JD1HI et. al. v. Budden et. al., 2018 NUCJ 15

Nunavunmi Maligaliuqtiit NUNAVUT COURT OF JUSTICE Cour de justice du Nunavut Citation: JD1HI et. al. v.

Budden et. al. , 2018 NUCJ 15 Date: 20180612 Docket: 08-15-754-CVC Registry: Iqaluit JD1HI, JD2HI, JD3HI, JD4HI, JD5HI, JD6HI, JD7HI, JD8HI, JD9HI, JD10HI, JD11HI, JD12HI, JD13HI, JD14HI, JD15HI, JD16HI, JD17HI, JD18HI, JD19HI, JD20HI, JD21HI, JD22HI, JD23HI, JD24HI, JD25HI, JD26HI, JD27HI, JD28HI, JD29HI, JD30HI, JD31HI, JD32HI, JD33HI, JD34HI, JD35HI, JD36HI, JD37HI, JD38HI, JD39HI, JD40HI, JD41HI, JD42HI, JD43HI, JD44HI, JD45HI, JD46HI, JD47HI, JD48HI, JD49HI, JD50HI, JD51HI, JD52HI, JD53HI, JD54HI, JD55HI, JD56HI, JD57HI, JD58HI, JD59HI, JD60HI, JD61HI, JD1HII, JD2HII, JD3HII, JD4HII, JD5HII, JD6HII, JD7HII, JD8HII, JD9HII, JD10HII, JD11HII, JD12HII, JD13HII, JD14HII, JD15HII, JD16HII, JD17HII, JDI8HII, JD19HII, JD20HII, JD21HII, JD22HII, JD23HII, JD24HII, JD25HII, JD26HII, JD27HII, JD28HII, JD29HII, JD30HII, JD31HII, JD32HII, JD33HII, JD34HII, JD35HII, JD36HII,JD37HII, JD38HII, JD39HII, JD40HII, JD41HII, JD42HII, JD43HII, JD44HII, JD45HII, JD46HII, JD47HII, JD48HII, JD49HII, JD50HII, JD51HII, JD52HII, JD53HII, JD54HII, JD55HII, JD56HII, JD57HII, JD1HIII, JD2HIII, JD3HIII, JD4HIII, JD1HIV, JD2HIV, JD1A, JD2A, JD3A, JD4A, JD1HUK, JD2HUK, JD3HUK, JD4HUK, JD5HUK, JD6HUK, JD7HUK, JD8HUK, JD9HUK, JD10HUK, JD11HUK Plaintiff/Second Respondent -and- GEOFFREY E.

BUDDEN and STUART A. MORRIS and GEOFFREY E. BUDDEN and STUART A. MORRIS cob. as BUDDEN MORRIS LAW OFFICES, “BUDDEN MORRIS”, or “BUDDEN, MORRIS BARRISTER & SOLICITORS,” or “BUDDEN, MORRIS LAW OFFICES OF MOUNT PEARL, NEWFOUNDLAND AND LABRADOR” Defendant/Respondent -and- AHLSTROM WRIGHT OLIVER & COOPER LLP Third Party/Applicant ________________________________________________________________________ Before: The Honourable Mr. Justice Paul Bychok Counsel (Third Party/Applicant): Jonathan Rossall Counsel (Defendant/Respondent): James Morton Counsel (Plaintiff/Second Respondent): No One Appearing

Location Heard: Iqaluit, Nunavut Date Heard: January 16, 2018 Matters: Application to strike a Third Party Notice REASONS FOR JUDGMENT (NOTE: This document may have been edited for publication) DISCLAIMER PAGE Restriction on Publication: By court order, information identifying the plaintiffs shall not be published or broadcast or transmitted in any way. Anonymized Judgment Disclaimer : This judgment has been anonymized to comply with legislative requirements or at the discretion of the authoring Justice to protect vulnerable parties. Letters have been assigned at random.

