DATE: 20060222

DOCKET: C43112

COURT OF APPEAL FOR ONTARIO

RE:

FAMILY DELICATESSEN LTD., 643254 ONTARIO INC., THE DONUT SHOPPE INC., LONDON BAKERY CO LIMITED, PAUL SMITH carrying on business as HASBEANS, ARSHALUICE AINTABLIAN carrying on business as KNICKERBOCKERS FINE FOOD EMPORIUM, EFTHALIA FROUSSIOS carrying on business as ALBERT’S AT THE MARKET RESTAURANT, TOM MAGLARIS AND JOHN MAGLARIS, carrying on business as COVENT GARDEN RESTAURANT, PAUL SMITH AND SON LIMITED, WILL PAWLOWSKI AND DOROTHY PAWLOWSKI carrying on business as ANNADOR FARMS, CAROL MEDYNSKI carrying on business as C. MARCO PRODUCE and COOKIE KING LIMITED (Plaintiffs/Appellants: Family Delicatessen Ltd., 643254 Ontario Inc. and Knickerbockers Fine Food Emporium) v. THE CORPORATION OF THE CITY OF LONDON and THE COVENT GARDEN MARKET CORPORATION (Defendants/Respondent: The Corporation of the City of London)

BEFORE:

DOHERTY, MOLDAVER and JURIANSZ JJ.A.

COUNSEL:

Kelly L. Webster as agent for counsel of record, Angela Assuras

for the appellants

Stuart R. Mackay

for the respondent, City of London

HEARD:

February 15, 2006

On appeal from the order of Justice E.R. Browne of the Superior Court of Justice dated January 24, 2005.

E N D O R S E M E N T

[1] We agree with counsel for the appellants that the motion judge should have considered the appellants’ motion to amend their statement of claim before determining the motion brought by the respondent (the City) to strike the statement of claim as not disclosing a cause of action.

[2] We are satisfied, however, that the motion to amend would have failed on its merits and that the motion judge correctly held that the unamended statement of claim did not disclose the cause of action against the City. Consequently, paragraph 2 of the order dismissing the action against the City should stand and the appeal should be dismissed.

[3] In the statement of claim issued in June 1988, the City was named only as a nominal defendant so that it would be bound by any judgment made against the true defendant, Covent Garden Market Corporation (“Covent Garden”). In the proposed amended statement of claim brought forward in November 2004, new causes of action were alleged directly against the City. Primarily, it was alleged that Covent Garden was the City’s agent and that the City was responsible in law for misrepresentations allegedly made by Covent Garden to the appellants.

[4] The appellants contend that the information which supported the new causes of action alleged against the City in the proposed amended statement of claim came to their attention during the discoveries. Counsel submitted that it was during these discoveries that the appellants learned that the City was the true landlord.

[5] The record does not support the appellants’ contention. The allegations in the proposed amended statement of claim are based on the relationship between the City and Covent Garden as described in the provincial statute creating Covent Garden. The proposed amended statement of claim provides a revised interpretation of that relationship.

[6] The appellants could have brought the motion to amend their claim at any time after the outset of these proceedings. They chose not to do so despite repeated requests from the City that they either bring a motion to amend or agree to a dismissal of the action against the City. There is no justification for the inordinate delay in bringing the motion to amend the statement of claim. While delay is not in and of itself a basis for refusing an amendment, there must come a point where the delay is so long and the justification so inadequate that some prejudice to the defendants will be presumed absent a demonstration by the party seeking the amendment that there is in fact no prejudice despite the lengthy and unexplained delay.

[7] We agree with counsel for the City that there would be some prejudice to the City had the amendment been allowed. The City had participated in the proceedings for some six years on the basis that it was a nominal defendant. Its participation in the lawsuit was minimal and it took a cooperative stance with the other parties. Were the proposed amendment to be allowed, the City would be in a very different position with serious allegations of misrepresentation being brought against it. Its litigation strategy may well have been entirely different. It, of course, cannot undo what has already been done in this proceeding. While it is true that the prejudice to the City flowing from the proposed dramatic change in the course of this litigation could be addressed in part by appropriate orders concerning added discoveries and related matters, we are satisfied that the City could not be put in the position it would have been to meet these allegations had they been made in a timely fashion.

[8] We also accept counsel for the City’s submission that the proposed allegations in the amended statement of claim would be barred by the applicable limitation period if the appellants had to advance them now by way of a new claim. The effective loss of the benefit of a limitation period is presumptively prejudicial to the City and must be taken into account in considering a proposed amendment.

[9] There is an additional unusual feature of this case that must be addressed in deciding whether the proposed amendment should have been allowed. There is no prejudice to the appellants flowing from a denial of the motion to amend. We say that for three reasons. The pleadings make it clear that the appellants’ real claim is against Covent Garden. That claim remains and is scheduled to go to trial. The City has cooperated with the parties and will continue to do so. There is no danger that if the City is released from the action, information in the City’s possession will not be available to the appellants. Finally, and this is the most unusual aspect of the case, as counsel for the City acknowledges, under the terms of the statute, the City must pay any damages awarded to the appellants if Covent Garden cannot pay those damages. Consequently, even if the City is not a party to the litigation, the appellants will still be able to look to the City to satisfy any damages awarded to them if Covent Garden cannot pay those damages. For practical purposes, a refusal of the motion to amend the claim does not negatively alter the appellants’ position in this litigation.

[10] In summary, although the motion judge should have addressed the merits of the motion to amend, he would have dismissed that motion had he done so and proceeded to consider the City’s motion to strike the claim as unamended.

[11] We agree with the motion judge’s finding that the statement of claim as unamended did not disclose any cause of action against the City. That claim was properly struck by the motion judge.

[12] The appeal is dismissed. Costs to the City on a partial indemnity basis fixed at $7,500, inclusive of disbursements and GST.

“Doherty J.A.”

“M.J. Moldaver J.A.”

“R.G. Juriansz J.A.”