ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
BRANT GLADSTONE, JACQUELINE KEATINGE and JEMMA GLADSTONE, by her Litigation Guardian, JACQUELINE KEATINGE and LAWRENCE GLADSTONE, GERALD GLADSTONE, LORRAINE GLADSTONE, STEVEN GLADSTONE, SEANA GLADSTONE WOHLFEIL, SHEILA MCCUSKER, ALYCIA UCCELLO, ANGIE GLADSTONE and LISA RUSSELL
Plaintiffs (Appellants)
- and -
CANADIAN NATIONAL TRANSPORTATION LIMITED and ANTHONY JUCHNIEWICZ
Defendants (Respondents)
Lisa D. Belcourt and William Zener, for the Plaintiffs (Appellants)
John Webster, for the Defendants (Respondents)
HEARD at Toronto: June 26, 2009
1This is an appeal and cross appeal from the decision of Master Hawkins dated August 8, 2008. He allowed one party to be added after the expiry of the limitation period, but declined to add another party. He also refused the plaintiffs’ request with respect to various amendments. All aspects of his order are the subject matter of the appeal and the cross appeal.
2For the reasons outlined, the appeal is allowed and the cross appeal is dismissed.
Test - Standard of Review
3The order of the master refusing to allow a party to be added was a final order. The other aspects of his order were interlocutory. On appeal, the decision of a master is entitled to the same level of deference with respect to findings of fact and the exercise of discretion as would be accorded to the decision of a judge. The standard of review of an order, whether final or interlocutory, is correctness with respect to questions of law. Where the master exercises discretion, the court on appeal must determine whether the correct principles were applied and whether the master misapprehended the evidence such that there is a palpable and overriding error (see Zeitoun v. The Economical Insurance Group (2008), 2008 20996 (ON SCDC), 91 O.R. (3d) 131 (Div. Ct.)) aff’d 2009 ONCA 415).
Background facts
4This case involves a motor vehicle accident which occurred in 2001. The plaintiff Brant Gladstone was catastrophically injured when his car collided with a 1993 Kenworth tractor trailer which was making a left turn across several lanes of traffic.
5The plaintiffs include family members of Brant, initiated proceedings on November 26, 2002 against two defendants including the driver, Antony Juchniewicz, and the company that they thought was the owner of the tractor trailer, Canadian National Transportation Limited (CNTL). The plaintiffs discovered after the expiry of the limitation period that the tractor and trailer were in fact leased by CNTL and were owned respectively by 684196 Ontario Inc. (684) and Trailcon Leasing Inc. (Trailcon).
The Motion Decision
6The plaintiffs sought an order before the master to amend the claim to sue the owners of the tractor and trailer: 684 and Trailcon. The plaintiffs also sought to amend the pleadings to allege that the defendant Juchniewicz was driving the tractor trailer in his capacity as an employee or as an agent on behalf of CNTL with the consent of CNTL, 684 and Trailcon. The plaintiffs sought to amend the pleadings to allege that CNTL was vicariously liable for the actions of its employee and agent. The plaintiffs also sought to amend the claim to include a claim for negligence against CNTL.
7The master allowed the plaintiffs to add the claim against 684 notwithstanding the expired limitation period based upon special circumstances. He refused however to add the claim against Trailcon.
8The master refused to allow all of the amendments proposed by the plaintiffs as he concluded that the amendments were advancing new causes of action and not an elaboration of alternative theories of liability arising from the same factual nexus in the existing pleadings. Based upon the expiry of the limitation period, he refused to allow the proposed amendments.
Analysis
9This case obviously engages issues of potential solicitor negligence as the original counsel on the file, now deceased, did not conduct an ownership search before the Statement of Claim was issued. The defendants argue that the plaintiffs are not without a remedy.
10A prudent practice for all solicitors obviously would be to conduct such a search in all circumstances. However, the inquiry does not end with a prudent solicitor’s practice.
11In this case, for the reasons to be outlined, I conclude that the only reasonable inference to be drawn from the evidence is that the insurer for both 684 and Trailcon was aware of the accident, although they had admittedly not been served by the plaintiffs as a party in the Statement of Claim.
12I will deal first with the issues with respect to joining 684 and Trailcon as parties, followed by a review of the requests for the various amendments to the pleadings.
