform Contribu- 
tory Fauh Act . 

The Limitations Act , supra, note 27, contains no specific limitation period for contribu- 
tion claims, but the period is probably 6 years, since quasi-contractual claims (or 
equitable claims analogous thereto) are, presumably, governed by the period applicable 
to actions in contract: see Black v. Horseman (1974), 4 O.R. (2d) 188 (H.C.J. ). However, 
it is also arguable that the right of contribution under the Negligence Act, supra, note 4, 
falls within s. 45(l)(h) of the Limitations Act as an action given by statute for damages or 
a sum of money. Compare Schwella v. The Queen, [1957] Ex. C.R. 226, and Sherritt v. 
Thorold Concrete Block Co., [1954] O.W.N. 535 (C.A.). 

Alberta, Institute of Law Research and Reform, Contributory Negligence and Concur- 
rent Wrongdoers, Report No. 31 (1979) (hereinafter referred to as "Alberta Report"), at 
62-71. 



155 



and Dl settled after P had served notice upon Dl, and Dl had served a third 
party notice upon D2. 

The Institute was unable to make an analogous recommendation to 
cover the case where P has never instituted proceedings against Dl, and 
where Dl's claim for contribution is based upon a settlement between P and 
Dl. In this situation, the Institute recommended that D2 should not be liable 
to a claim for contribution in respect of a payment by Dl to P under a 
settlement that was made after D2's liability to P had ceased to be enforce- 
able by virtue of the lapse of time. 

The Alberta Institute's proposal may be attacked on the ground that it 
extends D2's liability to contribute beyond the contractual or statutory 
limitation period within which P must sue D2. Moreover, where P must 
proceed against D2 within a particularly short limitation period, this 
provision might expose D2 to liability to Dl for a substantial time after his 
liability to P had expired, especially if P commenced proceedings against Dl 
just before Dl's liability became statute-barred. In addition, its different 
treatment of claims based upon the liability of Dl established following the 
institution of legal proceedings by P, on the one hand, and settlements, on 
the other, is unsatisfactory.'*^ 

The Uniform Contributory Fault Act, adopted by the Uniform Law 
Conference of Canada,'^^ contains no provisions that bear specifically upon 
the problem under consideration."^^ However, it may be that the definition 
in section 1(a) of concurrent wrongdoers as persons "whose wrongful acts 
contribute to the same damage" only requires that they must have been 
potentially liable at any time after P sustained the loss. 

A third, and quite different, solution would be to impose upon the 
injured person the cost of his failure to institute proceedings against Dl until 
the lapse of time had rendered P's rights against D2 unenforceable. As might 
be anticipated, this is the approach adopted in the Irish Civil Liability Act, 
1961, "^"^ section 35(l)(i) of which provides that the plaintiff shall be respon- 



"^^ This point is conceded in the Alberta Report, ibid., at 71. There is no explanation why 
the Institute did not recommend that Dl could claim contribution within 6 months of 
making a settlement with P, even though D2's liability to P had expired by the time of the 
settlement. To make Dl's right depend upon whether or not P had instituted legal 
proceedings against Dl before the settlement was made seems odd. 



42 



Supra, note 38. 



"^^ It may be that the definition of a "release" in s. 1 of the Uniform Act as including an 
agreement that limits the liability of a person for damages applies to a limitation period 
contained in a contract. If so, then s. 12(2) solves the contribution problem by reducing 
the damages recoverable by the injured person by the amount that would otherwise 
have corresponded to the degree of responsibility for the loss that was attributable to the 
concurrent wrongdoer whose liability has ceased to be enforceable by virtue of the 
contractual clause. 



44 



Civil Liability Act. 1961, No. 41. 



156 

sible for the acts of a concurrent wrongdoer against whom he can no longer 
proceed by virtue of the lapse of a statutory limitation period. 

The proposal that the injured person's damages should be reduced if he 
unreasonably delayed proceedings against Dl until P's claim against D2 had 
become statute-barred has been supported by Professor Larson,"^^ and some 
judicial support can be found in the judgment of the Alberta Supreme 
Court, Appellate Division, in County of Parkland No. 31 v. Stetar,^^ in 
which P was awarded judgment against Dl for that portion of P's loss that 
corresponded to Dl's degree of fault. P was left to bear the share attributable 
to D2, whom he could no longer sue, and from whom Dl could not obtain 
contribution because P had failed to serve notice upon D2 in time. The 
Supreme Court of Canada, however, reversed this decision, and awarded 
damages against Dl for the whole of P's loss; Dl was denied a right of 
contribution against D2. 

The advantages of the position adopted in the Irish Act are that it 
protects D2 from stale claims and gives full effect to the reasons for giving 
D2 the benefit of a short limitation period against P. In addition, it prevents 
Dl from being prejudiced by P's delay, a matter over which he has no 
control. It thus limits the ability of P arbitrarily to cast the entire burden of 
compensating him, without any opportunity of apportionment, upon one 
of the concurrent wrongdoers. 

The disadvantages of the Irish solution are that it derogates from the 
principle that the injured person should not be prejudiced by the existence 
of another wrongdoer. Moreover, the plaintiff should not be penalized for 
deciding to proceed against only one wrongdoer, nor prejudiced in his claim 
against D2 for the way in which he decides to conduct his litigation with Dl. 
Any limitation upon P's right to recover that is regulated by reference to an 
unreasonable failure to proceed in time against D2 is likely to be difficult to 
apply 

A final approach would be to change the present law so as to give the 
highest priority to the restitutionary basis upon which claims for contribu- 
tion rest, leaving any injustices that result from the differing operation of the 
limitation periods in respect of P's claim against Dl and D2 to be dealt with 
by reforming the major source of the problems, namely, the law of limita- 
tions. Nor is this view inconsistent with the notion that the right of 
contribution is an independent right that arises at the time when Dl's 
liability to P is ascertained and that any limitation period should run from 
then, and not from when P's cause of action arose. The argument is not that, 
if Dl is sued by P after D2 had ceased to be liable to P, Dl's claim for 
contribution is statute-barred; rather, it is that the right to contribution 
never arose at all because Dl's payment can confer no benefit upon D2. 



^^ Supra, note 5, at 501. 

"^^ See supra, note 31, at 889-90. 



157 



The principal weakness of this proposal is, of course, that it enables P to 
prevent Dl from claiming contribution by simply delaying proceeding 
against Dl until D2's liability to P has ceased to be enforceable. This 
difficulty may be met in part by allowing Dl to seek a declaration of 
contingent entitlement to contribution from D2 in the event that Dl is sued 
by P and held liable. A proceeding of this kind would put D2 on notice that 
he might be required to pay contribution, and would enable Dl to preserve 
his ability to claim contribution in the event that P sued Dl at a time when 
D2 was no longer liable to P. It can also be argued that it is unattractive to 
give D2 the benefit of a technical and often substantively unmeritorious 
defence at the expense of Dl. 

(c) Conclusions 

The Commission has concluded that the consequences of the operation 
of different Umitation periods should not fall on P. The Irish Act's solution 
should therefore be rejected. Proposals for reforming the law of contribution 
among wrongdoers seem an inappropriate means for requiring the injured 
person to sue all who may possibly be liable for his loss, on pain of suffering 
a reduction in damages, and for derogating from the important principle of 
the in solidum Uability of those whose concurrent wrongs have caused a 
single, indivisible loss. Some of the most cogent doubts about the desirabil- 
ity of the right to contribution, which were considered in chapter 4 of this 
Report,"^^ spring from a fear that retaining and extending the right may 
prejudice the injured person's ability to recover full compensation, and a 
belief that this risk is not worth running in order to achieve fairness among 
the wrongdoers. 

A more difficult question is whether D2 should remain liable to pay 
contribution well beyond the period of his enforceable liability to P. The 
issue here is whether priority should be given to D2's protection from claims 
arising, in the broad sense, out of the loss inflicted upon P, or to Dl's interest 
in ensuring that his ability to recover contribution is not prejudiced by the 
conduct of P after P's cause of action against Dl and D2 has arisen. As we 
have seen in this chapter, powerful arguments can be made on both sides of 
this issue, and no result may be completely satisfactory. 

We turn first to consider the case of a statutory limitation period. The 
Commission has decided to recommend that a person should remain liable 
to pay contribution notwithstanding the fact that the injured person's rights 
against him have become unenforceable as a result of the expiry of a 
statutory limitation period or, indeed, the existence of an equitable defence 
based on delay'*^ Thus, Dl's ability to claim contribution should not be 



47 



Supra, ch. 4, sec. 3(a)(i). 



^^ See the Commission's proposed Contribution and Comparative Fault Act (hereinafter 
referred to as "Draft Act"), s. 15(a). The Act appears as an Appendix of this Report. 
Compare the Commission's Report on Limitation of Actions, supra, note 28, at 113. 



158 



prejudiced by any delay on the part of P in instituting proceedings against 
D2, even if D2's liability had become statute-barred when P instituted 
proceedings against Dl. The Commission also recommends that the result 
should be no different if Dl's claim is based upon a settlement that he has 
made with P."^^ It would be arbitrary to prevent Dl from recovering contri- 
bution after settling with P, if, at the time of the settlement, D2's liability to P 
had ceased to be legally enforceable as a result of a statutory limitation 
period. It would either discourage the well-advised from settling the injured 
person's claim, or deny contribution to a person who could have recovered if 
he had forced P to sue him. 

The preceding recommendations respecting the effect of a statutory 
limitation period would, therefore, embody the interpretation given by our 
courts to the Negligence Act and make it applicable to all rights of contribu- 
tion among concurrent wrongdoers, whether tortfeasors or those in breach 
of a contractual, statutory, or fiduciary duty. 

It is now necessary for us to consider the limitations imposed by 
paragraphs (a) and (b) of section 9 of the Negligence Act . With respect to 
paragraph (b), it seems to us to be difficult in principle to continue to justify 
the existing distinction between a limitation period and a statutory provi- 
sion that a person must be served with notice of the claim. Nor, indeed, do 
we see why P's failure to comply with any procedural requirement should be 
treated differently. In all these cases, the purpose is to protect a potential 
defendant from defending an action for damages by the injured person at a 
time when he may no longer expect to have to do so and, indeed, when he 
has, for example, lost or destroyed the evidence or when the evidence can no 
longer be obtained. If the right to contribution is not defeated by the 
plaintiff's delay in instituting proceedings, then it should be equally 
immune to a failure by the plaintiff to serve notice of his claim upon a 
concurrent wrongdoer or to comply with any other procedural requirement, 
and we so recommend. ^^ 

We do recognize, however, that some statutes require the giving of 
notice of a claim within a very short period of time from when P's cause of 
action arose. For example, section 284(5) of the Municipal Act^^ provides 
that no action shall be brought against a municipality for breach of its duty 
to keep highways and bridges in repair unless notice of the claim is given 
within ten days (or seven days in the case of an urban municipality). Short 
notice provisions of this kind are designed to give the defendant the 
opportunity to preserve the evidence needed to defend P's action where that 
evidence is likely to be lost or to disappear quickly. 



"^^ Draft Act, s. 15(d). 

^^ Ibid.,s. 15(c). 

^' R.S.O. 1980, c. 302. See, also. Proceedings Against the Crown Act, R.S.O. 1980, c. 393, 
s. 7(3). 



159 



Under our recommendation permitting Dl to claim contribution even 
though notice was not given to D2 within the time stipulated by statute, it 
would be possible, for example, for a concurrent wrongdoer to claim 
contribution against a municipality several years after an accident, and 
without any notice to the municipality, where the claim is based on the 
municipality's alleged failure to clear the highway of snow and ice, even 
though the injured party would be barred from bringing his own action in 
respect of the accident. On the other hand, as we have said, the alternative 
solution to the problem created by P's failure to serve notice is also subject to 
considerable criticism, both in principle and in practice. Moreover, not all 
notice provisions are as short as the one contained in section 284(5) of the 
Municipal Act; to the extent that particular notice periods and particular 
limitation periods are of the same length of time, the arguments for treating 
the two in different ways clearly become less compelling. 

The Commission does, however, believe that attention should be drawn 
to the various statutory notice provisions, particularly having regard to the 
fact that our proposals would alter the law quite significantly in this area. 
Accordingly, we recommend that, should the Commission's proposed legis- 
lation be enacted, those governmental officials responsible for the adminis- 
tration of statutes requiring notice of a claim to be sent to an alleged 
wrongdoer should review the nature and purpose of the statutory notice 
requirements in order to determine whether they are of overriding impor- 
tance and, therefore, whether they ought to be made to apply notwithstand- 
ing the Commission's Contribution and Comparative Fault Act. If it is 
thought that the failure to give notice under a particular statutory notice 
provision should continue to be available as a defence to a contribution 
claim, an express non obstante clause could then be enacted. We believe that 
this proposal properly places the burden on government officials adminis- 
tering the relevant statutes to justify the retention of existing notice provi- 
sions and, therefore, the protection of concurrent wrongdoers against whom 
contribution is claimed. 

With respect to the special limitation period, set out in section 9(a), 
within which a claim for contribution must be made against a wrongdoer 
who has ceased to be Uable to the injured person, the Commission wishes to 
make the following comments in support of its proposal in favour of 
abolition. For one thing, nearly all claims for contribution made following 
the institution of legal proceedings by P against Dl will be made in the 
course of that litigation by means of a third party claim. Moreover, in the 
cases in which Dl claims contribution in an independent action, following 
either a settlement with P or a judgment against him in P's favour, the 
requirement that Dl proceed within a year of judgment or settlement does 
not, in our view, provide a very effective compromise between the interests 
of Dl and D2. The length of time for which D2 will remain exposed to 
liability to Dl after P's action against D2 has been barred by lapse of time 
depends, under section 9, upon the date of the settlement or judgment, not 
the date when P's rights against D2 ceased to be enforceable. To this extent, 
paragraph (a) is an arbitrary restriction upon the rights to recover contribu- 
tion. 



160 



We turn now to consider the effect of a contractually imposed limita- 
tion period. In this case— where the contract between P and D2 includes a 
short hmitation period that, at the operative time in terms of Dl's contribu- 
tion claim, renders D2 immune from suit by P— we believe that different 
considerations from those described above ought to apply. It will be recalled 
that, in the context of contractual exemption clauses, we were not of the 
opinion that a contractual term should be set aside, and that D2 should be 
deprived of the bargain entered into with P, in order to ensure that Dl is not 
prejudiced by this bargain. To assist Dl, we would have been compelled to 
give Dl a windfall for which he had not paid. 

For these reasons— which, we believe, apply equally in the analogous 
case of a contractual limitation period in favour of D2— the Commission 
recommends that it should be a defence to a claim for contribution for the 
contributor to establish that proceedings were instituted by the injured 
person against the claimant, or a settlement was made between them, after 
the expiry of a limitation period contained in a contract made between the 
contributor and the injured person before the latter's cause of action arose 
against the contributor. ^^ 

3. THE EFFECT OF A JUDGMENT IN FAVOUR OF D2 IN 
PROCEEDINGS INSTITUTED BY P 

(a) Introduction 

In this part of the chapter, the question to be considered is whether it 
should be a defence to a claim for contribution that the person from whom it 
is claimed (D2) has ceased to be liable to the injured person (P) because, 
before the claimant's (Dl) right to contribution arose (as a result of a 
settlement between P and Dl or successful legal proceedings by P against 
Dl), D2 had already been sued by P and judgment had been given in D2's 
favour. This problem may arise in a number of different contexts. First, P 
may have sued Dl and D2 together, and P's claim against D2 may have been 
dismissed. To the extent that the law allows a claim for contribution that 
could have been made by a third party notice to be pursued in a separate 
action, should the failure of P to obtain judgment against D2 be a conclusive 
defence to the action for contribution? Secondly, P may proceed against D2 
alone. If P's claim is unsuccessful, but he later sues Dl, should Dl be entitled 
either to serve a third party notice or to institute a separate action for 
contribution against D2? Thirdly, if P has unsuccessfully sued D2, and P and 
Dl later settle P's claim, should Dl be able to recover contribution from D2? 
Fourthly, if P successfully sued Dl, who does not serve a third party notice 
upon D2, and P then sues D2 because Dl has not satisfied the judgment in 
P's favour, but loses, can Dl subsequently claim contribution from D2 if he 
later satisfies P's judgment? 



^2 Draft Act, s. I4(l)(b). 



161 



The problem common to these hypothetical is that when Dl was held 
liable to or settled with P, D2 could not legally be required to compensate P 
because the judgment rendered in D2's favour in the action instituted by P 
had made the issue of D2's liability to P res judicata. To use the principles of 
the law of restitution, Dl's satisfaction of P's claim will confer no benefit 
upon D2 because D2 could not have been successfully sued by P: he had no 
legal liability to P that Dl's payment could discharge. Another reason why it 
would be unjust to hold D2 liable to contribute is that it would expose D2 to 
the "double jeopardy" of having to relitigate with Dl a question that had 
already been decided in his favour in the action brought by P. There is, in 
addition, a public interest in the finality of litigation. On the other hand, it 
can be argued that Dl should not lose his right to contribution and thus be 
prejudiced by the outcome of Utigation in which he did not participate: the 
doctrine o{ res judicata usually only applies when the issues and the parties 
are identical. 

(b) The Present Law 

It has already been noted in this Report that section 2 of the Negligence 
Act, which is the principal provision creating the right of contribution 
among concurrent tortfeasors, does not define those who may claim contri- 
bution, and those from whom it is claimed, as persons who are liable to the 
injured person for the loss that he has sustained. Similarly, section 6, which 
provides for the service of third party notices for contribution, speaks of the 
person upon whom notice may be served as one who "is or may be wholly or 
partly responsible for the damages claimed". The language of these sections 
thus leaves it open to argument that they do not limit those from whom 
contribution may be claimed to persons who, at the time when the right to 
contribution arose, were still potentially Uable to be sued successfully by the 
injured person. However, it should also be noted that section 3 defines those 
from whom contribution may be recovered by a person who has settled with 
the injured person as "any other tort feasor who is, or would if sued have 
been, liable in respect of the damage". 

There seems to be relatively little case law in Ontario on the application 
of these provisions to the problem under consideration. However, the issue 
did arise in Horvath v. Registrar ofM. K.^^ In this case, the Registrar sought 
to join as third parties persons (D2) against whom the plaintiff's claim had 
already failed, apparently on its merits. The Master dismissed the applica- 
tion on the basis of what seemed to him to be "the clear effect" of section 6 of 
the Negligence Act. He held that, although the issue of D2's liability to P was 
not strictly res judicata against Dl for the purpose of claiming contribution, 
it was not intended "that the defendant [D2] in the original action should be 
subject to the possibility of being put in jeopardy again under [section 6 of 
the Negligence ActY.^"^ 



^^ [1961] O.W.N. 324 (Master S.C.O.). 
^"^ Ibid., at 325. 



162 



The reasons given for judgment, however, are not very convincing, and 
its authority may therefore be open to question. The learned Master relied 
upon Sinkevitch and Beaudoin v. Canadian Pacific Railway Co.^^ for the 
proposition that section 6 does not authorize the issue of a third party notice 
against a person "against whom a judgment for damages could not in law be 
given". But the person from whom contribution was claimed in Sinkevitch 
enjoyed a statutory immunity from suit under workers' compensation 
legislation. A case in which D2 was never potentially Uable to the plaintiff 
does not necessarily determine the result of one in which D2's defence is 
that, although liable to P at one time, he has ceased to be liable by virtue of a 
judgment in his favour in an action brought by P. 

The effect upon a contribution claim of an existing judgment in favour 
of D2 has been considered on a number of occasions in other jurisdictions, 
where the relevant legislation was worded, like section 3 of the Ontario 
Negligence Act , so as to define potential contributors as those who are or 
would if sued have been liable in respect of the plaintiff's damage. 

The best known is the decision of the House of Lords in George 
Wimpey & Co. Ltd. v. British Overseas Airways Corp.^^ In this case, P sued 
Dl and D2 for damage caused by the negligence of the defendants' employ- 
ees. Dl was held liable, but P's action against D2 was dismissed on the 
ground that P had instituted proceedings after the expiry of the short 
limitation period within which public authorities were at that time required 
by statute to be sued.^^ By a majority, the House of Lords struck out Dl's 
third party notice for contribution on the ground that section 6(l)(c) of the 
Law Reform (Married Women and Tortfeasors) Act, 1935^^ contemplated 
only two categories of persons from whom contribution could be sought. 
These were tortfeasors who had been held liable to P in legal proceedings 
and those against whom no legal proceedings had been instituted by P, but 
who would, if sued, have been held liable. Thus, there was no right to claim 
contribution from a person in the position of D2 in this case, that is, a person 
who had been sued and held not liable, even though the plaintiff's action 
had failed because it was out of time, rather than on the substantive issue of 
the legal wrongfulness of D2's conduct.^^ It seems tolerably clear that their 

55 [1954]O.W.N.21(H.C.J.),at23. 

5^ Supra, note 31. 

5^ Limitation Act 1939, c. 21 (U.K.), s. 21. This Act was repealed by the Law Reform 
(Limitation of Actions, &c.) Act, 1954, c. 36 (U.K.). However, in Ontario, short 
limitation periods apply to some actions against public authorities {Public Authorities 
Protection Act , supra, note 8, s. 11(1)), and municipalities {Municipal Act , supra, note 
18, s. 284(2)). The Health Disciplines Act , R.S.0. 1980, c. 196, s. 17, also contains a short 
limitation period for malpractice suits. 

5^ Supra, note 30. 

5^ This was the view of Viscount Simonds and Lord Tucker. The third member of the 
majority, Lord Reid, held that a contribution claim failed if D2 had ceased to be liable 
either when Dl was sued by P or when Dl claimed contribution from D2. He did not 
find it necessary to select between these because on the facts D2 had ceased to be liable to 
P at both times. 



163 



Lordships would have reached the same result if D2 had been found not 
liable to P on the merits and Dl had subsequently contended that the court 
had erred in finding D2 not liable to P.^^ 

A question not decided in Wimpey was whether the result would have 
been the same if D2 had not been sued by P This would have required their 
Lordships to consider the issue discussed in the previous part of this chapter, 
namely, the effect upon a claim for contribution of the expiry of the 
limitation period in D2's favour against P by the time that P sued Dl or Dl 
claimed contribution from D2. The subsequent decision in Harvey v. R.G. 
O'DellLtd.^^ that, where D2 had not been sued, he could be required to pay 
contribution to Dl provided only that he had at some time been liable to P, 
created a serious anomaly in English law. It was difficult to justify a 
conclusion that whether D2 was bound to contribute after P's claim against 
him had become statute-barred depended upon the fortuity of whether P 
had sued D2 or not. 

The reasoning and the result in Wimpey have been followed by the 
Supreme Court of Canada in a case that arose under Alberta's Tort-feasors 
Act,^^ which defined those from whom contribution could be claimed in the 
same way as the English Act of 1935. In County of Parkland No. 31 v. 
Stetar,^^ P sued Dl and D2 for injuries caused by the defendants' negligence. 
The trial judge attributed 75 percent of the fault to Dl, and 25 percent to D2. 
However, P did not obtain judgment against D2, a municipality, because 
notice had not been given to D2 of P's claim in the short period provided by 
the Municipal Government Act, 1968.^^ Dl's claim for contribution was 
dismissed.^^ 

While these decisions seem clearly to preclude a claim for contribution 
under section 3 of the Ontario Negligence Act against a person who has 
already been held not Hable, for whatever reason, to the injured person, 
neither they nor Horvath s case can be regarded as settling conclusively the 



^^ Thus, Viscount Simonds stated that it would be undesirable to expose D2 to a second 
action, brought by Dl, on the assumption that P's action had failed because "the case 
had been inadequately presented or even because the judge or jury had taken a wrong 
view of it" (George Wimpey & Co. Ltd. v. British Overseas Airways Corp., supra, note 
31, at 178). 

^^ 5'M/7ra,note29. 

62 R.S.A. 1955, c. 336 (now R.S.A. 1980, c. T-6). 

6^ Supra, note 31. 

6'* C. 68 (now R.S.A. 1980, c. M-26). 

6^ Dickson J. stated that had Alberta's Contributory Negligence Act, R.S.A. 1970, c. 65 
(now R.S.A. 1980, c. C-23), applied, then the county might have been liable to pay 
contribution, even though the plaintiff's action failed because timely notice of the claim 
was not given. See, also, Mackenzie v. Vance, supra, note 34, and Campbell v. Bart let t 
and Yonge (third party) (No. 2) (1979), 107 D.L.R. (3d) 591, [1980] 1 W.W.R. 758 (Sask. 
C.A.). But see J.R. Paine and Associates Ltd. v. Strong, Lamb and Nelson Ltd. (1979), 
103 D.L.R. (3d) 579, [1979] 6 W.W.R. 353 (Alta. C.A.). 



164 



question whether sections 2 and 6 permit the service of a third party notice 
upon an alleged tortfeasor against whom P has unsuccessfully instituted 
proceedings in respect of the damage. 

The rationale for the courts' interpretation of the relevant legislation in 
Wimpey and Stetar was later made clear by the English Court of Appeal in 
Hart V. Hall & Pickles Ltd.^^ In this case, the Court allowed a third party 
notice to be served upon a person who had previously been sued by P, but 
whose action had been struck out for lack of prosecution. Lord Denning 
M.R. distinguished the case before him from Wimpey in this way:^^ 

When an action has been dismissed for want of prosecution, the defendant has 
not been 'sued to judgment' at all. There has been no finding on the merits. 
There has been no judgment that the defendant is not liable. It is only an 
interlocutory order— a matter of procedure— which does not affect substantive 
rights. It is not a final decision. It does not give rise to an estoppel by res 
judicata. The plaintiff can start another action for the same cause, so long as he 
does so within the period allowed by the Statute of Limitations. 

The concluding sentences of this passage reveal a rationale that may well 
extend beyond the particular language in which the liability to contribute is 
defined in the 1935 English Act and those statutes that are patterned after 
it.^^ If the reason for the failure of P's action against D2 is such that he is free 
to institute fresh proceedings against D2, then D2 remains potentially Uable 
to P when contribution is claimed by Dl. If Dl is held liable to P, then his 
payment is still capable of conferring a benefit upon D2 by discharging an 
existing liability to P. In other words, the passage supports a restitutionary 
view of the right to contribution.^^ 



^^ [1969] 1 Q.B. 405 (C.A.). 

^^ 7/?/^., at 411. 

^^ See Re Urquhart and Halt, supra, note 10. 



A similar result was reached in a New Zealand case, Calderwood v. The Nominal 
Defendant, [1970] N.Z.L.R. 296 (C.A.), in a rather different context. P had been injured 
by the negligence of Dl and D2. P first sued D2, who served a third party notice upon 
Dl. Judgment was given in P's favour, the judge having found that P had sustained a loss 
of about N.Z.$24,000. However, D2's liability was limited by statute to $15,000. The 
comparative degrees of fault of D2 and Dl were assessed at 60% and 40%, respectively, 
and Dl was ordered to pay contribution to D2 of 40% of $15,000. P then instituted a 
second action, this time against Dl, in order to recover the difference between $24,000 
and the $15,000 recovered in the first action against D2. Dl's liability to pay P this sum 
was not disputed, but the question was whether Dl could recover 60% of it from D2 by 
way of contribution. Dl argued that the judge in the first action had erred because he 
ought to have apportioned between Dl and D2 the full $24,000, provided only that D2 
could never have been required to pay more than $15,000. The Court of Appeal refused 
to consider whether the judge had erred in the way contended by Dl. It denied Dl's claim 
for contribution on the ground that D2 had ceased to be liable to P as a result of 
satisfying the judgment entered against D2 in the first action. When Dl paid under the 
judgment in the second action, he did not thereby discharge any existing liability to P 
owed by D2. 



165 



(c) Alternatives for Reform 

One possible solution to the problem raised above is to adopt the view 
taken by the English courts and the Supreme Court of Canada towards the 
interpretation of legislation that differs in some significant respects from the 
present Ontario Negligence Act. New legislation could provide that if P had 
instituted legal proceedings against D2 that had resulted in a judgment in 
D2's favour that rendered the issue of D2's liability to P res judicata between 
them, then D2 could not subsequently be held liable to contribute to Dl. 
Since the principal reasons for this view are the restitutionary nature of the 
right to contribution and the public interest in discouraging multiple suits 
and in not reopening questions already litigated, thereby exposing litigants 
to "double jeopardy", it should generally make no difference whether P's 
action failed because of delay or some other "technical" reason, or on more 
substantive questions of D2's liability to P. 

The English Law Commission proposed that a person who, after a trial, 
has been found not Hable to the injured person "on the merits" should not 
subsequently be liable to pay contribution to a concurrent wrongdoer. ^^ The 
requirement that the judgment in D2's favour should be "on the merits" was 
intended to exclude collusive judgments^ ^ and the dismissal of a proceeding 
for want of prosecution or on the ground that it had been brought outside 
the limitation period within which P must enforce his rights against D2. The 
Law Commission took the view that if P's action against D2 had failed 
because P had not succeeded in establishing that D2 was ever liable, D2 
ought not to be placed in a position of double jeopardy by being forced to 
relitigate the substantive issues.^^ 

This matter is dealt with in the English Civil Liability (Contribution) 
Act 1978 P section 1(5) of which provides that a judgment in an action 
brought by P against D2 "should be conclusive in the proceedings for 
contribution as to any issue determined by that judgment in favour of 
[D2]". This is presumably intended to implement the English Law Commis- 
sion's recommendation, although whether it is appropriately worded so as to 
have this effect has been doubted. ^"^ The Law Commission of Hong Kong 



70 



Law Commission Report, supra, note 37, paras. 62-65, at 19. 



^' For an example, see Corvi v. Ellis, [1969] S.C. 312 (Ct. of Sess.). What the Commission 
had in mind was the institution of proceedings against D2 for the sole purpose of 
precluding a subsequent claim for contribution by Dl: it will be recalled that a 
settlement between P and D2 leaves D2 exposed to the possibility of a claim for 
contribution by Dl in the event that D2 settled for less than his proportionate share of 
the liability. 

^^ See, generally, Law Commission Report, supra, note 37, paras. 60-67, at 18-20. 
^■^ Supra, note 36. 

'^^ If this provision is read literally and in isolation, it might be argued that Dl could not 
reopen a finding that P's action failed because D2's liability had become statute-barred. 
However, s. 1(5) should be read in conjunction with s. 1(3), which provides that it is no 



166 



has adopted the English Law Commission's recommendation in this 
respect.^^ 

The Alberta Institute for Law Research and Reform has also recom- 
mended the adoption of the English Law Commission's resolution of these 
issues. ^^ Thus, the Institute concluded that "it is preferable for Dl to lose his 
claim for contribution than that D2 should be required to defend himself 
twice". A judgment in favour of D2 would not, however, bar a claim for 
contribution in cases where P's action had failed because it was commenced 
after any relevant limitation period had run in D2's favour, or where the 
plaintiff's action had been dismissed for want of prosecution, or where 
judgment was obtained as a result of collusion between P and D2. Section 13 
of the Canadian Uniform Contributory Fault Ac f is similar to section 1(5) 
of the English Act of 1978, but, unUke the English legislation, the Uniform 
Contributory Fault Act makes no specific provision for the effect upon 
contribution claims of the running of time in D2's favour against P. It also 
limits the scope of the estoppel to "any issue that has been determined on its 
merit in the action". 

The advantages of this view are that it effectively protects D2 from 
"double jeopardy" and avoids the waste of resources involved in allowing 
the relitigation of issues. To the extent that it denies a right of contribution 
against a person who can no longer be sued by the injured person when P 
institutes proceedings against or settles with Dl, it is consistent with the 
restitutionary nature of the claim. On the other hand, of course, it deprives 
Dl of a right that he would otherwise have had if P had not sued D2, and 
imposes upon Dl the cost of the failure of P's action against D2, to which Dl 
was not a party and over which he had no control. The exceptions to the rule 
contained in the English Act of 1978, the Alberta Institute's Report, and 
section 13 of the Uniform Contributory Fault Act attempt to minimize this 
disadvantage by confining it to judgments made "on the merits". 

A second approach, at the opposite end of the spectrum, would be a rule 
that the existence of a judgment in favour of the person from whom 
contribution is claimed should never be relevant to the liability of that 
person to pay contribution. The inquiry on the contribution claim would be 
confined to determining whether D2 ought to have been held liable to P. For 
this purpose, it should be open to Dl to produce evidence or legal argument 
to persuade the court of D2's liability (whether or not this material had been 
put before the court that determined P's action against D2), even though 

defence to a contribution claim that D2 has ceased to be liable to P. Dl could thus argue 
that D2 cannot rely upon the expiry of the limitation period as a defence to Dl's claim. 
The drafting is not, however, satisfactory and departs from that proposed by the Law 
Commission. 

^^ See paras. 6.5-6.9, at 33-35, of the Hong Kong Report, supra, note 37. It was, however, 
critical of the drafting of the 1978 Act on this point. 

^^ Alberta Report, supra, note 40, at 76, Recommendation 18. 

nn 

Supra, note 38. 



167 



such a conclusion would be inconsistent with the judgment in the litigation 
instituted against D2 by P. 

However, a special consideration arises if P's action failed against D2 
because it was commenced after the expiry of the limitation period govern- 
ing the enforcement of P's rights against D2. The Commission has already 
recommended that D2 should be required to contribute, even though, at the 
time when P settled with Dl or commenced proceedings against Dl, D2 
could no longer be sued by P.^^ It follows, therefore, that Dl's claim for 
contribution will not be defeated by D2's establishing that P's action against 
him was properly dismissed as being out of time. 

The advantage of this view is that it prevents Dl from being prejudiced 
by the conduct of P after he sustained the loss for which Dl and D2 were 
initially liable. It protects Dl from any adverse consequences of litigation to 
which he was not a party and puts him in the same position as he would have 
been if P had not sued D2. Of course, D2 may succeed in satisfying the court 
in the contribution proceeding that he had been correctly found riot liable 
toP 

A third approach is reflected in the Irish Civil Liability Act, 1961 ,^^ 
which contains an elaborate set of provisions that are designed to avoid the 
most obvious injustices likely to be caused to Dl by the first approach, and 
to D2 by the second. First, section 29(5) of the Act provides that, where Dl 
and D2 are joined as parties-defendant to P's action, and P's action against 
D2 is dismissed, Dl is bound by any findings of fact and law upon which the 
judgment in D2's favour was based. However, Dl is not estopped from 
subsequently asserting that D2 was a wrongdoer if P obtained judgment in 
fraud of Dl or if the proceedings took place in a foreign jurisdiction in which 
Dl was denied an opportunity either to present evidence and legal argument 
designed to establish D2's liability to P, or to launch or to oppose an appeal 
against the judgment in the litigation between P and D2. In addition, under 
section 29(2), if Dl is joined as a third party to the suit between P and D2, Dl 
is bound by any finding of fact and law in the action on which he was given 
leave to defend. Where Dl was not a party to P's proceeding against D2, 
section 29(8) of the Act provides that it is no defence to a contribution claim 
that D2 had been unsuccessfully sued by P. 

This last provision, however, must be read in the light of section 35(l)(j), 
which reduces the damages recoverable by P from Dl if Dl can establish 
that, despite an earlier judgment in favour of D2 in an action brought 
against him by P, both Dl and D2 were concurrent wrongdoers. P is thus 
identified with D2 and the damages that he can recover from Dl are reduced 
by an amount proportionate to the degree of fault that should have been 
attributed to D2. This solution removes from both Dl and D2 the harsh 



^^ See supra, this ch., sec. 2(c). 
^^ Supra, note 44. 



168 



consequences of P's previous unsuccessful suit against D2, by penalizing the 
injured person. Moreover, it discourages a multiplicity of proceedings by 
giving P a strong incentive to proceed against Dl and D2 in a single action. 
The objection to this scheme is, of course, that it makes P worse off than he 
would have been if Dl's wrongful conduct had been the sole cause of P's 
injury. 

(d) Conclusions 

The Commission does not favour the solution to this problem con- 
tained in the Irish Act. The avoidance of unfairness to Dl and D2 is 
purchased at the expense of the injured party. In our view, the adjustment of 
the secondary rights and duties of the wrongdoers should not be effected by 
frustrating a cardinal policy of the law respecting the primary right of the 
injured person to be compensated fully for the injury caused by the defen- 
dants' wrongful conduct. It is true that the plaintiff may avoid this unfortu- 
nate consequence by proceeding against Dl and D2 in a single action, but 
the penalty prescribed for P's faiUng to do this is unduly onerous. The 
Commission has already proposed sanctions that it believes may appropri- 
ately be imposed in order to encourage P to join all concurrent 
wrongdoers. ^^ Moreover, to increase further the pressure upon P to sue all 
possible defendants together may add unreasonable elements of complexity, 
delay, hazard, and cost to P's ability to obtain relief. P's right to compensa- 
tion shguld be neither substantively reduced nor procedurally burdened by 
the presence of more than one wrongdoer. 

The choice thus lies between, on the one hand, exposing D2 to "double 
jeopardy" by reopening matters already litigated to judgment between P 
and D2, and, on the other, depriving Dl of the right to contribution that he 
would have enjoyed if P had not sued D2 and lost. Whichever view is 
adopted may cause hardship and violate a particular poHcy of the law. 

In chapter 5, the Commission took the position that if Dl claims 
contribution after settling with P, D2 should not be able to defend the claim 
on the ground that Dl ought not to have settled because Dl was not liable to 
P^^ In addition, in chapter 6 we recommended that, if Dl is successfully sued 
by P, it should not be a defence to any claim for contribution pursued in an 
independent action for D2 to prove that Dl ought not to have been held 
liable to P, except where the judgment against Dl was obtained by collusion 
or fraud. ^^ 



^^ See supra, ch. 2, sec. 4(a). 

^^ See supra, ch. 5, sec. 3(b). 

^^ See supra, ch. 6, sec. 2. However, in the contribution action, D2 would be entitled to 
show that the court wrongly assessed the quantum of the injured person's loss in Pv.Dl. 



169 



If D2 cannot reopen a settlement between Dl and P or the liability of 
Dl, as determined in Pv.Dl, then we believe that Dl should be bound by the 
result of the litigation between P and D2. Since Dl's payment has conferred 
no benefit upon D2 that it would be unjust for him to retain, the costs 
involved in permitting further litigation of the same issues outweigh the 
benefit of attempting to achieve some rather nebulous notion of a fair 
apportionment of P's loss between Dl and D2. Moreover, to require D2 to 
defend a second trial may be regarded in the circumstances as especially 
harsh, particularly when judgment was given in D2's favour on a ground 
inconsistent with D2's ever having been liable to P. 

Accordingly, the Commission recommends that it should be a defence 
to a claim for contribution for the contributor to establish that judgment on 
the merits has already been given in his favour in an action by the injured 
person. ^^ This proposal should not apply, therefore, to the dismissal of the 
injured person's action for delay. ^"^ We also recommend that such a judg- 
ment should not be a defence to a contribution claim where it was obtained 
by collusion or fraud. ^^ 

Moreover, we wish to re-emphasize our support of the provisions in the 
Irish Act that make it clear that Dl is bound by any finding made in an 
action by P against both Dl and D2, as co-defendants. If Dl is brought into 
the action as a third party, he would also be bound by a finding made in the 
main action on which he has been given leave to contest. ^^ Since P will often 
join all concurrent wrongdoers as defendants, and since, where he does not, 
Dl can normally be expected to serve a third party notice, the problem 
discussed in this part of the chapter may, in any event, arise only rarely. 

