SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-09-1425
DATE: 20130726

RE: TYHME THOMPSON, LINDA THOMPSON, MICHAEL THOMPSON and LUCKAS THOMPSON by his litigation guardian Linda Thompson, Plaintiffs

AND:

STUART MUNGHAM, CHARLIE ROBINSON, BRENDA ROBINSON, CODY ROBINSON, MARJORIE COLLINS, MARGARET GRAHAM and K.O.B. NORTH LAKE HOLDINGS LTD., Defendants

BEFORE: THE HON. MR. JUSTICE J.R. McCARTHY

COUNSEL:
J.L. Vigmond and A. Little, for the Plaintiffs

M.P. Forget, for the Defendants K.O.B. North Lake Holdings Ltd. and the Margaret Graham

R.D. Rollo, for the Defendant Stuart Mungham, not appearing

R.S. Sutherland, for the Defendants, Robinson, not appearing

D. Winnitoy, for the Defendant Marjorie Collins, not appearing

HEARD: July 10, 2013

ENDORSEMENT

THE MOTION

[1] The Plaintiffs move to add K.O.B. North Lake Holdings Ltd. (“KOB”) as a party Defendant under Rules 5.02 and 5.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

BACKGROUND

[2] This action arises out of injuries sustained in a single all-terrain vehicle (“ATV”) accident, which occurred on July 25, 2008, on a trail designated as ATV Trail 250, Ross Lake Road in the Township of Dysart, County of Haliburton. The General Occurrence Report prepared by the Ontario Provincial Police (the “OPP”) specifies that the incident occurred at “1435 Rosslake Road, Dysart et al.”

[3] The Plaintiffs obtained additional information about the accident through the OPP Motor Vehicle Accident Report (the “MVA report”), the Ambulance Call Sheet (the “ACS”), the Fire Department Report, and a Technical Collision Investigation Report (the “TCI report”). They retained a private investigator, a Mr. Braney, to conduct interviews of potential witnesses and parties, carry out a property search of title, and obtain photographs of the accident scene. The ACS recorded that the “pick-up location” of the injured person was at 1435 Ross Lake Road and that the injured person was found on the side of the road. The TCI report indicated that the accident location was a “Private Trail at the end of Ross Lake Road.” The incident synopsis in the TCI report described the ATV as being operated “east bound on a private gravel roadway at the end of Ross Lake Road.” The search of title performed by Braney revealed that Graham was the owner of property identified in a certificate of registration assigned number 221333 and registered on April 08, 1999. Braney described this property as “the lands involved in the accident” in his report dated November 26, 2008. Braney’s interview with witness and prospective defendant Charlie Robinson on November 23, 2008 revealed that Robinson’s aunt owned the property. Robinson’s aunt was the defendant Margaret Graham.

[4] The Statement of Claim was issued on October 26, 2009 and named various defendants. Among them, Margaret Graham was alleged to have been the “owner, occupier, lessor or controller of premises located at 1435 Ross Lake Road.” A Statement of Defence was served and filed on behalf of Graham on February 8, 2010. On March 29, 2010, counsel for Graham wrote to counsel for the Plaintiff as follows:

Our investigation of this matter has revealed that the accident involving Thyme Thompson did not occur on property owned by our client, Margaret Graham. I have received instructions from my client to consent to a dismissal of the claim as against her, without costs. In the event this offer to settle is not accepted within thirty days from today, we have instructions to proceed with a motion for summary judgment and I will be seeking costs.

[5] On April 16, 2010, the solicitor for the Plaintiff wrote to counsel for the Defendant as follows:

We acknowledge receipt of your correspondence dated March 29, 2010. It is our information that the incident occurred on Ms. Graham’s property. Based on our review of the available surveys, it appears that Ms. Graham owns the trail from the end of Ross Lake Road up to the point of the hydro transmission lines. It is our understanding that the incident occurred on this portion of the trail. If you have information to the contrary, we would appreciate hearing from you at your earliest opportunity.

[6] There was no reply to that correspondence.

