Court File and Parties

CITATION: Cooper v. Toronto (City), 2019 ONSC 7486

DIVISIONAL COURT FILE NO.: 247/19

DATE: 20191223

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: JACINTA COOPER, Plaintiff/Appellant

AND: CITY OF TORONTO, Defendant/Respondent

BEFORE: Wilton-Siegel J.

COUNSEL: Jillian Evans, for the Plaintiff/Appellant

Ara Basmadjian, for the Proposed Defendant/Respondent, Toronto Hydro Energy Services Inc.

HEARD at Toronto: October 2, 2019

ENDORSEMENT

[1] The plaintiff/appellant Jacinta Cooper (“Cooper”) appeals an order dated April 9, 2019 (the “Order”) of Master Brott (the “Master”) which dismissed Cooper’s motion seeking leave to amend the statement of claim in this proceeding to add Toronto Hydro Energy Services Inc. (“Hydro”) as a defendant in this action.

Factual Background

[2] The plaintiff seeks damages arising out of an incident on December 31, 2011 when she alleges that she walked into a light pole (the “Pole”) on a sidewalk in Toronto. After first corresponding with the adjacent condominium corporation and its insurance adjuster, Cooper put the defendant, the City of Toronto (the “City”), on notice of her claim. Shortly thereafter, the condominium corporation’s insurance adjuster, who was also the City’s adjuster, advised that the City was the owner of the Pole. Cooper’s representative served her statement of claim on the City on December 19, 2013, within the two-year limitation period. The City served its statement of defence on June 30, 2014 asserting a number of alternative defences, including that the Pole was not under its jurisdiction. The City did not, however, name Hydro as the owner of the Pole and there is no evidence of any indication on the Pole that Hydro was the owner. On July 4, 2014, after receiving the City’s statement of defence, Cooper printed a number of internet articles regarding pedestrian safety, including an article from the Toronto Star dated February 19, 2010 describing the City’s sale of its light poles to Hydro in 2005 (the “Article”). Cooper provided the Article to her legal counsel on a date that has not been determined.

[3] In December 2016, counsel for the City left a voice message for Cooper’s counsel suggesting that Hydro may be an appropriate defendant in this proceeding. However, Cooper says she did not become aware of Hydro’s ownership of the Pole, and therefore of her cause of action against Hydro, until service of the City’s draft affidavit of documents on or about May 15, 2017 (the “Affidavit of Documents”). The Affidavit of Documents included a copy of the 2005 agreement of purchase and sale regarding the sale of the City’s light poles to Hydro. Cooper served a notice of motion to amend her statement of claim to add Hydro on August 15, 2017 (the “Motion”).

[4] A complication in this proceeding arises from the extent of the evidence pertaining to the Article that was before the Master. While Cooper swore an affidavit for the purposes of the Motion, she made no reference to the Article in that affidavit. The Article only came to the attention of Hydro later when Hydro’s counsel sought and obtained the documents described in a schedule to Cooper’s draft affidavit of documents. Further, Cooper was not asked on her cross-examination whether she read, or understood the contents of, the Article. Accordingly, there is no evidence that Cooper ever read, or understood the contents of, the Article prior to May 15, 2017.

[5] Therefore, as Cooper’s counsel points out, the only facts before the Master and the Court on this appeal regarding the Article are that: (1) Cooper downloaded the Article on July 4, 2014; (2) Cooper gave it to her counsel at some point no later than December 2016; and (3) the Article was included in her draft affidavit of documents which was delivered to the City in December 2016.

The Master’s Decision

[6] The Master provided reasons for the Order in the form of a written endorsement dated April 8, 2019 (the “Reasons”). In the Reasons, the Master first set out the factual background in the form of a chronology of events, the applicable statutory provisions of the Limitations Act, 2002, S.O. 2002, c.24 Sch. B., and the positions of the parties.

[7] The Master then defined the issue before her as whether there was a triable issue regarding when the plaintiff discovered or should have discovered the facts giving rise to the proposed amendment that constituted her cause of action against Hydro. To address the specific question before her, the Master referred to the statement in Skrobacky v. Frymer, 2014 ONSC 4544 (Div. Ct.) that “if a plaintiff provides a reasonable explanation as to why the facts were not known or obtainable with due diligence within two years of moving to amend such that the motions judge determines there is a triable issue of fact or credibility, the court will normally permit the amendments with leave to plead a limitations defence”.

