Freudmann-Cohen v. Tran,  O.J. No. 1699 Ontario Court of Appeal
The Plaintiff Freudmann and Defendant Tran were in an MVA in October 1993. In October 1995, an action against Tran was commenced. In June 1996, Zurich was added as a defendant when Freudmann formed the opinion Tran was underinsured. Tran was not examined for discovery until April 2001, at which time the parties learned that he was delivering pizza for Pizza Nova at the time of the accident. Pizza Nova had Non-Owned Automobile Insurance coverage. The Plaintiff consented to the issuance of a third party claim against Pizza Nova by Zurich. No explanation was given as to why the Plaintiff did not claim directly against Pizza Nova. Pizza Nova sought to have the third party claim dismissed on the basis that Zurich’s only claim against it was a subrogated claim for contribution and indemnity on the basis of contributory negligence and vicarious liability, with no direct claim. This was not disputed by the parties.
Pursuant to the Ontario Insurance Act an insurer has the right to bring a subrogated action in the name of the insured, and pursuant to the common law it must make that claim in the name of the insured. However, the Ontario Rule of Civil Procedure allows third party actions by any Defendant against any party who “may be liable … for all or part of the claim” so long as there is a sufficient factual nexus between the claim and transaction at issue in the main action. Pizza Nova argued that the intent of the Rule was to eliminate a multiplicity of proceedings only, not to override the subrogation principle. The Appeal court upheld the Motions court ruling that the Rule of Civil Procedure was intended to make substantive changes in the law, to simplify proceedings and allow joinder that would have been otherwise prohibited at common law. The Rule changed the nature of a third party claim so it no longer needed to be a “flow through” recovery from the third party, and as such the Rule was sufficient to override the traditional subrogation principle. Zurich was named as a Defendant in its own name, and thus the Rule was sufficient to allow it to bring a third party claim in its own name against any party with a sufficient connection to the main action.
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