COURT FILE NO.: 214/07

DATE: 20071016

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N:

STEPHANOS TSIOLAKIS and HELENE TSIOLAKIS Respondents/Plaintiffs

• and -

SUNIL SETHI Appellant/Defendant

Counsel: Theresa Hartley, for the Respondent/Plaintiffs Derek V. Abreu, for the Appellant/Defendant

Heard: October 5, 2007

Before: Ellen Macdonald J.

REASONS FOR DECISION

[1] In this motion, the Defendant seeks leave to appeal to the Divisional Court from the order of Justice Low dated May 2, 2007. The history of this matter is as follows. The Registrar dismissed the action as abandoned on August 2, 2002. On February 28, 2006, Justice Lissaman set aside the Registrar’s dismissal. He also extended the time for the service of the statement of claim. The Defendant moved to set aside Justice Lissaman’s order, but Justice Low dismissed that motion. It is from that order that the Defendant now seeks to appeal.

[2] The Defendant submits that the key issue before Justice Low was whether the Plaintiffs should have been granted an extension of time to serve their statement of claim despite failure to provide any notice to the Defendant of the action until more than six years after the accident.

[3] Justice Low’s reasons are contained in the motion record. They are detailed and comprehensive. The Defendant submits that Justice Low erred in fact and law in her determination of whether there was irremediable prejudice to the Defendant as a result of the Plaintiffs’ delay. In paragraph 3 of its factum the Defendant points to alleged errors that would justify the granting of leave. I reproduce them:

(i) she was incorrect in finding that there was no irremediable prejudice to the defendant since she failed to consider and apply section 258.3 of the Insurance Act, the operation of which section distinguishes the within matter as unique from all other authorities;

(ii) in considering whether there was irremediable prejudice to the defendant, Justice Low incorrectly shifted the onus of proof from the plaintiff to the defendant, and further found a positive duty on the defendant to take litigation steps prior to there being any notice that an action was issued, pending or even contemplated; and

(iii) in finding that there was no irremediable prejudice to the defendant, Justice Low incorrectly relied on and applied the reasoning in Kaloe v. Cook, despite the fact that the judge in Kaloe made specific findings of fact with respect to the nature and extent of the plaintiff’s injuries as the evidentiary basis for the decision, whereas Justice Low made no similar findings of fact in the within motion below.[^1]

Factual Background

[4] This claim arises out of a motor vehicle accident that occurred on January 19, 2000, more than seven and a half years ago. Both Plaintiffs allege that they suffered injuries, for which they seek substantial damages. The statement of claim was issued on January 18, 2002, the last day before expiry of the limitation period but it was not served on the Defendant until March 2006, more than four years later. Until service of the statement of claim, neither the Defendant nor his insurer had any prior notice that the Plaintiffs’ action was issued. The Defendant submitted that by not serving the statement of claim until March 2006, the Plaintiffs were not in accordance with Rule 14.08(1), of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. It requires that the pleading be served within six months of being issued. More importantly, the Defendant stresses that by failing to provide any notice of the action until service of the statement of claim in March 2006, the Plaintiffs breached the 120-day statutory notice requirement set out in s. 258.3 of the Insurance Act, R.S.O. 1990, c. I.8. Because no steps were taken, the Registrar dismissed the action for delay on August 1, 2002.

[5] The Plaintiffs, on an ex-parte basis, brought the motion before Justice Lissaman on February 28, 2006. This was approximately three and a half years after the Registrar dismissed the action as abandoned. The motion before Justice Lissaman requested that the dismissal order of the Registrar be set aside and that there be extension of time for service of the statement of claim. Justice Lissaman granted the Plaintiffs’ motion, without reasons.

[6] Both Plaintiffs allege that they have suffered serious and permanent personal injuries as a result of the motor vehicle accident. The Plaintiff Helene Tsiolakis complains of low back pain. The Plaintiff Stephanos Tsiolakis complains of back pain, concentrated over the back, without radiation into the lower limbs. Dr. Fred Langer, retained by the Defendant, prepared an expert’s report in June 2006. The Plaintiffs’ allegations are that their respective complaints of ongoing back pain are the result of the motor vehicle accident, but each of them has been involved in incidents subsequent to the accident that have directly involved back pain, thereby creating an issue of causation in this action.