TABLE OF CONTENTS I. OVERVIEW .. 5 II. BACKGROUND . 5 III. POSITIONS OF THE PARTIES . 8 A. The third-party applicant 8 B. The defendants . 9 IV. LAW .. 9 A . Contributory Negligence Act 10 B. Rules of Court 10 C.

Interpretation Act 11 D. Case Law .. 11

i. The law in British Columbia . 12 ii. The law in Ontario . 13 E. Onus . 13 V. ISSUES . 13 VI. ANALYSIS . 14 A. Does the Third Party Notice disclose a cause of action against the applicant? . 14 i. Contributory Negligence Act 14 ii. Rules of Court 15 iii. The B.C. Adams test 15 iv. The Ontario Corcoran test 19 v. Third party procedure in Nunavut 19 B. Did the applicant have a duty of care in tort towards the defendants respecting the HST issue? 20 C. Should the Third Party Notice be struck because it is an abuse of process, frivolous, vexatious, or would cause an unreasonable delay of the trial? . 20 VII.

DECISION . 21 VIII. COSTS . 21 I. OVERVIEW [ 1 ] The plaintiffs in this action filed a Statement of Claim in December 2015 against the defendants. About nine months later, in August 2016, the defendants filed with the Court a Third Party Notice which added the third party to this civil action. This is an application by the third party law firm, Ahlstrom, Wright, Oliver & Cooper LLP (“AWOC”) or the applicant, asking the Court to strike the Third Party Notice. II.

BACKGROUND [ 2 ] Some background is required to understand this application. [ 3 ] The 139 plaintiffs in this action are survivors of sexual abuse perpetrated on them by a teacher Ed Horne, or by a social worker Kevin Amyot. The perpetrators were employees of the government of the Northwest Territories when they committed their crimes. [ 4 ] Many years later, various groups of survivors came together at different times to sue the governments of the Northwest Territories and Nunavut, seeking damages for the abuse they suffered.

In all, five different civil actions were launched in the Nunavut Court of Justice between 2001 and 2014. The plaintiffs retained the legal services of the defendant lawyer Geoffrey E. Budden and his law firm (“the defendants”) to represent them in these five civil actions. [ 5 ] The defendants negotiated out-of-court settlements for each one of the plaintiffs. “Millions of dollars in settlement monies” were paid by the governments to the defendant law firm in trust to be distributed to the plaintiffs. [1] These negotiated settlements brought

those five separate legal proceedings to an end. [ 6 ] It appears from the pleadings that sometime in 2011, some or all of the 139 plaintiffs retained the applicant law firm AWOC to sue the defendants – the plaintiffs’ former lawyers. Approximately four years later, the applicant filed a Statement of Claim on behalf of their clients, the plaintiffs, suing the defendants for alleged negligence in the way they handled the plaintiffs’ original claims. [ 7 ] On December 2, 2015, the applicant filed a Statement of Claim with the Court suing the defendants and seeking various categories of damages.

The present application concerns just one part of the plaintiffs’ claim against the defendants – whether the defendants were in “breach of trust and fiduciary duties [owed to the plaintiffs] by negligently deducting HST [harmonized sales tax]” from the settlement proceeds. [2] The applicant says those HST monies “may or may not have been remitted to Revenue Canada [sic]” by the defendants. [3] Nunavut has never had a territorial sales tax, so it does not participate in the HST program. [ 8 ] According to the pleadings, it appears that the applicant had a “general understanding” of the HST issue, and that it may have owed a duty to the plaintiffs “to ensure that HST amounts were proper and recovered”. [4] The window for reclaiming the allegedly withheld HST closed sometime in 2014, some three years or so after the applicant came on the file. [ 9 ] We now arrive at the events leading to the present application.

