O.J. No. 5630 (C.A.) (Released 24 December 2010)
Civil procedure – Third party procedure –
Discovery – Production and inspection of documents
– "Mary Carter"-type Settlements –
A dispute between the City of Brampton and Aecon Buildings arose
over the construction of the $46-million Brampton Performing Arts
Centre. Aecon claimed damages for breach of contract arising from
delays in construction.
Following Aecon's commencement of its action, the two
parties came to an agreement. The City of Brampton agreed to
advance claims against a third party architect on Aecon's
behalf and Aecon agreed to cap its damage claims against the City
of Brampton to any amounts the City recovered from the third party
architect and its consultants (the "agreement").
A fourth party consultant appealed the decision of its failed
motion for summary judgment to have the City of Brampton's
third party claim against the architect dismissed on the basis that
the agreement is champertous and an abuse of process.
Aecon and the City of Brampton argued, and the Court of Appeal
agreed, that the agreement was in substance a legitimate means to
cap liability for the City of Brampton. They further argued that
there was no abuse of process as there was no prejudice; the
agreement was produced before the close of pleadings.
MacFarland J.A., writing for the court, found that there had
been an abuse of process. In this case, the agreement was only
produced to the other parties several months after its discovery
and after specific requests. The lack of timeliness in producing
the agreement to the other parties was a significant problem.
MacFarland J.A. held that there is an obligation on the parties
to such agreements to disclose them to the other parties. Upon
formation, a failure to produce an agreement immediately to other
parties constitutes an abuse of process, as such agreements change
the landscape of the litigation by altering the relationship
amongst the parties. The absence of prejudice is not a
The consultant's appeal was allowed, with the result that
the City of Brampton's third party claim against the architect
and the fourth party claim against the consultants were stayed.
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