4. THE EFFECT UPON THE RIGHT TO CONTRIBUTION OF A 
SETTLEMENT, RELEASE, OR WAIVER BY P OF D2'S 
LIABILITY 

This Report has already considered the contribution implications of a 
settlement between one wrongdoer and the injured person. It was concluded 
that a settlement that still left another wrongdoer liable to be sued by the 
plaintiff should not protect the settling wrongdoer from a subsequent claim 
for contribution in the event that he had been able to settle with P for a sum 
less than an amount of P's loss that was proportionate to his due share. 



^3 Draft Act, s. 14(l)(c). 
^"^ Ibid., s. 15(b). 
^5 Ibid., s. 14(2). 



See supra, ch. 6, sec. 2. This may already be the law in Ontario: Kirk v. Faugh, [1951] 
O.W.N. 745 (H.C.J.). See, now, Rules of Civil Procedure, supra, note 17, r. 29.05(5), 
which also provides that a third party who does not deliver a statement of defence to the 
main action is also bound by an order or determination made in the main action 
between the plaintiff and the party claiming contribution. 



170 



The Commission recommends that, even though the concurrent 
wrongdoer (D2) who settled with P, or to whom P gave a release or waiver, 
may have ceased to be liable to P by the time that Dl claims contribution, Dl 
should nonetheless be entitled to contribution for a sum proportionate to 
D2's proper share.^^ The settlement, release, or waiver will merely have the 
effect of reducing Dl's liability to P. The Commission has taken the view that 
to apply a strictly restitutionary approach in this context would give P too 
much power to decide who should ultimately bear the loss. 

Recommendations 

1. (1) It should never be a defence to a claim for contribution for the 

contributor to establish that his liability to the injured person had 
ceased to be enforceable by reason of the failure of the injured 
person to comply with a procedural requirement, the expiry of a 
statutory limitation period, dismissal of the injured person's action 
for delay, or an analogous equitable bar upon a successful suit by 
the injured person. The contributor should not be protected from 
Uability to contribute, even if he had ceased to be capable of being 
successfully sued by the injured person when that person com- 
menced proceedings against or settled with the person claiming 
contribution. 

(2)^ Should the recommendation in paragraph (1) be enacted, those 
' governmental officials responsible for the administration of stat- 
utes requiring notice of a claim to be sent to an alleged wrongdoer 
should review the nature and purpose of the statutory notice 
requirements in order to determine whether they are of overriding 
importance and, therefore, whether they ought to be made to apply 
notwithstanding the Commission's Contribution and Comparative 
Fault Act. 

2. It should be a defence to a claim for contribution for the contributor to 
establish that proceedings were instituted by the injured person against 
the claimant, or a settlement was made between them, after the expiry 
of a limitation period contained in a contract made between the 
contributor and the injured person before the latter 's cause of action 
arose against the contributor. 

3. (1) It should be a defence to a claim for contribution for the contribu- 

tor to establish that judgment on the merits has already been given 
in his favour in an action by the injured person, except where the 
judgment was obtained by collusion or fraud. 



87 



Draft Act, s. 15(d). For a recent decision affirming that this is already the law, see Re 
Urquhart and Halt, supra, note 10. 



171 



(2) The recommendation in paragraph (1) should not apply where the 
injured person's action was dismissed for delay. 

It should never be a defence to a claim for contribution for the 
contributor to establish that he had ceased to be liable to the injured 
person by virtue of a settlement made with, or a release or waiver of 
liability given by, the injured person after that person's cause of action 
against him arose. 



CHAPTER 8 



THE ASSESSMENT OF 
CONTRIBUTION 



1. INTRODUCTION 

The previous chapters of this Report have considered the cir- 
cumstances in which a right of contribution should arise among concurrent 
wrongdoers who have caused a single loss to an injured person. In addition, 
they have canvassed the principal defences that should be available to a 
person against whom a right of contribution is asserted. In this chapter, we 
assume that a right of contribution has been established, and examine the 
principles that should govern the amount that the contributor ought to pay. 

The task of quantifying D2's liability to Dl can be broken into a series of 
more specific questions. The first is to decide to what sum Dl and D2 are 
required to contribute; this we shall refer to as the "contributable sum". A 
second relevant consideration is the persons among whom the contributable 
sum should be divided. A problem that can arise in this context is that not all 
those liable to the plaintiff may be parties to the litigation in which the claim 
for contribution is made. In calculating how the loss ought to be divided 
among those who are parties, should account be taken of the existence of 
other wrongdoers who are not before the court? After determining the 
contributable sum and the number of parts into which it is to be divided, the 
last question concerns the quantification of each of those parts. In other 
words, on what basis should the court decide how much each of those liable 
to contribute is required to pay? 

2. THE CONTRIBUTABLE SUM 

(a) General 

The situation considered throughout this Report is one in which the 
wrongful conduct of two or more persons has caused a single or indivisible 
loss to another. It is only in respect of damages for this loss that a right of 
contribution can arise. If it is possible to identify some element of the 
damage suffered by the injured person for which one wrongdoer (Dl) is 
solely hable, then that person will have no reason for requiring others to bear 
that portion of the liability • Since no one else is legally liable to compensate 



' See Katzman v. Yaeck (1982), 37 O.R. (2d) 500, at 504-07, 136 D.L.R. (3d) 536 (C.A.), 
where the injuries originally sustained in a motor vehicle collision, negligently caused by 

[173] 



174 



the injured person for that item of her loss, any payment made by Dl to P in 
discharge of this liability confers no benefit upon anyone else. However, a 
defendant may claim contribution in respect of that part of the plaintiff's 
loss for which another is concurrently liable with the defendant. 

An item of P's loss may be attributable solely to one wrongdoer because 
it is clear on the facts that her conduct alone caused it. But differences that 
result from the operation of rules of law of general application may also 
produce differences in the damages recoverable from the various wrong- 
doers. For instance, exemplary damages may be awarded against one 
defendant, but not the other.^ Differences in the rules relating to remoteness 
of damage in tort actions and actions based on breach of contract may also 
result in a lower liability for one defendant. A fiduciary who profits from her 
breach of duty may be required to disgorge, even though the beneficiary of 
the relationship could not have made the profit for herself, and could not be 
said otherwise to have suffered a loss equal to the fiduciary's gain.^ Only in 
respect of the injured person's loss may the fiduciary and another be 
concurrently liable. 

In each of the circumstances described above, the sum to which the 
parties may be required to contribute is limited to that for which they are 
both liable. Not only does their common liability provide the amount 
beyond which they cannot be required to contribute, but the proportion of 
the liability attributable to their degree of fault is calculated as a percentage 
of this amount. On the other hand, if the liability of one concurrent 
wrongdoer is limited by the operation of a partial defence apphcable to that 
person, then, according to the recommendations made in chapter 6, the 
contributable sum is calculated by reference to the parties' full liability to 
the plaintiff, and the limitation serves only to determine the maximum sum 
that the party with the limited liability can be required to contribute. 
Contractually or statutorily limited liability and the partial defence of 



the defendant, were increased by the negligence of the dentist, the third party, who 
subsequently treated her. 



2 



3 



On the award of punitive damages generally, see Waddams, The Law of Damages 
( 1983), ch. 1 1. Punitive damages, or damages for mental distress, have not generally been 
regarded as recoverable for a breach of contract {Addis v. Gramophone Co. Ltd. , [1909] 
A.C. 488 (H.L.)), but courts in Canada appear to be retreating from this position more 
quickly than English courts. For two recent statements of the growing willingness of 
Ontario courts to recognize this head of recovery, see Pilato v. Hamilton Place Conven- 
tion Centre Inc. (1984), 45 O.R. (2d) 652, at 663-64, 7 D.L.R. (4th) 342 (H.C.J.) 
(wrongful dismissal), and Thompson v. Zurich Insurance Co. (1984), 45 O.R. (2d) 744, 
at 750-53, 7 D.L.R. (4th) 664 (H.C.J.). See, also, Waddams, supra, this note, at 576-78. 

See, however, Vorvis v. Insurance Corp. of British Columbia (1984), 53 B.C.L.R. 
63, 9 D.L.R. (4th) 40 (C.A.), where a majority adhered to the view taken in the older 
authorities. See, too, Attorney-General for Ontario v. Tiberius Productions Inc. (1984), 
46 O.R. (2d) 152, 8 D.L.R. (4th) 479 (H.C.J.). 

Reading v. Attorney-General, [1951] A.C. 507 (H.L.) and Boardman v. Phipps, [1967] 2 
A.C. 46 (H.L.) are the leading authorities. 



175 



contributory negligence that may be available to one defendant, but not the 
other, provide the most obvious examples.'* 

The reason for treating the latter cases differently from those consid- 
ered in the previous paragraph is that, in the examples given in that 
paragraph, the defendants were not concurrent wrongdoers in respect of the 
larger sum for which only one was liable. On the other hand, the conduct of 
a person whose liability is limited by one of the special defences considered 
in the immediately preceding paragraph is still a legal cause of the injured 
person's loss. Her liability is limited, not because she is not a wrongdoer in 
respect of the whole loss, but because the plaintiff's conduct has reduced the 
damages recoverable. The defendants may be legally liable for causing the 
same loss, but the damages payable by way of compensation are different. 

We turn now to consider some problems of calculating the sum to 
which concurrent wrongdoers must contribute when their wrongful con- 
duct has caused a single loss for which they are liable to the injured party in 
the context of both settlements and successive judgments. 

(b) Settlements 

(i) General 

As we have already seen, an individual who has settled with the injured 
person may recover contribution from others who are liable for the loss.^ 
The Commission has recommended that this right should be retained, 
whether or not the settlement effectively bars the injured person from suing 
others in respect of the loss to which the settlement related.^ The question 
considered here is the sum to which the person from whom contribution is 
claimed (D2) following a settlement between P and Dl should be required to 
contribute. 

One view would be that it is for the court in the contribution claim to 
decide the amount for which Dl and D2 could have been held legally liable 
to pay to P by way of damages, and that this is the sum upon which the 
parties' proper share should be calculated. The justification for this view is 
that the purpose of contribution is to apportion between Dl and D2 their 



The consequences for the right of contribution of the availability of one of these defences 
to a concurrent wrongdoer are described supra, ch. 6, sec. 3(d). In a recent case, it was 
said that a party whose liability to the injured person has been reduced as a result of a 
partial defence of contributory negligence likely cannot be required to contribute more 
than the amount to which her liability has thereby been reduced: Acrecrest Ltd. v. WS. 
Hattren& Partners, [1983] Q.B. 260, at 280-81, [1983] 1 All E.R. 17 (C.A.), overruled on 
other grounds by Governors of the Peahody Donation Fund v. Sir Lindsay Parkinson & 
Co. Ltd., [1985] 1 A.C. 210, [1984] 3 W.L.R. 953 (H.L.). 

Supra, ch. 5, sec. 2. 

Supra, ch. 5, sees. 3(a) and (c). 



176 



common liability to P, and that in order to ensure that neither is unjustly 
enriched at the expense of the other, the benefit obtained by D2 as a result of 
Dl's discharge or reduction of D2's liability to P should be used as the 
amount in respect of which contribution may be required. An opposing 
argument would be that to require Dl to quantify with precision the liabiHty 
of Dl and D2 to P would be unduly onerous, and would tend to discourage 
settlements. For if Dl settled with P on the basis of a sum that exceeded the 
total liability, then Dl would be forced to absorb the excess. It may be too 
generous to D2 to allow her to stand aside from the settlement, and then to 
contest a claim for contribution on the ground that Dl had settled for too 
high a figure. 

An example will illustrate the choices. Suppose, for instance, that P's 
claim was for $10,000, but that she accepted from Dl the sum of $8,000 as a 
final settlement of her claim against Dl and any other person against whom 
she could have proceeded in respect of the injury. Dl then claims contribu- 
tion from D2, who admits that Dl and D2 are equally at fault, but argues 
that P would not have recovered more than $7,000 if she had instituted legal 
proceedings against the wrongdoers. Should Dl be required to prove the 
exact amount that P would have been awarded if she had sued, or should Dl 
be able to rely upon the amount of the settlement as the proper figure? On 
the first view, Dl would recover $3,500 and would have to absorb the 
amount by which she overestimated her liability to P. On the other view, Dl 
would recover $4,000 and thus force D2, although no more at fault than Dl, 
to pay a sum greater than half of her liability as would have been determined 
by the court. These extreme positions do not, of course, exhaust the 
possibilities: a compromise between the competing considerations outlined 
above might produce a rule that required Dl to prove that the amount for 
which she settled was a reasonable estimate of the common liability. A 
solution that is more favourable to Dl's interest would regard the settlement 
figure as a presumptively correct assessment of P's recoverable loss, and 
place upon D2 the burden of proving that it was excessive. 

The fact situation considered above may be varied by postulating a case 
in which P sued D2 after she had made a settlement with Dl that did not 
prevent P from suing other wrongdoers liable for P's loss. This could occur if 
Dl purported to settle only her own share of the liability, or if the agreement 
was not expressly made in final settlement of all the actions that P might 
have against others, and the settlement figure was less than P's recoverable 
loss or Dl's payment was not forthcoming. In the litigation between P and 
D2, the court will determine P's recoverable loss; D2's liability will be 
calculated by deducting from this figure the amount that Dl paid P under 
the settlement. If Dl later claims contribution from D2, should D2's 
contribution be assessed with reference to the settlement figure or the figure 
at which the court in P's action against D2 fixed P's recoverable loss? What if 
D2 claims contribution from Dl by making her a third party to the main 
action? Should Dl be bound by the court's assessment of P's loss, even if it is 
less than the settlement figure? 



177 



(ii) The Present Law 

The relevant provision in the Negligence Act'' is section 3. This section 
provides that a tortfeasor who has settled with the plaintiff may recover 
contribution from any other tortfeasor "who is, or would if sued have been, 
liable in respect oUhe damage. . .". The party claiming contribution under 
this section is required to "satisfy the court that the amount of the settlement 
was reasonable, and in the event that the court finds the amount of the 
settlement was excessive it may fix the amount at which the claim should 
have been settled". 

The Act, therefore, does not limit Dl to claiming contribution on the 
basis of the exact amount of P's legally recoverable loss; it does, however, 
place the onus of proving the reasonableness of the settlement figure upon 
Dl, who will normally be able to discharge this burden by leading evidence 
from which the court can approximate what P would have recovered if she 
had instituted legal proceedings. In determining the reasonableness of a 
settlement figure it is relevant to take into account any amount by which P's 
damages would have been reduced as a result of her contributory 
negligence.^ Once Dl has established the reasonableness of the settlement 
figure, the burden of proving that it was excessive shifts to D2. If the court 
finds that the settlement figure was excessive, D2 will only be required to 
contribute to the sum fixed by the court as that at which Dl ought to have 
settled P's claim. However, the Commission has previously proposed that a 
claimant who settled when she was not liable at all should not necessarily 
have the amount of the contributable sum reduced to zero. Such a result 
would negative the right of such persons to claim contribution, and would 
undermine the policy of encouraging settlements upon which the Commis- 
sion has based its recommendation that Dl should be able to claim contribu- 
tion even though she could not have been sued successfully by the injured 
person.^ Indeed, a person who settled when she was not liable to the injured 
person should normally be entitled to an indemnity from those whose 
liability was thereby discharged. 

The Act does not deal specifically with the application of section 3 to a 
situation where P's recoverable loss has already been quantified in legal 
proceedings instituted by P against D2, to which Dl was not a party. One 
possibility is that a court would simply apply section 3 in such a case exactly 
as it would have done if the common liability had not been determined in a 
prior legal proceeding at a figure lower than that on which the settlement 
between P and D2 was based. The language of section 3 would certainly 
support this conclusion, and it could also be argued that Dl's right to 
contribution should not be reduced by the institution of legal proceedings by 



"^ Negligence Act, R.S.O. 1980, c. 315. 

^ Nesbitt V. Beattie, [1955] O.R. Ill, [1955] 2 D.L.R. 91 (C.A.). 

^ Supra, ch. 5, sec. 3(b). 



178 



P against D2 to which she was not a party. Of course, if D2 brought Dl into 
the action by a third party claim, Dl would be entitled to contest the 
quantum of P's damages and would be bound by the judicial determination 
of the question. On the other hand, it may be argued that to calculate D2's 
contribution by reference to a figure that is higher than that for which she 
has been held legally liable is unfair, and is inconsistent with the restitution- 
ary basis of contribution. 

(iii) Other Jurisdictions 

The principal bases upon which the contributable sum could be deter- 
mined in a claim made following a settlement have already been outlined. 
This section provides a brief survey of the ways in which this problem has 
been dealt with in other jurisdictions. 

0. Final Settlement 

The Irish Civil Liability Act, 1961 '^ contains a provision, section 22(1), 
that is substantially similar to section 3 of Ontario's Negligence Act. The 
Alberta Institute of Law Research and Reform has recommended the 
adoption of the Ontario formula. •' Section 12(3) of the Uniform Contribu- 
tory Fault Act, adopted by the Uniform Law Conference of Canada, '^ is 
worded slightly differently: it states that the sum to which D2 is required to 
contribute following a settlement between P and Dl, which releases all the 
claims that P may otherwise have had, should be based on the lesser of the 
value of the consideration actually given for the release and the value that 
"in all the circumstances. . .it would have been reasonable to give for the 
release". However, it is unlikely that this wording would in practice produce 
any significantly different results from those that would follow from the 
formula suggested by the Alberta Institute and already contained in the 
Ontario Act. The American Uniform Comparative Fault Act^^ restricts the 
right to recover contribution to claims made following a total settlement, 
and then only "to the extent that the amount paid in settlement was 
reasonable". 

A Working Paper published in 1983 by the Contracts and Commercial 
Law Reform Committee of New Zealand has recommended that Dl should 
be able to recover contribution based upon the amount of her settlement 



'^ Civil Liability Act, 7967, No. 41. 

'^ Alberta, Institute of Law Research and Reform, Contributory Negligence and Concur- 
rent Wrongdoers, Report No. 31 (1979) (hereinafter referred to as "Alberta Report"), at 
55-56. 

^^ Uniform Law Conference of Canada, Proceedings of the Sixty-Sixth Annual Meeting 
(1984), Appendix F, Uniform Contributory Fault Act . 

^^ National Conference of Commissioners on Uniform State Laws, Uniform Comparative 
Fault Act, Uniform Laws Annotated, Vol. 12 (1987 Pocket Part), §4(b). 



179 



with P, provided that the settlement was reasonable "having regard to all 
factors that influenced the settlement", and that "D2 is liable to P for an 
amount equal to or exceeding the amount claimed by Dl by way of 
contribution". ^"^ This second requirement may limit the occasions on which 
Dl is able to use the settlement figure as the basis on which the loss should be 
apportioned, and may often require Dl to establish the precise amount of 
the parties' concurrent liability. 

The English Civil Liability (Contribution) Act 1978^^ differs from the 
measures considered in the previous paragraphs, in that it does not expressly 
provide that a claimant for contribution who has settled with the injured 
person must prove that the settlement figure was reasonable. Thus, section 
1(4) provides that contribution may be claimed by a "person who has made 
or agreed to make any payment in bona fide settlement or compromise of 
any claim made against him" by the injured person. 

It is doubtful whether the omission of any express requirement that the 
settlement figure must be reasonable is likely to produce results that are 
materially different from those found in cases under the formula contained 
in the Ontario Negligence Act . Indeed, in making the recommendation that 
became section 1(4) of the 1978 Act, the English Law Commission thought 
that its proposal took "roughly the same line" as the Irish Act, and noted 
that section 22(1) of that Act "does not seem to have given rise to any 
difficulties or been the subject of criticism in the Republic of Ireland".'^ 
There is judicial authority for the proposition that a claim for damages for 
breach of contract may be quantified by reference to the amount for which 
the plaintiff settled a claim made by a third party only if the settlement 
figure was reasonable. '^ A settlement for an amount substantially in excess 
of the damages that the injured person would have recovered had she sued 
might well not be regarded by a court as bona fide. If this inference were 
drawn, then the result would seem to be that Dl could not claim contribu- 
tion at all, a result that might be considered unduly harsh. 

Some have thought, however, that the choice between the English and 
the Ontario solutions may have practical consequences. The Law Reform 
Commission of Hong Kong, for example, decided not to recommend the 
adoption of an explicit requirement that Dl establish the reasonableness of 
the settlement figure, on the ground that "a claimant would be required to 



'"* New Zealand, Contracts and Commercial Law Reform Committee, Working Paper on 
Contribution in Civil Cases (1983) (hereinafter referred to as "New Zealand Working 
Paper"), at 17. 

'5 Civil Liability (Contribution) Act 1978, c. 47 (U.K.). 

'^ The Law Commission, Law of Contract: Report on Contribution, Law Com. No. 79 
(1977) (hereinafter referred to as "Law Commission Report"), paras. 56-57, at 17. 

'^ Biggin & Co. Ltd. v. Permanite Ltd., 119511 2 K.B. 314, 11951] 2 All E.R. 191 (C.A.). 



180 



prove the measure of damages strictly, which would involve a very compli- 
cated and expensive enquiry".'^ It noted that D2 was adequately protected 
from being required to pay an excessive amount as a result of either a 
collusive agreement between P and Dl, or a gross overestimate of the 
amount of Dl's liability, by the requirement that the claimant must establish 
the bona fide nature of the settlement. For similar reasons, the English 
House of Commons defeated an amendment proposed to the 1978 Bill that 
sought to insert an express requirement that the settlement figure must be 
reasonable. 

b. Partial Settlement 

Law reform measures in other jurisdictions appear not to have 
addressed the question of how to determine the sum to which the parties 
may be required to contribute following a settlement by one concurrent 
wrongoder that still leaves others exposed to an action by the injured person. 
Some jurisdictions have avoided the problem by denying a right to contribu- 
tion in such circumstances.'^ But, for reasons advanced in chapter 5, the 
Commission has decided that a claim for contribution should be available 
on the basis of a partial settlement.^^ 

(iv) Conclusions 

a. Final Settlement 

The Commission has decided to recommend that a formula similar to 
that already contained in section 3 of the current Negligence Act should be 
retained in any new statute that extends the right to contribution among 
concurrent wrongdoers, irrespective of the legal nature of the civil obliga- 
tion owed to the injured person.^' This formula appears to have worked 
satisfactorily in the past, and it is difficult to see why the extension of the 
right of contribution to include concurrent contract breakers and fiduci- 
aries should make any difference. If the notion of a bona fide settlement 
implies that the settlement figure must be reasonable, then it is surely better 
that the requirement should be made express. In addition, this would keep 
the Ontario position in line with the Canadian Uniform Contributory Fault 
Act}^ The Commission believes that to require the claimant for contribu- 



'^ The Law Reform Commission of Hong Kong, Report on the Law Relating to Contribu- 
tion Between Wrongdoers, Topic 5 (1984), para. 5.11, at 26. The issue is discussed more 
generally in paras. 5.9-5.13, at 25-27. 

'^ See, especially, Alberta Report, supra, note 11, at 61, Recommendation 13, and the 
Canadian Uniform Contributory Fault Act , supra, note 12, s. 12(2). 

^^ Supra, ch. 5, sec. 3(c). 

See the Commission's proposed Contribution and Comparative Fault Act (hereinafter 
referred to as "Draft Act"), s. 11. The Draft Act appears as an Appendix of this Report. 

^^ Supra, note 12. 



181 



tion to establish to the court's satisfaction the reasonableness of the settle- 
ment figure neither unduly complicates the litigation of the contribution 
claim, nor effectively deters the making of compromises or settlements 
between the injured person and one of the potential defendants. Accord- 
ingly, we recommend that where contribution is sought on the basis of a full 
settlement made between the injured person and the claimant, the contribu- 
tion payable by the contributor should be calculated by reference to the 
value of the consideration given for the settlement, which the claimant must 
establish it was in all the circumstances reasonable for her to give.^^ 

If the claimant does not establish that the consideration actually given 
was reasonable, the contribution payable by the contributor should be based 
on the court's determination of the value of the consideration that it would 
have been reasonable for the claimant to have given.^"^ 

Where the claimant for contribution has settled the injured person's 
claim by performing services or delivering goods, then the court in contribu- 
tion proceedings should be required to value these in order to determine 
whether the claimant has settled for a reasonable amount.^^ 

b. Partial Settlement 

Suppose that Dl has settled with P in a way that does not preclude the 
possibility that P may later sue D2 for the balance of the loss in respect of 
which the settlement was made. However, before legal proceedings are 
instituted against D2 by P, Dl claims contribution from D2. A question to be 
considered in chapter 9 is whether a person should be able to recover 
contribution before she has discharged more than the share of the common 
liability that should fairly be borne by her. Subject to this, however, we 
recommend that the amount of contribution payable in this hypothetical 
should be calculated by reference to the same principles as those proposed 
above for final settlements. In other words, the court should decide whether 
the settlement figure was reasonable and, if it was, D2 should be required to 
contribute to it.^^ If P subsequently sues D2 successfully or settles with D2, 
and D2 pays a sum that is more than her fair share of the common liability, 
D2 should be able to recover from Dl by way of contribution the amount by 
which this sum exceeds D2's fair share.-^^ 



23 Draft Act, s. 11(1). 

2"* Ibid.,s. 11(2). 

25 Ibid., s. 9(7). 

2^ Ibid., s. 10(1) and (2). Often, of course, if P has merely settled with Dl for her estimated 
share of the loss, the settlement figure will be significantly less than P's recoverable loss. 
In this case, the settlement figure will be the sum to which D2 will be asked to contribute. 

2^ For a provision to this effect, see the Irish Civil Liability Act, 1961 , supra, note 10, 
s. 22(2). 

If the settlement between P and Dl included a promise by P to indemnify Dl 
against further claims in respect of the loss, Dl would normally be able to pass on to P 



182 



Where P institutes legal proceedings against D2 before Dl claims 
contribution, and D2 joins Dl as a third party in order to claim contribu- 
tion, the contributable sum should be the amount of their common liability 
as determined by the court in that action.^^ The following hypothetical will 
illustrate the operation of this proposal. Suppose that Dl settles with P for 
$10,000 in a way that allows P to proceed against D2. P does indeed sue D2 
for that portion of her claim for damages that was not satisfied by the 
settlement, and then D2 makes a third party claim against Dl. The court 
finds D2 liable, and calculates P's total loss at $30,000. Judgment is entered 
against D2 for this amount, less the $10,000 already paid by Dl under the 
settlement. The court further finds that Dl and D2 are equally responsible 
for P's loss. It follows from the recommendations made in chapter 5 that D2 
is entitled to a contribution of $5,000 from Dl, so that each ultimately will 
have paid $15,000 towards P's loss. At the end of the day, Dl has not been 
able to reduce her liability by making an advantageous settlement with the 
injured person, unless, of course, she has received an indemnity from P. 
There will be no inquiry in such a case as to whether the settlement figure 
represented a reasonable estimate of Dl's proper share of P's recoverable 
loss. A reason for denying to Dl the latitude that the Commission has 
recommended should be extended to a person who makes a final settlement 
of all the injured person's claims is that full settlements deserve more 
encouragement than those that do not dispose, once and for all, of the need 
for further litigation by the injured person. 

Let us suppose that the facts of our hypothetical are changed somewhat, 
so that the effect of the judgment is that P's total recoverable loss is 
calculated to be only $15,000, for which Dl and D2 are again found equally 
responsible. Dl has settled with P for $10,000. Having been joined as a third 
party by D2, Dl has crossclaimed for contribution from D2 in the event that 
she is held to have settled for more than her proper share. Judgment will be 
entered in P's favour against D2 for $5,000. If the contributable sum is the 
amount of the common liability to Dl and D2 as determined by the court, 
then Dl will be entitled to a contribution claim of $2,500. To regard the 
settlement figure as the contributable sum where Dl has overestimated her 
liability to P would be unfair, especially since she is not permitted to benefit 
from a settlement that is for less than her due proportion of P's loss, as 
determined by a court. 

The situation may be complicated if the claim for contribution is made 
in an independent action, and not by way of a third party proceeding to the 
main action. In such a case, we recommend that the contributable sum 
should be the amount of the common liability as determined by the court in 
the independent action.^^ Thus, suppose that Dl settled P's claim for $500 in 
a way that did not bar P's action against a concurrent wrongdoer, D2. When 

the cost of the contribution. The amount of the sum that Dl was liable to contribute 
would then be of importance to P. 

28 Draft Act, s. 10(4). 

29 Ibid., s. 10(3). 



183 



P sues D2, P's loss is found to be $1,500, and judgment is entered against D2 
for this sum, less the $500 already paid to P under the settlement with Dl. 
D2 did not issue a third party claim, but proceeds in a separate action 
against Dl.^o In this proceeding, Dl ought to be able to establish that their 
true liabiUty to P was only $1,000, and if Dl and D2 are equally at fault, D2 
will recover no contribution. This resuU may seem unjust to D2 who has had 
to pay more than Dl, even though they have been found equally at fault; 
however, to allow D2 to base her claim for contribution on the amount that 
she was held liable to pay P would mean that Dl would be prejudiced by the 
outcome of litigation to which she was not a party. 

On the other hand, D2 ought not to be able to claim that the true 
amount of their concurrent liability was for a sum greater than that 
determined by the court when P sued D2. Thus, in the above example, if 
judgment was awarded in P's favour against D2 for $1,500, D2 should not be 
able to argue in subsequent contribution proceedings that their "true" 
liability was $2,000 ($1,500 plus the $500 paid to P by Dl), of which she has 
paid $1,000, and that she is therefore entitled to $500 as contribution from 
Dl. D2 has, after all, had an opportunity to litigate her liability, and the 
matter has been judicially determined. Her recovery should be limited to 
$250, so that each will bear an equal share of the sum in which D2 has been 
held liable to P. The way in which the contributable sum should be appor- 
tioned will not have been judicially determined before D2 sues Dl, and 
therefore it will be assessed in that litigation by the court, without regard to 
any assumption about her due share of the liability upon which Dl settled 
with P 

Finally, we recommend that, if the terms of the settlement provide for 
the performance of services or the delivery of goods, these should be 
required to be valued by the court in order to determine the amount of 
contribution recoverable.^' 



(c) Successive Judgments 

It may be difficult to determine the sum to which concurrent wrong- 
doers are required to contribute when the injured person institutes separate 
actions against them. The courts that decide the two cases may calculate 
differently the damages recoverable by P Suppose, for example, that P sues 
Dl, who does not issue a third party claim against D2, and judgment is 
entered against Dl for $10,000. If Dl does not satisfy this judgment, or P 
believes that the damages awarded did not fully compensate her for her loss, 
a separate action may be instituted against D2.''2 Suppose that in the action 



^^ For the circumstances in which this may be possible, see supra, ch. 9, sec. 2(a)(v); for the 
Commission's recommendations that they should be extended, see supra, ch. 9, sec. 
2(c). 

^' Draft Act, s. 9(7). 

^^ It will be recalled that, under the present law, concurrent wrongdoers who are only 
severally liable can be sued separately, and that the plaintiff's damages may be assessed 



184 



by P against D2, to which Dl is not joined as a third party, P's loss is 
calculated to be only $5,000. If Dl satisfies P's judgment and D2 does not, is 
the sum to which D2 may be required to contribute $5,000 or $10,000? 

Fortunately, there have been few occasions for problems of this kind— 
the product of a multiplicity of litigation from a single loss— to arise in 
Ontario.^^ This is largely because Ontario courts have generally required 
claims for contribution, following a judgment against the contribution 
claimant, to be made in third party proceedings. The great merit of this 
procedural requirement, first imposed in Cohen v. S. McCord& Co. Ltd.,^^ 
is that it ensures that one court will decide conclusively, in a single proceed- 
ing, such questions as whether D2, as well as Dl, is liable to P and, if so, the 
amount of P's recoverable loss, and the basis upon which it is to be 
apportioned. The result will be binding upon the plaintiff, the parties- 
defendant, and those joined as third, fourth, or subsequent parties. How- 
ever, it is unclear whether the Ontario courts' interpretation of the present 
Negligence Act will be upheld in this respect in the Supreme Court of 
Canada, or whether it will be applied by Ontario courts to a situation where 
a jurisdictional limit on the court in which the plaintiff commenced her 
proceedings prevents the defendant from joining a concurrent wrongdoer as 
a third party. The exclusive jurisdiction of the Federal Court of Canada over 
the liability of the federal Crown, and the apparent constitutional incompe- 
tence of that Court to entertain proceedings in which a claim is based on 
provincial law,^^ have already raised the possibility that multiple litigation 
can arise from a single accident, transaction, or loss, with the attendant 
danger that the courts dealing with discrete parts of the claims may reach 
inconsistent results. ^^ 

The possibility of multiple lawsuits may also be increased if the Com- 
mission's recommendation is accepted that the rule forbidding the institu- 

in the second action at a higher figure than they were in the first. The Commission has 
recommended that this common law rule should be applied to cases of joint liability as 
well: supra, ch. 2, sec. 4(b). 

^^ An analogous problem under the present law can arise when both P and Dl have 
suffered a loss in a single accident— a multiple vehicle collision, for example. Suppose 
that Dl first sues D2 for the damage caused to Dl's car by D2; the court finds that D2 
was liable, but reduces Dl's damages because she was contributorily negligent as to 25%. 
P then sues Dl, who joins D2 as a third party. If the court finds that Dl and D2 were both 
liable for P's injury, are they bound by the finding in Dl's action against D2 as to their 
respective degrees of fault? 

An affirmative answer was given in Kirk v. Faugh, [1951] O.W.N. 745 (H.C.J. ). 
There are decisions from other Commonwealth jurisdictions going both ways. See, for 
example, Bell v. Holmes, [1956] 1 W.L.R. 1359, [1956] 3 All E.R. 449 (Q.B.); Marginson 
V. Blackburn Borough Council, [1939] 2 K.B. 426, [1939] 1 All E.R. 273 (C.A.) (prior 
findings binding); Randolph v. Tuck, [1962] 1 Q.B. 175, [1961] 1 All E.R. 814; dind Jackson 
V. Goldsmith (1950), 81 C.L.R. 446 (H.C.) (prior finding not binding). 

^"^ [1944] O.R. 568, [1944] 4 D.L.R. 753 (C.A.). 

But see discussion supra, ch. 2, note 97. 

^^ Supra, ch. 2, sec. 4(a). 



185 



tion of independent actions for claiming contribution should be relaxed. ^"^ 
The abolition of the judgment bar rule may also have the same effect.^^ 
However, it would be a mistake to overestimate the practical consequences 
of these proposed changes: a plaintiff will normally wish to join as many 
defendants to her action as she can, and it will generally be in the interests of 
those who are joined to have questions of contribution decided conclusively 
at the same time as their liability to the plaintiff is determined. Defendants 
are, therefore, still likely to claim contribution from their co-defendants and 
to issue third party claims against those whom the plaintiff has not pro- 
ceeded. Thus, despite the theoretical difficulty of the issues considered in 
this part of the chapter, it is unlikely that the courts will have to deal with 
them with any frequency. 

It will be recalled that, in chapter 6, we recommended that, if Dl is 
successfully sued by P, it should not be a defence to any claim for contribu- 
tion pursued in an independent action for D2 to prove that Dl ought not to 
have been held liable to P,^^ except where the judgment against Dl was 
obtained by collusion or fraud, although D2 would be entitled to show that 
the court wrongly assessed the quantum of the injured person's loss in P v. 
Dl . While a principle enshrining the sanctity of litigation, as envisaged 
above, can help to some degree to resolve claims to contribution advanced 
subsequent to P's separate successful actions against Dl and D2, such a 
principle cannot always deal adequately with successive judgments. Having 
regard to our proposal in chapter 6, it is clear as a general principle that, 
where a claim for contribution is made, neither Dl nor D2 would be entitled 
to open up the question of their liability to P. Put simply, each has already 
had her day in court on this issue, and no problem arises if, in the 
contribution action, the court were to accept their liability as having been 
conclusively established in the earlier litigation. 

Such is not the case, however, where the courts that decided P v. Dl and 
P V. D2 assessed P's damages differently. Obviously, here the finality of 
litigation is impossible to achieve. 

Accordingly, the Commission recommends that, where the injured 
person has obtained judgment against concurrent wrongdoers in separate 
proceedings and the damages of the injured person have been assessed 
differently, in a claim for contribution by one wrongdoer against another 



^^ This procedural question is considered fully in chapter 9 of this Report. 

^^ Supra, ch. 2, sees. 2(a) and 4(a). 

^^ See supra, ch. 6, sec. 2, and Draft Act, s. 8(1). In chapter 7, we considered the reverse 
situation— that is, where Dl seeks to open up P's prior unsuccessful litigation against 
D2— and recommended that it should be a defence to a claim for contribution for the 
contributor to establish that judgment on the merits has already been given in her favour 
in an action by the injured person, except where the judgment was obtained by collusion 
or fraud. 



186 



wrongdoer the court should be required to determine the sum to which the 
parties to the contribution claim shall contribute, without reference to the 
findings on damages in the earlier litigation. "^^ 

3. THE DIVISION OF THE CONTRIBUTABLE SUM: WHO 
MUST CONTRIBUTE? 

Having determined the sum to which concurrent wrongdoers may be 
required to contribute, the next question concerns the division of this 
amount. The issue considered here is the number of portions into which the 
sum must be divided. The next section considers the principles for deter- 
mining the size of each of these portions. 

It has been recommended in this Report that the principle of m solidum 
liability should be retained as an important protection for those injured by 
others' wrongful conduct.^' The person who has sustained the loss may 
recover the full amount of her damages from any one of a number of 
wrongdoers liable for the loss and, if she sues only one, she is not restricted to 
recovering from that person the part of her loss proportionate to the fault of 
the individual whom she has sued. 

A right of contribution may therefore arise among those sued to 
judgment by P and anyone against whom a third party claim has been made. 
In addition, a person may claim contribution in an independent action 
following either a settlement or, in unusual circumstances, a judgment 
against her in an action to which she did not join the contributor as a third 
party. The entire loss will be divided among those sued, and the share 
attributable to a person who has not been made a party to any legal 
proceedings will be ignored. However, where one person is liable for 
another's wrong, the joint tortfeasors should count for this purpose as one. 
Thus, if P is injured by the tort of Dl in circumstances that make D2 
vicariously liable, and by the tort of D3, then, if D3 is equally responsible 
with Dl for the loss, Dl and D2 will be liable between them for 50 percent 
and D3 for 50 percent. 

Difficulties may also arise, although reported cases are very few, when 
P omits to sue one wrongdoer and that wrongdoer is not made a third party 
by the defendant, perhaps because neither P nor those whom she sued knew 
her identity or whereabouts. Thus, suppose that Dl, D2, and D3 are equally 



40 



41 



Draft Act, s. 8(2). See Transit System, Inc. v. Slingland, 266 F. 2d 465 (D.C. Cir. C.A. 
1959), where P, in separate actions, obtained judgment against Dl for $15,000 and 
against D2 for $10,000. Dl and D2 were held equally at fault, and P executed the 
judgment for the larger amount. D2 was held to be liable to contribute that part of the 
judgment against her that the larger judgment bore to the sum of the two judgments. 
The following formula was used: 

llgx $10,000 = $6,000 
Supra, ch. 3. 



