Craig Brown and Darcy Merkur of Thomson, Rogers in Toronto; photo by Paul Lawrence Click here to see full sized version.

A recent $3.5-million civil jury verdict against the manufacturer, distributors and retailers of a defective CCM mountain bike required jurors to wrestle with a new two-step procedure in Ontario for assessing contributory negligence.

Jurors were also informed of the existence of a “Mary Carter” agreement between the plaintiffs and one of the co-defendants, which partially settled the case vis à vis that defendant about a week before trial, said plaintiffs’ counsel Craig Brown and Darcy Merkur of Thomson, Rogers in Toronto.

After a six-week trial, a six-person Toronto jury awarded Nathan Resch, 23, and his family what their counsel estimate is an award with a present value of about $3.5 million.

Mary Carter agreements, named after an American case, remain uncommon and controversial among counsel in Canadian law suits, even though the agreements’ existence has been approved by the courts. Mary Carter agreements are used in multiple defendant cases involving joint and several liability where at least one, but not all, of the defendants want to settle before trial. “There are not very many jury trials in which a Mary Carter agreement has existed and it’s gone all the way to judgment,” said Brown.

The existence of an agreement is disclosed to the non-settling defendants and to the judge and jury, but its monetary terms are kept secret. At the outset of trial, the jury is advised of the broad terms of the agreement and its effect. The agreement guarantees the plaintiff a minimum recovery from the settling defendant, while capping the downside risk at trial of the settling defendant to the agreed-on amount.

The settling defendant thus remains in the lawsuit, cooperating with the plaintiff, with no true liability risks at trial because the plaintiff has agreed the settling defendant will never have to pay more than the agreed-on portion of the plaintiff’s damages. Normally, the settling defendant will withdraw contributory negligence claims against the plaintiff, and will agree to continue cross-claims against the non-settling defendants. The plaintiff agrees to protect the settling defendant from the results of a contribution claim by the non-settling defendants. Such agreements are typically based on a fixed maximum financial contribution. In cases with the appropriate incentives, the settling defendant may be entitled to an increasing rebate if the non-settling defendant(s) is found liable for certain amounts and has to pay more than a certain amount.

Peter Trebuss of Toronto’s Trebuss Rapley LLP represented the Canadian Tire franchisee that sold the CCM bike and signed the Mary Carter agreement.“Mr. Brown and I mutually decided that there were sufficient advantages over disadvantages to come to some agreement that created a level of comfort for both our clients,” said Trebuss. In multi-defendant cases, he noted, “There are very, very few cases that go through the trial once there is a Mary Carter agreement in place because the pressures where all guns are suddenly leveled against the non-signing party become big,” said Trebuss. “Strategically it’s a difficult spot to be in, being the non-settling party, so at some point in time my experience is that the case does get resolved” before a trial.   

Brown said he anticipates judgment in the case will be taken out before Ontario Superior Court Justice Nancy Spies in April, after an economist pegs the present value of the cost of Resch’s future surgeries, medical care and rehabilitation.

The award also includes punitive damages against Canadian Tire Corporation Ltd. and Procycle Group Inc., the franchisor-retailer and manufacturer/distributor, of the subject bicycle.
Days before Resch’s 16th birthday in 1998, he was thrown head first from his new CCM “Heat” mountain bike that his stepfather purchased for him from a Canadian Tire outlet in Fort Erie, Ont.

The accident, which occurred on a city street, was apparently caused by a malfunctioning front wheel assembly. Resch’s face and frontal lobe of his brain were seriously injured. Three days before the accident Resch had returned the bike to the Canadian Tire store because his stepfather saw a recall notice in a local newspaper. A Canadian Tire employee adjusted the bike, but did not repair it. Resch was allowed to take the bike home.

The jury assessed responsibility for the accident 35 per cent to franchisor head office Canadian Tire Corporation Ltd.; 55 per cent to the CCM bike’s Quebec manufacturer Procycle Group Inc.; and 10 per cent to the Fort Erie Canadian Tire dealership operated by Mills-Roy Enterprises Ltd. which signed the Mary Carter settlement agreement.  

Jurors found Procyle negligent for using unproven forks from an unvalidated supplier and for issuing a recall notice that was vague and lacked urgency. Punitive damages were awarded against Procycle for inadequately validating the safety of new component designs in their product.

The jury explained it was awarding punitive damages against Canadian Tire Corp Ltd. for failing to implement its professed “safety above all policy,” particularly in failing to communicate to its franchisee the urgency of the safety issue.

Also, the jury was asked two questions about Resch’s role in the incident: (1) Did he contribute to the accident? and (2), under the heading of damages, Did he contribute to his own injuries by failing to take reasonable precautions for his own safety in failing to wear a helmet or riding his bike too fast? Jurors answered “no” to both questions.

Brown and Merkur told The Lawyers Weekly so far as they know, the case marks the first time that a trial judge and jury have applied last September’s Ontario Court of Appeal comments on contributory negligence in Snushall v. Fulsang. Relying on Snushall in her jury instructions, the trial judge “separated causation vis a vis the accident, versus causation vis a vis the damages,” instead of the traditional one-step, global comparative negligence assessment of all the parties, Merkur explained.
Under the new two-step exercise, a jury could theoretically find a defendant 100 per cent liable for causing the accident, but also find that the plaintiff could have avoided all injury if a seat belt, or helmet, had been worn. But “you shouldn’t get zero just because you weren’t wearing a seat belt if a drunk driver runs a red light at 100 miles an hour and hits you,” Merkur argued.

Brown said “the upshot was a set of jury questions that are different from the normal jury questions. [The defendants] got two kicks at Nathan’s [alleged] contributory negligence — the first kick in respect of the accident, the second kick in respect of a helmet. We weren’t particularly happy with it,” he acknowledged.

In Snushall, a jury case which involved a car accident victim who wore a lap belt but not a shoulder belt, the appeal court instructed trial judges thus on contributory negligence: “Rather than referring to the failure to wear a seatbelt as “causing or contributing” to the injuries, it would be better to instruct the jury that the defendant’s negligence, if such negligence is found, is the sole cause of all the injuries, but that the law allows some reduction of the plaintiff’s damages if the plaintiff has failed to take reasonable precautions to protect himself or herself from the consequences of the defendant’s negligence. The jury’s task is to decide on the amount of the reduction...”

On March 9, the Supreme Court of Canada denied leave to appeal to the defendant in Snushall, thus leaving the landmark decision intact.