Court File and Parties

COURT FILE NO.: CV-14-1539-00A2 DATE: 20180724 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Maria Simard, Plaintiff – and – The Corporation of the Town of Gravenhurst, Defendant – and – Her Majesty the Queen in Right of Ontario, Third Party

Counsel: Amanda Pinto, for the Defendant Marie Sydney, for the Third-Party

HEARD: January 5, March 6, April 9, 2018

RULING RE: Motion to amend third party claim

MCKELVEY J.:

[1] The defendant, The Corporation of the Town of Gravenhurst (“Town of Gravenhurst”), has brought a motion to amend its third party claim against the third party, Her Majesty the Queen in Right of Ontario (“Ontario”).

[2] The plaintiff’s action arises out of a motor vehicle accident which occurred on September 15, 2012. The driver of the vehicle which struck the plaintiff’s vehicle was driven by a taxi driver employed by Gravenhurst Taxi Ltd. (“Gravenhurst Taxi”). Gravenhurst Taxi is co-owned by Mr. Kjell Iverson. The taxi was being driven at the time of the accident by Mr. Joseph Conway. Two separate actions have been commenced by the plaintiff Maria Simard. One action names Mr. Conway, Gravenhurst Taxi and Mr. Iverson as defendants. The other action names the Town of Gravenhurst as a defendant. The allegations made in the statement of claim against the Town of Gravenhurst are that it was negligent in issuing a taxi cab licence to Mr. Conway.

[3] The Town of Gravenhurst issued a third party claim against Ontario. This third party action related to an allegation that Mr. Conway’s driver’s licence had been suspended for medical reasons but was lifted without proper investigation prior to the motor vehicle accident. Paragraph 6 of the third party claim states as follows:

The Town pleads that at all material times prior to the alleged motor vehicle accident, MTO was or ought to have been aware of medical conditions suffered by Conway that could or would likely affect his ability to safely operate a motor vehicle, and at one point had issued a suspension of Conway’s licence for medical reasons, yet for reasons wholly unknown to the Town, lifted that suspension prior to Conway applying for and obtaining a Taxi Driver’s Licence from the Town.

[4] The statement of claim was served on the Town of Gravenhurst on January 19, 2015. The third party claim was issued on July 23, 2015, well within the two year time frame prescribed under s. 18 of the Limitations Act, 2002, S.O. 2002, c. 24, for claims of indemnity.

[5] The Town of Gravenhurst now wishes to amend its third party claim to include additional allegations against Ontario. Specifically the Town of Gravenhurst wants to allege that there was a second suspension of Mr. Conway’s driver’s licence. This suspension was for a period of two years following a conviction for careless driving on May 11, 2010. The two year suspension would have run, if it existed, until May 10, 2012 and would have pre-dated the motor vehicle accident on September 15, 2012. However, Mr. Conway was hired by Gravenhurst Taxi on February 14, 2012 and the theory of the defendant is that Mr. Conway would not have been given a taxi licence on February 14, 2012 had he been prohibited from driving at that time. The Town therefore suggests that he would not likely have been driving the taxi in question on September 15, 2012. The new allegation against Ontario is that they were negligent in failing to properly note Mr. Conway’s suspension in his motor vehicle record.

The issues which must be addressed and the legal principles applicable to this motion

[6] Rule 26.01 of the Rules of Civil Procedure provides that on a 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”. It is clear from the plain wording from the rule that the granting of an amendment is mandatory, unless non-compensable prejudice would result. See for example: Farmers Oil and Gas Inc. v Ontario (Natural Resources), 2016 ONSC 6359, [2016] 134 OR (3d) 390 (Div. Ct.) at para. 13.

[7] Case law has also established that an amendment which establishes a new cause of action will not be allowed if the relevant limitation period has expired. See: Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469 at para. 28.

[8] On this motion the defendant takes the position that the proposed amendments do not constitute a new cause of action in its third party claim. If the amendments do in fact constitute a new cause of action the defendant argues that the principle of discoverability applies to a third party claim and that there is at least a triable issue on the principle of discoverability.

