ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-07-1448-00
DATE: 20120208

B E T W E E N:

SUBOMI SALAMI, ABIODON TAOFEEK SALAMI, ZAINAB SALAMI, TAHIRA SALAMI, O. FAIZAH SALAMI SALAMI

Adeyinka O. Oyenubi, for the Plaintiffs

Plaintiffs

• and -

NORTH CASTLEMORE DEVELOPMENTS INC., THE PERSONAL PROPERTY INSURANCE AND FOREST HILL HOMES

Frank D. Costantini, for the defendants and plaintiffs by counterclaim, North Castlemore Developments Inc. and Forest Hill Homes

Defendants and Plaintiffs by Counterclaim

(No one appearing for Personal Property Insurance)

• and -

ABIODON TAOFEEK SALAMI

Osborne G. Barnwell, for the defendant by counterclaim, Abiodon Taofeek Salami (not appearing on the motion)

Defendant by Counterclaim

HEARD: February 1, 2012

ENDORSEMENT

MacKenzie J.

Introduction

[ 1 ] The plaintiffs make two motions: the first motion is to amend the statement of claim pursuant to Rule 26.01 of the Rules of Civil Procedure and the second motion is for leave pursuant to Rule 48.04(1) to obtain an order for examination for discovery of the defendants notwithstanding that the plaintiffs have set the action down for trial.

[ 2 ] For the reasons that follow, the plaintiffs’ motion to amend the statement of claim pursuant to Rule 26.01 is dismissed and the plaintiffs’ motion for leave pursuant to Rule 48.04(1) for and order for examination for discovery of the defendants is granted.

Background

[ 3 ] The plaintiffs’ claims for damages arise out of an alleged slipped and fall incident that happened on or about September 28, 2006 at the residence owned by the plaintiffs, Salami and Abiodon T. Salami, who are respectively wife and husband. The plaintiff, Subomi Salami, alleges that she slipped and fell while walking on an unstable precast concrete slab that rested on the ground giving entry to her residence. The residence was purchased by the husband and wife from the defendant, North Castlemore Developments Inc., which residence had been built by the defendant Forest Hill. The purchase and sale transaction was completed on or about the 29 th day of November 2005 on which date the husband and wife entered into possession of the residence.

[ 4 ] Following the alleged slip and fall incident, on or about September 28, 2006, the plaintiffs retained counsel and in due course a statement of claim was issued on May 7, 2007.

[ 5 ] The defendant North Castlemore Development Inc. delivered its statement of claim on May 27, 2008 and a statement of defence and cross-claim of the defendant, The Personal Property Insurance, was received on July 7, 2008. An amended statement of defence and counterclaim of North Castlemore Development Inc. was delivered on December 11, 2008, the counterclaim being against the husband for contribution and indemnity for any losses for which North Castlemore Developments Inc. might be found liable.

[ 6 ] The subsequent relevant steps in the litigation were as follows:

(a) the plaintiff wife swore her affidavit of documents on April 6, 2008;

(b) the plaintiffs delivered their trial record and a signed “Certificate of Completeness” dated January 22, 2009 on August 24, 2009;

(c) the examination for discovery of the wife was completed on the January 25, 2010; and

(d) the plaintiffs served a notice of examination on July 8, 2010 for examination for discovery of both defendants; however, the scheduled examination did not take place as former counsel for the plaintiffs refused to enter upon the examination on the basis that he took the position that the representative for both corporate defendants was in an apprehended conflict of interest position in that the proffered individual could not speak for the corporate defendants.

[ 7 ] The position of the plaintiff’s former counsel was set out in a letter to counsel for the defendants dated August 27, 2010. In such letter, former counsel suggested that there was also a conflict of interest with respect to counsel for the corporate defendants representing the two corporate defendants as independent entities.

[ 8 ] By letter dated September 3, 2010, counsel for the defendants responded, denying there could be any apprehended conflict of interest in their representation of the corporate defendants inasmuch as both defendants were related companies, North Castlemore Developments Inc. being the developer of the community which the subject residence was located and Forest Hill Homes being the builder of the subject residence, among others, in the development. In addition, counsel denied any conflict of interest in the proffered representative being the same person for both companies on the basis that such proffered individual was an employee of both corporate defendants and had significant knowledge of the matters in issue. Counsel further stated that the plaintiffs’ former counsel should have proceeded to examine the proffered representative for discovery, and if deemed appropriate at the conclusion of such examination, move to examine another representative of the defendants.

[ 9 ] Although plaintiffs’ former counsel indicated her intention to bring motions relating to the discovery issues, nothing further in terms of court proceedings occurred until a status hearing conducted on October 19, 2010, at which time plaintiffs’ former counsel and counsel for the defendants were present.

[ 10 ] The presiding justice at the status hearing (Snowie J.) directed, among other things, that any motions relating to discovery issues of the defendants should be scheduled and heard prior to February 27, 2011. No motion by plaintiffs’ former counsel was mounted in accordance with the above direction.