[8] It is not disputed that neither Cooper nor her counsel ever inquired of the City or Hydro as to the ownership of the Pole. Cooper relied on the statement of the condominium corporation’s insurer that the City was the owner of the Pole and on the absence of any contrary communication from the City between April 2013 and December 2016. The Master effectively focused on the issue of whether this constituted a reasonable explanation for Cooper’s failure to investigate the ownership of the Pole until receipt of the Affidavit of Documents. The Master concluded that it did not constitute a reasonable explanation.

[9] The Master concluded that “[a]s the plaintiff [has] failed to offer a reasonable explanation on proper evidence as to why her claim against Toronto Hydro could not have been discovered, there is no triable issue.”

[10] The following passages set out the basis for this conclusion of the Master:

On this motion, the plaintiff has failed to provide a reasonable explanation or proper evidence to explain why, with reasonable due diligence, the information was not available. Here, the plaintiff relied solely on the word of the TSCC claims examiner regarding ownership of the light pole. The plaintiff never even followed up with the City nor provided any explanation as to why not. The plaintiff failed to explain how, when she provided the Toronto Star article to her counsel at some point prior to December 2016, the ownership issue was not looked into. As well, there is no explanation about why no inquiries were undertaken after the plaintiff was served with the Statement of Defence.

In deciding when the plaintiff ought reasonably to have discovered the proper ownership, it is necessary to consider that reasonable steps were taken by the plaintiff and in my view, those steps and the failure to explain why/why not they were/were not taken demonstrates a lack of due diligence.

[11] The Master therefore found that Cooper’s cause of action against Hydro was statute barred pursuant to s. 5(1)(b) of the Limitations Act, 2002 due to her inability to provide a reasonable explanation for her failure to conduct due diligence in the form of inquiries of the City or Hydro to establish ownership of the Pole. In doing so, the Master effectively concluded that Cooper’s cause of action against Hydro was statute barred because it was reasonably discoverable more than two years prior to August 15, 2017 when she commenced the Motion. The implicit finding underlying these conclusions is that Cooper had knowledge of sufficient facts that called for a further investigation regarding ownership of the Pole and therefore her explanation for her failure to conduct such an investigation was not reasonable. I will address this reasoning below.

Standard on Appeal

[12] The appeal is brought pursuant to section 19(1)(c) of the Courts of Justice Act, R.S.O. 1990, c. C.43. The standard of review is set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at paras. 6-10 and 36-37. On a pure question of law, the standard of review is correctness. The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a “palpable and overriding error”. Questions of mixed fact and law are subject to the “palpable and overriding error” standard, unless it is clear that the trial judge made an error of law or principle that can be identified independently in the judge’s application of the law to the facts of the case.

Applicable Law

[13] This proceeding engages the provisions of ss. 4 and 5 of the Limitations Act, 2002 which provide as follows:

4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

5(1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[14] Insofar as this case involves the requirement for a duly diligent investigation of the relevant facts that is inherent in s. 5(1)(b), the principles to be applied have been addressed by the Court of Appeal in Morrison v. Barzo, 2018 ONCA 979 at paras. 29-32 as follows:

[29] Where there is a question as to whether claims covered by the basic two-year limitation period are statute-barred, such that parties cannot be added pursuant to s. 21(1) of the Limitations Act, the court must make a finding as to when the plaintiff first knew the elements of the claim listed in s. 5(1)(a). If the date of actual discovery, as determined by the court, would bring the claim within the limitation period, and the proposed defendant relies on "reasonable discoverability" to contend the claim was brought outside the prescription period, the court must go on to determine under s. 5(1)(b) when "a reasonable person with the abilities and in the circumstances of [the plaintiff] first ought to have known of the matters referred to in clause (a)". While a plaintiff's due diligence is relevant to the finding under 5(1)(b), the absence of due diligence is not a separate basis for dismissing a claim as statute-barred: see Fennell v. Deol, 2016 ONCA 249, 97 M.V.R. (6th) 1, at paras. 18 and 24; Galota v. Festival Hall Developments Ltd., 2016 ONCA 585, 133 O.R. (3d) 35, at para. 23. This is the case whether expiry of the limitation period is at issue in a motion for summary judgment or in a motion to add a defendant: Mancinelli v. Royal Bank of Canada, 2018 ONCA 544, 24 C.P.C. (8th) 1, at para. 30.

