COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Laidar Holdings Ltd. v. Lindt & Sprungli (Canada)
  Inc.,

2012 BCCA 22

Date: 20120117

Docket:
CA038943

Between:

Laidar Holdings Ltd.

Respondent

(Plaintiff)

And

Lindt & Sprungli (Canada) Ltd.

Respondent

(Defendant)

And

DTZ Barnicke Limited

Appellant

(Third Party)

And

DTZ Barnicke Vancouver Ltd. and
Colliers
Macaulay Nickolls Inc. and Warrington PCI
Management, A Partnership

Respondents

(Third Parties)

And

Blake, Cassels & Graydon LLP

Respondent
(Respondent)

Before:

The Honourable Madam Justice Newbury

The Honourable Mr. Justice Frankel

The Honourable Madam Justice Bennett

On appeal from Supreme Court of British Columbia, March
17, 2011
(
Laidar Holdings Ltd. v. Lindt & Sprungli (Canada) Ltd.
2011 BCSC
325,
Vancouver Registry Docket S092249)

Counsel for the Appellant:

S.R. Andersen

Counsel for the Respondent,

Blake, Cassels & Graydon LLP:

M.G. Armstrong

Place and Date of Hearing:

Vancouver, British
  Columbia

December 16, 2011

Place and Date of Judgment:

Vancouver, British
  Columbia

January 17, 2012

Written Reasons by:

The Honourable Madam Justice Newbury

Concurred in by:

The Honourable Mr. Justice Frankel

The Honourable Madam Justice Bennett

Reasons for Judgment of the Honourable
Madam Justice Newbury:

[1]

This appeal involves a rule that straddles the line between substantive law
 the law of contribution between tortfeasors, codified in the
Negligence
Act
and procedure  the court rules governing third party notices.  The
rule has been considered several times and is well settled in this province.
It was described by McLachlin J.A. (as she then was) on behalf of this court in
Adams v. Thompson, Berwick, Pratt & Partners
(1987) 15 B.C.L.R. (2d) 51 as follows:

It thus may be stated with
confidence, in my view, that a third party claim will not lie against another
person with respect to an obligation belonging to the plaintiff which the
defendant can raise directly against the plaintiff by way of defence. Where the
only negligence alleged against the third party is attributable to the
plaintiff, there is no need for third party proceedings since the defendant has
his full remedy against the plaintiff.

(I will refer to this as the
first branch of the
Adams
rule.)  The Court continued:

On the other hand, where the
pleadings and the alleged facts raise the possibility of a claim against the
third party for which the plaintiff may not be responsible, the third party
claim should be allowed to stand.  [At 55.]

(I will refer to this as the second branch of the rule, although it might
also be considered an exception to the first branch.)

[2]

In the case at bar, as in many previous cases, the question of which
branch applies arises in the context of a client-solicitor relationship between
persons in the positions of plaintiff and third party respectively  although in
this case, they are in fact the defendant and a proposed fourth party
respectively.  The chambers judge below held that the first branch of
Adams
applied, and dismissed an application brought by a third party, DTZ Barnicke
Ltd. (DTZ), to join Blake, Cassels & Graydon LLP (Blakes), the
solicitors of the defendant (and plaintiff by counterclaim), as a fourth party.
DTZ submits that the Court thereby erred and that the chambers judge should
have followed a decision of the Ontario Court of Appeal,
478649 Ontario Ltd.
v. Corcoran
(1994) 118 D.L.R. (4th) 682.  There the Court ruled that it
was not plain and obvious that the fault alleged against a proposed third
party, the plaintiffs solicitor, would be attributable under agency principles
to the client, and that the first branch of
Adams
should not be applied.

[3]

For the reasons that follow, I have concluded that the chambers judge in
the case at bar did not err and that the appeal should be dismissed.

Relevant Legislation

[4]

I begin by setting out a helpful explanation of the historical evolution
of third party claims and the rules governing them, provided by McLachlin J.A.,
then of this court, in
McNaughton v. Baker
(1988) 25 B.C.L.R. 17:

Third party proceedings are a form of pleading
by
which
a
defendant asserts a claim against someone other than the plaintiff in
the event the defendant is found liable to the plaintiff. Originally, the claim
was confined to contribution or indemnity: see
Australian Newsprint Mills
Ltd. v. Canadian Union Line Ltd
. (1952) 6 W.W.R. 321 (N.S.), 7 W.W.R.
(N.S.) 94 (B.C.S.C.). This type of claim that could be raised by third party
proceedings was broadened in 1961 by amendments, confirmed in the present Rule
22(1). In addition to claims for contribution and indemnity, third party
proceedings may be brought for claims for relief or a remedy relating to or
connected with the original subject matter of the action, and in cases where the
proposed third party claim involves a question or issue substantially the same
as a question or issue arising in the claim between the plaintiff and
defendant: see
Webber v. Lowrie
(1978), 8 B.C.L.R. 131, 90 D.L.R. (3d)
682 (C.A.).

Third party pleadings function as a

special type of
statement of claim. Indeed, the claim they embody could be brought by separate
action. But to avoid a multiplicity of proceedings, the rules permit the claim
to be made in the action which has been commenced against the defendant. The
object of permitting third party proceedings to be tried with the main action
is to provide a single procedure for the resolution of related questions,
issues or remedies, in order to avoid multiple actions and inconsistent
findings, to provide a mechanism for the third party to defend the plaintiffs
claim, and to ensure the third party claim is decided before a defendant is
called upon to pay the full amount of any judgment. The avoidance of a
multiplicity of proceedings is fundamental to our rules of civil procedure.
This has been the case since the reforms effected by the Judicature Acts in the
nineteenth century. As Cotton L.J. stated in
Searle v. Choat
(1884) 25
Ch. D. 727: [t]he whole tenor of the
Judicature Act
is to require all
proceedings as far as possible to be taken in one action.

The rules in force in this
province before 1976 required the defendant to obtain leave to issue a third
party notice. Before a third party notice could be issued, the court was
required to decide whether, in the interest of justice and convenience, the
defendant should be allowed to join his claim against third parties in the
action against him, or whether he should be required to bring it as a separate
proceeding. In practice, leave was usually granted, provided the defendants
proposed pleadings disclosed a reasonable cause of action against the proposed
third party. Third party notices were commonplace, separate actions for
indemnification and contribution rare.  [At 20-1.]

[5]

Sections 1 and 4 of the
Negligence Act,
R.S.B.C. 1996,
c. 333, now provide:

1(1)      If by the fault 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 to which each person was at fault.

(2)      Despite subsection (1), if, having regard to all
the circumstances of the case, it is not possible to establish different
degrees of fault, the liability must be apportioned equally.

(3)      Nothing in this section operates to make a person
liable for damage or loss to which the person's fault has not contributed.