[7] The Plaintiff Helene Tsiolakis was off work for six months after the motor vehicle accident. She returned to work for about two months and then had a workplace accident on October 19, 2000. As a result of this accident, she submitted a WSIB claim and has been off work ever since. Her husband, the Plaintiff Stephanos Tsiolakis, was off work after the motor vehicle accident until August 2000, at which time he returned to work for about six or seven weeks. He was then involved in an accident that caused a sharp exacerbation of his low back pain while getting out of his car. He stopped work and, according to the report of Dr. Langer, had not returned to work at least up to the time that he was seen by Dr. Langer.

[8] The Defendant submits that irremediable prejudice arises because of the Plaintiffs’ failure to provide the 120-day statutory required under s. 258.3 of the Insurance Act. The irremediable prejudice is alleged to be the inability of the Defendant to obtain timely medical examinations that could have determined the nature and extent of the Plaintiffs’ alleged injuries prior to their involvement in the respective subsequent incidents described above. The Defendant also submits that the Plaintiffs’ delay in pursuing this matter has prevented the Defendant from obtaining timely surveillance.

[9] The Plaintiffs are advancing pecuniary claims for loss of income and loss of earning capacity, but they have not produced any supporting records or documentation in this regard, nor have they led any evidence confirming that such records or documentation are available. Justice Low commented in her reasons on this point as follows:

[20] The plaintiffs have not adduced in evidence their tax returns or employment records. There is no evidence that they cannot be obtained.

[21] Finally, with respect to the availability of decoded OHIP summaries being limited to 7 years back from the date of request, I would observe that the summaries are business records of claims for payment for specific services by health care providers. They are not medical records. The primary evidence of treatment is the medical records. The defendant has already identified possible pre-existing conditions and possible post-accident injuries and is entitled to follow the treatment path of those conditions and injuries on discovery. Accordingly, I am of the view that the absence of a decoded OHIP summary is not a significant impediment to the investigation and defence of the action.

[22] The plaintiffs have disclosed numerous medical records and reports, including material that is helpful to the defence. They are available for discovery and for medical examination. Should the defence choose to conduct observations, the plaintiffs may be observed. The monetary consequences of delay may be addressed by an adjustment to the prejudgment interest, should the plaintiffs be successful, and in costs.

[10] Following the release of Justice Low’s reasons dated May 2, 2007, the Defendant delivered a notice of motion for leave to appeal dated May 7, 2007.

Legal Issues

[11] The Defendant submits that Justice Low was incorrect in finding that there was no irremediable prejudice to the Defendant. Her reasons do not explicitly refer to s. 258.3 of the Insurance Act, although the reasons do address the issue of prejudice. The motion record before Justice Low contained reference to s. 258.3 of the Insurance Act.

[12] The Defendant also submits that in considering whether or not there was irremediable prejudice to the Defendant, Justice Low incorrectly shifted the onus of proof from the Plaintiffs to the Defendant and found a positive duty on the Defendant to take litigation steps prior to there being any notice that an action was issued, pending or contemplated.

[13] The Defendant says that in finding that there was no irremediable prejudice to the Defendant, Justice Low incorrectly relied on and applied the reasoning in Kaloe v. Cook.

[14] Mr. Abreu and Ms. Hartley, counsel for the Defendant and Plaintiffs, respectively, agree that the statement contained paragraph 24 of the Defendant’s factum with respect to the results in Chiarelli v. Wiens, [2000] O.J. No. 296 (C.A.) (“Chiarelli”), is correct. It is as follows:

a) The Court should not extend the time for service if to do so would prejudice the defendant;

b) The plaintiff bears the onus of demonstrating that the defendant would not be prejudiced by the extension;

c) The defendant has an evidentiary obligation to provide some details of prejudice to it which would flow from an extension of time for service;

d) The defendant cannot create prejudice by its failure to do something that it reasonably could have or ought to have done; and

e) Prejudice that will defeat an extension of time for service must be caused by the delay.

[15] In summary, the Defendant submits that Justice Low erred in her consideration of prejudice to the Defendant and that her analysis on the motion did not accord with the above noted principles. One criticism of the reasons of Justice Low is that there was no mention of s. 258.3 of the Insurance Act in her reasons. The Defendant submits that Justice Low failed to consider and apply s. 258.3.

