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HOW TO COUNTER-SUE!

If a litigant decides to proceed by way of an action, rather than by an application, it is necessary to serve either a Notice of Action (followed by a Statement of Claim), or simply a Statement of Claim.  Countermeasures can be taken by the defendant consisting of  a counterclaim against the plaintiff; a crossclaim against any co-defendant; or a third party claim against a person not yet a party to the litigation (the main action).

A Counterclaim is asserted by a defendant who has a claim either against the plaintiff, or jointly against the plaintiff and another person.  This can be done along with a defence to the main action. The right may be any right or claim, and need not arise from the same facts, occurrences, or transactions involved in the main action.

As a defendant to the counterclaim, the claiming defendant may join any other person, including a stranger to the litigation.  For example, a counterclaim can be brought in the name of both the defendant in the main action and in the name of a related company as the co-counterclaimant. In other words, the courts will allow a stranger to the litigation to be added as plaintiff by counterclaim.

Usually, a counterclaim is tried at the trial of the main action, unless the court orders otherwise. If, however, it unduly complicates or delays the trial of the main action, the court may order separate trials of the main claim and counterclaim.  Failure to attend the trial may result in the judge allowing the plaintiff to prove his or her claim and dismiss any counterclaim.

If a stranger has been added to the litigation, as mentioned earlier, the Statement of Defence and Counterclaim, considered to be an originating process, has to be issued (by the court registrar) before being served on all parties to the main action, and be also served on the new defendant to the counterclaim (that is only being added now to the action), along with all pleadings previously served.  This stranger, if residing in Ontario, should deliver its Defence to the Counterclaim within 20 days after service of the Statement of Defence and Counterclaim.  If  elsewhere in Canada or the United States of America, the timeline is 40 days; if outside North America, the timeline is 60 days.

Without disputing the plaintiff’s claim in the main action, if the defendant asserts a counterclaim, the court may stay the main action until the counterclaim is disposed of.

A Crossclaim is not issued because it is not an originating process. As it is a claim by a defendant against an existing defendant  in the same action,  a defendant may never crossclaim a plaintiff in the same action.

Interestingly, for instance, two defendants in the main action issue separate third party claims against different third parties. The third parties in the two, separate third party claims are not co-defendants in the same action; only the two defendants in the main action are.

In other words, third parties may not crossclaim against each other, unless third partied by the same defendant to the main action. If they wish to make claims against each other, they must do so by fourth party claims.

A crossclaim differs from a counterclaimbecause unlike a counterclaiming defendant, a crossclaiming defendant cannot graft onto the main action a crossclaim against a co-defendant that has nothing factually to do with the main action.  It is an independent claim for damages or other relief that arises out of the same transaction or occurrence as the main action.

If the crossclaim is for indemnity under the Negligence Act, the defendant by crossclaim does not need to deliver a Defence to Crossclaim.   Again, a defendant who claims contribution from a co-defendant under the Negligence Act must do so by way of crossclaim, which can be explained by the following illustration:  Two brawling persons injured an innocent passerby, who suffered both physical damage and loss of income. The passerby sued both fighters, and the court found that Defendant A was 40 percent responsible while Defendant B was 60 percent responsible. Ultimately the verdict was that, “The defendants shall pay to the plaintiff the sum of $30,000 [plus interest and costs].” Because both defendants have been adjudged to have caused or contributed in some way (and to some extent) to the plaintiff’s injuries, under the Canadian regime of tort liability, both defendants are jointly and severally (i.e., individually and together) liable for the full amount of the $30,000 judgment (plus interest and costs). However, under the Negligence Act, Defendant A can easily and automatically crossclaim 10% indemnity from Defendant B bringing Defendant A’s contribution down from 50% to 40% (assuming that both defendants contributed equally to the judgement payout).

Third (and subsequent) Party Claims

A third party claim is a claim by a defendant against a stranger to the litigation, a person who has been (until then) a total stranger to the main action. It is an originating process and should therefore be issued by a court registrar with a Statement of Claim. That is how it differs from a crossclaim, which is a claim by a defendant against another existing defendant (i.e. a person who is also a party to the action).

In a multi-vehicle collision, third party claims often bring in a surprise to the litigants. The person mainly responsible may get away with paying nothing in the main action, but may not be that lucky against third party claims. Consequently, the plaintiff may not get anything for damages from the main action, but would be compensated to some extent due to a third party claim.

Actions are inherently complicated, especially when more than one defendant and third pary are involved. Contact the lawyers at Levy Zavet PC to map out a strategic plan of claims, counterclaims, crossclaims and third party claims to your course of action!

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