SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: 08-00363617
MOTION HEARD: 20111004
ENDORSEMENT RELEASED : 20120330

RE:

Simon Pufal Plaintiff v. Steven Richards and Toronto Transit Commission, TTC Insurance Company Limited and Superintendent of Financial Services Defendants

BEFORE: MASTER D.E. SHORT

COUNSEL:
S. Train Fax: 416 968.0232
for the Plaintiff, Pufal

N. Priday Fax: 416 338.0117 ,
for the Defendants, Richards and TTC

L. Takacs Fax: 416 367.8821
for the Defendant, Superintendent
of Financial Services,

HEARD: October 4, 2011

REASONS FOR DECISION: Due Diligence (#3)

Due Diligence

The diligence reasonably expected from, and ordinarily exercised by, a person who seeks to satisfy a legal requirement or discharge an obligation.

Black’s Law Dictionary, 9 th edition

I. Overview

[ 1 ] This action arises out of an accident, which is alleged to have occurred on May 8, 2007. The plaintiff, Mr. Pufal, alleges that he was injured that day in a fall on a TTC bus when the bus came to a sudden, unexpected stop.

[ 2 ] The Toronto Transit Commission operates the public transit service in the city. The defendant Richards was the TTC employee, operator with responsibility for the bus at the time of the accident. For simplicity I will refer to Mr Richards and his employer collectively as the “TTC”. Amongst the defences now put forward by the TTC, is an assertion that the event was caused by a criminal act of an unknown passenger who jumped on the brake pedal of the bus, causing a sudden stop, and then fled the scene. That individual was never apprehended.

[ 3 ] A Statement of Claim was issued on October 2, 2008 naming only the two TTC defendants. The TTC delivered its original defence dated October 29, 2008.

[ 4 ] Subsequently by letter dated April 7, 2009, counsel for the TTC wrote to counsel for the plaintiff enclosing a proposed Amended Statement of Defence. That letter requested a consent to the amendment. When the TTC was not prepared to accept the conditions suggested by counsel for the plaintiff for his consent, in a subsequent letter of April 29 the TTC advised that it intended to bring the appropriate motion.

[ 5 ] The two year anniversary of the accident occurred on May 8, 2009.

[ 6 ] Prior to that date, the text of the relevant portion of the proposed amendment to the TTC’s Defence, that was transmitted to plaintiff’s counsel in April of 2009 read as follows:

“With respect to the allegations in paragraph 5 of the Statement of Claim, the version of events put forward by the plaintiff is incorrect.

What in fact happened was that while Richards was driving in a careful and prudent manner a passenger on the bus, whose identity is unknown, unexpectedly and maliciously slammed his foot onto the brake causing the bus to stop suddenly. The defendants state it was this criminal act by the unknown passenger that caused the bus to stop suddenly and this caused the plaintiff's injuries and losses, not any act or omission on the part of Richards.

The defendants state the criminal act by the unknown passenger was unforeseeable. The defendants plead and rely on the doctrine of novus actus interveniens.”

[ 7 ] It would appear that the amendment motion did not proceed prior to examinations for discovery being conducted by counsel representing both the Toronto Transit Commission and Mr. Pufal on June 18, 2009. On a later motion on January 19 2010, coincidentally also heard by me, leave was granted to issue and serve the amended defence.

[ 8 ] The plaintiff’s counsel subsequently listed the matter for trial on October 28, 2010.

II. Motions

[ 9 ] The plaintiff moved ex parte before Master Peterson on June 15, 2011, seeking an order granting leave to amend Statement of Claim to add the two defendants TTC Insurance Company Limited and the Superintendent of Financial Services.

[ 10 ] That motion was granted and the style amended effective upon that Order being made.

[ 11 ] The TTC defendants and the TTC Insurance Company Limited (“TTC Insurance”) now seek to set aside that order and the resulting amended statement of claim, asserting that there was no jurisdiction for the order being obtained on an ex parte basis and without leave being obtained.

