Released September 8, 2015 | Full Decision
This case involved a plaintiff who was badly injured when she was struck by a motor boat while swimming near a harbour entrance. She had been staying at a cottage owned by defendants Shannon Pitt and Erik Rubadeau (“Pitt defendants”) at the time. She brought claims against Benjamin Chalmers in his capacity as driver of the motor boat and against the Pitt defendants for their failure to warn her of the hazardous harbour entrance near the end of their dock.
Prior to trial, the plaintiff and the Chalmers defendant entered into a Mary Carter agreement. In exchange for payment by Chalmers of his policy limits, the plaintiff agreed to save Chalmers harmless from any liability over his policy limits. The agreement contained a number of other provisions, which included the obligation on Chalmers to cooperate with the plaintiff in prosecuting the action against the Pitt defendants, and not to contest the plaintiff’s damages.
The Pitt defendants brought a motion seeking summary judgment on the eve of trial. They argued that the partial settlement agreement between the plaintiff and Chalmers – and more specifically the save harmless provision – had changed the relationship between the parties. They argued that it nullified the joint liability provisions flowing from the Negligence Act and had the legal effect of limiting the Pitt defendants liability to one of several liability.
Justice Ray dismissed the motion. He held that the Pitt defendants’ position remained the same with or without the agreement. Chalmers’ exposure was capped at the fixed amount of his policy limits. If a judgment against all of the defendants were to exceed Chalmers’ limits, the Pitt defendants would be liable for the balance. Justice Ray held that the fact the agreement provided for a refund to Chalmers up to a capped amount did not alter the rights or liability of the Pitt defendants. Further, if the judgment was less than the cap, then there would be no enforceable judgment against the Pitt defendants.
The Pitt defendants relied on case law that dealt with Perringer agreements. These agreements stipulated that the settling defendant would be let out of the action and the plaintiff would limit his/her claim against the non-settling defendant to several liability. This was included to prevent any claims for indemnity by the non-settling defendant.
Justice Ray distinguished these cases. There was no such provision in the subject Mary Carter agreement. Justice Ray also noted there was no authority to support the proposition that the substantive rights of the parties were altered as a matter of law because they had entered into a Mary Carter agreement.
Justice Ray compared this situation to situations where one defendant enjoys immunity at law, has limited liability by statute, or has no assets to pay his/her proportionate share. He held that none of those situations protect the remaining non-settling defendants from joint liability. He cited the Newfoundland case of Ryan Estate v Canada, 2015 NLTD(G) 90, as authority.
Counsel for the plaintiff: Roger Oatley and Troy Lehman
Counsel for the defendants: Walter Aronovitch and Donald Rollo
