SUPERIOR COURT OF JUSTICE
CITATION: Sunset Inns Inc. v. Sioux Lookout (Municipality), 2012 ONSC 437 COURT FILE NO.: CV-09-0049 DATE: 2012-01-17
B E T W E E N:
SUNSET INNS INC., Plaintiff
- and -
THE CORPORATION OF THE MUNICIPALITY OF SIOUX LOOKOUT, Defendant
COUNSEL: Morris J. Holervich, for the Plaintiff Allan D. McKitrick, for the Defendant
HEARD: December 22, 2011 at Thunder Bay, Ontario
BEFORE: Mr. Justice D. C. Shaw
Reasons On Motion
Introduction
[1] The defendant brings a motion for summary judgment dismissing the plaintiff’s action. The plaintiff concedes that its existing claims, which are based on unjust enrichment and breach of contract, should be dismissed. However, having received the summary judgment motion, the plaintiff brings a motion to amend its statement of claim to assert new causes of action, based on negligence and negligent misrepresentation.
[2] The issue is whether the causes of action that the plaintiff now wishes to assert are barred by the expiry of the relevant limitations period. Because the plaintiff agrees to a dismissal of the claims set out in its statement of claim, as presently constituted, if the amendments requested are not granted, the action must fall.
Overview
[3] In or about 1986, the plaintiff completed construction of a building known as the Sunset Inn. At the time, the defendant owned and operated a sanitary sewer mainline adjacent to the plaintiff’s lands. A sewer line was installed from the mainline to the Sunset Inn in 1986. There were ongoing problems with flow in the sewer line to the Sunset Inn. The plaintiff complained that the defendant did not install the sewer line properly. In 1987 and again in 2003, the plaintiff requested that the defendant install a sewage lift station to service its property to eliminate the sewer problems which it was experiencing.
[4] The defendant declined the plaintiff’s request. The defendant’s position was that it was responsible for providing services to the lot lines for properties wishing to tie into the municipal services. Once at the property line, property owners were responsible for attaching to municipal services. The defendant advised the plaintiff that the plaintiff, as a property owner, was responsible for ensuring that there was a proper grade to the municipal infrastructure, along with any other tie-in requirements.
[5] The plaintiff did not accept the defendant’s position. It continued its complaint that the defendant was responsible for the sewer problems it was experiencing.
[6] Faced with the defendant’s rejection of the plaintiff’s request that the defendant construct a sewage lift station, the plaintiff built its own lift station. The plaintiff began work on the lift station in 2003 and completed the work in May 2004, at a cost of $250,000.
[7] On May 10, 2004, the plaintiff wrote to the defendant stating that the defendant’s decision to turn down the plaintiff’s proposal “…to solve the past, present and future sewage issues on Hillcrest Drive has started what is going to be a costly and confrontational legal battle between us.”
[8] The significant amendments sought by the plaintiff are as follows, with the proposed amendments underlined
- Following the completion of the Sunset Inn building in about 1986, the defendant Town represented to the plaintiff:
(a) that the sewer system provided by the defendant Town was and would be useful, and did and would not present any risk of harm to the plaintiff if the plaintiff were to connect its property to the sewer system; and
(b) that the defendant Town did and would continue to maintain and ensure that its sewer system was kept in a reasonable state of repair.
- The plaintiff states and the fact is that at all material times, the defendant Town owed a duty of care to the plaintiff to provide a sewer system:
(a) which was and would be useful to the plaintiff
(b) which if connected to the plaintiff’s property, did and would not present any risk of harm to the plaintiff’s property; and
(c) which was properly maintained and kept in a reasonable state of repair.
- The plaintiff stated and the fact is that the sewer system provided by the defendant Town was and is deficient in a number of material respects, including but not limited to the following:
(a) the slope of the sewer main adjacent to the plaintiff’s property is insufficient;
(b) the sewer mains and manholes adjacent to the plaintiff’s property include components which are defective and/or improperly installed;
(c) the flow of sewage in the system is from time to time reversed, with the result that sewage from elsewhere in the system enters the plaintiff’s property; and
(d) no proper maintenance or other steps have or are being taken to maintain and ensure that the sewer system is useful or in a reasonable state of repair.
- The plaintiff states and the facts are that:
(a) each of the acts and omissions of the defendant Town in relation to the sewer system, including as pleaded at paragraph 7 above, is a breach of one or more of the duties of care owed by the defendant Town to the plaintiff; and
(b) it was and is reasonably foreseeable that is the defendant Town did breach one or more of its duties of care owed to the plaintiff, the plaintiff would, as a direct result of that breach, suffer damages and loss.
The plaintiff states and the fact is that is has suffered damages and loss as the direct result of the defendant Town having breached one or more of its duties of care as aforesaid.
The plaintiff states and the fact is that it has been required to mitigate its damages and to attempt to avoid sustaining damages in the future, by installing a sewage life station to ensure that sewage is carried away from its property by the defendant’s Town’s sewer system, and, to attempt to ensure that any sewage which enters the plaintiff’s property from the sewer system is in turn forced back into the system.