[9] The third party takes the position that the proposed amendments do constitute a new cause of action and that the principle of discoverability does not apply to a third party claim. Further, even if the principle of discoverability applies it argues that there is no triable issue on the issue of discoverability and that the amendments are therefore statute barred.

[10] As a result, there are three issues on this motion which must be addressed as follows:

1. Do the amendments proposed by the defendant constitute a new cause of action for purposes of the third party claim?
2. Does the principle of discoverability apply to a third party claim?
3. If the principle of discoverability applies to a new cause of action contained in the third party claim, is there a triable issue on the principle of discoverability?

[11] For the reasons set out below I have concluded that the requested amendments should be allowed, subject to the right of the third party to plead and rely upon a limitation defence.

Do the amendments proposed by the defendant constitute a new cause of action for purposes of the third party claim?

[12] In the existing third party claim the Town of Gravenhurst pleads that due to a medical condition suffered by Mr. Conway, his licence should have been suspended. Virtually all of the allegations of negligence focus on that theory of liability. The Ministry of Transportation record dated February 14, 2012 (when a taxi licence was issued) has been produced. It shows that on March 25, 2010 Mr. Conway’s licence was suspended for medical reasons until September 16, 2010. The driver’s record also shows that on May 11, 2010 Mr. Conway was convicted of careless driving. There is no reference to any driving prohibition as a result of this conviction. In the notes of the officer who investigated the accident, however, the following handwritten notation is found, “noted conviction for careless, 2010/05/11, two year prohibition, not registered? Ted Carlton to investigate further”.

[13] On May 30, 2017, Counsel for Gravenhurst Taxi and Mr. Iverson provided to counsel for the Town of Gravenhurst and others an Offence Detail Report which appears to show that on May 11, 2010, Mr. Conway was convicted of careless driving under s. 130 of the Highway Traffic Act, and that as part of his conviction there was, “two years driving prohibition-exp. date 10 May 2012”.

[14] It was in response to this information that led the Town of Gravenhurst to seek an amendment to its third party claim.

[15] The defendant argues that as the proposed amendments only deal with its already pleaded claim in negligence and as Ontario remains the only third party, the Town is therefore not seeking to add a new cause of action. The defendant argues that negligence is one indivisible cause of action and cannot be split into several causes of action. Therefore the defence argues that while the proposed amended third party claim adds particulars regarding the Town’s claim in negligence, the additional particulars do not constitute a new cause of action. The defendant relies upon the Ontario Court of Appeal decision in Cox v. Robert Simpson Co. (1974), , 1 O.R. (2d) 333. In that case the plaintiff was involved in a motor vehicle accident in November, 1970. He brought an action for the repairs required to his vehicle which settled. In accordance with the applicable legislation, the plaintiff was “deemed to have accepted it (the amount paid) in full satisfaction of his claim”.

[16] Subsequently the plaintiff in the Cox decision commenced another action in which he claimed damages for personal injury. A successful motion was brought by the defendant to dismiss that action. On appeal, the Court noted that the factual situation which gave the plaintiff a cause of action was the negligence of the defendant which caused the defendant to suffer damage. The Court went on to state, “This single cause of action cannot be split to be made the subject of several causes of action”. In the case before me, the defendant therefore argues that having asserted a claim in negligence in the third party claim, the provision of additional particulars does not constitute a new cause of action.

[17] It is apparent, however, in considering whether a new cause of action has been asserted for purposes of an amendment to a pleading, the courts have been guided by different considerations and have adopted a broader, factually oriented approach to the meaning of “cause of action” in interpreting and applying r. 26.01.

[18] In Farmers Oil and Gas Inc. v. Her Majesty the Queen in Right of Ontario, supra., Justice Nordheimer for the Divisional Court reviewed a number of authorities and concluded,

As may be obvious from the above, the distinction between the authorities relied upon by the appellant, and those relied upon by the respondent, turns on whether the proposed amendments do, or do not, arise out of the same facts, or the factual matrix, that was pleaded in the original statement of claim. If they do, then the amendments should be permitted. If they do not, and the limitations period has expired, then the amendments should be refused.