Certain events are relevant given the positions of the parties. They bear mention. [ 10 ] James Morton, counsel for the defendants, prepared a Third Party Notice which he signed on August 1, 2016. In it, the defendants allege that the applicant had a duty between 2011 and 2014 to apply to Canada Revenue Agency on behalf of its clients, the plaintiffs, to get back the HST. [5] Therefore, the defendants say that the applicant was negligent and should be added as a party to this civil lawsuit.

The defendant did not file or serve a copy of the Third Party Notice on the applicant at that time. [ 11 ] On August 16, 2016, I presided over a pre-trial conference involving the parties. Mr. Morton did not mention the Third Party Notice during that conference. On August 29, 2016, Mr. Morton filed the Third Party Notice with the Court. Again, he did not serve the Third Party Notice on the applicant. [ 12 ] The Court had previously directed that affidavits were to be filed no later than August 30, 2016.

Having not received affidavits by that date, the applicant had a Registry search done at the Iqaluit courthouse. During that search, the applicant discovered the Third Party Notice. [ 13 ] On October 5, 2016, the defendants filed a second identical Third Party Notice with the Court. [ 14 ] The filing of the Third Party Notice had an immediate impact on this action. Because the applicant had been added as a party, the applicant could no longer represent the plaintiffs in the main action. That is because a party to an action cannot also represent another party on the same action.

This scenario raises a conflict of interest between the applicant and the plaintiffs as their interests are opposite to each other. [ 15 ] In this case, the conflict of interest is clear. If HST was remitted wrongly to Canada Revenue Agency, and if the applicant knew about the issue and failed to seek refunds for its clients, then the applicant may be partly responsible for the plaintiffs’ loss.

In such a case, the plaintiffs would have a right to recover that loss from the applicant as well as from the defendants. [ 16 ] In response to the Third Party Notice, the applicant filed a Notice of Motion requesting the Court to strike, or dismiss, the Third Party Notice.

That Notice of Motion was filed on September 16, 2016, by the applicant’s lawyer, Jonathan Rossall. [ 17 ] This Court was not prepared to entertain the application until I could be assured of three things: first, the plaintiffs were made aware of the application which directly affected their interests; second, the plaintiffs were advised of their right to get independent legal advice to protect their interests; and third, the plaintiffs were told they had the right to be present in person or represented by counsel and to be heard at the application.

After some delays, I took the extraordinary step of having the Court itself send an explanatory letter to each plaintiff.

[ 18 ] The application was finally heard on January 16, 2018. The applicant was represented by Mr. Rossall. The defendants were represented by Mr. Morton. Four plaintiffs appeared alone, without counsel. The remaining 135 plaintiffs were absent and not represented by counsel on the application. I reserved judgment to consider the issues. These are my reasons for decision. III. POSITIONS OF THE PARTIES A. The third-party applicant [ 19 ] Mr.

Rossall, on behalf of the applicant, asserts that this Court should strike the Third Party Notice on the following grounds: • it discloses no cause of action; • it is scandalous, frivolous, and vexatious; • it will prejudice, embarrass, and delay a fair trial of the action; and • it is an abuse of the process of the Court. [6] [ 20 ] The applicant denies that it owed a duty of care towards the defendants other than “to be fair in the conduct of the litigation” [7] . If the applicant had a duty to collect the HST, the applicant owed that duty solely to the plaintiffs.

Therefore, it argues, the Third Party Notice fails to disclose a cause of action by the defendants against the applicant. [ 21 ] In the applicant’s view, the Court should be troubled by the timing of the filing of the Third Party Notice. The defendants filed the Third Party Notice a month after it was signed, and they did not serve it on the applicant. Defendants’ counsel failed to mention the document’s existence at the pre-trial conference two weeks after signing the Third Party Notice. The applicant only discovered the Third Party Notice during a document search of the Court registry.

The applicant argued that “in part the filing of that notice was intended to delay the proceedings … it was a stalling and delaying tactic.” [8] [ 22 ] Furthermore, the applicant says the effect of the Third Party Notice has been “to drive a wedge between the plaintiffs and their legal counsel. They have managed to delay proceedings for over a year.

