CITATION: Rojas v. Porto, 2019 ONSC 6822
DIVISIONAL COURT FILE NO.: DC-206/19 DATE: 20191126
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
MARCO ROJAS
Appellant
– and –
PRINCIA PORTO also known as PATRICIA PORTO and CORPORATION OF THE CITY OF TORONTO
Respondents
– and –
RESIDENCE ENGINEERING and FILIPE SOUSA
Third Parties
Nicolas C. Canizares, for the Appellant
Mario Delgado, for Residence Engineering and Filipe Sousa
HEARD at Toronto: November 25, 2019
REASONS FOR DECISION
F.L. Myers J.
Background
[1] This is an appeal from the final decision of Master Josefo dated January 16, 2019 refusing the appellant leave to amend his statement of claim to add the third parties as party defendants. The appeal is brought to the Divisional Court under s.19(1)(c) of the Courts of Justice Act, RSO 1990, c C.43. It is heard by a single judge of the court pursuant to s.21(2)(a) of the statute.
[2] For the reasons that follow the appeal is dismissed.
Standard of Review
[3] The standard of review in an appeal from the order of a master is the same as that for an appeal from an order of a judge: correctness for an error of law, palpable and overriding error for an error of fact, and correctness or palpable and overriding error for a question of mixed fact and law, depending on whether there is an extricable legal principle at issue. See: Zeitoun v. Economical Insurance Group, 2009 ONCA 415 at para. 1; Wellwood v. Ontario (Provincial Police), 2010 ONCA 386 at para. 28.
The Issues
[4] The appellant submits that the Master erred in finding that the limitation period had expired prior to the bringing of his motion to amend his statement of claim to add the third parties as defendants.
[5] Prior to argument, the court directed the registrar’s office to advise counsel that it wished to hear argument on the question of whether the Master ought to have decided the limitation period issue on a motion to amend the pleadings rather than granting the motion and leaving the resolution of the limitation period for adjudication on its facts at a later stage of the proceeding. The additional issue then was: when can a Master or a judge decide a limitation argument on its merits at the preliminary pleadings motion?
[6] As expected, the appellant argued that the Master erred in deciding contested facts at a preliminary motion. The respondent argued that there was no contested issue of fact or credibility impeding the resolution of the limitation period issue.
The Legal Test
[7] The seminal case on the topic of adding third parties as defendants after the alleged expiry of the limitation period is the decision of Master Dash in Wong v. Adler, 2004 8228 (ON SC), affd 2004 73251 (ON SCDC). It has been approved expressly by the Court of Appeal. See: Pepper v. Zellers Inc. (Zellers Pharmacy), 2006 42355 (ON CA), at para. 21. It remains good law.
[8] In Wong, the plaintiff sued the defendant for damages caused when the defendant’s car rear-ended her car. The defendant issued third party proceedings against another driver and car owner claiming that the accident was caused by the third party’s car first rear-ending the defendant’s car and propelling it into the plaintiff’s car. The plaintiff moved to add the third party as a party defendant to her main action more than two years from the date of the accident. The applicable limitation period was two years under s.206(1) of the Highway Traffic Act, RSO 1990 c H.8.
[9] Shortly after the accident and well prior to issuing the statement of claim, the defendant’s insurer had advised the plaintiff and her insurer that the defendant denied liability for the accident and had identified the third party as the responsible party.
[10] There was no evidence adduced as to any steps the plaintiff or her paralegal took to investigate the third party’s liability prior to the plaintiff retaining counsel near the two-year anniversary of the accident. Shortly after being retained and just prior to the expiry of the limitation period, counsel issued a statement of claim against the defendant alone. Apparently, counsel did not know that the third party had been involved in the accident.
[11] The defendant defended and delivered a third party claim in due course. The plaintiff claimed that this was the first time her lawyer learned of the third party and was the relevant date for limitation period purposes. The motion to amend the statement of claim was brought within two years of the delivery of the third party claim but nearly four years after the accident and the defendant’s insurer telling the plaintiff and her paralegal that liability rested with the third party.