Adding the Parties 684 and Trailcon
13This action is not subject to the new Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, which came into force on January 1, 2004, so the master did have discretion to add parties if he concluded that special circumstances existed.
684
14The master, in my view, correctly exercised his discretion based upon the special circumstances to add 684 as a party. He confirms the test for special circumstances in his reasons:
[49] In Meady, Feldman J.A. said (at paragraph 22) that the common law doctrine of special circumstances was not completely repealed by the Limitations Act, 2002 and continued to form part of former limitation periods. Subsection 206(1) of the Highway Traffic Act is one such former limitation period. A court can, Feldman J.A. said (at paragraph 24), continue to apply the common law special circumstances doctrine where appropriate, to extend a former limitation period when the transition provisions of section 24 of the Limitations Act, 2002 apply, as they do here.
[50] There is no definitive list of what constitutes special circumstances that will rebut the normal presumption that a proposed defendant will be prejudiced by being added as a party to an existing action after a limitation period has expired, and, as a result of being added, loses that limitations period defence.
[51] The fact that a proposed defendant had notice of a claim before the relevant limitation period has expired can constitute a special circumstance.
[52] In the present case the evidence before me indicates that Anthony Juchniewicz was an officer and director of 6co on and after September 25, 2001, the date of the subject accident. He was served with the statement of claim within two years of the accident. In those circumstances, 6co effectively had notice of the plaintiffs’ claims in their original form before the limitation period in subsection 206(1) of the Highway Traffic Act expired. There is no evidence before me that had 6co been made a defendant from the beginning it would have defended this action in a manner materially different from the way in which the original defendants did. 6co was not separately represented on this motion. I therefore conclude that these facts constitute special circumstances such that, in the case of 6co, the running of the limitation period should be extended so as to permit me to order that 6co be added as a defendant to this action. I so order. I also extend the time for service on 6co of notice of the plaintiffs’ intention to commence this action, as necessary.
[Emphasis added]
15I agree with the master’s analysis and his conclusions reached. There is no error in my view and the cross-appeal is dismissed.
Trailcon
16The master reaches a different conclusion with respect to Trailcon, which at first blush appears to be reasonable. However, cogent arguments were made by new counsel before me on appeal, that bring into question his conclusions that Trailcon, or its insurer had no notice of the action, and are hence prejudiced by being added as a party.
17The master states in his reasons at para. 53, that he declined to join Trailcon as a party as it had no notice of the proceeding:
[53] The case of Trailcon is different. I know very little about Trailcon. The evidence before me indicates that on September 25, 2001 Trailcon had leased the subject trailer to CNTL. I do not know the terms of the lease. This lessor/lessee relationship, by itself, does not justify the conclusion that Trailcon had constructive notice of the plaintiffs’ original claims as soon as CNTL was served with the statement of claim. There is no evidence before me that Trailcon had notice of the plaintiffs’ claims at any time before it was served with this motion in 2007.
[54] I therefore conclude that the plaintiffs have failed to demonstrate in the case of Trailcon that there are special circumstances to overcome the presumption that Trailcon will be prejudiced if it is added as a party to this action and deprived of a limitation of action defence. I dismiss this motion insofar as the plaintiffs seek an order adding Trailcon as a defendant to this action and an order extending the time for service on Trailcon of notice of their intention to commence this action.
Evidence that the insurers of Trailcon had at least constructive notice of the claim
18The issues with respect to the insurance coverage, and hence the actual or constructive notice of the 684 and Trailcon were not argued before the master.
19These undisputed facts are important in assessing whether there are special circumstances in the facts of this case, and whether Trailcon had actual or constructive notice of the accident.
20I conclude that Trailcon had at least constructive notice of the accident. It may well have had actual notice of the claim well before this motion to join it as a party.
21It is not disputed that all defendants, including the driver, CNTL, 684 and Trailcon are covered by a single policy of insurance with Royal Sun Alliance. They are represented by one counsel in this appeal, and have been vigorously represented both before and after commencement of the proceedings.
22Of note, it is undisputed that there was a discussion and correspondence exchanged between counsel for the plaintiffs and the insurance adjuster for Royal Sun Alliance in December 2001 prior to the issuance of the Statement of Claim, only a few months after the accident and well within the limitation period. The contents of this letter speak volumes as to why perhaps counsel did not conduct a motor vehicle search with respect to ownership of the tractor trailer. The letter states:
We represent Royal & SunAlliance Insurance Company of Canada who issued a policy of Automobile insurance to Canadian National Transportation which covered the 1993 Kenworth which was being driven by Anthony Juchniewicz at the time of this accident. We are advised by our principals that the legal liability limits applicable to this policy are $5 million.