[7] The parties proceeded to examinations for discovery in July 2011. At discoveries, Graham could not confirm where on Ross Lake Road the accident had taken place. At the discovery of Robinson, a document containing a sketch of Graham’s property and a property to the north of it was identified and made an exhibit. This sketch featured an “X” marked on a portion of the trail in question. Robinson testified that he did not place the “X” on the sketch, but confirmed that the “X” did in fact mark the location of the ATV accident. That “X” does not appear on the copy of the sketch contained in the property search papers obtained by Braney from the registry office in 2008. Graham’s counsel could not explain how the “X” came to be placed on the document. Her counsel refused to divulge any information, knowledge, or belief in her possession suggesting that the accident did not occur on Graham’s property. Nor could her counsel comment on the significance of item number 6 in Schedule “A” of Graham’s affidavit of documents, other than to say that it showed the name of the owner of property to the north of Graham and further along the trail (KOB).

[8] On October 11, 2011, counsel for the Defendant Graham provided two surveys prepared by C.T. Strongman Surveying and completed on January 25, 2010. The Defendant relied on those for her position that the subject accident did not take place on property owned by Graham, but rather on property owned by KOB.

[9] The Plaintiff obtained an order on March 6, 2012 for leave to amend its Statement of Claim to add KOB as a Defendant. The motion seeking that order was brought on or about February 21, 2012. That order was set aside by McIsaac J. on May 1, 2012, on the basis that KOB wished to oppose the relief sought because of the expiration of the limitation period.

THE PLAINTIFFS’ POSITION

[10] The Plaintiffs concede that the motion to add KOB as a Defendant was brought after the expiration of the prima facie limitation period of two years in the Limitations Act, 2002 S.O. 2002, c. 24 (“the Act”) but argue that they are entitled to add KOB by virtue of the discoverability rule, now codified by ss. 5 (1) and (2) of the Act. The Plaintiff relies on the Divisional Court decision in Wong v Adler (2005), 2004 73251 (ON SCDC), 76 O.R. (3d) 237 (Div. Ct.), which effectively upheld and adopted the decision of Master Dash, at 2004 8228 (ON SC), 70 O.R. (3d) 460, dismissing the Plaintiff’s motion in that case to add a party after the expiration of the relevant limitation period. Simply put, that case held that if there is some issue of fact or credibility on the discoverability issue, the proposed Defendant should be added with leave to the Defendant to plead the limitations defence. Where the issue is the due diligence of the Plaintiff in identifying a Defendant, issues of credibility may require a trial or summary judgment motion on the issue.

[11] The Plaintiffs contends that there is ample evidence to support a finding that they exercised due diligence to determine the identity of the owner and occupier of the property on which the accident took place. In spite of that due diligence, the identity of KOB as a proper Defendant to the action was not discovered by the Plaintiff until the Strongman surveys were disclosed to them in October 2011. It was only then that they discovered that an act or omission on the part of KOB as owner and occupier of the property might be the basis for a claim against that entity. Accordingly, they rely on s. 5(1) of the Act to argue that the limitation period as against KOB would not begin to run until that date. They sought leave of the court to add KOB as a Defendant shortly thereafter and well within the limitation period of two years.

[12] In terms of a “triggering event” which would have revived or renewed the Plaintiffs’ obligation to exercise due diligence to identify an alternative owner and occupier to the one named in the claim, the earliest such event can only be the letter from counsel for Graham of March 29, 2010. The Statement of Defence of Graham contains only blanket denials and boiler plate wording. Moreover, there is no affirmative denial of ownership and no mention of any other party who might be an owner; in short, there is nothing that would put the Plaintiffs to a renewed inquiry into the issue of ownership of the property whereupon the accident took place.

[13] The Plaintiffs concede that the existence of KOB as an entity and property owner was discoverable within the two year limitation period; yet, it is the discoverability of KOB as a necessary and property party to the action, rather than its status as a legal entity and general property owner, which is at issue. Reasonable diligence in the immediate aftermath of the accident had satisfied the Plaintiffs that Graham was the owner and occupier of the property in question and therefore an appropriate Defendant. That same reasonable diligence had failed to uncover KOB as a potential Defendant. Reasonable diligence should not be held to include conducting title searches on properties abutting the location of an accident scene unless and until some evidence is reasonably available placing the accident scene there.

[14] Finally, the Plaintiffs argue that the failure by counsel for the Defendant Graham to respond to the April 16, 2010 inquiry made of him by counsel for the Plaintiff, when the survey that was ultimately served was available to him as early as January 2010, creates an undercurrent of deception on the part of counsel for the Defendant Graham. This is especially so because that same counsel has been retained by KOB to represent its interests and to oppose the motion to add it as a party.

KOB’S POSITION

[15] The motion is opposed by KOB on the basis that the relevant limitation period of two years from the date of the accident, which gave rise to the Plaintiffs’ cause of action, has now expired. It is clear that s. 21 (1) of the Act effectively bars a party from adding a person to an existing proceeding if the limitation period has expired.