They have managed to discourage certain plaintiffs from proceeding.” [9] The Third Party Notice “is clearly an abuse of process” and it should be struck. [10] [ 23 ] The applicant went further to say the Third Party Notice “is a thinly veiled attempt to place AWOC in a position of conflict such that they would have to remove themselves from acting on behalf of the Plaintiffs.” [11] [ 24 ] The applicant also requests solicitor-client costs. B. The defendants [ 25 ] Mr.

Morton, on behalf of the defendants, asserts that the Third Party Notice is not frivolous, and that it discloses a viable cause of action in tort – negligence. They say that if the defendants were negligent (for withholding the HST), then so, too, was the applicant – the applicant knew about the HST issue but did nothing about it. This is, the defendants say, the “nub” of their position. [12] [ 26 ] The defendants also urge the Court to recognize a new cause of action in negligence against the applicant based on a novel duty of care.

The defendants say the applicant could reasonably have foreseen the defendants’ potential HST liability. This foreseeability gave rise to a legal duty of care towards the defendants which the applicant breached. Mr. Morton urged the Court to expand the judge-made

common law to recognize this new claim. [13] IV. LAW [ 27 ] In certain circumstances, a defendant in a civil lawsuit may make a claim against another person by adding them as a third party to the action. The procedure permits the defendant, in effect, to point the finger at the third party for some or all of the plaintiffs’ losses. The benefits of this procedure include disposing of related claims in one hearing, and the avoidance of potentially inconsistent judgments. [14] [ 28 ] In this case, the defendants rely on two alternate ways of adding the applicant as a party.

The defendants have invoked both the Contributory Negligence Act [15] and the Rules of Court . [16] A . Contributory Negligence Act [ 29 ]

Section 7 of the Contributory Negligence Act provides a mechanism for adding a third party to a civil action in Nunavut: 7. Where it appears that a person who is not a party to an action is or may be wholly or partly responsible for the damages claimed, that person may be added as a party defendant or may be made a third party to the action on the terms that a judge considers just. [17] [ 30 ] The defendants have pleaded

section 7 of the Act . B. Rules of Court [ 31 ] Rule 142 of Nunavut’s Rules of Court permits a defendant to serve notice on a potential third party in three circumstances: 142.

(1) A defendant may serve a third party notice on any person, whether or not the person is already a party to the action, where the defendant claims against that person that (

a) he or she is entitled to contribution or indemnity; (

b) he or she is entitled to any relief or remedy that is related to or connected with the original subject matter of the action and that is substantially the same as some relief or remedy claimed by the plaintiff; or (

c) any question or issue relating to or connected with the original subject matter is substantially the same as some question or issue arising between the plaintiff and defendant and should properly be determined, not only as between the plaintiff and the defendant, but also as between the plaintiff and the defendant and the third party, or between any of them . [18] [Emphasis added] [ 32 ] Specifically, the defendants pleaded rule 142(1)(c), which I have highlighted above.

C.

Interpretation Act [ 33 ] My decision in this case must rest upon a correct

interpretation and application of Nunavut legislation. In this regard, the

Interpretation Act [19] reminds me that all legislation is “remedial.” [20] Our Contributory Negligence Act and Rules of Court “shall be given such fair, large and liberal construction and

interpretation as best ensures the attainment of its objects.” [21] [ 34 ] The exceptional and unique challenges of delivering justice to Nunavummiut in criminal court – as I outlined in R v Anugaa [22] – are no less evident in civil litigation. Statutory

interpretation in Nunavut must account for the territory’s enormous infrastructure deficit, as well as our marginalised and isolated population. This case provides the Court with an opportunity to clarify third party procedure in Nunavut. D. Case Law [ 35 ] Canadian courts have placed limitations on when third parties may be added to a civil action. The applicant relies on several leading authorities on this issue from British Columbia and Ontario.