[12] The legal issue for the purposes of the motion in Wong was whether the limitation period commenced to run at the time of the accident and letter from the defendant’s insurer or at the later time when the plaintiff’s counsel received the third party claim. In Wong, the issue arose at common law in relation to the interpretation of the Highway Traffic Act. A very similar issue arises in this case under the Limitation Act, 2002, SO 2002, c 24, Sched. B.
[13] Citing the Court of Appeal’s decision in Aguonie v Galion Sold Waste Material Inc. (1998), 1998 954 (ON CA), 38 OR (3d) 161, Master Dash recited the legal test that the limitation period begins “when the material facts on which it is based have been discovered, or ought to have been discovered by the plaintiff in the exercise of reasonable diligence”. The test is augmented by the current legislation but not in a way that is material to this appeal.
[14] The Master also noted that in Aguonie the Court of Appeal found that the question of when the cause of action arose and the limitation period commenced is a question of fact.
[15] In Aguonie, there was a question as to when the plaintiff discovered the name of the proposed defendant. The Court of Appeal required that factual issue to go to trial. The Master in Wong determined that on the facts before him, there was no issue of fact that required a trial in order to know when the cause of action was discovered and the limitation period had begun. He concluded that the plaintiff’s paralegal had actual notice of the proposed defendant’s name and role more than three years before the plaintiff brought her motion. With no evidence to the contrary, the Master found that it would be wrong to simply rubber stamp the plaintiff’s motion to amend and send it to trial.
[16] The Master set out the relevant principles to govern this situation as follows:
[45] 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 [page477] 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. [Emphasis added.]
[17] Master Dash drew support for his decision from a decision of the Court of Appeal which the appellant also relies upon before me; Zapfe v Barnes. In Zapfe, the plaintiff claimed that her car was hit by the defendant’s car as it was leaving a parking lot. The defendant defended and delivered a third party claim against the local municipality. The defendant alleged that her view of the plaintiff’s oncoming car was obstructed by large piles of snow that the local municipality failed to remove despite its duty to do so. Three months later, the defendant delivered another third party claim adding a claim against the area municipality on the basis that the local municipality argued that its duty was only to plow the sidewalks whereas, she said, the area municipality was required to plow the roads.
[18] To support a late motion to add the two municipalities as defendants in the main action, counsel for the plaintiff adduced evidence of why she did not know of the issues with the municipalities within two years of the accident. She distinctly put in issue her client’s and her knowledge of the causes of action against the municipalities and the relevancy of the snow piles alleged by the defendant.
[19] The Court of Appeal ruled:
Whether the appellant's solicitor's explanation as to why no inquiries could be made prior to discoveries to substantiate or disprove Barnes' claims will survive scrutiny on cross-examination, or whether evidence exists that information was available to the appellant upon proper inquiry prior to her amendment motion to ground a cause of action against the respondents, cannot be determined at this stage . . . In this case, the crucial fact-finding exercise has not yet occurred and the appellant's asserted version of the facts concerning the discoverability of a cause of action against the municipalities was uncontradicted on the motion before the motions judge. Accordingly, the testing of the appellant's assertion that the limitation period has not yet commenced to run must await either a summary judgment motion or a trial.
[20] That is, on the facts in Zapfe, there was competing evidence on the issue of discoverability that required determination before the judge could make the finding of fact as to when the plaintiff learned of the cause of action. In Wong, Master Dash fairly contrasted that factual paradigm to the case before him, in which there had been no denial of the facts and no evidence adduced putting discoverability in issue. In Wong, there was no competing evidence and no factual lis requiring resolution in order to assess when the cause of action was discovered.
[21] Which is it here?
The Master’s Decision
The Background Facts
[22] The Master recited the uncontested facts that the appellant bought a newly-renovated house from the defendant on December 27, 2013. By July, 2015, the appellant knew that there were defects in the renovation. The appellant testified that by that time he knew that the two-story rear addition had been built on two rows of cinder blocks with no foundations or footings. The Master found that the appellant was aware of the foundation (or lack thereof) problem by the end of August, 2015.
[23] In February, 2016, the appellant obtained an expert report from an engineer. The appellant’s engineer told him that municipalities rely on letters from engineers to assess foundation adequacy. The engineer told the appellant that his house foundations “were not reviewed” by the project engineer and this was contrary to good practice.
