SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 07-CV-330383PD 2
MOTION HEARD: January 18, 2012

RE: Sealed Air (Canada) Co.

v.

ABB Inc.

BEFORE: Master Thomas Hawkins

COUNSEL:
Joel Richler
for moving plaintiff
Fax No.: 416-863-2653

Michael Burgar
for responding proposed defendant and existing third party Mersen Canada Toronto Inc.
Fax No.: 416-863-1241

Ivan Y. Lavrence for responding defendant
ABB Inc.
Fax No.: 416-593-5437

No one for third party Peel Financial Services Limited

REASONS FOR DECISION

[ 1 ] This is a motion by the plaintiff under subrule 5.04(2) and rule 26.01 for leave to amend the statement of claim in terms of the draft amended statement of claim being schedule “A” to the notice of motion. The proposed amendments in part involve adding Mersen Canada Toronto Inc. (“Mersen”) as a defendant. During the course of this action the third party Ferraz Shawmut Canada Inc. changed its name to Mersen Canada Toronto Inc. Thus Mersen is already a third party to this action.

[ 2 ] The defendant ABB Inc. does not oppose this motion. The proposed defendant Mersen does oppose the motion.

[ 3 ] Subrule 5.04(2) provides as follows.

At any stage of a proceeding the court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[ 4 ] Rule 26.01 provides as follows.

On 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.

[ 5 ] Both subrule 5.04(2) and rule 26.01 contain reverse onuses in favour of adding parties and granting leave to amend respectively. Subrule 5.04(2) is discretionary (“the court may by order add” a party), while rule 26.01 is mandatory (“the court shall grant leave to amend”).

[ 6 ] In this action the plaintiff’s main complaint is that chemical contaminants used in manufacturing operations on what is now property owned by ABB Inc. were released into the ground and have escaped from that property and migrated to the plaintiff’s adjacent property causing the plaintiff to suffer loss and damage.

[ 7 ] Mersen opposes this motion to add it as a defendant on the ground that when this motion was brought on October 3, 2011 (the date the plaintiff’s motion record was served on Mersen’s lawyers) the relevant limitation period had already expired.

[ 8 ] That limitation period is found in section 4 of the Limitations Act, 2002, S.O. 2002 ch. 24 Schedule B . Section 4 provides as follows.

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.

[ 9 ] Mersen submits that because this limitation period had expired before October 3, 2011 when this motion was brought, the motion to add it as a defendant is barred by subsection 21 (1) of the Limitations Act, 2002 . Subsection 21 (1) provides as follows.

If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.

[ 10 ] Plaintiff’s counsel argues otherwise. He submits that by virtue of the discoverability principle set out in subsections 5 (1) and (2) of the Limitations Act, 2002 , the limitation period respecting the plaintiff’s proposed claim against Mersen had not expired when this motion was brought.

[ 11 ] Subsections 5(1) and (2) of the Limitations Act, 2002 provide as follows.

(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).

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[ 12 ] In the context of this motion, the effect of subsection 5(2) is to place on the plaintiff the onus of showing that the plaintiff neither knew nor ought to have known that the plaintiff had the claim against Mersen which the plaintiff proposes to make in the draft amended statement of claim until a point in time less than two years before this motion was brought on October 3, 2011.

[ 13 ] There are three possible outcomes to the plaintiff’s motion to add Mersen as a defendant in light of the limitation of action issue which Mersen has raised.

[ 14 ] The first possible outcome is that it is clear that the relevant limitation period had not expired when this motion was brought. In that case the motion is successful and Mersen is added as a defendant.

[ 15 ] The second possible outcome is that it is clear that the relevant limitation period had already expired when this motion was brought on October 3, 2011. In that case subsection 21(1) of the Limitations Act, 2002 applies and the motion to add Mersen as a defendant is dismissed.

[ 16 ] The third possible outcome is that it is unclear whether the relevant limitation period had already expired when this motion was brought on October 3, 2011. In that case Mersen is added as a defendant subject to the term that it may raise a limitation of action defence to be decided on a motion for summary judgment or at trial.

