Toneguzzo et al. v. Corner et al.; Lloyd's Underwriters, Third Party [Indexed as: Toneguzzo v. Corner]

94 O.R. (3d) 795

Ontario Superior Court of Justice,

Divisional Court,

Valin, J. Wilson and Ray JJ.

April 17, 2009

Limitations -- Discoverability -- Plaintiff suffering catastrophic injuries in motor vehicle accident and commencing action within limitation period against person named as owner of other vehicle in police report -- Defendant admitting that he was owner -- Ownership of vehicle not in issue when plaintiff received letter within limitation period from defendant's insurer identifying leasing company as lessor of vehicle -- Plaintiff obtaining motor vehicle ownership search after expiry of limitation period which revealed that lessor was owner of vehicle at time of accident -- Discoverability principle applying -- Actual ownership of vehicle not discovered until plaintiff obtained search results -- Insurer's appeal from order adding lessor as defendant dismissed.

The plaintiff was catastrophically injured in a motor vehicle accident in May 2001. The police report indicated that the defendant W was the owner of the other vehicle. The plaintiff commenced an action against W within the applicable two-year limitation period. The insurer of both W and the defendant L took an off-coverage position due to an alleged misrepresentation by W as to the use of the vehicle, had itself added as a statutory third party and delivered a statement of defence in which it pleaded "no knowledge" of the allegation that W was the owner. Within the limitation period, the insurer provided the plaintiff with a copy of a certificate of automobile insurance identifying L as lessor of the vehicle. After the expiry of the limitation period, the plaintiff obtained for the first time a motor vehicle ownership search which revealed that L was the owner of the vehicle at the time of the accident. The plaintiff's motion to add L as a defendant was granted on the basis that, notwithstanding the expiry of the limitation period, there were special circumstances that justified making the order sought. The insurer appealed.

Held, the appeal should be dismissed.

The discoverability principle applied. Based on the police report and W's admission that he was the owner, the ownership of the vehicle ceased to be an issue for the plaintiff well within the limitation period. As a result, receipt of the copy of the certificate of insurance did not trigger an obligation to conduct further [page796] inquiries concerning ownership. The actual ownership of the vehicle was not discovered until the plaintiff received the search results. If that conclusion was incorrect, then the motion judge did not err in finding that this was one of the rare cases in which, notwithstanding the provisions of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, special circumstances existed that warranted adding L as a defendant.

APPEAL from the order adding the defendant after the expiry of the limitation period.

Cases referred to Ioannou v. Evans, [2008] O.J. No. 21, 50 C.P.C. (6th) 358, 2008 117, 162 A.C.W.S. (3d) 914 (S.C.J.); Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 549, [1997] S.C.J. No. 31, 151 D.L.R. (4th) 429, 217 N.R. 371, J.E. 97-1825, 103 O.A.C. 161, 46 C.C.L.I. (2d) 147, 12 C.P.C. (4th) 255, 30 M.V.R. (3d) 41, 74 A.C.W.S. (3d) 117; Robertson v. O'Rourke, [1997] O.J. No. 3724, 40 O.T.C. 29, 14 C.P.C. (4th) 182, 31 M.V.R. (3d) 102, 73 A.C.W.S. (3d) 748 (Gen. Div.) Statutes referred to Highway Traffic Act, R.S.O. 1990, c. H.8, s. 206(1) Insurance Act, R.S.O. 1990, c. I.8, s. 258(14) Limitations Act, 2002, S.O. 2002, c. 24, Sch. B

M. Lamers, for plaintiffs/respondents. G. Mew, for third party/appellant.

[1] BY THE COURT: -- This is an appeal brought by Lloyd's Underwriter's ("Lloyd's") from the decision of Templeton J. adding LAKES Leasing Corporation ("LAKES") as a defendant in this action.