[ 12 ] When this matter initially came before me, I directed that it was to be adjourned on that occasion and that it was to be treated, on the return of the motion, as a motion brought by the plaintiff seeking to amend the statement of claim in the manner that had been sought before Master Peterson.

[ 13 ] In my view, the original motion ought not to have been dealt with without notice to the TTC defendants. In light of the provisions of rule 48.04, a party where a matter has been set down for trial a party "shall not initiate or continue any motion or form of discovery without leave of the court". No such leave apparently was sought or obtained from Master Peterson.

[ 14 ] The moving parties first learned of the amendments when served with the amended claim (without the Order of Master Peterson). Once they learned the facts, they moved promptly to seek to set aside the subject Order.

[ 15 ] As I was mindful of potential Limitations Act problems I did not yet set aside the Order of Master Peterson. Rather, I have therefore determined to treat the matter as an application de novo by the plaintiff to justify the preservation of the relief already obtained.

III. Initial Issues

[ 16 ] Clearly Rule 48.04 allows the court to grant leave to bring any motions in appropriate circumstances. One of the issues before me therefore was whether or not I ought to grant leave to the plaintiff to effectively bring its motion, at this time, in the circumstances of this case.

[ 17 ] This decision belatedly completes an augmented trilogy of cases decided by me dealing with motions concerning the addition of parties after the expiration of the normal two year limitation period. [see Tran v. Patel 2011 ONSC 6225 ; Wolkowicz v. Avignon Inc. , 2011 ONSC 5899 and Mercurio v. Smith , 2011 ONSC 390 4 ]

[ 18 ] In those earlier cases I addressed problems encountered in seeking to add a party or to alter the party being sued on the basis of an alleged misnomer. I adopt my analysis of the law in the above cases and do not intend to repeat it in any significant detail in this decision.

IV. Limitations Act, 2002

[ 19 ] As well, I need to address the impact of Section 5 of the Limitations Act, 2002. I have previously considered this area of the law in my decision in Parent v. Janandee Management Inc. ; 82 C.P.C. (6th) 321 ; 2009 CarswellOnt 5432 ; 180 A.C.W.S. (3d) 407 . I am relying, as well, upon my previous analysis in that decision .

[ 20 ] Under Section 4 the basic two year period for commencing a proceeding expires on the second anniversary of the day “on which the claim was discovered’

[ 21 ] The language of section 5 deals with the four requirements that must be considered when determining when a claim “is discovered ” with respect to any possible defendant:

“(a) The loss or damage had occurred;

(b) The loss or damage was caused by or contributed to by an act or omission;

(c) The act or omission was allegedly that of the defendant against which the claim is now being asserted; and

(d) Having regard to the nature of the loss or damage, a proceeding would have been an appropriate means to seek to remedy it." [my emphasis throughout]

[ 22 ] Section 5(b) of the Act deals with delayed discovery and provides that in, the commencement of the two year limitation can be deferred if the plaintiff can prove that the cause of action was not discovered nor discoverable until a later date.

[ 23 ] However, I held in Parent that in my view, reasonable efforts to discover the identity of parties responsible must be made and disclosed in a supporting affidavit, by the party seeking to add a new defendant after the initial two-year period.

[ 24 ] In Central Trust Co. v. Rafuse 1986 29 (SCC) , [1986] 2 S.C.R. 147 at para. 77 , the Supreme Court of Canada clearly laid out the point in time when a cause of action has been "discovered" for the purposes of commencement 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 ."

[ 25 ] Further in Peixeiro v. Haberman , [1977] 3 S.C.R. 549 at para. 18 , that Court confirmed the proposition that discovery of the cause of action occurs when the plaintiff knows some damage has occurred and the plaintiff has identified the tortfeasor.

[ 26 ] The Act provides in section 5(2) that 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.