15. 11. The remedial work installation of the sewage lift station was completed by May, 2004, at a cost of approximately $250,000.00
16. 12. The Town participated in the completion of the remedial work, including in the connection of the new lift station to the manhole on the Town’s sewer line.
17. 13. Despite repeated demands to do so, the Town has to date refused or neglected to reimburse to the plaintiff any of the costs incurred by the plaintiff in performing the remedial work mitigating its damages. In the meantime, the plaintiff had been paying full, the Town’s invoices for the water and sewer services provided to the Sunset Suites building, notwithstanding the agreement and the town’s earlier representations to the plaintiff.
18. 14. The plaintiff states and the fact is that by reason of the Town’s refusal to reimburse to the plaintiff its costs including as aforesaid, the plaintiff has suffered general and special damages and loss. , presently estimated to amount to approximately $250,000.00.
[9] During submissions on the motion to amend, counsel for the plaintiff advised that he wanted further amendments to paragraph 14 of the Statement of Claim, to add the words “as a result of the plaintiff having relied on the representations as pleaded in paragraph 5” and “the Town’s conduct, as aforesaid, including the refusal to …”
Limitations Act
[10] Section 4 of the Limitations Act provides for a basic two year limitation period.
S. 4 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.
Section 5(1) of the Limitations Act defines the date on which the claim was discovered
5(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).
[11] Section 24 deals with the transition between the present Limitations Act, 2002 and the Limitations Act, R.S.O. 1990, c.L.
24(1) In this section
“former limitation period” means the limitation period that applied in respect of the claim before January 1, 2004
…(5) If the former limitation period did not expire before January 1, 2004 and if a limitation period under this Act would apply were the claim based on an act or omission that took place on or after that date, the following rules apply:
If the claim was not discovered before January 1, 2004, this Act applies as if the act or omission had taken place on that date.
If the claim was discovered before January 1, 2004, the former limitation period applies.”
[12] The former limitation period with respect to actions for negligent misrepresentation and negligence, under the Limitations Act R.S.O. 1990, c.L. 15 was six years from the date the cause of action arose, subject to the discoverability principles.
[13] Counsel for the plaintiff acknowledged in his submissions that it was fair to say that the plaintiff knew by late 2003 that the acts or omissions of the defendant had resulted in a problem with the defendant’s sewer system, exposing the plaintiff to loss and damages, and that the plaintiff had to do something about the problem, which it did by building the lift station.
[14] In my view, the allegation of negligent misrepresentation, which is pleaded in the proposed amendment at paragraph 5, is a cause of action which is out of time. Whether the cause of action for alleged negligent misrepresentation arose in or about 1986, as would appear from the pleading, or whether it arose as late as 2003, when the plaintiff acknowledges that it knew of the problems with the sewer system, the six year limitation period under the old Limitations Act had expired well before the plaintiff brought its motion to amend.
[15] The particulars of the negligence alleged in paragraphs 6 and 7 of the proposed amendments were also known to the plaintiff by late 2003. Counsel for the plaintiff acknowledges this, as noted above. It is also apparent from the proposed amendments at paragraphs 10 and 11 where the plaintiff pleads that it was required to mitigate its damages and attempt to avoid sustaining damages in the future by installing a sewage lift system. Construction of the lift system commenced in 2003 and was completed, as alleged, in 2004. The negligence was therefore discovered by at least 2003 and the six year limitation period under the former Limitations Act would have expired, at the latest, in 2009. Even if it could be argued that the claim was discovered in 2004, when the lift station was completed, the two year limitation period under the present Limitations Act has expired.
[16] However, the plaintiff submits that the alleged negligence is a continuing cause of action and that therefore the limitation period has not run out. The plaintiff submits that its proposed amendments plead that not only “was” the sewer system deficient, the proposed amendments also allege the sewer system “is” deficient in a number of material respects, including those itemized in paragraph 7 of the proposed amendments, and that the defendant “is” in breach of one or more of the duties of care owed by the defendant to the plaintiff.
[17] The defendant submits that the allegations of negligence are not a continuing cause of action. The defendant points to the fact that the damages alleged in the proposed amendments at paragraph 13 and 14 relate to the alleged failure of the defendant to reimburse the plaintiff for the costs incurred by the plaintiff for the construction of a lift system, which was completed in 2004. The defendant contends that the only damages alleged are in relation to the costs of the lift station and there is no allegation of continuing damages. The defendant submits that the plaintiff had available to it by 2004 all the facts it needed to plead the negligence that it now seeks to assert. The defendant states that since 2004 there has been nothing new and discrete to extend the limitation period.
[18] In my view, the cause of action framed in negligence is not a continuing action.
[19] As described in Perell and Morden, The Law of Civil Procedure in Ontario, First Edition (Markham: LexisNexis Inc. 2010), at p. 306
“A cause of action is a set of facts that entitles a person to obtain a judgment in his or her favour from a court exercising its common law, equitable or statutory jurisdiction…. A cause of action arises when its constituent factual elements exist and are known or discoverable by the exercise of reasonable diligence.”