187 



responsible for P's loss. P sues Dl who joins D2 as a third party. Dl and D2 
are adjudged to be equally at fauh, and Dl satisfies P's judgment in full. Is it 
open to D2 to argue that she is only hable to contribute up to one third of the 
damages because D3 is equally at fault? Or should the presence of D3 be 
ignored for this purpose, so that Dl is able to recover one half of the damages 
by way of contribution from D2? Or should Dl be able to recover from D2 
two thirds of the damages, on the ground that she (Dl) was only one third at 
fault? Lastly, it has been suggested that if D3's degree of fauh is ignored, then 
it ceases to be practicable to determine the respective degrees of fault of the 
parties to the action, with the result that Dl and D2 must be deemed equally 
at fauh by virtue of section 5 of the Negligence Act, ^^ whether or not Dl was 
more or less culpable than D2.^^ 

The Commission is of the view and, accordingly, recommends that in 
determining contribution among concurrent wrongdoers, the degree of 
fault attributable to an absent concurrent wrongdoer should be ignored, and 
100 percent of the fault should be allocated among the parties before the 
court."^"* To attempt to apportion the fault that should be borne by D3 may 
well be both unjust and inconvenient. If D3 is never sued, because her 
identity or whereabouts cannot be estabUshed, it would be unjust to Dl to 
restrict her claim from D2 to one third of the common liability to P, and 
unjust to D2 to allow Dl to recover two thirds from her. To divide the 
contributable sum between Dl and D2 on the basis that they are 100 percent 
at fault recognizes their comparative culpability, and, of course, provides an 
incentive for them to add D3 as a fourth party. Should D3 later appear, and 
it is procedurally possible for contribution to be claimed other than after a 
settlement or by way of a third party notice, then Dl and D2 would be 
entitled to contribution from her.'*^ 

A variation on the theme of the "missing wrongdoer" may be found in 
the following situation. Suppose that P, Dl, and D2 are all equally respon- 
sible for P's loss, but that P sues only Dl. Should a court apportion the fault 
between P and Dl and reduce P's damages by half, with the possibility that P 
may sue D2 later and that Dl might be able to recover contribution from 
D2? Or should P's damages be reduced by only one third, which represents 
her proper share of responsibility if account is taken of the existence of D2? 
Or, lastly, should P obtain judgment against Dl for only one third of her 
damages, on the ground that Dl was only one third to blame? 



^^ Section 5 reads as follows: 

5. If it is not practicable to determine the respective degree of fault or negligence 
as between any parties to an action, such parties shall be deemed to be equally at 
fault or negligent. 

^'^ Cheifetz, "The Missing Tortfeasor: A Problem in Fault Apportionment under the 
Ontario Negligence Act" (1977-78), 1 Advocates' Q. 270. The author discusses the 
question further in his book, Apportionment of Fault in Tort (1981) (hereinafter referred 
to as "Cheifetz"), at 22-23 and 106-10. 

^ Draft Act, s. 12. 

^^ This is the solution contained in the Irish Civil Liability Act, 1961, supra, note 10, s. 25. 



188 



The current law in Ontario is not altogether clear. There are certainly 
dicta that support the view that 100 percent of the fault should be appor- 
tioned between P and Dl on the basis of their proper share inter se.^^ On the 
other hand, in Colonial Coach Lines Ltd. v. Bennett,'^'' Laskin J.A., by way 
o^ dicta, said: 

[A] defendant found to be at fault and disappointed in his expectation of having 
a co-defendant share, as between themselves, a portion of the liability to an 
injured plaintiff may well be disentitled to shift additional blame to a plaintiff 
who has been already fixed with a percentage of fault. 

In other words, according to Laskin J.A., if a court finds that P was 10 
percent responsible for her loss, Dl, 50 percent, and D2, who was not sued, 
40 percent, then Dl will have judgment against her for 90 percent, and has 
the burden of attempting to recover from D2 the 40 percent attributable to 
her. 

It is not proposed, however, to pursue this question further in this 
chapter, since it relates principally to the apportionment of loss between 
the injured person and a wrongdoer. It is considered in chapter 10, which 
deals with contributory negligence and a number of the contribution 
consequences."*^ 

The other problem to be mentioned is the effect that the insolvency of 
one wrongdoer may have upon the division of the contributable sum. The 
Commission has already recommended that, where there are two wrong- 
doers, the solvent one should bear the entire loss, but that, where there are 
more than two, the share of the insolvent wrongdoer should be divided 
among the wrongdoers in proportion to their share of the fault. The plaintiff 
should not be required, irrespective of whether or not she was contributorily 
at fault, to bear the burden of the insolvency in proportion to her own 
culpability."*^ 

4. THE DIVISION OF THE CONTRIBUTABLE SUM: 
QUANTIFYING THE PORTIONS 

(a) The Present Law 

The final question considered in this chapter is the amount that those 
who are liable to contribute should be required to pay towards the contribut- 
able sum. The Ontario Negligence Act provides in section 2 that each of two 



46 



47 
48 
49 



Bennctto and Bennetto v. Leslie and Werhw 11950] O.R. 303 (H.C.J. ); St. Catharines 
FIving Club v. The Citv of St. Catharines, [1953] O.R. 393 (C.A.); Roustauskas v. 
Wilson, [1952] O.W.N. 441 (H.C.J. ); and, semble, Paquette v. Batchelor (1980), 28 O.R. 
(2d) 590, 1 1 1 D.L.R. (3d) 642 (H.C.J. ). 

[1968] 1 O.R. 333, at 341, 66 D.L.R. (2d) 396 (C.A.). 

Supra, ch. 10, sec. 5. 

See supra, ch. 3, sec. 4. 



189 



or more tortfeasors who have caused damage to an injured person and are 
found to have been at fault or negligent is liable in solidum, but, "as between 
themselves, in the absence of any contract express or implied, each is liable 
to make contribution and indemnify each other in the degree in which they 
are respectively found to be at fault or negligent". Thus, while a person's 
tortious conduct may be only one of several causes of the plaintiff's loss, 
provided that it was one of the causes in law, the plaintiff is entitled to 
recover the full amount of her loss from that person alone. However, by 
showing that the tortious conduct of others also contributed to the plaintiff's 
loss, the defendant may be able to distribute part of that loss to those others. 
It becomes relevant at this stage to determine the degree of fault that can be 
attributed to each of the wrongdoers who are before the court. 

Section 3, as we have seen, deals with the right to recover contribution 
by a person who has settled with the injured person. The section does not 
expressly provide that the sum awarded is to be based upon an evaluation of 
the parties' respective degrees of fault, but this is surely implicit. In the event 
that it is not practicable for the court to quantify the degree of fault or 
negligence attributable to each of the tortfeasors, section 5 provides that the 
parties to the claim for contribution are regarded as equally at fault, and that 
the contributable sum is to be divided equally between or among them. This 
section applies whether the claim is made following a judgment or a 
settlement. 

No significant legal difficulties appear to have been experienced with 
the operation of the apportionment principles currently contained in the 
Negligence Act . Courts approach the question by considering the compara- 
tive fault of the tortfeasors, and assessing the extent to which each deviated 
from the standard of conduct by which their liability is determined. ^^ 

For the purposes of contribution, a court may fix the proportion of 
fault attributable to the parties to the claim. The task of quantifying degrees 
of fault is essentially factual in nature. Where the trial is before judge and 
jury, it is for the jury to decide how the liability should be apportioned. 
Appellate courts are reluctant to disturb findings made at trial on this 
question, in the absence of a clear error of principle or an apportionment 
that is unreasonable or manifestly erroneous. Thus, in Taylor v. Asody,^^ 
Dickson J. (as he then was), dissenting, said: 

Apportionment of fault is primarily and properly a matter within the 
discretion of the trial judge who has, as has so often been pointed out, the great 
advantage of seeing and hearing the witnesses, of observing demeanour, noting 
nuances of expression, detecting dissimulation — [EJxcept in a strong and 



^^ Many of the cases are collected in Cheifetz, supra, note 43, at 99-105. For a recent 
example, see Consumers' Gas Co. v. The Corp. of the City of Peterborough and 
Peterborough Utilities Comm., [1981] 2 S.C.R. 613, 129 D.L.R. (3d) 507, in which it was 
held that a negligent tortfeasor was not entitled to an indemnity from a defendant (who 
was found to have been more at fault) to whom the claimant also owed a duty of care. 

^' [1975] 2 S.C.R. 414, at 423, 49 D.L.R. (3d) 724 (emphasis added) (subsequent reference 
isto[1975]2S.C.R.). 



190 



exceptional case , an appellate court will not feel free to substitute its apportion- 
ment of fault for that made by the trial judge unless there has been palpable and 
demonstrable error in appreciation of the legal principles to be applied or 
misapprehension of the facts by the trial judge. 

A somewhat broader appellate standard of review may be applied in non- 
jury actions where the dispute concerns the inferences to be drawn from the 
evidence, rather than a question of credibility. ^^ 

The cases in which the scope of section 5 has been discussed contain 
little that is not evident from a reading of the statute itself. ^^ For example, it 
has been held that the power to apportion fault equally where it is not 
practicable to determine specific degrees of fault does not release the court 
from first deciding whether the parties were liable at all to the original 
person. ^"^ It may not be practicable to ascribe a specific degree of fault 
because the evidence is insufficiently cogent to reach a final conclusion 
about the relevant events or conduct. ^^ Similarly, the parties' conduct may 
have been so inextricably intertwined that it is not practicable to assess the 
culpability of each separately. ^^ It is not certain whether section 5 should 
apply to a case in which it is clear that the parties were not equally to blame, 
but where the jury is unable to agree how their respective degrees of unequal 
fault should be quantified. The appropriate procedure in such a case may be 
to order a new trial. ^^ Whether an apportionment is "practicable" is a 
question of fact to be decided on the balance of probability. 

(b) Reforming the Law 

(i) General 

No doubt there will be many cases in which judges or juries experience 
real difficulty in apportioning liability among tortfeasors. The reason is that 
the exercise necessarily contains elements of subjective judgment and 
appreciation, not to say a degree of arbitrariness, which may in part explain 
why appellate courts have been reluctant to overturn assessments made at 



^^ See, generally, Cheifetz, supra, note 43, at 286-97. 

^^ They are briefly discussed by Cheifetz, ibid. , ch. 4. 

^^ Waring v. Jarvis, [1956] O.W.N. 661 (C.A.), and Binda v. Waters Construction Co. Ltd. 
andHunchuk (1960), 24 D.L.R. (2d) 431 (Man. C.A.). 

It may be impracticable to attribute a determinate degree of fault to the parties because 
the evidence given by witnesses is incomplete or lacking in credibility {Taylor v. Asody, 
supra, note 5 1, at 424), or because the evidence, while credible, is not sufficiently clear to 
enable a court to draw an inference with the appropriate degree of confidence {Potan v. 
Keleher (1975), 9 O.R. (2d) 289, at 298, 60 D.L.R. (3d) 217 (C.A.)). 



55 



56 



57 



Malenfant and Beetham v. McKee and Taylor, [1953] O.WN. 652 (C.A.), at 655, rev'd 
on other grounds [1954] S.C.R. 651. 

Magee v. Johnson, [1954] O.WN. 141 (Co. Ct.). 



191 



first instance. It will often be the kind of issue upon which more than one 
view can reasonably be held. The institutional characteristics of an appellate 
court do not guarantee that the quality of the decision will be sufficiently 
improved to justify a redetermination. 

There are two considerations that suggest that the legal basis for 
apportioning the loss ought to be reviewed in this Report. First, the 
Negligence Act currently contains a rather narrower criterion than that 
found in other jurisdictions, including those in which the question has 
recently been re-examined. Secondly, if the recommendations in this 
Report are accepted, and the scope of the right to contribution is expanded 
so that it potentially applies to all concurrent wrongdoers, and not just 
tortfeasors, then the current basis of apportionment may be inadequate to 
deal satisfactorily with the new range of situations to which it will have to be 
applied. It should also be remembered that, until quite recently, it was 
widely thought that the Negligence Act applied only to the tort of negligence 
or, at most, to torts in which negligent conduct is an element. ^^ There is little 
evidence about the way in which the apportionment provisions of the 
Negligence Act apply to intentional torts and torts of strict liability.^^ 

No doubt litigation involving negligent defendants is likely to continue 
to provide the overwhelming majority of cases in which respective degrees 
of fault will have to be apportioned. Nonetheless, there will be occasions in 
which the court will be required to determine how liability should be 
apportioned among those whose liability, for example, in tort or contract, is 
strict, or based on negligence or intentional conduct. Should it be an 
invariable rule that the wrongdoer whose liability to the injured person does 
not depend upon some negligence or morally culpable conduct should be 
entitled to contribution from a person who has been negligent? And is the 
negligent wrongdoer invariably entitled to contribution from the inten- 
tional wrongdoer, and, if not, how should the loss be apportioned? When the 
Hability of one concurrent wrongdoer depends upon breach of contract, 
comparative fault may prove to be both too elusive and too narrow a 
standard to provide satisfactory solutions.^^ 

The almost limitless range of fact situations in which an apportionment 
of Hability will have to be made inevitably suggests that this is an area where 
the Legislature should leave considerable discretion to the court of original 



^^ Supra, ch. 4, sec. 3(a)(ii). 

^^ For a recent example in which the court held dishonest tortfeasors liable for 90% of the 
plaintiff's loss, and those who had been negligent, 10%, see Anderson and G. W.Anderson 
Holdings Ltd. v. Stevens (1981), 125 D.L.R. (3d) 736, [1981] 5 W.W.R. 550 (B.C.S.C). 

^^ Some of these questions were considered in the New Zealand Working Paper on 
Contribution in Civil Cases, supra, note 14. In that Working Paper, the New Zealand 
Contracts and Commercial Law Reform Committee tentatively proposed that the 
difficulties could be minimized by confining the right of contribution to wrongdoers 
whose relationship created "any sort of legal or moral duty or obligation as between 
them" {ibid., at 11). However, the insuperable task of defining this condition precedent 
led the Committee to abandon it. See, generally, paras. 3.1-3.6, at 10-15. 



192 



jurisdiction, and where appellate courts should be slow to substitute their 
judgment for that of the judges of first instance. Having said this, however, it 
is still necessary to consider to what extent the discretion should be struc- 
tured. Detailed rules may be impracticable, but a listing of the factors to be 
taken into account may be feasible. Ease of application may support a very 
narrow range of considerations that a court is directed to consider; multiple 
factors not only expand the scope of the inquiry by increasing the matters 
that are relevant, but also may present difficult questions of assessing the 
weight to be given to them, and deciding whether some factors should be 
more important than others and, if so, which ones. One facet of justice is the 
formulation of rules that can be applied reasonably easily, predictably, and 
efficiently, so that the costs of administration do not outweigh whatever 
improvement there may be in the quality of decisions made in individual 
cases. 



(ii) Approaches to Reform 

It is relevant to note at this point the recommendations contained in the 
Ontario Law Reform Commission's recent Report on the Law of Trusts. ^^ 
Two aspects of the Commission's conclusions respecting contribution 
among trustees, who are jointly and severally liable to a beneficiary for a 
breach of trust, are of particular relevance here. First, the Commission 
proposed that the court's power to order contribution should be broader 
than it currently is: the court should not be limited to dividing the Hability 
equally among the trustees, or, in the few situations in which equity does not 
require this, to providing that one trustee must indemnify her co-trustees. It 
recommended that these unduly rigid rules should be repealed. Secondly, 
the Commission proposed a standard for apportioning the loss that is 
different from that in the Negligence Act , and that may authorize the court 
to consider a range of factors broader than comparative fault. Thus, section 
54(1) of the Commission's proposed draft Trustee Act, which was contained 
in its Report, provided as follows: 

54.— (1) Subject to any express limitation of liability in the trust instrument 
or to any express provision in the trust instrument as to contribution or 
indemnity, the proportions in which co-trustees in breach of trust are liable as 
between themselves for making good the loss to the trust or the amount of 
contribution which may be recovered by a trustee from any co-trustee are such 
as may be found by the Court to be just and equitable having regard to the extent 
of the responsibility of each trustee in breach for the loss caused. 

It will be recalled that section 2 of the Negligence Act requires appor- 
tionment to be awarded "in the degree in which Dl and D2 are respectively 
found at fault or negligent". As will become apparent from the following 
discussion, comparative responsibility may be a broader concept than 
comparative^aw// or negligence, and may thus require the consideration of 
a wider range of factors. 



^^ Ontario Law Reform Commission, Report on the Law of Trusts (1984), Vol. II, at 374- 
87. 



193 



Section 2(1) of the United Kingdom Civil Liability (Contribution) Act 
1978^^ provides that, subject to any limitation upon the liability of one 
concurrent wrongdoer that is imposed by statute, contract, or by the 
contributory negligence of the injured person, "the amount of the contribu- 
tion recoverable from any person shall be such as may be found by the court 
to be just and equitable having regard to the extent of that person's 
responsibility for the damage in question". Subsection (2) makes it clear that 
the court's power includes granting 100 percent contribution to one person 
and requiring another to contribute 100 percent to the other concurrent 
wrongdoers. These provisions implemented the recommendation of the 
English Law Commission that the corresponding provision in section 6(2) 
of the Law Reform (Married Women and Tortfeasors) Act, 1935^^ should be 
retained and extended to all concurrent wrongdoers, whatever the legal 
nature of their liability to the injured person. ^"^ 

English courts have held that the notion of "responsibility" requires 
consideration of both the causative potency of the conduct that caused the 
loss, and the comparative culpability of the parties.^^ It now seems as if the 
courts attach greater weight to the second of these factors,^^ although at one 
time there was a line of authority that made the degree of causation the only 
consideration.^ '^ It would be wrong to overestimate the practical differences 
that flow from preferring one factor over the other; the modern emphasis on 
comparative fault may, however, be attributed to the difficulty of assessing 
which conduct was the more closely causally connected to the injury.^^ 
Despite this latter difficulty, and any problem that there may be in deciding 
which factor is the more important, it may be arguable that both should be 
retained. Indeed, the American Uniform Comparative Fault Act^^ specifi- 
cally directs the trier of fact, when determining the percentage of fault, to 
consider "both the nature of the conduct of each party at fault and the extent 
of the causal relation between the conduct and the damages claimed". ^^ 



^^ Supra, note 15. 

^^ Law Reform (Married Women and Tortfeasors) Act, 1935, c. 30 (U.K.). 

^"^ Law Commission Report, supra, note 16, paras. 68-69, at 20. 

^5 Driver v. William Willett (Contractors) Ltd, [1969] 1 All E.R. 665 (Sussex Assizes) 

^^ Maxfieldv. Llewellyn, [1961] 1 W.L.R. 1119, [1961] 3 All E.R. 95 (C.A.). 

^^ See, for example, the judgments of Hilbery J. in Daniel v. Rickett, Cockerell & Co., Ltd. 
and Raymond, [1938] 2 K.B. 322, [1938] 2 All E.R. 631, and Collins v. Hertfordshire 
County Council, [1947] 1 K.B. 598, [1947] 1 All E.R. 633. 

^^ The conceptual difficulties inherent in assessing comparative causative potency are 
noted in Williams, Joint Torts and Contributory Negligence (1951), at 157; Chapman, 
"Apportionment of Liability Between Tortfeasors" (1948), 64 Law Q. Rev. 26; and Klar, 
"Contributory Negligence and Contribution Between Tortfeasors", in Klar (ed.), 
Studies in Canadian Tort Law (1977) 145, at 156-57. 

^^ Supra, note 13. 

''^ Ibid, ^2{b). 



194 



Examples of situations where a comparison of the degrees of causation 
may influence the amount awarded by way of contribution may include the 
following. Suppose that scaffolding erected on a building site by Dl collapses 
and injures P. The injury is caused by both Dl's failure to comply with the 
relevant regulations, for which Dl is strictly liable, and the negligence of D2, 
a contractor whose employee carelessly backed a truck into the scaffolding. 
If the assessment were made strictly on the basis of comparative fault, then 
Dl would be entitled to 100 percent contribution from D2, even though the 
negligence imputed to D2 might well not have caused the collapse if Dl had 
constructed the scaffolding in accordance with the regulations. Or suppose 
that P has engaged D2 to design and build a boat, and has employed Dl to 
supervise its construction and to inspect the finished product. The boat's 
design is defective, and the boat is negligently built. Dl fails to notice the 
defects when it is delivered to P. Even though there was no significant 
difference in the extent to which Dl and D2 departed from their respective 
duties of care, it may be appropriate to attribute more than half the 
responsibility to the designer and builder. ^^ 

The Alberta Institute of Law Research and Reform chose "responsibil- 
ity" as the criterion of apportionment. ^^ ^^ vvg h^ve seen, this allows a court 
to consider both causation and fault. However, it decided to depart from the 
formula found in the 1978 English Act by omitting any reference to a "just 
and equitable" apportionment; it thought that these words conferred too 
much discretion upon the court. ^^ 

If the test prescribed in the Ontario Negligence Act were retained and 
applied to all cases of concurrent civil liabiUty, this would confine the court 
to considering comparative degrees of fault. An obvious advantage of 
limiting the court's consideration to comparative degrees of fault when 
determining the amount payable by way of contribution is that Ontario 
lawyers and judges are already famihar with this criterion, and there is no 
evidence of any real difficulty with its application. 

Section 21(2) of the Irish Civil Liability Act, 7967 ^'^— which, like the 
recommendations made in this Report, extends the rights of contribution to 
all concurrent wrongdoers— contains an amalgamation of the English and 
the Ontario formulae. It provides that the amount of contribution recover- 
able from any contributor shall be such as may be found by the courts to be 



71 



This and similar fact situations are discussed in the New Zealand Working Paper, supra, 
note 14, where it is argued that a person whose "wrong" consists of not adequately 
protecting the injured person from another's breach of duty should be regarded as less 
responsible for the loss than the other: see para. 3.4, at 14, and, generally, paras. 3.1-3.6, 
at 10-15. 



72 



Alberta Report, supra, note 11, at 77-78. 

^^ The Institute appears only to have considered "just and equitable" as a standard 
unqualified by a direction concerning the factors to which a court should have regard in 
reaching its decision. 



74 



Supra, note 10. 



195 



"just and equitable"; however, in applying this standard, the courts are to 
have regard "to the degree of the contributor's fault". 

The Canadian Uniform Contributory Fault Act''^ appears to limit the 
range of factors that a court may consider in apportioning the loss. It 
provides that contribution is to be assessed in a way "that is proportionate to 
the degree to which the wrongful act of the other concurrent wrongdoer 
contributed to the damage". '^^ It is not altogether clear what this means, 
although it may be interpreted as requiring the courts to consider only the 
respective degrees of causation of the wrongdoers' conduct, and not their 
comparative fault. If this is so, then it is difficult to understand the reasoning 
underlying it, particularly given the well-documented problems likely to be 
faced by the courts in determining the percentages of comparative causation 
that should be attributed to the parties. 

At the other extreme, the standard for apportionment might be framed 
so as to give maximum discretion to the court by specifying no more than 
that apportionment should be based on what is just and equitable in all the 
circumstances. However, guidance in the exercise of the discretion could be 
given by the compilation of an exhaustive or a non-exhaustive list of matters 
to be taken into consideration. These would include the parties' compara- 
tive fault and the causal potency of their conduct. Other factors that might 
be considered are the extent to which one wrongdoer has profited from his 
breach of duty,^^ and the respective ability of the parties to distribute the loss 
efficiently— for example, through insurance. 

(c) Conclusions 

In choosing from among the various models, described above, for 
apportioning the loss among concurrent wrongdoers, a number of compet- 
ing considerations have to be taken into account. First, the principles should 
be both substantively just and appropriate, and consistent with the existing 
bases of civil liability. One difficulty in formulating the applicable principles 
with any precision is that it will not be easy to anticipate the variety of 
situations in which the proposed extension of the right to contribution will 
have to be applied. This leads to a second consideration: to what extent 
should any legislation entrust trial judges, subject to a right to appeal that is 
hkely to be narrow in scope, with discretion to develop the relevant 
principles on a case-by-case basis? The need for discretion in this area has 
been recognized in other jurisdictions, although there seems to be no 

^^ Supra, note 12. 

''^ Ibid.,s.S(\). 

^^ This might be particularly relevant to those whose wrong consisted of a breach of 
fiduciary duty, although it need not be confined to this category of civil liability One of 
the exceptions to the equitable rule that trustees are entitled and liable to contribute 
equally to a loss for which they are concurrently liable is that a trustee who has benefited 
from the breach of trust is liable to indemnify the co-trustees. See Bahin v. Hughes 
(1886), 31 Ch. D. 390 (C.A.), at 395-96. 



196 



consensus on the extent to which it is desirable or feasible to structure that 
discretion. If flexibility and the ability to tailor the right to a wide and, in 
part, unpredictable range of fact situations are the positive aspects of 
discretion, there are also costs. These potentially include a lack of predicta- 
bility, and inconsistency. In addition, considerable delays and expense are 
likely to attend a statutory regime that authorizes courts to undertake 
inquiries of wide and ill-defined scope about the parties and their conduct, 
the result of which may prove inconclusive and unsatisfying. 

The interests of ease of administration and certainty could be given 
priority by providing that the loss should be apportioned equally between 
the claimant for contribution and the contributor. However, we are satisfied 
that this would be too blunt an instrument, and would often cause substan- 
tial injustice by treating alike parties whose conduct requires that they 
should be treated differently. The relevance of fault in imposing and 
apportioning liability is too deeply embedded in the law of civil obligation to 
be disregarded in this context. Nonetheless, equal division may be the only 
course available when other criteria do not yield any other scheme of 
apportionment. We therefore recommend the retention of a type of provi- 
sion similar to that currently contained in section 5 of the Negligence Act. 

As to the test to be applied by the court initially, we are of the view that 
the formula now contained in the Negligence Act is inadequate and, 
therefore, ought to be replaced. The power of the court to consider only the 
comparative degrees of fault of the wrongdoers, thereby making any of the 
other considerations mentioned above strictly irrelevant, is too narrowly 
circumscribed. Even if, as may be argued, it would be disingenuous to think 
that the notion of fault is not sufficiently flexible to allow a judge to view the 
fact situation as a whole, we cannot see any reason why the legislation 
should not provide clearly for such flexibility. 

The "responsibility" test is, on the other hand, of sufficient flexibility to 
permit a consideration of both the causative factor and the fault of the 
parties. As we have seen, the United Kingdom Civil Liability (Contribution) 
Act 1978 and the Alberta Institute of Law Research and Reform, as well as 
this Commission, in its 1984 Report on the Law of Trusts, have adopted the 
"responsibility", rather than the fault, test. Moreover, both the proposals of 
this Commission in 1984 and the United Kingdom legislation go further by 
recommending or providing that the amount recoverable in a contribution 
action is such as may be found by the court to be "just and equitable", 
having regard to the extent of the "responsibility" of each party. 

We are of the view that this comprehensive approach— incorporating 
the notion of a "just and equitable" determination in the context of the 
"responsibility" test— is the appropriate one for Ontario. Unlike the Alberta 
Institute, we do not beheve that giving the court power to make an order that 
is "just and equitable" confers excessive discretion on the court. Rather, 
such jurisdiction would allow the court to arrive at a more finely balanced 



197 



apportionment of liability. We believe this to be particularly important in 
the light of our earlier proposal to extend a right to contribution beyond 
concurrent tortfeasors to all concurrent wrongdoers. 

Accordingly, the Commission recommends that the amount of contri- 
bution recoverable from a concurrent wrongdoer should be such as may be 
found by the court to be just and equitable, having regard to the degree of 
responsibility of each concurrent wrongdoer for the damage caused. '^^ If the 
degree of responsibility of a concurrent wrongdoer cannot be determined in 
relation to another concurrent wrongdoer, they should be deemed to be 
equally responsible.^^ The determination of the degree of responsibility 
attributable to each party should be regarded as a question of fact. ^^ 

In chapter 4, the Commission recommended that the criminal nature 
of the wrongdoing, the fact that it was committed intentionally or that the 
damages paid by a defendant included a penal or punitive element, should 
not automatically bar a right of contribution.^' We recommend here, 
however, that such factors should be relevant to the court's exercise of its 
discretion concerning the quantum of contribution awarded. 

We wish to make one final comment on the proposed test to be applied 
by the court in contribution proceedings. As we indicated in chapter 1, 
section 2 of the present Negligence Act countenances a right to an "indem- 
nity"— that is, 100 percent contribution— in such proceedings. This result 
would, we believe, be all the more possible under the broader apportion- 
ment test proposed in this chapter, since the court would be given a 
relatively wide discretion to make a contribution award that is "just and 
equitable", having regard not simply to the fault of Dl and D2, but rather to 
their respective degrees of "responsibility". For example, while the fault 
principle alone might dictate at least some recovery for a particular concur- 
rent wrongdoer, it is envisaged that, under certain circumstances, that 
wrongdoer may quite appropriately be entitled to no award whatsoever 
where his responsibility for the loss far exceeds the very minimal degree of 
fauh attached to the conduct of the other wrongdoer. Accordingly, we 
recommend that, in determining the amount of responsibility of a concur- 
rent wrongdoer, the court should be entitled to find any degree of responsi- 
bility, including responsibility for none or all of the damage.^^ 



^^ Draft Act, s. 9(1). 

''^ Ibid., s. 9(3). 

^0 Ibid., s. 22. 

^' Supra, ch. 4, sees. 3(a)(v) and 3(b)(iv)a. 

^2 Draft Act, s. 9(2). 



198 

Recommendations 

The Commission makes the following recommendations: 

1. Where contribution is sought on the basis of a full settlement made 
between the injured person and the claimant, the contribution payable 
by the contributor should be calculated by reference to the value of the 
consideration given for the settlement, which the claimant must estab- 
lish it was in all the circumstances reasonable for her to give. If the 
claimant does not estabUsh that the consideration actually given was 
reasonable, the contribution payable by the contributor should be 
based on the court's determination of the value of the consideration 
that it would have been reasonable for the claimant to have given. 

2. Where the claimant for contribution has settled the injured person's 
claim by performing services or delivering goods, the court in contribu- 
tion proceedings should be required to value these in order to deter- 
mine whether the claimant has settled for a reasonable amount. 

3. If a wrongdoer has settled the injured person's claim against him in such 
a way that the injured person may proceed against those concurrently 
liable with the settling wrongdoer, the contributable sum should be 
calculated in the way described above, but, 

(a) if a claim for contribution is made by or against the settling 
wrongdoer by a third party claim incidental to an action brought 
by the injured person against a concurrent wrongdoer, the contri- 
butable sum should be the amount of their common liability as 
determined by the court in that action; and 

(b) if the non-settling wrongdoer is sued by the injured person, and 
subsequently claims contribution from the settling wrongdoer in 
an independent action, the contributable sum should be the 
amount of the common liability as determined by the court in that 
action. 

4. If the terms of the settlement provide for the performance of services or 
the delivery of goods, these should be required to be valued by the court 
in order to determine the amount of contribution recoverable. 

5. Where the injured person has obtained judgment against concurrent 
wrongdoers in separate proceedings and the damages of the injured 
person have been assessed differently, in a claim for contribution by one 
wrongdoer against another wrongdoer the court should be required to 
determine the sum to which the parties to the contribution claim shall 
contribute, without reference to the findings on damages in the earlier 
Utigation. 



199 



In determining contribution among concurrent wrongdoers, the court 
should disregard the fact that some other person, who is not a party to 
the contribution proceedings, might also be concurrently liable to the 
injured person. 

(1) The amount of contribution recoverable from a concurrent 
wrongdoer should be such as may be found by the court to be just 
and equitable, having regard to the degree of responsibility of each 
concurrent wrongdoer for the damage caused. 

(2) If it is not practicable for a court to make such an assessment, each 
should be determined to be equally responsible and liable to pay an 
equal amount by way of contribution. 

(3) The determination of the degree of responsibility attributable to 
each party to a claim for contribution should be regarded as a 
question of fact. 

(4) While the criminal nature of the wrongdoing, the fact that it was 
committed intentionally or that the damages paid by a defendant 
include a penal or punitive element, would not automatically bar a 
right of contribution (see chapter 4, Recommendation 1(2)), such 
factors should be relevant to the court's exercise of its discretion 
over the quantum of contribution awarded. 

(5) In determining the degree of responsibility of a concurrent wrong- 
doer, the court should be entitled to find any degree of responsi- 
bility, including responsibility for none or all of the damage. 



i 



1 



CHAPTER 9 



SOME PROCEDURAL 
ASPECTS OF 
CONTRIBUTION CLAIMS 



L INTRODUCTION 

In the previous chapters of this Report, we have considered the princi- 
pal substantive aspects of claims to contribution among persons from whom 
an injured person has a legal right to recover compensation for a single loss 
that he has sustained. Thus, we have examined the circumstances in which a 
claim for contribution may arise, the essential elements of the right, contri- 
bution claims made following a settlement with the injured person, defences 
that may be available to the person from whom contribution is sought, and 
the principles governing the quantification of the amount of contribution 
payable. In this chapter, we shall examine some procedural aspects of the 
enforcement of the right to contribution. 

We should point out that we do not propose to deal exhaustively with 
every provision of the Rules of Civil Procedure' that relate to contribution 
claims. For instance, a right to contribution based upon the concurrent 
liability of civil wrongdoers for a single loss will normally be asserted 
through a third party claim or, where the parties to a contribution claim are 
co-defendants to the main action brought by the injured person, by a 
crossclaim by one defendant against another. The procedures governing 
these kinds of proceeding have recently been exhaustively reviewed, and the 
product of that review is now to be found in the new Rules of Civil 
Procedure.^ It would be inappropriate for the Commission to re-examine 
the general features of the relevant procedures, even though claims for 
contribution among concurrent wrongdoers are likely to prove one of the 
most frequent kinds of claim to which these procedures will apply. 

The Commission has therefore tried to isolate, and to focus its attention 
upon, those aspects of civil procedure that appear to be unique, or virtually 
unique, to claims for contribution among wrongdoers. The three topics 
identified by the Commission as especially deserving of attention in this 
project are the rule in Cohen v. S. McCord& Co. Ltd.,^ the limitation period 



• Rules of Civil Procedure, O. Reg. 560/84. 

^ On third party claims, see, generally, Rules of Civil Procedure, ibid., R. 29. Rule 28 deals 
with crossclaims. 

^ [1944] O.R. 568, [1944] 4 D.L.R. 753 (C.A.). 

[201] 



202 



governing contribution claims, and the eariiest time at which an order for 
contribution may be executed. Of these, the first is likely to be the most 
controversial and important. 

2. PROCEEDINGS FOR CLAIMING CONTRIBUTION 

(a) The Present Law 

A claim for contribution by one concurrent wrongdoer against another 
may be made in a variety of procedural forms, the most important of which 
may be outlined briefly as follows. 

(i) Claims Against Co-Defendants 

When P has made Dl and D2 co-defendants, and Dl claims contribu- 
tion from D2, or Dl and D2 claim contribution for each other, under the 
Negligence Act^ the claim must now be made by way of a crossclaim, which 
must be included in the same document as the defence to the action.^ The 
Rules of Civil Procedure in this respect largely codify the previous case law, 
which had held that a claim for contribution under the Negligence Act made 
by one co-defendant against another should not generally be made by the 
issue of a third party notice.^ By making a crossclaim a necessary condition 
for the assertion of a claim for contribution under the Negligence Act, it may 
no longer be sufficient if the statement of defence, without expressly 
including a crossclaim, alleges facts that make it clear that the claimant is 
seeking to impute to a co-defendant responsibility for the plaintiff's loss, 
and is claiming contribution.^ 



^ Negligence Act, R.S.0. 1980, c. 315. 

^ Rules of Civil Procedure, supra, note 1, r. 28.01(2). 

^ Thompson v. The Toronto Transportation Commission, [1947] O.W.N 920 (Sen. Master 
S.C.O.); Samis v. Toronto Transit Commission, [1955] O.W.N. 523 (Sen. Master S.C.O.); 
Randall's Paints Ltd. v. Tanner, [1969] 2 O.R. 169 (H.C.J.); and Dominion Chain Co. 
Ltd. V. Eastern Construction Co. Ltd (1974), 3 O.R. (2d) 481 (H.C.J.), and (1976), 12 
O.R. (2d) 201 (C.A.), at 220, aff'd {sub nom. Giffels Associates Ltd. v. Eastern 
Construction Co. Ltd.) [1978] 2 S.C.R. 1346. 

For an exception, see Attorney-General of Ontario v. Kibrick (1974), 4 O.R. (2d) 
313 (C.A.), where the defendant was held to have properly issued a third party notice to 
a person who had been named as a co-defendant to the plaintiff's action, but upon 
whom the plaintiff had not served the writ. See, also. Slater Steel Industries Ltd. v. L C E. 
Combustion Systems Inc. (1984), 46 O.R. (2d) 45 (H.C.J.), where third party proceed- 
ings, commenced after the main action "had effectively died" as a result of separate 
settlements between the plaintiff and the tortfeasors, were held to be an appropriate 
procedure for a defendant to claim contribution from a co-defendant. 

See, generally, Cheifetz, Apportionment of Fault in Tort (1981), at 86-91. 

^ See, for example, Samis v. Toronto Transit Commission, supra, note 6, at 524, and Sgro 
V. Verbeek (1980), 28 O.R. (2d) 712, HI D.L.R. (3d) 479 (H.C.J.). 



203 



The justification for dispensing with the need for a third party notice 
had been found by the courts in the language of the Negligence Act. Thus, it 
was said that by requiring a court to determine the degree of fault of each of 
two or more persons found at fault, what is now section 2, by its very terms, 
imposed a liability to pay contribution or indemnity accordingly. Moreover, 
the power conferred by section 6 to permit another person to be added as 
party defendant or third party is expressly limited to situations where the 
person sought to be added is not already a party to the action. By implica- 
tion, therefore, the procedural step of issuing a third party notice was 
unnecessary where the person from whom contribution is claimed was 
already a party to the plaintiff's action. 

(ii) Claims Against a Plaintiff 

After some initial hesitation, the Court of Appeal in Crowder v. Gra- 
ham held that a defendant may claim contribution under the Negligence Act 
from a plaintiff in the action without the necessity of serving either a 
counterclaim or a third party notice.^ Contribution should normally be 
claimed in the statement of defence. There is authority for the proposition 
that the claim for contribution need not be expressly pleaded, provided that 
the statement of defence makes the substance of the allegation and claim 
clear, although a claimant for contribution who made his claim inferentially 
has been denied costs. ^ 

When contribution is sought against a plaintiff in a capacity other than 
that in which he is suing, it may be necessary to do so by a third party claim, 
or by adding the contributor as a defendant to the main action. For instance, 
in Emard v. Mason, ^^ the plaintiff sued the defendant under The Fatal 
Accidents Act,^^ but in order to claim contribution from the estate of the 
deceased, the defendant had to add the plaintiff as a defendant to the action 
in his capacity as administrator of the estate.'^ 



^ Crowder v. Graham, [1961] O.W.N. 320 (C.A.) effectively narrowed the scope of the 
statement in Carter and Carter v. Booth, [1956] O.W.N. 812, 6 D.L.R. (2d) 83 (C.A.) that 
contribution should generally be claimed by way of a third party notice. Equally suspect 
are cases in which it had been held that a counterclaim was the appropriate procedure 
for claiming contribution from a plaintiff. See, for example, Burslem v. The Toronto 
Transportation Commission, [1948] O.W.N. 369 (Sen. Master S.C.O.), and Heron and 
Heron v. Pearce, [1956] O.W.N. 65 (Sen. Master S.C.O.), at 68. 