[ 11 ] In or about March, 2010, the plaintiffs’ former counsel became the subject of disciplinary investigations and hearings by the Law Society of Upper Canada (LSUC). On or about March 2, 2011, a hearing panel of the discipline committee suspended the licence of the former plaintiffs’ counsel on an interlocutory basis, pending further investigations by the LSUC.

[ 12 ] In June 2011, present counsel, Mr. Oyenubi was retained by the plaintiffs.

Analysis

[ 13 ] As previously noted, the plaintiffs seek leave to set aside the setting down of the action for trial, with a view to moving to amend the statement of claim under Rule. 26.01, and conducting an examination for discovery of the representative of the defendants.

[ 14 ] Rule 48.04(1) sets out the consequences of setting an action down for trial in the following terms:

CONSEQUENCES OF SETTING DOWN OR CONSENT

48.04 (1) Subject to subrule (3), any party who has set an action down for trial and any party who has consented to the action being placed on a trial list shall not initiate or continue any motion or form of discovery without leave of the court . (emphasis added)

(2) ... [Not applicable]

(3) ... [Not applicable]

[ 15 ] By operation of clause (1) above, the plaintiffs by their former counsel having set down the action for trial are prohibited from initiating or commencing any motion or proceeding to examination for discovery of the defendants unless they first obtain the court’s leave to do so.

[ 16 ] The preliminary question is whether leave should be granted to the plaintiffs in the circumstances.

[ 17 ] The gist of the plaintiffs’ position on the relief being sought may be simply put, in the following terms:

Should the mistake of former counsel be visited on the litigant?

[ 18 ] This concept has been restated as a principle that the sins of the lawyer should not be visited upon the client in many cases: see Graham v. Vandersloot, 2012 ONCA 60 , and cases described therein, at para. 10.

[ 19 ] The case law establishes that the signing of a Certificate of Trial Readiness to the effect that everything necessary has been done for the trial is a serious step and highlights the significance of setting a matter down for trial: see LML Investments Inc. v. Choi , 2007 8926 (ON SC) . Counsel refers to the test for granting leave in Hill v. Ortho Pharmaceutical (Canada) Ltd., [1992] O.J. 1740 (Ont. Ct. Gen. Div.) . E. MacDonald J. described the test as follows:

The significance of setting a matter down for trial is enhanced by, among other things, the fact the counsel setting the matter down for trial must sign a certificate to the effect that everything has been done to place the matter on the list for trial. The authorities make it clear that setting down a matter for trial is not a mere technicality of procedure. Before it can be vacated to permit any further discovery or any interlocutory proceedings, there must be a substantial or unexpected change in circumstances such that a refusal to make an order under S. 48.04(1) would be manifestly unjust : p. 3 Emphasis added.

[ 20 ] Counsel for the defendants submits there are no “substantial or unexpected changes in circumstances” that would make the courts’ refusal to grant leave under Rule 48.04(1) “manifestly unjust.” In this regard, counsel points out that “litigation strategy errors do not constitute a change in circumstances,” referring to the act of the plaintiffs’ former counsel in signing the certificate of readiness for trial in the circumstances outlined above. In this regard, counsel refers to the courts’ comments in Hill v. Ortho Pharmaceutical at page 4 as follows:

I appreciate that after obtaining new counsel disagree with the tactics of the initial solicitor, ultimately, the plaintiffs now wish to effectively reopen their case. I find however, that regardless of the hardship to them, occasioned by their former counsel’s approach to the matter, the courts have established clear and unequivocal principles that govern these facts.

[ 21 ] A close reading of the factual background in Hill indicates that the plaintiff became dissatisfied with her solicitor and filed a complaint against him with the LSUC. The plaintiff in due course retained fresh counsel who took the position that it would have been impossible to properly prepare for trial without further examination for discovery of the defendant.

[ 22 ] In my view, there is a significant factual distinction between the Hill case and the present case. There is no evidence in the present case that the plaintiffs were at the time dissatisfied with the conduct of their case by their former counsel. The reasons for the LSUC’s initiating disciplinary action and subsequent suspension of their former counsel are not clear from the record but there is no indication of dissatisfaction and resulting termination of former counsels’ retainer by the plaintiffs at the material time. As can be seen, there was an approximate three month hiatus between the effective suspension of their former counsel and the retainer of their present counsel in this matter.

[ 23 ] Nowhere in the facta or the submissions by either the plaintiffs or the defendants has reference been made to the overarching principle of interpretation of the Rules of Civil Procedure , found in 1.04(1), as follows:

INTERPRETATION

General Principle

1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

[ 24 ] In my view, this overarching principle has been adapted in the case law under Rule 48.04(1) by the acknowledgement in all the cases that, before leave may be given to vacate a certificate of readiness for trial, “there should be substantial and unexpected changes in circumstances that to refuse the order would be manifestly unjust.”

[ 25 ] The words “unexpected change in circumstances” here must be construed having regard to the general principle of interpretation of the liberal construction of the rules to secure a just, expeditious determination on the merits. I conclude that the circumstances of the suspension of their former counsel in the timeframe in which it happened was unexpected by the plaintiffs and was a circumstance over which they would have had no control: they did not, on the record, terminate the retainer of former counsel of their own motion – such retainer would have been terminated by the suspension order of the LSUC.