[30] Reasonable discoverability of a claim under s. 5(1)(b) that precludes adding a party contrary to s. 21(1) requires an evidentiary foundation. The court must be satisfied that a reasonable person in the plaintiff's circumstances ought to have discovered the claim, and the date of such reasonable discovery must be determined. It is not sufficient for the court to say that the claim was discoverable "before the expiry of the limitation period", without explaining why. It may be that the date of reasonable discoverability can only be determined at a later stage in the proceedings, at trial or on a summary judgment motion. In such a case, the motion to add the defendant should be granted, with leave for the defendant to plead a limitation defence: Mancinelli, at paras. 31 and 34.

[31] The evidentiary burden on a plaintiff seeking to add a defendant to an action after the apparent expiry of a limitation period is two-fold. First, the plaintiff must overcome the presumption in s. 5(2) that he or she knew of the matters referred to in s. 5(1)(a) on the day the act or omission on which the claim is based took place, by leading evidence as to the date the claim was actually discovered (which evidence can be tested and contradicted by the proposed defendant). The presumption is displaced by the court's finding as to when the plaintiff subjectively knew he had a claim against the defendants: Mancinelli, at para. 18. To overcome the presumption, the plaintiff needs to prove only that the actual discovery of the claim was not on the date the events giving rise to the claim took place. It is therefore wrong to say that a plaintiff has an onus to show due diligence to rebut the presumption under s. 5(2): Fennell, at para. 26.

[32] Second, the plaintiff must offer a "reasonable explanation on proper evidence" as to why the claim could not have been discovered through the exercise of reasonable diligence. The evidentiary threshold here is low, and the plaintiff's explanation should be given a "generous reading", and considered in the context of the claim: Mancinelli, at paras. 20 and 24.

[15] The following statement of the Court of Appeal at paras. 23 and 24 of Fennell v. Deol, 2016 ONCA 249 is also relevant:

[23] Due diligence is not referred to in the Limitations Act, 2002. It is, however, a principle that underlies and informs limitation periods, through s. 5(1)(b). As Hourigan J.A. noted in Longo v. MacLaren Art Centre Inc., 2014 ONCA 526, 323 O.A.C. 246, at para. 42, a plaintiff is required to act with due diligence in determining if he has a claim, and a limitation period is not tolled while a plaintiff sits idle and takes no steps to investigate the matters referred to in s. 5(1)(a).

[24] Due diligence is part of the evaluation of s. 5(1)(b). In deciding when a person in the plaintiff's circumstances and with his abilities ought reasonably to have discovered the elements of the claim, it is relevant to consider what reasonable steps the plaintiff ought to have taken. Again, whether a party acts with due diligence is a relevant consideration, but it is not a separate basis for determining whether a limitation period has expired.

Analysis and Conclusions

[16] Cooper raises four grounds of appeal.

[17] The first ground of appeal is that the Master erred by dismissing the Motion without making findings regarding: (1) the date on which the plaintiff first knew the requisite elements of her claim against Hydro; and (2) when “a reasonable person with the abilities and in the circumstances of [the plaintiff] first ought to have known of such claim.” Such findings are a requirement before any finding that claims against a proposed defendant are statute-barred: see Morrison v. Barzo at para. 30.

[18] I agree that the Master erred in law in dismissing the Motion without making either of these findings. Although the Master determined the Motion on the ground of a lack of a reasonable explanation, it is not clear whether the Master proceeded on the basis that Cooper had actual knowledge as of July 4, 2014, based on having obtained the Article on that date, or accepted that Cooper did not have actual knowledge until May 2017 but proceeded on the basis that she ought to have had knowledge on or about June 30, 2014 or July 4, 2014 as a result of receipt of one or both of the City’s statement of defence and the Article,. The reference to the delivery of the Article to her counsel may even suggest that the Master proceeded on the basis that she had neither until such time as her counsel received the Article. In any event, there is no finding regarding the date on which Cooper first had actual knowledge, and, more importantly, there is no finding regarding the date on which Cooper reasonably ought to have had knowledge of her cause of action against Hydro.

