2014 NBCA 47, 2014 NBCA 47

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 91-13-CA EXIT REALTY ASSOCIATES and JACQUES COMEAU APPELLANTS EXIT REALTY ASSOCIATES et JACQUES COMEAU APPELANTS - and - - et - MARTIN AUBIN RESPONDENT MARTIN AUBIN INTIMÉ - and - - et - JOAN SAVOIE ST-CŒUR and ROBERT ST- CŒUR RESPONDENTS JOAN SAVOIE ST-CŒUR et ROBERT ST-CŒUR INTIMÉS Exit Realty Associates et al. v. Aubin et al., 2014 NBCA 47 Exit Realty Associates et al. c.

Aubin et al., 2014 NBCA 47 CORAM: The Honourable Justice Larlee The Honourable Justice Deschênes The Honourable Justice Bell CORAM : l’honorable juge Larlee l’honorable juge Deschênes l’honorable juge Bell Appeal from a decision of the Court of Queen’s Bench: August 6, 2013 Appel d’une décision de la Cour du Banc de la Reine : le 6 août 2013 History of Case: Historique de la cause : Decision under appeal: Unreported Décision frappée d’appel : Inédite Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard: February 26, 2014 Appel entendu : le 26 février 2014 Judgment rendered: July 10, 2014 Jugement rendu : le 10 juillet 2014 Reasons for judgment by: The Honourable Justice Deschênes Motifs de jugement : l’honorable juge Deschênes Concurred in by: The Honourable Justice Larlee The Honourable Justice Bell Souscrivent aux motifs : l’honorable juge Larlee l’honorable juge Bell Counsel at hearing: For the appellants: R é my M. Boudreau For the respondent, Martin Aubin: Lucie Richard, Q.C.

No one appeared for the respondent, Joan Savoie St- Cœur No one appeared for the respondent, Robert St- Cœur Avocats à l’audience : Pour les appelants : R é my M. Boudreau Pour l’intim é Martin Aubin : Lucie Richard, c.r. Personne n’a comparu pour l’intimée Joan Savoie St- Cœur Personne n’a comparu pour l’intimé Robert St-Cœur THE COURT The appeal is allowed and the motion judge’s decision striking out the Third Party Claim and his order as to costs in favour of the third party are set aside . The appellants are entitled to their costs on appeal against the third party in the amount of $2,500.

English version of the Court’s reasons for judgment delivered by DESCHÊNES, J.A. I. Introduction and Background [ 1 ] On November 5, 2010, the plaintiffs, Joan Savoie St-Cœur and Robert St-Cœur (the respondents), brought an action for damages against the defendants, Exit Realty Associates and Jacques Comeau (the appellants).

In their Statement of Claim, the St-Cœurs claim that they suffered damages as a result of the defendants’ wrongdoing, during the purchase of a parcel of land, owing to the representations and warranties made by the defendants as real estate agents in connection with the location of the boundaries of the property. At the time of the transaction, the St-Cœurs had retained the services of solicitor Martin Aubin. [ 2 ] The appellants filed a Statement of Defence in which they deny any liability to the St-Cœurs. The appellants also served Mr.

Aubin with a Notice of Third Party Claim (Rule 30 of the Rules of Court ) seeking a contribution or indemnity from him. It is alleged he failed to advise the St-Cœurs to hire a surveyor in order to obtain a building location survey, which supposedly would have prevented the type of problem the St-Cœurs encountered. [ 3 ] Mr. Aubin filed a Third Party Defence. He contends, inter alia , that

a) he [TRANSLATION] “discharged his mandate as requested” by the St-Cœurs; b) [TRANSLATION] “there is no contractual relationship, duty or other legal relationship” between him (Mr. Aubin) and the defendants in the main action; and c) [TRANSLATION] “the defendants’ action against the third party has no basis in law and is frivolous, vexatious and malicious.” [ 4 ] As third party, Mr. Aubin also filed a Notice of Motion seeking

summary judgment against the defendants under Rule 22 and, in the alternative, the striking out of their claim against him as third party under Rule 23(1)(

b) on the basis that their pleading against the third party does not disclose a cause of action. [ 5 ] The St-Cœurs support the steps Mr. Aubin is taking against the appellants and, much like Mr. Aubin, do not understand [TRANSLATION] “how a lawyer whom we do not know (a reference to the lawyer acting on behalf of the defendants) and whom we did not hire, can make claims on our behalf against our own lawyer without our permission, thereby depriving us of his services and the sense of security we had when he was handling our affairs.” As for Mr.