[19] This approach is supported by the Ontario Court of Appeal’s decision in 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848, where the Court states at para. 23,

Based on the foregoing, an amendment will be refused when it seeks to advance, after the expiry of a limitation period, a “fundamentally different claim” based on facts not originally pleaded.

[20] A helpful definition of a “cause of action”, is found in the decision of Bank of Nova Scotia v. PCL Constructors Canada Inc., 2009 ONSC 56303, a decision of Master Glustein (as he then was). Master Glustein refers to the decision in Ascent Inc. v. Fox 40 International Inc., [2009] O.J. No. 2964, where a cause of action was defined as follows:

A “cause of action” has been defined as a “factual situation the existence of which entitles one person to obtain from the court a remedy against another person.” The key is whether substantially all of the material facts giving rise to the "new cause of action" have previously been pleaded or whether new facts are sought to be added that are relied upon to support a new cause of action. A new cause of action is not asserted if the amendments simply plead an alternative claim for relief arising out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon which the original right of action is based.

[21] It is apparent that in assessing whether a new cause of action has been pleaded the case law sometimes appear to favour a generous reading of the original claim and a fair bit of latitude in considering the extent to which the original pleading extends. For example, in Phommachanh v. Toronto Transit Commission, 2002 Carswell Ont. 1157, the Court dealt with a situation where the plaintiff sued the TTC and the streetcar driver. The particulars of negligence related to the manner in which the streetcar was operated, the competence of the streetcar driver and the condition of the streetcar. A motion was subsequently brought to add as particulars of the negligence pleaded against the TTC, the unsafe design of the streetcar and the Spadina streetcar line. The master found that these amendments constituted an enlargement of the existing claim but not a new claim. On appeal, the Court stated,

I do not believe the amended 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 that 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 Mr. Phommachanh 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.

[22] In the present case I am satisfied that the proposed amendments of the third party claim do constitute a new cause of action. In the original third party claim, the entire focus for the claim is related to the allegation that Ontario was negligent in allowing Mr. Conway to hold a valid driver’s licence in light of his medical disabilities. This is reflected in the allegations of negligence which include failing to properly interpret, screen or prioritize Mr. Conway in terms of risk to road safety, failing to properly interpret or assess medial reports, and failing to refer Mr. Conway’s driver’s licence suspension matter to the medical advisory committee for review. While some of the allegations in the third party claim are more general, a fair reading of the pleading does not raise any issue other than Mr. Conway’s ability to drive based on his medical condition. This conclusion is supported by the evidence of defence counsel who fairly agreed on cross-examination that the intention of the third party claim when it was first issued was to sue the Crown in respect of medical suspensions and not non-medical suspensions.

[23] The proposed amendments to the third party claim attempt to add allegations of negligence relating to a failure by Ontario to properly record on Mr. Conway’s driving licence a two year licence suspension as a result of a conviction for careless driving. This conviction occurred on May 11, 2010. This date is different than the medical suspension which commenced on March 25, 2010. There is no factual overlap between the medical licence suspension and the alleged two year driving prohibition.

[24] In these circumstances even with a generous interpretation of the original third party claim and due allowance for drafting deficiencies, the proposed amendments cannot reasonably be seen as falling within the four corners of the existing third party claim. They do not arise out of the same factual matrix of the original third party claim. Further, the proposed amendments cannot fit within a description of particulars of an allegation already plead or additional facts upon which the original right of action is based.

