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CIVIL PROCEDURE - Parties - Third party procedure - Striking out or setting aside - Appeals

Tuesday, December 12, 2017 @ 7:57 AM  

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Appeal by the defendant Crown from the dismissal of its third party claim against non-governmental organizations (third parties) for indemnity. The plaintiff commenced a proposed class action for damages suffered as a result of the treatment of young offenders in youth detention centers. The plaintiff alleged that in the operation, oversight, or management of the youth detention centres, the Crown was negligent, breached its fiduciary duties, and breached the class members' Charter rights in the use of solitary confinement. Some of the detention centres were operated by non-governmental organizations pursuant to signed service contracts with the Crown. Relying in part on indemnity provisions in the service contracts, the Crown brought third party claims against the non-governmental organizations for contribution and indemnity from them. The plaintiff and the third party non-governmental organizations brought a motion for the dismissal of the third party claim. The plaintiff argued that he purposefully chose not to sue these organizations, that he did not wish them to be joined to his proposed class proceeding, and that it was neither necessary nor desirable to have the third parties as part of the class action because he had confined his claim for damages to the several or independent liability of the Crown. The judge allowed the motion and dismissed the third party claim. He found that since the plaintiff limited his claim against the Crown to losses directly attributable to the Crown's own negligence, breaches of fiduciary duty, and breaches of the Charter, a right of contribution and indemnity did not arise. He therefore found that a third party claim for contribution and indemnity could not be advanced and he struck the claim. The Crown appealed.

HELD: Appeal allowed. It was not plain and obvious that the Crown’s third party claim had no reasonable prospect of success. The plaintiff claimed that the Crown was liable for harms perpetrated by the third parties, their agents and employees, when acting within the authority granted to them by the Crown. The third parties had contracted to provide services to the Crown in accordance with the policies, guidelines and requirements of the Crown. The service contracts included an indemnity clause. However, it was possible for the plaintiff to amend the claim in such a manner that the Crown’s third party claim would have no reasonable prospect of success, at which point the Crown’s third party claim could be properly struck without leave to amend.

J.K. v. Ontario, [2017] O.J. No. 6143, Ontario Court of Appeal, A. Hoy A.C.J.O., G. Huscroft and D. Paciocco JJ.A., November 24, 2017. Digest No. TLD-December112017003