^ Sgro V. Verbeek, supra, note 7. See, also, Durocher v. Tiffin, [1960] O.W.N. 185 (Master 
S.C.O.). 



10 



[1943] O.W.N. 378 (H.C.J.). 



^^ R.S.O. 1937, c. 210. 

^^ But see Crowder v. Graham, supra, note 8, where the plaintiff sued for damages on 
behalf of his injured child and in his personal capacity No third party notice was 
required in order to enable the defendant to claim contribution under the Negligence 
Act for a breach of the plaintiff's duty of care on the child's parent. Compare Arnold v. 
Teno, [1978] 2 S.C.R. 287, 83 D.L.R. (3d) 609. 



204 



Under rule 27.01 of the new Rules of Civil Procedure,'^ a defendant 
may assert a counterclaim against the plaintiff. The counterclaim must be 
included in the same document as the statement of defence, ^^ and is not now 
normally to be treated as an originating process. It should be noted that rule 
27.01 appears to be of general application and contains no specific exemp- 
tion for contribution claims made under the Negligence Act . It is possible, 
therefore, that Crowder v. Graham will no longer be followed. '^ 

(iii) Claiming Contribution by Adding a Party to the Action 

If the injured person has named only Dl as a defendant, and Dl believes 
that he may be entitled to contribution from another whose wrongful 
conduct was also a cause of the loss for which P is suing Dl, the normal 
method of asserting this claim is by way of a third party claim. '^ Alterna- 
tively, a person who may be liable for contribution, but who was not initially 
made a defendant to the plaintiff's action, may be joined subsequently as a 
party defendant. 

The relevant statutory provision is section 6 of the Negligence Act, 
which states: 

6. Wherever it appears that a person not already a party to an action is or 
may be wholly or partly responsible for the damages claimed, such person may 
be added as a party defendant to the action upon such terms as are deemed just 
or may be made a third party to the action in the manner prescribed by the rules 
of practice for adding third parties. 

In its original form, this provision applied only to the addition of 
another as a party defendant, and not as a third party. ^^ Nonetheless, in 
Sauriol v. Summers, ^"^ the Court of Appeal concluded, though neither 
unanimously nor unhesitatingly, that a defendant could bring in another as 

See, also, Peter v. Anchor Transit Ltd. (1979), 100 D.L.R. (3d) 37, [1979] 4 W.W.R. 
150 (B.C.C.A.), where PI, an infant, and P2, his father, sued D for an injury suffered by 
PI. D's defence was that P2 and Pi's mother were partly responsible for the accident. It 
was held that a third party notice was required for the claim for contribution against the 
mother, who was not a party, but not against P2. 

'^ Supra, note 1. 

''^ Ibid., r. 27.02. 

^^ Note, too, that under r. 27.01(2), a defendant who is counterclaiming is permitted to join 
as a defendant a person who is not a party to the main action. In this connection, see, 
also, r. 27.03. 

^^ When the tortfeasors are liable for distinguishable parts of the plaintiff's loss, the service 
of a third party notice claiming contribution is inappropriate: Katzman v. Yaeck (1981), 
33 O.R. (2d) 597, 125 D.L.R. (3d) 270 (H.C.J.). This decision was reversed on appeal on 
the ground that the third party may have been concurrently liable with the defendant for 
a part of the plaintiff's injuries: (1982), 37 O.R. (2d) 500, 136 D.L.R. (3d) 536 (C.A.). 



17 



The Negligence Act, 1930, S.O. 1930, c. 27, s. 6. 



^^ [1939] O.R. 253, [1939] 2 D.L.R. 297 (C.A.). 



205 



a third party, even though a settlement made between the plaintiff and the 
proposed third party had rendered the third party immune from a successful 
suit by P. The Court held that the machinery provided in the Act for the 
assertion of contribution claims between co-defendants was not clearly 
intended to be the sole procedural mechanism for enforcing the substantive 
right. An amendment to The Negligence Act in 1939'^ expressly provided for 
the issue of a third party notice in such a case, and thus gave a more solid 
foundation to the result reached in Sauriol. 

Despite the breadth of the language of section 6, the courts have 
regularly held that a person may not be added as a party defendant at the 
instance of the defendant when the plaintiff objects. More explicit language 
would be needed to exclude the common law principle that the plaintiff is 
dominus litis and cannot be forced to sue a party against whom he chooses 
not to proceed.^^ Whether this is an absolute rule or merely a general 
principle to which there may be exceptions seems not to be a question of 
much moment, given the consistency with which courts have refused to 
depart from it. The only discordant note of any significance was struck by 
Rose C.J.H.C. in Colville Cartage Co. Ltd. v. Smith Transport Ltd.,^^ where 
he stated that, in the interests of procedural simplicity, persons not sued by 
the plaintiff should normally be brought in at the instance of the defendants 
as parties defendant and not third parties, where the sole purpose was to 
enable the defendant to obtain contribution. In the event, however, the 
Court did not disturb the decision below to add the respondents as third 
parties; moreover, this was a case in which the plaintiffs were indifferent to 
the capacity in which those served were brought into the action. 

In order to add as a third party a person not sued by the plaintiff, the 
defendant must show only that the proposed third party is or may be 
responsible for the plaintiff's loss. A motion to strike out the addition of a 
third party is not the appropriate vehicle for deciding a difficult question of 
law upon which the primary liability of the third party may depend.-^ The 
inability of the defendant to institute proceedings for contribution other 
than through the third party procedure makes it particularly appropriate 
that third party notices should not be lightly refused or set aside.^^ While a 
person not named as a defendant by the plaintiff may not subsequently be 



19 



The Statute Law Amendment Act, 1939, S.O. 1939, c. 47, s. 23. 



20 Timmins v. Taggart Services Ltd., [1940] O.W.N. 140, [1940] 4 D.L.R. 285 (H.C.J.); 
Carter and Carter v. Booth, supra, note 8; and Krezanowski v. Scarborough, [1961] 
O.W.N. 315 (Sen. Master S.C.O.). 



21 



[1944] O.W.N. 527 (H.C.J.), at 530. 



22 Healy v. Runny mede Iron and Steel Co. , [1941] O.R. 133, [1941] 3 D.L.R. 325 (C.A.). See, 
also, the decision of the Court of Appeal in Katzman v. Yaeck, supra, note 16. For an 
unsatisfactory decision to the contrary, see Cameron v. The Corp. of the City of Glasgow, 
[1936] S.C. 26, [1936] 2 All E.R. 173 (H.L.); this decision is criticized by Williams, Joint 
Tortfeasors and Contributory Negligence (1951), at 181-82, and is specifically overturned 
by the Irish Civil Liability Act, 1961, No. 41, s. 27(3). 

23 Paul Papp Ltd v. Fitzpatrick, [1967] 1 O.R. 565 (C.A.), at 570. 



206 



joined as a party defendant if it is clear that the plaintiff cannot successfully 
sue him to judgment, as we have seen he can nonetheless be added as a third 
party. ^"^ 

An application to add a party under section 6 of the Negligence Act 
should not be made until the applicant has filed a statement of defence.^^ A 
third party notice may be served not only by the original defendant to the 
plaintiff's action, but also by a plaintiff against whom the defendant has 
claimed contribution.^^ Moreover, the third party may serve a notice upon 
other persons, whether or not they were parties to the original action, thus 
making them, in effect, fourth parties.^^ Fourth parties may also bring in 
fifth parties, and so on. 

In addition to disputing his own liability to the defendant on the 
contribution claim, the third party may raise any defence available to the 
defendant against the claim made by the plaintiff.^^ For if the defendant is 
held not liable to the plaintiff, that will effectively preclude any Uability of 
the third party to make contribution to the defendant. A third party who is 
permitted to defend the main action is bound by any order or determination 
made in it, as is a third party who does not deliver a statement of defence.-^^ 
The Rules of Civil Procedure now also permit a third party to counterclaim 
against the parties to the main action. ^^ 

(iv) Claiming Contribution in an Independent Action 

A defendant who has not been sued to judgment by the injured person 
may claim contribution in an independent action. The relevant provision of 
the Negligence Act is section 3, which states in part: 

3. A tort feasor may recover contribution or indemnity from any other tort 
feasor who is, or would if sued have been, liable in respect of the damage to any 
person suffering damage as a result of a tort by settling with the person suffering 



'^^ Sauriol v. Summers, supra, note 18. 

^^ Timmins v. Taggart Services Ltd. , supra, note 20, and Emard v. Mason, supra, note 10. 

2^ Judson V. Vasilaras and Town of Lindsay, [1971] 1 0.R. 290 (H.C.J.). 

^^ Toronto Asphalt Roofing Manufacturing Co. Ltd. v. Plate and Structural Steel Sales 
Lr^^., [1950JO.R. 335, [1950]D.L.R. 552 (C.A.), and Aetna Insurance Co. v.MojanLtee. 
(1979), 27 N.B.R. (2d) 356, 106 D.L.R. (3d) 286 (C.A.). 

^^ Rules of Civil Procedure, supra, note 1, r. 29.05(1). 

29 //7zV/.,r.29.05(2)(b)and(5). 

^^ Ibid., r. 27.10. However, an allegation by the third party that the defendant should be 
responsible for some or all of the plaintiff's loss will normally be made in the defence to 
the third party notice. Whether a counterclaim could be made by the third party against 
the plaintiff was previously unclear: Armak Chemicals Ltd. v. Canadian National 
Railway Co. (1980), 29 O.R. (2d) 259, 112 D.L.R. (2d) 560 (C.A.) (the Divisional Court 
judgment appears at 29 O.R. 260 and 112 D.L.R. (2d) 561). 



207 



such damage, and thereafter commencing or continuing action against such 
tort feasor 

The substantive aspects of the right to contribution available to or 
against a person who has settled the claim of the injured person have been 
discussed in chapter 5 of this Report. In this chapter, our concern is with the 
procedural implications of the section. In a number of respects, the courts 
appear to have been willing to give a generous interpretation to the scope of 
this provision. Two factors can be identified as contributing to this phenom- 
enon. First, the courts have been quick to support the policy underlying 
section 3, namely, that settlements should be encouraged by the law and that 
no unnecessary procedural barriers should be placed between the settling 
wrongdoer and other concurrent wrongdoers who have benefited from the 
settlement. Secondly, the consequences for a claimant of a court's decision 
that the machinery provided by section 3 is not available can be very serious, 
including the loss of an opportunity ever to be able to enforce the right to 
contribution. 

This latter point refers, of course, to the rule in Cohen v. S. McCord & 
Co. Ltd.^^ that a person who is sued to judgment must normally claim 
contribution within the action by joining the potential contributor (D2) as a 
party defendant or as a third party. It is not surprising, therefore, to discover 
a number of cases in which claimants have resorted to the section 3 
procedure in circumstances somewhat removed from the paradigm case of a 
prior settlement between the injured person and the claimant, which has 
made unnecessary the institution of litigation between them. 

For instance, in Kraft v. The Queen in right of the Province of Ontario, ^'^ 
section 3 was held to be the appropriate procedure for the assertion of a right 
to contribution by persons who were defendants to a negligence action that 
was brought in New York following a road accident in Ontario. The 
defendants to the contribution claim applied to have the action struck out 
on the ground that, since there had been no settlement between the parties 
to the New York litigation, nor any finding of liability made, the claimants 
had failed to establish that they had yet acquired any cause of action. It was 
conceded that the claimants could not obtain contribution in the New York 
proceedings. The Court held that the action was not premature and that a 
claim under section 3 was in order, "notwithstanding that the precise 
amount with respect to which relief is sought, has not been finally 
determined". ^^ Equally surprising is the fact that the Court was willing, 
without even adverting to the point, to conclude that section 3 was appropri- 
ate, even though it might be thought that a contribution claim based upon 
potential liability in a suit in a foreign court was not founded upon a 
"settlement" between the claimants and the injured persons. 



^' Supra, note 3. 

^2 [1972] 3 O.R. 684, 29 D.L.R. (3d) 275 (H.C.J.) (subsequent reference is to [1972] 3 
O.R.). 

^^ //7/W.,at687. 



208 



The question of the timing of a section 3 action has been considered 
more recently in Glass v. Avenue Dodge Chrysler}^ As a resuh of an 
automobile coUision, the injured party sued Dl for damages. The parties 
settled this claim, but before the settlement was made Dl instituted proceed- 
ings under section 3 against D2 for contribution. Dl alleged in this action 
that D2's negligence in repairing the brakes of Dl's car entitled Dl to 
contribution because D2 could have been sued by P, and, as between Dl and 
D2, D2 must bear at least a share of the responsibility. D2 moved that Dl's 
statement of claim should be struck out as disclosing no cause of action: the 
wording of section 3 made it clear, it was argued, that proceedings could be 
instituted only after the claimant had settled with the injured person. The 
motion was disallowed on the ground that Dl's cause of action for contribu- 
tion arose when P sustained his injury, and that the provision in section 3 
governing the time at which the claim for contribution could be enforced 
was merely procedural. Since P and Dl did in fact settle, the learned judge 
refused to regard as fatal to Dl's action for contribution what was no more 
than a procedural irregularity that had not prejudiced D2. 

The Court's reasoning that Dl's cause of action arose at the date of the 
injury to P can be sustained on neither principle nor authority.^^ However, it 
is difficult to deny that the result is anything but satisfactory. One 
commentator^^ has sought to support the conclusion in Glass by reference 
to the wording of section 3, which speaks of Dl as "thereafter commencing 
or continuing action against such other tort feasor". The argument is that 
the word "continuing" must mean that the legislation contemplates the 
initiation of proceedings before the settlement is made. It is suggested, 
however, that a more plausible view is that the situation envisaged by the 
word "continuing" is one in which P has sued Dl and D2, or only Dl, with 
D2 brought in as a third party, and after a settlement between P and Dl, the 
action continues between Dl and D2 for the purpose of determining the 
issue of contribution.^^ The probable truth of the matter is that this question 
was not foreseen by the drafter of the legislation. 

If one ignores for the moment the precise wording of section 3, there 
would not be anything peculiar about permitting a claimant for contribu- 
tion to institute independent proceedings for contribution before making a 
settlement with the injured person. The fact that Dl has not yet agreed to pay 
a sum to P should no more bar a claim against D2 than the fact that Dl has 
not been held liable to P at the time he issues a third party notice to D2. Of 



3"* (1979), 26 O.R. (2d) 592, 10 C.C.L.T. 69 (Co. Ct). 
^^ See discussion infra, this ch., sec. 3(b). 
^^ Cheifetz, supra, note 6, at 156-57. 



37 



For an example of the use of s. 3 in this fact situation, see Slater Steel Industries Ltd. v. 
I.C.E. Combustion Systems Inc., supra, note 6, where third party proceedings, com- 
menced by one defendant against another after they had settled separately with the 
plaintiff, were held to be a permissible form of proceeding to assert a right of contribu- 
tion under s. 3 of the Negligence Act, supra, note 4. 



209 



course, a person who obtains an order for contribution is not thereby 
necessarily entitled to enforce it immediately.^^ 

One final point should be noted. It has been held that a consent 
judgment is a settlement within section 3.-^^ 

(v) The Rule in Cohen v, 5. McCord & Co, Ltd, 

Until comparatively recently, the Ontario Negligence Act has been 
interpreted as providing that a party who has been sued to judgment by P 
may claim contribution only within that action. "^^ If the contributor is a co- 
defendant, the claim must be made in the statement of defence; if the 
contributor is not joined as a co-defendant to the plaintiff's action, contri- 
bution must be sought by a third party claim. This rule was first established 
in Cohen v. S. McCord & Co. Ltd.,"^^ where P had sued Dl and D2. D2 and P 
then settled in the course of the trial. Counsel for Dl made no objection to 
this, stating that he did not intend to claim over against D2. The Court of 
Appeal dismissed a subsequent suit brought by Dl for contribution after he 
had been held liable to P. The Court reasoned that the Negligence Act , which 
at that time contained neither the current section 3 nor section 9,"^^ created 
both the substantive right of contribution among tortfeasors and provided a 
complete procedural code for its vindication. Thus, by virtue of section 2, 
contribution could be claimed in the proceeding in which Dl and D2 were 
held liable to P. If P sued only Dl, then the third party procedure expressly 
introduced into the Act in 1939"^^ was the exclusive method for claiming 
contribution, even though the wording of the statute was permissive, not 
mandatory. 

The rule established in this case has generally been accepted as the law 
in Ontario, and has been regarded as surviving the subsequent amendments 



^^ See infra, this ch., sec. 4. 

3^ Morello v. Henderson, [1959] O.W.N. 121 (H.C.J.). 

'*^ See, generally, Cheifetz, supra, note 6, at 79-86. 

'*' Supra, note 3. 

^^ Section 9 reads as follows: 



9. Where an action is commenced against a tort feasor or where a tort feasor 
settles with a person who has suffered damage as a result of a tort, within the 
period of limitation prescribed for the commencement of actions by any relevant 
statute, no proceedings for contribution or indemnity against another tort feasor 
are defeated by the operation of any statute limiting the time for the commence- 
ment of action against such other tort feasor provided, 

(a) such proceedings are commenced within one year of the date of the 
judgment in the action or the settlement, as the case may be; and 

(b) there has been compliance with any statute requiring notice of claim 
against such tort feasor. 



^^ See supra, note 19. 



210 



to the Negligence Act. The introduction of section 3, which allows Dl to 
institute proceedings for contribution following a settlement with P, even 
though he has not been held liable, might be thought to have removed one of 
the planks of the Court of Appeal's reasoning in Cohen v. S. McCord & Co. 
Ltd., namely, that contribution could only be claimed in proceedings in 
which the liabihty of Dl to P was determined. It was also argued in 
Rickwood V. The Town of Aylmer,^'^ the leading case decided after these 
amendments to the Negligence Act, that section 9, added after the decision 
in Cohen, '^^ was inconsistent with that decision, because it envisaged the 
institution of contribution proceedings at some time after Dl had been held 
liable to P. Rickwood, like Cohen itself, was a case in which the contribution 
claimant and the contributor were parties to the main action. The Court 
nonetheless held that the rule in Cohen v. S. McCord & Co. Ltd. should still 
be followed. The rule has also been applied when P sues only Dl."^^ 

Despite its application in a number of cases, the future of the rule in 
Cohen v. S. McCord & Co. Ltd. is now somewhat uncertain."^^ This is largely 
the result oi dicta in a judgment of the Supreme Court of Canada in The 
Queen v. Thomas Fuller Construction Co. (1958) Ltd. ,'^^ where the decision 
in Cohen was described as "unsatisfactory"."^^ It was also pointed out that 
the addition to the Negligence Act of section 3 has made it clear that section 
2 creates only a substantive right and does not determine the procedure by 
which it must be estabhshed. More recently, a judge of the High Court of 
Ontario has refused to follow Cohen v. S. McCord & Co. Ltd. , holding that 
section 9 clearly contemplates the possibility that contribution may be 
claimed in a separate action following a judgment in favour of the injured 
person against the claimant for contribution.^^ In this case, Dl had been 
refused an extension of time to serve a third party notice upon D2. Before 
the action between P and Dl had come to trial, Dl commenced an action for 
contribution against D2, which it was proposed should be tried with or 
immediately after P's action against Dl. D2's application to have Dl's action 
struck out was dismissed. 



"^ [1957] O.W.N. 243, 8 D.L.R. (2d) 702 (C.A.). 

^^ The Negligence Amendment Act. 1948, S.0. 1948, c. 61, s. 3. 

^ Paul Papp Ltd. v. Fitzgerald, supra, note 23. 

^"^ An editorial note to the D.L.R. report of Cohen v. S. McCord & Co. Ltd., at [1944] 4 
D.L.R, 754, doubts whether the result is a justifiable interpretation of the language of 
the Negligence Act . The additions of ss. 3 and 9 can only have increased those doubts. 

^^ The Queen v. Thomas Fuller Construction Co. (1958) Ltd, [1980] 1 S.C.R. 695, 106 
D.L.R. (3d) 193 (subsequent reference is to [1980] 1 S.C.R.). 

^^ Ibid., at 712. Pigeon J., writing for the majority, expressed grave reservations about the 
interpretation given to section 2 of the Negligence Act in Cohen v. 5*. McCord & Co. Ltd. 
Only in Ontario have the courts so interpreted the statute that creates a right of 
contribution among tortfeasors. Professor GJanville Williams has described the result in 
Cohen v. 5*. McCord & Co. Ltd. as "judicial legislation, based on very slender authority 
in the text of the Negligence Act": Williams, supra, note 22, at 185, n. 28. 

^^ Cristovao v. Doran's Beverages Inc. (1983), 40 O.R. (2d) 737, 143 D.L.R. (3d) 641 
(H.C.J.). 



211 



U Cohen v. S. McCordd Co. Ltd. is still the law in Ontario, there would 
seem to be at least one genuine exception to the rule that it establishes. If it is 
legally impossible for the primary rights and duties of the injured person and 
the defendants to be determined in the same proceeding as any contribution 
claim, the courts may allow the latter to be pursued in separate proceedings 
before the competent court. This possibility is created by the Federal Court 
Act,^^ which gives to the Federal Court exclusive jurisdiction over suits 
brought against the federal Crown, and concurrent jurisdiction over actions 
brought by the federal Crown and actions against servants and officers of the 
federal Crown. However, the Supreme Court of Canada, in a series of 
judgments, has taken a very narrow view of the constitutional power of 
Parliament to clothe the Federal Court with original jurisdiction. ^^ jhg 
result is that a perfectly ordinary claim for damages made against a number 
of defendants, which include the federal Crown, may potentially give rise to 
the following separate proceedings: (1) an action against the federal Crown 
that must be brought in the Federal Court; (2) an action against the other 
defendants that can only be brought in the appropriate court in a province; 
(3) a claim for contribution that must be made against the federal Crown in 
the Federal Court by any defendants held liable to the plaintiff; and (4) a 
claim for contribution in a provincial court by the federal Crown. ^^ 

In Bates v. Illerburn .^"^ Jessup J. A. was prepared to assume that Cohen 
V. S. McCord & Co. Ltd. did not bar a right to contribution that, by virtue of 
the Federal Court Act and the constitutional limits upon the Federal Court's 
jurisdiction, it was impossible to pursue in the main action. As we have seen, 
in Kraft v. The Queen in right of the Province of Ontario, ^^ the Court treated 
a claim for contribution that could not be pursued in the main action before 
a foreign court as falling within section 3 of the Negligence Act . It is unclear 
whether the courts would be prepared to extend this reasoning to a situation 
where it was impossible, as a matter of practicality, for the claimant for 
contribution to issue a third party notice, because, for instance, he could not 
have known at the time when he was sued by P that there was another 
wrongdoer. 

(b) Alternatives for Reform 

Of the procedural aspects of contribution claims outlined above, the 
only one that the Commission considers should be reviewed is the rule in 
Cohen v. S. McCord & Co. Ltd. In other respects, the procedure appears to 
have attracted little criticism, and raises procedural questions that are by no 
means confined to claims for contribution among wrongdoers. In any 



^' S.C. 1970-71-72, c. 1, s. 17. See supra, ch. 2, sec. 4(a). 

^2 See Evans, "Federal Jurisdiction: A Lamentable Situation" (1981), 59 Can. B. Rev. 124. 

^^ But see discussion suprq, ch. 2, note 97. 

^"^ (1976), 12 O.R. (2d) 721, at 725, 70 D.L.R. (3d) 154 (C.A.). 

^^ Supra, note 32. 



212 



event, as we have indicated, the general principles governing third party 
claims, crossclaims, and counterclaims have recently been the subject of 
extensive revision, and it would obviously be inappropriate to re-examine 
them as part of this project. 

The principal procedural question relating to contribution among 
wrongdoers that is considered in this Report is whether the law of Ontario 
should prohibit a person who has been successfully sued to judgment by the 
injured person from claiming contribution in an independent action com- 
menced outside the proceeding in which he has been held liable to the 
plaintiff. It has been noted that it is not altogether clear whether the 
interpretation of the Negligence Act adopted in Cohen v. S. McCord & Co. 
Ltd. is still good law. Even if the policy underlying that decision is to be 
retained, we believe that the Commission's proposed new Contribution and 
Comparative Fault Act^^ should deal with the point expressly. It is also 
possible that the extension of the right to contribution beyond concurrent 
tortfeasors may produce fact situations in which it will be more difficult 
than is currently the case under the Negligence Act for the contribution 
claimant to ascertain the existence of a concurrent wrongdoer. The changes 
in the law recommended in this Report may increase the occasions on 
which it would be unjust to require the claimant for contribution to pursue 
his claim within the main action brought by the injured person. 

There are three principal approaches to reform that should be consid- 
ered in this area. First, the proposed statutory reform of contribution among 
wrongdoers could include a provision to the effect that, as a general 
principle, any right to contribution against a concurrent wrongdoer follow- 
ing judicial determination of Dl's liability to P must be made in the course of 
the proceeding brought by P against the contribution claimant (Dl). How- 
ever, an independent action for contribution could be brought where the 
court in which P sued Dl had no jurisdiction to determine a claim for 
contribution by Dl against D2, or following a settlement between P and Dl, 
whether or not the settlement was embodied in a consent judgment. This 
would, in effect, be a statutory codification and generalization of the rule in 
Cohen v. S. McCord & Co. Ltd. , but it would also remove any doubt that the 
rule does represent Ontario law. A reform of this kind would also make it 
clear that a person should not be deprived of the right to contribution by 
virtue of his having been sued by the plaintiff in a forum where it was legally 
impossible to claim contribution within the principal proceeding. 

The advantages of a reform of this nature are as follows. First, it avoids 
the difficulties and inconveniences of permitting many of the same issues to 
be litigated and relitigated in separate proceedings. Multiple litigation, with 
the possibility of inconsistent verdicts, is wasteful of court resources, costly 
for the parties, and likely to result in substantial delays. Secondly, it clarifies 
the present law and gives it a firmer statutory foundation. Thirdly, it 
eliminates the possibility that the present law may have the effect of 



56 



The proposed new legislation appears as an Appendix of this Report. 



213 



destroying a right to contribution where P sues Dl in a forum that cannot 
determine the question of contribution. Fourthly, by preventing Dl from 
claiming contribution from D2 after Dl has been sued by P, this proposed 
reform reduces the hkeUhood that D2 may have to pay contribution after 
the expiry of the period within which P must proceed against D2. Fifthly, it 
puts into statutory form a legal rule already familiar to Ontario practition- 
ers, and one that appears in practice to cause few injustices. 

The important question is whether the undoubted benefits that flow 
from minimizing the number of legal proceedings that can arise from a 
single loss suffered by the plaintiff are being purchased at too high a price. As 
indicated, the situations in which it would be unfair to deny Dl the right to 
bring an independent action for contribution may increase with the expan- 
sion of rights to contribution among concurrent tortfeasors, contract break- 
ers, and those in breach of fiduciary duties. Thus, the fact that the plaintiff 
could have sued D2 in respect of the loss for which he has sued Dl may not 
be apparent to Dl until after he has been held liable to P. 

A second approach, which has been followed in some jurisdictions, 
would be to adopt Cohen v. S. McCord & Co. Ltd. as the basic rule, but to 
soften its impact by conferring upon the court a discretion to permit the 
claim to proceed by way of an independent action. For example, section 
27(1) of the Irish Civil Liability Act, 196P^ provides that where Dl and D2 
are sued in a single proceeding by P, they may claim contribution only in 
that action. Where D2 has not been joined by P, Dl must claim contribution 
by serving a third party notice "as soon as is reasonably possible". If no third 
party notice is served, the court in its discretion may refuse to make an order 
for contribution. 

The Irish legislation gives no indication of the scope of the judicial 
discretion to refuse to award contribution where no third party notice has 
been served, nor the grounds upon which it may be exercised. However, 
Professor Williams, upon whose draft legislation the Irish statute is largely 
based, has stated that an independent action should be permitted only 
where it is impossible, as a practical matter, for the third party notice to be 
served.^^ Section 2(4)(b) of the South African Apportionment of Damages 
Act, 1956^^ indicates more clearly that claims for contribution by way of an 
independent action are to be very much the exception to the general rule: it 
provides that rights of contribution against persons who are not co-defen- 
dants shall be made by third party notice, "except with the leave of the court 
on good cause shown as to why notice was not given". 

The advantage of an approach along these lines is that it attempts to 
preserve the benefits of Cohen v. S. McCord & Co. Ltd. , while, at the same 



^^ Supra, note 22. 

5^ Williams, supra, note 22, at 185-86. 

^^ 1956S.S.A., No. 34. 



214 



time, permitting a court to mitigate the rule's Draconian consequences in 
cases where the contribution claimant would otherwise be denied an effec- 
tive opportunity to assert his right. The difficulty is to find a verbal formula 
that prevents the exceptions from eroding the basic rule. In addition, to 
confer upon the courts an inadequately structured discretion, exercisable on 
a case-by-case basis, might introduce an unwarranted degree of uncertainty 
into the law. 



A third option is to abolish the rule in Cohen v. S. McCord & Co. Ltd. , 
and allow the contribution claimant to elect to pursue his claim either 
within the main action or by an independent proceeding after he has been 
held liable to the injured person. Unnecessary multiple litigation could be 
discouraged by the imposition of a costs sanction upon a person who is 
unable to satisfy the court that he had good cause for claiming contribution 
in a separate proceeding. 

Most jurisdictions, including some in which the matter has been 
reconsidered recently, impose no restriction upon the claimant's ability to 
seek contribution outside and subsequent to the main action. Section 4(a) of 
the American Uniform Comparative Fault Act^^ specifically allows a right 
to contribution to be enforced in the original action by the injured person, 
"or by a separate action brought for that purpose". In addition, the English 
Law Commission was satisfied with the broad framework of the Law 
Reform (Married Women and Tortfeasors) Act, 1935^^ and recommended 
no procedural changes.^^ Contribution, in English law, may be recovered 
from a concurrent wrongdoer either within the main action or in a separate 
proceeding. 

The procedural issue under consideration has been specifically 
addressed by the Alberta Institute of Law Research and Reform, which has 
recommended against the adoption of the rule in Cohen v. S. McCord & Co. 
Ltd.^^ The reason given in the Institute's Report is that the undoubted 
advantages of ensuring that all the issues arising out of a single loss suffered 
by the injured person are determined in one piece of litigation, the outcome 
of which would bind all parties, are outweighed by the disadvantages of 
forcing defendants unnecessarily to add potential contributors as third 
parties. This, it is argued, would be likely to complicate unduly the prosecu- 
tion of P's claim in what might otherwise be a straightforward case.^^ It 

^^ National Conference of Commissioners on Uniform State Laws, Uniform Comparative 
Fault Act, Uniform Laws Annotated, Vol. 12 (1987 Pocket Part). 

^' C. 30 (U.K.). 

^^ The Law Commission, Law of Contract: Report on Contribution, Law Com. No. 79 
(1977),para. 31, atlO. 

^^ Alberta, Institute of Law Research and Reform, Contributory Negligence and Concur- 
rent Wrongdoers, Report No. 31 (1979) (hereinafter referred to as "Alberta Report"), 
Recommendation 16, at 74. 

^^ For a similar view, see Weir, 11 Int'l Enc. Comp. L. XI Torts (1983), ch. 12 (Complex 
Liabilities), at 76-77. 



215 



should be noted that the Uniform Contributory Fault Act, adopted by the 
Uniform Law Conference of Canada,^^ is silent on the issue. It may be 
inferred from this either that the Uniform Law Conference agreed with the 
Alberta Institute, or that the imposition of procedural restrictions upon the 
pursuit of a claim for contribution is regarded as a matter of individual 
choice for the provinces that adopt the uniform statute. 

There are some advantages in abolishing the rule in Cohen v. S. McCord 
& Co. Ltd., with or without a costs sanction. First, as the Alberta Institute 
has suggested, it would minimize the risk that the question of the secondary 
right of contribution would prejudice the vindication by the injured person 
of his primary right to obtain compensation from the defendant against 
whom he has chosen to institute proceedings. Secondly, it would avoid the 
unattractive possibility that Dl's substantive right may be barred by a rigid 
procedural rule, or be made subject to the exercise of judicial discretion. 

In attempting to assess the weight that should be attached to these 
arguments it ought to be borne in mind that adding a third party does not 
necessarily prejudice the plaintiff. The secondary rights and liabilities of Dl 
and D2 can often be determined when the issues in the main action have 
been decided, after which P, in effect, drops out of the picture. However, if 
the court rules that it is appropriate for the third party to defend against P's 
claim in the main action, the addition of the third party may well complicate 
P's action: to this extent, P's ability freely to choose his defendant will be 
limited. It is arguable that the plaintiff's interest in being able to select the 
defendant against whom he will proceed is adequately protected by his 
ability to prevent from being joined as a co-defendant to the main action a 
person whom a defendant wishes to be brought in as a party-defendant. 

(c) Conclusions 

The Commission is satisfied that the benefits of eliminating multiple 
proceedings are sufficiently clear that it is justifiable to impose more than a 
costs sanction to encourage parties to claim contribution within the main 
action.^^ We recommend, therefore, that where the contribution claimant 
and the contributor are parties to the injured person's action, contribution 
should be claimed by way of a crossclaim in that action in accordance with 
the relevant provisions of the Rules of Civil Procedure.^^ No subsequent 
claim for contribution outside the action should be permitted, except where 
the court that determines the liability to P of Dl and D2 has no jurisdiction 



^^ Uniform Law Conference of Canada, Proceedings of the Sixty-Sixth Annual Meeting 
(1984), Appendix F; Uniform Contributory Fault Act. 

^^ For an example of judicial approval of Cohen v. S. McCord & Co. Ltd. in a jurisdiction 
where this is not the law, see Ingli.s Ltd. v. South Shore Sales and Service Ltd. (1979), 31 
N.S.R. (2d) 541, at 557-59, 1 1 C.P.C. 127 (S.C, App. Div.). 

^^ Supra, note 1. See the Commission's proposed Contribution and Comparative Fault Act 
(hereinafter referred to as "Draft Act"), s. 19(1). The Draft Act appears as an Appendix 
of this Report. 



216 



to award contribution.^^ When the contributor is not a party to the action, 
contribution should normally be claimed only by way of a third party 
claim.^^ Again, this rule should be subject to the proviso that Dl should be 
able to claim contribution in a separate action, after he has been held liable 
to P, where the court before which P's action is instituted cannot in law 
award contribution.^^ 

More difficult is the question whether a further exception should be 
made to cover cases where the contribution claimant could, as a matter of 
law, have served a third party notice and had the issue of contribution 
decided on its merits, but where it was impracticable for him to have done 
so. On balance, the Commission favours broadening the scope of the 
exception beyond cases where it is legally impossible to claim contribution 
within the main action. Admittedly, under the present law, there will be few 
situations in which it will be impractical for a defendant to institute a claim 
for contribution by way of a third party claim. He will normally be aware at 
some time before the conclusion of the plaintiff's action that another person 
may be concurrently Uable for the plaintiff's loss. In cases where the 
defendant does not know the whereabouts of such a person, substitutional 
service is available. ^^ Nonetheless, there is much to be said for enabling the 
defendant to claim contribution in an independent action in cases where 
proceeding by way of a third party claim is impracticable, especially since 
expanding the scope of the right of contribution may increase the incidence 
of situations where to deny the contribution claimant this remedy would 
effectively negate his substantive right. 

The Commission recommends, therefore, that a person should be able 
to claim contribution in a separate proceeding, after being held liable to the 
plaintiff, provided that the person from whom contribution is claimed was 
not a party to the plaintiff's action in which the claimant was held liable and 
that it was impracticable for him to have pursued the claim by way of a third 
party notice.^^ 

Finally, it should be noted that, under section 3 of the Negligence Act, a 
defendant who has settled with the injured person may claim contribution 
from another concurrent wrongdoer in an independent action. ^^ Moreover, 
the bar upon claiming contribution in an independent action appears not to 
apply to a consent judgment against Dl in favour of P. Consent judgments 
are treated for this purpose as settlements, and give rise to a claim for 



^^ Draft Act, s. 19(3). 
^^ Ibid., s. 19(2). 
^^ Ibid., s. 19(3). 

71 

See Rules of Civil Procedure, supra, note 1, r. 16.04. On service outside the junsdiction, 
see R. 17. 

^2 Draft Act, s. 19(3). 

^^ See supra, this ch., sec. 2(a)(iv). 



217 



contribution under section 3 of the Negligence Act J ^ However, if Dl has 
been sued to judgment by P, Dl cannot later claim contribution from D2, a 
co-defendant, who settled P's claim in the course of the trial: this was the fact 
situation in Cohen v. S. McCord & Co. Ltd. itself. 

The Commission recommends that, as is the case under the Negligence 
Act, a person whose right to contribution is based upon a settlement of the 
injured person's claim should continue to be entitled to institute an inde- 
pendent action for contribution against a person who is or may be con- 
currently liable for the loss to which the settlement relates. Moreover, for 
example, where P sues Dl and D2 (or D2 is added as a third party), Dl 
immediately institutes contribution proceedings against D2, and then Dl 
settles with P, Dl should be entitled, as he now is under the Negligence Act, Xo 
continue the proceedings for contribution against D2. It is further recom- 
mended that consent judgments should continue to be treated as if they were 
court-approved settlements for the purpose of making a claim for contribu- 
tion, on the ground that it would be arbitrary to make the procedural 
consequences of a settlement depend upon the often fortuitous fact of 
whether or not its terms were embodied in a formal judgment.^^ 

3. CONTRIBUTION CLAIMS AND LIMITATION PERIODS 

(a) Introduction 

The question considered in this part of the chapter is whether a special 
limitation period within which a claim for contribution must be made 
against a concurrent wrongdoer should be recommended, and, if it should, 
what its duration ought to be. It is important at the outset to emphasize the 
comparatively narrow scope of the issue under consideration and to distin- 
guish it from other aspects of the expiry of limitation periods. In chapter 7 of 
this Report, the Commission examined the question whether Dl's right to 
contribution should be prevented from arising by the fact that, when P 
instituted proceedings against or settled with Dl, P's cause of action against 
D2 had become barred by the lapse of time. It will be recalled that the 
Commission concluded that it would be unjust to allow Dl's ability to 
obtain contribution to be thwarted by P's failure to press his claim against 
Dl before D2's liability to P had ceased to be enforceable by virtue of the 
expiry of a limitation period. ^^ It is also relevant to note that, under the 
recommendation made in the previous section of this chapter, when Dl is 
sued by P, he must normally claim contribution within or incidentally to the 
action, either by way of a crossclaim or a third party claim. 



''^ Morello v. Henderson, supra, note 39, and Glass v. Avenue Dodge Chrysler, supra, note 
34. 

^5 Draft Act, s. 17(1). 

^^ See supra, ch. 7, sec. 2(c). 