Aubin, he indicated in his affidavit in support of the motion that he [TRANSLATION] “had repeatedly asked counsel for the defendants (Exit Realty) to justify their position of claiming damages from me that would be payable to the plaintiffs (the St-Cœurs) and by what right he could do so without the plaintiffs’ authorization and against their wishes” (see para. 17 of the St-Cœurs’ affidavit supporting Mr. Aubin’s efforts and para. 15 of Mr. Aubin’s affidavit in support of his motion). [ 6 ] In any event, the grounds raised by Mr. Aubin under Rules 22 and 23 can be summarized as follows: 1.

The third party intends to show that there was never a contractual or other relationship with, or a duty of care or other duty towards the defendants. 2. The third party intends to show that the addition of a third party applies to a claim by a defendant against a third party who has a relationship with and duties to said defendant in connection with the plaintiffs’ action against the defendant. 3. The third party intends to show that, under the circumstances, the defendants’ addition of the third party has no basis in law and is frivolous, vexatious, scandalous and an abuse of process.

II. Hearing before the Motion Judge [ 7 ] It is clear from reading the record that the motion judge was pressed for time, since he had to hear another trial in the afternoon and had only a few hours to deal with the issues before him. He also sidetracked the proceedings by telling Mr. Aubin that he thought it was wiser not to deal with his motion under Rule 22, but rather to deal with everything under Rule 23. Mr. Aubin reluctantly agreed, although he did indicate he wanted to reserve his right to make his submissions under Rule 22. [ 8 ] In the end, the judge’s decision to proceed this way did no real harm to the third party, since the grounds raised with a view to obtaining

summary judgment (Rule 22) are the same as those raised with a view to having the cause of action struck out (Rule 23) and are based on an issue of law, namely: is it necessary, as the third party contends, for there to be a “legal relationship” between the defendant and the third party in order for a defendant to issue a third party claim under Rule 30? In the view of the third party, Mr. Aubin, the “legal relationship” that must exist in order for a third party claim to be issued is a “contractual relationship” or “duty of care,” which the third party must owe to the defendant. [ 9 ] When Ms.

Fontaine, the lawyer acting on behalf of the defendants, finally had the floor, she argued that Mr. Aubin’s

interpretation of Rule 23 was obviously wrong. I take the liberty of quoting her since her

interpretation is certainly the correct one, as we will see later [TRANSLATION]: I’m going to try to do this quickly, although we clearly disagree with the

interpretation of the third party claim rule suggested by Mr. Aubin. First, a third party claim is for contribution and indemnity, so if someone is monetarily liable to the plaintiff but another party also ought to have been monetarily liable to the plaintiff, that person can be added as a third party. There is no --- the Rules of Court don’t say that there has to be a legal relationship between the third party (and) a defendant at all. Quite the opposite. [p. 11 of the Appellants’ Book of Essential References] III.

Motion Judge’s Decision [ 10 ] The motion judge agreed with the third party’s contention and found as follows [TRANSLATION]: This is my decision. The court agrees in principle that the Third Party Claim now being put forward by the defendants does not meet the requirements of Rule 30 because there is no legal relationship, duty or liability between Mr. Aubin and the defendants. […] […] Given the intentions, objectives and parameters of, that Rule 30 dealing with third party claims. O.K.

In the Court’s view, the proposed Third Party Claim is too speculative at this stage, if it rests on the allegations set out in the pleadings in the Third Party Claim, and the Court reiterates that it is determining this motion based on Rule 23. […] Rule 30 should not be so comprehensive in its application, or broad, as to cover an argument over the nature or quality of the legal advice that the plaintiffs were offered by Mr. Aubin, their lawyer, in 2009 at the time the land was purchased.

In this Court’s opinion, such an argument, in addition to being too speculative at this stage… will needlessly complicate and unreasonably prolong the Court’s determination of the relevant and existing issues between the plaintiffs and the defendants. [p. 20, 28 and 30 of the Appellants’ Book of Essential References] [ 11 ] When he gave his decision from the bench, the motion judge added that, in his opinion, a third party added under Rule 30, like Mr.

Aubin, [TRANSLATION] “would [not] be able to dispute the contention that there is no duty to the plaintiffs” (p. 31 of the Appellants’ Book of Essential References).

IV. Analysis [12] Rule 30.01(1)(

a) provides that “[a] defendant may issue a Third Party Claim against a personwho is not a party to the action, and who is, or may be, liable to him for all or part of the claim of the plaintiff”. [13] Moreover,

section 5 of the Contributory Negligence Act, R.S.N.B. 2011, c. 131, provides that“[w]hen it appears that a person who is not already a party to an action is or may be wholly or partly responsible for the damagesclaimed, that person may be added as a party defendant or may be made a third party to the action on the terms that may be consideredjust”. [14] In the case at bar, the plaintiffs claim they suffered pecuniary damages in excess of $35,000owing to the negligence of real estate agents Exit Realty and Jacques Comeau.