[24] On May 31, 2016, the appellant sued the former owner and the City. Among his allegations against the City, the appellant alleged that it failed to notice that footings were not below the required depth below grade as required by the Building Code.
[25] The City defended on August 1, 2016 and on August 10, 2016, it delivered a third party claim against the third party engineer and his employer. Para. 17 of the third party claim sets out expressly four heads of liability including negligence and misrepresentation by the engineer to the City.
[26] Just over one year later, in late September 2017, the City delivered its affidavit of documents listing two letters or reports from the engineer to the City. In October, 2017, the engineer was examined for discovery and confirmed that the two letters he sent to the City purported to confirm that the house had been built to the required standards of the Ontario Building Code when this was not the case.
[27] The appellant moved to add the engineer and his employer as defendants another year later. Before the Master, the appellant argued that the limitation only began to run when counsel learned of the engineer’s liability with certainty on discovery in October, 2017. In the factum below and before me orally, counsel agreed that the delivery of the City’s affidavit of documents disclosing the engineer’s two letters a month earlier was the date that the cause of action for misrepresentation was or ought to have been discovered. In either case, counsel argued that the motion to amend and add the engineer and his employer as defendants a year later was within the two-year limitation period.
[28] The Master referred to case law saying that the limitation period will begin when the plaintiff knows that the proposed defendant might be liable. Certainty is not required. See: Malamas v Edmonton Park Construction Ltd., [2002] OJ No 4249 (CA).
[29] The Master ruled as follows:
[21] In this case, the timeline identifies a number of points when it could be held that the limitation period began to run, as follows:
• One could convincingly argue that the limitation period began to run against the Plaintiff to add the Third Parties as defendants as early as when the Plaintiff obtained its own engineering report from B Design Engineering Services Inc. on February 22, 2016. After all, that report, while not yet identifying the Third Parties, surely alluded to their existence. It was at least then a matter for careful consideration, if not actual investigation. If nothing else, this report at least ought to have alerted the Plaintiff that something else was brewing.
• If not then, one could even more convincingly argue that when Toronto served its statement of defence on August 1, 2016, the Plaintiff was put on good notice. After all, at that point, at paragraph 27, the municipality identified the Third Parties. An amendment at that point would have been apt, as it could be fairly concluded that the limitation period began to run as of August 1, 2016.
• Yet if not then, then certainly as of August 10, 2016, when Toronto served its Third Party Claim, the Plaintiff could not have had a clearer picture. Paragraph 17 of that pleading lays out in specific and cogent detail the (alleged) negligence of the Third Parties in four sub-paragraphs, (a) through (d). The allegations include that the Third Parties failed to review and inspect the construction, they failed to ensure the work was carried out in accordance with the building permits, they failed to detect deficiencies, and they made false representations to the municipality. In my view, the Third Party claim was also an excellent template for the Plaintiff to use when amending his claim so to add the Third Parties as defendants to the main action.
[22] My view is that the limitation period likely began in this case to run as of August 10, 2016. In so concluding, I note that I have chosen the latest date, most favourable to the Plaintiff.
Analysis
[30] The Master did not expressly allude to the question of whether he ought to decide the factual issue of when the limitation period was discovered using Master Dash’s test from Wong. As noted above, the issue was not expressly argued before the Master and was raised by me on this appeal.
[31] The appellant argues that the Master should not have made the finding that the cause of action had been or could have been discovered by the appellant without reviewing the two letters that the engineer sent to the City. Counsel argued that those letters were only provided to the appellant with the City’s affidavit of documents in September, 2017. The appellant did not put the letters before the Master.
[32] In response to this argument, the engineer’s counsel points to para. 27 of City’s statement of defence delivered August 1, 2016 that provides:
The City specifically states that it received two reports, dated December 10 & 17, 2012 (the “Engineering Reports”) from Filipe Sonsa [sic], a professional engineer retained by [the defendant]…The Engineering Reports were stamped by Mr. Sonsa’s [sic] Licensed Ontario Professional Engineer stamp and indicated that he had inspected the footings, foundation walls, and structural framing of the building at the Property and found that they were structurally sound and met [Ontario Building Code] design requirements and were constructed in general conformity with the drawings and specifications in the New House Permit.
