Treaty Group Inc. v. Drake International Inc., (2007) 227 O.A.C. 72 (CA)

• Judge: Weiler, Rosenberg and Simmons, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: April 13, 2007
• Jurisdiction: Ontario
• Citations: (2007), 227 O.A.C. 72 (CA);2007 ONCA 450

Treaty Group Inc. v. Drake Intl. Inc. (2007), 227 O.A.C. 72 (CA)

MLB headnote and full text

Temp. Cite: [2007] O.A.C. TBEd. JN.055

The Treaty Group Inc. carrying on business as Leather Treaty (plaintiff/respondent/appellant by way of cross-appeal) v. Drake International Inc. (defendant/appellant/respondent by way of cross-appeal)

(C44744; 2007 ONCA 450)

Indexed As: Treaty Group Inc. v. Drake International Inc.

Ontario Court of Appeal

Weiler, Rosenberg and Simmons, JJ.A.

June 25, 2007.

Summary:

Drake International Inc., an employment placement agency, placed Simpson, an administrative assistant, with Leather Treaty without checking her references. Simpson defrauded Leather Treaty. Leather Treaty obtained a judgment for fraud against Simpson and her husband for $261,951. Leather Treaty then sued Drake for damages for negligent misrepresentation, negligence and breach of contract.

The Ontario Superior Court, in a decision reported [2005] O.T.C. 1044, allowed the action. Damages were however reduced by 50% for contributory negligence (i.e., $131,662). Following release of the trial judgment counsel disagreed over its meaning and effect. Drake raised the issue of double recovery by Leather Treaty and sought clarification of the judgment. The trial judge ruled that the monies to be collected by Leather Treaty from the Simpsons were not to be deducted from the $131,662 awarded against Drake. Drake appealed and Leather Treaty cross-appealed.

The Ontario Court of Appeal dismissed the appeal and cross-appeal.

Contracts - Topic 548

Parties - Joint and several - Effect of judgment against one of parties jointly or severally liable - [See all Damages - Topic 510 ].

Damages - Topic 510

Limits of compensatory damages - Prohibition against double recovery - Drake International, an employment placement agency, placed Simpson, an administrative assistant, with Leather Treaty without checking her references - Simpson defrauded Leather Treaty - Leather Treaty obtained a judgment for fraud against Simpson and her husband for $261,951 - Leather Treaty then sued Drake for damages for negligent misrepresentation, negligence and breach of contract - The trial judge allowed the action but reduced damages by 50% for contributory negligence (i.e., $131,662) - The trial judge also ruled that the monies to be collected by Leather Treaty from the Simpsons were not to be deducted from the $131,662 awarded against Drake - Drake appealed, arguing that the trial judge erred in finding that Leather Treaty could claim against Drake and that his ruling constituted double recovery of damages - The Ontario Court of Appeal dismissed the appeal - The court stated that subject to the rule barring double recovery, where a plaintiff sued one of severally liable defendants (as was the case here), there was no legal principle precluding a second action - It was not the damages awarded that amounted to satisfaction and barred a second action but the recovery by the plaintiff in the first action - Here there was no bar to Leather Treaty commencing an action unless it had actually received the full amount of the loss, which it had not - The court noted that Drake was still entitled to claim over against the Simpsons for any amounts that it paid - See paragraphs 13 to 24.

Damages - Topic 510

Limits of compensatory damages - Prohibition against double recovery - Drake International, an employment placement agency, placed Simpson, an administrative assistant, with Leather Treaty without checking her references - Simpson defrauded Leather Treaty - Leather Treaty obtained a judgment for fraud against Simpson and her husband for $261,951 - Leather Treaty then sued Drake for damages for negligent misrepresentation, negligence and breach of contract - The trial judge allowed the action but reduced damages by 50% for contributory negligence (i.e., $131,662) - The trial judge also ruled that the monies to be collected by Leather Treaty from the Simpsons were not to be deducted from the $131,662 awarded against Drake - Drake appealed, arguing that the trial judge's finding that Leather Treaty could claim against Drake constituted an abuse of process and that it was unfair for it to now be subject to paying the entire 50% of the judgment for which it was found liable because Simpson was insolvent - The Ontario Court of Appeal dismissed the appeal, holding that this did not constitute an abuse of process - The court stated that the short answer to this submission was that insolvency was not relevant to the allocation of fault - The court also stated that this argument confused liability with recovery and the court would not give effect to it - Drake was liable to Leather Treaty for the full 50% of the damages and could claim over against Simpson for contribution and indemnity - See paragraph 20.

