The employee of an insured may not be sued in negligence to recover funds paid to an insured.

An appeal from an order dismissing applications to strike out third party claims. The appeal was allowed.

Howalta Electrical Services Inc. v. CDI Career Development Institutes Ltd., [2011] A.J. No. 1227, November 15, 2011, Alberta Court of Appeal, J.E.L. Côté, J.D.B. McDonald and B.K. O’Ferrall JJ.A.

A fire destroyed a building occupied by tenants. The fire insurance company paid the owner landlord for the loss to the building. The insurance company brought a subrogated claim against various parties in the name of the landlord. The appellants  who had been named as defendants  in the claim, were a tenant and its employee. No one suggested they caused the fire. The employee was alleged to have smelled or noticed smoke or fire and had not told the landlord. The lease required tenants to tell the landlord if they learned about any condition which might damage the building.

The appellant tenant asserted that it had paid its share of the fire insurance premiums as common-expense payments required by the lease. The insurance company discontinued its subrogated suit as against both the appellant tenant and employee.

In the meantime, other defendants, including the respondent, had issued notices seeking contribution and indemnity from the appellants. The notices allege that the appellants were also tortfeasors, and relied on the Tort-Feasors Act. A motion to summarily dismiss those notices failed and that decision was appealed.

The appeal was allowed. The tenant, by paying its share of the fire insurance premiums, had no liability to the plaintiff. There was a basis for giving the employee the same protection as the tenant. Therefore, they had no statutory liability to contribute to a second tortfeasor. The real plaintiff was the fire insurer. The person with a cause of action was the landlord. The fire insurer could not claim against the tenant or its employee. The second tortfeasors could not, therefore claim against them.

This case was digested by Kim Yee and edited by David W. Pilley of Harper Grey LLP.

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