[33] In his affidavit sworn November 27, 2018, the appellant swore:
I am advised by my counsel and verily believe that it was only during the discovery that Mr. Sosna admitted that he had not visually inspected the existence of the foundation and footings to the rear two story addition. This was the first time we discovered on the basis of his admissions that he had issued a false letter to the City to the effect that he had inspected the foundation and footings to the rear two story addition when, in fact, he had not done so. [Emphasis added.]
[34] As heavily qualified evidence on information and belief goes, this may well be true. But it is not responsive to the question from Wong or that was before the Master. The question before the Master was when did the appellant know or when ought he to have known that he might have a lawsuit against the engineer. The question from Wong was whether there is an evidentiary contest or a credibility issue that required that resolution of this question be deferred to a later fact-finding process.
[35] In my view, the question answered by the Master’s finding the date the cause of action arose was a question of fact that is well-grounded in the evidence. The appellant points to neither a palpable nor an overriding error in that finding.
[36] As to whether there was a contested question of fact or credibility that should have prevented the Master from making the finding, the answer is obviously “no”. The statement of defence and third party claim set out the engineer’s name, his alleged neglect, full particulars of the two letters, and the alleged misrepresentation cause of action against the engineer.
[37] As in Wong, the appellant and his counsel adduced no evidence as to why they did nothing from August, 2016 (at the latest) until the appellant moved to amend his claim and add the third party engineer as a defendant over two years later. The question of whether the appellant learned from the engineer’s misrepresentation “on the basis of his own admission” on discovery was not the point. There is no contest in the evidence that he knew all he needed to know to plead in August, 2016. There is no evidence, like there was in Zapfe, putting discoverability in issue.
[38] Moreover, counsel’s concession that the disclosure of the two letters in the City’s affidavit of documents was sufficient to commence the limitation period applies equally to the particularized disclosure of the very same two letters contained in the statement of defence. If the appellant wanted to see the engineer’s two letters, once they were referred to in the statement of defence, counsel could have required their production for inspection as of right under Rule 30.04(2).
[39] There was simply no evidence before the Master of any basis to put in issue the date when the appellant knew or ought to have known of his causes of action against the engineer. Counsel’s professed desire for the certainty of an oral admission is not a basis to put in issue the uncontradicted evidence that the appellant knew or ought to have known all of the relevant facts underpinning all of his causes of action against the engineer.[^1]
[40] I see no basis to interfere with the Master’s decision. In fact, I agree with it.
[41] The appeal is therefore dismissed.
[42] Counsel tried to agree on costs in court. They thought they were close to agreement but Mr. Delgado needed instructions. Relying on this advice, I requested counsel to advise me through the registrar’s office once costs are agreed. In the unlikely event that there is no agreement on costs by the end of the day on December 6, 2019, then the respondent may deliver up to three pages of written submissions on costs by December 17, 2019. The appellant may then respond with no more than three pages of submissions by December 23, 2019. Both sides shall deliver Costs Outlines with their submissions. In addition, counsel may deliver any relevant offers to settle on which they rely. All material shall be delivered as searchable PDF attachments to an email to the registrar. No case law or statutory materials may be delivered. References to caselaw or statutory materials, if necessary, shall be made by hyperlinks in counsel’s submissions.
F.L. Myers J.
Released: November 26, 2019
CITATION: Rojas v. Porto, 2019 ONSC 6822
DIVISIONAL COURT FILE NO.: DC-206/19 DATE: 20191126
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
MARCO ROJAS
Appellant
– and –
PRINCIA PORTO also known as PATRICIA PORTO and CORPORATION OF THE CITY OF TORONTO
Respondents
REASONS FOR DECISION
F.L. Myers J.
Released: November 26, 2019
[^1]: I note that to this date, the appellant has not delivered a draft amended statement of claim showing any further or additional causes of action that the appellant wants to plead against the engineer other than negligence and misrepresentation as pleaded by the City already. Best and almost invariable practice on a motion to amend a pleading is to provide a draft so as to focus argument on the points of the proposed amendment(s).