In Canada, decisions from another jurisdiction may (or may not) be persuasive, but they are never binding. [23] There are also subtle differences in third party procedure between those two provinces and Nunavut. In what follows, I have extracted those B.C. and Ontario principles which the applicant says apply to the issues raised in this case. i. The law in British Columbia [ 36 ] The applicant relies on Adams v Thompson, Berwick, Pratt & Partners , a 1987 decision of the British Columbia Court of Appeal. [24] Adams established a two-branch test respecting third party procedure in that province.

I note this case was followed and commented upon 25 years later by the same court in Laidar Holdings Ltd v Lindt & Sprungli (Canada) Inc . [25] I will, therefore, refer to Laidar . [ 37 ] Writing on behalf of the Court in Laidar , Justice Newbury outlined the two branches of the Adams test. The first branch articulates when a motion to strike a Third Party Claim will be successful. The branch one test reads: A third party claim will not lie against another person with respect to an obligation belonging to the plaintiff which the defendant can raise directly against the plaintiff by way of defence.

Where the only negligence alleged against the third party is attributable to the plaintiff, there is no need for third party proceedings since the defendant has his full remedy against the plaintiff. [26] [ 38 ] The second branch of the Adams test applies to cases where a Third Party Claim will survive a motion to strike: where it appears on the pleadings that the breach of duty allegedly committed by the proposed third party might not be owed or attributable only to the plaintiff, but might give rise to an independent cause of action ‘not belonging’ to the plaintiff. [27] [ 39 ] On this point, Justice McLachlin, in Adams , stated “where the pleadings and the alleged facts raise the possibility of a claim against the third party for which the plaintiff may not be responsible, the third party claim should be allowed to stand.” [28] [Emphasis added] [ 40 ] According to this principle, the key factor in the present case is whether the obligation in issue – to mitigate damages by seeking the HST reimbursement – belonged to the plaintiffs or their lawyers, the proposed third party.

I will return to this issue in my analysis.

ii. The law in Ontario [ 41 ] I referred earlier to the Ontario line of cases. Some of these cases have adopted the Adams two-branch test. Some others have expanded the second branch of the Adams test. In my view, the latter cases stand for the proposition that in certain circumstances, a plaintiff “may be able to say that it acted reasonably in retaining the third party to advise it … and accordingly should not be responsible for any negligence on the part of its solicitor.” [29] [ 42 ] I will return to the second branch of the Adams test in my analysis. E.

Onus [ 43 ] The onus, by which I mean the burden of persuasion, is with the applicant to establish on a balance of probabilities that the Third Party Notice should be struck. V. ISSUES [ 44 ] This application poses several questions which I must resolve on a balance of probabilities. I will address them in the following order: 1. Does the defendants’ Third Party Notice disclose a cause of action against the applicant? 2. Did the applicant have a duty of care in tort towards the defendants respecting the HST issue? 3.

Should the Third Party Notice be struck because it is an abuse of process, frivolous, vexatious, or would cause an unreasonable delay of the trial? [ 45 ] In my view, the application to strike the Third Party Notice must be dismissed, and the Third Party Notice must be confirmed. VI. ANALYSIS A. Does the Third Party Notice disclose a cause of action against the applicant? i. Contributory Negligence Act [ 46 ] At the outset, I remind myself I must give the Act a “fair, large and liberal”

interpretation which serves to meet the Act ’s objectives. In my view, the application fails on a plain reading of

section 7 of the Act .

[ 47 ] As I noted earlier, the Act permits the issuance of a Third Party Notice “where it appears that a person who is not a party to an action is or may be wholly or partly responsible for the damages claimed.” [30] The Act imposes no further prerequisites to the issuance of a Third Party Notice. The section’s language is clear and unambiguous.

If the statutory threshold is met, then a Third Party Notice may be issued. [31] [ 48 ] According to the pleadings, by sometime in 2011, the applicant had been retained to act as counsel for the plaintiffs in this action. [32] The applicant was aware of the HST issue at this time. [33] The applicant by its own admission did not apply to Canada Revenue Agency to have the HST reimbursed to their clients.