218 



There would, therefore, be relatively few situations in which a question 
could arise about the limitation period governing the contribution claim 
itself However, it will be important to know the period within which a right 
to contribution must be enforced when the claim for contribution is made 
following a settlement between the injured person and the claimant for 
contribution, and in those rare situations when a claim for contribution that 
is based upon a judgment given in favour of the injured person against the 
claimant for contribution can be asserted subsequently by way of an 
independent action. 

(b) The Present Law 

Neither the Negligence Act nor the Limitations Ac f^ expressly specifies 
the period within which a claim for contribution must be made. The better 
view appears to be that an action for contribution must be brought within 
six years of the date when the cause of action accrued.^^ In George Wimpey 
& Co. Ltd. V. British Overseas Airways Corp.,'^^ Viscount Simonds was 
prepared to assume that, for limitations purposes, the claim should be 
treated as one for breach of contract. The reasoning supporting this view is 
that contribution is the equitable equivalent of the common law action of 
indebitatus assumpsit, and is similar to the common law money count for 
money paid by a person to another's use.^^ Historically, the common law 
counts were classified as ^w^5/-contractual.^* If this is the correct characteri- 
zation of contribution among wrongdoers, the relevant provision in the 
Ontario Limitations Act would be section 45(l)(g), which also prescribes a 
six year limitation period for actions for simple contracts or debts founded 
upon contract. 

The matter cannot, however, be regarded as completely free from 
doubt. The propriety of regarding even the common law money counts as 
being "contractual" in any real sense is no longer accepted in Canada.^^ It is 
even more questionable to extend this dubious reasoning to a statutory right 
derived from an equitable principle, albeit one that can be brought under the 
same broad umbrella of restitution that also shelters the action for money 
paid. It might thus be suggested that the relevant provision in the Limita- 
tions Act is section 45(l)(h); this provides a limitation period of two years 
within which ""an action for a penalty, damages, or a sum of money given by 
any statute to.. .the party aggrieved. . ." must be enforced. There is some 



^^ R.S.0. 1980, c. 240. 

'^^ See, for example, Black v. Horseman (1974), 4 O.R. (2d) 188 (H.C.J.), at 194. 

^^ [1955JA.C. 169(H.L.),atl77. 

For a recent judicial recognition of this similarity, see Ronex Properties Ltd. v. John 
Laing Construction Ltd., [19831 Q-B. 398, at 407, [1982] 3 All E.R. 961 (C.A.). 

^' Goff and Jones, The Law of Restitution (2d ed., 1978), at 5-11. 

^2 Fridman and McLeod, Restitution (1982), at 29-30. 



219 



weak authority to this effect.^^ It is hardly surprising that the question has 
rarely arisen in Ontario; the reason, of course, is that Cohen v. S. McCord& 
Co. Ltd. has ensured that most claims for contribution are made before the 
liability of Dl to P has been determined in litigation. 

Section 9 is the one provision of the Negligence Act that has a direct 
bearing upon the time within which claims for contribution must be made. 
This, it will be recalled, has been held to enable a claim for contribution to be 
made against a concurrent tortfeasor who had ceased to be liable by the time 
the injured person commenced proceedings against or settled with Dl.^"^ 
However, the section restricts the claimant's right to contribution by provid- 
ing that the claim must be made within a year of the judgment in P's favour 
against Dl or of the settlement between P and Dl. In addition, there must 
have been compliance with any statutory requirement respecting the service 
of notice of P's claim against D2. These provisions give a very limited and 
somewhat arbitrary degree of protection to D2 from claims for contribution 
made long after his liability to P has expired. 

An important aspect of the description of any limitation period is the 
point in time from which it starts to run. Although there are some aberrant 
decisions,^^ the clear weight of authority supports the proposition that the 
right to contribution arises at the date of the judgment in P's favour against 
Dl or, where Dl's claim is based upon a settlement, the date when the 
settlement was made.^^ A claim for contribution, even when made by way of 
a third party claim within the main action, has been recognized in other 
contexts as having an existence that is independent of P's cause of action.^^ 
The limitation period governing the contribution claim will, therefore, start 
to run from the event giving rise to the right to contribution in a given case; 
it does not commence when the injured person's cause of action accrued 
against the wrongdoer who is seeking contribution. 

The reason why the limitation period governing Dl's right to contribu- 
tion commences at one of the two points indicated above is that the right is 
based upon the conferral upon D2 by Dl of a benefit that takes the form of 



^^ Sherritt v. Thorold Concrete Block Co. , [1954] O.W.N. 535 (C.A.), and Schwella v. The 
Queen, [1957] Ex. C.R. 226. 

^^ See supra, ch. 7, sec. 2(a). Section 9 is reproduced supra, note 42. 

^^ See, for example, Glass v. Avenue Dodge Chrysler, supra, note 34. 

^^ Cheifetz, supra, note 6, at 76-77. See, also, Cristovao v. Doran's Beverages Inc., supra, 
note 50. 

^^ The Queen v. Thomas Fuller Construction Co. (1958) Ltd. , supra, note 48. See, however, 
Dorland v. Apollo Leasing Ltd (1981), 33 O.R. (2d) 183 (Div. Ct.), where a third party 
claim by the defendant against a municipality was held to deny the plaintiff a right to a 
trial by jury of the main action. The municipality would be bound at least by the 
assessment of damages in the plaintiff's action, and the Judicature Act, R.S.O. 1980, 
c. 223, s. 58 (repealed by the Courts of Justice Act, 1984, S.O. 1984, c. 11, s. 187(1)) 
provides that certain actions against municipalities shall be tried without a jury (see, 
nov/. Courts of Justice Act. 1984, s. 121(2)12). 



220 



discharging or reducing D2's liability to P. Nonetheless, there are objections 
to pursuing this reasoning to its logical conclusion in the context of periods 
of limitation, because, particularly where the limitation period is a lengthy 
one, the effect may be to extend unduly the length of time for which D2 
remains liable to a claim that will depend, in part at least, upon events for 
which he may have ceased to be liable some considerable time previously. 

Suppose, for example, that P has suffered a single loss as a result of 
breaches of separate contracts by Dl and D2. P has six years from the breach 
within which to press his claim against them. One day before the period 
expires, Dl settles P's claim in full. If Dl's right to seek contribution from D2 
is regarded as a truly independent cause of action springing from his 
settlement with P, then Dl may arguably delay a further six years less one 
day before commencing proceedings for contribution. It may seem at least 
questionable whether D2 should remain potentially liable for almost twelve 
years from the time that P's cause of action against him for an alleged breach 
of contract arose. The problem is aggravated, of course, if D2's liability to P 
had expired before Dl settled with P or before P obtained a judgment against 
him. 

(c) Alternatives for Reform 

Several approaches to reform are possible in respect of the limitation 
period governing contribution claims. One alternative is to recommend that 
any statutory reform of the law relating to contribution among concurrent 
wrongdoers should not contain any provisions dealing with the time within 
which Dl must claim contribution. Despite the uncertainty in the present 
law about the limitation period applicable to claims of this kind, and the 
potential for causing an injustice to D2, who must remain ready to defend a 
claim long after he has ceased to be liable to P, it could be argued that this is 
a problem that ought to be left to be considered within the context of a 
general reform of limitation periods. Moreover, there is little evidence to 
suggest that the theoretical disadvantages of the present law are any more 
than exactly that: in practice, neither injured plaintiffs nor claimants for 
contribution generally delay the institution of the legal proceedings neces- 
sary to assert their rights. 

Against this position it can be argued that, given the uncertain nature of 
the present law on a point of particular relevance to contribution among 
wrongdoers, it is appropriate that it should at least be clarified by legislation. 
Reform of the law of limitations in Ontario has been under consideration 
for some time, and there is no reason why the aspect relevant to this Report 
should not be settled now.^^ 



^^ Neither the Ontario Law Reform Commission's Report on Limitation of Actions (1969), 
nor the draft Limitations Act proposed in Discussion Paper on the Proposed Limitations 
Act (1911), issued by the Ministry of the Attorney General, nor the former proposed 
Limitations Act. 1983, Bill 160, 1983 (3d Sess. 32d Legis.), which did not proceed beyond 
1st Reading, deals specifically with this issue. Claims for contribution would generally 



221 



If it is desirable to include in the proposed statute a limitation period 
specifically governing claims for contribution among wrongdoers, a second 
approach would be to adopt a single length of time that would apply to all 
such claims. While the selection of a limitation period is always somewhat 
arbitrary, to establish a uniform limitation period would have the great 
merits of clarity and simplicity. 

As indicated, the present law probably provides that, except for claims 
for contribution governed by section 9 of the Negligence Act, Dl has six 
years from the date either that judgment was entered against him, or that he 
settled with P, in which to institute proceedings for contribution. This seems 
unduly long, especially when it is recalled that the claim could involve 
disputed events that happened nearly twelve years before contribution is 
claimed, and that D2 may have ceased some time before to be capable of 
being sued successfully by P. 

The English Civil Liability (Contribution) Act 1978^^ extends to the 
expanded right of contribution among all concurrent civil wrongdoers the 
two year limitation period that formerly governed claims for contribution 
and indemnity among concurrent tortfeasors.^^ The Law Reform Commis- 
sion of Hong Kong has recommended the adoption of the English 
solution.^' The American Uniform Comparative Fault Act also contains a 
single Hmitation period of one year within which the right to contribution 
must be asserted.^^ 

A third possible approach is to relate the limitation period governing 
the contribution claim to the period within which D2 remains liable to P. 
The advantages of a scheme of this kind are twofold. First, it protects D2 
from claims for contribution brought too long after his original liability to P 
has expired. Secondly, it ensures that Dl will be able to sue D2 for at least as 
long as D2 could be sued successfully by P. In short, this type of proposal 
recognizes that, although the right to contribution is in some respects 



be governed by the residual six year limitation period, although it was recommended 
that a provision similar to s. 9 of the Negligence Act should be included in any new 
limitations statute. See Ontario Law Reform Commission Report, at 111-13, and 
Discussion Paper, draft Limitations Act , s. 4(2). See, also. Bill 160, ss. 5(3) and 21(2)14. 

^^ Civil Liability (Contribution) Act 1978, c. 47 (U.K.). 

^^ See Schedule 1 of the 1978 Act, which made the necessary amendments to the 
Limitation Act 1963, c. 47 (U.K.), s. 4, in order to make it applicable to all concurrent 
wrongdoers with a right of contribution under the 1978 Act. (See Limitation Act 1980, 
c. 58 (U.K.), s. 40(3), Sch. 4, which repealed s. 4 of the Limitation Act 1963. See, now, s. 
10 of the 1980 Act.) In its Twenty-First Report (Final Report on Limitation of Actions) 
(Cmnd. 6923, 1977), para. 3.34, at 40, the English Law Reform Committee concluded 
that it was unlikely in practice that D2 would be required to pay contribution long after 
his liability to P had ceased to be enforceable, and that it was therefore unnecessary to 
shorten the limitation period to deal with the problem. 

^' The Law Reform Commission of Hong Kong, Report on the Law Relating to Contribu- 
tion Between Wrongdoers, Topic 5 (1984), at 28-30. 

^2 5'w/7ra,note60,§5(c). 



222 



independent of the right of the injured person, there is, nonetheless, a 
substantial overlap between the factual and legal bases of D2's liability to 
both P and Dl. 

Considerations of this kind have influenced law reform in some juris- 
dictions. For example, section 31 of the Irish Civil Liability Act, 196 1"^^ 
provides that Dl must pursue his right to contribution within two years from 
the time of judgment or the time that P's damages are paid, or for as long as 
D2's liability to P remains enforceable, whichever period is the longer. Other 
proposals have fixed the continuing liability of D2 to P as the maximum 
extent of the limitation period. For example, the Alberta Institute of Law 
Research and Reform has recommended that Dl should not be entitled to 
bring a separate action for contribution after the expiry of the limitation 
period governing P's rights against D2.^'* The South African Apportionment 
of Damages Act, 1956^^ provides that, in order to claim contribution, Dl 
must establish that he has brought his action within one year from the date 
that judgment was entered against him in his litigation with P, and that P's 
right to sue D2 has not become barred by the expiry of the limitation period 
governing the enforcement of P's claim against D2. As we have already seen, 
section 9 of Ontario's present Negligence Act imposes a short limitation 
period for the enforcement of the right of contribution against contributors 
whose liability to the injured person has already lapsed. 

(d) Conclusions 

A number of competing considerations are relevant to determining the 
appropriate limitation period. On the one hand, sufficient time should be 
given to enable Dl to vindicate effectively his right to contribution. How- 
ever, in the interests of the administration of justice and fairness to the 
person from whom contribution is claimed, the claimant's right should be 
asserted without undue delay. 

In striking the appropriate balance, two considerations peculiar to the 
right of contribution among wrongdoers should be borne carefully in mind. 
First, while the right arises at the date of the judgment against Dl or the time 
when Dl settles with P, many of the issues relevant to establishing the right 
and to any defence that D2 may raise will relate to the earlier events 
surrounding the infliction of the loss upon P by the concurrent wrongs of Dl 
and D2. The argument for shortening the limitation period is strengthened 
if D2's liability to P has become statute-barred. 



^•^ Supra, note 22. 

^'* Alberta Report, supra, note 63, at 15-16. However, the Report also recommended (at 
71) that the lapse of the limitation period governing P's rights against D2 should not 
prevent Dl from claiming contribution in a third party proceeding, provided that notice 
is served within 6 months of the delivery to Dl of P's statement of claim. 

^^ Supra, note 59, s. 2(6)(b). 



223 



Secondly, the Commission has already emphasized the undesirability 
of permitting Dl, after being held liable to P, to claim contribution in a 
separate proceeding. To impose a short limitation period upon the right to 
contribution would minimize the situations in which such a claim could 
ever be made successfully. On the other hand, once it has been decided that 
justice requires that some limited exceptions should be made to a statutory 
codification of the rule in Cohen v. S. McCord& Co. Ltd., Dl should not be 
denied, by the imposition of an unrealistically short limitation period, a fair 
opportunity to avail himself of the benefit of the exception that permits him 
to proceed by way of a separate action. In addition, the mischief at which the 
rule in Cohen v. S. McCord & Co. Ltd. is aimed is, of course, not present 
when Dl claims contribution following a settlement; however, most of the 
reasons considered above for a short limitation period for contribution 
claims remain relevant in this context. 

An undoubted advantage of a uniform limitation period governing all 
claims for contribution from a concurrent wrongdoer is that it would make 
for clarity in the law and ease of administration. It is likely that the cases in 
which a genuine limitation issue will arise will be few because most claims 
will continue to be made within or incidentally to the main action, and those 
made in an independent action will generally be asserted expeditiously. The 
circumstances in which contribution will be sought in an independent 
action from a person who has ceased to be liable to the injured person will be 
unusual. 

In recommending that a right to contribution should not be prevented 
from arising by the expiry of the limitation period governing P's rights 
against D2, the Commission has already indicated that it does not regard 
this as a decisive matter in determining the availability of the right.^^ We 
further recommend here that a single limitation period should govern all 
actions for contribution among wrongdoers brought after Dl has been held 
liable to P or Dl and P have made a settlement. In the opinion of the 
Commission, a person should be required to institute proceedings for 
contribution within two years of the date of the judgment or settlement that 
gave rise to the right.^^ 

The imposition of a comparatively short limitation period is justified 
by the close relationship between the claim for contribution and earlier 
events, the possible lapse of the time within which P had to enforce his rights 
against D2, and the public policy interest in keeping to a minimum the 
incidence of multiple litigation. 

4. ENFORCING THE RIGHT TO CONTRIBUTION 

Throughout this Report, we have argued that an important rationaliz- 
ing principle of the right to contribution among wrongdoers is that, by 

^^ See supra, ch. 7, sec. 2(c). 
^^ Draft Act, s. 18. 



224 



discharging his Habihty to P, Dl thereby confers a benefit upon D2, who is 
concurrently Uable for P's loss, and that D2 will be unjustly enriched at Dl's 
expense if Dl pays to P more than the share of the total liability that, as 
between Dl and D2, should fairly be borne by Dl. One of the peculiarities of 
contribution claims is that proceedings may be instituted, and an order for 
contribution obtained from the court, before Dl has been held liable to P or 
has made a payment that discharges or reduces the concurrent liability of Dl 
and D2. 

As we have seen, the most common procedural method of claiming 
contribution is the crossclaim or third party claim made within the action 
brought against Dl and D2, or Dl alone. Claims for contribution are thus 
typically made before the essential ingredients of the right are present; 
moreover, at the conclusion of the trial, the judgment may order D2 to pay 
contribution to Dl, even though Dl has not yet paid anything to the 
successful plaintiff, and therefore has conferred no benefit at all upon D2. 
Similarly, proceedings may be instituted under section 3 of the Negligence 
Act even before a settlement has been made between P and Dl.^^ An English 
court has held that contribution could be claimed in an action as soon as Dl 
could show that a demand from P was imminent.^^ 

While the courts may fairly readily allow a claim for contribution to be 
made before Dl has paid anything to P or before a settlement has been made 
between P and Dl, provided that Dl can prove an imminent loss, it does not 
follow that an order made in Dl's favour will be immediately executable. 
The principal issue considered in this part of the chapter touches primarily 
upon this latter question, namely, the determination of the earliest moment 
at which the contribution claimant is entitled to an executable order for 
contribution. '^^ Should Dl be required to satisfy P's claim in full, or only to 
pay his proportionate share, before being entitled to be put in funds by D2? 
It might even be argued that as soon as Dl pays anything at all he should 
have an enforceable right immediately to recover part by way of contribu- 
tion, on the ground that every dollar that he pays to P reduces D2's liability 
and thus confers a benefit upon him. On the other hand, it could be pointed 
out that the purpose of a contribution order is to prevent unjust enrichment, 
and that D2 is only unjustly enriched when Dl pays more than his propor- 
tionate share of the loss. Moreover, it may be unjust to D2 to allow the 
contribution order to be executed before Dl has satisfied the judgment in 
full, because D2 may remain liable to P for the unsatisfied portion. 

Consider, first, the case where Dl and D2 are both sued by P in one 
proceeding. Assume that both are held liable to P and are found to be 
equally responsible for the loss. The order normally made in such a case is 
that each party is entitled to claim contribution on paying to P more than 50 



See, for example, Glass v. Avenue Dodge Chrysler, supra, note 34. 
^^ Wolmershausen v. Gullick, [1893] 2 Ch. D. 514. 
'^^ See Cheifetz, supra, note 6, at 122-26. 



225 



percent of P's recoverable loss.'^' A problem arises if it is suspected that D2 
cannot satisfy P's judgment and that it will not be possible to enforce it. To 
require Dl to satisfy the judgment in full before being able to execute the 
contribution order might be unduly harsh: Dl might be able to satisfy his 
proportionate share without too much difficulty, but would be financially 
embarrassed if he had to pay the entire amount before recovering anything 
from D2. On the other hand, to allow Dl to obtain payment from D2 before 
he has compensated P in full may endanger P's ability to recover the balance 
from D2. P and Dl may thus be competing for D2's limited resources. Of 
course, P can always elect to execute against Dl for the entire amount. 

The solution to this problem adopted in section 23 of the Irish Civil 
Liability Act, 1961 '^^ is that Dl may execute the contribution order either 
when he has discharged his entire liabiUty to P or when he has paid more 
than his proportionate share. However, if Dl has not paid the entire amount, 
he is only entitled to contribution in respect of the amount paid in excess of 
the proportion of the judgment that he should ultimately bear. Moreover, 
when Dl seeks to enforce the contribution order before paying the entire 
loss, the court must make provision, "by obtaining the personal undertak- 
ing of [Dl's] sohcitor or otherwise, for applying the sum received under the 
said judgment towards satisfaction of the damages due to the injured 
person". 

A similar recommendation has been made by the Alberta Institute of 
Law Research and Reform, which has proposed that, where execution of the 
contribution judgment is issued after Dl has paid more than his proportion- 
ate share, but less than the total amount, the money recovered from D2 
should be paid into court to the credit of the person who has suffered the 
damage or such other person as the judge may order. '^^ This recommenda- 
tion has been incorporated in section 14 of the Canadian Uniform Contribu- 
tory Fault Act }^^ 

Suppose, though, that D2 has not been joined as a co-defendant to P's 
action against Dl, but has been brought in by Dl as a third party. Should 
similar principles apply to the execution of a judgment for contribution 
obtained by Dl against D2? It has been suggested that, in this case, Dl should 
be able to execute the contribution order for every dollar that he pays, even 
if his payment to P never exceeds the proportion of the liability that, as 
between himself and D2, he ought ultimately to bear.'05 Again, provision 
could be made for ensuring that whatever is recovered from D2 goes first to 
satisfy any amount of P's judgment against Dl that Dl has not satisfied. The 



•°' For an example of the typical form of the order, see Stewart v. London Transportation 
Comm., [1969] 1 O.R. 123, 1 D.L.R. (3d) 550 (H.C.J.). 

^^^ Supra, note 22. 

'^^ Alberta Report, supra, note 63, at 81-83. 

^^^ Supra, note 65. 

'^^ Cheifetz, supra, note 6, at 123-25. See, also, Williams, supra, note 22, at 148-51. 



226 



argument made is that, since P has not obtained judgment against D2, to 
enable Dl to claim contribution before paying his fair share would not put P 
and Dl in the position of competitors for D2's money. Moreover, if any 
money recovered by Dl is applied first to satisfying P's claim, then P will 
actually be able to recover more through this means than he would if the 
contribution order was only enforced in respect of any amount actually paid 
by Dl in excess of his proportionate share. 

It is not recommended that the preceding proposal be adopted. It may 
be noted that the Canadian Uniform Contributory Fault Act does not 
distinguish between a case where D2 is a co-defendant and where he is a 
third party. To introduce an added complexity in the procedural arrange- 
ments needs clear justification. It is not obvious why D2, who has not, after 
all, been sued by P, should be required indirectly to put P in funds when D2 
has not been unjustly enriched, because Dl has paid less than Dl's propor- 
tionate share of P's loss. If Dl is solvent, P can recover in full against him, 
and if he is not, it is not clear why P should have access to the funds of D2, 
whom he has not made a party to the main action. 

The Commission has recommended earlier in this Report that, as a 
general principle, a person should be able to obtain contribution from a 
concurrent wrongdoer, even though that person's liability to P has not been 
judicially determined. Thus, Dl may claim contribution when he has settled 
P's claim, either in total satisfaction of any cause of action that P may have 
against anyone in respect of the loss, or in satisfaction only of P's claim 
against Dl. ^^^ If Dl has settled with P in such a way as to render D2 immune 
from an action by P, then Dl will be able to obtain an executable order for 
contribution when he has paid his proportionate share of P's loss as 
quantified by the settlement figure, assuming, of course, that it is not 
unreasonable. 

The issues are more complex when Dl has settled only his own share of 
P's claim, so that P is still able to sue D2 for the balance. It will be difficult for 
Dl to know whether he is entitled to contribution before P's loss has been 
fixed if Dl must show that he has paid more than his fair share. It may also 
be unfair to require D2 to pay anything to Dl while he remains liable to P. 

One solution would be to deny Dl the right to an executable order for 
contribution while P may still successfully sue D2 for the balance of his loss. 
When P's claim against D2 lapses through the expiry of the limitation 
period, or is satisfied, Dl could then recover from D2 if he had settled for 
more than his fair share. The difficulty with this solution is that it may keep 
Dl out of funds for an unduly long period; it may also prevent him from 
recovering at all if D2's financial position is precarious or if he moves assets 
out of the jurisdiction. Another disadvantage is that it may discourage the 
making of partial settlements. 



106 



See supra, ch. 5, sec. 3(c). 



227 



Alternatively, the rule applied to other bases for contribution claims 
could be extended to partial settlements— that is, Dl will be entitled to an 
executable order when he has paid more than his due proportion of the 
liability. In order to protect D2 from being sued twice, and to ensure that P 
and Dl are not in competition for the same assets, the court could order that 
any moneys found payable by D2 as contribution should be used first to 
ensure that P is fully compensated for his loss. While the Irish Act does not 
deal with this aspect of contribution claims made on the basis of a settle- 
ment, the provision in the Canadian Uniform Contributory Fault Act 
appears general enough to cover the problem. The court might order, for 
example, that the claimant's solicitor shall hold moneys paid by D2 in trust 
for P until P had been fully compensated. 

Following the enactment of the English Civil Liability (Contribution) 
Act 1978,^^'' an amendment was made to the rules of practice to deal with 
the execution of contribution orders against concurrent wrongdoers. The 
Rules of the Supreme Court now provide ^^^ that when a contribution order 
is made against a third party, a co-defendant, or a defendant in an action 
commenced to obtain an order for contribution, execution shall not issue on 
the order without the leave of the court until the contribution claimant has 
discharged his hability to the injured person. Although the Rules do not set 
out when leave will be granted, or on what terms, it will presumably be open 
to the court to ensure that the injured person will be satisfied first out of any 
money that the contributor is ordered to pay. Leave may be refused if the 
contributor remains at risk of an action by the injured person. 

The Commission has come to the conclusion and, accordingly, recom- 
mends that a contribution order should not be executed until the contribu- 
tion claimant has paid more than his proportionate share of the common 
liability, unless the contributor has ceased to be liable to the injured person. 
When the claimant has not discharged his liability to the injured person, the 
money recovered from the contributor should be paid into court in satisfac- 
tion of the claimant's liability to the injured person. '^^ 

Recommendations 

1. A person who is claiming contribution from another who is a co- 
defendant in the action brought by the injured person should do so by a 
crossclaim in that action, in accordance with the relevant provisions of 
the Rules of Civil Procedure, unless the court before which the action is 
brought has no jurisdiction to determine the claim for contribution. 



'^"^ Supra, note 89. 

•^^ R.S.C. 1965, O. 16, r. 7(2) and (3). 

'^^ Draft Act, s. 13. 



228 



2. A person who is sued by the injured person should normally claim 
contribution from a concurrent wrongdoer, who is not a party defend- 
ant, by a third party claim in accordance with the relevant provisions of 
the Rules of Civil Procedure. However, the claimant should be entitled 
to institute an independent action for contribution where the court 
before which the injured person's action was brought had no jurisdic- 
tion to determine the claim for contribution, or it was otherwise 
impracticable for the claimant to assert his right to contribution by a 
third party claim. 

3. A person whose right to contribution is based upon a settlement of the 
injured person's claim should be entitled to institute or continue 
proceedings for contribution against a person who is or may be con- 
currently liable for the loss to which the settlement relates. For this 
purpose, "settlement" should include a settlement approved by a court 
and a judgment obtained by consent. 

4. The limitation period governing the enforcement of the right of contri- 
bution among concurrent wrongdoers should be two years. Where the 
claim is based upon a judgment against the claimant in favour of the 
injured party, the period should run from the date of the judgment. 
Where the claim is based upon a settlement, the period should com- 
mence from the date when the settlement was made. 

5. An order for the payment of contribution should become executable 
when the claimant has discharged a greater proportion of the common 
liability than represents his degree of fault, or when the contributor can 
no longer be sued successfully by the injured person. Where the 
claimant has not discharged his liability to the injured person, the 
money recovered from the contributor should be paid into court in 
satisfaction of the claimant's Uability to the injured person. 



CHAPTER 10 



CONTRIBUTORY 
NEGLIGENCE 



1. INTRODUCTION 

Contributory negligence means a failure to exercise reasonable care for 
one's own person, property, or other recognized interest. This chapter 
considers the question whether, where such conduct is one of the causes of a 
plaintiff's harm, the court should be able to apportion responsibility 
between the plaintiff and defendant and to reduce the plaintiff's recovery 
accordingly. 

(a) The Common Law Background 

At common law, contributory negligence was, in theory, a complete 
defence. ' The result of this rule was very harsh to the plaintiff, who could be 
deprived of all compensation on account of a comparatively slight act of 
carelessness. Even though the defendant was, comparatively speaking, far 
more to blame than the plaintiff, the latter would recover nothing. There 
seems to be no adequate theoretical justification for this rule, especially as, 
from an early date, the civil law applied a different rule in the High Court of 
Admiralty.^ 

Even the common law recognized that the effect of the rule was too 
harsh, for, at an early date, there developed a subsidiary rule called the 
doctrine of "last clear chance", or "last opportunity", or "ultimate negli- 
gence", whereby the defendant was made liable, despite the plaintiff's 
contributory negligence, if the defendant could have avoided the accident 
altogether by the use of due care at the time of its occurrence. 

The last clear chance rule often enabled the courts to secure a verdict 
for a contributorily negligent plaintiff, and to that extent it served a useful 
purpose in alleviating the unduly harsh rule of contributory negHgence. But 



• Butterfield v. Forrester (1809). 1 1 East 60, 103 E.R. 926 (K.B.). 

2 Hayy. LeNe\e{\%lA\ 2 Shaw, Sc. App. 395 (H.L.). In Cayzer Irvine & Co. v. Carron Co. 
(1884), 9 App. Cas. 873 (H.L.), at 881, Lord Blackburn stated that there was authority 
before 1824 for apportionment according to the degree of fault. 

[229] 



230 



the doctrine of last clear chance rested on uncertain logical foundations, and 
consequently acquired complexities, anomalies, and uncertainties of its 
own^— a common result where the courts, unhappy with the consequences 
of a legal rule, seize on an illogical means of avoiding those consequences. 
The motives of the judges who developed such an exception can be under- 
stood and even applauded, but the law became complex and logically 
indefensible. The real cause of the difficulty was the original rule, and the 
only satisfactory solution was abrogation of that rule, an event that occurred 
in all Canadian common law jurisdictions by legislation. 

(b) Apportionment Legislation 

In 1924, Ontario became the first jurisdiction in the common law world 
to introduce apportionment legislation."^ The United Kingdom followed 
suit in 1945.^ The relevant sections in the Ontario legislation, the Negligence 
Act,^ now provide as follows: 

4. In any action for damages that is founded upon the fault or negligence of 
the defendant if fault or negligence is found on the part of the plaintiff that 
contributed to the damages, the court shall apportion the damages in propor- 
tion to the degree of fault or negligence found against the parties respectively. 

5. If it is not practicable to determine the respective degree of fault or 
negligence as between any parties to an action, such parties shall be deemed to 
be equally at fault or negligent. 

The provisions of the Uniform Contributory Fault Act, adopted by the 
Uniform Law Conference of Canada in 1984,"^ that correspond to sections 4 
and 5 of the Ontario Negligence Act are as follows: 

5.— (1) Where the fault of two or more persons contributes to damage 
suffered by one or more of them, the liability for damages of a person whose 
fault contributed to the damage is reduced by an amount of the damages 
proportionate to the degree to which the fault of the person suffering the 
damage contributed to the damage. 



(3) If the degrees to which the fault of persons contributed to damage cannot 
be determined in relation to each other, those persons shall be deemed to have 
contributed equally in relation to each other. 



^ See Reming, The Law of Torts (6th ed., 1983), at 243-44. 

"* The Contributory Negligence Act, 1924, S.0. 1924, c. 32. 

^ Law Reform (Contributory Negligence) Act, 1945, c. 28 (U.K.). 

^ Negligence Act, R.S.0. 1980, c. 315. 

^ Uniform Law Conference of Canada, Proceedings of the Sixty-Sixth Annual Meeting 
(1984), Appendix F, Uniform Contributory Fauh Act . 

The Act was based on a Report of the Alberta Institute of Law Research and 
Reform. See Alberta, Institute of Law Research and Reform, Contributory Negligence 



231 



The wording of section 5(1) of the Uniform Contributory Fault Act 
follows the wording of the former Uniform Act, first adopted in 1924 and 
revised in 1935 and 1953.^ Section 6 of the 1984 Act makes it clear that each 
wrongdoer is liable in solidum for the whole of the plaintiff's loss not 
attributable to the plaintiff's own contributory negligence. 

The balance of this chapter considers the questions whether apportion- 
ment legislation should be retained and, if so, the form it should take and its 
proper scope. 

The more general question— whether apportionment for contributory 
negligence should be retained— may be disposed of very briefly. Every 
Commonwealth common law jurisdiction has apportionment legislation. 
American jurisdictions, after much hesitation, are now adopting a similar 
approach, either by legislation or by judicial decision.^ We believe that a 
return to the common law position would be intolerably harsh. On the other 
hand, a rule that the plaintiff should always recover in full would be 
perceived as unfair to the defendant, perhaps leading the court to deny 
liability altogether on principles of causation or assumption of risk. '^ So 
long as the present system of individual responsibility remains, it would 
seem that apportionment legislation should be retained. •• Accordingly, we 
recommend that, subject to the recommendations made in the balance of 



and Concurrent Wrongdoers, Report No. 31 (1979) (hereinafter referred to as "Alberta 
Report"). See, also, the Institute's Working Paper: Contributory Negligence and Concur- 
rent Tortfeasors (1975). 

^ See Proceedings of the Seventh Annual Meeting of the Conference of Commissioners on 
Uniformity of Legislation in Canada (1924), Appendix B; Proceedings of the Eighteenth 
Annual Meeting of the Conference of Commissioners on Uniformity of Legislation in 
Canada (1935), Appendix E; and Proceedings of the Thirty-Fifth Annual Meeting of the 
Conference of Commissioners on Uniformity of Legislation in Canada (1953), Appen- 
dix I. 

It should be noted that the former Uniform Act remains in force in Alberta. See 
the Alberta Contributory Negligence Act, R.S.A. 1980, c. C-23. Section 1(1) of the 
Alberta Act reads: 

l._(l) When by fauh of 2 or more persons damage or loss is caused to one or 
more of them, the liability to make good the damage or loss is in proportion to the 
degree in which each person was at fault — 

^ See Wade, "Comparative Negligence— Its Development in the United States and Its 
Present Status in Louisiana" (1980), 40 La. L. Rev. 299. 

'*^ Moreover, such a rule would be inconsistent with this Commission's Report on Products 
Liability (1979). 

'^ However, the wording of the Ontario Negligence Act, supra, note 6, seems to be 
unsatisfactory in several respects. For example, the use of the word "damages" in the 
phrase "that contributed to the damages" is not consistent with conventional use, and 
the requirement of apportionment against "parties" may leave open the possibility that 
a court might, in the case of two or more wrongdoers each partly responsible for the loss, 
only one of whom was a party to the plaintiff's action, find that damages should be 
apportioned up to 100% between the plaintiff and the wrongdoer who was made a party. 
With respect to the latter issue, see discussion infra, this ch., sec. 5(a). 



232 



this chapter, where a person is injured by the wrongful act of one or more 
persons and the fault of the injured person is found to have contributed to 
the damage, the court should determine the degrees of fault of the person or 
persons and of the injured person that contributed to the damage, and 
should apportion the damages in proportion to the degrees of fault that are 
so found. '^ 

The question concerning the relative degrees of fault of the wrongdoer 
and the injured person is, as we shall see,'^ one of fact, to be determined 
having regard to all the circumstances of the case. In some situations, it may 
be extremely difficult to make an assessment of the plaintiff's degree of fault 
in relation to that of the defendant. Where this difficulty arises, there may 
well be a tendency to view the plaintiff's degree of fault in isolation, rather 
than comparatively, and to set the plaintiff's degree of fault at a conven- 
tional figure or a conventional range. 

For example, it has been suggested that, given the problems of proof 
where the plaintiff's injuries are allegedly exacerbated by a failure to wear a 
seat belt, courts not infrequently set the degree of fault of the plaintiff at 
between ten and thirty percent. It is sometimes said that the figure is arrived 
at not by a careful consideration of all the facts, but simply by the imposition 
of a conventional figure. •"* 

The Commission is of the view that the establishment and use of a 
conventional figure respecting the plaintiff's relative degree of fault, 
whether in the seat belt cases or otherwise, is simply not warranted under the 
present Negligence Act. Nor do we believe that any justification for the 
imposition of a conventional figure could or should exist under the provi- 
sion we have just recommended for inclusion in the proposed Contribution 
and Comparative Fault Act. The court's mandate is clearly and unequivo- 
cally to determine the issue on a comparative basis, having regard to the 
relative degrees of fault of both parties in each particular case. 



^^ See the Commission's proposed Contribution and Comparative Fault Act (hereinafter 
referred to as "Draft Act"), s. 2(1). The Draft Act appears as an Appendix of this Report. 

'^ Infra, this ch., sec. 8. 

^^ See, for example, Froom v. Butcher, [1975] 3 All E.R. 520 (C.A.), at 527-28. This 
tendency appears to be most noticeable in British Columbia. See, for example. Yuan v. 
Farstad (1967), 66 D.L.R. (2d) 295, 62 W.W.R. 645 (B.C.S.C), and Thorsell v. Hoem 
(1984), 54 B.C.L.R. 35 (S.C). But see Halliday v. Sanrud (1979), 15 B.C.L.R. 4 (C.A.), 
esp. at 10. For a review of British Columbia case law, see Thornicroft, "Contributory 
Negligence and the Seat Belt Law" (1984), 42 The Advocate 29. Thornicroft agrees that 
the degree of fault is a question of fact, but suggests the use of a conventional figure. 
Linden endorses this suggestion, in order to ameliorate the problems of proof, but would 
countenance the introduction of evidence to show that the conventional figure is not 
appropriate in the particular case: Linden, "Torts— Seat Belts and Contributory Negli- 
gence" (1971), 49 Can. B. Rev. 475, at 481. 

The following are examples of cases in which Ontario courts considered whether 
the plaintiff's failure to wear a seat belt constituted contributory negligence and, if so, to 
what degree: Van Spronsen v. Gawor, [1971] 2 O.R. 729, 19 D.L.R. (3d) 53 (Co. Ct.) (no 



233 

2. LEGAL WRONGS SUBJECT TO APPORTIONMENT 

(a) Introduction 

(The proper scope of the apportionment legislation has proved to be a 
most difficult question, both as a matter of construction of the current 
legislation and as a question of principle. The Uniform Act provides: 

1. In this Act, 

'fault' means an act or omission that constitutes 

(a) a tort, 

(b) a breach of a statutory duty that creates a liability for damages, 

(c) a breach of duty of care arising from a contract that creates a liability 
for damages, or 

(d) a failure of a person to take reasonable care of his own person, 
property or economic interest, 

whether or not it is intentional. 

The various areas of difficulty will be considered below from the points of 
view of the existing law in Ontario, the changes proposed by the Uniform 
Act, and the desirability of adopting those changes. 

1 

(b) Torts 

(i) Nominate Torts Involving Negligence 

The present Ontario legislation— section 4 of the Negligence Act — 
speaks of an action founded on "fault or negligence". This wording includes 
a negligent trespass and, probably, a negligent nuisance.'^ There seems to be 
no sound reason to exclude apportionment in such cases, and good reason 
to avoid attaching important consequences to the name chosen by the 
plaintiff for her action. The Uniform Act, by its definition of "fault", 

reduction in damages); Jackson v. Millar, [1972] 2 O.R. 197, 25 D.L.R. (3d) 161 (H.C.J. ), 
rev'd on other grounds [1973] 1 O.R. 399, 31 D.L.R. (3d) 263 (C.A.), trial judgment 
restored [1976] 1 S.C.R. 225, 59 D.L.R. (3d) 246 (damages reduced 10%); Dodgson v. 
\ Topolinsky (1980), 33 O.R. (2d) 585, 125 D.L.R. (3d) 177 (H.C.J.) (subsequent reference 

' is to 33 O.R. (2d)), aff 'd (1980), 125 D.L.R. (3d) Mln (C.A.) (damages reduced 15%); and 

Schmidt v. Sharpe (1983), 27 C.C.L.T. 1 (Ont. H.C.J.) (damages reduced 30%). In the 
Dodgson case, Labrosse J. noted (at 586-88) the wide variation of the degree of 
contributory negligence attributed to a plaintiff by Ontario and other courts in the seat 
belt cases. 