[25] In these circumstances I conclude that the proposed amendments to the third party claim do constitute a new cause of action. This conclusion is also supported by the wording of the proposed amendment of the third party claim, which appears to recognize that a new cause of action is being pleaded. At paragraph 6(f) of the proposed amended pleading the defendant states,

The Town pleads and relies upon the doctrine of discoverability, and states that in all of the circumstances of this case, prior to the expiry of the limitation period which arises pursuant to the Limitations Act, 2002, it did not know, and through the exercise of due diligence could not have reasonably have been expected to know of:

(i) the existence of the 2 year driving ban that accompanied Mr. Conway’s May 11, 2010 conviction for careless driving;

(ii) the negligence of one or both of the MTO and/or the Ministry of the Attorney General for Ontario, including their failure to properly communicate, record and implement said 2 year driving ban;

(iii) the causal connection between the aforementioned negligence of one or both of the MTO and/or the Ministry of the Attorney General for Ontario, and the Plaintiff’s damagers in the main action; and,

(iv) other relevant factors pursuant to s. 5(1)(a) of the Limitations Act, 2002.

Does the principle of discoverability apply to a third party claim?

[26] The plaintiff’s statement of claim was served on the Town of Gravenhurst on January 19, 2015. The initial third party claim was served on Ontario on July 23, 2015. The draft amended third party claim was served on counsel for Ontario on July 21, 2017. The delay in sending the draft amended claim therefore was in excess of two years from the time the plaintiff’s statement of claim was served on the Town of Gravenhurst.

[27] Under s. 4 of the Limitations Act, 2002, a proceeding, “shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered”.

[28] Section 18(1) of the Limitations Act, 2002, provides for claims of contribution and indemnity. It states,

For the purposes of subsection 5 (2) and section 15, in the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought shall be deemed to be the day the act or omission on which that alleged wrongdoer’s claim is based took place.

[29] The issue which arises in connection with s. 18(1) is whether the doctrine of discoverability applies to claims for contribution and indemnity. Two lines of authority, which are irreconcilable, have emerged in the case law. The first line of cases is represented by Miaskowski v. Persaud, 2015 ONSC 1654, [2015] O.J. No. 1208. In that case, the Court concluded that the discoverability principle did not apply to s. 18 of the Limitations Act, 2002. If this analysis is correct and in light of the fact that the proposed amendments constitute a new cause of action, the request of the defendant to deliver an amended pleading should be dismissed due to the expiry of the limitation period.

[30] On the other hand, there is another line of cases which suggest the discoverability principle does apply to third party claims. This is reflected in the decision in Demide v Attorney General of Canada et al, 2015 ONSC 3000, [2015] O.J. No. 2611, where the Court states at para. 95, “I find that the basic limitation period applicable to claims for contribution and indemnity is indeed subject to discoverability, and that the parties before me were correct to approach this motion in that manner”.

[31] Since this motion was argued, the Ontario Court of Appeal has resolved the issue of discoverability under s. 18 of the Limitations Act in the case of Mega International Commercial Bank (Canada) v. Yung, 2018 ONCA 429. In that decision, the Court concludes that s. 18 of the Limitations Act, 2002, does not displace the discovery principles found in ss. 4 and 5 of the Act. At para. 74 of the decision, the court states,

I would therefore hold that the motion judge erred in his interpretation of s. 18. The two-year limitation period prescribed by ss. 4, 5(2), and 18 for contribution and indemnity claims presumptively begins on the date of service of a claim in respect of which contribution and indemnity is sought. That presumptive limitation period start date, however, can be rebutted by the discoverability principles prescribed in s. 5 of the Limitations Act, 2002.

[32] It follows from the decision in Mega International that if there is a tenable argument that the limitation period has not expired due to a discoverability issue, then the issue of the limitation period will need to be determined based on evidence called on that issue.

Is there a triable issue on the principle of discoverability?