[19] In dismissing the Motion without making the necessary findings of fact set out above to ground her decision, the Master erred in law by failing to apply the test as set out in Morrison v. Barzo. Accordingly, the Order must be set aside.

[20] This raises the issue of the appropriate disposition of this appeal. Both parties have indicated that they are content that, in these circumstances, the Court should apply the test in Morrison v. Barzo and substitute its own determination.

[21] Hydro asserts that Cooper had actual knowledge, or ought reasonably to have had knowledge, of Hydro’s ownership of the Pole more than two years prior to the commencement of the Motion. In this regard, Hydro makes two arguments which I will discuss in turn below.

[22] Hydro’s first, and principal, submission is that the Court should draw an inference that Cooper had actual knowledge of Hydro’s ownership of the Pole for the purposes of s. 5(1)(a) of the Limitations Act, 2002 as of July 4, 2014 when she printed the Article. If the Court can draw such an inference on a balance of probabilities standard, Cooper’s explanation for the absence of any further investigation would clearly be irrelevant and unreasonable.

[23] However, as mentioned, there is no evidence, whether by way of affidavit or on cross-examination, that Cooper read the Article. In particular, while it is possible to speculate regarding Cooper’s motivation in obtaining articles on the internet regarding pedestrian safety and in giving these articles to her counsel, there is no evidence regarding these actions. In the absence of evidence of Cooper on any of these matters, there is insufficient evidence to support a finding, on a balance of probabilities standard, that Cooper read the Article on or before any particular date. As a consequence, it is not possible to determine a date of commencement of the limitation period under s. 5(1)(a) of the Limitations Act, 2002 based on actual knowledge of the contents of the Article.

[24] As an alternative argument regarding actual knowledge, Hydro also submits that the circumstances in which the Article came to light should ground an inference that Cooper knew the contents of the Article as of July 4, 2014, and its significance for her case, and therefore tried to hide it. I cannot make that inference on the record before the Court.

[25] In summary, a court cannot find that Cooper read the Article without a trial that would provide for, among other things, viva voce evidence from Cooper as to when she first read the Article and would permit an assessment of Cooper’s credibility on this issue. Similarly, there is an absence of evidence regarding when her counsel in this proceeding read the Article. That evidence might demonstrate knowledge of facts requiring an investigation on an alternative basis.

[26] Hydro’s second submission is that, either individually or collectively, Cooper’s receipt of the Article on July 4, 2014 and the City’s denial of jurisdiction over the Pole in its statement of defence fixed Cooper with knowledge of sufficient facts that she ought to have investigated the ownership issue. This raises the issue of whether Cooper fulfilled the obligation of reasonable due diligence that is inherent in s. 5(1)(b).

[27] I pause to address the question of who has the onus of demonstrating that Cooper’s cause of action was actually discovered, or was reasonably discoverable, more than two years prior to the commencement of the Motion. While it is not made express in Fennell and Morrison, in circumstances such as the present where a plaintiff demonstrates a reasonable basis for concluding that a cause of action was discovered within the applicable limitation period, as a practical matter, a proposed defendant who asserts a limitation defence must demonstrate that the plaintiff had actual knowledge, or reasonably ought to have had knowledge, on an earlier date outside the limitation period.

[28] If the basis of the defendant’s position in such circumstances is not that the evidence demonstrates actual knowledge at an earlier date but rather that the plaintiff failed to conduct a duly diligent investigation, Morrison v. Barzo says that the plaintiff has the onus of providing a reasonable explanation for his or her failure to conduct any further investigation. As I understand the applicable case law including Skrobacky v. Frymer, in such event, a court may grant the defendant’s motion only if it finds the plaintiff’s explanation to be unreasonable. If, however, such a determination requires a finding of a material fact or a determination regarding the plaintiff’s credibility, a motions judge should not determine the reasonableness of the explanation without a trial to determine such matters. In such circumstances, therefore, the motions judge cannot make a determination of whether the plaintiff should reasonably have discovered his or her claim outside the applicable limitation period – that is, satisfied the plaintiff’s obligation of due diligence that is implicit in s. 5(1)(b) of the Limitations Act, 2002 – and must therefore dismiss the defendant’s motion.

