Speaker's Corner - Joint and several liability: Putting innocent victims first

Before considering reforms to the Negligence Act, we need to ask whose interests take priority - those who suffer injury or those who have caused it?

Lawyers who act for innocent victims of wrongdoing take for granted the principles of tort compensation that strive to restore innocent victims as fully as possible to the position they would have been in had the wrongful act not occurred.

An important and long-standing Canadian legal tradition that helps to ensure the goal of full recovery is the principle of joint and several liability amongst multiple tortfeasors.  

Yet, as fundamental and, dare I say, as sacrosanct a principle as joint and several liability is to many of us, we are aware that our regard for it is not shared by all.

Indeed, as recently as two weeks ago in these pages (see “Municipalities seek reform of Negligence Act,” Law Times, Oct. 4), there was yet another report of how joint and several liability has come under attack.

The latest salvo comes from the Association of Municipalities of Ontario, which argues for reform based on the U.S. proportionate liability model.

Now, the AMO is apparently pressing the provincial government for changes prior to the election next year. In the past, there have been other critics as well.

At least as far back as the mid-1980s, the Canadian Institute of Chartered Accountants expressed concern about joint and several liability and attempted to influence legislators to change the law.

The accounting profession argued that auditors faced a liability crisis brought on by the application of joint and several liability against them.

At that time, the institute argued, as the AMO is now doing, in favour of a system of proportionate liability, at least as it related to auditors and professional accounting advisers. Their arguments have never gone away and continue to resurface to this day.

In the fall of 2009, the Law Commission of Ontario, in part as a result of the growing lobbying efforts, undertook a study of the law of joint and several liability.

On paper, the study was intended to be limited to a discussion about the implications of joint and several liability under Ontario’s Business Corporations Act, but many groups took it as an opportunity to advocate for wholesale changes to the Negligence Act, just as the AMO now proposes.

Municipalities and chartered accountants are lobbying hard for a system of proportionate liability, caps on the liability of select groups, and other changes that would erode the rights of innocent victims of wrongdoing.

Their arguments are, unfortunately, a scaremongering approach that clouds the reality of the situation. In response to these positions, the Ontario Trial Lawyers Association has identified a number of key arguments illustrating the fundamental flaws with those presented by the proponents of reform.

First, there is a lack of empirical data justifying reform. For more than 20 years, the accountants and now the municipalities have referred to the so-called one-per-cent rule, an urban legend whereby a tortfeasor with one-per-cent liability would be 100-per-cent responsible for a loss.

No one has pointed to a single case - reported, settled or otherwise - in which this outcome occurred. Indeed, the two cases mentioned in the AMO white paper dealt with circumstances in which the municipality was 25-per-cent liable in one instance and 45-per-cent liable in the other, not one per cent.

Secondly, proponents of change fail to recognize or admit that concurrent liability means the defendant is 100-per-cent at fault for causing the loss to the plaintiff because, without that particular party’s individual wrongdoing, the plaintiff would not have suffered a loss at all or would have incurred a very different loss.

It is not accurate to say that each of a number of concurrent wrongdoers is only partly responsible for the plaintiff’s loss for liability. In all cases, the causal responsibility of each wrongdoer extends to the whole of a plaintiff’s loss.

Each wrongdoer is liable given that the plaintiff has been able to establish that the entire loss was caused by the defendant in question, not just one per cent or some other proportion.
Thirdly, the U.S. experience is an inappropriate comparator.

It is unhelpful to look to the experience in U.S. jurisdictions, which are beginning to adopt proportionate liability regimes in some cases, given factors such as the much narrower scope and application of punitive damage awards in Canada compared to the United States; our experience with professional liability insurance; the Canadian duty-of-care analysis, which more than adequately protects defendants; and the fact that Canadian litigation includes costs consequences for the loser, which isn’t the case south of the border.

In addition, there is no evidence of a liability crisis. Independent studies, such as a 1988 Ontario Law Reform Commission paper, a 1998 Law Reform Commission of Saskatchewan paper, and one by the 1996 standing Senate committee on banking, trade, and commerce, found the idea of a liability crisis to be unsupported by empirical data.

At the same time, there is no evidence of competitive disadvantage. In fact, there is no proof that Canadian accounting firms suffer any competitive jurisdictional disadvantage with the existing legal scheme in place.

Furthermore, fundamental reform of tort law requires a high burden of proof. We all must be wary of the law of unintended consequences, in which one change might trigger negative or unforeseen outcomes.

We must never lose sight of the innocent and blameless victim whose right of recovery will be eroded or eliminated by the proposed changes.

Most importantly, the existing legal framework works very well to provide a triple layer of protection in the form of the duty-of-care analysis, the but-for causation test, and public policy considerations.

The flexible legal test is more than sufficient to address the anecdotal and exaggerated concerns raised by the proponents of change to the business corporations or negligence acts.

Without wrongdoing, there are no damages paid by a defendant, and the blameless party recovers the costs of litigation.

The AMO and the accounting organization’s emotional claims and persistent lobbying of legislators are cause for concern. Any erosion of the principles of joint and several liability inflicts harm upon innocent accident victims and cannot be allowed to occur.

The argument that citizens will be the ones to suffer as cities and towns have to cut services simply does not stand up to scrutiny.

The AMO fails to recognize that if it is successful in changing the laws governing joint and several liability, it will be the very same people they claim to protect who will be at risk when tortfeasors escape the responsibility of paying full damages to the innocent plaintiff.

Andrew Murray, a partner at Lerners LLP, is also vice president of the Ontario Trial Lawyers Association. The OTLA’s full response to the law commission consultation paper is available at otla.com.

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