...

4
(1)      If damage or loss has been caused by the fault of 2 or
more persons, the court must determine the degree to which each person was at
fault.

(2)      Except
as provided in section 5 if 2 or more persons are found at fault

(a)        they are jointly and severally liable to the person
suffering the damage or loss, and

(b)        as
between themselves, in the absence of a contract express or implied, they are
liable to contribute to and indemnify each other in the degree to which they
are respectively found to have been at fault.

(Section 5 of the
Act
may be disregarded for purposes
of this case: it is restricted to causes of action arising before April 17,
1985 in respect of bodily injury to or the death of married persons.)  The
foregoing provisions are virtually the same as the provisions in force when
Adams
was decided: see R.S.B.C. 1979, c. 298.

[6]

Rule 22 of the
Supreme Court Rules,
also

in force when
Adams
was decided, stated in material part:

Issue of third party notice

(1)        Where a defendant who has entered an appearance
claims against any person, whether or not that person is a party to the action
(in these rules called the third party),

(a)        that
he is entitled to contribution or indemnity,

(b)        that
he is entitled to any relief or remedy relating to or connected with the
original subject matter of the action and substantially the same as some relief
or remedy claimed by the plaintiff, or

(c)        that any question or issue
relating to or connected with the original subject matter is substantially the
same as some question or issue arising between the plaintiff and the defendant
and should properly be determined not only as between the plaintiff and the
defendant but as between the plaintiff and defendant and the third party, or
between any or either of them, the defendant may issue in the same manner as a
writ of summons a third party notice in Form 15 setting out a statement of the
defendants claim against the third party.

...

Third party proceedings not to prejudice plaintiff

(12)      A plaintiff should not
be prejudiced or unnecessarily delayed by third party proceedings, and the
court may impose terms to prevent prejudice or delay.

[7]

Rule 3-5 of the
Civil Rules
of the Supreme Court of British
Columbia, B.C. Reg. 168/2009, now governs third party notices in substantively
similar terms to those of Rule 22.  Rule 3-5 provides in material part:

Rule
3-5 ‒ Third Party Claims

(1)        A
party against whom relief is sought in an action may, if that party is not a plaintiff
in the action, pursue a third party claim against any person if the party
alleges that

(a)        the party is entitled to contribution or
indemnity from the person in relation to any relief that is being sought
against the party in the action,

(b)        the party is entitled to relief against the
person and that relief relates to or is connected with the subject matter of
the action, or

(c)        a
question or issue between the party and the person

(i)         is substantially the same as a question or
issue that relates to or is connected with

(A)            relief claimed in the action, or

(B)            the subject matter of the action, and

(ii)        should
properly be determined in the action.

...

(2)        A third party claim
may be pursued against a person, whether or not that person is a party to the
action.

...

(14)      The court may impose
terms on any third party procedure to limit or avoid any prejudice or
unnecessary delay that might otherwise be suffered by a party as a result of
that third party procedure.

Adams
‒
First
Branch

[8]

In
Adams,
the plaintiffs had sought to develop certain property as
a residential subdivision.  They had retained an engineering firm, the
defendant
Thompson, Berwick, Pratt & Partners, to carry
out the plans and obtain municipal approvals.  They had also retained a firm of
solicitors, Messrs.
Shrum, Liddle & Hebenton, to provide services
and advice with respect to the project.  Various problems with respect to the
sewage disposal fields for the subdivision and setback requirements for
residential lots arose, causing the plaintiffs to be delayed in marketing their
lots.  During the period of delay, the market declined and it appears the
project was abandoned.

[9]

The plaintiffs sued their contractor and the engineering firm, alleging
negligent design and delay.  The engineers in turn issued a third party notice
against Shrum, Liddle & Hebenton on the ground that in breach of their
fiduciary duty owed
to the plaintiffs
, the law firm had failed to
provide appropriate services.  In particular, it was said the law firm had
failed to advise the plaintiffs that when the delays first arose, they should
have sought to develop ten of the lots separately so that they could have been
sold before the market crashed.

[10]

The engineering firm argued that if it and the law firm were found to
have been at fault, it should be in a position to seek contribution and
indemnity from the law firm, and therefore sought to invoke s. 4 of the
Negligence
Act
, R.S.B.C. 1979, c. 298, and Rule 22.  This court, however, upheld
the chambers judges order striking out the third party notice.  The Court cited
Yemen Salt Mining Corp. v. Rhodes-Vaughan Steel Ltd.
(1976) 2 C.P.C. 318 (B.C.S.C.) and
Westcoast Transmission Co.
v. Interprovincial Steel & Pipe Corp
. (1985) 60 B.C.L.R. 368
(S.C.), both of which illustrated that, in the words of McLachlin J.A.,
Where
the fault alleged against the proposed third party is in fact the fault of the
plaintiff, the defendant can raise the default by way of defence, making third
party proceedings unnecessary.  (At 55.)  After stating the two branches of
the rule in the passage I have quoted at para. 1, she explained the
distinction between claims for contribution and indemnity between co-defendants
under s. 4 of the
Negligence Act
, and the reduction of damages
recoverable by a plaintiff who has contributed to his own loss, under s. 1:

The same result arises if one views the matter on the basis
of the
Negligence Act
and the
Supreme Court Rules
. Where the
third party claim can be raised by way of defence, the substance of the matter
is that the plaintiff is at fault. That being the case, s. 1 of the
Negligence
Act
, which deals with the situation where fault is alleged, against the
plaintiff, is applicable.
Section 1 makes no provision for contribution or
indemnity between co-defendants
. By contrast, s. 4 of the
Negligence
Act
, which deals with cases
where the plaintiff is not at fault,
provides for contribution and indemnity between those found at fault in causing
the plaintiff's loss.

Under Supreme Court Rule 22, a
third party claim may be brought for contribution or indemnity.
That
remedy is available only where s. 4 of the
Negligence Act
is applicable.
It is not available where the claim is for fault for which the plaintiff is
responsible
.  [At 55-6; emphasis added.]

[11]

The Court described two kinds of situations in which a plaintiff will be
responsible for the conduct of a proposed third party ‒ where the acts of
the third party fall within the scope of an agency relationship between the
third party and the plaintiff, and where the claim is that the third party
should have advised or assisted the plaintiff to mitigate his damages.  (At 56.)
In applying these principles to the facts in
Adams
, McLachlin J.A. found
it unnecessary to decide whether legal
advice
given by a solicitor to
his or her client  as opposed to the legal
representation
of ones
client in dealings with others  would fall outside the agency relationship, as
the engineers contended.  Even if one assumed that argument was correct, she
said, the purported third party claim was in fact, a claim with respect to an
obligation
of the plaintiff[s]
  the obligation to mitigate their losses.
This being so, the engineers would have a complete remedy by way of reduction
of [the plaintiffs] damages if the mitigation argument succeeded.  Third
party proceedings were unnecessary.  (At 57.)