[29] In my opinion, the Court finds itself in that position in the present circumstances.

[30] Cooper’s explanation for her failure to investigate the ownership of the Pole is essentially that her communications with the two most obvious potential defendants – the condominium corporation and the City – did not prompt a suggestion that Hydro might be the owner of the Pole. She says, in effect, that she was entitled to rely on the communication from the condominium corporation’s insurer and her communications with the City that suggested that the City was the owner in the absence of any suggestion to the contrary from the City until December 2016. Accordingly, Cooper’s argument proceeds on the basis that she never received any information that gave rise to a need to inquire further regarding the ownership of the Pole.

[31] Cooper submits that this is a reasonable explanation, given the low threshold for a reasonable explanation in the case law. She relies on the decisions in Galota v. Festival Hall Developments Ltd. et al., 2015 ONSC 6177; upheld 2016 ONCA 585; Madrid v. Ivanhoe Cambridge Inc., et al., 2010 ONSC 2235 and Kesian v. The City of Toronto, 2016 ONSC 6461 as evidence of this low threshold and as exhibiting similar circumstances in which courts have concluded that the threshold had been satisfied.

[32] Hydro effectively argues that Cooper’s explanation is not reasonable in view of either or both of her receipt of the Article and the City’s denial of jurisdiction in its statement of defence. In my view, however, given the evidence before the Master and this Court, neither Cooper’s mere receipt of the Article, without evidence that she actually read it, nor the City’s denial of jurisdiction in its statement of defence were sufficient to fix her with knowledge that required a further investigation for the following reasons.

[33] The mere existence of the Article cannot be a basis for concluding that Cooper ought reasonably to have conducted a further investigation. This would require a finding, by inference or otherwise, that she read the Article such that she was aware, at a minimum, of the subject-matter of the Article even if she did not have knowledge of the specific facts set out therein. However, the Court’s conclusion above that a trial is required to determine whether Cooper read the Article precludes such a finding by this Court.

[34] Accordingly, Hydro’s second submission really turns on whether Cooper’s receipt of the City’s statement of defence was sufficient to require a further investigation. I accept that a specific denial of jurisdiction could, in some circumstances, have such a result. However, in this case, the denial was only one of at least ten alternative defences asserted by the City in its statement of defence. In addition, the denial was not accompanied by the assertion of any specific facts supporting this defence nor did it identify Hydro as the owner of the Pole. It is not reasonable to assume that a plaintiff would identify a potential issue of ownership from a bald denial of jurisdiction in such circumstances.

[35] I also note that Hydro has identified a number of searches that it says would have revealed its ownership of the Pole if Cooper had conducted one or more of them. I do not doubt the utility of such searches. However, the issue is not whether such searches would have revealed Hydro’s ownership of the Pole but rather whether any searches were required, that is, put in the negative, whether Cooper’s failure to undertake any of these searches was unreasonable.

[36] In summary, the relevant evidence before the Court is limited to the following. The Pole was located on a City sidewalk. There is no evidence of any indication on the Pole that Hydro was the owner. There is also no evidence that Cooper ever read, or understood the contents of, the Article prior to May 15, 2017, which would have alerted her to Hydro’s ownership. Lastly, for a period of more than 44 months after Cooper put the City on notice of her claim, the City did not deny ownership of the Pole in any communication with Cooper or her counsel. In these circumstances, I conclude that the determination of whether Cooper has a reasonable explanation for her failure to investigate further the ownership of the Pole will require a trial of the issue regarding whether, and if so when, Cooper or her counsel read the Article.

[37] Based on the foregoing, the Order of the Master is set aside and leave is granted to Cooper to join Hydro as a defendant in the action without prejudice to Hydro to assert any defence available to it, including the expiry of a limitation period. In particular, for clarity, I make no finding in this Endorsement regarding Cooper’s actual knowledge as a result of receipt of the Article other than the finding that, on the basis of the record before the Master and this Court, it is not possible to draw an inference, on a balance of probabilities, that Cooper read and understood the Article at any date prior to May 15, 2017. As the successful party, Cooper is entitled to costs on a partial indemnity basis in the all-inclusive amount of $8,400.

Wilton-Siegel J.

Date: December 23, 2019