15 



Bell Canada v. Cope (Samia) Ltd. (1980), 31 O.R. (2d) 571, 119 D.L.R. (3d) 254 (C.A.), 
and Funnell v. CP.R. , [1964] 2 O.R. 325, 45 D.L.R. (2d) 481 (H.C.J.). 



234 



includes all torts, whether or not intentional, and therefore would extend 
the power of apportionment to cases of negligent trespass and nuisance. The 
Uniform Act would also, it seems, include cases of defamation. This 
extension seems to be desirable. Accordingly, we recommend that all torts 
committed by negligence should be included in the proposed contributory 
negligence apportionment legislation. ^^ 

(ii) Torts of Strict Liability 

The plaintiff's negligence has always been regarded as a defence to torts 
of strict liability. ^^ It has sometimes been argued that contributory negli- 
gence is an inappropriate concept where liability is strict because it is 
impossible to compare the plaintiff's negligence with the defendant's strict 
hability. ^^ In our opinion, however, even where the defendant's liability is 
not based on negligence, the plaintiff may, by unreasonable conduct, 
contribute to her own loss, and in such a case apportionment seems to be the 
most appropriate solution. This was the view taken by the Commission in its 
1979 Report on Products Liability }^ Moreover, the principle of apportion- 
ment in cases of strict liability has been incorporated in recent Ontario 
legislation. 2^ The Uniform Act, by its definition of "fault" in section 1, 
includes torts of strict liability, and we recommend that such torts should be 
included in our proposed Ontario apportionment legislation. ^i 

(iii) Intentional Torts 

Some difficulties and differences of opinion have arisen in respect of 
intentional torts. While there seems to be good reason to apply apportion- 
ment legislation in some cases of unintended injury— such as in the case of 
unintended trespass, discussed below— greater difficulty arises where the 
injury is intentional. Professor Williams supports the view that contributory 
negligence should not apply to intentional wrongdoing: ^2 

'The intention to injure the plaintiff negatives all excuses' This exclusion of 

the defence in cases of intentional wrongdoing rests partly on ideas of policy; it 
is a penal provision aimed at repressing conduct flagrantly wrongful. Also, it is a 



Draft Act, s. 2(2)(a). 

Rylands v. Fletcher (1866), L.R. 1 Ex. 265, at 279, aff 'd (1868), L.R. 3 H.L. 330, 37 L.J. 
Ex. 161. 

See American Law Institute, Restatement of the Law, Second- Torts 2d (1965), §402A, 
Comment n; Daly v. General Motors Corp., 20 Cal. 3d 725, 575 P. 2d 1162 (Sup. Ct. 
1978); and the discussion in Epstein, Modern Products Liability Law (1980), at 121-41. 



'^ Supra, note 10, at 96-97. 

2^ Dog Owners' Liability Act, R.S.0. 1980, c. 124, s. 2(3). 

21 Draft Act, s.2(2)(a). 

^^ Williams, Joint Torts and Contributory Negligence (1951), at 198, and Horkin v. North 
Melbourne Football Club Social Club, [1983] VR. 153 (S.C). 



235 



result of the ordinary human feehng that the defendant's wrongful intention so 
outweighs the plaintiff's wrongful negligence as to efface it altogether. 

We now turn to consider whether apportionment should be available in 
respect of a number of intentional torts. 

a. Assault and Battery 

It may be argued that a distinction may be drawn between the case 
where the defendant actually intends to inflict the harm suffered by the 
plaintiff, and the case where the defendant intends an assault, but causes 
unanticipated harm, for example, because the plaintiff was not, as expected, 
wearing safety equipment. 

In the latter case, there seems to be no objection in principle to 
apportionment. The loss can be said to be caused partly by the defendant's 
wrong and partly by the plaintiff's own fault. If the defendant's conduct is 
worthy of punishment, this object can be effected by the criminal law or by 
an award of exemplary damages. From the point of view of punishment, the 
extent of the plaintiff's loss is an irrelevant criterion. Often the defendant 
will be deserving of greater punishment than the law of compensatory 
damages can inflict. On the other hand, holding the defendant fully liable 
might, in the case of a trivial assault where no harm was intended, result in 
an excessive award. 

In the case where the defendant actually intends the resulting harm, 
apportionment may seem less apt. Suppose that the defendant, intending to 
injure the plaintiff, waits until the plaintiff (contrary to proper practice) 
removes her hard hat, and then drops a brick onto her head. Here it is 
arguable that, as a matter of policy, the defendant ought to be fully liable for 
the resulting injury. It may be said, again, that considerations of punishment 
should be excluded for the reasons given in the preceding paragraph. 
Nevertheless, it is difficult to attribute any significant element of cause to 
the plaintiff's conduct. Admittedly, the wearing of a hard hat would have 
prevented this particular injury on this particular occasion, but if the 
defendant were determined to injure the plaintiff, she could presumably 
have found an opportunity to do so even if the plaintiff had complied with 
proper safety practice. In Professor Williams' opinion, the defendant's 
wrongful intention should outweigh the plaintiff's wrongful negligence.-^ 

Even if one were to accept this view, however, it does not necessarily 
mean that intentional injury should be expressly excluded from the appor- 
tionment legislation. It is impossible for legislation to foresee all cases that 
will arise. Much must be left to the courts in any event. Drafting such an 
exclusion for cases where injury was intended would be a complex exercise 
and might create its own anomalies. In a case where the harm suffered was 



^^ Supra, note 22, at 198. 



236 



intended, it can be expected under the Uniform Act that, although appor- 
tionment is theoretically available, the trier of fact would be very unlikely to 
reduce the damages by a significant amount. 

A difference of judicial and academic opinion has arisen in the case of 
provocation by the plaintiff that leads to an assault by the defendant. It is 
universally agreed that provocation may properly reduce an award of 
exemplary damages, for it is plainly relevant in assessing to what extent the 
defendant's conduct is worthy of punishment.^^ Similarly, provocation is 
relevant to the assessment of aggravated damages, for one who provokes an 
assault can less reasonably complain of insult or humiliation.^^ 

The problem arises in respect of compensatory damages. In Lane v. 
Holloway,^^ the English Court of Appeal held that provocation could never 
reduce compensatory damages. Lord Denning M.R. said:^^ 

The defendant has done a civil wrong and should pay compensation for the 
physical damage done by it. Provocation by the plaintiff can properly be used to 
take away any element of aggravation. But not to reduce the real damages. 

Salmon L.J. said:^^ 

I cannot see how logically or on any principle of law the fact that the plaintiff 
has behaved rather badly and is a cantankerous old man can be even material 
when considering what is the proper compensation for the physical injury 
which he has suffered. 

However, nine years later, the English Court of Appeal reached an opposite 
conclusion in a decision^^ that was barely consistent with Lane v. Holloway. 

Canadian authority is divided. In a number of cases, account has been 
taken of the plaintiff's conduct in assessing damages for assault,^^ but the 



^'* See, for example, Waddams, The Law of Damages (1983), para. 1021, at 590. 

^ For the distinction between exemplary damages and aggravated damages, see Walker v. 
CFTO (1987), 59 O.R. (2d) 104, at 111, 39 C.C.L.T. 121 (C.A.). 

26 [1968] 1 Q.B. 379, [1967] 3 W.L.R. 1003 (C.A.) (subsequent references are to [1968] 
1 Q.B.). 

2^ Ibid., at 387. 

28 Ibid., at 390. 

29 Murphy v. Culhane, [1977] Q.B. 94, [1976] 3 W.L.R. 458 (C.A.). 

^0 See Veinot v. Veinot (1976), 22 N.S.R. (2d) 77, 31 A.P.R. 77 (S.C, T.D.), aff'd (1977), 31 
A.PR. 630, 81 D.L.R. (3d) 549 (N.S.S.C, App. Div.), and Griggs v. Southside Hotel Ltd., 
[1947] O.R. 674, [1946] 4 D.L.R. 73 (H.C.J.), aff'd [1947] O.R. 680, [1947] 4 D.L.R. 49 
(C.A.). 



237 



Courts of Appeal of Manitoba^' and Ontario"^^ have expressly followed Lane 
V. Holloway. In the most recent Ontario case. Long v. Gardner^^ Smith J. 
held that, although the existing legislation could be interpreted to permit 
apportionment in a case of assault, it was doubtful whether provocation (not 
in itself tortious) should ever be properly taken into account to reduce 
compensation. 

The following points may be made in favour of the view that compensa- 
tory damages ought not to be reduced on account of provocation. No 
question of punishment is in issue, and there seems to be no reason why the 
defendant should not pay for the actual loss admittedly caused by her wrong. 
To deprive the plaintiff of full compensation is to effect a forfeiture by taking 
away from her, on account of conduct of which the court disapproves, 
compensation to which the plaintiff is entitled by the general principles of 
compensatory damages. 

The Commission is not fully persuaded by these arguments. But even if 
it were persuaded, it would still recommend that legislation not preclude 
apportionment in cases of provocation. The problem is a difficult and 
controversial one, and its solution would seem to be best left to the courts. 
There is merit in uniformity of legislation on this point. The decision in 
Long V. Gardner indicates that, even where no express exception is made, 
the courts are still free to reduce the plaintiff's share of fault to an insignifi- 
cant proportion. 

For the above reasons, the Commission recommends that the proposed 
apportionment legislation should apply to all cases of assault and battery, 
whether or not the resulting injury was intended, and regardless of 
provocation.^"^ 

b. Trespass and Nuisance 

It has recently been established by the Ontario Court of Appeal, 
overruling an earlier case,^^ that apportionment under the current legisla- 
tion is available in cases of trespass, at least where the defendant is negligent. 
In Bell Canada v. Cope (Sarnia) Ltd.,^^ the defendant had deliberately 
destroyed a telephone cable, in the mistaken belief that it was abandoned 



3^ Check V. Andrews Hotel Co. Ltd. (1974), 56 D.L.R. (3d) 364, [1975] 4 W.W.R. 370 (Man. 
C.A.). 

32 Shaw V. Gorter (1977), 16 O.R. (2d) 19, 77 D.L.R. (3d) 50 (C.A.), and Landry v. Patterson 
(1978), 22 O.R. (2d) 335, 93 D.L.R. (3d) 345 (C.A.). 

33 (1983), 144 D.L.R. (3d) 73 (Ont. H.C.J.). 
3^^ Draft Act, s. 2(2)(a). 

35 Hollebone v. Barnard, [1954] O.R. 236, [1954] 2 D.L.R. 278 (H.C.J.). 

3^ Supra, note 15. For the facts of the case, see the judgment of Linden J. at (1980), 11 
C.C.L.T. 170 (Ont. H.C.J.). 



238 



and useless. The facts of this case illustrate that trespass can be intentional 
without the defendant intending to cause the harm suffered. The same can 
be true in cases of nuisance. In such circumstances, apportionment seems 
appropriate. Where the harm is actually intended, it can be expected that, 
even under legislation requiring apportionment, the court would generally 
allow full or virtually full recovery to the plaintiff.^^ It is recommended, 
therefore, that, under the proposed legislation, apportionment should be 
available in cases of trespass or nuisance. ^^ 

c. Fraud 

It has long been established that the gullibility of the plaintiff in 
beheving the defendant's misrepresentation, or lack of care in failing to 
make an independent investigation, is no defence in an action based on 
fraud.^^ It does not lie in the mouth of one who makes a statement on which 
another relies to say that the other was careless in believing her. Although the 
wording of the Uniform Act would appear to permit apportionment 
between fraudulent and negligent tortfeasors, it would seem that it was not 
intended to alter the abovementioned rule. In Anderson v. Stevens, ^^ the 
British Columbia Supreme Court held, in a contribution case, that the word 
"fault" in the provincial Negligence Act"^^ included fraud, and therefore that 
the Act permitted contribution between fraudulent and negligent tortfea- 
sors. It has not been suggested that this decision has the effect of reversing 
the rule that carelessness in believing a misrepresentation is no defence. 

Cases can be imagined where apportionment between fraudulent and 
negligent tortfeasors would be appropriate, as, for example, where the 
defendant fraudulently induces the plaintiff to purchase defective goods, 
and the plaintiff then unreasonably uses them after observing the defect. It 
would seem likely that, even if the power of apportionment is extended to 
cases of fraud, the courts are unlikely to use the power where the plaintiff's 
only fault is to have reUed on the defendant's word. Consequently, it is 
recommended that, under the proposed legislation, apportionment should 
be available in cases of fraud."^^ 



37 
38 
39 



See Long v. Gardner, supra, note 33. 

Draft Act, s. 2(2)(a). 

See Reming, supra, note 3, at 601, and Redgrave v. Hurd{\SS\), 20 Ch.D. 1, [1881-85] All 
E.R. Rep. 77 (C.A.) (equitable relief not affected). 



"^0 (1981), 125 D.L.R. (3d) 736, [1981] 5 W.W.R. 550 (B.C.S.C). 
'^^ R.S.B.C 1979, c. 298. 
^^2 Draft Act, s. 2(2)(a). 



239 



d. Conversion and Related Torts 

A question arises whether contributory negUgence ought to apply in 
conversion and other similar actions involving the wrongful interference 
with goods, such as trespass, or indeed where the true owner has recovered 
the goods without the assistance of a court. 

In some cases, apportionment seems appropriate, particulariy where 
the wrongdoer has not actually benefited from the tort. Professor Williams 
gives the example of a defendant who pays money for property to a third 
party whose fraud against the plaintiff has been facilitated by the plaintiff's 
carelessness.'*^ To give another example, the defendant, acting on the 
plaintiff's negligent assurance that certain property belongs to the defend- 
ant, may donate the property to a charity. 

The Commission is considering, in its current Project on Remedies for 
Wrongful Interference with Goods, the relationship between contributory 
negligence and the property torts. Accordingly, we make no recommenda- 
tion on this matter in this Report."*"* 

e. Defamation 

A further issue arises concerning whether apportionment should be 
available in cases of defamation. A case could be imagined where the 
plaintiff carelessly leads the defendant to believe that the plaintiff is guilty of 
a crime, perhaps by behaving in a suspicious manner and by unreasonably 
refusing to give an explanation of her conduct. If the defendant subse- 
quently publishes an allegation that the plaintiff has committed the crime, it 
could be said that the fault of the plaintiff has contributed to the resulting 
damage. One commentator has written that the plaintiff's conduct is a 
factor that the jury is entitled to take into account even apart from 
apportionment legislation."*^ Plainly, it would reduce any punitive element 
in the damages and often would be taken into account in the somewhat 
vague process of assessment of compensatory damages. 

We note that the Uniform Act, extending apportionment to all torts, 
would apply to the tort of defamation. The Commission agrees and, 
accordingly, we recommend that the proposed legislation governing appor- 
tionment should apply in cases of defamation."^^ 



"*^ Williams, supra, note 20, at 212. However, Williams states that "it is usually held that 
the defendant has no defence to an action for conversion even though he has given full 
value for the property to a deceitful stranger and even though the plaintiff is guilty of 
contributory negligence" {ibid.). 

^^ Draft Act, s. 2(2)(a). 

'*5 Lewis (ed.), Galley on Libel and Slander (8th ed., 1981), §1451, at 592-93. 

^ Draft Act, s. 2(2)(a). 



240 



(c) Breach of Contract 

(i) Present Law 

Even in the absence of apportionment legislation specifically applic- 
able to breach of contract, conduct of the plaintiff that contributes to 
damage caused by the defendant's breach of contract can operate as a 
defence in a variety of ways. It may be said that the plaintiff's conduct 
breaks the chain of causation, that it makes the damage claimed too remote, 
or that the scope of the defendant's obligation is impliedly restricted. 
Furthermore, in many cases, the plaintiff's careless failure to protect her 
own interests will occur after the defendant's breach and will operate as a 
failure to mitigate loss."^^ 

These defences, however, compel an all or nothing choice. Consider, as 
an example, the facts of Lexmead (Basingstoke) Ltd. v. Lewis, "^^ where a 
seller, in breach of warranty, supplied a defective trailer hitch, and the buyer 
suffered loss by carelessly using it, knowing it to be damaged. It is not clear 
whether, in general, plaintiffs or defendants benefit from all or nothing 
choices. Denying the possibility of an intermediate solution is no benefit to 
the plaintiff if it leads the court to hold that the defendant's breach of 
contract cannot be said to have caused the plaintiff's loss or that the 
defendant's warranty cannot be construed to apply in the circumstances. In 
many cases where a loss is caused partly by the defendant's wrong and partly 
by the plaintiff's carelessness, there seems as strong a case as elsewhere for 
apportionment. 

Under existing law, there are three techniques whereby apportionment 
may be made available in contract cases. It may be held (1) that the 
Negligence Act^^ applies to contracts, or (2) that the breach of contract also 
constitutes a tort to which the Negligence Act applies, or (3) that apportion- 
ment is available in contract cases at common law, irrespective of the 
Negligence Act. 

A number of cases decided at first instance in England^^ and British 



^'^ It has been pointed out that the doctrine of mitigation applies in many cases that would 
be treated, from the tort point of view, as cases of contributory negligence, because a 
breach of contract (unlike the tort of negligence) is actionable before any damage occurs, 
so that the duty to mitigate operates as soon as the plaintiff knows of the breach, an^ if 
the plaintiff can then, acting reasonably, avoid a loss but fails to do so, recovery will be 
denied. See Coote, "Contract, Tort and Contributory Negligence", [1982] N.Z.L.J. 294. 

^^ [1982] A.C. 225, [1981] 2 W.L.R. 713 (H.L.). 

^^ Supra, note 6. 

^^ De Meza v. Apple, [1974] 1 Lloyd's Rep. 508 (Q.B.), aff'd on other grounds [1975] 1 
Lloyd's Rep. 498 (C.A.), and Artingstoll v. Hewen's Garages Ltd., [1973] R.T.R. 197 
(Q.B.). But see Basildon District Council v. J.E. Lesser (Properties) Ltd., [1985] Q.B. 
839, [1984] 3 W.L.R. 812, and Rowe v. Turner Hopkins & Partners, [1980] 2 N.Z.L.R. 



241 



Columbia^* have held that the word "fauh" in the apportionment legislation 
of those jurisdictions extends to breach of contract. In the Ontario case of 
Bank of Nova Scotia v. Terry, ^^ a similar conclusion was reached by the trial 
judge, although the decision was reversed on appeal. There, a bank had 
suffered a loss on account of the negligence of the defendant solicitor, but 
the loss could have been avoided by care on the part of the bank in its 
dealings with the solicitor. At trial, O'Brien J. held that, even if the liability of 
the solicitor was based in contract only, the Negligence Act appliedi^"^ 

I am satisfied the damages which flowed from her action were a result of 'fault' 
which I find to be a term of broader meaning than negligence. 

It is not, however, clear that this interpretation will be accepted by 
higher courts. As indicated, Terry was reversed on appeal. ^^^ In Dominion 
Chain Co. Ltd. v. Eastern Construction Co. Ltd.,^^ the Ontario Court of 
Appeal held that the word "fault" in the contribution section of the Negli- 
gence Act did not apply to breaches of contract, and the Supreme Court of 
Canada, without definitely deciding the point, inclined to the same view.^^ It 
is true that the case was concerned with contribution among wrongdoers 
and not with contributory negligence; however, a decision on the meaning 
of the word "fault" in a provision separated by only one section from the 
contributory negligence section must be highly persuasive on the construc- 
tion of section 4. 

Turning to the second means of apportioning damages in contract 
cases, a series of decisions, of which the Dominion Chain Co. Ltd. case is 

550 (H.C.). See, also, Swanton, "Contributory Negligence as a Defence to Actions for 
Breach of Contract" (1981), 55 Austl. L.J. 278, at 283-85. 

^' mst Coast Finance Ltd. v. Gunderson. Stokes. Walton & Co. (1974), 44 D.L.R. (3d) 232, 
[1974] 2 W.W.R. 428 (B.C.S.C), rev'd on other grounds (1975), 56 D.L.R. (3d) 460 
(B.C.C.A.); Emit Anderson Constr. Co. Ltd. v. Kaiser Coal Ltd.. unreported (1972, 
B.C.S.C), referred to in Truman v. Sparlling Real Estate Ltd. {\911l 3 C.C.L.T. 205 
(B.C.S.C); and Carmichael v. Mavo Lumber Co. Ltd. (1978), 85 D.L.R. (3d) 538 
(B.C.S.C). 

^2 (1982), 141 D.L.R. (3d) 438 (Ont. H.C.J. ), rev'd (1984), 46 O.R. (2d) 180, 9 D.L.R. (4th) 
101 (CA.) (subsequent reference is to 141 D.L.R. (3d)). 

" Ibid., at 450. 

5"* Supra, note 52. In Husky Oil Operation Ltd. v. Oster (1978), 87 D.L.R. (3d) 86 (Sask. 
Q.B.), at 91, the Saskatchewan Contributory Negligence Act , R.S.S. 1965, c. 91, was said 
to be "of course, without applicability in the case of a breach of contract", but liability 
was apportioned on the basis of concurrent liability in tort. A similar result was reached 
in Canadian Western Natural Gas Co. Ltd. v. Pathfinder Surveys Ltd. (1980), 12 Alta. 
L.R.(2d)135(C.A.). 

^^ (1976), 12 O.R. (2d) 201, 68 D.L.R. (3d) 385 (C.A.), aff'd {.sub nom. Giffels Associates 
Ltd. V. Ea.stern Construction Co. Ltd) [1978] 2 S.CR. 1346, 84 D.L.R. (3d) 344 
(subsequent references are to [1978] 2 S.C.R.). See, also, Dabous v. Zuliani (1976), 12 
O.R. (2d) 230, 68 D.L.R. (3d) 414 (C.A.). 

^^ 5//pra,note55,atl354. 



242 



one, has held that a breach of a contractual duty of care constitutes a tort.^^ 
Thus, apportionment may be available under the Negligence Act on the 
basis that the plaintiff's action lies in tort. What is not clear is whether the 
plaintiff, should she wish to do so, can avoid the possibility of apportion- 
ment by bringing her action solely in contract. It cannot be satisfactory for 
the availability of apportionment to depend on the form of action chosen by 
the plaintiff. 

The third technique of apportioning damages in contract cases is to 
hold that, even though the Negligence Act does not apply, damages can be 
apportioned at common law by analogy with the Act. This bold and novel 
approach has been adopted in two recent Ontario cases at first instance, ^^ 
and was described by the Ontario Court of Appeal in Cosyns v. Smith ^^ as an 
"attractive conclusion", although the point did not require a definite 
decision in that case. 

(ii) Should All Breaches of Contract be Affected? 

a. General 

The Canadian Uniform Act limits its scope to "a breach of duty of care 
arising from a contract that creates a liability for damages". ^^ This was a 
carefully considered limitation. In the draft presented for consideration in 
1983,^^ the corresponding definition had included any breach of contract 
that created a liability in damages, but this version was not approved.^^ 

The Report of the Alberta Institute of Law Research and Reform, upon 
which the Uniform Act was based, had recommended that not all breaches 
of contract should give rise to a right to apportionment. The Institute 
stated:^^ 



^^ Husky Oil Operation Ltd. v. Oster, supra, note 54; Midland Bank Trust Co. Ltd. v. Hett, 
Stubbs & Kemp, [1979] Ch. 384, [1978] 3 W.L.R. 167; Jacobson Ford-Mercury Sales Ltd. 
V. Sivertz (1979), 103 D.L.R. (3d) 480, [1980] 1 W.W.R. 141 (B.C.S.C); and John Maryon 
International Ltd. v. New Brunswick Telephone Co. (1982), 141 D.L.R. (3d) 193 
(N.B.C.A.). 

Tompkins Hardware Ltd. v. North Western Flying Services Ltd. (1982), 139 D.L.R. (3d) 
329 (Ont. H.C.J.), and Ribic v. Weinstein (1982), 140 D.L.R. (3d) 258 (Ont. H.C.J.). 

(1983), 146 D.L.R. (3d) 622 (Ont. C.A.), at 628. See, also. Smith v. Mclnnis, [1978] 2 
S.C.R. 1357, at 1377-78, 91 D.L.R. (3d) 190, per Pigeon J., dissenting, and Speed v. 
Finance America Realty Ltd. (1979), 11 R.RR. 161 (N.S.S.C, App. Div.). 

Supra, note 7, s. 1(c), under "fault". 

See Uniform Law Conference of Canada, Proceedings of the Sixty-Fifth Annual Meeting 
(1983), at 28, and Proceedings of the Sixty-Fourth Annual Meeting (1982), Appendix J, 
at 162. 

See Proceedings of the Sixty-Fifth Annual Meeting, supra, note 61, at 28. 

^^ Alberta Report, supra, note 8, at 15. 



58 
59 

60 
61 



243 



We think that the principle of contributory negligence should not be 
extended to all breaches of contract. Contributory negligence is not relevant in 
regard to a contract which imposes an absolute obligation, for instance, to 
deliver a certain quantity of wheat. 

The Report went on to point out, however, that where a contractual duty of 
care was in issue, concurrent liability in tort was usually present, and that it 
would be anomalous to make the availability of apportionment depend on 
the form of action selected by the plaintiff.^'* The Institute conceded that 
there would be difficulties in distinguishing between cases of breach of a 
contractual duty of care and breaches of other contractual obligations,^^ but 
nevertheless recommended that apportionment should be available only in 
case of breach of a duty of care. 

The English Law Commission, in declining to recommend changes to 
the law of contributory negligence in the context of its Report on 
Contribution,^^ referred to difficulties that could arise if apportionment 
were available in respect of breaches of contract. The Commission stated:^^ 

In our working paper we mentioned that the existing law of contributory 
negligence might be in need of reform but that it was not appropriate to deal 
with it as part of our work on the law of contribution. We drew attention to the 
difficulties in the existing law where the plaintiff claims damages for breach of 
contract. It may be that where the breach of contract in question consists of the 
breach of a contractual duty of care the defendant is entitled to a reduction in 
damages for which he is otherwise liable on the ground of the plaintiff's 
contributory negligence. However, where the contractual breach is of a duty 
other than a duty of care contributory negligence on the part of the plaintiff is 
not, it seems, available as a partial defence. Many of those we consulted 
expressed the view that this was an anomaly, and that the Law Reform 
(Contributory Negligence) Act 1945 should be examined with a view to its 
reform. Some went further and proposed that the overhaul of the law of 
contributory negligence should be done at the same time as that of the law of 
contribution; they pointed out that the subjects were related and to take them 
separately would mean reforms of a 'piecemeal' kind. These arguments have 
force and if we were satisfied that the reform of the law of contributory 
negligence could be dealt wdth satisfactorily in a summary way we might have 
felt able to adopt them. However we doubt whether the partial defence of 
contributory negligence could be slotted into the general law of contract 
vWthout serious repercussions on, for instance, the present law of 'discharge by 
breach' and on the assessment of damages for breach of contract. Take, for 
example, the familiar case of the builder who abandons work because the 
person who engaged him has delayed the payment of an installment. If he is not 
entitled, by the other's breach, to stop work altogether, should he nevertheless 



^"^ Ibid., at 24. 
^5 Ibid., at 25. 

^^ England, The Law Commission, Law of Contract: Report on Contribution, Law Com. 
No. 79(1977). 

^"^ //7/fi^.,para. 30,al9-10. 



244 



be allowed to rely on it as a partial defence to a claim for damages? Our 
preliminary view when we referred to the topic of contributory negligence in 
our working paper was that its reform would call for deeper study than we could 
conveniently give it in a paper on contribution. We are still of this view, and are 
supported in it by comments we received from those we consulted. We are 
therefore not making any proposals in this report for changes in the law of 
contributory negligence. 

Other cases can be envisaged in which apportionment might lead to 
odd results. Often, where the defendant has made a disadvantageous bar- 
gain, she is looking for an excuse to terminate the contract. Consider the 
case of a charter party on terms that have turned out to be advantageous to 
the charterer. The owner may decide to scrutinize the charterer's perform- 
ance in order to detect a deficiency. The charterer carelessly makes a freight 
payment a few hours late, and the owner purports to terminate. Under the 
present law, if it is determined that the termination is wrongful, the owner 
will be liable to pay compensation in full for the charterer's loss. It would 
seem odd to introduce apportionment in a case like this. The charterer's loss 
in such a case is usually equal to the owner's gain. There is incentive enough 
under the present law for the owner to repudiate her obligation. It would 
greatly increase the incentive if the prospect were added that, even if found 
to be in breach of contract, the owner might not have to pay full compensa- 
tion. This would enable a contract breaker to retain a benefit (a part of the 
benefit of the bargain) as a result of her own wrong. 

Another difficult case is that of specific performance. Suppose D agrees 
to sell Blackacre to P at a price of $100,000. D then discovers that the value 
of Blackacre is $150,000 and instructs her solicitor to seek a justification to 
terminate. P commits a minor breach of contract, and D, in breach of her 
own obligations, purports to terminate. If P obtains a decree of specific 
performance, she will capture the whole benefit of the bargain, and it would 
be anomalous to have a rule of damage assessment that differed substan- 
tially in economic effect. The Courts of Justice Act, 1984,^^ empowers the 
court to award damages in substitution for an award of specific perform- 
ance, thereby implying that such an award would have equivalent economic 
effect. Again, if specific performance had a substantially more beneficial 
effect than an award of damages, there would be a case for a widespread 
extension of the right to specific performance, for the basic test for availabil- 
ity of specific performance is inadequacy of an award of damages. If an 
award of damages were liable to fall short of full compensation because of 
apportionment, the plaintiff would be able to argue that this alone justified a 
decree of specific performance. 

These problems might be met with the argument that the courts would 
not be compelled in practice to apportion damages, even if the statute were 
extended to cover all breaches of contract. On the other hand, in view of the 
limited scope of the Canadian Uniform Act^^ and the hesitation exhibited 



^^ S.O. 1984, c. 11, s. 112. 

^^ See supra, note 60 and accompanying text. 



245 



by law reform bodies in other jurisdictions, it would seem somewhat rash to 
recommend extension of apportionment to all breaches of contract unless 
there is a very strong case for such a reform. Before reaching a conclusion, 
various possible approaches, other than that suggested by the Uniform Act, 
will be discussed. 



b. Possible Approaches to Apportionment for Breach of 
Contract 



(1) Breach of Warranty and Physical Damage 

The American Uniform Comparative Fault Act^^ defines "fault" as 
follows: 

1.— (b) 'Fault' includes acts or omissions that are in any measure negligent or 
reckless toward the person or property of the actor or others, or that subject a 
person to strict tort liability. The term also includes breach of warranty, 
unreasonable assumption of risk not constituting an enforceable express con- 
sent, misuse of a product for which the defendant otherwise would be liable, 
and unreasonable failure to avoid an injury or to mitigate damages 

On the inclusion of breach of warranty, the Comment to the American 
Uniform Act states:^' 

An action for breach of warranty is held to sound sometimes in tort and 
sometimes in contract. There is no intent to include in the coverage of the Act 
actions that are fully contractual in their gravamen and in which the plaintiff is 
suing solely because he did not recover what he contracted to receive. The 
restriction of coverage to physical harms to person or property excludes these 
claims. 

The modern American law of strict products liability has developed 
largely from the concept of warranty^^ and it would be anomalous for 
apportionment to apply to products liability actions framed in tort but not 
to those framed in warranty. In the Ontario law of products liability, the law 
of warranty imposes, within a limited class of cases, a strict liability for 
damage caused by defective products.^^ In a case where the plaintiff's loss is 
caused partly by breach of warranty and partly by careless use of the 
product— as, for example, in the case of the defective trailer hitch, discussed 
above^"^— apportionment seems appropriate. Indeed, it is not clear that the 



^^ National Conference of Commissioners on Uniform State Laws, Uniform Comparative 
Fault Act, Uniform Laws Annotated, Vol. 12 (1988 Pocket Part). 

^' Ibid., 1988 Pocket Part, at 39. 

^2 See Prosser, "The Fall of the Citadel" (1966), 50 Minn. L. Rev. 791. 

^^ See Ontario Law Reform Commission, Report on Products Liability, supra, note 10, at 

23-27. 

^'^ See text accompanying note 48, supra. 



246 



exclusion of apportionment is beneficial to plaintiffs because, as indicated 
above, an "all or nothing" choice will often leave the plaintiff with nothing. 

This Commission, in its 1979 Report on Products Liability, recom- 
mended a rule of strict liability for defective products and that apportion- 
ment should apply in case of a loss contributed to by the plaintiff's 
negligence.^^ Consistent with this conclusion, we are of the view that 
apportionment should apply at least to cases of physical damage caused 
under the present law by breach of warranty of the supplier of a product. A 
case can also be made for including other breaches of contract that cause 
physical damage. There seems to be no good reason to exclude apportion- 
ment in the case of a breach of warranty by a supplier of services, or, indeed, 
any breach of contract, that causes personal injury or property damage. 
These are not the types of case, identified above, in which the contract 
breaker profits at the expense of the innocent party.^^ 

(2) Reliance on Promised Performance 

In its Working Paper on contribution,^^ the New Zealand Contracts 
and Commercial Law Reform Committee referred to the restriction of 
apportionment, in the Alberta Institute's Report, to cases of breach of a duty 
of care, and said that it was "inclined tentatively to prefer a reform of wider 
application".^^ Nevertheless, the Committee proposed to limit the applica- 
tion of apportionment in case of breach of contract by another principle. Its 
proposal reads as follows: ^^ 

(1) For the purposes of this Act 'fault' means, on the part of a plaintiff or 
defendant (and whether by act or omission), negligence, breach of statutory 
duty, breach of contract or any other breach of a civil duty owed by the one to 
the other and, in the case of a plaintiff, any unjustified failure to take adequate 
care for his own interests. 

(2) A failure by a plaintiff to take adequate care for his own interests is 
unjustified if it is not excused (i) by the terms of a contract or other agreement 
between the plaintiff and the defendant, or (ii) by the rules of the common law 
or of equity, or (iii) by the provisions of any enactment. 

(3) Care taken by a plaintiff for his interests is not inadequate, by reason only 
and to the extent that it constitutes a failure to take precautions against 



''^ See supra, note 10, at 96-97, and s. 6(1) of the Draft Bill proposed in the Report on 
Products Liability, supra, note 10. 

See discussion supra, this ch., sec. 2(c)(ii)a. 

New Zealand, Contracts and Commercial Law Reform Committee, Working Paper on 
Contribution in Civil Cases (1983). 

"^^ Ibid., para. 8.6, at 25. 

''^ //7/W., para. 9.1, at 30. 



247 



(a) the breach by the defendant of an obligation owed to the plaintiff 
under the terms of a contract, or 

(b) the deliberate fault of a defendant before the plaintiff knows or ought 
to be taken to know that, as the case may be, the breach or the 
deliberate fault has occurred. 



By way of explanation, the Committee stated: 



80 



[I]t is (agreement apart) not open to a contract-breaker to suggest that the 
innocent party showed lack of care because, before breach, he acted on the basis 
that the wrongdoer would perform his contract. Hence, in a case, say, between a 
building owner and a contractor, it could not be held against the owner that he 
failed to tell the contractor all he knew about the site if the entire responsibility 
for its suitability had been allocated to the contractor by the building contract. 

This restriction would, it seems, exclude apportionment in many cases 
where apportionment would be permitted under the terms of the Canadian 
Uniform Act. For example, in a case where loss was caused by the defend- 
ant's negligent professional opinion based on misleading or incomplete 
information given by the plaintiff, apportionment would be excluded. It is 
not clear, therefore, that the New Zealand proposal is wider than the 
Uniform Act, for in the case just mentioned it seems that the Uniform Act 
would permit apportionment. Furthermore, there seems to be no strong 
reason to exclude apportionment in such cases unless the agreement allo- 
cates the entire risk to the defendant.^' 

The Commission recommends that, subject to the recommendation we 
make later concerning the right of the parties to agree otherwise,^^ appor- 
tionment should not be excluded where the plaintiff has relied on the 
defendant's contractual assurance of performance.^^ Accordingly, where, 
for example, the plaintiff has negligently withheld critical information from 
the defendant, thereby affecting the defendant's performance, apportion- 
ment would be available. However, where the plaintiff has not acted in this 
manner, and where the plaintiff's reliance on the defendant's assurance of 
performance is reasonable, there would be no basis for finding that the 
plaintiff's negligence has contributed to the loss.^"^ 



^^ Ibid., para. 8.6(d), at 29. 

^' As in Bank of Nova Scotia v. Terry, supra, note 52. 

^^ See infra, this ch., sec. 2(c)(ii)c. 

^^ Draft Act, s. 2(2)(c) and (d). 



^'^ In Sirois v. Federation des Enseignants du Nouveau- Brunswick (1984), 56 N.B.R. (2d) 
50, 28 C.C.L.T. 280 (Q.B.), a teachers' federation was held to be liable in tort for 
misinforming its members of their rights to unemployment insurance benefits, but the 
members were held to have been contributorily negligent in not consulting the associa- 
tion office, as invited. Apportionment would seem appropriate in a similar case based 
on breach of contract. 



248 



(3) Deliberate Breach 

Professor Williams, in discussing the scope of contributory negligence 
at common law, suggests that the defence applied to "unintentional" 
breaches of contract,^^ and, in discussing the scope of the English apportion- 
ment legislation, he suggests that "fault" extends to negligent breaches of 
contract. ^^ In his draft Act, however, he includes all breaches of contract 
"whether or not the wrong is intentional".^'' Often an intentional breach of 
contract causes unintended harm. As in the case of torts, discussed above,^^ 
there seems no strong reason to exclude intentional breaches of contract 
from the scope of the apportionment legislation, and we so recommend.^^ 

c. Conclusions 

As has been shown, there are a considerable number of difficulties in 
this area. The Canadian Uniform Act deals with the strongest case for 
apportionment, that is, where there is a breach of a contractual duty of 
care— a case where there is concurrent liability in contract and tort and 
where a serious anomaly would arise in permitting apportionment in the 
one form of action and denying it in the other. Consequently, we have 
concluded that Ontario should go at least as far as the Uniform Act. 

Should it go further? There is a strong argument for including all 
breaches of contract in the legislation and leaving it to the courts to exclude 
apportionment in the appropriate cases. Further, there is the danger of 
inhibiting the development of the power of apportionment at common law, 
a power asserted by some recent Ontario cases. On the other hand, the 
inclusion of all contracts may attract criticism along the lines discussed 
above, and it may seem a weak response to say, with respect to legislation on 
its face positively requiring apportionment, that the courts can be expected 
not to apportion in improper cases. On balance, we have concluded that the 
proposed apportionment legislation should not apply to all breaches of 
contract, but that, subject to certain amendments and one extension, the 
position of the Uniform Act should be adopted. 

Accordingly, we recommend that, like the Uniform Act, the proposed 
Contribution and Comparative Fault Act should contain a provision mak- 
ing apportionment applicable in the case of breach of a duty of care arising 
from a contract that creates a liability for damages.^^ For reasons stated 



^^ Williams, supra, note 22, at 214 et seq. 