[Emphasis added.]
23It is clear therefore that the insurance policy of CNTL engages with respect to all of the defendants including the driver, CNTL, the tractor owned and leased by 684 and the trailer owned and leased by Trailcon.
24This fact is of significance when it comes to assessing the question of prejudice. The evidence is undisputed that the insurer throughout this litigation and before the litigation began, took an active role in conducting an investigation. There are some seven adjuster’s reports in the file and two expert engineering reports. The trailer in question was examined and was the subject matter of at least one of the expert reports.
25The insurance policy was not produced to the plaintiffs until January 2005. The policy itself does not clarify issues of ownership with respect to the tractor trailer. The policy shows the insured as CNTL. The policy also includes permissions for CNTL to “rent or lease automobiles and extending coverage to blanket free coverage for Ontario licensed automobiles”. The coverage specifically includes:
Any Lessor who supplies automobiles to the insured, when the Lease Agreement stipulates that the insurance is to be provided by the Lessee, is insured with respect to automobiles leased to the Named Insured.
26The insurance policy of CNTL covers the tractor leased by 684 to CNTL.
27By the terms of the standard automobile policy the trailer also is covered under the same policy of insurance. The trailer is owned by Trailcon and it was leased to CNTL. The standard automobile policy includes coverage for trailers that stipulated in OAP1 to the Standard Automobile Policy. Under 2.2.4 includes coverage for trailers:
2.2.4 Trailers – any trailer used in connection with the automobile is insured for the following coverages:
Liability
Accident Benefits, and
Uninsured Automobile.
Special Conditions: Any trailer you own and that is not described in this policy is also covered for Direct Compensation – Property Damage Coverage under the following conditions:
If it is attached to an automobile with a manufacturer’s gross vehicle weight rating of not more than 4,500 kilograms, or if not attached, it is normally used with an automobile with a manufacturer’s gross vehicle weight rating of not more than 4,500 kilograms.
It is not designed or used for living in, to carry passengers, or for commercial purposes.
28The involvement of the insurer for Trailcon from the date of the accident is a special circumstance which overcomes the presumption that Trailcon will be prejudiced if it is added as a party to this action.
29I also note that the affidavit filed by Trailcon, which is very short, does not state that they were unaware of the action until the plaintiff brought their motion in 2007. The affidavit, carefully worded states:
This action arises from a motor vehicle collision on September 25, 2001, at the intersection of Airport Road and Clark Boulevard, Brampton, Ontario.
The Statement of Claim was issued on November 26, 2002.
The Plaintiffs provided no notice to Trailcon that they intended to institute an action against it until their solicitors delivered a letter dated March 19, 2007 and enclosing the motion record dated March 19, 2007, which was more than five years after the accident occurred.
[Emphasis added.]
30The Statement of Claim was issued by the plaintiffs in November 2002 claiming that CNTL was the owner of the tractor trailer.
31The defence chose not to clarify the issue of ownership of the tractor trailer within the limitation period when the facts as to ownership would have been known. The defendants pleaded that they had “no knowledge” as to the ownership of the tractor trailer. This sort of response gives rise to a concern about the defence “waiting in the weeds” for a limitation period to expire.
32The affidavits of documents were exchanged within the limitation period. The defendants’ affidavit of documents does not include any documents about the ownership of the tractor trailer which would have been in their possession including any leasing documents between CNTL and 684 and CNTL and Trailcon.
33It also appears, as previously outlined, that the adjuster made errors with respect to ownership of the tractor trailer well before the action commenced.
34At the discovery of the defendants, Juchniewicz gave evidence that he in fact owned the tractor trailer which adds further confusion to the issue of ownership. Clearly at discovery where he had the opportunity to do so, he did not clarify the issue of ownership.
35I conclude that there is no prejudice to Trailcon adding them as a party. They have been vigorously protected throughout and they are represented by the same insurer, and the same counsel as all other defendants.
36For these reasons, I conclude that the master erred in his conclusion that there were no special circumstances that engaged that would allow Trailcon to be added as defendant. I am not being critical of the master as these arguments appear to have been raised squarely for the first time in this appeal.