[ 27 ] This section puts the onus upon the plaintiff to satisfy me that it would be highly unlikely, if not impossible, with due diligence to have obtained the necessary information within two years of the cause of action arising (in this case the discovery of the failure to commence the motor vehicle action in time).

[ 28 ] There is generally an onus on the plaintiff to lead cogent evidence of either stonewalling or evidence that it would be inappropriate and abnormal to investigate further within two years of the start of the applicable limitation period.

[ 29 ] Section 5 (2) of the Limitations Act, 2002 requires that the "contrary" be proven if the plaintiff is to avoid the presumption of knowledge contained in that subsection.

[ 30 ] The Supreme Court of Canada cases referred to above provide guidance with respect to the need for “reasonable diligence”. If the plaintiff exercised such diligence and was unable to determine the information, then an extension of the time for bringing an action could be granted.

[ 31 ] In somewhat different circumstances in Brand Name Marketing Inc. v. Rogers Communications Inc., 2010 ONSC 2892 , I considered the relevance of the extent of knowledge of the potential claim prior to the end of the two year period. There (dealing in part with misnomer) I observed:

84. I believe that equity dictates that if a defendant knows that the "finger of litigation" is pointing in its direction, and an action is commenced on a timely basis based on specific actions, this court ought to take appropriate steps to ensure that the true lis between the parties is addressed, rather than permitting one party to perhaps escape its possible liability by relying upon a technical Limitations Act defence.

[ 32 ] My decision in the present case is guided as well, by the decision of my colleague Master Dash in Wakelin v. Gourley , 2005 23123 (ON SC) , 76 O.R. (3d) 272 where he considers the appropriate evidentiary threshold for motions such as this:

[9] On this motion the proposed defendants accept that the plaintiff did not have actual knowledge of the identity of the tortfeasors he now wishes to add but claim that the plaintiff has not established on the evidence before me that he has acted with such due diligence as to justify adding them on the basis of discoverability. Wong v. Adler was a clear case of the plaintiff having actual knowledge of the third parties' identities and it was not necessary to consider due diligence. As indicated in the quoted passage from Wong v. Adler : "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." I left open a window however to challenge the addition of a defendant based on due diligence "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". It will be rare that the applicability of the discoverability principle based on due diligence will be determined on a motion to add a party. The third parties claim however this is exactly such a "clear and uncontradicted" case.

[10] I must therefore consider how far the plaintiff must go on an amendment motion to adduce evidence so that the court can determine whether it is clear and uncontradicted that there has been no due diligence or whether there is a triable issue of fact or credibility best left to the trial judge or a summary judgment motion.

[ 33 ] On the appeal from that decision, G.J. Epstein J, then sitting as a judge on the Divisional Court observed (in a decision found at [2006] O.J. No. 1442 ; 148 A.C.W.S. (3d) 368 ; 2006 CarswellOnt 286 :

3 The Master was correct in identifying the only concern as being whether a reasonable explanation as to due diligence was provided such as to raise a triable issue.

4 The Master's reasons are thoughtful, detailed and complete. In them he draws reasonable inferences that, together with other evidence, lead him to conclude that the plaintiff could have obtained the requisite information prior to the expiry of the limitation period. There is no reason to interfere with this conclusion.

[ 34 ] Against this background I come to an examination of the time line and the information clearly available to the plaintiff at various points in time.

V. What the Plaintiff Knew, When.

[ 35 ] In many ways this case reads like a law school exam question. An innocent passenger falls as a result of the wrongful actions of another passenger, whose conduct causes the sudden stopping of the vehicle. Assuming he never touched the steering wheel, was he a “driver” of the bus? Where can the injured passenger look for payment of any liability ascribed to the unidentified rogue?

[ 36 ] The submissions of the plaintiff before me and the draft pleading, direct us to Section 265(1) of the Insurance Act . Counsel for the TTC defendants asserts that Section 265(1) does not provide coverage “in a tort claim for all persons who are uninsured”. It is further submitted that Mr. Pufal “was not a motorist, and he was insured for accident benefit purposes by TTCICL.”