[33] The applicable principles to follow where there is an issue of discoverability were set out by the Court of Appeal in Pepper v. Zellers Inc., 2006 ONCA 42355, [2006] O.J. No. 5042. At para. 18 the Court states,

The motion judge referred to the proper approach to discoverability on a motion to add a party, which was concisely and clearly set out by Master Dash in Wong v. Adler (2004), 2004 ONSC 8228, 70 O.R. (3d) 460 (S.C.J.), at para. 45 affd 2004 ONSC 73251, [2005] O.J. No. 1400 (Div. Ct.),

What is the approach a judge or master should take on a motion to add a defendant where the plaintiff wishes to plead that the limitation period has not yet expired because she did not know of and could not with due diligence have discovered the existence of that defendant? In my view, as is clearly implied in Zapfe, the motions court must examine the evidentiary record before it to determine if there is an issue of fact or of credibility on the discoverability allegation, which is a constituent element of the claim. If the court determines that there is such issue, the defendant should be added with leave to plead a limitations defence. If there is no such issue, as for example where the evidence before the motions court clearly indicates that the name of the tortfeasor and the essential facts that make up the cause of action against such tortfeasor, were actually known to the plaintiff or her solicitor more than two years before the motion to amend, the motion should be refused. If the issue is due diligence rather than actual knowledge, this is much more likely to involve issues of credibility requiring a trial or summary judgment motion, provided of course that the plaintiff gives a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence. That is not to say that such motion could never be denied if the evidence is clear and uncontradicted that the plaintiff could have obtained the requisite information with due diligence such that there is no issue of fact or credibility.

[34] I have concluded that a similar analysis is appropriate on the motion before me where the defendant is attempting to plead a new cause of action.

[35] In the present case the third party argues that the essential facts regarding the new claim were either known to the defendant or would have been known had they exercised due diligence. Because there is an issue of due diligence raised by the third party, this case falls into a category where it is more likely that the limitation issues should be left to the trial judge to determine based on a full evidentiary record.

[36] In the present case the Town of Gravenhurst agrees that it had the application of Mr. Conway for a taxi licence as well as a copy of the MTO record as of February 14, 2012. As previously noted, the MTO record does not include any reference to the alleged two year driving prohibition as a result of the careless driving conviction.

[37] The handwritten police notes containing a reference to a possible driving prohibition as referenced above were delivered on February 12, 2015. The OPP Offence Detail Report which sets out in a more formal way the conviction for careless driving and the driving prohibition was not delivered until May 30, 2017 following the examinations for discovery of Mr. Conway and Mr. Iverson which took place in July of 2016.

[38] The draft amended third party claim was not circulated to counsel until July 21, 2017. The formal motion seeking the amendment was served on August 21, 2017.

[39] In considering the timelines noted above, it is apparent that there are several scenarios that a court must consider as follows:

1. If the new claim should have been discovered when the notes of the police officer were delivered in February 2015, it follows that the limitation period would have expired before any steps were taken to amend the third party claim. The third party argues that the defendant had all the information it needed in February of 2015 when the notes of the police officer were delivered and which raised an issue as to why the two year prohibition was not registered.
2. If the date of discoverability is based on the date of discoveries, these occurred in July of 2017 and the motion to add the new claims would have been commenced within the two year limitation period.
3. If the date of discoverability did not occur until delivery of the offence record on May 30, 2017, this would again support a conclusion that the motion to amend the third party claim was brought within the two year limitation period.
4. If a court concludes that the notes of the police officer were delivered in February of 2015 and ought to have put defence counsel on notice of the need to conduct further investigation, a court will need to consider when with due diligence the defendant should have become aware of the facts on which its new allegation of negligence is based.

[40] I have concluded that the police notes may not provide sufficient information to have put the defence on notice of the new claim they are seeking to add. The presence of a question mark in the note and the reference to the need for another officer to investigate further suggest the need to conduct further investigation before drawing any conclusion as to whether a suspension was imposed as a result of the careless driving conviction. It is significant to note that the MTO record is clearly at variance with the suggestion in the police officer’s motes that a suspension was imposed on the conviction for careless driving.

[41] Counsel for the defendant, Charles Painter, has filed two affidavits on this motion. He was also cross-examined on those affidavits. In his initial affidavit dated August 17, 2017, Mr. Painter asserts at para. 11 that it was not until May 30, 2017 when he received the formal OPP offence summary that he became aware that there had been a two year licence ban imposed upon Mr. Conway which was not implemented by the Province. In his subsequent affidavit dated October 20, 2017, he elaborates further at paras. 4 and 5 as follows:

At the end of the day, the cryptic entry about a possible 2 year ban found deep within the handwritten notes of PC Houston would not – if I had read it back in March 2015 – have raised any concern or suspicions on my behalf, because of what the 3 Year Abstract showed.