[16] In addition, KOB contends that the Plaintiffs cannot rely on the discoverability rule now enshrined in the Act because the Plaintiffs are unable demonstrate that they exercised due diligence to discover that which was easily discoverable within two years of the date when the cause of action arose: that the accident in question took place on property owned and occupied by KOB.

[17] In the alternative, the KOB contends that, to the extent that the Plaintiffs can rely on the line of cases that serve to extend the limitation period in situations where the identity of a defendant is not reasonably discernible, the “triggering event” which served to start the limitation period of two years running was the serving and filing of the Statement of Defence of February 8, 2010. That pleading unequivocally denied each and every allegation in the Statement of Claim. Moreover, paragraphs 4 and 7 of that pleading constitute a clear denial that the Defendant Graham was the occupier of the premises and that the incident occurred on Graham’s property. Since the Plaintiffs only sought leave to amend the claim to add KOB on February 21, 2012, they are outside of any extended limitation period that might be afforded to them by ss. 5 (1) and (2) of the Act or the law of discoverability.

[18] KOB contends that the law is well settled: as stated in the case of Marcovitch v. Kurtes, 2012 ONSC 1496, [2012] O.J. No. 1024, at para. 45, a Defendant cannot be added to an action following the two year limitation period unless the Plaintiff can establish that it was highly unlikely, if not impossible, to discover the claim against the defendant in the two years following the incident or a triggering event.

[19] KOB further contends that the failure of counsel for Graham to respond to the inquiry of April 16, 2010 is immaterial to the issue before the court. The fact that KOB retained counsel for Graham to oppose this motion is irrelevant; to the extent that an explanation for this anomaly was required, Mr. Forget offered simply that his familiarity with the matter’s background and the pleadings made him the logical candidate to respond to the motion.

ANALYSIS

I) Section 5 of the Limitations Act

[20] It is clear to me that s. 5.(1) of the Act was specifically intended to enshrine the discoverability rule as developed by the courts into the legislative framework. That section reads as follows:

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).

[21] The operative subparagraph in this case is s. 5(1)(a)(iii). In my view, this is clearly designed to capture the situation where a potential tortfeasor’s identity cannot be readily determined or where a connection between the alleged act and a person or entity cannot reasonably be established.

II) Due Diligence within the prima facie limitation period

[22] I conclude that there is sufficient evidence of due diligence by the Plaintiffs in the time period following the ATV accident of July 25, 2008, to satisfy the low threshold test in Wong v. Adler. There were no less than seven sources of information that they relied upon to arrive at the conclusion that the incident had occurred on property owned by the defendant Graham. I agree with the proposition of Master Dash in the case of Wakelin v. Gourley (2005), 2005 23123 (ON SC), 76 O.R. (3d) 272, aff’d [2006] O.J. No. 1422 (Div. Ct.), that not much evidence is required at the pleadings amendment stage for the Plaintiff to establish that the proposed Defendants could not have been identified.

[23] The Plaintiffs did not limit themselves to the reports and documents generated by public authorities in the normal course of an investigation such as an OPP report, fire department report, or ambulance call report. Instead, they went much further, retaining a private investigator to interview witnesses, establish the precise location of the accident, and conduct a title search on the lands identified through that investigation.

[24] In my view, the Plaintiffs took reasonable steps in the time period following the ATV accident to determine the location of the accident. I find that those steps constitute what the Court of Appeal described as, “… a list of attempts to obtain information to substantiate the assertion that the party was reasonably diligent…” in the case of Zapfe v Barnes, (2003), 2003 52159 (ON CA), 66 O.R. (3d) 397, at p. 407.