[ 37 ] Succinctly the TTC factum argues:

Beyond that, TTCICL insured him for nothing . There is no uninsured motorist in this case. There is no unidentified vehicle in this case.

[ 38 ] Section 265(1) which has the sub-heading “Uninsured automobile coverage” reads:

Every contract evidenced by a motor vehicle liability policy shall pr o vide for payment of all sums that,

(a) a person insured under the contract is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injuries resulting from an accident involving an automobile;

(b) any person is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injury to or the death of a person insured under the contract resulting from an accident involving an automobile; and

(c) a person insured under the contract is legally entitled to recover from the identified owner or driver of an uninsured automobile as damages for accidental damage to the insured automobile or its contents, or to both the insured automobile and its contents, resulting from an accident involving an automobile,

subject to the terms, conditions, provisions, exclusions and limits as are pre-scribed by the regulations.

[ 39 ] Clearly the determination of where an injured party should look for possible coverage following an event involving an unidentified person and a motor vehicle is a complex and difficult art. Particularly as the paths to relief have fluctuated, as various changes have been enacted by provincial legislators, over the years.

[ 40 ] It would not seem intuitive that a 36 year old bus passenger would seek to recover “no-fault” benefits from his mother’s automobile insurance provider. Nevertheless Mr Pufal apparently did contact that company following his suffering a number of, not insignificant, injuries in this case.

[ 41 ] That insurer arranged for an adjuster to interview Mr. Pufal. As part of that process a seven page, typed, and witnessed, statement from him was prepared and signed by Simon Pufal on June 27, 2007 (the accident having happened on May 8 th ).

[ 42 ] On March 10, 2008 the adjuster for the mother’s insurer sent a copy of the typed statement to the TTC and to the plaintiff’s lawyers.

[ 43 ] Part of the narrative set out at page 6 of the statement conveys the following information:

“There was a guy on the back steps of the bus who pressed the button to get off. .... The driver of the bus wouldn't let him off . The dri v er said he pressed the button to release the doors, but the rear doors would not open so the dri v er started to move forward . The guy in the back started to yell "hey let me off ' . The guy on the steps walked forward towards the bus driver to confront him. He asked the bus driver again to let him off the bus. The bus driver just kept driving forward. The guy asked the bus driver for his badge number. The guy started yelling and kicking the front door of the bus in order to get out. The guy then jumped on the brake pedal of the bus. Prior to that the bus had been moving about 20 km/hour. When the guy jumped on the brake pedal the bus came to an abrupt, immediate dead stop . Everyone on the bus went flying. Several people fell on the floor area . One lady fell on my legs and I think she broke some ribs. When the bus stopped the guy kept kicking the front door until it opened and then he took off As far as I know the police haven't caught him. The police asked me if I could identify him and I said yes. ...”

[ 44 ] Within a month of receiving this material the TTC sought the consent to its proposed amendment to the defence.

[ 45 ] I accept the foregoing chronology as accurate, although there are, what I regard as insufficiently proven variations, suggested in the affidavits of individuals employed at the firm of the plaintiff’s counsel.

[ 46 ] In light of my findings with respect to the points in time information was available to the plaintiff, I turn to the specific amendments sought.

VI. Amendments Sought

[ 47 ] To the extent that there is any variation in the proposed amended pleading before me as opposed to that in front of Master Peterson, I am addressing the more recent version.

[ 48 ] There would appear to be two classes of amendments sought by the plaintiff. The first relates to amendments flowing from the amended defence but not raising any new claim but rather asserting further details of the existing claims. I am satisfied that those amendments, largely to paragraphs 5 and 6 of the claim ought to be permitted and leave is hereby granted with respect to those paragraphs.