[ 17 ] I find the evidence which the plaintiff’s lawyers have filed in support of this motion to be most unsatisfactory. That evidence is limited to an affidavit of Lindsay Aagaard. Ms. Aagaard is an associate in the law firm which now represents the plaintiff. Although the plaintiff commenced this action on March 30, 2007, the plaintiff did not retain its present lawyers until August 2011.

[ 18 ] The critical issue on this part of the plaintiff’s motion is what the plaintiff or its agents (chiefly its lawyers) knew or ought to have known about the facts underlying the claim which the plaintiff proposes to make against Mersen in the draft amended statement of claim.

[ 19 ] Notwithstanding this, in her affidavit Ms. Aagaard says nothing about what the plaintiff knew as of October 3, 2009 (two years before this motion was brought). Similarly, she says nothing about what the plaintiff’s then lawyers knew as of that date. This is so despite the fact that under subsection 5(2) of the Limitations Act, 2002 , the plaintiff has the onus of showing that the plaintiff and its agents lacked the requisite knowledge as of October 3, 2009 and ought not to have known the requisite facts as of that date.

[ 20 ] I find Ms. Aagaard’s affidavit to be deficient in one other respect. That affidavit says nothing about the steps, if any, which the plaintiff or its agents took in order to discover the facts underlying the proposed claim against Mersen, and nothing about when those steps were taken.

[ 21 ] Under subsection 5(2) of the Limitations Act, 2002 the plaintiff is presumed to have known the requisite facts underlying the proposed claim against Mersen on the day the acts or omissions of Mersen occurred “unless the contrary is proved”.

[ 22 ] In paragraph 10 of the proposed amended statement of claim the plaintiff alleges that predecessor corporations of Mersen owned the ABB property from 1954 to 1981. In paragraph 12 of that proposed pleading the plaintiff alleges that Mersen carried out manufacturing operations which involved using volatile organic compounds and polychlorinated byphenyls (two of the contaminants the plaintiff complains of) but does not allege when this happened. Presumably, this was before ABB bought what is now the ABB property in 1981.

[ 23 ] Unless the plaintiff can take advantage of the discoverability doctrine laid down in section 5 of the Limitations Act, 2002 , nearly all of the claims which the plaintiff proposes to make will be statute barred. The only claims which are clearly not statute barred are the claims for tortious conduct and breach of duty by Mersen to the extent they continued since October 3, 2009.

[ 24 ] Claims that are clearly statute barred are untenable pleas. The plaintiff should not be given leave to amend to raise untenable pleas.

[ 25 ] I recognize that on a motion to amend a pleading I should avoid weighing evidence and making findings of fact. If there is any doubt about whether a limitation period has or has not expired, the third possible outcome (discussed in paragraph [16] above) applies.

[ 26 ] The problem here is that in critical areas relevant to the application of the discoverability principle to this motion, there is a total lack of evidence. That being so, the presumption (set out in subsection 5(2) of the Limitations Act, 2002 ) that the plaintiff knew by 1981 the requisite facts necessary to allege most of the proposed claims against Mersen applies, and most of those claims are clearly statute barred. On the evidence before me, the plaintiff has not even attempted to prove the contrary of the presumption of knowledge set out in subsection 5(2). The evidence does not even rise to the level of a state of doubt as to whether a limitation period has expired. On this evidence, it clearly has expired.

[ 27 ] For all these reasons, this motion is dismissed, subject to the following term. The plaintiff may renew this motion in whole or part before me provided that the plaintiff’s motion record is served within 45 days of the final disposition of this motion. On any such renewed motion, the plaintiff is to underline all amendments to the existing statement of claim in order to comply with subrule 26.03 (2).

[ 28 ] Mersen has been successful on this motion and is entitled to the costs of it. I fix those costs at $6,000 and order the plaintiff to pay such costs to Mersen within 30 days.

[ 29 ] Counsel for ABB did not bring a costs outline (Form 57B) to the hearing of this motion as required by subrule 57.01(6). There will therefore be no costs award in favour of ABB. This is not a situation where I should award costs against ABB. ABB did not oppose the motion.

Master Thomas Hawkins

DATE: April 4, 2012