DIVISIONAL COURT FILE NO.: 610/04
SCJ File No. 01-CV-218154CM3
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
RICHARD PARLETTE, KAYLA PARLETTE, a minor by her Litigation Guardian, Richard Parlette and REBECCA PARLETTE, a minor by her Litigation Guardian, Richard Parlette
Plaintiffs
- and -
SOKKIA INC., BLUE BIRD MOVING AND STORAGE, THOMAS LIFT TRUCK SERVICES LTD., FRANK MAYO, TEREX CORPORATION
Defendants
J.S. Maidment, for the Applicant/Terex Corporation/Defendant
R.K. Datt, for the Respondents/Plaintiffs
HEARD at Toronto: January 24, 2005
i. Nature of the Proceedings
1The Defendant/Terex Corporation (Terex) seeks leave to appeal to the Divisional Court under s. 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C. 43 and rule 62.02(4)(b) from the order of Kozak J., dated November 10, 2004, wherein he dismissed Terex’s appeal under s. 19(1)(c) of the Courts of Justice Act from the order of Master Kelly, dated May 26, 2004, which order granted to the Plaintiffs leave to amend their Statement of Claim by adding Terex as a defendant.
II. Background and Chronology
2In his reasons of May 26, 2004, Master Kelly said:
[2] On November 29, 1995, Richard Parlette was seriously injured when during the course of attempting to release a jammed fork on a forklift, the lower bar of the travel guide dropped on his leg. The claim against the Defendant Clark Material Handling Company (“Clark No. 1”) is a product liability claim (defective design and manufacture) advanced on the basis that Clark No. 1 was the manufacturer and supplier of the forklift. Clark No. 1 is a Delaware, USA corporation. The forklift is described as Clarklift Model C300-40LP. The forklift was manufactured circa 1980.
[3] The Statement of Claim was issued on October 1, 2001. It is common ground that with respect to the claim against Terex the applicable limitation period is six years (i.e. expiry November 29, 2001 unless extended by the discoverability principle).
[4] The Statement of Defence and Crossclaim of Defendants Sokkia and Mayo was served on January 14, 2002. The crossclaim was advanced against all co-defendants, including Clark No. 1.
[5] On February 19, 2002, the Statement of Claim was served upon Clark No. 1 at an address in Lexington, Kentucky (not the same Lexington address as is shown on the Statement of Claim).
[6] By letter, dated March 5, 2002, Toronto counsel, Mr. Garri Hendell of Borden Ladner wrote to Plaintiffs’ counsel, Paul Miller, to advise that their client Clark No. 1 was a Delaware company which did not exist in 1995 (being incorporated in November 1996), and that the forklift in question was likely manufactured by a Kentucky company of identical name (“Clark No. 2”), that had since changed its name to Terex Material Handling (?) and was a subsidiary of Terex Corporation. The letter advised as well that Clark No. 1 was currently under Chapter 11 protection in the United States. Mr. Miller in his affidavit swears that Mr. Hendell advised him (I presume by telephone) that Terex Corporation purchased Clark No. 2, and its potential liabilities, in 1992.
[7] The affidavit of Norman C. Hargreaves, [Director of Product Safety of Terex Corporation] sworn August 20, 2003, affords some assistance in understanding the mix-up. Hargreaves believes that the forklift was manufactured by Clark Equipment Company, in or about March 1980. Between July 1992 and November 1996, CMH Acquisition Corp, a Terex subsidiary, owned the shares of Clark Material Handling Company (name changed at some time after acquisition to “Terex Material Handling Corp.”), a Kentucky corporation that manufactured forklifts (“Clark No. 2”). The said affidavit did not explicitly disclose whether or not Clark Equipment Company became Clark Material Handling Company at some time before its acquisition by CMH Acquisition Corp. In any event, Terex Material Handling Corp. sold its business to Clark Material Handling Company, a Delaware corporation, in November 1996, and was dissolved in 1998.
[The reasons have two paragraph 7’s]
[7] On July 9, 2002, the Plaintiffs discontinued the action as against Clark No. 1, and on July 10, 2002 Plaintiffs’ counsel wrote to Terex to advise of the Plaintiffs’ intention to bring this motion. July 10, 2002 is, by agreement of counsel, the effective date for limitation considerations. The delay in getting the motion on is explained and was not made an issue on the motion. I am therefore treating the motion as if decided on July 10, 2002.
[8] The Plaintiffs contend that the limitation period did not commence to run until March 5, 2002, when Plaintiffs’ counsel received Mr. Hendell’s letter, sent that day by fax. Plaintiffs’ counsel asserts the discoverability principle, and argues that the discoverability issue is not capable of resolution on motion but requires exploration at a trial. Further Plaintiffs’ counsel submits that, in any event, Terex will suffer no irreparable damage by virtue of being added, as any prejudice that could be identified would have already been in existence if it had been named in the Statement of Claim from the outset.