[ 49 ] The proposed amendments to Paragraph 4 of the claim present different problems. The claims asserted against TTC Insurance read in substance:

4.1 The Defendant, TTC Insurance Company Limited ("the Defendant Insurer"), is a corporation incorporated under the laws of Ontario and/or Canada, and at all material times provided insurance coverage on a vehicle against which the Plaintiff may claim under the unidentified, uninsured and/or underinsured provisions pursuant to Section 265(1) of the Insurance Act, R.S . O . 1990, c. I.8, as amended, pursuant to a policy of insurance, .... Under the Policy the Defendant Insurer provided accident benefits to the Plaintiff .

4.2 In the event that the accident was caused by the criminal activity of an unknown passenger on the TIC bus and not as a result of any act or omission on the part of Mr. Richards, as alleged in the Amended Statement of Defence of the Defendant TIC, which is not admitted but expressly denied, the Plaintiff claims against the Defendant Insurer under Section 265(1) of the Insurance Act .

[ 50 ] The added claims as against the Superintendent read:

4.3 The Defendant, Superintendent of Financial Services, is the statutory agent of the Motor Vehicle Accident Claims Fund ("the Fund"). The purpose of the Fund is to provide the certainty of some recovery to those parties who were injured in motor vehicle accidents and who would otherwise be denied compensation because they have no motor vehicle insurance available. Mr. Pufal states and pleads that the Superintendent of Financial Services is a proper party to this Action and is properly named pursuant to the Motor Vehicle Accident Claims Act , R.S.O. 1990. c. M. 41, as amended.

4.4 In the event that the Plaintiff is denied coverage by the Defendant Insurer under s. 265 of the Insurance Act based on the criminal act, as alleged in the Amended Statement of Defence of the Defendant TIC, which is not admitted but expressly denied, the Plaintiff claims against the Fund.

[ 51 ] On the attendance before me counsel for the Superintendant also had a separate motion. This dealt primarily with ensuring that if the matter was to proceed to trial, adequate opportunity would be provided to allow the Superintendant to fully address all relevant issues and to take such steps as their counsel deemed appropriate.

[ 52 ] It however was my understanding that the Superintendent, while in no way acknowledging any liability whatsoever, nevertheless was not seeking to challenge the plaintiff’s motion to add the Superintendant as a party.

[ 53 ] It seems to me the parties will likely be able to work out a plan in the nature of a Discovery Plan well in advance of any trial date. As a result it will probably not be necessary for their motion to be argued in the future. Nevertheless, these reasons are not intended in any way to preclude a renewal of the existing motion.

VII. Livingston v. Williamson & TTC

[ 54 ] In light of my ultimate determinations in this case it is appropriate for me to consider the recent decision of my colleague Master Hawkins in Livingston v. Williamson , 107 O.R. (3d) 75 , 2011 ONSC 3849 .

[ 55 ] In that case the plaintiff was allegedly injured when the bus on which she was a passenger braked suddenly to avoid a collision with an unidentified driver. She brought an action against the TTC and the driver of the bus. The TTC was sued as owner of the bus, as employer of the driver and as an insurer providing unidentified motorist coverage .

[ 56 ] Specifically the original claim read:

The Defendant TORONTO TRANSIT COMMISSION (hereinafter referred to as "TTC") is a statutory commission engaged in the carriage of passengers for hire in and about the City of Toronto and was, at all material times ...the owner of the Defendant's Vehicle and the employer of ... the TTC bus driver. The Defendant TTC also at all material times provided unidentified coverage to the Plaintiff for the negligence and resulting damages caused by a third party unidentified motorist. [my emphasis]

[ 57 ] In fact, as has been noted above in these reasons, the TTC was not an insurer. The proper insurer was TTC Insurance, a corporation separate from the TTC itself. The plaintiff brought a motion before Master Hawkins for leave to amend the statement of claim by correcting the name of the insurer to TTC Insurance. TTC Insurance took the position that this was not a misnomer motion but a motion to add a party brought after the two-year limitation period had expired.