[12]

The first branch of
Adams
has been applied in several cases
involving proposed third party notices against solicitors, including
Sodican (B.C.) Inc. v. Bancorp Financial Ltd.
[1987] B.C.J. No. 2909;
Doyle v. Bell Pole Co.
(1993) 86
B.C.L.R. (2d) 40 (S.C., Master);
TNR Gold Corp. v. MIM Argentina
Exploraciones S.A.
2011 BCSC 243; and
Zur v. Rogowski,
(B.C.S.C.
Vancouver Registry, Docket S052676).
We were also referred to
Alkan Air Ltd. v. Johnson & Higgins
[1990] Y.J. No. 122 (S.C.), which concerned an action by the plaintiff Alkan
against its insurance brokers for failure to place excess insurance coverage.
The broker sought to add the plaintiffs counsel as a third party, claiming
that he had been negligent in his duty to the plaintiff in not taking steps to
have the plaintiff mitigate its loss.  (Para. 4.)  The Court rejected the
defendants submission that there was a possible scenario whereby the sins of
the counsel, Mr. Brenner, may not be visited upon the plaintiff, Alkan,
and that is if the trial judge finds that Brenner was not acting in his
capacity as counsel and agent for the plaintiff, Alkan, when he did something
negligently, or negligently omitted to do something.  Richard J. observed:

On an application like this, I am bound by the pleadings. I
am not to look beyond the pleadings.
All of these pleadings allege a
litigant/counsel relationship between Alkan and Brenner
. The Statement of
Claim states that Brenner was counsel to Alkan. The Statement of Defence filed
by the Johnson & Higgins defendants, states that Brenner was counsel to
Alkan. The Third Party Notice, that is attacked here, states that Brenner was
counsel to Alkan. And for what it is worth, Brenner, in his Statement of
Defence and on this application, states he was counsel to Alkan.
There is no
uncertainty on the issue, as was the situation in the
McNaughton
and
Cardar
cases
.

In summary, any wrongdoing alleged against Brenner, as
counsel, is something that can be raised against the plaintiff, Alkan, and
there is no need to add Brenner as a third party. In my view, the third party
proceedings against Brenner are indeed unnecessary, and to strike these third
party proceedings will, in my view, not prejudice the Johnson & Higgins
defendants in their defence of this action.

In the result, Mr. Brenner's
application is granted and there will be an order striking out the Third Party
Notice against him.  [At 10-2; emphasis added.]

(See also
Gelt Holdings Ltd. v. Doane
Raymond Pannell
[1995] B.C.J. No. 1283 (B.C.S.C.) at
paras. 17-19 regarding accounting services.)

Adams
‒
Second Branch

[13]

The opposing authorities applying the second branch of
Adams
involve
circumstances where it appears on the pleadings that the breach of duty allegedly
committed by the proposed third party might not be owed or attributable only to
the plaintiff, but might give rise to an independent cause of action not
belonging to the plaintiff.  As stated in
Adams
:

At the same time, it must be
recognized that a person acting as agent to the plaintiff may undertake duties
toward co-contractors and others outside the scope of his agency. To put it
another way, the plaintiff's agent may, as a consequence of his relations with
other contractors on the project, assume duties toward persons other than the
plaintiff, for breach of which the plaintiff would not be vicariously liable.
It was the possibility of such claims which led McEachern C.J.S.C. in
Quintette,
supra,
to allow the third party claim to stand.  [At para. 20.]

[14]

This courts decision in
McNaughton v. Baker, supra,
is an
example of such a case.  There, a dairy farm had been sold in a transaction
that later failed, leading the vendors to foreclose on a mortgage they had taken
back from the purchasers.  The vendors sued the lawyers who had assisted in the
transaction.  They in turn denied negligence and issued a third party notice alleging
negligence on the part of the realtors and accountants who had also assisted
the vendors.  The law firm relied on s. 4 of the
Negligence Act
and
sought to plead a breach of duty of care owed by those parties
to the law
firm
.

[15]

After some unsuccessful attempts were made by the law firm to amend its
pleadings, the accountants sought to have the third party notice struck out.
This court held that the application stood to be decided on the basis of the
pleadings, which must be considered to be true in connection with a motion to
strike out or amend a third party claim.  (At 23.)  The judge below had instead
made his decision on the evidence, finding no basis for an argument that the
alleged negligence would be applicable outside the scope of the retainer, whatever
it may be.

[16]

Considering only the pleadings, the Court found that
McNaughton
was
distinguishable from
Adams
: it could not be said that the allegations
against the third party all necessarily related to acts committed as agents
for the plaintiff.  In McLachlin J.A.s words:

On the contrary, the scope of the
retainer between the plaintiff and the accountants appears to be in dispute. In
these circumstances, amendments alleging that the accountants owed an
independent duty to the defendants of which they were in breach, disclosed a
possible third party claim against the accountants and should be permitted.
[At 27.]

In the result, the law firms amended third party notice as
against the accountants was permitted to stand.

[17]

The second branch of
Adams
has also been applied in cases
involving complex contractual and tort relationships among various parties
including professional consultants who have interacted in the course of a
project of some kind.
Quintette Coal Ltd. v. Bow Valley Resource Services
Ltd.
(1986) 19 C.L.R. 153 (B.C.S.C.)
,
was one such case.  In
Quintette
,
the plaintiff made various allegations founded in breach of contract, improper
design, negligent misstatement, and other causes of action against the
defendant, Bow Valley.  The plaintiff had contracted with an engineering
firm, Kilborn, for its provision of project management, engineering,
procurement, planning, scheduling, construction contract administration and
construction management services.  The contract specified that Kilborn would be
an independent contractor in the performance of these services and would
perform them in accordance with its own or agreed upon methods, subject to
compliance with the specifications, schedules and drawings approved by the
Client ...