Therefore, it may be argued that the applicant “may be wholly or partly responsible” for the lost HST funds, and that the applicant may be wholly or partly liable down the road to indemnify the defendants for all or part of the lost HST funds. [ 49 ] In my view, the Contributory Negligence Act alone permitted the defendants to issue and serve the Third Party Notice. The Third Party Notice stands. ii. Rules of Court [ 50 ] I turn now to our Rules of Court . As we have seen, the defendants claim that the applicant was negligent in the way it handled the HST issue before it started its civil action.

The defendants assert the applicant ought to have applied to Canada Revenue Agency on behalf of its clients – the plaintiffs – seeking the HST reimbursement. The applicant failed to so apply. As a result, the defendants say the applicant is responsible for some or all the HST losses suffered by the plaintiffs. [ 51 ] The Third Party Notice refers directly to this HST question. However one parses the requirements in rule 142, the HST question raised in the Third Party Notice is related, connected, and substantially the same as the HST issue between the plaintiffs and defendants in the main action.

The HST issue ought to be determined in one hearing where all three parties are represented. On its face, then, it would appear open to the defendants to issue and serve the Third Party Notice on the applicant. [ 52 ] Applicant’s counsel stressed in argument that the applicant was not party to the initial loss (the HST remittance to Canada Revenue Agency) and therefore there is no independent claim against it (the applicant). In other words, the obligation to mitigate – to seek the HST reimbursement – was solely the obligation of the plaintiffs.

Any fault which may then exist for that failure to mitigate lies solely on the shoulders of the plaintiffs. Therefore, the applicant says this Court should apply branch one of the B.C. Adams test and strike the Third Party Notice. [ 53 ] I cannot agree. In my view, it is irrelevant to this analysis that the applicant was not party to the initial loss. Nor am I persuaded that the applicant may hide behind the assertion that it was acting merely as the plaintiffs’ agent. I must interpret the applicable law considering the unique realities of life in Nunavut, which are an essential backdrop of this action.

In this light, branch one of the B.C. Adams test is not the law in Nunavut. iii. The B.C. Adams test [ 54 ] If the Adams decision were binding on this court, branch one of the test could only shield the applicant from potential liability if the applicant’s role was only the giving of legal advice. The heart of the question, then, is whether the failure to mitigate – that is, to try to get back the HST from Canada Revenue Agency – remained at all times the plaintiffs’ responsibility.

If it was the plaintiffs’ responsibility, then the defendants could raise that fact as a defence. [34] In these circumstances, it would be redundant for the defendants to add the applicant as a third party. This reflects branch one of the B.C. Adams case. [ 55 ] The pleadings filed by the parties do not reveal the terms of the applicant’s retainer to represent the various plaintiffs. Without that information, I cannot say that the applicant had not assumed responsibility to seek the HST reimbursement.

It is, however, not just possible but extremely likely that the applicant was retained and undertook to do just that.

[ 56 ] In this regard, the Statement of Claim is instructive. The plaintiffs have sued the defendants because they say, among other things, that the defendants unlawfully withheld HST from their settlements. They say that money ought instead to have been paid to the plaintiffs with the rest of their individual settlements. In other words, the plaintiffs want their HST money back – and the plaintiffs retained the applicant to do just that. [ 57 ] The pleadings suggest that the applicant knew about the HST issue within the period when it could have applied for reimbursement.

On the pleadings, it is possible that the applicant was negligent when it did not seek those HST reimbursements. This may give rise to an independent cause of action against the applicant. [ 58 ] I am also very concerned in the present case about the power imbalance between the plaintiffs and the applicant. The plaintiffs, survivors of sexual abuse, all reside in isolated and remote arctic communities.

