CITATION: Blue Simcoe Developments Inc. et. al v. 714222 Ontario Inc. et al, 2015 ONSC 820
DIVISIONAL COURT FILE NO.: 191/14
DATE: 20150205
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MARROCCO A.C.J.S.C.
BETWEEN:
BLUE SIMCOE DEVELOPMENTS INC., PERFECT NORTHERN DEVELOPMENTS CORPORATION, 1662893 ONTARIO INC., AND 1662894 ONTARIO INC.
Plaintiffs/Appellants
– and –
714222 ONTARIO INC. O/A TERRAPROBE LIMITED, AND TERRAPROBE INC.
Defendants/Respondents
COUNSEL:
Michael Gayed and Solomon Ross Fischoff, for the Plaintiffs/Appellants
John McNeil, for the Defendants/Respondents
HEARD: November 26, 2014
MARROCCO A.C.J.S.C.:
[1] The appellants/plaintiffs wanted to develop property on Lakeshore Drive in Barrie. The respondents/defendants are consulting firms that offer specialized engineering services.
[2] The appellants sued for damages alleging the failure of the respondents to produce a Ministry of the Environment approved Risk Assessment for the Barrie property in accordance with a guaranteed delivery date. The respondents maintain the timeframe was an estimate.
[3] The process of obtaining a Risk Assessment approval from the Ministry of the Environment is regulated by the Environmental Protection Act, R. S. O. 1990, c. E. 19.
[4] The respondents submitted Risk Assessment approval requests twice. Both times the Ministry advised that the Risk Assessments submitted did not contain sufficient data or information to support its conclusions. The respondents continued to perform work on the project and delivered invoices to the appellants until May 31, 2012.
[5] No approval was ever obtained from the Ministry of the Environment with the result that, according to the appellants, they suffered increased carrying costs and eventually abandoned their plans to develop the property. The appellants claim they sold the property “as is” for substantially less than it would have been worth with an Approved Risk Assessment.
[6] After discovery the appellants moved to add Mr. Paul Bowen as a new necessary defendant. Mr. Bowen is mentioned by name in the body of the appellants’ original Statement of Claim. Mr. Bowen, according to the appellants, personally supervised and directed the activities of the corporate defendants. The appellants claim that Mr. Bowen was the primary point of contact between themselves and the respondents.
[7] The motion to add Mr. Bowen as a necessary defendant was unsuccessful; the appellants have in this proceeding appealed that refusal. The appellants have also in this proceeding applied to introduce fresh evidence on the hearing of the appeal.
[8] The fresh evidence was in two parts:
• First, correspondence between counsel and a motion scheduling form to prove that the appellants had the intention to add Mr. Bowen as a new defendant before he was examined for discovery. No objection is taken to the admissibility of the correspondence between counsel and the motion scheduling form. The respondents admit that the appellants expressed an intention to bring a motion to add Mr. Bowen as a defendant before he was examined for discovery;
• Second, a document entitled “Terms and Conditions of Work and Payment.” Objection is taken to the admissibility of this document.
[9] The “Terms and Conditions of Work and Payment” document contains two terms which should be noted:
• Term number six: “the start date for any statute of limitations or limitation for a claim, shall be deemed to be the last date on any invoice issued Terraprobe for work provided.”
• Term number nine: “Terraprobe’s total cumulative liability for all claims shall not exceed the limits of insurance carried for such reasons. Terraprobe shall not be liable for any indirect or consequential damage such as loss of use, business interruption, loss of profit or delay.”
[10] The Master refused to add Mr. Bowen as a necessary party. The Master observed that Mr. Bowen’s participation in the plaintiffs’ project was well known. The Master observed that Mr. Bowen’s name appeared throughout the invoices rendered by Terraprobe and that he was the company’s witness at the examinations for discovery. Accordingly the Master concluded that the plaintiffs deliberately chose not to sue him when they commenced their action. These were relevant considerations on the question of whether Mr. Bowen was a necessary party. This was a conclusion open to the Master on the evidence.
