



COURT
    OF APPEAL FOR ONTARIO

CITATION: J.K. v. Ontario, 2017 ONCA 902

DATE: 20171124

DOCKET: C63234

Hoy A.C.J.O., Huscroft and Paciocco JJ.A.

BETWEEN

J.K.

Plaintiff (Respondent)

and

Her Majesty the Queen in Right of the Province of
    Ontario

Defendant (Appellant)

and

Banyan Community
    Services Inc., Craigwood Youth Services, Pwi-Di-Goo-Zing-Ne-Yaa-Zhing Advisory
    Services, CAS of Nipissing and Parry Sound, William W. Creighton Youth
    Services, Ray of Hope Inc., Northern Youth Services Inc., Youth Services Bureau
    of Ottawa, Anago (Non) Residential Resources Inc., Kennedy House Youth Service
    Inc., North Eastern Ontario Family and Childrens Services/Services a la
    Famille et a LEnfance du Nord-Est de LOntario, St. Lawrence Youth
    Association, Kinark Child and Family Srvc. Corp. (Markham), Casatta Ltd., York
    Detention Centre Ltd.

Third Parties (Respondents)

Tamara D. Barclay and Jonathan Sydor for the appellant,
    Her Majesty the Queen in right of the Province of Ontario

Kirk Baert and James Sayce for the respondent plaintiff,
    J.K.

C. Kirk Boggs for the respondents Bayan Community
    Services Inc., Craigwood Youth Services, Pwi-di-Goo-Zing-Ne-Yaa-Zhing Advisory
    Services, CAS of Nipissing and Parry Sound, William W. Creighton Youth
    Services, Ray of Hope Inc., Northern Youth Services Inc., Youth Services Bureau
    of Ottawa, Anago (Non) Residential Resources Inc., Kennedy House Youth Services
    Inc., North Eastern Ontario Family and Childrens Services/Services a la
    Famille et a LEnfance du Nord-Est de LOntario, St. Lawrence Youth
    Association, Kinark Child and Family Srvc. Corp. (Markham), and York Detention
    Centre Ltd.

No one for the respondent Casatta Ltd.

Heard:  September 11, 2017

On appeal from the order of Justice Paul M. Perell of the
    Superior Court of Justice, dated December 22, 2016, with reasons reported at
    2016 ONSC 8047.

Hoy A.C.J.O.:

[1]

This is a proposed class proceeding against Her Majesty
    the Queen in Right of the Province of Ontario (the Crown) alleging
    negligence, breach of fiduciary duty, and breach of
Charter

rights
    in the use of solitary confinement in youth detention centres across Ontario.

[2]

At issue on this appeal is whether it is plain
    and obvious that the Crowns third party claim against 15 non-government,
    non-profit organizations (the Third Parties), which operated some of the
    youth detention centres under contract with the Crown, has no reasonable
    prospect of success and was properly struck, without leave to amend.

[3]

For the following reasons, I conclude that it is
    not plain and obvious that the Crowns third party claim has no reasonable
    prospect of success. I would therefore allow this appeal. However, I further
    conclude that it is possible for J.K. to amend his Amended Statement of Claim
    in such a manner that the Crowns third party claim would have no reasonable
    prospect of success, at which point the Crowns third party claim could be
    properly struck without leave to amend.   As requested by J.K., I provide
    guidance below on the kind of amendment that would enable the third party claim
    to be struck.

BACKGROUND

[4]

The Crown operates or oversees the operation of
    23 youth detention centres in Ontario. Some are operated by the Ministry of
    Children and Youth Services (the MCYS), but others are operated by the Third
    Parties.

[5]

J.K., the plaintiff in this proposed class action
    under the
Class Proceedings Act, 1992
, S.O. 1992 c. 6, alleges that
    children in these facilities are regularly subjected to lengthy and wholly
    inappropriate periods of solitary confinement. He sues the Crown for damages on
    behalf of all persons who were detained and/or incarcerated at one of the
    facilities between January 1, 2007 and the present day. He asserts that the
    Crown was negligent, breached its fiduciary duties, and breached class members
    rights under ss. 7, 9 and 12 of the
Canadian Charter of Rights and Freedoms
.

[6]

At para. 45 of his Fresh as Amended Statement of
    Claim, J.K. purports to limit his and class members claims to the Crowns
    several liability:

45. The Plaintiffs claim, and the claim of
    each Class Member, is limited to the amount of the Plaintiffs or other Class
    Members damages that would be apportioned to the Defendant in accordance with
    the relative degree of fault that is attributable to the Defendants
    negligence. The Plaintiffs claim is against the Defendant for those damages
    that are attributable to its proportionate degree of fault, and he does not
    seek, on his own behalf or on behalf of the Class, any damages that are found
    to be attributable to the fault or negligence of any other person, or for which
    the Defendant could claim contribution or indemnity.