[12] …I am satisfied that there were, at least prima facie, quite understandable reasons for the confusion which caused the naming of Clark No. 1 rather than Clark No. 2. Clark No. 2 bought the business of Clark No. 1, and used the same name. Both companies manufactured forklifts. Both companies had presence in Kentucky. I find that the Plaintiffs have raised a triable issue with respect to discoverability, and that that issue should be decided at a trial. ………
[13] I find that Terex, if added, will suffer significant prejudice. However, that prejudice, identified in the Respondent’s materials and factum, softened somewhat by the available evidence disclosed in the Plaintiffs’ Supplementary Motion Record, would have existed even had Terex been named in the Statement of Claim from the outset. In other words, the prejudice does not result from the fact of being added after the putative limitation date, but from the passage of time from 1980 to November 2001.
[15] In view of my finding with respect to the discoverability issue, I need not consider the issue of “special circumstances”. That issue is left to be determined by the trial judge together with the prejudice issues, in the event that the judge decides that the limitation period was not extended to July 10, 2002.
[17] THEREFORE ORDER TO GO as follows:
(a) The Plaintiff shall have leave to amend the Statement of Claim, nunc pro tunc to July 10, 2002, to add Terex Corporation as a party defendant, and to issue and serve an Amended Statement of Claim in the form contained in draft at Tab 3 of the Motion Record, on or before July 15, 2004
(b) This Order is made without prejudice to the right of Terex to plead any defence available to it, including a limitation defence
(The footnotes have been omitted)
3Kozak J. heard submissions on October 26, 2004 and reserved judgment. On November 10, 2004, in dismissing the appeal of Terex, Kozak J. released nine (9) pages of written reasons. He said, in part:
[21] Issues related to the applications of the discoverability rule may be determined on a motion provided that none of the material facts are in dispute. In Home Savings and Loan v. Linton (1999), 38 C.P.C. (4th) 278, Justice Finlayson wrote at paragraph 6:
The appellant appears to take the view that if there are different dates that can trigger the commencement of a limitation period, the motions judge must defer the determination of which date is applicable to the trial judge. The appellant relies upon Aguonie v. Galion Solid Waste Material Inc. (1998), 38 O.R. (3d) 161 (Ont. C.A.). However, Aguonie does not stand for such a proposition. It is only where there are material facts in dispute as to the commencement of the limitation period that the matter must be remitted to the trial judge. Where as here, none of the material facts are in dispute, the requirements of Rule 20 have been satisfied and the motions judge can make whatever findings are necessary on the limitations issue: See: Soper v. Southcott (1998), 39 O.R. (3d) 737 (Ont. C.A.)
[24] It is clear from the reasons of Master Kelly that he was following the format as set out in Wong [supra] (2004), 70 O.R. (3d) 460 per Master Dash].
[25] Unlike the situation in Wong where the plaintiff actually had the name of the tortfeasor within a month of the accident, the evidentiary record before Master Kelly was that the plaintiffs did not have actual knowledge of Terex Corporation as being a tortfeasor at the time of the commencement of the action or within the six-year limitation period. Master Kelly was satisfied on the basis of the evidentiary record that not only did the plaintiffs not know of the involvement of Terex Corporation in the herein claim because of intricate and puzzling corporate dealings (see paragraph 12 of his reasons as well as the affidavit of Norman Hargreaves), but that one might reasonably wonder whether, even with admirable diligence, plaintiffs’ counsel could have discovered Terex Corporation’s involvement within the first eight months following the accident.
[26] The evidentiary record as filed contains:
(a) Material facts in dispute.
(b) Issues of credibility.
(c) Contradictory evidence.
Upon review of the evidentiary record, it was the finding of Master Kelly that the plaintiffs raised a triable issue with respect to discoverability and that this issue should be decided at trial. Accordingly, the plaintiffs were granted leave to amend the statement of claim nunc pro tunc to July 10, 2002 to add Terex Corporation as a party defendant without prejudice to the right of Terex Corporation to plead the limitations defence. In view of his findings with respect to the discoverability issue, Master Kelly left to the trial judge the issue of special circumstances should the trial judge determine that the limitations period was not extended to July 10, 2002.
[27] I can find no error on the part of Master Kelly in the granting of the amendment and in deferring the discoverability issue to the trial judge. Accordingly, the herein appeal is ordered to be dismissed.
III. Applicable Case Law
4In Banque Nationale de Paris (Canada) v. Canadian Imperial Bank of Commerce, [2000] O.J. No. 134, Nordheimer J. said:
[25] … The Supreme Court of Canada has made it clear that the principle of discoverability is to govern the application of all limitation periods – see Peixeiro v. Haberman, [1997] 3 S.C.R. 549. Determining the application of the discoverability principle in any given case necessarily requires a determination of facts – an exercise that is generally discouraged on interlocutory motions – see Aguonie et al. v. Galion Solid Waste Management Inc. et al. (1998), 156 D.L.R. (4th) 222 (Ont. C.A.). Therefore, it is not appropriate for me to attempt to make that determination on this motion. Rather, the issue must be left for determination by the trial judge when the necessary facts can be found. Consequently, in such cases, the proper procedure would be to allow the amendments to the statement of claim after which the defendants can in turn amend their statement of defence to plead the application of the limitation period and the matter can then be left for trial.