^^ Ibid., at 328 et seq. 

^^ Ibid., at 529, s. 39(1) (definition of "wrong"). 

^^ See supra, this ch., sec. 2(b)(iii). 

^^ See the closing portion of Draft Act, s. 2(2). 

^^ Ibid., s. 2(2)(c). 



249 



above,^' we would go further than the Uniform Act in one respect and 
recommend that apportionment should apply in the case of personal injury 
or property damage caused by a breach of contract.^^ Apportionment for 
loss caused by breach of contract should, however, be subject to any 
agreement, express or implied.^^ Finally, we have concluded that, as a 
general principle, the proposed Act should also provide that nothing in the 
Act shall be construed to remove any power of apportionment the courts 
have apart from statute. We shall deal with this matter below^"^ 

(d) Breach of Statutory Duty 

The Canadian Uniform Act includes in its definition of "fault" in 
section 1 "a breach of a statutory duty that creates a liability for damages". It 
has been recendy held by the Supreme Court of Canada that a breach of a 
statutory duty does not in itself give rise to civil liability.^^ However, there 
are cases where the Legislature expressly creates a cause of action and, in 
such cases, in the absence of a contrary intention in the legislation, there 
seems no reason to exclude apportionment. Accordingly, it is recommended 
that, like the Uniform Act, the proposed Contribution and Comparative 
Fault Act should include a provision extending apportionment to a breach 
of a statutory duty that creates a liability in damages.^^ 

(e) Breach of Fiduciary Duty 

In this section, we shall consider whether the partial defence of contrib- 
utory fault ought to be extended by statute to breach of fiduciary duty, 
including breach of trust. The issue is controversial, particularly in the 
traditional trust context, given the nature of the relationship between 
beneficiary and trustee and the onerous duties placed on the latter. The 
matter has also generated some debate in the context of other fiduciary 
relationships, having regard to the gradual extension, for a variety of 
reasons, of "fiduciary" obligations into different areas, although it is not 
entirely clear to what extent these new fiduciary relationships give rise to the 
same rights and duties as those found in the ordinary trust context. 

There is virtually no legislation,^^ and little case law, concerning the 
relationship between contributory fault and breach of fiduciary duty 

^' Supra, thisch., sec. 2(c)(ii)b(l). 

^2 Draft Act, s. 2(2)(d). 

^^ Ibid., s. 2(4). 

^^ Infra, this ch., sec. 9. 

^^ The Queen in right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205, 143 
D.L.R. (3d)9. 

^^ DraftAct, s. 2(2)(b). 

^^ Although see s. 34(1) of the Trustee Act, R.S.O. 1980, c. 512. Under this section, where a 



250 



However, in Carl B. Potter Ltd. v. The Mercantile Bank of Canada, "^^ the 
Supreme Court of Canada did consider the question whether the term 
"fault" in the Nova Scotia Contributory Negligence Act"^^ was wide enough 
to include a breach of trust. Ritchie J., for the Court, stated that, "whatever 
extended meaning may be given to the word 'fault' it must involve a breach 
of duty of some kind".'^^ He then went on to say that there was "no 
authority for the proposition that a cestui que trust owes a duty to its trustee 
to ensure that the terms of the trust are observed". '^^ 

In a recent New Zealand case, Day v. Mead, '^^ the Court of Appeal 
reached the opposite conclusion in a different fiduciary context. In that 
case, the plaintiff sued his former solicitor, who had advised the plaintiff to 
invest in a company of which the solicitor was a director. The solicitor failed 
to make adequate disclosure of this conflict of interest as well as other 
conflicts. The company ultimately went into receivership. The trial judge 
held for the plaintiff, but reduced the damages awarded on the ground that, 
before making the investment, it would have been prudent for the plaintiff 
to obtain completely independent and competent financial advice. The 
plaintiff appealed, arguing that damages for compensation for breach of 
fiduciary duty were not apportionable. The appeal was dismissed. 

The reasons for dismissing the plaintiff's appeal differ from one judge 
to another, although all members of the Court of Appeal were willing to 
import some notion of comparative fault or responsibility into the equitable 
context under consideration. However, it bears emphasizing that the Presi- 
dent of the Court did acknowledge that, having regard to the high standard 
of conduct expected of fiduciaries, a strong case must be made out to relieve 
a fiduciary of complete responsibility. 

While the Alberta Report does address the issue, at least insofar as 
trusts are concerned, it offers very little assistance in determining precisely 
why contributory fault should or should not be made applicable in that 



breach of trust is actually requested, or consented to in writing, by a beneficiary, the 
court has a power to make "such order as to the court seems just for impounding all or 
any part of the interest of the beneficiary in the trust estate by way of indemnity to the 
trustee. . .". In its Report on the Law of Trusts (1984), Vol. II, at 384, the Commission 
recommended that this power should be continued in the Trustee Act proposed in that 
Report. 

^^ [1980] 2 S.C.R. 343. 

^^ R.S.N.S. 1967, c. 54, s. 1. 

'^ Supra, note 98, at 352. 

•01 Ibid. 

'0^ Unreported (July 31, 1987, N.Z.C.A.). The facts appear in the report on an interlocutory 
matter: Mead v. Day, [1985] 1 N.Z.L.R. 100. For a recent discussion of this case and its 
implications, see "Compensation for Breach of Fiduciary Duty", by the Honourable 
Mr. Justice Gummow, of the Federal Court of Australia, a paper presented to The 
International Symposium on Trusts, Equity and Fiduciary Obligations, Faculty of Law, 
University of Victoria (February 14-17, 1988). The discussion appears at 40-48. 



251 



context. The Alberta Institute of Law Research and Reform, in deciding to 
exclude breach of trust from the scope of the apportionment legislatipn, 
dealt with the matter as follows: "We think that the liability between the 
trustees and the beneficiaries of trusts are [sic] adequately and properly 
covered by the law of trusts". ^^^ Since the Uniform Act is based largely on 
the Alberta Report, it is not surprising that the Act contains no reference to 
a breach of trust. Nor did this Commission examine the general issue of 
apportionment of damages between beneficiary and trustee in its Report on 
the Law of Trust sJ^"^ 

The issue under consideration is, we believe, an important one. It is, as 
well, exceedingly difficult, and is complicated by the increasing number and 
variety of situations in which a fiduciary obligation is now imposed as a 
matter of law. It may be that a case can be made for extending apportion- 
ment to some breaches of fiduciary duty—perhaps, for example, where such 
a duty arises in commercial situations quite distinct from the more tradi- 
tional trust context. 

However, the Commission is not convinced that a statutory extension 
of the doctrine is desirable, at least at this time. For one thing, it may be 
argued forcefully that the essence of a fiduciary, and especially a trust, 
relationship is that the beneficiary should be entitled to rely entirely on the 
fiduciary, and that the beneficiary should not be penalized for failing to take 
independent steps to protect her own interests or to check that the fiduciary 
is doing her duty. While the notions of fault or negligence pertain to the duty 
to take reasonable care, the duty of a fiduciary is, as we have said, consider- 
ably higher. There is a danger, then, that the introduction of contributory 
fault will subvert or dilute this stricter duty. 

Moreover, the law in this area is fluid and developing; for this reason, 
we are of the opinion that further time is needed to examine more fully 
whether contributory fault is an appropriate principle to be imported into 
the many different contexts in which a fiduciary obligation is imposed. Such 
an examination can and, in our view, should be undertaken by the courts. It 
will be recalled that a similar type of approach has been proposed by the 
Commission with respect to breaches of contract. '^^ 

Accordingly, the Commission recommends that the proposed appor- 
tionment legislation should not be extended to breach of fiduciary duty, 
including breach of trust. Rather, the issue of the applicability of apportion- 
ment in this context should be left to be determined by the courts on a case- 
by-case basis. '^^ 



^^^ Alberta Report, supra, note 8, at 25. 

^^ But see supra, note 97. 

'^^ See supra, this ch., sec. 2(c)(ii)c. 

•^ Draft Act, s. 2(7). See, further, infra, this ch., sec. 9. 



252 



(0 Losses Subject to Apportionment 

In the previous sections of this chapter, we recommended that appor- 
tionment should be available where liability for damages arises from a tort 
or breach of statutory duty, or from a breach of contract that causes physical 
damage (that is, personal injury or property damage) or a breach of a 
contractual duty of care. The issue to be resolved in this section concerns the 
kinds of loss that ought to be subject to apportionment, bearing in mind 
these recommendations. 

Under the American Uniform Comparative Fault Act, although the 
"specific application of [the principle of apportionment]. . .is confined to 
physical harm to person or property", the Comment is clear that this 
principle "necessarily includes consequential damages deriving from the 
physical harm".'^^ While "matters like economic loss" are not specifically 
included in the types of loss subject to apportionment, the Comment states 
that apportionment may still apply under the common law. ^^^ 

The former versions of the Canadian Uniform Contributory Fault Act 
did not deal expressly with the issue. However, in a Report by the Alberta 
Commissioners to the Uniform Law Conference of Canada, made prior to 
the adoption of the final version of the Act, the Alberta Commissioners 
stated: '09 

We are not sure. . .that damage to person or property includes economic loss, or 
that a failure to take care of person or property includes a failure to take care of 
one's economic interests. We take it that, if the Conference intends to extend 
the defence of contributory fault to all claims based on contract, it must intend 
to include claims for economic loss. We would recommend that, whether or not 
the Conference makes the extension, the terminology be changed so that 
'damage' would clearly include economic loss, and so that contributory 'fault' 
would clearly include a failure of a person to take reasonable care of his own 
interests of any kind. 

This view was accepted by the Conference, so that section 1 of the present 
Uniform Act defines "damage" to include "economic loss" and "fault" to 
include "a failure of a person to take reasonable care of his own person, 
property or economic interest". 

The Commission believes that there are sound reasons for adopting the 
position taken in the Uniform Act and, therefore, permitting apportion- 
ment where any kind of loss has occurred as a result of the kinds of 
wrongdoing mentioned above. Problems could arise in framing legislation 
so as to draw a clear distinction between various types of loss. Attempts to 



'^"^ Supra, note 70, 1987 Pocket Part, at 40. 

'08 Ihid. 

Proceedings of the Sixty- Fourth Annual Meeting, supra, note 55, Appendix I, "Contrib- 
utory Fault and Contribution Report of the Alberta Commissioners" 1 18, at 120. 



253 



draw such a distinction for purposes of remoteness have proved to be very 
difficuh. Moreover, many of the recent tort cases in which apportionment 
has been ordered under existing legislation have, in fact, involved economic 
loss, and there seems to us to be no strong reason to exclude apportionment 
in, for example, contract cases involving such loss. 

For the foregoing reasons, therefore, we believe that it would be wiser to 
leave it to the courts to deal with apportionment in all cases, including those 
involving economic loss. As we have suggested earlier, "^ it would appear 
that the courts may exclude or limit apportionment in a proper case by 
attributing the loss in question entirely, or almost entirely, to the defendant's 
conduct. Accordingly, we recommend that apportionment should apply to 
all types of loss, including economic loss.'^^ 

3. SET OFF AND COUNTERCLAIM 

Problems arise where, as is not uncommon, an accident causes damage 
to both responsible parties, and each claims compensation from the other. 
Suppose that P and D are equally responsible for an accident in which P's 
damage is $10,000 and D's damage is $20,000. If neither party is insured, 
there is no objection to giving judgment to D for $5,000, that is, the 
difference between $10,000 recoverable by D from P and $5,000 by P from 
D. If either party were insolvent, it would be most unjust to compel the other 
to pay full compensation with the prospect of recovering only a small 
fraction of her own judgment. 

If, however, as is now required in Ontario up to certain limits for 
automobile drivers, P and D are insured against liability for the loss,"^ the 
effect of setting off the judgments would be to benefit the insurers. The 
parties have suffered compensable losses of $15,000, but only $5,000 would 
be paid out. One of the purposes of compulsory automobile insurance is to 
provide a source of compensation for loss caused by accidents and this 
purpose would be defeated if set off were allowed. 

The Ontario Rules of Civil Procedure"^ provide as follows: 

27.09(3) Where both the plaintiff in the main action and the plaintiff by 
counterclaim succeed, either in whole or in part, and there is a resulting balance 
in favour of one of them, the court may in a proper case give judgment for the 
balance and dismiss the smaller claim and may make such order for costs of the 
claim and counterclaim as is just. 



''^ See supra, this ch., sec. 2(b)(iii)a. 

"' Draft Act, s. 2(5). 

''^ Compulsory Automobile Insurance Act, R.S.O. 1980, c. 83. 

''^ Rules of Civil Procedure, O. Reg. 560/84. 



254 



Thus, the court has power to order a set off "in a proper case". Under the 
former Rules of Practice,""^ it appears that the practice was not to order a set 
off in cases where this would benefit insurers. In an automobile accident 
case in which a set off was opposed by the defendant but favoured by her 
insurer, the Ontario Court of Appeal said simply that a set off was "not in 
accordance with the practice".''^ 

The same practice apparently obtains in Alberta. The Alberta Institute 
of Law Research and Reform said on this point: ''^ 

The practice is not to provide for set-off in motor vehicle cases. We have 
concluded that it is best to leave the question to be decided by the court in each 
individual case, with the exception that in actions arising out of the operation of 
motor vehicles, the statute should provide that there shall be no set-off unless 
the court otherwise orders. 

No such provision, however, appears in the Canadian Uniform Act. The 
express exclusion of motor vehicle cases seems too narrow, for the problem 
of a set off benefiting insurers could arise in cases other than automobile 
accidents. This point could be met by a provision along the lines of the 
original section 3 of the American Uniform Comparative Fault Act,"^ 
which provided: 

3. A claim and counterclaim shall be set off, and only the difference between 
them is recoverable in the judgment. However, if either or both of the claims are 
covered by liability insurance and an insurance carrier's liability under its 
policy is reduced by reason of the set-off, the insured is entitled to recover from 
the carrier the amount of the reduction. Amounts so recovered shall be credited 
against pertinent liability policy limits. For purposes of uninsured-motorist and 
similar coverages, the amounts so recovered shall be treated as payment of 
those amounts to the insured by the party liable. 

Similarly, the Irish Civil Liability Act, 1961 "^ has a special provision on 
insurance, which reads, in part, as follows: 

36.— (4) ...[Wlhere a claim is made against a person who is insured in 



'•'* R.R.0. 1980, Reg. 540, rr. 1 18 and 1 19. With respect to set offs, see the {oxmtx Judicature 
Act, R.S.O. 1980, c. 223, ss. 134 and 136. 

"^ Wells V. RusselL [1952] O.W.N. 521 (C.A.), at 522. See, also, Lewenza v. Ruszczak 
(1960), 22 D.L.R. (2d) 167 (Ont. C.A.), where a set off was refused in the case of an 
insurer suing by subrogation. 

"^ Alberta Report, supra, note 8, at 27. 

Supra, note 70. The present § 3 reads as follows: 

3. A claim and counterclaim shall not be set off against each other, except by 
agreement of both parties. On motion, however, the court, if it finds that the 
obligation of either party is likely to be uncollectible, may order that both parties 
make payment into court for distribution. The court shall distribute the funds 
received and declare obligations discharged as if the payment into court by either 
party had been a payment to the other party and any distribution of those funds 
back to the party making payment had been a payment to him by the other party. 



117 



118 



Civil Liability Act, 1961, No. 41, s. 36(4). 



255 



respect of a liability alleged in that claim and the claim is paid by the insurer 
with a deduction in respect of a sum owed to the insured by the person making 
such claim, the insured or any person representing or deriving title under him 
shall be entitled to recover from the insurers the amount of the said deduction. 

As is shown by a comparison of the above statutes, different approaches 
are possible to the drafting of provisions respecting set offs and counter- 
claims. Any such provision is certain to give rise to complexities of its own. 
There does not seem to have been any particular problem in this area. 
Moreover, the Canadian Uniform Act includes no such provision, and rule 
27.09(3) of the Rules of Civil Procedure appears to give adequate discretion 
to the court. Accordingly, it is recommended that no specific provision be 
included on this matter. 

4. COSTS 

There are, at present, several relevant legislative provisions in Ontario 
dealing with costs. The Negligence Act ^^^ includes a provision on the award 
of costs in the context of the plaintiff's own negligence: 

8. Where the damages are occasioned by the fault or negligence of more than 
one party, the court has power to direct that the plaintiff shall bear some 
portion of the costs if the circumstances render this just. 

The Courts of Justice Act, 1984^^^ provides generally for an award of costs, 
as follows: 

141.— (1) Subject to the provisions of an Act or rules of court, the costs of and 
incidental to a proceeding or a step in a proceeding are in the discretion of the 
court, and the court may determine by whom and to what extent the costs shall 
be paid. 

Finally, rule 57.01(l)(b) of the Rules of Civil Procedure'^i provides that, in 
exercising its discretion under section 141, the court may consider, among 
other things, "the apportionment of liability". 

Although there are some cases to the contrary, '^2 the Ontario practice 
generally appears to be to award costs in the ordinary way to a successful 
plaintiff who recovers a judgment, notwithstanding the fact that, because of 
the plaintiff's contributory negligence, the amount awarded is less than the 
amount claimed. '^3 This is said by the Alberta Institute of Law Research 



'^^ Supra, note 6, s. 8. 
'20 5'M/7ra,note68,s. 141. 
'2' Supra, note 113. 

'22 See, for example, Heggtveit v. Ottawa Brickcote Ltd., [1952] O.W.N. 541 (C.A.). See, 
also, McConnell v. Alexander, [1954] O.W.N. 61 (H.C.J. ). The decision concerning costs 
in the latter case was amplified in McConnell v. Alexander, [1954] O.WN. 266 (H.C.J. ). 

'23 In Tuuri v. Canadian Pacific Railway, [1938] O.W.N. 425 (C.A.), counsel for the 
defendant sought to have the Court exercise its jurisdiction to apportion costs under 



256 



and Reform also to be the practice in Alberta. ^^"^ The Institute recom- 
mended that costs should continue to be dealt with under the general 
discretionary rule,'^^ and no provision on costs appears in the Canadian 
Uniform Act. 

The Commission wishes to express its concern about those cases in 
which a finding of contributory negligence becomes, in itself, a ground for 
apportioning costs. We are of the view that, while there may well be 
circumstances where such apportionment is justified, this power to appor- 
tion costs should not be exercised automatically, without considering all the 
circumstances of the case. On balance, however, the Commission has 
concluded that the Courts of Justice Act, 1984 and the Rules of Civil 
Procedure do seem to give the court adequate power to deal appropriately 
with costs. Accordingly, we recommend that no express provision 
corresponding to section 8 of the existing Negligence Act should be incorpo- 
rated into any new legislation. 

In the case of a successful counterclaim involving apportionment, 
more difficult problems arise, but these are not fundamentally different in 
nature, it would seem, from those arising in any other case of a successful 
counterclaim. Rule 27.09(3), reproduced in the preceding section of this 
chapter, gives express power to the court to "make such order for costs of the 
claim and counterclaim as is just". The Irish Civil Liability Act, 1961 ^^^ 
includes an express provision on this point: 

42. As a general principle, but not so as to limit the judge in the exercise of 
his discretion, where damages are awarded on claim and counterclaim subject 
in each case to a reduction for contributory negligence. . .costs shall be awarded 
in the same proportions as damages. 

This provision still leaves an overriding discretion in the court. In the 
absence of evidence that the powers of the court under the existing rules are 



what is now s. 8 of the Negligence Act. The Court responded as follows (at 428): "There 
are no special circumstances here present, and the exercise of the power in this case 
would involve the principle that it should be applied in every case where there is 
negligence on both sides". 

See, also, the following cases where the plaintiff was awarded full costs despite 
being held contributorily negligent to some significant degree: Stark v. Batchelor, [1928] 
4 D.L.R. 815 (Ont. App. Div.); Wright v. McConnell, [1953] O.W.N. 372 (C.A.); Hogan v. 
Italian Mosaic & Tile Co. Ltd., [1927] 1 D.L.R. 1149 (Ont. H.C.J.); Saunders v. Brown, 
[1943] O.W.N. 675 iH.C.J.);md Lusty v. Peer and DeGraw, [1952] O.W.N. 763 (H.C.J.). 
In addition, see Orkin, The Law of Costs (2d ed., 1987), at 2-47, who states that "[t]here 
is. ..no absolute rule of law or practice which obliges the judge to apportion costs 
between the parties" in contributory negligence cases. Therefore, a contributorily 
negligent plaintiff "will be awarded his full costs in the absence of special cir- 
cumstances". 



^■^^ Alberta Report, supra, note 8, at 88. 

125 Ibid., at 90. 

•26 5'wpra,notell8,s. 42. 



257 



inadequate, and having regard to the absence of any provision in the 
Uniform Act, no express provision is recommended on this matter. 

5. CONTRIBUTORY NEGLIGENCE AND MULTIPLE 
WRONGDOERS 

Suppose that P, Dl, and D2 are each equally responsible for a $6,000 
loss suffered by P. If Dl and D2 are both sued and are both solvent it makes 
no difference whether P recovers judgment for $4,000 against Dl and Dl 
then obtains contribution to the extent of $2,000 from D2, or whether P 
recovers $2,000 from each of Dl and D2. Difficulties arise, however, in three 
situations: (1) where D2 is absent or insolvent; (2) where Dl and D2 have 
claims against P; and (3) where P is contributorily negligent vis-a-vis Dl, but 
not vis-d-vis D2. 



(a) Absent or Insolvent Wrongdoer 

The first fact situation mentioned above, involving an absent or insol- 
vent wrongdoer, was the subject of discussion in chapter 3 of this Report. In 
that chapter, we considered the principle of in solidum liability, whereby 
wrongdoers whose acts concur to cause a single, indivisible harm are each 
liable to the injured person for the entire amount of the damage suffered. In 
the course of discussing in solidum liability, the Commission considered the 
desirability, in the case of a contributorily negligent plaintiff and an insol- 
vent or absent wrongdoer, of modifying the rule, along the lines of the 
American Uniform Comparative Fault Act,^^^ to require the plaintiff to 
share the burden of insolvency or absence with other wrongdoers. For 
reasons set out in chapter 3,^^^ we rejected this alternative, and recom- 
mended no change in the principle of m solidum liability, even in the case of 
a contributory negligent plaintiff. '^^ Thus, in the abovementioned example, 
if P were to sue Dl alone, she would recover two-thirds of her loss ($4,000), 
on the basis that she is one-third to blame, and Dl would bear the risk of 
D2's insolvency or absence. We note that this is the position adopted by the 
Canadian Uniform Act. ^^^ 



^27 5"wpra, note 70, § 2(d). 

'^^ Supra, ch. 3, sec. 4. 

'^^ Ibid. While, under the Commission's proposals, a contributorily negligent plaintiff 
would not bear the risk of an insolvent or absent wrongdoer, where there are more than 
two concurrent wrongdoers the share of the absent or insolvent wrongdoer would be 
divided among the remaining wrongdoers in proportion to their respective degrees of 
fault. 

'^^ See supra, note 7, s. 5(1), reproduced supra, this ch., sec. 1(b), and s. 6, which provides 
that "[t]he liability of concurrent wrongdoers for damages is joint and several", that is, in 
solidum. See, also, ibid., s. 9, which deals with the apportionment of contribution 
among wrongdoers where the "contribution of a concurrent wrongdoer cannot be 
collected". 



258 



(b) P Liable to Di and D2 on Counterclaims, and Di and D2 
Liable to Each Other 

Professor Williams has argued that, where three parties all suffer 
damage in circumstances where each is partly responsible, there is a case for 
apportioned judgments because the calculation and entering of six separate 
judgments would be "an unduly complicated way of disposing of the 
matter", •^^ and would require a party to advance money that she would 
have to recover subsequently from others. Arguments about complexity, 
however, cut both ways on this issue. Professor Williams' draft legislation for 
apportioned judgments, adopted in the Irish Civil Liability Act, 1961 P'^ 
contains twelve subsections. It would seem that the rule of in solidum 
habiUty has not given rise to great difficulty in practice. ^^^ Perhaps most 
importantly, a system of apportioned judgments would be inconsistent with 
the position we have taken in chapter 3 with respect to in solidum hability. 
Consequently, it is recommended that the principle of in solidum liabiHty 
should be retained and no provision should be made for apportioned 
damages even where three or more parties suffer damage for which each is 
partly responsible.*^"^ 

(c) P CONTRIBUTORILY NEGLIGENT ViS-A- ViS Dl BUT NOT 
ViS-A-ViS D2 

Cases can be envisaged in which the plaintiff conducts herself dif- 
ferently towards different defendants. Suppose that the plaintiff's architect 
and a municipal building inspector are both responsible for a loss caused by 
the building of the plaintiff's house on an inadequate foundation, and that 
the plaintiff is partly responsible for the loss in that she negligently furnished 
the architect (but not the building inspector) with soil test results that related 
to a different site. In Acrecrest Ltd. v. W.S. Hattrell & Partner s,^^^ Donald- 
son L.J. said of such a case:*^^ 

I can conceive of two situations in which a Court considering a claim for 
contribution between the first and second defendants might be concerned with 
the plaintiff's contributory negligence. The first is if the plaintiff has conducted 
himself differently towards the first and second defendants so that, for exam- 
ple, his loss is £1,000 but the first defendant's liability is only £250 (75% 



^^' 5'w/7ra,note22, at398. 
'^^ Supra, note 118, s. 38. 

See supra, ch. 3, especially sec. 4. 

DraftAct, s. 4(1). 



133 
134 

135 



[1983] Q.B. 260, [1983] 1 All E.R. 17 (C.A.) (subsequent reference is to [1983] Q.B.), 
overruled on other grounds by Governors of the Peabody Donation Fund v. Sir Lindsay 
Parkinson & Co. Ltd., [1985] 1 A.C. 210, [1984], 3 W.W.R. 953 (H.L.). 

'^^ Supra, note, 135, at 280-81. 



259 



contributory negligence by the plaintifO whereas the second defendant is liable 
for the full amount. If the second defendant claimed contribution, I can see it 
being argued with force that it would not be just and equitable that the first 
defendant's contribution should exceed £250 and that it should probably be 
considerably less. 

The problem has been discussed along with analogous problems in 
chapter 6.^^'^ Our conclusion was that, supposing D2, but not Dl, to have a 
partial defence of contributory negligence, P should recover in full from Dl, 
that D2's liability to contribute should not exceed the extent of her liability 
to P directly, but that up to this limit D2 should be required to contribute in 
the ordinary way. 

6. DOCTRINE OF LAST CLEAR CHANCE 

The doctrine of last opportunity or last clear chance evolved to mitigate 
the rigours of the common law rule denying any recovery in cases of 
contributory negligence. After the introduction of apportionment, there- 
fore, the raison d'etre of the rule disappeared. Nevertheless, some Canadian 
cases held that the rule survived the apportionment Acts,^^^ on the reason- 
ing that the Acts were passed for the relief of plaintiffs, and that, where at 
common law the plaintiff would have been able to recover in full because 
the defendant had the last opportunity of avoiding the harm, the Act should 
be construed to enable plaintiffs to continue to recover in full. The better 
view appears to be, however, that apportionment seeks to do justice to both 
plaintiff and defendant, and where each contributes to the loss the damages 
should be apportioned, irrespective of the effect of the doctrine of last clear 
chance. 

The complexities and artificiality of the doctrine, although necessary 
perhaps in alleviating a harsh common law rule, are additional reasons for 
discarding the doctrine in modern law. This is the recommendation of the 
Alberta Institute. ^^^ The Canadian Uniform Act includes the following 
provision: 

3. This Act applies where damage is caused or contributed to by the Act or 
omission of a person notwithstanding that another person had the opportunity 
of avoiding the consequences of that act or omission and failed to do so. 

It is recommended that the proposed apportionment legislation should 
adopt a similar provision.'"*^ 



^^^ Supra, ch. 6, sec. 3(d)(ii)a. 

'3^ See Seniunas v. Lous Transport (1971), 25 D.L.R. (3d) 277 (Ont. H.C.J.). 

^^^ Alberta Report, supra, note 8, at 10. 

^"^ Draft Act, s. 21. 



260 



7. IMPUTED CONTRIBUTORY NEGLIGENCE 

In a number of cases, the negligence of another person is attributed to 
the plaintiff. The most obvious case is that of loss caused partly by the 
negligence of the defendant and partly by that of the plaintiff's employee. 
Professor Fleming has questioned the justification of apportionment in 
such a case,'"^' but Professor Williams supports it.^'*^ It would seem odd to 
hold the defendant fully liable in a case where the plaintiff's employee 
damaged the plaintiff's truck, the employee being 90 percent to blame for 
the accident and the defendant only 10 percent. In many such cases, a claim 
for contribution against the employee would be worthless. In other cases, 
the plaintiff would feel obliged to indemnify the employee, leading to the 
same net result as the initial imputation to the employer of the employee's 
negligence. Where the plaintiff did not indemnify the employee, the conse- 
quence might be considered oppressive, and to amount to a devious means 
of doing what the plaintiff might hesitate or be unable to do directly, that is, 
sue its own employee for loss caused by negligence in the course of her 
duties. 

Other instances where contributory negligence has been imputed are 
the actions for loss of an employee's services, and actions under Part V of the 
Family Law Act, 1986 ^^^ for loss caused by death of or injury to family 
members. ^"^"^ In the latter case, the Family Law Act, 1986 expressly provides 
that the contributory negligence of the person injured or killed reduces the 
claim. ^4^ In the Commission's recent Report on Compensation for Personal 
Injuries and Death, we recommended that Part V of the Act should be 
repealed. ^^^ 

Judicial opinion has differed with respect to the action for the loss of an 
employee's services, but the "mainstream of Canadian authority" '^^ in the 
analogous case of an action for the loss of a wife's services has been said to be 
that the action is derivative and, therefore, affected by the contributory 
negligence of the person injured. The action for loss of an employee's 
services is generally regarded as anachronistic, and its abolition has been 
recommended by this Commission. *^^ Pending abolition, it is our view the 
action can best be limited by regarding it as derivative and by assimilating it, 



''^^ Supra, note 3, at 260 et seq. 

^^^ Supra, note 22, at 431 et seq. 

^"^^ Family Law Act, 1986, S.0. 1986, c. 4. 

^^'^ //7/J.,s. 61(l)and(2). 

^"^5 Ibid., s. 61(3). 

Ontario Law Reform Commission, Report on Compensation for Personal Injuries and 
Death (1987), ch. 2, esp. sec. 4(d), and ch. 4, sec. 5. 

'"^^ Enridge v. Copp (1966), 57 D.L.R. (2d) 239 (B.C.S.C.). 

Report on Compensation for Personal Injuries and Death, supra, note 146, ch. 2, sec. 9. 



261 



as far as possible, with an action by the injured person herself. This implies 
the reduction of the employer's recovery in accordance with the employee's 
contributory negligence. 

The Alberta Institute of Law Research and Reform reached the same 
conclusion'"*^ and the Canadian Uniform Act contains the following provi- 
sion: 

5.— (2) Where a person other than a person referred to in subsection (1) 
makes a claim arising from the damage suffered by a person referred to in 
subsection (1) the liability for damages of a person whose fault contributed to 
the damage is reduced by an amount of the damages proportionate to the 
degree to which the fault of the person who suffered the damage from which the 
claim arose contributed to the damage. 

The need for such an express provision in Ontario is perhaps debatable, in 
that the actions for loss of a wife's and child's services and for loss of 
consortium have been aboUshed,'^^ and, as we have seen, the Family Law 
Act, 1986 expressly deals with the question of contributory negligence in 
actions within its scope. However, the action for loss of an employee's 
services still exists, in respect of which, it would seem, the provision in the 
Canadian Uniform Act confirms existing law. It is possible also that an 
action could be brought, at common law rather than under the Family Law 
Act, 1986, for economic loss caused by injury to a third party. '^^ Accord- 
ingly, we recommend that a provision dealing with the same issue covered 
by section 5(2) of the Uniform Act should be included in our proposed 
apportionment legislation. '^^ 

8. FACT AND LAW 

The Ontario Negligence Act currently provides: 

7. In any action tried with a jury the degree of fault or negligence of the 
respective parties is a question of fact for the jury. 

The Canadian Uniform Contributory Fault Act includes a wider provision: 
4. In every action, 

(a) the fault or the wrongful act, if any; 



^^'^ Alberta Report, supra, note 8, at 97. 

'^^ Family Law Reform Act, R.S.O. 1980, c. 152, s. 69(3) and (4), preserved by the Family 
Law Act, 1986, supra, note 143, s. 71(1). 

'5' See Graham v. Toronto Transportation Comm., [1945] O.W.N. 904 (H.C.J. ), aff'd [1946] 
O.W.N. 274 (C.A.), and Young v. Burgoyne (1981), 122 D.L.R. (3d) 330 (N.S.S.C, T.D.). 

•^2 Draft Act, s. 2(3). 



262 



(b) the degree to which the fault or wrongful act of a person contributed 
to damage; and 

(c) the amount of damages, 

are questions for the trier of fact. 

This provision is based on the old model Uniform Act, in force in Alberta. '^^ 
It would seem that paragraphs (a) and (c) of the Uniform Act go beyond 
matters relating directly to apportionment. To say that in every action the 
fault or the wrongful act and the amount of damages are questions for the 
trier of fact may have the effect of altering the powers of juries generally, and 
will raise difficulties of interpretation in cases that have nothing to do with 
apportionment. Since the Commission has recommended the abolition of 
the civil juryj^^"^ there seems to be little case to be made for a general 
provision affecting jury powers. Accordingly, it is recommended that only a 
provision similar to section 4(b) should be included in the proposed appor- 
tionment legislation.'^^ Furthermore, we recommend that, if the degrees to 
which the fault of the plaintiff and defendant contributes to the damage 
cannot be determined in relation to each other, they should be deemed to 
have contributed equally in relation to each other. '^^ 

9. EXISTING RIGHTS OF APPORTIONMENT 

In chapter 4 of this Report, the Commission considered the effect that 
its proposed new statutory right of contribution should have upon any other 
right to contribution or indemnity that the parties may already have at 
common law, by statute, by virtue of a contract, or as a result of any other 
legal obligation. '^^ In this section, we deal with the analogous issue in the 
context of comparative fault. 

With respect to existing statutory rights of apportionment, we have 
come to the same general conclusion to which we came when we considered 
existing statutory rights of contribution, namely, that the relevant provisions 
in the proposed Contribution and Comparative Fault Act ought to 
govern. '^^ We are of the view that these provisions establish an apportion- 
ment regime that, in principle, should supersede other statutory provisions. 



^^^ Contributory Negligence Act, supra, note 8, s. 5. 

^^^ Ontario Law Reform Commission, Report on the Administration of Ontario Courts, 
Part I (1973), at 350. 

•55 Draft Act, s. 22. 

•56 Ibid., s. 2(6). 

•5^ Supra, ch. 4, sec. 3(c). 

•58 Draft Act, s. 2(7). 



263 



However, we do not wish to be doctrinaire concerning the appHcation 
of our Act. Two exceptions to the general rule ought to be made. First, we 
recommend that the apportionment provisions of the Contribution and 
Comparative Fault Act should have primacy over any other Act that 
provides for apportionment, unless the other Act specifically states that it is 
to apply notwithstanding the proposed Act.'^^ 

As in the case of the contribution proposal, we believe that the preced- 
ing recommendation, if enacted, would necessitate a review of any existing 
apportionment legislation. Therefore, we recommend that those govern- 
mental officials responsible for the administration of other relevant Acts 
should review those Acts in order to determine whether their apportion- 
ment provisions ought to be made to apply notwithstanding the Contribu- 
tion and Comparative Fault Act. 

The second exception concerns the type of apportionment power that 
now arises under section 34(1) of the Trustee Act^^^ and that, in its 1984 
Report on the Law of Trusts, the Commission proposed ought to be 
continued in its revised Trustee Act .^^^ Accordingly, we recommend that 
nothing in the proposed Contribution and Comparative Fault Act should 
affect this provision in any way. '^^ 

With respect to existing non-statutory rights of apportionment, the 
Commission has come to a different conclusion from the one adopted in the 
contribution context. In the latter context, we proposed that, subject to four 
exceptions, our Contribution and Comparative Fault Act ought to govern all 
non-statutory rights to contribution. Accordingly, rights to contribution 
arising at common law, for example, would be superseded under our 
recommendations. 

As we have seen earlier in this chapter, the Commission has recom- 
mended that the proposed apportionment legislation should not be 
expressly extended to all breaches of contract or to breaches of a fiduciary 
duty, including breaches of trust. ^^^ This proposed limitation on the purview 
of our legislation was not intended to preclude the possibility of apportion- 
ment in these cases (and, indeed, in other cases not governed by statute). 
Rather, we recognized that, since the extension of apportionment in these 
areas is, or would be, very controversial, it would be preferable for the law to 
develop on a case-by-case basis. In this manner, the evolution of common 
law or equitable apportionment principles, responding specifically to the 



159 Ibid. 

1^^ Supra, note 97. The provision is discussed ibid. 

'^1 See ibid. 

•^2 Draft Act, s. 23(2). 

^^^ See supra, this ch., sees. 2(c)(ii)c and 2(e), respectively. 



264 



complexity of the issues in the context of breach of contract and breach of 
fiduciary duty— as well as in other contexts— would remain possible. 
Accordingly, we recommend here that nothing in the proposed Contribution 
and Comparative Fault Act should derogate from the power a court has to 
apportion damages apart from statute. '^'^ 

Recommendations 

The Commission makes the following recommendations: 

1. Subject to the following recommendations, where a person is injured by 
the wrongful act of one or more persons and the fault of the injured 
person is found to have contributed to the damage, the court should 
determine the degrees of fault of the person or persons and of the 
injured person that contributed to the damage, and should apportion 
the damages in proportion to the degrees of fault that are so found. 

2. Subject to Recommendation 3, all torts of negligence and strict liability, 
as well as intentional torts, should be included within the scope of the 
proposed legislation governing apportionment in cases of contributory 
fault. 

3. The question whether the new apportionment legislation should apply 
in4;he case of actions for conversion, detinue, and injury to a reversion- 
ary interest, or where the true owner has recovered the goods without 
the assistance of a court, should be deferred for consideration in the 
Commission's Project on Remedies for Wrongful Interference with 
Goods. 

4. Apportionment should not be excluded where the plaintiff has relied 
on the defendant's contractual assurance of performance. 

5. Apportionment should not be restricted to an unintentional breach of 
contract. 

6. Apportionment should apply to a breach of a duty of care arising from 
a contract that creates a liability in damages, and, in addition, to any 
breach of contract that creates a liability for damages for personal 
injury or property damage. 

7. Apportionment for loss caused by breach of contract should be subject 
to any agreement, express or implied. 

8. Apportionment should extend to a breach of statutory duty that creates 
a liability in damages. 



164 



Draft Act, s. 2(7). 



265 



9. The proposed apportionment legislation should not be extended to 
breach of fiduciary duty, including breach of trust. 

10. Apportionment should apply to all types of loss, including economic 
loss. 

11. The proposed apportionment legislation should not deal expressly with 
set off and counterclaim in cases where either or both of the parties are 
insured. 

12. The proposed apportionment legislation should not include an express 
provision dealing with costs of a claim or counterclaim. 

