II. OVERVIEW OF JOINT AND SEVERAL LIABILITY

II. OVERVIEW OF JOINT AND SEVERAL LIABILITY2017-03-03T18:33:22+00:00

Joint and several liability provides for a plaintiff to recover the entire claim for damages from one of several negligent defendants. The authority for this remedy is set out in section 1 of the Ontario Negligence Act which reads:

 

Extent of liability, remedy over

 

1. Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent. [27]

 

Where three different defendants are found to have caused a plaintiff’s loss, the plaintiff is entitled to seek full payment (100%) from any one of the defendants. The defendant who fully satisfies the judgment has a right of contribution from the other liable parties based on the extent of their responsibility for the plaintiff’s loss.

 

For example, a court may find defendants 1 (D1), 2 (D2) and 3 (D3) responsible for 70%, 20%, and 10% of the plaintiff’s $100,000 loss, respectively. The plaintiff may seek to recover 100% of the loss from D2, who may then seek contribution from D1 and D3 for their 70% and 10% shares of the loss. If D1 and/or D3 is unable to compensate D2 for the amount each owes for whatever reason, such as insolvency or unavailability, D2 will bear the full $100,000 loss. The plaintiff will be fully compensated for $100,000, and it is the responsibility of the defendants to apportion the loss fairly between them.

 

The submission of the OTLA notes that:

 

As a policy statement, our legislators have long recognized that, as between an innocent victim and one or more wrongdoers, the innocent victim should not be the one to suffer, if a wrongdoer is unable to pay his or her proportionate share of a damage award.[28]

 

Several submissions, including those of The Advocates Society and the British Columbia Investment Management Corporation (bcIMC), noted that joint and several liability is liability in solidum (“for the whole”). They stressed the need to recognize: (a) the single loss suffered by the plaintiff, as a result of (b) the joint wrongdoing of concurrent wrongdoers, the result of which is full liability for any wrongdoer, with a right to contribution from the other liable parties. It is important to note that the harm may not have occurred “but for” the concurrent wrongdoing of all liable parties.[29]

 

The bcIMC states that:

 

It should not be the responsibility of those harmed as a result of corporate wrongdoing to have to seek out all those responsible in order to obtain full compensation. The burden should rest on those found responsible to pursue indemnification from each other.[30]

 

David Debenham, a legal and accounting commentator, describes the implications of joint and several liability in the context of professional advisors as follows:

 

The Plaintiff is not required to find and sue all the parties who caused or contributed to his damage in order to obtain full recovery. This is particularly important in an era where limitation periods are typically two (2) years or less and, in some cases, short as seven (7) days. In many cases, the Plaintiff is not in a position to know who contributed to their loss, and the Defendants are in a better position to have the necessary information and make this judgment.  In the case of the auditor, it is their responsibility to know how the faulty financial information was produced, and who was responsible for the misstatement, so the auditor is in a better position than the user of the financial information to detect the source of the erroneous information and add them as parties to the lawsuit, and they have a longer time than the Plaintiff does to start a lawsuit against other tortfeasors. Solidary liability gives Defendants, who usually have better information regarding who contributed to the loss, a motivation to add all responsible parties to the lawsuit before limitation periods expire. [31]

 

Debenham’s comments highlight that joint and several liability is efficient, promotes access to justice and reflects the underlying reality of who has the best access to information in relation to wrongdoing.

 

Further, it is important to note that joint and several liability only begins to operate once a wrongdoing has been proven by the plaintiff. A plaintiff must prove the substantive elements of the tort against a defendant in order for damages to be sought against that particular defendant. A finding of liability must come before any apportionment of degrees of fault between defendants. Thus, because fault is distributed only among co-defendants found liable according to the common law requirements of the tort, blameless co-defendants are absolved of any accusations of wrongdoing before fault is distributed.

 

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