Damages - Topic 510

Limits of compensatory damages - Prohibition against double recovery - Drake International, an employment placement agency, placed Simpson, an administrative assistant, with Leather Treaty without checking her references - Simpson defrauded Leather Treaty - Leather Treaty obtained a judgment for fraud against Simpson and her husband for $261,951 - Leather Treaty then sued Drake for damages for negligent misrepresentation, negligence and breach of contract - The trial judge allowed the action but reduced damages by 50% for contributory negligence (i.e., $131,662) - The trial judge also ruled that the monies to be collected by Leather Treaty from the Simpsons were not to be deducted from the $131,662 awarded against Drake - Drake appealed, arguing that because the result of the two actions was to give judgments to Leather Treaty for a total amount that was greater than 100% of the damages, something which could not have happened had there been one action, Drake should not bear any liability or there would be the prospect of double recovery - The Ontario Court of Appeal rejected this argument - See paragraphs 18 and 19.

Torts - Topic 6603

Defences - Contributory negligence - General - Apportionment of fault - General (incl. breach of contract cases) - Drake International, an employment placement agency, placed Simpson, an administrative assistant, with Leather Treaty without checking her references - Simpson defrauded Leather Treaty - Leather Treaty obtained a judgment for fraud against Simpson and her husband for $261,951 - Leather Treaty then sued Drake for damages for negligent misrepresentation, negligence and breach of contract - The trial judge allowed the action but reduced damages by 50% for contributory negligence (i.e., $131,662) - The trial judge also ruled that the monies to be collected by Leather Treaty from the Simpsons were not to be deducted from the $131,662 awarded against Drake - Drake appealed, arguing that the trial judge erred in his apportionment of damages - Drake argued that the trial judge erred in attributing 50% responsibility to Drake because 85% of the loss could have been prevented if appropriate controls were in place (i.e., an argument akin to the last clear chance doctrine) - The Ontario Court of Appeal rejected this argument, holding that this approach looked only to the consequences of the plaintiff's conduct rather than the entirety of both parties' tortious acts - Secondly, it failed to address tort law's primary objective of restoring the plaintiff to the position it would have enjoyed but for the negligence of the defendant - In any event, this submission overlooked the very high standard of deference owed to a trial judge's apportionment of liability - See paragraphs 27 to 31.

Cases Noticed:

Olsen v. Poirier et al. (1978), 21 O.R.(2d) 642 (H.C.), affd. (1980), 28 O.R.(2d) 744 (C.A.), refd to. [para. 13].

Cuttell v. Bentz (1985), 65 B.C.L.R. 273 (C.A.), refd to. [para. 13].

Westar Aluminium & Glass Ltd. v. Brenner (1993), 17 C.P.C.(3d) 228 (Ont. Gen. Div.), refd to. [para. 14].

Tucker v. Asleson (1993), 24 B.C.A.C. 253; 40 W.A.C. 253; 78 B.C.L.R.(2d) 173; 102 D.L.R.(4th) 518 (C.A.), refd to. [para. 18].

Renaissance Leisure Group Inc. et al. v. Frazer (2004), 189 O.A.C. 288; 242 D.L.R.(4th) 229 (C.A.), refd to. [para. 20].

Snushall v. Fulsang et al. (2005), 202 O.A.C. 297; 78 O.R.(3d) 142 (C.A.), leave to appeal refused (2006), 353 N.R. 194 (S.C.C.), refd to. [para. 28].

McCannell v. McLean, [1937] S.C.R. 341, refd to. [para. 30].

Olmstead v. Vancouver-Fraser Park District, [1975] 2 S.C.R. 831; 3 N.R. 326, refd to. [para. 30].

Ferenczy v. MCI Medical Clinics et al. (2005), 198 O.A.C. 254 (C.A.), refd to. [para. 30].

Authors and Works Noticed:

Ontario, Law Reform Commission, Report On Contribution Among Wrongdoers and Contributory Negligence (1988), pp. 137, 138 [para. 19].

Waddams, Stephen M., The Law of Damages (1991) (Looseleaf), pp. 1-28 to 1-30 [para. 22].

Counsel:

Kimberly T. Morris, for the appellant/respondent by way of cross-appeal;

Susan J. Stamm, for the respondent/appellant by way of cross-appeal.

This appeal was heard on April 13, 2007, before Weiler, Rosenberg and Simmons, JJ.A., of the Ontario Court of Appeal. Weiler, J.A., delivered the following decision on June 25, 2007.