[7]

However, J.K. specifically pleads, at para. 50
    of his Fresh as Amended Statement of Claim, that

by virtue of its quasi-parental, or
in

loco
    parentis
, responsibility for the safety, care and control
    of residents, the Crown is vicariously liable for the harms perpetrated upon
    residents by its employees, representatives and agents.

[8]

The Crown sought particulars about how this claim
    of vicarious liability related to the Third Parties.

[9]

J.K. replied that it related to [h]arms
    perpetrated on residents in the Facilities that are operated by the Third
    Parties:

i.

by the Crowns employees, servants and agents;
    and,

ii.

by the Third Parties and their agents and
    employees, but only when acting within the authority granted to them by the
    Crown.

[10]

In other words, J.K. has confirmed to the Crown
    that he claims that the Crown is liable for harms perpetrated by the Third
    Parties, their agents and employees, when acting within the authority granted
    to them by the Crown.

[11]

The Third Parties had contracted to provide
    services to the Crown in accordance with the policies, guidelines and
    requirements of the Crown, as communicated to them. The service contracts which
    govern their relationship include the following indemnity clause:

Indemnification

12(a) The Service Provider will, both during
    and following the term of this contract, indemnify and save harmless Ontario
    from all costs, losses, damages, judgments, claims, demands, suits, actions,
    complaints or other proceedings in any manner based upon, occasioned by or
    attributable to anything done or omitted to be done by the Service Provider,
    its directors, officers, employees, agents or volunteers in connection with
    services provided, purported to be provided or required to be provided by the Service
    Provider pursuant to this contract.

[12]

The Crown claimed against each of the Third
    Parties under the indemnity clause in the service contract in respect of any
    amounts found owing to J.K. and the class members in respect of any facility
    operated by the Third Party.

[13]

In turn, J.K. and the Third Parties brought
    motions seeking to have the Crowns third party claims struck out, severed, or
    stayed.

THE MOTION JUDGES REASONS

[14]

The motion judge considered this courts
    decision in
Taylor v. Canada (Health Canada)
, 2009 ONCA 487, 95 O.R.
    (3d) 561.

[15]

In
Taylor
, a proposed representative
    plaintiff in a class action alleged that Health Canadas negligent regulation
    of jaw implants caused her injuries. She limited her claim and that of the
    other class members for damages to those attributable to Health Canadas proportionate
    degree of fault. Justice Laskin, writing for the court, found that because the
    plaintiff had limited her claim and the claim of the other class members to
    those attributable to the fault of Health Canada, the Attorney Generals third
    party claim against the doctor and the hospitals for contribution and indemnity
    disclosed no reasonable cause of action.

[16]

The motion judge concluded that
Taylor
applied and precluded third party claims for breach of fiduciary duty and class
    members
Charter
rights.  In his words, those claims are claims for
    which the Crown exclusively would be liable and thus these claims would not
    support any third party claim against the [Third Parties] which cannot be
    liable for matters for which the Crown exclusively would be liable. (para. 19).

[17]

He acknowledged that
Taylor
did not
    consider a claim for vicarious liability. He noted that vicarious liability is
    not attributable to the proportionate degree of fault between the defendant and
    the non-party for whom the defendant is vicariously liable.  However, in his
    view J.K.s pleading makes it clear that J.K. only seeks to make the Crown
    liable to the limits of its several liability in negligence.

[18]

At para 26, he wrote:

Put differently still, J.K. has pleaded his
    action in a way that the court will be required to determine what proportion of
    the liability for the Class Members injuries rests exclusively with the Crown
    and to grant judgment exclusively for that sum, if any. The judgment award
    will, therefore, by definition, not include any award for injuries for which
    there would be a claim for relief over in third party proceedings. Thus,
    pleading as J.K. has in the main action, it is plain and obvious in the third
    party proceedings that the Crown does not have third party claims and the third
    party claims should be struck out.

[19]

The motion judge declined to consider J.K.s and
    the Third Parties further argument that the Crown would not be entitled to
    indemnification under the provision in the service contracts because that would
    be tantamount to permitting it to be indemnified for its own negligence.

[20]

The motion judge did not address their alternate
    request for a stay of the third party proceedings because he struck the Crowns
    third party claims.