[2] We dismiss the appeal and confirm the result of the decision of the motion judge. We are of the view that the principle of discoverability was determinative of the issue before the motion judge and that it was not necessary for her to consider special circumstances. Background

[3] Gordon Toneguzzo (the "plaintiff") suffered catastrophic injuries in a motor vehicle accident that occurred on May 29, 2001 when his vehicle was struck by a Peterbilt truck (the "defendant's vehicle"). The police report indicated that the defendants Corner and Way were the operator and registered owner, respectively, of the defendant's vehicle.

[4] On October 15, 2001, counsel for the plaintiff issued a statement of claim alleging that Corner and Way were the operator and owner of the defendant's vehicle. On July 9, 2002, the defendants Corner and Way delivered a statement of defence [page797] in which they admitted that Way was the owner of the defendant's vehicle.

[5] Lloyd's was the insurer of Corner, Way and LAKES. As Way's putative insurer, Lloyd's decided to take an off-coverage position due to an alleged misrepresentation by Way as to the use of the defendant's vehicle. On January 13, 2003, Lloyd's obtained an order adding itself as a statutory third party pursuant to s. 258(14) of the Insurance Act, R.S.O. 1990, c. I.8.

[6] On January 22, 2003, within the two-year limitation period, Lloyd's delivered a statement of defence and pleaded "no knowledge" of the allegation that Way was the owner of the defendant's vehicle.

[7] On August 25, 2003, at the request of counsel for the plaintiff, Lloyd's provided a copy of a certificate of automobile insurance listing three vehicles (including the defendant's motor vehicle), and identifying LAKES Leasing Corporation ("LAKES") as lessor. Portions of that document were barely legible; other portions were missing. The defendant Way's name does not appear on the document as an insured or as a lessor.

[8] During his examination for discovery conducted on January 21, 2004, the defendant Way admitted that he was the owner of the defendant's vehicle.

[9] On December 8, 2005, a new solicitor retained by the defendants Corner and Way informed counsel for the plaintiff that Way's ownership of the defendant's vehicle may be in issue.

[10] On December 15, 2005, counsel for the plaintiff obtained for the first time a motor vehicle ownership search in connection with the defendant's vehicle; it revealed that LAKES was the owner at the time of the accident.

[11] On July 10, 2007, the plaintiff brought a motion seeking leave to amend the statement of claim by adding LAKES as a defendant. Templeton J. heard the motion on December 19, 2007. On April 3, 2008, she determined that, notwithstanding the expiry of the applicable limitation period, there were special circumstances that justified adding LAKES as a defendant to the action.

[12] LAKES took no position on the motion seeking to add it as a defendant and did not participate in this appeal. Discoverability

[13] At the time of the accident (May 29, 2001), s. 206(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8 provided that the applicable limitation period for an action for recovery of damages occasioned by a motor vehicle was two years from the time the damages were sustained. [page798]

[14] Section 206(1) is subject to the principle of discoverability, which provides that a cause of action arises, for the purposes of a limitation period, when the material facts on which it is based have been discovered or ought reasonably to have been discovered by the plaintiff by the exercise of reasonable diligence. [See Note 1 below]

[15] Counsel for Lloyd's argued that the plaintiff has failed to show due diligence in this case. He submitted that the plaintiff ought to have known of the underlying facts giving rise to a cause of action against LAKES, by no later than the date upon which the letter of August 25, 2003, enclosing a copy of the certificate which expressly listed LAKES as lessor, was received. He further argued that there was no excuse for the plaintiff's failure to conduct a vehicle ownership search before the action was commenced on October 15, 2001.

[16] We do not agree. The police report named Way as owner of the defendant's vehicle. It also correctly identified Lloyd's as the insurer of the defendant's vehicle and the correct policy number. As of July 9, 2003, Way admitted in his statement of defence that he was the owner of the defendant's vehicle. In those circumstances, ownership of the defendant's vehicle ceased to be an issue for the plaintiff well within the two-year limitation period.

[17] The plaintiff suffered catastrophic injuries in the accident. We accept that, when his counsel requested and received a copy of the certificate of insurance in late August 2003, his interest was in the policy limits. In our view, receipt of that document did not trigger an obligation to conduct further inquiries concerning ownership. At that time, ownership of the defendant's vehicle was not in issue.