13. For the reasons discussed in chapter 3, liability to a contributorily 
negligent plaintiff should continue to be in solidum even where one or 
more of the concurrent wrongdoers is or are absent or insolvent. 

14. No provision should be made for apportioned damages, and liability 
should continue to be in solidum, even where three or more parties 
suffer damage for which each party is partly responsible. 

15. The case where the plaintiff is contributorily negligent against one 
wrongdoer but not against another should be dealt with as proposed in 
chapter 6. (See chapter 6, Recommendation 4.) 

16. The proposed apportionment legislation should contain a provision, 
similar to section 3 of the Canadian Uniform Contributory Fault Act, 
abolishing the doctrine of last clear chance. 

17. The proposed apportionment legislation should include a provision, 
similar to section 5(2) of the Uniform Act, imputing the contributory 
fault of an injured person to a third person claiming damages arising 
from the injury. 

18. (1) The proposed apportionment legislation should contain a provi- 

sion, similar to section 4(b) of the Uniform Act, stating that the 
degree to which the fault or wrongful act of a person contributed to 
damage is a question for the trier of fact. 

(2) If the degrees to which the fault of the plaintiff and defendant 
contributed to the damage cannot be determined in relation to 
each other, they should be deemed to have contributed equally in 
relation to each other. 

19. (1) (a) The apportionment provisions of the Contribution and Com- 

parative Fault Act should have primacy over any other Act 
that provides for apportionment, unless the other Act specifi- 
cally states that it is to apply notwithstanding the proposed 
Act. 



266 



(b) Those governmental officials responsible for the administra- 
tion of other relevant Acts should review those Acts in order to 
determine whether their apportionment provisions ought to 
be made to apply notwithstanding the Contribution and Com- 
parative Fault Act. 

(2) The Contribution and Comparative Fault Act should be made 
subject to section 34(1) of the Trustee Act (which the Commission 
proposed ought to be continued in the revised Trustee Act recom- 
mended in its Report on the Law of Trusts (1984)). 

(3) Nothing in the proposed Contributory and Comparative Fault Act 
should derogate from the power a court has to apportion damages 
apart from statute. 



SUMMARY OF RECOMMENDATIONS 



The Commission makes the following recommendations: 

CHAPTER 1: INTRODUCTION 

1: The Negligence Act should be repealed and a new Contribution and 
Comparative Fault Act should be enacted to deal comprehensively with 
the rights and obligations, as between themselves, of concurrent wrong- 
doers, the rights of the injured person vis-a-vis such wrongdoers, and 
the effect of the injured person's contributory fault on the issue of 
Uability. 

CHAPTER 2: JOINT AND SEVERAL LIABILITY 

2. The provisions currently contained in section 149 of the Courts of 
Justice Act, 1984, as modified in accordance with the following recom- 
mendations, should be placed in the proposed new Contribution and 
Comparative Fault Act. 

3. A person who has obtained judgment against a defendant should not 
thereby be precluded from instituting or continuing an action against 
another in respect of the same debt or damage for which the defendants 
are jointly liable. 

4. (1) Subject to paragraphs (2) and (3), a person who releases a person 

should not thereby be barred from proceeding against any other 
person who is concurrently liable in respect of the same debt or 
damage. 

(2) Where a person who settles with a concurrent wrongdoer or debtor 
expressly gives up his right to sue any person who is liable for the 
damage or debt, he should not subsequently be able to institute a 
proceeding in respect of the damage or debt against a concurrent 
wrongdoer or debtor who was not a party to the settlement. 

(3) A person who has released a debtor should not be entitled to 
proceed against another who is concurrently liable in respect of the 
debt if the second debtor has been prejudiced by the release of the 
first. 

(4) The payment into court rule, enunciated in Reaney v. National 
Trust Co. , should be abolished. An offer of settlement made under 
Rule 49 of the Rules of Civil Procedure should be treated like any 
other settlement. That is, a person who accepts an offer of settle- 
ment should not be precluded from continuing or instituting an 
action against any other person who is or may be concurrently 

[267] 



268 



liable for the debt or damage in respect of which the offer of 
settlement was made, unless the settlement is expressly made in 
respect of the claim that the plaintiff may have against other 
persons. 

5. The Parliament of Canada should be requested to enact legislation that 
would abrogate the judgment bar and release bar rules respecting 
proceedings in the Federal Court. 

6. The single judgment rule should be abolished, so that the present law 
with respect to separate awards of damages against concurrent defen- 
dants who are severally Hable would be extended to those whose 
liability is joint. A plaintiff should always be able to prove the extent of 
the loss for which a particular defendant is Uable, without regard to the 
sum awarded to the plaintiff against another, concurrently liable 
defendant. 

7. A person who proceeds in separate actions against two or more persons 
who are concurrently liable in respect of the same damage or debt 
should be entitled to costs only in the first action, unless that person 
satisfies the court that there were reasonable grounds for bringing more 
than one action. 



CHAPTER 3: IN SOLIDUM LIABILITY 

8. There should be no change in the law respecting the in solidum liability 
of concurrent wrongdoers to a plaintiff, even where the plaintiff is 
contributorily negligent. 

9. Where there are more than two concurrent wrongdoers, and one 
wrongdoer is insolvent or otherwise unavailable to satisfy her share of 
liability, that share should be divided between the remaining wrong- 
doers in proportion to their respective degrees of fault, without dis- 
charging the liability to contribute of the defaulting concurrent 
wrongdoer. 



CHAPTER 4: THE NATURE AND SCOPE OF THE RIGHT TO 
CONTRIBUTION 

10. (1) Subject to the following recommendations, a right to contribution 
should be capable of arising among wrongdoers who cause a single 
loss to an injured person, irrespective of the nature of the legal 
obligation that gives rise to their liability in damages, and of the 
form of the relief that the wrongdoer has been required to provide 
to the injured party. 

(2) The criminal nature of the wrongdoing, the fact that it was com- 
mitted intentionally or that the damages paid by a defendant 



269 



include a penal or punitive element, should not automatically bar 
a right of contribution. (See, also. Recommendation 37(4).) 

(3) For the purpose of this recommendation, liability to restore a 
chattel to the injured party should be regarded as equivalent to 
liability to pay damages. In addition, other decrees of specific relief 
that discharge or reduce the liability of a concurrent wrongdoer 
should be capable of founding a claim for contribution. 

11. The proposed statutory right should not extend to those liable for a 
debt. 

12. (1) Subject to the exceptions recommended below, the contribution 

provisions of the proposed new Contribution and Comparative 
Fault Act should govern in all cases and, therefore, should super- 
sede any other right to contribution (as distinct from indemnity), 
whether that right arises by statute or by any other means (includ- 
ing common law and equity). 

(2) (a) The proposed Contribution and Comparative Fault Act ought 

to supersede all other statutory rights of contribution, as 
recommended in paragraph (1), unless it is specifically pro- 
vided in the other statute that the contribution provisions of 
that statute apply notwithstanding the provisions in the Con- 
tribution and Comparative Fault Act. 

(b) Should the proposed legislation be enacted, those governmen- 
tal officials responsible for the administration of other rele- 
vant Acts should review those Acts in light of the new 
Contribution and Comparative Fault Act in order to deter- 
mine whether the provisions in such Acts ought to be made to 
apply notwithstanding the Contribution and Comparative 
Fault Act. 

(c) The proposed review of existing legislation should include 
a consideration of the precise meaning of any provisions 
concerning the right to "indemnity", having regard to the 
distinction, made in chapter 1 of this Report, between "contri- 
bution" and "indemnity" and the not infrequent use of the 
latter term in two different ways in the legislation of Ontario. 

(3) The contribution provisions of the new Contribution and Compar- 
ative Fault Act should apply in the case of trustees and other 
fiduciaries, except as otherwise specifically provided by the revised 
Trustee Act proposed by the Commission in its Report on the Law 
of Trusts (1984). 

(4) The provisions of the proposed new Contribution and Compara- 
tive Fault Act governing contribution should be subject to any 
express or implied contractual agreement relating to contribution 
made by the concurrent wrongdoers. 



270 



13. The proposed legislation should not affect any express or implied 
contractual or other right to indemnity, as defined in chapter 1 of the 
Report. 

14. No person should be able to claim contribution from a person who is 
entitled to be indemnified by the claimant for the damages in respect of 
which contribution is sought. 

15. A person who has a right to contribution under the proposed Contribu- 
tion and Comparative Fault Act should be subrogated to any right that 
the injured person has against the concurrent wrongdoer from whom 
contribution is claimed. 

16. The proposed new statutory provisions for contribution among wrong- 
doers should expressly apply to the Crown in right of Ontario and, 
insofar as it is constitutionally permissible, to the Crown in right of 
Canada. 



CHAPTER 5: SETTLEMENTS AND CONTRIBUTION CLAIMS 

17. Where a person who has settled the claim of an injured person claims 
contribution from another who he alleges is liable for the injured 
person's loss, it should be no defence to the contribution claim that the 
claimant could never have been successfully sued by the injured person. 
However, the court should be empowered to refuse contribution if the 
person claiming contribution made the settlement without believing 
that he was or might be liable and without regard to any legal proceed- 
ings that might be instituted against him by the injured person for the 
claim settled. 



18. A person who settles a claim made against him by the injured person 
should be entitled to institute or continue a claim for contribution from 
those concurrently liable if the settlement provides for the discharge or 
reduction of the liability of the other concurrent wrongdoers to the 
injured person. 

19. If an injured person obtains judgment against a wrongdoer, his dam- 
ages should be reduced by any consideration already given to him 
under a settlement by another concurrent wrongdoer. 

20. Where, following a settlement between the injured person and a con- 
current wrongdoer, another concurrent wrongdoer has been held liable 
to the injured person or has settled the injured person's claim for an 
amount that exceeds his proportionate share of the liability, he should 
be entitled to claim contribution from the first concurrent wrongdoer 
for the excess, even though the first concurrent wrongdoer has ceased to 
be liable to the injured person by virtue of the settlement. 



271 



CHAPTER 6: DEFENCES TO CONTRIBUTION CLAIMS: 
LIABILITY TO THE INJURED PERSON 

21. Where the injured person sues both the claimant for contribution and 
the person against whom the claim is made as co-defendants in a single 
action, or where, in the injured person's action against the claimant 
alone, the contributor is added as a third party by the claimant, both the 
claimant for contribution and the contributor should be bound by the 
findings of the court in that action. 

22. (1) Where a claim for contribution is made in a legal proceeding 

independent of that in which judgment was awarded in favour of 
the injured person against the claimant for contribution, it should 
be no defence for the person against whom the claim for contribu- 
tion is made to show that the court erred in holding the claimant 
liable to the injured person, except where the judgment was 
obtained by collusion or fraud. 

(2) The recommendation in paragraph (1) should apply even where 
the judgment against the claimant in favour of the injured person 
was on consent. 

(3) (a) In the independent contribution action, the person against 

whom the claim for contribution is made should be entitled to 
show that the court wrongly assessed the quantum of the 
injured person's loss in the earlier action between the injured 
person and the claimant for contribution. Accordingly, the 
sum to which the contributor should be required to contribute 
should be determined by the court before which the contribu- 
tion claim is made. 

(b) However, the claimant for contribution should be estopped 
from arguing that the injured person's loss was greater than 
the amount at which that loss was assessed by the court that 
decided the injured person's action against the claimant. 

(4) If the judgment in favour of the injured party ordered specific 
relief against the claimant for contribution— such as the delivery of 
goods or the performance of a service by the claimant— the court 
before which the claim for contribution is brought should be 
required to place a value on such delivery or performance in order 
to determine the amount of contribution recoverable. 

23. A person who could at no time have been successfully sued by the 
injured person should not be liable to pay contribution to another 
person in respect of the injured person's loss. 

24. A person whose liability to the injured person is less than that of 
another wrongdoer because of a contract made with the injured person 



272 



before the cause of action arose, the contributory fault of the injured 
person, a statute, or any other reason, should never be required to pay 
by way of contribution a sum that exceeds the amount of her liability to 
the injured person. 

25. The fact that a wrongdoer's liability to the injured person is limited 
should be ignored for the purpose of calculating the amount that she is 
liable to pay by way of contribution, except for the purpose of ensuring 
that her liability to contribute does not exceed the amount in which her 
hability to the injured person was limited. 

26. No recommendation made in this Report is intended to affect in any 
way the Workers ' Compensation Act . 



CHAPTER 7: DEFENCES TO CONTRIBUTION CLAIMS: 
SUBSEQUENT IMMUNITIES 

27. (1) It should never be a defence to a claim for contribution for the 

contributor to establish that his liability to the injured person had 
ceased to be enforceable by reason of the failure of the injured 
person to comply with a procedural requirement, the expiry of a 
statutory limitation period, dismissal of the injured person's action 
for delay, or an analogous equitable bar upon a successful suit by 
the injured person. The contributor should not be protected from 
liability to contribute, even if he had ceased to be capable of being 
successfully sued by the injured person when that person com- 
menced proceedings against or settled with the person claiming 
contribution. 

(2) Should the recommendation in paragraph (1) be enacted, those 
governmental officials responsible for the administration of stat- 
utes requiring notice of a claim to be sent to an alleged wrongdoer 
should review the nature and purpose of the statutory notice 
requirements in order to determine whether they are of overriding 
importance and, therefore, whether they ought to be made to apply 
notwithstanding the Commission's Contribution and Comparative 
Fault Act. 

28. It should be a defence to a claim for contribution for the contributor to 
establish that proceedings were instituted by the injured person against 
the claimant, or a settlement was made between them, after the expiry 
of a limitation period contained in a contract made between the 
contributor and the injured person before the latter 's cause of action 
arose against the contributor. 

29. (1) It should be a defence to a claim for contribution for the contribu- 

tor to establish that judgment on the merits has already been given 
in his favour in an action by the injured person, except where the 
judgment was obtained by collusion or fraud. 



273 



(2) The recommendation in paragraph (1) should not apply where the 
injured person's action was dismissed for delay. 

30. It should never be a defence to a claim for contribution for the 
contributor to establish that he had ceased to be liable to the injured 
person by virtue of a settlement made with, or a release or waiver of 
liability given by, the injured person after that person's cause of action 
against him arose. 

CHAPTER 8: THE ASSESSMENT OF CONTRIBUTION 

31. Where contribution is sought on the basis of a full settlement made 
between the injured person and the claimant, the contribution payable 
by the contributor should be calculated by reference to the value of the 
consideration given for the settlement, which the claimant must estab- 
lish it was in all the circumstances reasonable for her to give. If the 
claimant does not establish that the consideration actually given was 
reasonable, the contribution payable by the contributor should be 
based on the court's determination of the value of the consideration 
that it would have been reasonable for the claimant to have given. 

32. Where the claimant for contribution has settled the injured person's 
claim by performing services or delivering goods, the court in contribu- 
tion proceedings should be required to value these in order to deter- 
mine whether the claimant has settled for a reasonable amount. 

33. If a wrongdoer has settled the injured person's claim against him in such 
a way that the injured person may proceed against those concurrently 
liable with the settling wrongdoer, the contributable sum should be 
calculated in the way described above, but, 

(a) if a claim for contribution is made by or against the settling 
wrongdoer by a third party claim incidental to an action 
brought by the injured person against a concurrent wrong- 
doer, the contributable sum should be the amount of their 
common liability as determined by the court in that action; 
and 

(b) if the non-settling wrongdoer is sued by the injured person, 
and subsequently claims contribution from the settling 
wrongdoer in an independent action, the contributable sum 
should be the amount of the common liability as determined 
by the court in that action. 

34. If the terms of the settlement provide for the performance of services or 
the delivery of goods, these should be required to be valued by the court 
in order to determine the amount of contribution recoverable. 

35. Where the injured person has obtained judgment against concurrent 
wrongdoers in separate proceedings and the damages of the injured 



274 



person have been assessed differently, in a claim for contribution by one 
wrongdoer against another wrongdoer the court should be required to 
determine the sum to which the parties to the contribution claim shall 
contribute, without reference to the findings on damages in the earlier 
litigation. 

36. In determining contribution among concurrent wrongdoers, the court 
should disregard the fact that some other person, who is not a party to 
the contribution proceedings, might also be concurrently liable to the 
injured person. 

37. (1) The amount of contribution recoverable from a concurrent 

wrongdoer should be such as may be found by the court to be just 
and equitable, having regard to the degree of responsibility of each 
concurrent wrongdoer for the damage caused. 

(2) If it is not practicable for a court to make such an assessment, each 
should be determined to be equally responsible and liable to pay an 
equal amount by way of contribution. 

(3) The determination of the degree of responsibility attributable to 
each party to a claim for contribution should be regarded as a 
question of fact. 

(4) While the criminal nature of the wrongdoing, the fact that it was 
committed intentionally or that the damages paid by a defendant 
include a penal or punitive element, would not automatically bar a 
right of contribution (see Recommendation 10(2)), such factors 
should be relevant to the court's exercise of its discretion over the 
quantum of contribution awarded. 

( 5 ) In determining the degree of responsibility of a concurrent wrong- 
doer, the court should be entitled to find any degree of responsibil- 
ity, including responsibility for none or all of the damage. 

CHAPTER 9: SOME PROCEDURAL ASPECTS OF 
CONTRIBUTION CLAIMS 

38. A person who is claiming contribution from another who is a co- 
defendant in the action brought by the injured person should do so by a 
crossclaim in that action, in accordance with the relevant provisions of 
the Rules of Civil Procedure, unless the court before which the action is 
brought has no jurisdiction to determine the claim for contribution.. 

39. A person who is sued by the injured person should normally claim 
contribution from a concurrent wrongdoer, who is not a party defend- 
ant, by a third party claim in accordance with the relevant provisions of 
the Rules of Civil Procedure. However, the claimant should be entitled 



275 



to institute an independent action for contribution where the court 
before which the injured person's action was brought had no jurisdic- 
tion to determine the claim for contribution, or it was otherwise 
impracticable for the claimant to assert his right to contribution by a 
third party claim. 

40. A person whose right to contribution is based upon a settlement of the 
injured person's claim should be entitled to institute or continue 
proceedings for contribution against a person who is or may be con- 
currently liable for the loss to which the settlement relates. For this 
purpose, "settlement" should include a settlement approved by a court 
and a judgment obtained by consent. 

41. The hmitation period governing the enforcement of the right of contri- 
bution among concurrent wrongdoers should be two years. Where the 
claim is based upon a judgment against the claimant in favour of the 
injured party, the period should run from the date of the judgment. 
Where the claim is based upon a settlement, the period should com- 
mence from the date when the settlement was made. 

42. An order for the payment of contribution should become executable 
when the claimant has discharged a greater proportion of the common 
liability than represents his degree of fault, or when the contributor can 
no longer be sued successfully by the injured person. Where the 
claimant has not discharged his liability to the injured person, the 
money recovered from the contributor should be paid into court in 
satisfaction of the claimant's liability to the injured person. 



CHAPTER 10: CONTRIBUTORY NEGLIGENCE 

43. Subject to the following recommendations, where a person is injured by 
the wrongful act of one or more persons and the fault of the injured 
person is found to have contributed to the damage, the court should 
determine the degrees of fault of the person or persons and of the 
injured person that contributed to the damage, and should apportion 
the damages in proportion to the degrees of fault that are so found. 

44. Subject to Recommendation 45, all torts of negligence and strict 
liability, as well as intentional torts, should be included within the scope 
of the proposed legislation governing apportionment in cases of con- 
tributory fault. 

45. The question whether the new apportionment legislation should apply 
in the case of actions for conversion, detinue, and injury to a reversion- 
ary interest, or where the true owner has recovered the goods without 
the assistance of a court, should be deferred for consideration in the 
Commission's Project on Remedies for Wrongful Interference with 
Goods. 



276 



46. Apportionment should not be excluded where the plaintiff has relied 
on the defendant's contractual assurance of performance. 

47. Apportionment should not be restricted to an unintentional breach of 
contract. 

48. Apportionment should apply to a breach of a duty of care arising from 
a contract that creates a liability in damages, and, in addition, to any 
breach of contract that creates a liability for damages for personal 
injury or property damage. 

49. Apportionment for loss caused by breach of contract should be subject 
to any agreement, express or implied. 

50. Apportionment should extend to a breach of statutory duty that creates 
a liability in damages. 

51. The proposed apportionment legislation should not be extended to 
breach of fiduciary duty, including breach of trust. 

52. Apportionment should apply to all types of loss, including economic 
loss. 

53. The proposed apportionment legislation should not deal expressly with 
set off and counterclaim in cases where either or both of the parties are 
insured. 

54. The proposed apportionment legislation should not include an express 
provision dealing with costs of a claim or counterclaim. 

55. For the reasons discussed in chapter 3, liability to a contributorily 
negligent plaintiff should continue to be in solidum even where one or 
more of the concurrent wrongdoers is or are absent or insolvent. 

56. No provision should be made for apportioned damages, and liability 
should continue to be in solidum, even where three or more parties 
suffer damage for which each party is partly responsible. 

57. The case where the plaintiff is contributorily negligent against one 
wrongdoer but not against another should be dealt with as proposed in 
chapter 6. (See Recommendation 24.) 

58. The proposed apportionment legislation should contain a provision, 
similar to section 3 of the Canadian Uniform Contributory Fault Act, 
abolishing the doctrine of last clear chance. 



59. The proposed apportionment legislation should include a provision, 
similar to section 5(2) of the Uniform Act, imputing the contributory 
fault of an injured person to a third person claiming damages arising 
from the injury. 



277 



60. (1) The proposed apportionment legislation should contain a provi- 

sion, similar to section 4(b) of the Uniform Act, stating that the 
degree to which the fault or wrongful act of a person contributed to 
damage is a question for the trier of fact. 

(2) If the degrees to which the fault of the plaintiff and defendant 
contributed to the damage cannot be determined in relation to 
each other, they should be deemed to have contributed equally in 
relation to each other. 

61. (1) (a) The apportionment provisions of the Contribution and Com- 

parative Fault Act should have primacy over any other Act 
that provides for apportionment, unless the other Act specifi- 
cally states that it is to apply notwithstanding the proposed 

Act. 

(b) Those governmental officials responsible for the administra- 
tion of other relevant Acts should review those Acts in order 
to determine whether their apportionment provisions ought 
to be made to apply notwithstanding the Contribution and 
Comparative Fault Act. 

(2) The Contribution and Comparative Fault Act should be made 
subject to section 34(1) of the Trustee Act (which the Commission 
proposed ought to be continued in the revised Trustee Act recom- 
mended in its Report on the Law of Trusts (1984)). 

(3) Nothing in the proposed Contributory and Comparative Fault Act 
should derogate from the power a court has to apportion damages 
apart from statute. 



CONCLUSION 



In this Project, the Commission has examined the contribution rights 
and obHgations of persons whose wrongful conduct has caused a single toss 
to another. The Report has also considered the rights of the injured person 
vis-d-vis such wrongdoers and the effect of the injured person's contributory 
negligence or fault on the extent of his recovery. 

Despite the restitutionary doctrine of unjust enrichment upon which 
the right to contribution is based, deference to this principle is, in the case 
law, often haphazard. Much of the jurisprudence remains confusing, contra- 
dictory, or unsettled. Moreover, the Negligence Act , dealing with contribu- 
tion only among concurrent "tort feasors", is unjustifiably restrictive, 
particularly measured against this underlying equitable doctrine. So, too, 
are the provisions in that Act concerning contributory "fault" or "negli- 
gence". 

In attempting to assess and reform these areas of the law, the Commis- 
sion has turned for guidance to restitutionary, as well as other relevant, 
principles. The result, we believe, is a comprehensive set of recommenda- 
tions and a proposed Contribution and Comparative Fault Act that will 
bring a coherence and rationality to the law that the courts have often found 
difficult to achieve by means of case-by-case adjudication. 

In the Introduction to this Report, we acknowledged the many persons 
who contributed their time and expertise to our study. We wish, once again, 
to express our gratitude to those persons, and, particularly, to the Project 
Director, Professor John M. Evans, of Osgoode Hall Law School, York 
University. 

All of which is respectfully submitted. 





James R. Breithaupt 
Chairman 



>6<^^^ 



H. Allan Leal 
Vice Chairman 




c:^^^ 



Earl A. Cherniak 
Commissioner 




J. Robert S. Prichard 
Commissioner 



March 23, 1988 




Margaret A. Ross 
Commissioner 



[2791 



APPENDIX 



Draft Bill 



Bill 00 



198 



An Act to revise the Law respecting comparative Fault 
and Contribution among Wrongdoers 



HER MAJESTY, by and with the advice and consent of the 
Legislative Assembly of the Province of Ontario, enacts as 
follows: 

1. In this Act, 

"concurrent wrongdoer" means one of two or more per- 
sons whose wrongful acts contribute to the same damage 
suffered by one or more persons and includes a person 
who, without fault, is liable for the wrongful act of 
another; 

"injured person" means a person who suffers damage as a 
result of an act or omission of a concurrent wrongdoer. 

COMPARATIVE FAULT 



Interpretation 



2.— (1) Where a person is injured by the wrongful act of 
one or more persons and the fault of the injured person is 
found to have contributed to the damage, the court shall 
determine the degrees of fault of the person or persons and 
of the injured person that contributed to the damage, and 
shall apportion the damages in proportion to the degrees of 
fault that are so found. 



Apportionment of 
fault 



(2) This section apphes where the liability for damages 
arises from 



Application 



(a) a tort other than conversion, detinue and inj ury to 
a reversionary interest;* 



* The questions whether the new apportionment legislation should apply in the case of 
actions for conversion, detinue, and injury to a reversionary interest, and whether it 
should apply where the true owner has recovered the goods without the assistance of a 
court, have been deferred for consideration in the Commission's Project on Remedies 
for Wrongful Interference with Goods. 

[281] 



282 



Recovery by third 
person 



Agreements 



Economic loss 



Degree of fault 



Other powers 
to apportion 



(b) a breach of statutory duty; 

(c) a breach of duty of care arising from a contract; or 

(d) a breach of contract that resuhs in personal injury 
or property damage, whether the tort or breach is 
intentional or not. 

(3) Subsection (1) applies notwithstanding that the 
person making the claim for damages is not the person 
suffering the damage. 

(4) The apportionment of fault under subsection (1) 
where damage arises under a contract is subject to an 
agreement, express or implied. 

(5) The damage referred to in this section includes 
economic loss. 

(6) If the degrees to which the fault of persons 
contributes to the damage cannot be determined in 
relation to each other, those persons shall be deemed to 
have contributed equally in relation to each other. 

(7) Nothing in this section derogates from a power a 
court has to apportion damages apart from this section, but 
where the power is given by or under another Act, section 
23 appHes. 



Application of 
ss.4 to 19 



LIABILITY AND CONTRIBUTION OF 
CONCURRENT WRONGDOERS 

3.— (1) Sections 4 to 19 apply where Uability for damages 
or to deliver goods or perform services arises from, 

(a) a tort; 

(b) a breach of statutory duty; 

(c) a breach of contract; 

(d) a breach of a fiduciary duty, including a breach of 
trust, except as otherwise specifically provided by 
the Trustee Act f or 

(e) a breach of any other legal duty. 



* The reference in this provision is not to the present Ontario Trustee Act, but to the 
revised Trustee Act recommended by the Commission in its Report on the Law of Trusts 
(1984), which contains provisions dealing specifically with contribution among trustees. 



283 



(2) Sections 4 to 6 apply where the HabiUty is for a debt, 
as specifically provided therein. 

Concurrent Liability 



Application of 
ss. 4 to 6 to debt 



4. — ( 1) Each concurrent wrongdoer or debtor is liable for 
the damage or debt that would be assessed if the concurrent 
wrongdoer or debtor were the only person who is liable to 
the injured person or creditor. 

(2) The total amount recoverable by an injured person 
or creditor shall not exceed the amount of that person's 
damage or debt. 

5.— (1) A judgment against one concurrent wrongdoer 
or debtor does not preclude judgment against another 
concurrent wrongdoer or debtor in the same or a separate 
proceeding. 

(2) Where a person brings separate proceedings against 
two or more concurrent wrongdoers or debtors, the person 
is not entitled to costs in a proceeding other than the one in 
which judgment is first given, unless the court is of the 
opinion that there are reasonable grounds for bringing 
more than one proceeding. 

(3) In an action brought by an injured person, the 
injured person may establish the amount of damages for 
which a concurrent wrongdoer is liable without regard to 
the amount of damages awarded to the injured person 
against another concurrent wrongdoer. 

6. A release of one concurrent wrongdoer or debtor or 
the acceptance of an offer of settlement does not preclude 
judgment against another concurrent wrongdoer or debtor, 
unless the release or settlement expressly so provides, or in 
the case of a debt, prejudices the rights of another debtor 
who is liable for the same debt. 



Concurrent liability 
of debtors and 
wrongdoers 



Maximum recovery 



Separate actions 



Costs 



Single judgment 



Releases and 
settlements 



Contribution 



7.— (1) A concurrent wrongdoer is entitled to claim con- 
tribution from other concurrent wrongdoers whether or 
not his or her conduct is intentional or of a criminal nature 
or whether or not the damages awarded are punitive. 

(2) A concurrent wrongdoer who is entitled to 
contribution from another concurrent wrongdoer is 
subrogated to the rights of the injured person against the 
other concurrent wrongdoer for the purpose of recovering 
the contribution to which he or she is entitled. 



Right to contribution 



Subrogation 



284 



Other rights to 
contribution or 
indemnity 



(3) Nothing in this Act affects any express or impUed 
contractual or any other right to indemnity, or any express 
or imphed contractual provision respecting contribution, 
and in particular, no person is entitled to contribution 
from a person who is entitled to be indemnified, by the 
claimant, for the damages for which the contribution is 
sought. 



Finding of HabiHty 
and assessment of 
damage 



8.— (1) A judgment in favour of the injured person 
against a concurrent wrongdoer is, for the purpose of 
claiming contribution from another concurrent wrongdoer 
who was not a party in the action or was not joined as a 
third party, conclusive as to the liability of the concurrent 
wrongdoer but not as to the assessment of the damage, 
except that the sum to which the concurrent wrongdoer 
may be required to contribute shall not be an amount 
greater than the amount determined by the judgment. 



Idem, where two 
assessments of 
damage 



(2) Where the injured person has obtained judgment 
against two or more concurrent wrongdoers in separate 
proceedings and the damage of the injured person has been 
assessed differently, in a claim for contribution by one of 
them from another of them the court shall determine the 
sum to which the parties to the claim shall contribute. 



Amount of 
contribution 



9.— (1) The amount of contribution recoverable by one 
concurrent wrongdoer from another is the amount that is 
found by the court to be just and equitable having regard to 
the degree of responsibility of each concurrent wrongdoer 
for the damage of the injured person. 



Degree of 
responsibility 



(2) The degree of responsibihty found by a court under 
subection (1) may include any degree of responsibihty, 
including responsibility for none or all of the damage. 



Idem 



(3) If the degree of responsibility of a concurrent 
wrongdoer cannot be determined in relation to another 
concurrent wrongdoer, they shall be deemed to be equally 
responsible. 



Limitation on 
contribution 



(4) A concurrent wrongdoer whose liability for damages 
is less than that of another concurrent wrongdoer because 
of. 



(a) the contributory fault of the injured person; 

(b) a contract made with the injured person before the 
cause of action arose; 



(c) a statute; or 



285 



(d) any other reason, 

is not liable to pay by way of contribution a sum that 
exceeds the amount of his or her liability to the injured 
person. 

(5) Where the liability of a concurrent wrongdoer to the 
injured person is reduced as set out in subsection (4), the 
reduced liability does not affect the amount of 
contribution payable except as provided by subsection (4). 

(6) Where there are three or more concurrent 
wrongdoers and one cannot pay his or her due share of the 
liability because of insolvency or for any other reason, that 
share shall be allocated to the other concurrent wrongdoers 
proportionately to the degrees in which they are found 
responsible, without discharging the liability of the 
defaulting concurrent wrongdoer to contribute. 

(7) The delivery of goods or performance of a service by 
a concurrent wrongdoer in satisfying his or her liability to 
the injured person shall be included in a claim for 
contribution, and the value shall be fixed by the court for 
the purpose. 

10.— (1) Where a concurrent wrongdoer makes a settle- 
ment with the injured person that does not discharge the 
liability of another concurrent wrongdoer, the sum to 
which they may be required to contribute is the value of the 
consideration given for the settlement that is established by 
the concurrent wrongdoer who settled to have been reason- 
able in all the circumstances. 



Effect of reduced 
liability 



Insolvent wrongdoer 



Value of goods and 
services 



Determination of 
damages where 
partial settlement 



(2) Where the court is satisfied that the amount of 
consideration given for a settlement referred to in 
subsection (1) was not reasonable in all the circumstances, 
the court may fix the value of a reasonable consideration 
for the purposes of contribution. 

(3) Where, in a case referred to in subsection (1), the 
injured person obtains judgment against a concurrent 
wrongdoer who claims contribution from the concurrent 
wrongdoer who settled, the sum to which they may be 
required to contribute is the amount of the injured person's 
damages as determined by the court determining the claim 
for contribution. 

(4) Where, in a case referred to in subsection (1), 
proceedings are instituted against a concurrent wrongdoer 
to which the concurrent wrongdoer who settled is joined as 



Idem 



Idem, where 
judgment 



Idem, where settler is 
third party 



286 



Determination of 
damages where full 
settlement 



a third party, the sum to which they may be required to 
contribute is the amount of their common habiHty for the 
damage as determined in those proceedings. 

11.— (1) Where a concurrent wrongdoer makes a settle- 
ment with the injured person that discharges the liability of 
another concurrent wrongdoer, the sum to which they may 
be required to contribute is the value of the consideration 
given for the settlement that is established by the concur- 
rent wrongdoer who settled to have been reasonable in all 
the circumstances. 



Idem 



(2) Where the court is satisfied that the amount of 
consideration given for a settlement referred to in 
subsection (1) was not reasonable in all the circumstances, 
the court may fix the value of a reasonable consideration 
for the purposes of contribution. 



Parties to action for 
contribution 



Execution of order 
for contribution 



Payment into court 



12. In a proceeding to determine contribution between 
concurrent wrongdoers, the court shall disregard the exis- 
tence of concurrent wrongdoers who are not parties to the 
proceeding. 

13.— (1) A concurrent wrongdoer shall not execute an 
order for contribution against another concurrent wrong- 
doer until the wrongdoer claiming contribution has paid to 
the injured person more than his or her share of the Uability 
or until the contributing wrongdoer can no longer be sued 
successfully by the injured person. 

(2) Where the judgment of the injured person is not 
satisfied, any amount paid under the order shall be paid 
into court toward satisfaction of the judgment. 



Defences 



Defences to claim for 
contribution 



14.— (1) It is a defence to a claim for contribution that, 

(a) the person against whom the claim is made could 
not at any time be held liable to the injured person 
for the damage; 

(b) the person against whom the claim is made has 
ceased to be liable to the injured person by virtue 
of the expiration of a limitation period contained 
in a contract between them that was entered into 
before the injured person's cause of action arose; 
or 



287 



(c) the person from whom contribution is claimed 
has been held not liable on the merits in an action 
by the injured person. 

(2) A claimant for contribution under this Act may not 
rely upon a judgment in a proceeding to which the person 
from whom contribution is claimed was not a party or was 
nqt joined as a third party where that judgment was 
obtained by collusion or fraud. 

15. A concurrent wrongdoer may recover contribution 
from another concurrent wrongdoer even though the per- 
son against whom the claim is made has ceased to be liable 
to the injured person because of, 

(a) the expiration of a statutory limitation period, or 
the existence of an equitable defence based on 
delay; 

(b) the dismissal of an action by the injured person for 
delay; 

(c) the failure of the injured person to comply with a 
procedural requirement; or 

(d) a settlement with or a release or waiver by the 
injured person after the injured person's cause of 
action arose, 

whether the person against whom the claim for contribu- 
tion is made ceased to be hable to the injured person before 
or after the time when the claimant's right to contribution 
arose, determined in the same manner as set out in section 
18. 

Settlements 



Judgment obtained 
by collusion or fraud 



Defences excluded 



16. The damages awarded to an injured person against a 
concurrent wrongdoer shall be reduced by the amount of 
consideration received under a settlement with another 
person against whom the injured person has made a claim 
for the same loss. 



Effect of settlement 
on damages 



17.— (1) A concurrent wrongdoer who has made a settle- 
ment with the injured person, including a settlement that is 
approved by a court or is the subject of a judgment 
obtained by consent, may institute or continue proceedings 
for contribution from another concurrent wrongdoer, if the 



Recovery of 
contribution 



288 



Idem 



Limitation period for 
contribution 



Idem 



settlement provides for the discharge or reduction of the 
liabihty of the other concurrent wrongdoer to the injured 
person. 

(2) Subsection (1) applies even though the person who is 
claiming contribution can be shown to have been not liable 
to the injured person, but the court may, in its discretion, 
refuse to order contribution if the person claiming 
contribution made the settlement without believing that he 
or she was or might be liable and without regard to any legal 
proceedings that might be instituted against him or her by 
the injured person for the claim settled. 

Limitations 

18.— (1) A proceeding to claim contribution between 
wrongdoers must be commenced within two years after the 
right to contribution arose. 

(2) Where the claim to contribution is based on a 
settlement, the right to contribution shall be deemed to 
arise when the settlement is made. 



Idem 



(3) Where the claim to contribution is based on a 
judgment, the right to contribution shall be deemed to arise 
when the judgment is given. 

Procedure 



Crossclaim 



19.— (1) A claim for contribution between parties to a 
proceeding commenced by an injured person must be 
made by crossclaim in accordance with the Rules of Civil 
Procedure. 



Third party claim 



(2) A claim for contribution against a concurrent 
wrongdoer who is not a party to a proceeding commenced 
by an injured person must be by third party claim in 
accordance with the Rules of Civil Procedure. 



Separate action (3) A Concurrent wrongdoer who has been held liable to 

an injured person may institute a separate proceeding to 
claim contribution from another concurrent wrongdoer 
only if the court is satisfied that it was impossible to 
proceed by crossclaim or impossible or impracticable to 
proceed by third party claim. 



289 



GENERAL 



20. This Act binds the Crown. 



Act binds Crown 



21. This Act appHes where damage is caused or contrib- 
uted to by the act or omission of a person notwithstanding 
that another person had the opportunity of avoiding the 
consequences of the act or omission and failed to do so. 



Last clear chance 



22. A question of the degree of fault or responsibility that 
contributed to damage is a question for the trier of fact. 

23.— (1) This Act has primacy over any other Act that 
provides for the same subject matter, unless the other Act 
specifically provides that it is to apply notwithstanding this 
Act. 

(2) This Act is subject to the Workers ' Compensation Act 
and section 34(1) ofihcTrustee Act. 

24. The Negligence Act , being chapter 315 of the Revised 
Statutes of Ontario, 1980 and section 149 of the Courts of 
Justice Act, 1984, being chapter 11, are repealed. 

25. This Act comes into force on a day to be named by 
proclamation of the Lieutenant Governor. 

26. The short title of this Act is the Contribution and 
Comparative Fault Act, 19 . 



Fault or 
responsibility a 
question of fact 

Primacy 



Act subject to 
R.S.O. 1980, c. 539 
andc. 512 



Commencement 



Short title 



Copies of this report may be purchased from the Ontario Government 
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