In the Statement of Claim, the plaintiffs were described as follows: All the Plaintiffs grew up in small, isolated, Northern, Inuit, communities … Relative to the Defendants, the Plaintiffs were all unsophisticated and had an inferior knowledge of the law and the English language. [35] [ 59 ] I do not agree with the assertion that a lower level of formal education leads to a lack of sophistication.

However, I do agree with this to the extent that this description of the plaintiffs’ vulnerability resonates in their dealings with the applicant lawyers. [ 60 ] The plaintiffs are now reliving the painful events of their abuse after the original litigation and negotiated settlements had appeared to bring them closure. I have no doubt these survivors find this situation to be very stressful and upsetting. They would carry that stress and upset into their meetings with the applicant.

Despite their lack of familiarity with the legal process, I have little doubt that the plaintiffs retained the applicant, in part, to get their HST monies back. [ 61 ] I contrast the plaintiffs’ situation with the big-city law-savvy applicant lawyers who live in Edmonton. It is unclear how accessible the applicant has been to the plaintiffs. Mr.

Rossall told the Court on March 29, 2017, that the applicant did not have “detailed, accurate, specific contact information for every individual plaintiff”. [36] Respectfully, I continue to find such a claim perplexing given that the plaintiffs are the applicant’s own clients. [ 62 ] Unfortunately, my concerns about the power imbalance between the applicant and the plaintiffs were borne out at the January 2018 hearing. Four plaintiffs had attended the hearing either by telephone or in person. Once I heard from the lawyers, I invited the four plaintiffs to speak to me if they wished.

One of the plaintiffs came forward. He is unilingual. In the interpreter’s words, he said the following to the Court: “He’s got a question. If the rumour has – there’s a position of conflict, Adam Regal [sic]. I just want to hear if this rumour is legitimate or not.” [37] [ 63 ] The plaintiff continued after I answered his question. In the words of the interpreter: The gentleman is asking about why there were so many documents they had to sign and – when he is not able to comprehend what the document is referring to, but there were – they kept coming to him to sign documents.

And when I was in Kingston, I was updated or educated about what those documents are. And because of that information session about what the documents were, I stopped signing the papers. But what I would like to know is why all those documents were coming to us for our signatures. [38] [ 64 ] This intervention highlights the very real vulnerability of the plaintiffs involved in this litigation. It validates this Court’s ongoing concern that the plaintiffs may not understand their individual rights, as well as the nature and import of these proceedings.

The current plaintiffs are very unlike those in the Adams case, which involved sophisticated professional parties. [ 65 ] The present case does not involve a classic agency relationship between the plaintiffs and the applicant. On the pleadings, it appears that the plaintiffs retained the applicant to get back their HST monies, and that the applicant assumed direct responsibility for reclaiming it. The 139 plaintiffs – isolated and alone across the territory – reasonably relied on the applicant lawyers to get back their HST. [ 66 ] A strict application of branch one of the B.C.

Adams test, in the particular circumstances of Nunavut, would be unjust to the plaintiffs. As I stated earlier, I must be sensitive to the realities which underpin this litigation.

[ 67 ] In this context, Justice McLachlin’s comments in Adams concerning branch two of the test bear another examination: where the pleadings and the alleged facts raise the possibility of a claim against the third party for which the plaintiff may not be responsible, the third party claim should be allowed to stand. [39] [ 68 ] I find this statement to be highly persuasive. In my view, this is one of those cases where it is possible that the applicant indeed assumed the plaintiffs’ obligation to mitigate their damages. Therefore, I apply the second branch of the Adams test.

I rule the Third Party Notice shall stand. [ 69 ] In coming to this conclusion, I am aware of Justice Newbury’s concern in Laidar that this analysis appears to permit “the ‘obvious mischief’ that arises from allowing one party to sue another party’s solicitor.” [40] The underlying policy concern here is for the integrity of the solicitor-client relationship. However, I find that to permit the applicant to shield itself behind the solicitor-client relationship would wreak injustice on the plaintiffs. iv.