[11] The Master commented on the fact that there was no evidence to explain the timing of the decision to add Mr. Bowen and commented that the plaintiffs intend to assert against him only that which they knew at the time the action was commenced, even though they had had examined him for discovery. Finally the Master noted that there was no suggestion that the defendants lacked the appropriate insurance coverage. In this regard when this motion was argued, counsel for the defendants informed the court that the plaintiffs’ claim was fully insured.
[12] It is true the Master observed at page three of her reasons that in her view all possible limitation periods had expired. This, however, did not form the basis for her decision. Specifically, in the paragraph immediately following this observation the Master stated: “Limitation period aside, in the absence of evidence addressing why Bowen is a necessary party, I exercise my discretion against adding him to the action. A proper party is not the same thing as a necessary party, contrary to what Blue Simcoe asserts. Had Bowen been sued at the outset he may well have been viewed as a proper party and that was all he had to be at that point. But he was not named then, so a different test now applies and that test has not been met with the evidence.”
[13] Finally, at page four of her reasons the Master stated: “I can see no reason why Bowen is a necessary party when Terraprobe is there to respond to all allegations. His presence is not needed to help the court adjudicate on all the issues before it. The expiry of the applicable limitation periods only serve to exacerbate my concerns.” (Emphasis added)
[14] Finally the Master suggested that the absence of evidence led her to draw the inference that adding Mr. Bowen was done for the purpose of enhancing the plaintiffs’ leverage in the action and compelling a better and more expeditious settlement because Mr. Bowen’s professional integrity has been placed on the line. The Master concluded that adding a party for such a purpose was an abuse of process. While not necessary for her decision, this conclusion was open to the Master based on the circumstances to which she referred.
The motion to introduce new evidence is dismissed.
[15] The test for receiving fresh evidence is set out in R. v. Palmer, 1979 8 (SCC), [1980] 1 S.C.R. 759 and Sengmueller v. Sengmueller (1994), 1994 8711 (ON CA), 17 O.R. (3d) 208 (C.A.). The court considers the following:
• Is the evidence credible,
• Could the evidence of been obtained prior to trial through the exercise of reasonable diligence and
• If admitted, will the evidence likely be conclusive of an issue in the appeal.
[16] In support of its motion to admit the “Terms and Conditions” document, the appellants filed the affidavit of Mr. Mikhail Kerbel who is an officer, director and representative of the appellants. Mr. Kerbel attempted to explain the discovery of the “Terms and Conditions” document. He deposed that, in the course of answering the Undertakings after he was examined by the respondents, he gathered numerous documents from various sources and thoroughly searched for further documents. He stated that he gave those documents to Mr. Fischoff, his lawyer, for review. He deposed that these documents had been collected from storage, from his accountant and from real estate agents. He then deposed at paragraph 29 that Mr. Fischoff discovered the “Terms and Conditions” document while reviewing the materials Mr. Kerbel had given him. Mr. Kerbel went on to depose that he did not appreciate the importance or relevance of the document and that he did not have it in his possession when he was securing documents for the affidavit of documents.
[17] A consideration of Mr. Kerbel’s version of how he found this document leads to the conclusion that it was available prior to the hearing of the motion through the exercise of reasonable diligence.
[18] The document, if admitted, will not likely be conclusive of an issue in the appeal. It is clear that the Master did not base her decision on the fact that a limitation period had expired. The Master exercised her discretion against adding Mr. Bowen as a party because there was in her view an absence of evidence on the question of why he was necessary. This document does not address that issue.
[19] The motion to admit fresh evidence is dismissed with costs.
The appeal of the refusal to add Mr. Bowen as a party is dismissed
[20] A judge of the Divisional Court reviewing the final order of a master will apply a correctness standard of review for an error of law. The judge will apply a palpable and overriding error standard of review when dealing with questions of fact. A judge will apply the palpable and overriding error standard of review for questions of mixed fact that law except where the question of mixed fact and law is inextricably tied to a legal principle in which case the standard of review is correctness. See Zeitoun v. Economical Insurance Group, 2009 ONCA 415, at para. 1; Housen v. Nikolaisen, 2002 SCC 33, [2002]2 S.C.R. 235, at paras. 34-35.