Indeed, even when the possibility of some kind of mistake being made was first theorized and shared by Ms. Gronke, counsel for the Defendants, Gravenhurst Taxi Ltd. and Kjell Iverson, on July 15, 2016, it still did not make sense to me that if a medical suspension for the incident on February 5, 2010 was imposed, and subsequently lifted/ended 6 months later, that a separate and overlapping suspension as punishment for Careless Driving was also supposed to be imposed.

[42] At para. 7 of this affidavit he goes on to state that in the documents provided by counsel for Mr. Conway on November 16, 2016 from his criminal lawyer there was an indication that the Crown itself was only seeking a one year driving ban in respect to the careless driving charge.

[43] In cross-examination Mr. Painter acknowledged that there were no efforts made on his part to clarify the entry in Officer Houston’s note. To date, no transcript of the proceedings where Mr. Conway was convicted of careless driving has been obtained. It is also interesting to note that the third party has denied that a two year driving prohibition was imposed upon Mr. Conway at the time of his conviction on May 11, 2010 for careless driving. Of course, if this assertion is correct, the allegation of the defendant and the issues on this motion are moot.

[44] I have concluded that the outcome on whether the limitation period has expired is likely to be determined on the due diligence issue. However, there is insufficient evidence which allows me to determine when the potential claim reasonably could have been discovered. For example, we do not know whether Ted Carlton conducted some follow-up investigation and if so, where that report is and when it could reasonably have been accessed. We also do not know whether a transcript of the proceedings where Mr. Conway was convicted is available and if so, when it could have been accessed. We do not even know at this point whether a two year driving prohibition was entered by the Court at the time of Mr. Conway’s conviction. As noted above, the third party denies that such a prohibition was ever imposed.

[45] It may turn out to be significant as to when the defendant could or should have brought a motion to obtain the OPP offence record and how long it would have taken to produce that record in response to the order. To some extent the volume of productions by all parties may inform the court as to when the defendant ought to have identified the comments in the police officer’s notes. The credibility of defence counsel may be relevant in considering some of these issues especially his assertion that the police officer’s notes would not have been a concern. The court may also need to consider whether other steps should have been taken before a motion to obtain the OPP records, and if so, how this might have affected the timeline for obtaining relevant information. The analysis of what steps should have been taken, the timing of these events and the information which would have been available will all be critical issues for the court to consider. In the absence of evidence for these and other points there is an inadequate evidentiary record before this Court to determine when the defendant could have ascertained with due diligence the facts on which they now rely in support of their proposed amendment.

[46] As noted in the Ontario Court of Appeal decision in Lawless v. Anderson, 2011 ONCA 102,

The principle of discoverability 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 to have been discovered, by the plaintiff by the exercise of reasonable diligence.

[47] Given the evidentiary vacuum as to what information was available through reasonable diligence and the fact that there will no doubt be credibility issues about the explanation for the delay given by defence counsel, it is not possible to draw any firm conclusions about the starting date for the limitation period for the latest allegation of the defendants and whether the claim is statute barred.

Conclusion

[48] For the above reasons I conclude that the defendant may amend its third party claim without prejudice to the right of the third party to plead and rely upon a limitation period defence.

[49] If the parties are not able to agree on the costs of this motion, they may speak with the trial coordinator within 30 days of the date of these reasons to take out an appointment to address the issue of costs. In such event, the parties will deliver concise briefs at least two days before their attendance. If no arrangements are made within 30 days for an appointment to speak to costs, there will be no order for costs.

Justice M. McKelvey Released: July 24, 2018

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Maria Simard Plaintiff – and – The Corporation of the Town of Gravenhurst Defendant – and – Her Majesty the Queen in Right of Ontario Third Party RULING RE: Motion to amend third party claim Justice M. McKelvey Released: July 24, 2018