[ 26 ] In the result, I grant leave to the applicants to vacate the certificate of readiness for trial and the setting down for trial of the action. The plaintiffs are therefore at liberty to bring their motion to amend their statement of claim herein.

[ 27 ] Rule 26.01 sets out the general power of the court relating to the amendment of pleadings.

26.01 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.

[ 28 ] The position of the applicants is that in the original statement of claim, all of the relevant facts have not been properly pleaded, particularly facts relating to the contract between the parties and in particular, facts which establish a duty of care on the part of the defendants. If the plaintiffs are to succeed in a claim for negligence, the first step is to show that they are owed a duty of care.” see para. 16 (plaintiffs’ factum).

[ 29 ] The position of the defendants is that the original statement of claim deals only with allegations of common law negligence, in particular the installation and maintenance of an allegedly unstable precast concrete pad at the entrance to the plaintiffs’ residence at the time of the alleged slip and fall incident.

[ 30 ] The defendants contend the proposed amendments deal with much more than negligence at common law and in essence constitute a new cause of action which would be treated as a new claim for purposes of a limitation period under the Limitations Act, 2002 , S.O. 2002, c.24, Sched. B., as amended. In essence, the defendants position is that the proposed amendments relate to alleged acts or omissions of the defendants under an alleged breach of a purchase and sale agreement, all of which are clearly separate and apart from the allegedly negligent installation of a precast concrete slab at the entrance to the plaintiffs’ residence.

[ 31 ] Simply put, counsel submits the proposed amendments constitute a new cause of action which is subject to the limitation period in the Limitations Act , 2002 . In this regard, counsel cites authority for the proposition that an amendment to a statement of claim which gives rise to the consideration of a limitation period defence is prejudice that is actual, i.e. non-compensable by either money terms or an adjournment.

[ 32 ] The defendants further submit that the passage of approximately five years after the incident and the intervening sale by the plaintiffs of the residence constitutes prejudice to the defendants that is not compensable in money terms or an adjournment. Of particular significance in this regard is the fact that the plaintiffs in the intervening period having sold their residence and no longer residing there, have no control, use, occupation, or access to the residence. In his factum, counsel for the defendants submits, “the defendants have been denied a fair opportunity to complete a timely investigation and to obtain facts and statements from witnesses with actual knowledge of facts relevant to the new allegations. The plaintiffs no longer reside in the premises as the property was listed for sale and sold. This amounts to actual prejudice because the defendants cannot carry out an inspection of the premises to ascertain the validity of the plaintiffs’ allegations. The defendants’ ability to defend against the proposed amended claims by the plaintiffs has been severely impaired by the loss of information whether it be due to lost memories or loss of evidence. This constitutes non-compensable prejudice under 26.01 of the Rules of Civil Procedure .” see paragraph 27.

[ 33 ] I agree with this submission. Quite apart from the prejudice constituted by pleading a new cause of action relying on facts different to the facts pleaded in the claim based on negligence, there is actual prejudice to the defendants that cannot be compensated by either money terms or an adjournment. On the basis of actual prejudice, the plaintiff’s motion under Rule 26.01 is dismissed.

[ 34 ] I turn to the other area in respect of which leave has been granted under Rule 48.04(1), namely, initiating or continuing any form of discovery.

[ 35 ] Taking into account there is no new cause of action now permitted and that the claim of negligence set out in the original statement of claim frames the issues between the parties, I am unable to conclude that there would be any prejudice to the defendants that is not compensable in money terms by permitting the plaintiffs to examine for discovery a representative or representatives of the defendants. An order for such examination in accordance with the Rules of Civil Procedure shall issue; however, in the somewhat unique circumstances relating to the failure of former counsel for the plaintiffs to proceed with discovery, it is only fitting and proper that the plaintiffs bear the costs of such examinations for discovery in any event of the cause.

Disposition

(1) The plaintiffs’ motion for leave under Rule 48.04(1) to vacate the Certificate of Readiness for Trial, has been granted.

(2) The plaintiffs’ motion under Rule 26.01 to amend the statement of claim is dismissed.

(3) The plaintiff’s motion to proceed to the examination for discovery of the defendants is granted.

Costs

[ 36 ] As there has been divided success in this motion, there shall be no order for costs unless there has been an offer or offers to settle the issues on the motion, in accordance with Rule 49.

MacKenzie J.

Released: February 8, 2012

COURT FILE NO.: CV-07-1448-00
DATE: 20120208

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: SUBOMI SALAMI, ABIODON TAOFEEK SALAMI, ZAINAB SALAMI, TAHIRA SALAMI, O. FAIZAH SALAMI SALAMI Plaintiffs - and – NORTH CASTLEMORE DEVELOPMENTS INC., THE PERSONAL PROPERTY INSURANCE AND FOREST HILL HOMES Defendants and Plaintiffs by Counterclaim - and – ABIODON TAOFEEK SALAMI Defendant by Counterclaim REASONS FOR JUDGMENT MacKenzie J.

Released: February 8, 2012