[16] According to s. 258.3 of the Insurance Act, a Plaintiff shall not commence an action for damages arising out of a motor vehicle accident unless notice is provided to the Defendant within 120 days of the accident:

258.3 (1) An action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile shall not be commenced unless,

(b)The plaintiff served written notice of the intention to commence the action on the defendant within 120 days after the accident or within such longer period as a court in which the action may be commenced may authorize, on motion made before or after the expiry of the 120-day period…

[Emphasis added]

[17] Once the requisite notice is provided by the Plaintiffs as contemplated in s. 258.3, the Plaintiffs are required to submit to a medical examination, at the Defendant’s expense, within 90 days thereafter. This is pursuant to s. 258.3 (1) (d):

258.3 (1) An action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile shall not be commenced unless,

(d) The plaintiff has, at the defendant’s expense, undergone examinations by one or more persons selected by the defendant who are members of the Colleges as defined in the Regulated Health Professions Act, 1991, if the defendant requests the examinations within 90 days after receiving the notice under clause (b)…

[Emphasis added]

[18] It is on this basis that the Defendant submits that the Plaintiffs were required to provide notice to the Defendant that an action was pending and that such notice should have been given within 120 days of the date of accident: that is, by May 18, 2000.

[19] What follows from this, the Defendant argues, is that if the Plaintiffs had provided the statutory notice by May 18, 2000 as required, s. 258.3 (1) (d) would have entitled the Defendant to medical examinations of the Plaintiffs within 90 days thereafter: that is, by August 16, 2000. The Defendant is therefore said to be deprived of the opportunity to obtain early medical examinations that would have provided “snapshot” assessments of the Plaintiffs’ health status and/or the extent and nature of their alleged injuries by no later than August 16, 2000. This loss of opportunity to have medical assessments as contemplated in the Insurance Act allegedly to caused irremediable prejudice to the Defendant. This prejudice is compounded by the fact that, in the circumstances of this case, the Plaintiffs allege ongoing back pain as a result of the subject motor vehicle accident. Yet, each of them has been involved in subsequent incidents that have directly involved back pain. The Defendant says that because of the lost opportunity to have medical examinations by August 16, 2000, it will no longer be able to determine whether the Plaintiffs’ alleged ongoing injuries are truly the result of the motor vehicle accident or the extent to which they were caused and compounded by the subsequent incidents.

[20] On the question of importance of the issues raised in this motion, the Defendant submits that the motion is important not only to the within litigants but is important more generally to the development of the jurisprudence in this area and to the insurance industry. It is on this basis that the Defendant says that the criteria contained in Rule 62.02(4) of the Rules of Civil Procedure have been met. Rule 62.02(4) is:

(4) Leave to appeal shall not be granted unless,

(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or

(b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

[21] I agree with the statement that is contained in paragraph 44 of the Defendant’s factum. It was not open to Justice Low to speculate as to the existence or non-existence of third party records, which she did in paragraphs 20-22 of her decision (quoted above). The motion should have been decided based on the evidence that was properly before her. The Plaintiffs’ failure to confirm that any of the income records or documentation were available should have resulted in a finding of prejudice based on the Plaintiffs’ failure to discharge their onus. This is especially so considering that, at the time of the hearing of the motion before Justice Low, over 7 years had elapsed since the accident.

[22] Rule 62.02(4)(b) does not require a standard of correctness. It is the lower standard of “good reason to doubt the correctness of the order in question.” I agree with the Defendant’s submission that the ramifications to him and his insurers of the extension of times and the possible disregard for the application of s. 258.3 of the Insurance Act constitutes an issue which is of public importance and warrants the granting of leave to appeal. Defendants and their insurers are entitled to expect that Plaintiffs will comply with statutory obligations imposed upon them. It may be that the delays in this action constitute a significant impediment to the investigation and defence of the action. It must be remembered that while the Plaintiffs produced medical records in connection with their application and receipt of Statutory Benefits, it remains that the Plaintiffs must establish in the tort action that the injuries sustained from the motor vehicle accident caused serious and permanent impairment. The jurisprudence in connection with the latter issue demonstrates that the onus on the Plaintiffs is a very high one. It is the Plaintiffs’ onus to prove that there is no prejudice to the Defendant.

[23] Returning to the issue of public importance, the Defendant submits that if Justice Low’s decision stands, it will create new requirements and responsibilities for Defendants. Their insurers will be required to investigate all motor vehicle accidents immediately to prepare for possible extensions of time for service. This is a matter of sufficient importance that it should be heard before a full panel of the Divisional Court.

[24] For all of the above reasons, the Defendant’s request for an order that leave be granted to appeal the order of the Honourable Madam Justice Low is allowed. I decline to make an order as to costs.

Ellen Macdonald J.

Released: October 16, 2007

[^1]: The citation for Kaloe v. Cook is [2006] O.J. No. 3798 (Sup. Ct.).