[21] Whether it was necessary to add Mr. Bowen is a question of mixed fact and law for the Master, and her decision was discretionary. The Master’s decision was based upon the evidence to which she referred and lack of evidence upon which she commented. She committed no palpable and overriding error in that regard.
[22] The Master’s decision that Rule 5.03(4) governed this situation was correct. Rule 26.01 is a general provision related to the amendment of pleadings; the more specific rules relating to adding parties apply to the amendments of pleadings that actually involve the addition of parties. Morden & Perell, The Law of Civil Procedure in Ontario, 2d ed. (LexisNexis: Markham, 2014) at p. 435 provides: “where the amendment to a pleading includes the addition of a party, then the court must also consider whether the joinder would satisfy the requirements of the Rules on the joinder of parties and claims.” This would include considerations arising under Rule 5.03(4) on whether the added party is a necessary or proper party. See: Sycor Technology Inc. v. Kaier (2006), 76 O.R. (3d) 268, at para. 7; Plante v. Industrial Alliance Life Insurance Co. (2003), 2003 64295 (ON SC), 66 O.R. (3d) 74.
[23] The Master’s observation that there was no evidence to explain the timing of the decision to name Mr. Bowen is a party is also grounded in the evidence or perhaps more accurately the lack of evidence. The fact that Terraprobe is not insolvent and has adequate insurance coverage for the purposes of this action is a relevant consideration when determining whether adding Mr. Bowen personally is necessary “to enable the court to adjudicate effectively.” A person is a necessary party only where he or she ought to be bound by the court’s determination of an issue, making his or her participation required. In Din v. Melady, [2009] O.J. No. 5658 (Div. Ct.), Karakatsanis J. upheld the Master’s finding that certain employees were not necessary parties, and recounted with approval the Master’s reasoning that: “there was no possibility of greater recovery by joining the individual defendants, there was no suggestion that the hospital could not have satisfied any judgment and there was no possibility of divided liability as between the hospital and its employees” (at para. 23). Finally the Master’s distinction between a proper party – that is, someone who can properly be named as a defendant – and a necessary party is appropriate given the Master’s conclusion based on the evidence presented to her that Mr. Bowen’s presence was not necessary to help the court adjudicate on all the issues.
[24] During the argument, appellants’ counsel indicated that some of the appellants’ proposed amendments had been on consent and that the Master had inadvertently failed to reflect those amendments in her endorsement. This was a matter which the appellants should have raised with the Master before her order was finalized. I cannot determine on the material before me whether the Master’s failure to make the uncontested amendments was an inadvertent error or a deliberate decision.
[25] In short there is no palpable or overriding error or any error for that matter in the Master’s decision and the appeal is dismissed.
[26] The parties reached an agreement concerning the quantum of costs to the successful party. The agreed costs for the motion and the appeal are reasonable.
[27] Accordingly the respondents are awarded $4,000 on the motion to introduce fresh evidence and $10,000 on the appeal. Both amounts are inclusive of disbursements and all applicable taxes. These costs are payable within 30 days of the release of this decision.
MARROCCO A.C.J.S.C.
Released: 20150205
CITATION: Blue Simcoe Developments Inc. et. al v. 714222 Ontario Inc. et al, 2015 ONSC 820
DIVISIONAL COURT FILE NO.: 191/14
DATE: 20150205
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MARROCCO A.C.J.S.C.
BETWEEN:
BLUE SIMCOE DEVELOPMENTS INC., PERFECT NORTHERN DEVELOPMENTS CORPORATION, 1662893 ONTARIO INC., AND 1662894 ONTARIO INC.
Plaintiffs/Appellants
– and –
714222 ONTARIO INC. O/A TERRAPROBE LIMITED, AND TERRAPROBE INC.
Defendants/Respondents
REASONS FOR JUDGMENT
Released: 20150205