[ 58 ] Master Hawkins allowed the amendment, noting that both the TTC legal department and TTC Insurance operated from the same building, had identical postal codes and were represented by the same lawyer on the argument of the motion (as in the case before me).

[ 59 ] The key difference in the present case is that no allegation was contained in the original pleading on behalf of Mr. Pufal asserting any “insurer” role for the TTC.

[ 60 ] Master Hawkins observed that a representative of TTC Insurance, receiving the statement of claim and being aware that the TTC was not an insurer, would conclude that the statement of claim referred to TTC Insurance and that insofar as unidentified motorist insurance coverage was concerned, TTC Insurance had simply been misnamed as the TTC.

[ 61 ] On the evidence, the plaintiff's lawyers were ignorant of the existence of TTC Insurance until shortly before the motion was brought. Neither the TTC nor TTC Insurance had suffered any actual prejudice as a result of what had transpired. The “finger of litigation” was pointing their way and in my view Master Hawkins correctly allowed the amendment, after the limitation period had otherwise tolled. That however is very different from the factual matrix before me.

VIII. Due Diligence?

[ 62 ] With respect to the amendments challenged by the TTC Defendants and TTC Insurance, I am satisfied that some of the proposed amendments raise new “claims” and that to seek to raise those claims in the circumstances of this case in June of 2011, more than four years after the event is not appropriate

[ 63 ] The plaintiff “knew” of the involvement of the rogue as of the day of the accident and detailed that involvement in a written statement shortly thereafter. The existence of the statement was confirmed to his counsel three months prior to the two year anniversary and the related amendment was communicated before the discoveries were held. The plaintiff’s counsel, possessed of this knowledge listed the matter for trial. It is too late and, based on the available information, inappropriate to add a claim against the resisting party at this time.

[ 64 ] I am of the view that the plaintiff has not raised a credibility issue or issue of fact that would merit consideration on a summary judgment motion or at a trial. I am satisfied that this is a case where I am justified in “cutting down” the addition of the proposed defendant TTC Insurance and any related amendments to the pleading at this stage.

IX. Disposition

[ 65 ] Leave is therefore granted to amend the Statement of Claim as sought in Paragraphs 5.1, 5.2, 5.3 and paragraph 6.

[ 66 ] I am granting leave to amend to add as a defendant the Superintendent of Insurance and permitting the addition of paragraphs 4.3 and 4.4 to the claim. This order is made without prejudice to any limitation defences available to that party.

[ 67 ] I am refusing the addition of the proposed defendant TTC Insurance Company Limited.

[ 68 ] As a consequence the amendments to add paragraphs 4.1 and 4.2 are refused.

[ 69 ] The parties shall deliver their defence pleadings within 30 days of being served with the Amended Statement of Claim.

[ 70 ] While success has been divided, in the circumstances, the plaintiff is clearly seeking a number of indulgences. There will be no costs as between the plaintiff and the Superintendant of Insurance. Any costs relating to the motion brought by thwe superintendant are reserved to the judicial officer ultimately hearing that application if it ever proceeds.

[ 71 ] Master Hawkins observed in awarding costs to the TTC in Livingston :

In granting this motion to the extent I have, I have given the plaintiff a considerable indulgence. The price of an indulgence is often the payment of costs to those who have sought unsuccessfully to prevent its being granted. See Fox v. Bourget , [1987] O.J. No. 2326 , 17 C.P.C. (2d) 94 (Dist. Ct.) .

[ 72 ] Here, the proposed defendant TTC Insurance Company Limited has been successful in resisting its addition to the action. I am allowing one set of costs of this motion to the TTC Defendants and TTC Insurance on a partial indemnity basis payable in any event of the cause.

[ 73 ] If the parties cannot agree on the quantum of those costs I may be contacted to resolve the issue.

Master D. E. Short

DATE: March 30, 2012

DS/ E.51 (revised)