A recent decision of the Alberta Court of Appeal has opened the
door for defendants in contract cases to implicate other would-be
contract-breakers, thereby potentially reducing the defendants'
exposure to liability while increasing the size and complexity of
breach of contract claims.
In Petersen Pontiac Buick GMC (Alta) Ltd v Campbell,
2013 ABCA 251 [Petersen Pontiac], the Alberta
Court of Appeal considered an appeal in which a defendant lawyer
(Campbell) was found liable in both contract and tort to certain
plaintiffs, while another defendant (Petersen Pontiac) was likewise
found liable for breaching a separate contract with the plaintiffs.
Each defendant's fault had caused the same loss to the
plaintiffs. On appeal, the Court considered who had to pay for the
plaintiffs' loss when both defendants independently caused it.
First, the Court confirmed that the liability of the defendants was
several and not joint since the causes of action brought against
Campbell and Petersen Pontiac were separate and distinct. That is,
Campbell's fault was independent of Petersen Pontiac's
breach of contract. After reviewing academic commentary on
contribution in contract and finding some support for its view in
the case law, the Court concluded that it saw "no impediment
in contract law to dividing liability between two parties who have
breached two different contracts, causing the same damages to a
plaintiff." The Court also justified its conclusion on the
basis of equitable principles relating to contribution. In the
result, the Court equally apportioned the damages between the
defendants, since nothing in the trial judge's reasons
indicated that one was more or less to blame than the other. The
result is something that would be common in tort cases, like a
negligence case, but is novel for a contract matter.
While the boundaries of Petersen Pontiac remain to be
seen, the case is significant for its potential impact on claims
involving more than one prospective defendant in a contractual
relationship with a plaintiff. In these cases, a defendant may now
consider bringing a third-party claim against another person
contractually obliged to the plaintiff, where that contract may
also be implicated in the plaintiff's loss. That means that a
contract-breaker is now at risk of being sued not only by its
actual counterparty, but also by anyone else the counterparty has
sued for a breach of contract giving rise to the same loss. While
it has been surmised that such separate breaches of contract
leading to the same damage are likely to be relatively rare, it is
not clear that this is the case. Take, for example, a homeowner who
has suffered damage from faulty construction, where the actions of
both a contractor and architect are implicated. The homeowner may
choose to sue the builder, but the builder can third-party the
architect into the lawsuit. Or the case of a sale of a company that
turns out to be less profitable than expected, contrary to
representations contained in the sales agreement, and where due
diligence contracted for and conducted by the purchaser's
accountants and lawyers fails to discover the problem. Again, the
purchaser may choose to sue the vendor, but the vendor might
third-party the purchaser's lawyers and accountants. Other
construction examples abound, including cases where separate
breaches of contract lead to the same delay of a construction
project. Petersen Pontiac thus increases the potential for
large, multi-party contract litigation, akin to similar tort cases
seen in recent years, where defendants are motivated to creatively
point the finger at other would-be contract-breakers in order to
increase contribution to the settlement pot.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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