ANALYSIS

[21]

The Crowns primary concern is that J.K seems to
    assert (1) that he is permitted to seek damages based on the Crowns vicarious
    liability for harms perpetrated on residents in the Facilities that are
    operated by the Third Parties and their agents and employees, when acting
    within the authority granted to them by the Crown, and (2) that contribution
    and indemnity would not be available to the Crown in such circumstances. The
    Crown argues that it is not plain and obvious that it would not have a claim
    for contribution and indemnity against the Third Parties if it were found
    vicariously liable for tortious acts of the Third Parties, their agents or employees.
    It also argues that the motion judge erred in concluding that it is plain and
    obvious that a claim for breach of fiduciary duty cannot found a third party
    claim for contribution and indemnity.

(1)

Contribution and Indemnity if the Crown is Vicariously Liable

[22]

Turning to the first issue, in my view, the
    motion judges decision is properly viewed as determining only that if damages
    for negligence for which the Crown is vicariously liable are within the limited
    scope of the damages claimed by J.K. in the first sentence of para. 45 (and
    they may not be), then J.K. does not seek any such damages attributable to the
    fault or negligence of the Third Parties or for which Crown could claim
    contribution or indemnity against the Third Parties, whether under the service
    contracts or s. 1 of the
Negligence Act
.  In my view, it is on that
    basis that the motion judge concluded that the Crown does not have any third
    party claims and that they could be struck.

[23]

The motion judge did not consider whether, if such
    damages were within the limited scope of damages claimed by J.K., the law would
    attribute the damages for which the Crown is vicariously liable to the
    negligence of the Third Parties, their agents and employees, who committed the
    tortious acts. Nor did the motion judge determine that the Crown would not have
    rights of contribution and indemnity in such circumstances.

[24]

Indeed, the extent to which the Crown could
    claim contribution or indemnity will presumably be an important issue in the
    litigation. Contrary to J.K.s submission at the hearing, the Crown did not
    concede that it would not have rights of indemnity under the service contracts,
    if it were found vicariously liable for harms perpetrated on residents in the
    Facilities that are operated by the Third Parties and their agents and
    employees, when acting within the authority granted to them by the Crown.
    Further, it is not plain and obvious that the Crown would not be entitled to
    contribution and indemnity from the Third Parties pursuant to the service
    contracts it entered into with the Third Parties or under s. 1 of the
Negligence
    Act
, R.S.O. 1990, c. N.1
. As
    Gerald Fridman points out in
The Law of Torts in Canada
,
3d ed.
    (Toronto: Carswell, 2010), at p. 274, there is a difference between authorizing
    a wrongful act and authorizing an employee or agent to do something, in the
    course of which the employee or agents commits an improper act.

[25]

The law governing Crown liability, vicarious liability,
    and the apportioning of that liability on the basis of fault is complex. In
    order for this court to strike the Crowns third party claim, J.K. must have
    drafted his Fresh as Amended Statement of Claim so as to make it plain and
    obvious that such a claim has no reasonable prospect of success.

[26]

I agree with the motion judge that J.K. could
    preclude third party claims arising out of his claim based in vicarious
    liability, but para. 45 is not clear enough to justify striking the Crowns
    third party claim.  I would not strike the Crowns third party claim as having
    no reasonable prospect of success unless J.K. amended his Fresh as Amended
    Statement of Claim to explicitly reflect what I believe to be the reasoning
    underpinning the motion judges decision to strike the Crowns third party
    claim. That is, if J.K. seeks damages against the Crown based on vicarious
    liability for harms perpetrated on residents of Facilities that are operated by
    the Third Parties, by the Third Parties and their agents and employees, when
    acting within the authority granted to them by the Crown, he is not entitled to
    any such damages for which the Crown could claim contribution and indemnity
    from the Third Parties.  At para. 33 below, I suggest language that accomplishes
    this task.

(2)

Claims against the Third Parties arising out of J.K.s Claims for Breach
    of Fiduciary Duty

[27]

I agree with the Crown that it is not plain and
    obvious that J.K.s claim that the Crown breached its fiduciary duty could not
    also support a third party claim. It is possible that the damages suffered by
    J.K. were caused concurrently by the Crowns breach of its fiduciary duty and
    the Third Parties negligence.

[28]

In concluding that J.K.s claims for breach of
    fiduciary duty could not support a third party claim, the motion judge relied
    on
Johnston v. Sheila Morrison Schools
, 2012 ONSC 1322, 20 C.P.C.
    (7th) 103.  In that case, the Divisional Court held that there can be no right
    of contribution and indemnity on account of a breach of fiduciary duty because
    such liability is not subject to apportionment. It did not cite authority for
    this proposition.