[18]

The defendant issued a third party notice against Kilborn.  The third
party, supported by the plaintiff, applied to have the notice struck out.  McEachern,
C.J.S.C., as he then was, formed the preliminary view that the case might be a
suitable one for third party proceedings in light of the independent
contractor clause.  Counsel for Kilborn argued, however, that two decisions of
the Supreme Court of Canada,
Bilodeau v. A. Bergeron & Fils Lt
ée
[1975] 2 S.C.R. 345, and
Vermont Construction Inc. v. Beatson
[1977] 1
S.C.R. 758, implied that Kilborn could have no duty to the defendant, with the
result that the third party notice must be set aside.  Upon examination of
these cases, and the decision of McLachlin J. (as she then was) in
Westcoast
Transmission Co. Ltd. v. Interprovincial Steel and Pipe Corp.
(1985) 60
B.C.L.R. 368 (B.C.S.C.), the Chief Justice was not persuaded that they stood
for the sweeping argument made on behalf of the third party.  He noted that the
defendant was relying not only on an alleged breach of contract on the part of
Kilborn but rather its conduct as an actor in this particular construction neighbourhood
when Kilborn knew there were other legal neighbours who might be injured by its
lack of care, if any.  (At 169.)  Like the accountant in
Candler v. Crane,
Christmas & Co
. [1951] 2 K.B.164 (C.A.), the banker in
Hedley Byrne
v. Heller
[1964] A.C. 465 (H.L.), the flooring subcontractor in
Junior
Books Ltd. v. Veitchi Ltd
. [1982] 3 All E.R. 201 (H.L.) and even the
bottler in
Donahue v. Stevenson
[1932] A.C. 562 (H.L.), the Chief
Justice said, Kilborn might be said to have been operating in the same milieu
with the other actors, and duties to legal neighbours arose out of such
circumstances whether there were contemporary breaches of contract to someone
else or not.  (Para. 29.)

[19]

The Court concluded that the defendant should be permitted to proceed
with the third party proceeding.  (See also
North Fraser Harbour Commission
v. Hardy BBT Ltd.
[1992] B.C.J. No. 2748 (S.C.), which involved a complex
pollution cleanup project undertaken by various parties at various times; and
G.W.L.
Properties Ltd. et al. v. W.R. Grace & Company of Canada Ltd. et
al.,
(B.C.S.C., Vancouver Registry, Docket C900884) dated June 10,
1992, which involved an asbestos removal project.)

Ontario Cases

[20]

Counsel for DTZ  in the case at bar, however, referred us to two Ontario
cases which distinguished
Adams
in fairly uncomplicated situations
involving professional advisors
Cardar Investments Ltd. v. Thorne Riddell
(1989) 71 O.R. (2d) 29 (Div. Ct.) and
478649 Ontario Ltd. Corcoran, supra.
In
Cardar,
the plaintiffs had sued an accounting firm for damages they
had allegedly suffered due to negligent advice given to them regarding the
amount of scientific research tax credits they needed to buy in order to effect
the greatest possible tax savings.  The accounting firm in turn sought to join
the plaintiffs solicitors, alleging they had negligently failed to make the
necessary calculations or to advise their client to engage someone else to do
so, and might therefore be partly responsible for the plaintiffs damages
within the meaning of s. 6 of the
Negligence Act,
R.S.O. 1980,
c. 315.  It provided:

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 considered just or may be made a
third party to the action in the manner prescribed by the rules of practice for
adding third parties.

[21]

The law firm naturally relied on
Adams,
but the Court concluded
that the firms conduct might not be attributable to its client on agency
principles.  In the Courts analysis:

... The
alleged negligence of
the solicitors in failing to calculate the optimum amount of tax credits
required by the plaintiffs, can only be attributable to the plaintiffs if the
plaintiffs were themselves under an obligation to make such calculation
.
Whether the plaintiffs were themselves under such an obligation depends on how
specific the information was that they gave to the accountant and how specific
the advice was that was given by the accountant to the plaintiffs. If, as
alleged by the plaintiffs, the accountant advised the plaintiffs that each
ought to buy $2,000,000 worth of tax credits, it can scarcely be maintained
that the plaintiffs had to satisfy themselves in that regard before acting on
it.
In any event, since it is at this point uncertain whether the alleged
negligence of the solicitors can be attributed to the plaintiffs, the third
party notice should issue
.  [At 33-4; emphasis added.]

[22]

Cardar
was approved and relied upon by the Ontario Court of
Appeal in
Corcoran
, the facts of which were somewhat similar to those of
the instant case.  The plaintiff purchaser was suing the vendor of certain real
property, and its real estate agents (Stellar), for negligent
misrepresentation concerning the value of the property, which depended on its
potential for development.  Stellar in turn issued a third party notice against
the plaintiffs solicitor on the ground that he had reviewed the agreement of
purchase and sale before it was executed, and failed to give proper advice regarding
precautions that could have protected his client.  (Like the allegation made
against the solicitors in
Cardar,
this sounds suspiciously like a last
clear chance argument.)

[23]

Speaking for the Court in
Corcoran
,

Laskin J.A.

referred
to
Adams
.  He read it as turning on the view that the plaintiffs
obligation to mitigate their damages (which Laskin J.A. saw as the substance
of the defendants allegation in
Adams
) was the plaintiffs alone, and
could not be avoided by delegation to their solicitor.  This had not been the
case in
Carder
and, he reasoned, was not the case in
Corcoran,
since
in his analysis it was possible a plaintiff could shelter behind his or her
choice of a reputable law firm as a defence to attributed responsibility as the
firms principal. In his words:

This may not be a case where the
fault alleged against the third party is in fact the fault of the plaintiff,
but rather a case where the plaintiff may not be responsible for the negligence
alleged against its solicitor. While the plaintiff was, as the motions judge
points out, responsible for completing the transaction, what has been put
against the solicitor is that he was negligent in failing to give proper advice
concerning the agreement of purchase and sale and that his negligence
contributed to his clients loss.
The plaintiff may be able to say that it
acted reasonably in retaining the third party to advise it on the terms of the
agreement and accordingly should not be responsible for any negligence on the
part of its solicitor
.  See
Salmond and Heuston on The Law of Torts
,
20th ed. (1992) at p. 474 ff. and
Jackson & Powell on Professional
Negligence
, 3rd ed. (1992) at p. 363 ff.  [At 689; emphasis added.]

Ultimately, since the Court could not say that the third
party claim was certain to fail, the plaintiffs motion to strike out the
third party claim was dismissed.

The Case at Bar

[24]

Against this background, I turn at last to the case at bar.  It arises
out of a real estate transaction involving a lease of property in Vancouver
from the plaintiff Laidar to the defendant Lindt.  The lease provided that
Lindt would be permitted to use the leased premises for the sale and distribution
of chocolate  a use that, it later became apparent, was not permitted under
the existing zoning of the property.

[25]

In negotiating the lease, Laidar had been assisted by a property
management firm, the third party Warrington PCI Management (Warrington) and a
leasing agent, the third party Colliers Macaulay Nicolls Inc. (Colliers).
Lindt was assisted by its leasing agents, the third parties DTZ and DTZ
Barnicke Vancouver Ltd. (DTZ Vancouver), and by Blakes as legal counsel.  Because
of the zoning difficulties, Lindt ultimately did not take possession of the
premises or make any payments under the lease.  On March 24, 2009, Laidar
sued Lindt for arrears of rent.  Among other things, Lindt then counterclaimed
for breach of the lease and tortious misrepresentation.  Soon thereafter, it filed
third party notices against DTZ and DTZ Vancouver.  Laidar filed notices
against Warrington and Colliers.