[20] The generally accepted test of a continuing cause of action is found in Hole v. Chard Union, [1894] Ch. 293 (C.A.), per Lindley, L.J., at p.295
“What is a continuing cause of action? Speaking accurately, there is no such thing; but what is called a continuing cause of action is a cause of action which arises from the repetition of acts or omissions of the same kind as that for which the action was brought.”
[21] Hole was cited with approval by the Manitoba Court of Appeal in Manitoba v. Manitoba (Human Rights Commission) (1983), 1983 CanLII 2967 (MB CA), 25 Man. R. (2d) 117 (Man. C.A.). In that case the plaintiffs alleged discrimination as a result of their compulsory retirement at the age of 65. The Manitoba Human Rights Act prescribed a limitation period of six months “after the alleged contravention or, where a continuing contravention is alleged, after the date of the last alleged contravention of the Act.” Phelp J.A., for court, held, at para. 19.
“To be a “continuing contravention”, there must be a succession or repetition of separate acts of discriminations of the same character. There must be present acts of discrimination which could be considered as separate contraventions of the Act, not merely one act of discrimination which may have continuing affects or consequences.”
[22] In the instant case, the alleged act or acts of negligence had all occurred, at the latest, by the end of 2003. There is no allegation in the pleadings of a succession or repetition of separate acts of negligence by the defendant since 2003 such that the limitation period would continue to run on a day to day basis. The pleading that the defendant’s sewer system “is” deficient and that the defendant “is” in breach of alleged duties of care to the plaintiff does not constitute the type of repetitive and continuing conduct which is the foundation of a continuing cause of action. The plaintiff pleads that its damages relate to the costs of the installation of the lift system and the failure or refusal of the defendant to reimburse the plaintiff for those costs which were incurred in 2003 and 2004. There is no allegation of continuing damages. The damages are fixed by the pleadings, as of 2004.
[23] The principles set out by the Supreme Court of Canada in Chaudiere Machine and Foundry Co. v. Canada Atlantic Railway (1902), 1902 CanLII 18 (SCC), 33 S.C.R. 11 (S.C.C.) are also applicable to this case. In Chaudiere, in 1888, the defendant railway company built its line through a street in Ottawa and, in so doing, built a ten foot high embankment and raised the level of the street. The plaintiffs acquired land on this street in 1895. In 1900, they brought an action alleging that the level of the street was raised unlawfully, and claimed damages for flooding and for obstruction of entry to their premises. The Supreme Court of Canada held that the plaintiffs’ right to complain of trespass or nuisance arose when that trespass or nuisance was committed, which was over ten years before the action was instituted and beyond the six year limitation period. The court stated, at para. 3:
“The fact that they [the plaintiffs] became the owners of this lot only in 1895 does not affect the case one way or the other. If they have an action every spring after the melting of the snow, or after each rain storm during the summer, as they would contend, the party who owned the lot in 1888 would have the same right had he retained ownership of it. Now that cannot be so. He had then a right of action for the waters shed upon the lot and the impaired access to the street, and the depreciation of value of his property in consequence thereof, and upon such an action the damages caused by the respondent’s embankment would have been assessed once and for all (citations omitted).
His right of action would therefore now be barred, or was barred when the present action was instituted by the lapse of six years. And the appellants cannot recover damages upon that very cause of action. The proposition that every conveyance of title would revive a right of action arising out of the same tort for the additional damages suffered by the new owner is untenable. If an action had been taken by the then owner, when the respondents built this embankment, for the damages to this property, a judgment in his favour in that action would be a bar to any subsequent actions for subsequent damages either at his instance or at the instance of the subsequent owners of the property.” Goodrich v Yale, 8 Allen (Mass.) 454.
[24] As summarized in the headnote to Chaudiere: “Upon the erection of a work which causes recurring damage to land, a single cause of action arises in respect thereof and recovery thereon will involve the assessment of damages from all recurring injuries to the property….”
[25] Rule 26.01 provides that 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. This is a mandatory provision which requires the court to grant leave, no matter what stage the action is at, unless there would be non-compensable prejudice to the opposing party.
[26] Amendments sought by a plaintiff which are statute barred constitute non-compensable prejudice. On this motion, the amendments sought by the plaintiff are statute barred and, as such, constitute non-compensable prejudice to the defendant. The amendments requested are therefore denied.
[27] Because the plaintiff has agreed that the causes of action previously asserted in the statement of claim should be dismissed, with prejudice, there is nothing left in the statement of claim that constitutes a cause of action. The defendant shall have summary judgment against the plaintiff. The plaintiff’s action is dismissed.
[28] If the parties are unable to agree upon costs, the defendant shall deliver written submissions, not to exceed five pages, together with its Bill of Costs, within 15 days. The plaintiff shall deliver responding submissions, not to exceed five pages, together with any Bill of Costs it may wish to file for comparison purposes, within 10 days of service of the defendant’s submissions.
“original signed by”
The Hon. Mr. Justice D. C. Shaw
Released: January 17, 2012