Apportioning Liability for a Single Loss Caused By Separate Breaches of Contract
Contributory negligence legislation allows liability to be apportioned between tortfeasors – but what about defendants who are severally liable for a single loss caused by independent breaches of contract? In Petersen Pontiac Buick GMC (Alta.) Ltd. v. Campbell, 2013 ABCA 251, counsel for both parties could find no authority on the issue of apportioning liability between defendants when “a plaintiff suffers the same loss, caused by a breach of contract by one party and a breach of a different contract and negligence by another.” The Alberta Court of Appeal helped fill this gap by holding that the common law rule against apportionment and contribution in tort does not apply to breaches of contract.
This appeal involved the apportionment of liability between the defendants Petersen Pontiac and Campbell for the losses of the plaintiffs, who were not parties to the appeal.
The plaintiffs and Petersen Pontiac owned adjoining parking lots. Petersen Pontiac’s lot had an access easement over the plaintiffs’ lot, while the plaintiffs held a right of first refusal to purchase Petersen Pontiac’s lot. The plaintiffs and Petersen agreed to amend the easement and discharge the right of first refusal. The defendant Campbell acted as solicitor for the plaintiffs. Campbell discharged the plaintiffs’ right of first refusal before ensuring that the easement amendments were registered, omitted a significant term when drafting the Easement Amending Agreement, and failed to register a caveat on Petersen’s Pontiac lot. Petersen Pontiac sold its lot before the Easement Amending Agreement was registered, and did not assign its contractual obligations to the purchasers. As a result, the plaintiffs lost the benefit of the easement amendments that it had negotiated with Petersen Pontiac.
The trial judge found Campbell liable for negligence and breach of retainer and Petersen Pontiac liable for breach of contract. He held that the defendants’ liability was several, not joint, because the causes of action were distinct and the defendants had not acted in furtherance of a common purpose. Furthermore, he found Campbell’s liability to be “secondary” to Petersen Pontiac’s, which would permit Campbell to assign the judgment against Petersen Pontiac. This would effectively result in Petersen Pontiac being responsible for the full amount of damages.
Petersen Pontiac appealed.
The Court of Appeal agreed that the liability of defendants was several because the causes of action were independent. However, it found that the trial judge had “misused” the concept of secondary liability.
The Court identified two possible approaches to apportion liability for separate breaches of separate contracts: (1) under Alberta’s Contributory Negligence Act, or (2) through principles of contract law.
The Contributory Negligence Act permits apportionment of liability between two or more defendants who are found to be “at fault”. The Court considered whether the term “at fault” could be broad enough to encompass both tortious and contractual wrongdoing. The Court was persuaded by the reasoning of LaForest J.A. (as he then was) in a New Brunswick Court of Appeal decision that he would have “considerable hesitation” in applying the Contributory Negligence Act to contracts cases. The purpose of such legislation is to relieve the “injustice and rigidity” of the common law rule that contributory negligence is an absolute bar to recovery in negligence actions. Unlike certain jurisdictions such as the United Kingdom, Alberta does not have a statute to apportion non-tortious liability.
The Court of Appeal held that the common law allows liability to be apportioned between defendants whose breaches of separate contracts contributed to a single loss. It again cited LaForest, J.A.:
[T]here is no authority requiring the application of absolutist common law tort notions of responsibility to contracts. Indeed, as Pigeon J. observes [in Smith], there never developed in contract law the rigid rules against apportionment of loss that prevailed in tort law and, in fact, loss was apportioned in the rare cases where separate breaches of contract contributed to a single loss. So there does not seem to be any inherent requirement in contract law dictating an absolutist doctrine of liability.
The Court of Appeal found that contribution between defendants was not barred due to causation or remoteness. As the trial judge’s reasons did not suggest that one defendant was more or less to blame than the other, the Court of Appeal apportioned liability equally between Campbell and Petersen Pontiac and permitted each to claim contribution from the other.
This decision represents one more step in aligning remedies in contract and tort, and may help address the undesirable anomaly identified by S.M. Waddams that “a defendant’s right to claim contribution should vary according to the form of action chosen by the plaintiff.”
It should be noted that the Supreme Court of Canada has previously suggested that the common law rules against apportioning liability for negligence and against contribution between tortfeasors are no longer in keeping with modern notions of justice and fairness, and may no longer be absolute. Apportionment and contribution may therefore occur even in the absence of a Contributory Negligence Act, such as under Canadian maritime law. These authorities were not cited by the Alberta Court of Appeal.
Court File: 1203-0167-AC
Date of Decision: July 12, 2013
Alberta Court of Appeal breach of contract Contributory Negligence Act contributory negligence legislation severally liable