[26]

In December, DTZ prepared a fourth party notice against DTZ Vancouver,
Colliers, Warrington, Blakes and others.  Because more than 42 days had elapsed
since it had been served with notice of claim by Lindt, DTZ required leave to
file its fourth party notice under R. 3-5.  (See para. 7 above.)  The
relevant portions of DTZs notice of claim read as follows:

The Defendant instructed DTZ Limited to negotiate on its
behalf on offer to lease of the subject property, which was prepared and dated
February 14, 2009 (the Offer to Lease).

Paragraph 26 of the Offer to Lease (the Condition) provided
as follows:

Tenants Condition #1: Solicitors Approval
:  This
Offer is conditional for (5) business days from the date of acceptance of this
Offer upon the approval of the terms hereof by the Tenants solicitor.  Unless
the Tenant gives notice in writing delivered to the Landlords address as
hereinafter indicated not later than the time period stated above, that this
condition is fulfilled, this Offer shall be null and void and the deposit shall
be returned to the Tenant in full without deduction.  This condition is
included for the benefit of the Tenant and may be waived at his sole option by
notice in writing to the Landlord within the time period stated herein.

At all relevant times,
Blakes acted as legal counsel for
the Defendant
in regard to negotiation and preparation of the lease of the
Property.

Blakes failed to confirm that the
Defendants proposed use of the Property was permitted by the applicable zoning
bylaws.  In the alternative, Blakes
failed to advise the Defendant
that
the zoning of the Property did not permit the Defendants intended use.  In the
further alternative, Blakes failed to make the lease conditional upon a zoning
variance or to otherwise ensure that the Defendant would be able to use the
Property as intended.  [At paras. 25-8; emphasis added.]

[27]

With respect to the Legal Basis for the notice, DTZ alleged:

Blakes
owed the Defendant a duty
to exercise the
reasonable care, skill, and diligence of a reasonably prudent solicitor in
connection with its negotiation and preparation of the lease.

A reasonably prudent solicitor would have discovered the
zoning issue, such that the Offer to Lease would have been voidable at the
option of the Defendant.

A reasonably prudent solicitor
acting for a prospective
lessee
in such circumstances owes the client a duty to:

(a)        confirm
that the proposed use complies with the applicable zoning bylaws and if it does
not comply to advise the client accordingly; and

(b)        make
the lease conditional upon a zoning variance or to otherwise ensure that the
Defendant would be able to use the property as intended.

In the circumstances, Blakes breached the duty of care
that
it owed to the Defendant
:

(a)        when
it failed to confirm that the Defendants proposed use did not comply with the
applicable zoning bylaws;

(b)        in the
alternative, when it
failed to advise the Defendant
that the zoning of
the subject property did not permit the Defendants intended use;

(c)        in the alternative, when it
failed to make the lease conditional upon a zoning variance or to otherwise
ensure that the Defendant would be able to use the property as intended.  [At
paras. 23-6; emphasis added.]

[28]

The chambers judge, Madam Justice Maisonville, heard DTZs application
for leave on February 16, 2011.  The contentious issue was whether leave
should be granted to DTZ to bring the fourth party claim against Blakes.  At
paras. 10-1 of her reasons, which are indexed as 2011 BCSC 325, the chambers
judge stated the issue and her conclusion thus:

Accordingly, paraphrasing Rule 3-5 (1) to the facts before
the Court could DTZ ... be entitled to contribution or indemnity or relief from
[Blakes]?  Is the question between DTZ ... and [Blakes] substantially the same
question or issue relating to this matter and should it be properly be
determined here? And, more specifically, the question is:

Does a third party or fourth party claim lie against another
with respect to an obligation belonging to Lindt which the landlord Laidar
could raise directly against Lindt by way of defence?

I have determined that the answer
to that question is no. No third party claim or fourth party claim will lie
against another when the defence is one the defendant could raise directly
against the plaintiff. Any duty owing in law by [Blakes] to Lindt is to Lindt
alone. Further the question between the parties is not the same  while the
applicant DTZ ... seeks to characterize it as a simple matter of zoning, and
thus substantially the same question or issue in the matter, it is clear the
real issues will surround the lease. I do not find the issues to be the same.
Accordingly the application, insofar as it seeks leave to add [Blakes] as a
party to this matter, is to be dismissed for the reasons that follow.

[29]

At para. 22, Maisonville J. emphasized that the fourth party notice
contained no assertion that Blakes had made any representations to DTZ on
zoning, that it owed DTZ a duty of care, that it had acted outside the scope of
its retainer with Lindt, or that it had committed any independent tort.  Echoing
Adams,
she continued:

A third party (here DTZ ...), may
not assert a fourth party claim pursuant to Rule 3-5 (1) in respect of an
obligation belonging to a plaintiff, (here Lindt, the plaintiff by
counterclaim,) that the defendant, (here Laidar) could raise directly by way of
defence, even if the plaintiff by counterclaim contracted with a fourth party
(here Lindt retaining [Blakes], the proposed fourth party) to discharge the
obligation. Where a plaintiff by counterclaim, such as Lindt, contracts with
two separate entities and later sues only one of them,
the one sued cannot
claim contribution or indemnity from the other on the ground that the other
failed to execute its duties properly when there was no relationship between
those parties contractual or otherwise
. Further, where the only negligence
alleged against the third or fourth party is attributable to the plaintiff
there is no need for third or fourth party proceedings.  [At para. 24; emphasis
added.]

Relying as well on
Yemen Salt Mining, supra
, and
College
of New Caledonia v. Kraft Construction Co. Ltd.
2007 BCSC 1408, she
concluded that the case fell within the first branch of the
Adams
rule,
and that DTZs claim did not come within para. (a) of R. 3-5(1).

[30]

Turning next to paras. (b) and (c) of R. 3-5, the chambers judge
noted that as in
Alkan Air, supra
, the retainer of the solicitors was
not questioned or uncertain.  In both cases, it was alleged that the
relationship between the plaintiff (here, Lindt) and its solicitors was that of
litigant and counsel.  That relationship and the duty owed by the lawyer did
not constitute the main issue to be tried, which was whether the lease was
voidable or rescission should be granted as remedy.  Though not explicitly
stated, it appears that the chambers judge thus concluded that neither para. (b)
nor (c) of R. 3-5(1) applied.