[29]

However, in
Ault v. Canada (Attorney
    General)
, 2011 ONCA 147, this court apportioned liability between one
    group of wrongdoers who were found liable for negligent misrepresentation and
    breach of fiduciary duty, and the Attorney General of Canada, who was found
    liable for negligent misrepresentation.
Ault
illustrates that one
    partys breach of fiduciary duty and anothers negligence may contribute to a
    plaintiffs loss.

[30]

The indemnity clause in the service contracts
    might permit the Crown to seek indemnity for any damages for which it is found
    liable as a result of its breach of fiduciary duty if the damages were also occasioned
    by or attributable to the Third Partys negligence.

[31]

Further, the right to contribution under s. 1 of
    the
Negligence Act
has been held to apply not only to negligence, but
    to other fault-based causes of action:
Pet Valu Inc. v. Thomas
,
[2004]
    O.J. No. 497, 2004 CanLII 23785, at para. 24, citing
Bell Canada v. Cope
    (Sarnia) Ltd.

(1980), 11 C.C.L.T. 170 (Ont. H.C.), at 179-80,
    affirmed (1981), 119 D.L.R. (3d) 254 (Ont. C.A.) As a result, it is not plain
    and obvious that the Crown would not have a claim under that Act in such a
    situation.

(3)

Further Amendments to the Fresh as Amended Statement of Claim

[32]

Counsel for J.K. urged that if the court were
    not satisfied that para. 45 makes it plain and obvious that the Crowns third
    party claim has no reasonable prospect of success, this court should provide
    guidance as to how he might modify para. 45 to do so, and, in his words, 
Taylorize

his claim.

[33]

In my view, if J.K. amended para. 45 to read as
    follows, then the principle in
Taylor
would apply and preclude third
    party claims for contribution and indemnity. I have marked the required
    amendments below. If these amendments are made, the motion judge could then strike
    the Crowns third party claim in negligence, without leave to amend to plead a
    right of contribution and indemnity under the
Negligence Act
in
    addition to under the indemnity provisions of the service contracts:

The Plaintiffs claim, and the claim of each
    Class Member, is limited to the amount of the Plaintiffs or other Class
    Members damages that would be apportioned to the Defendant in accordance with
    the relative degree of fault that is attributable to the Defendant
s
    negligence
. The Plaintiffs claim is against the Defendant for those
    damages that are attributable to its proportionate degree of fault, and he does
    not seek, on his own behalf or on behalf of the Class, any damages that are
    found to be attributable to the fault or negligence of any other person, or for
    which the Defendant could claim contribution or indemnity.
For greater certainty, without limiting the foregoing, and
    notwithstanding para. 50, the Plaintiff does not seek, on his own behalf or on
    behalf of the Class, any damages for which the Crown is vicariously liable as a
    result of harms perpetrated on residents in the Facilities that are operated by
    the Third Parties and their agents and employees, whether or not acting within
    the authority granted to them by the Crown, for which the Crown could claim
    contribution or indemnity.


[34]

Replacing the words Defendants negligence
    with the word Defendant in the first sentence of para. 45 is intended to  make
    clear that J.K.s claim and the claim of each class member against the Crown
    for breach of fiduciary duty also excludes damages that can be attributed to the
    concurrent fault or negligence of any other person. The final sentence is added
    to address the concern about clarity that I expressed in paras. 25 and 26
    above.

(4)

J.K.s Request for a Stay or Severance of the Third Party Claim

[35]

As noted above, in light of his conclusion that
    the Crowns third party claims should be struck, the motion judge did not
    consider J.K. and the Third Parties alternate request that the claims against
    the Third Parties should be stayed until after any common issues trial or
    severed under rules 29.08 and 29.09 of the
Rules of Civil Procedure
,
R.R.O. 1990, reg. 194.  I would return this issue to the motion judge for
    consideration in the event that J.K. does not first amend his Fresh as Amended
    Statement of Claim as suggested above or in another manner satisfactory to the
    parties and the motion judge.

DISPOSITION

[36]

For the reasons above, I would allow the appeal.
     Counsel advised that the Class Proceedings Fund has provided funding to J.K.  I
    would permit the parties, together with the Class Proceedings Fund, to make
    written submissions on the issue of costs, no more than three pages in length,
    within 21 days following the release of these reasons.

Released:   AH  NOV 24 2017

Alexandra
    Hoy A.C.J.O.

I agree
    Grant Huscroft J.A.

I
    agree David Paciocco J.A.