[26] On this last point, I am aware that there is reference in the authorities to the fact that one of the problems with allowing any amendment after the expiration of the limitation period deprives the defendant of the right to plead the limitation period. This proposition appears to be drawn from the statement of Lord Esher, M.R. in Weldon v. Neal (1887), 56 L.J.Q.B. 621 in which he said:
“The effect of allowing these amendments would be to deprive the defendant of his right to plead the Statute of Limitations.”
In my view, that principle must be revisited in light of the advent of the discoverability principle. The discoverability principle clearly contemplates that there may be a factual issue regarding the proper starting point for the limitation period which can only be determined at trial. It follows logically from the recognition that such a factual dispute exists that both sides must be permitted to plead their respective position as to the facts. If the plaintiff is to be permitted to plead the cause of action then the defendant equally has to be permitted to plead that, as of the time when notice of the amendment to advance the claim was first made, the limitation period had already expired.
5In Zapfe v. Barnes (2003), 66 O.R. (3d) 397, 407-8, the Court of Appeal for Ontario said:
[37] Whether the appellant’s solicitor’s explanation as to why no inquiries could be made prior to discoveries to substantiate or disprove Barnes’ claims will survive scrutiny on cross-examination, or whether evidence exists that information was available to the appellant upon proper inquiry prior to her amendment motion to ground a cause of action against the respondents, cannot be determined at this stage. As observed by the Nova Scotia Court of Appeal in Burt v. LeLacheur (2000), 2000 NSCA 90, 189 D.L.R. (4th) 193, 49 C.P.C. (4th) 53 (N.S.C.A.), at p. 207 D.L.R., the precise amount of knowledge necessary to trigger the running of time under a limitation period must be determined upon application of the legislation creating the limitation period, using the discoverability principle, to the facts as found. In this case, the crucial fact-finding exercise has not yet occurred and the appellant’s asserted version of the facts concerning the discoverability of a cause of action against the municipalities was uncontradicted on the motion before the motions judge. Accordingly, the testing of the appellant’s assertion that the limitation period has not yet commenced to run must await either a summary judgment motion or a trial.
[38] In our view, therefore, given the evidentiary record before the motions judge, this is a case where the municipalities should have been added as parties in the main action, with leave to the respondents to plead the limitation period.
6In my view, the course charted by Master Kelly, whose decision was upheld by Kozak J., is in lock step with the decision of the Court of Appeal for Ontario in Zapfe v. Barnes (supra).
IV. Conclusions
7It will be observed that rule 62.02(4) states that leave to appeal shall not be granted unless the judge hearing the motion is persuaded that both branches of either subsection (4)(a) or subsection (4)(b) of rule 62.02 have been satisfied.
8Counsel for Terex confined his submissions to rule 62.02(4)(b).
9The issues before Master Kelly are fact driven. Master Kelly’s order is a discretionary order that should not be disturbed unless it is clearly wrong. (Marleen Investments Ltd. v. McBride (1979), 23 O.R. (2d) 125 (Ont. H.C.J.) per Southey J. Kozak J. did not conclude that the impugned order of Master Kelly was “clearly wrong”. I have no reason to doubt the decision of Kozak J.
10I have not been persuaded that I should have, nor do I have, any reason to doubt the correctness of the impugned order of Kozak J. That being so, there is no need for me to consider the second branch of rule 62.02(4)(b). If I were required to consider the second branch of rule 62.02(4)(b), I would hold that matters of general importance have not been shown: see: Rankin v. McLeod, Young, Weir Ltd. (1986), 57 O.R. (2d) 569 (H.C.J.) per Catzman J.
V. Result
11The application for leave to appeal is dismissed.
VI. Costs
12In a letter, dated and faxed to me on January 25, 2005, counsel agree “that the successful party on the motion shall have its costs fixed at $3,500.00 plus G.S.T”. Terex shall forthwith pay that amount to the Respondents/Plaintiffs.
O’Driscoll J.
Released: January 31, 2005
DIVISIONAL COURT FILE NO.: 610/04
SCJ File No. 01-CV-218154CM3
DATE: 20050131
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
RICHARD PARLETTE, KAYLA PARLETTE, a minor by her Litigation Guardian, Richard Parlette, and REBECCA PARLETTE, a minor by her Litigation Guardian, Richard Parlette
Plaintiffs
- and -
SOKKIA INC., BLUE BIRD MOVING AND STORAGE, THOMAS LIFT TRUCK SERVICES LTD., FRANK MAYO and CLARK MATERIAL HANDLING COMPANY TEREX CORPORATION
Defendants
REASONS FOR JUDGMENT
O’Driscoll J.
Released: January 31, 2005