[31]

Finally, the chambers judge noted that even if she had found that the
application had been properly made, the Court could still deny leave to file a
third party notice if the pleadings offended R. 9-5, which permits the
Court to strike scandalous, frivolous, or vexatious pleadings.  She observed
that generally, counsel owes no duty to any other party of a proceeding except
the client.  A pleading advanced by a non-client does not generally disclose a
reasonable claim.  (Citing
Kamahap Enterprises Ltd. v. Chus Central Market
Ltd
. (1989) 64 D.L.R. (4th) 167 (B.C.C.A.),
Young v. Borzoni
, 2007
BCCA 16, and other cases.).  Alternatively, she said, the addition of Blakes as
a fourth party would prejudice Lindt, which would be denied its counsel of
choice.  In summary, Maisonville J. held:

Since the proposed fourth party
pleadings do not fall within Rule 3-5(1), the application to add [Blakes] is
denied. There is no assertion that [Blakes] acted outside the scope of its
responsibilities in the only relationship it had which was pleaded  that is to
Lindt.  DTZ ... can raise by defence the obligations it says are owed to Lindt
and consequently the fourth party pleadings are unnecessary. I have found this
application did not meet the requirements of Rule 3-5(1) insofar as the
applicant seeks to add [Blakes].  In any event, I would have denied the
application to add [Blakes] under Rule 9-5 as not disclosing a reasonable cause
of action.  [At para. 38.]

Accordingly, she dismissed DTZs application to add
Blakes as a fourth party.

On Appeal

[32]

In this court, DTZ submits that the chambers judge erred in:

1)       finding
that a fourth party notice could be brought against Blakes only if Blakes owed
a duty of care to [DTZ];

2)       finding
that [DTZ] could not seek contribution or indemnity from Blakes pursuant to the
Negligence Act
;

3)       finding that any
negligence of Blakes would be attributed to Lindt;

4)       finding that Blakes
acted solely as Lindts agent; and

5)       distinguishing and not
following
Corcoran
.

[33]

I must say on the outset that in my view, grounds 3 and 4 rest on a
misconception of the chambers judges reasoning and the task before her.  She
did not find, nor could she find as facts, that Blakes acted solely as Lindts
agent or that any negligence of Blakes would be attributed to Lindt.  Rather,
she found
on the pleadings
that no independent tort, such as a
misrepresentation made directly to DTZ, was
alleged
that would support a
claim for contribution or indemnity by DTZ against Blakes.  Similarly, she noted
 correctly in my view  that the fourth party notice referred only to duties
of contract and care owed by Blakes to its client Lindt.  In other words, she
did not find facts but proceeded on the basis of the pleadings, consistent with
applicable case law: see, e.g.,
Baker v. McNaughton,
discussed above.  Thus
I conclude that grounds 3 and 4 cannot succeed.

[34]

With respect to the
Negligence Act
, DTZ submits that s. 4 creates
an independent statutory right as between tortfeasors to claim contribution
from any other person who may have been at fault.  On this point, DTZ cites
The
Owners, Strata Plan LMS 1751 v. Scott Management Ltd.
2010 BCCA 192, where the
Court stated at para. 57:

Section 4(2)(b) of the [
Negligence
]
Act
creates an independent right of contribution as between the
defendants and the respondents since the plaintiff had a cause of action
against each of them when the alleged tort occurred.

(The respondents in
Scott
were various sub-trades
and consultants who had been retained by the defendants in the construction of
an allegedly leaky condo owned by the plaintiffs.)  Since DTZ is in the case
at bar a third party rather than a defendant, it argues that the statement from
Scott
may be reformulated as follows:

Section 4(2)(b) of the
Act
creates an independent right of contribution as between the third party and the
fourth party since the defendant had a cause of action against each of them
when the alleged tort occurred.

[35]

Apart from the issue of the timing of the alleged torts, this statement
overlooks the fact that on the present pleadings, the only cause of action alleged
against Blakes is the breach of a duty owed
only to Lindt
.  The lesson
of
Adams
is that at least under the
Negligence Act
of this
province, the breach of such a duty does not give DTZ an independent right of
contribution against Blakes.  If the law firm was negligent in its advice to
its client, DTZ would, like the engineers in
Adams
, have a complete
remedy by way of reduction of Lindts damages for which DTZ could be liable.
A third party claim is unnecessary.

[36]

In normal circumstances, I would end this already too-long and tedious
analysis here, and conclude simply that the first branch of
Adams
governs.
However, since counsel for DTZ made lengthy submissions based on
Corcoran
,
I turn to explain why ‒ apart from the fact it involved different
pleadings and different legislation ‒ in my opinion that case does not,
and could not, displace
Adams
.

[37]

As we have seen, the Court in
Corcoran
declined to apply the
first branch of
Adams
because of the possibility that having acted
reasonably in retaining reputable solicitors to advise it on the terms of the
agreement, the plaintiff might argue successfully that it should not be responsible
on agency principles for any negligence on the solicitors part.  The Court

did
not cite any cases in which an argument of this kind has been considered in a
comparable situation; nor did counsel for DTZ do so in the case at bar.  Nor
have I located such an instance in the case law of this province.  The Court in
Corcoran
referred to two textbooks,
Professional Negligence
by
Jackson and Powell, and
The Law of Torts
by Salmond and Heuston.  I do
not find the former to be helpful on the point.  In
The Law of Torts,
however,
Salmond and Heuston say this:

The normal duty imposed by the law of negligence is no higher
than one of reasonable care.  As always, it is a question of fact in each case
whether reasonable care has been taken.  But it is certainly material to
consider whether what has to be done is something which forms part of the
obligors ordinary trade or business.
If the act or process in question is
one which

involves technical skill or knowledge, then the ordinary man
will discharge his duty by entrusting its performance to an apparently
competent contractor.

. . .

On the other hand the principal
may be liable where due care is not taken to see that the agent is properly
qualified for the performance of the task so committed to him, or where proper
instructions are not given to him in order to enable him to avoid the dangers
incidental to the work.  For it is important not to give an undue advantage to
the ignorant employer who confides all his affairs to independent contractors.
[At 476-77; emphasis added.]

The authors seem to imply, then, that in some
circumstances where a party lacks expertise in an area, he or she can avoid
liability for the negligent discharge of a duty by relying reasonably on a
third party who is competent in the area.  However, the authors provide a number
of exceptions to this statement and do not appear to go as far as the
proposition suggested in
Corcoran
.

[38]

Recently, the limitations of the reasoning in
Corcoran
have been
clarified in two Ontario cases,
Macchi s.p.a. v. New Solution Extrusion Inc.
[2007] O.J. No. 4392 (S.C.J.),
affd
2008 ONCA 586, and
Davy
Estate v. CIBC World Markets
2009 ONCA 763.  Unlike most of the cases
considered above involving solicitors,
Macchi
did not involve only an
alleged failure to mitigate on the clients part, brought about by the
solicitors negligence.  Rather, it was alleged the (plaintiffs) solicitor had
neglected to register properly a security interest in equipment on his clients
behalf, since he had been misinformed by one Simone, a defendant, as to  the
debtors name.  By the time the mistake was discovered, another creditor, the
defendant New Solutions Financial, had registered a general security agreement
under which it obtained a security interest in all of the debtors assets,
including the equipment.