The Pleadings Aspect of the Decision
37The master concluded that the proposed amendments were advancing new causes of action and therefore notwithstanding the provisions of Rule 26 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the request for the amendments was denied.
38Rule 26 provides the prima facie right to amend pleadings at any stage of the pleadings, subject to the issue of prejudice:
On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
39There are cases relevant to the issue of what constitutes a new cause of action, as opposed to pleading an alternative theory of liability based upon the same factual nexus.
40Jenkins J. in Fitzpatrick Estate v. Medtronic Inc., 1996 8118 (ON SC), [1996] O.J. No. 2439 (Ct. J. (Gen. Div.)) where he states:
I conclude that the modern approach is when substantially all of the material facts giving rise to “the new cause of action,” have been pleaded then there is in fact no new cause of action being added.
41The decision of Lane J. echoes this approach in Randolph v. Graye, [1995] O.J. No. 777 (Ct. J. (Gen. Div.)) dated March 24, 1995. Lane J. allowed an amendment alleging negligence, in a claim originally based on breach of fiduciary duty. He stated that “the new plea is of different legal conclusions drawn from the same set of facts.”
42The decision of Denton v. Denton (1977), 1976 831 (ON SC), 14 O.R. (2d) 382 (H.C.) is very helpful. Grange J. allowed an amendment on the basis that the proposed amendments pleaded legal consequences that flowed from the facts as opposed to a new cause of action. He allowed the appeal from the master’s refusal to amend the pleading. Grange J. said:
I am not sure that the mere pleading of an alternative ground for relief arising out of the same facts constitutes the raising of a new cause of action – see Canadian Industries Ltd. v. Canadian National R. Co., 1940 346 (ON CA), [1940] O.W.N. 452 … affirmed 1941 16 (SCC), [1941] S.C.R. 591 … , where an amendment in a contract action was permitted to claim relief in negligence based upon the same facts upon the ground that such new claim did not create a new cause of action, but merely an alternative claim with respect to the same cause.
43Another case on point that is relevant is the decision of Hoy J. in Phommachanh v. Toronto Transit Commission, 2002 49427 (ON SC), [2002] O.J. No. 1166:
As to special circumstances, to the extent required, I believe they exist. No alteration of the nature of the claim against the TTC (negligence) is proposed, no new relief is requested and no new parties are sought to be added. Moreover, I do not believe the amendment constitutes adding a new cause of action. The expanded particulars arise out of the same occurrence. They may relate to the manner in which the streetcar was operated, which was initially pleaded. I do not accept that the proposed amendments constitute a new cause of action because the streetcar and the Spadina line were designed before the accident occurred. Any claim of negligence by [the plaintiff] and his family against the TTC arising out of the alleged unsafe design of the streetcar and the Spadina line necessarily arises out of the accident in question.
44I conclude that the amendments sought by the plaintiffs were not advancing a new and discrete cause of action, but arose from the core factual nexus as the facts and circumstances of the case became clearer and matured. The amendments sought fall squarely within the contemplated amendments permitted routinely pursuant to Rule 26 of the Rules of Civil Procedure.
45For these reasons, applying the principles of Zeitoun v. The Economical Insurance Group the appeal is allowed, and the cross-appeal is dismissed.
46If the parties are unable to agree on reasonable costs, they may exchange written submissions within 30 days of the release of these reasons, and the plaintiffs shall file the consolidated submissions concerning costs with the court.
JANET WILSON J.
Date of Release: July 22, 2009
COURT FILE NO.: 465/08
DATE: 20090722
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
BRANT GLADSTONE, JACQUELINE KEATINGE and JEMMA GLADSTONE, by her Litigation Guardian, JACQUELINE KEATINGE and LAWRENCE GLADSTONE, GERALD GLADSTONE, LORRAINE GLADSTONE, STEVEN GLADSTONE, SEANA GLADSTONE WOHLFEIL, SHEILA MCCUSKER, ALYCIA UCCELLO, ANGIE GLADSTONE and LISA RUSSELL
Plaintiffs (Appellants)
- and -
CANADIAN NATIONAL TRANSPORTATION LIMITED and ANTHONY JUCHNIEWICZ
Defendants (Respondents)
REASONS FOR JUDGMENT
JANET WILSON J.
Date of Release: July 22, 2009