Howalta Electrical Services Inc. v. CDI Career Development Institutes Ltd., 2011 ABCA 234

In this case, the Alberta Court of Appeal considers whether a defendant in a tort suit may seek contribution from an alleged co-defendant under the Alberta Tort-Feasors Act, when the original plaintiff is barred from bringing suit against this co-defendant for reasons which do not negate fault. The issue arises from a fire that destroyed a building occupied by the tenant. The insurance company paid out the owner of the building and brought a subrogated suit against contractors who were working in the building (defendant) and the tenant of the building (co-defendant). The contractors allegedly caused the fire through negligence, while the tenants allegedly failed to notify the landlord when the smoke/fire was discovered, in violation of the lease. The subrogated suit against the tenant was discontinued upon discovery that the tenant contributed to payment of the insurance in accordance with the lease and so the suit was barred. The contractors issued notices seeking contribution and indemnity from the tenant under the Tort-Feasors Act.

The section of the Tort-Feasors Act at issue in this appeal is s. 3(1)(c), which allows a tort-feasor to “recover contribution from any other tort-feasor who is or would, if sued, have been liable in respect of the same damage, whether as a joint tort-feasor or otherwise…” The majority opinion of the court, delivered by Côté J., interpreted the pre-condition to recovery as requiring that the co- defendant (or “other tort-feasor”) be liable to the original plaintiff. This interpretation was based on an understanding of the world “liable” as including an element of enforceability and requirement of performance. Côté J. also looked to case law, and instances where procedural bars to bringing suit against the tort- feasor directly barred indemnity claims. Finally, Côté J. noted that “this bar to indemnity claims makes the law consistent. Someone not directly liable to the plaintiff should not be liable in a suit brought by the plaintiff, and so indirectly have to pay the plaintiff on the forbidden claim. The plaintiff and the defendant claiming contribution cannot do indirectly what is forbidden directly.” The court thus allowed the appeal, dismissing the claim for contribution.

O’Ferrall J. provided separate reasons, concurring in the result. O'Ferrall J. first noted that the Act at issue was enacted for the purpose of removing the common law 'rule' preventing tort-feasors from seeking contribution from other tort-feasors. As such, interpreting the legislation so that it likewise prevents proper sharing of liability is contrary to legislative intent. Additionally, O’Ferrall J. pointed to the words “whether as a joint tort-feasor or otherwise” in the section, and concluded that the “otherwise” refers to situations when the party from whom contribution is sought is not a joint tort-feasor, but nevertheless may be liable for all or part of the same damage/ harm. Consequently, O’Ferrall J. interpreted s. 3(1)(c) as permitting contribution from the co-defendant tort-feasor provided that the co- defendant is liable to either the plaintiff or to the defendant seeking contribution, so long as harm to the plaintiff is the same. The claim for contribution was dismissed because there was no pleadings or evidence suggesting that the tenant would have been liable to the contractors.

November 15, 2011
Link to Decision

Rebecca Crangle
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