[39]

In the ensuing priority contest, the debtor and Simone sought to launch third
party claims against the solicitor on the basis that he had been negligent in
failing to verify the debtors correct name and thus caused loss to the
plaintiff.  The Court struck out the debtors claim, noting that negligence on
the part of the solicitor would not provide the debtor with a defence to the
plaintiffs claim in breach of contract. (Para. 11.)  As for Simones claim, he
argued that he should be entitled to assert the solicitors alleged negligence as
a defence to his (Simones) own misrepresentation.  Wilton-Siegel J. rejected Simones
argument based on
Corcoran
that the plaintiff might succeed in
distancing itself from fault on the part of its solicitor despite the agency
relationship between them.  In the Courts analysis:

The factual circumstances of the present action are very
different from those in
Corcoran
, which involved legal advice with
respect to the terms of an agreement of purchase and sale.  The present action
involves the simpler circumstance of registration of a security interest under
the
PPSA.
Under that statute, the consequences of an invalid
registration clearly fall on the creditor.  Failure to effect a valid
registration has the consequence of subordinating a security interest to
various parties.  It is only in this limited sense that it is even possible to
speak of the responsibility for a valid registration statement resting with
the creditor.  As a prudential matter, to protect itself, a creditor will wish
to ensure that a registration complies with the requirements under the
PPSA
,
including setting out the correct name of the debtor.  However, the creditor
has complete discretion to decide how it wishes to proceed to protect its security
interest under the
PPSA.
In many instances, a creditor uses its own
personnel, who are knowledgeable in the requirements of the regulations, to
attend to registration on its behalf.
In other circumstances, including the
present, a creditor will engage a solicitor to attend to a registration on its
behalf.  If it does so, however, I think it is clear that the solicitor is
simply acting as the creditors agent for the purpose of registering a security
interest.

Such circumstances fall within
the circumstances envisaged by McLachlin J.A. (as she then was) in
Adams
...
[Paras. 17-8; emphasis added.]

[40]

The Court also considered that the legal relationship between principal
and agent in
Maachi
was very different from that discussed in
Corcoran
.
First, having retained an agent to carry out the registration, the plaintiff
did not cease to bear the consequence of any negligence on the part of [the
solicitor] by engaging him as its agent to attend to the registration. It
remained responsible for the consequences of an invalid registration under the
PPSA
even if it resulted from negligence on the part of [the solicitor].
(Para. 21.)  Second, Wilton-Siegel J. said:

...
a party may only shelter under its engagement of legal
counsel if it had a pre-existing duty, the performance of which can be said to
be discharged by retaining qualified legal counsel to advise it
.  In such
circumstances, as Laskin J.A. stated [in
Corcoran
], a party may be
relieved of responsibility for any negligence of its counsel, with the result
that liability for the consequences of the solicitors negligence falls
entirely on the solicitor.

In the present circumstances,
however, Macchi had no pre-existing duty to effect a valid registration that
could be satisfied by engaging qualified counsel to act on its behalf.  It
cannot, therefore, distance itself from responsibility for, or the consequences
of, any negligence on the part of its counsel as in
Corcoran
.  [At
paras. 22-3; emphasis added.]

Accordingly, the Court concluded that because any
negligence on the part of the solicitor was attributable to the plaintiff, no
third party proceedings were necessary.  Simone had his full remedy against
the plaintiff by virtue of his ability to assert the defence of Macchis
negligence in its failure to conduct searches to establish the correct name of
the party with which it had contracted.  Simones third party claim was struck
as failing to disclose a reasonable cause of action.  (The judgment was
affirmed by endorsement by the Court of Appeal.)

[41]

The reasoning in
Corcoran
was discussed at greater length, and again
distinguished in
Davy Estate, supra.
There the plaintiff, who was the
trustee of her fathers estate, was suing for conversion and breach of
fiduciary duty, alleging that the defendant financial managers had accepted her
fathers instructions to make certain transfers out of his account, despite
their knowledge of the fathers mental incapacity.  The defendants denied any
knowledge of incapacity on the fathers part and pleaded that they had followed
his wifes instructions pursuant to the terms of a power of attorney she held
from him.

[42]

Following an initial transfer from the fathers account, the plaintiffs
solicitor had written to the defendant CIBC to request that the account be
frozen.  CIBC replied that a court order would be required for this purpose,
but the plaintiff failed to seek such an order before the fathers wife had
divested the estate of certain shares.  The plaintiff claimed damages for
conversion and breach of fiduciary duty against the managers.  In response,
they pleaded that the plaintiff had failed to mitigate the estates losses by
failing to obtain a court order.  When asked why she had not sought such an
order, the plaintiff deposed that she had relied on the advice of her
solicitor, the proposed third party Mr. Henry.

[43]

The Court of Appeal agreed with the motions judge below that (the first
branch of)
Adams
should be applied.  Speaking for himself, Laskin and
MacFarland, JJ.A., Mr. Justice Sharpe began his analysis by noting the
distinction between a plea of mitigation in defence to a plaintiffs claim, and
a claim against a third party who was implicated in the initial loss and is
thereby jointly and severally liable for the same loss that the plaintiff
claims against the defendant.  In the latter situation, the Court noted, the
third partys fault does not have the effect of reducing the damages that the
plaintiff may claim against the defendant: The defendant and the third party
are each liable to the plaintiff for the full amount of the loss.  (Para. 17.)

[44]

Where failure to mitigate is claimed, on the other hand, the plea arises
after the loss has been suffered and relates to events or conduct unrelated to
the cause of the initial loss.  The plaintiffs solicitor owes the defendant
no common law duty of care ‒ it could only arise under s.1 of the
Negligence
Act
(R.S.O. 1990, c.N.1).  However, the Court said, s. 1 does not embrace a
plea of failure to mitigate on the part of a plaintiff, which is a
defence
to the plaintiffs initial claim that reduces the amount that the plaintiff may
recover ... for the wrong to the plaintiff.  (My emphasis.)  Sharpe J.A.
continued:

Even if the plaintiff relied upon advice from a solicitor
that was negligent or given in breach of the solicitor's fiduciary duty,
I
fail to see how the solicitor's fault with respect to mitigating the loss can
trigger a claim on the part of the defendant under the
Negligence Act
for having jointly caused the loss. The damages have not been caused or
contributed to by the fault or neglect of two or more persons. The damages
were caused solely by the defendant
. The defendant's complaint is that the
plaintiff failed to take post-loss steps to reduce the loss. As the fault of
the proposed third party related to the reduction of the impact of the loss
after it was suffered, and not to causing or failing to avoid the loss when it
did occur,
the proposed third party is not, in the words of s. 1 of the
Negligence
Act
, jointly and severally liable to the person suffering loss or damage
and not liable to make contribution and indemnify the defendant
.