The Ontario Corcoran test [ 70 ] I have reached the same result by applying the Ontario Corcoran test. [ 41] Corcoran says a proposed third party will not escape potential liability for its negligence if the plaintiffs acted reasonably in retaining the third party to act on their behalf.

I find this principle to be highly persuasive in the context of delivering civil justice to Nunavummiut. [ 71 ] The pleadings demonstrate that the plaintiffs arguably shared a reasonable expectation that, first, the applicant would give them sound legal advice and, second, that the applicant would take all necessary steps to get their HST back.

The plaintiffs – living in isolated communities with no local access to legal advice – reasonably would have relied on the applicant for competent and thorough representation – including action to get back the HST. [ 72 ] In these circumstances, the Third Party Notice reveals a valid cause of action by the defendants against the applicant according to the Corcoran test. Therefore, the Third Party Notice stands. v. Third party procedure in Nunavut [ 73 ] I have already noted that branch one of the B.C. Adams test does not fit Nunavut.

In every case, this Court must be vigilant to examine the circumstances which underpin the apparent agency relationship. The strict confines of the first branch of the Adams test would prohibit this Court from exercising its inherent and prescribed discretion when determining the justness of a third party pleading.

In this context, I find the Ontario Corcoran test to be responsive to our unique circumstances and, in my view, it is the principle which governs the third party analysis in Nunavut. [ 74 ] For the same reasons, I find that branch two of the Adams test is a logical statement of first principles when assessing the merit of a challenged Third Party Notice. It too, in my view, is good law in Nunavut. [ 75 ] This analysis is consistent with

section 7 of the Contributory Negligence Act , which is broad, liberal, and remedial in scope. B. Did the applicant have a duty of care in tort towards the defendants respecting the HST issue?

[ 76 ] Considering my ruling that the Third Party Notice is valid, there is no need for me to decide this question. C. Should the Third Party Notice be struck because it is an abuse of process, frivolous, vexatious, or would cause an unreasonable delay of the trial? [ 77 ] The applicant points to the timing of the filings of the Third Party Notice as evidence of abuse of process. Timing is but one factor to be considered. There is nothing else in the pleadings to suggest that the defendants had an oblique motive for filing the Third Party Notice.

I am not persuaded on a balance of probabilities that the applicant has satisfied its burden. [ 78 ] The applicant also complains that the Third Party Notice has driven a “wedge” between the applicant and their clients – the plaintiffs. [42] This argument fails to recognize that third party procedure often puts the proposed third party at issue with the plaintiff(s). It was the applicant’s duty to ensure independent counsel for the plaintiffs, so that they would understand the reasons for this application. It was the applicant’s duty to deal with the wedge issue.

The applicant’s submissions on this point do not persuade me that this third party procedure has been abusive, frivolous, improper, scandalous, or vexatious. [ 79 ] Nor do I accept the applicant’s argument that the third party procedure will unreasonably delay the trial or affect its fairness. On the contrary, the Third Party Notice streamlines the Court’s ability to deal with the HST issue in one hearing, where all the affected parties will be represented. VII. DECISION [ 80 ] There is no merit to the applicant’s argument that the Third Party Notice fails to disclose a viable cause of action.

It clearly does. [ 81 ] Nor am I persuaded that the Third Party Notice is an abuse of the Court’s process. [ 82 ] The applicant has not met its burden on a balance of probabilities. [ 83 ] I dismiss the application to strike the Third Party Notice. VIII. COSTS [ 84 ] The applicant has asked for solicitor-client costs. [ 85 ] There is nothing, in my view, to justify imposition of solicitor-client costs. Indeed, I have ruled that

section 7 of the Contributory Negligence Act clearly provided justification for the issuance of the Third Party Notice. [ 86 ] I award costs to the defendants on a party-party basis.

Dated at the City of Iqaluit this 12th day of June, 2018 ___________________ Justice P. Bychok Nunavut Court of Justice