Exit Realty and Jacques Comeau, on the other hand, denyany liability to the plaintiffs and further contend that as the lawyer acting for the plaintiffs during this transaction, Mr. Aubin is someonewho may be wholly or partly responsible for the damages claimed by the plaintiffs. It is in this context that the defendants, Exit Realtyand Jacques Comeau, issued a Third Party Claim against Mr. Aubin, alleging as follows [TRANSLATION]: 1. At all material times, the plaintiffs retained Mr. Aubin’s services in order to protect their interests during the transaction that is thesubject of the main action. 2. Mr.

Aubin displayed professional negligence in failing to inform the plaintiffs of the importance of obtaining a building locationsurvey in order to accurately identify the boundaries of the parcel of land they wanted to buy, and by failing to inform them that thecertificate of title would not suffice for that purpose. 3. If the plaintiffs suffered the pecuniary damages mentioned in the Statement of Claim, those damages were caused, in whole or inpart, by Mr.

Aubin’s negligence and he should, therefore, contribute to paying for those damages to the extent of his responsibility, inthe event that the defendants are held liable to the plaintiffs. [15] In short, the defendants deny that they were negligent and maintain that, if they are liable in anyway for the pecuniary damages suffered by the plaintiffs, the fault lies, at least in part, with Mr. Aubin due to his professionalnegligence. [16] In my view, Ms. Fontaine rightly contended the defendants could add Mr. Aubin as a third partyin the absence of a “legal relationship” between themselves and Mr. Aubin.

Of course, there may sometimes be a legal relationshipbetween the defendants and the third party, but it is not a prerequisite. After all, the defendants’ claim against the third party is not onefor damages caused by the third party’s negligence towards the defendants. Rather, it is a claim by the defendants against Mr. Aubin forcontribution or indemnity in the event the defendants are ultimately held liable to the plaintiffs. Of course, contrary to what the motionjudge believed, Mr.

Aubin, as third party, would have the opportunity to argue that he was not negligent at any time in fulfilling hismandate if the Third Party Claim were to run its course. [17] The motion judge was required to rule on a motion to strike out the Third Party Claim for lackof a reasonable cause of action pursuant to Rule 23. This being the case, he was required to apply a principle set out in a number ofdecisions from the Supreme Court of Canada and this Court.

Under the circumstances, the motion judge should not have dismissed theThird Party Claim unless it was plain and obvious, assuming the facts pleaded to be true, that the allegations against the third partydisclosed no reasonable cause of action. If it was not plain and obvious, the motion judge should have allowed the Third Party Claim torun its course (see R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 17; Odhavji Estate v. Woodhouse,2003 SCC 69, [2003] 3 S.C.R. 263, at para. 15; Hunt v. Carey Canada Inc., (SCC), [1990] 2 S.C.R. 959, [1990] N.B.J.No. 93 (QL), at para. 33; Sewell v.

ING Insurance Company of Canada, 2007 NBCA 42, 314 N.B.R. (2d) 330, at para. 26, per Drapeau,C.J.N.B.; Simson et al. v. Deer Island Credit Union Limited and Barteau et al., 2012 NBCA 92, 395 N.B.R. (2d) 76, at para. 6, perRichard, J.A.). [18] In my view, the judge erred in law, not only when he ruled that, in this case, there had to be a

legal relationship between the defendants and the third party in order for a third party claim to be issued, but also when he found that the defendants’ claims against the third party (Mr. Aubin) were speculative and that this was another factor that militated in favour of striking out the Third Party Claim pursuant to Rule 23. On this specific point, the motion judge should have assumed that all of the facts set out in the Third Party Claim were true.

If he had properly applied this important principle, he would have rightly denied the motion to strike out the Third Party Claim because it was not plain and obvious that the allegations in the Third Party Claim did not disclose the essential elements of a cause of action. [ 19 ] The motion judge also expressed concern that the addition of the third party to this case would unduly delay proceedings in the main action between the St-Cœurs and Exit Realty Ltd. and Jacques Comeau. In response, I would point out that Rule 30.11 allows a judge, on motion, to impose terms in order to prevent prejudice to the parties.

V. Disposition [ 20 ] For these reasons, I would allow the appeal and set aside the motion judge’s decision striking out the Third Party Claim, as well as his order as to costs in favour of the third party. [ 21 ] The appellants are entitled to their costs on appeal against the third party in the amount of $2,500. ____________________________________ ALEXANDRE DESCHÊNES, J.C.A. ____________________________________ M.E.L. LARLEE, J.C.A. _____________________________________ B. RICHARD BELL, J.C.A.