Likewise, no claim arises under
s. 2. This is not a claim by one tortfeasor who has settled with a plaintiff
and, in any event, the solicitor is not a tortfeasor who is, or could if sued
have been, liable
in respect of the damage
 (emphasis added) for which
the appellants are allegedly liable. Finally, s. 5 is purely procedural in
nature and deals with the right to contribution created by s. 1.
It does not
create a right to contribution and confers no substantive rights
:
HSBC
Securities (Canada) Inc. v. Davies, Ward & Beck
(2005), 74 O.R. (3d)
295, at para. 62.  [At paras 20-1; emphasis added.]

Cardar
and
Corcoran
were found to be distinguishable (from
Davy Estate
and from
Adams
)
on the basis that they had involved claims for contribution and indemnity
against parties alleged to have been implicated in the events giving rise to
the initial loss, as opposed to claims for failing to protect the interests of
the plaintiff after the loss had arisen.  (Paras. 22-3.)

[45]

Finally and most importantly for our purposes, the Court went on to
reject the possibility that a plaintiff relying on a solicitors advice might
be found to have acted reasonably for purposes of satisfying its duty to
mitigate, although the solicitors advice was negligent.  (Para. 27.)  Even in
such circumstances, Sharpe J.A. said, he could for the reasons already given see
no basis in law for allowing the defendant to assert a claim against the solicitor.
This result, he added, was in accordance with strong underlying policy reasons,
including the obvious mischief that arises from allowing one party to sue
another partys solicitor:

Such claims invade the sanctity
of the solicitor-client relationship.  The solicitors loyalty to the client is
undermined.  Difficult issues regarding solicitor-client privilege are bound to
arise in relation to the solicitors defence.  These policy reasons cannot
prevail in cases like
Corcoran
where the defendant has a valid legal
claim against [the] solicitor for contribution and indemnity, but in a case
such as the present one, the policy coincides with the strict letter of the
law.  [At para. 28.]

Accordingly, the Court applied the first branch of
Adams
and affirmed the order of the motions judge striking out the third party notice
against the plaintiffs solicitor.

Conclusion

[46]

Returning finally to the instant case, all the threads of argument
discussed above lead in my opinion to the conclusion that the chambers judge
properly applied the first branch of
Adams
.  The proposed fourth party
notice against Blakes does not disclose events giving rise to the initial
loss, but simply alleges a failure to protect the interests of Lindt.  The
conduct described in the notice clearly falls within the scope of the firms
retainer, which is not questioned or uncertain.  Lindt was not performing a
pre-existing obligation or duty; its only responsibility in the circumstances was
to act reasonably to protect itself.  In the words of
Adams
, that was an
obligation belonging to Lindt, which can be raised by the defendant by way of
defence, making third party proceedings unnecessary.  Finally, I respectfully
adopt the reasoning in
Davy Estate
, and conclude that even if one were
to assume that in some circumstances, a client might avoid the consequences of
an agency relationship by proving that he or she had retained a reputable
agent, a defendant would nevertheless have no basis for a claim against the
solicitor under the
Negligence Act
of this province for what remains the
clients failure to mitigate.

[47]

I would therefore dismiss the appeal.

The Honourable Madam Justice Newbury

I Agree:

The
Honourable Mr. Justice Frankel

I Agree:

The Honourable Madam Justice
Bennett


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Eichen v. Eichen,

2012 BCCA 32

Date: 20120118

Docket:
ca038949

Between:

Hans Peter Eichen

Respondent

(Plaintiff)

And

Rachel Eichen

Appellant

(Defendant)

And

Michael Dobres

Defendant

Before:

The Honourable Madam Justice Saunders

The Honourable Mr. Justice Lowry

The Honourable Madam Justice Bennett

On appeal from: Supreme
Court of British Columbia, March 18, 2011
(Eichen v. Eichen, Vancouver Registry E041040)

Oral Reasons for Judgment

Counsel for the Appellant:

D. Dunn

Counsel for the Respondent:

J. Fairburn

Place and Date of Hearing:

Vancouver, British
  Columbia

January 18, 2012

Place and Date of Judgment:

Vancouver, British
  Columbia

January 18, 2012

[1]

LOWRY J.A.
: The question is whether Madam Justice Russell erred
in making an order on 18 March 2011 terminating spousal support and cancelling
arrears payable by Hans Peter Eichen to his former wife Rachel Eichen pursuant
to an order made by Madam Justice Ross in 2007. Ms. Eichen filed no affidavit
evidence and, although duly served, did not appear and accordingly did not
oppose the application that gave rise to the order she now appeals.
Nonetheless, she maintains the judge failed to apply the legal principles that govern
applications of that kind.

[2]

The application was made under s. 17 of the
Divorce Act
, R.S.C.
1985, c. 3 (2nd Supp.), which provides a court may vary spousal support
orders. Section 17(4.1) provides:

(4.1)  Before the court makes a
variation order in respect of a spousal support order, the court shall satisfy
itself that a change in the condition, means, needs or other circumstances of
either former spouse has occurred since the making of the spousal support order
or the last variation order made in respect of that order, and, in making the
variation order, the court shall take that change into consideration.

[3]

When the application was made, Mr. Eichen was 64 years of age; Ms.
Eichen was 63. He filed an affidavit setting out the change in his circumstances.
Briefly they are that he was employed and earning $44,637 a year in 2007 when
he was ordered to pay $350 a month in support and $100 a month in payment of
arrears totalling $5,253. He lost his employment. He became bankrupt in 2009
and has no assets. At the time of the application, his sole source of income
was a CPP disability pension amounting annually to $10,176. Mr. Eichen suffers
from various physical ailments; he is unable to work in his former occupation;
and his medical prognosis is described by his treating physician as poor. He
lives in subsidized housing. He knew little of Ms. Eichens financial situation
but deposed he understood she had employment and had received a $30,000
inheritance from her mother over the past two years.

[4]

In making his application, Mr. Eichen sought no order for costs unless
the application was opposed which, as indicated, it was not.

[5]

The judge granted the order without giving reasons. Ms. Eichen says the
judge erred in not satisfying herself that there was a change in circumstances
sufficient to justify the termination of support and the cancellation of
arrears. But the evidence before her was clear in that regard and it was not
challenged. I see no basis on which Ms. Eichen can be heard to say the judge
erred. The fact the judge did not see fit to give reasons for the order she
made on what she was properly informed was an unopposed application does not
mean she did not apply the proper principles in granting the relief sought. She
is presumed to know the law.

[6]

I would dismiss the appeal with costs in this Court and in the trial
court.

[7]

SAUNDERS J.A.
: I agree.

[8]

BENNETT J.A.
: I agree.

The Honourable Mr. Justice Lowry