[18] The motor vehicle ownership search counsel for the plaintiff obtained on December 15, 2005 revealed that the defendant Way had transferred ownership of the defendant's vehicle to LAKES on February 2, 2000.

[19] We find that, at all material times, Lloyd's was the motor vehicle accident insurer for the defendants Corner and Way and the primary insurer of the proposed defendant LAKES. Lloyd's knew or ought to have known that the admission by the defendant Way, both in his statement of defence and on his examination for discovery as to his being the owner of the defendant's vehicle, was not correct. [page799]

[20] In these circumstances, we find that the actual status of ownership of the defendant's vehicle as of the date of the accident was not discovered by the plaintiff until December 15, 2005. We do not agree that it would be reasonable to conclude that fact ought to have been discovered by the plaintiff by the exercise of due diligence prior to December 15, 2005.

[21] Counsel for Lloyd's conceded that, if the motion judge had concluded that the claim against LAKES was not discovered until that date, there would be no basis, on limitation grounds, to oppose the proposed amendment adding LAKES as a defendant. Special Circumstances

[22] In the event our conclusion concerning the issue of discoverability is incorrect, then we are not persuaded that the motion judge made any overriding or palpable error in reaching the conclusion in her very thorough reasons that this is a rare case in which, notwithstanding the provisions of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, special circumstances exist that warrant the order she made adding LAKES as a defendant.

[23] Jurisprudence on the existence of special circumstances has made it abundantly clear that circumstances justifying an amendment after a limitation period has expired will be rare and the court should exercise its discretion to allow the amendment very sparingly. [See Note 2 below]

[24] In Robertson v. O'Rourke, [See Note 3 below] Molloy J. made the following observation of what constitutes special circumstances:

There can be no catalogue of what constitutes "special circumstances". As stated by the Court of Appeal in Deaville (at 729)"this is a discretionary matter where the facts of the individual case are the most important consideration in the exercise of that discretion". The cumulative effect of the various factors relevant to a particular case should be taken into account. Even where a single factor when taken alone would not constitute "special circumstances", it may, in combination with other such factors, be sufficient to warrant an exercise of discretion in favour of the plaintiff: Swain Estate v. Lake of the Woods District Hospital (1992), 1992 7601 (ON CA), 9 O.R. (3d) 74 at 85, 93 D.L.R. (4th) 440 at 451 (C.A.).

[25] In her reasons, the motion judge made a thorough analysis of the facts that she found constituted special circumstances. [page800] Without repeating all of her findings, they may be summarized as follows: (i) all preliminary evidence led to the erroneous, but not unreasonable, conclusion that Way was the owner of the defendant's vehicle; (ii) from the outset, Lloyd's was aware of the accident, and its gravity; (iii) the actual owner of the defendant's vehicle also knew about the accident from the beginning; and (iv) there was a reasonable explanation for the error. We conclude that those facts overwhelmingly constitute special circumstances.

[26] No prejudice will be suffered by Lloyd's or LAKES in the event LAKES is added as a defendant in this action. Lloyd's has fully participated in the defence of the action, has been provided with all productions and has attended all relevant examinations for discovery. We find that LAKES has known either directly or through the defendant Way, or through their insurer Lloyd's, of the fact of the accident on May 29, 2001 and of the claims advanced by the plaintiff since shortly after the accident. Result

[27] The appeal is therefore dismissed.

[28] The plaintiff/respondent is entitled to his costs of the appeal, which are hereby fixed in the amount of $6,500, inclusive of GST and disbursements.

Appeal dismissed.

Notes

Note 1: Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 548, [1997] S.C.J. No. 31, at paras. 36-39.

Note 2: Ioannou v. Evans, [2008] O.J. No. 21, 2008 117 (S.C.J.), at para. 50.

Note 3: [1997] O.J. No. 3724, 40 O.T.C. 29 (Gen. Div.), at para. 13.