III) The Test of Discoverability

[25] I am unable to agree with counsel for KOB that the appropriate test for discoverability is whether it was highly unlikely, if not impossible, for the Plaintiffs to discover the claim against the proposed Defendant within two years. Rather, the test is whether, by reasonable diligence, the requisite information was discoverable within the two year period. The words “by reasonable diligence” were inserted as part of the highly unlikely or impossible test followed by D.G. Stinson J. in Marcovitch, at para. 45. That phraseology is of primary importance. Variations on it have been employed in other cases (see for example, “diligent efforts” and “reasonable exercise of diligence,” at paras. 18 and 19, respectively, of the decision of B.A. Allen J. in Sloan v Sauve Heating Ltd., 2010 ONSC 3871, [2010] O.J. No. 3002, or the more succinct “due diligence” employed by my brother judge Sosna J. in Wilkinson v. Braithwaite, [2011] O.J. No. 1714, at para. 34). Thus, some evidence of reasonable investigation or inquiry into the entire circumstances of the accident is required at the pleadings amendment stage. If those efforts are found to constitute due diligence, then the inquiry shifts to whether it was highly unlikely, if not impossible, for the Plaintiffs to discover the claim based upon the information derived from that due diligence. In this case, the discovery of KOB was highly unlikely or impossible because the documents, statements, and information generated by the accident in the usual course, or obtained by the Plaintiff as part of their investigation into the accident, did not disclose or even provide a hint of KOB as a prospective Defendant.

IV) The Triggering Event

[26] The questions that should follow are: (a) was there a triggering event which served to alert the Plaintiffs that their conclusions were erroneous?; (b) if so, what was that triggering event?; (c) did the Plaintiffs then exercise sufficient due diligence to ascertain the actual location of the accident and the owner and occupier of the property upon which that location is found?; and, (d) was leave to amend the pleading and add KOB sought within two years of the triggering event?.

[27] In Sloan v, Sauve Heating Ltd., 2011 ONCA 91, [2011] O.J. 402, the Court of Appeal confirmed that the threshold on a motion to add a party is low. This ruling upheld the decision of B.A. Allen J., at 2010 ONSC 3871, [2010] O.J. No. 3002, which had allowed the appeal from the decision of a Master at [2009] O.J. No. 5222. A Plaintiff is required to provide some reasonable explanation as to why the proposed defendants were not identifiable and not named as parties prior to the expiry of the limitation period under s. 4 of the Limitations Act, 2002. In its very short reasons, the Court of Appeal explained what constituted the triggering event in the case before it: the delivery of a Statement of Defence which, “…in clear terms indicated the involvement of an independent contractor that actually delivered the fuel (emphasis added).”

[28] Lauwers J. (as he then was), writing in the context of an insurance adjuster’s denial of liability in Madrid v. Ivanhoe, 2010 ONSC 2235, 101 O.R. (3d) 553 at para. 17, decided that a “naked denial of liability should not trigger a duty on the plaintiff to make further inquiries.”

[29] I agree with counsel for the Plaintiffs that the earliest possible triggering event was the letter from Mr. Forget, dated March 29 2010, in which he set out the Defendant Graham’s position that the accident did not take place on property owned by her. In my view, while the Statement of Defence denied that Graham was the occupier, it did not deny ownership or provide sufficient detail which would put the Plaintiffs to the obligation to conduct further investigation. It did not sufficiently point the litigation finger at another prospective defendant. It was what the kind of naked denial of liability identified by Lauwers J. (as he then was) in Madrid v. Ivanhoe. The pleading did not indicate in clear terms the involvement of an independent party that actually owned the lands in question. I would draw an inference that Defence counsel felt the same since he followed up that pleading with correspondence dated March 29 2010, setting out his client’s position. Like the pleading, the letter lacked sufficient detail but it at least confirmed in no uncertain terms the Defendant Graham’s position that she was not the “owner” of the land where the accident took place and that she was prepared to move for summary judgment as a result. Here, at least, was a denial that was somewhat, albeit scantily, clothed.

[30] On the evidentiary basis before me, I find that the March 29, 2010 letter was the event that triggered the Plaintiffs’ renewed obligation to exercise due diligence to uncover further specifics of where the accident took place and on whose property.

V) Post-Event Diligence

[31] The letter of inquiry to Defence counsel dated April 2010, and the questions asked at discovery in July 2011, constituted further diligence on the part of the Plaintiff to obtain that information. That exercise of diligence and the motion for leave to amend the claim to add KOB all took place within two years of the triggering event of March 29, 2010.

CONCLUSION

[32] I therefore conclude that there is sufficient evidence on the record for a finding at this stage that the Plaintiffs and their solicitor exercised reasonable diligence to ascertain the identities of all potential Defendants. Because the information about KOB was neither explicitly nor implicitly contained in the information obtained as a result of that reasonable diligence, I find that it was highly unlikely or impossible for the Plaintiffs to discover a claim against KOB within the prima facie limitation period. I have found that the triggering event that put the Plaintiffs to further inquiry and diligence was the March 29, 2010 letter from counsel for the Defendant Graham. The denials and allegations set out in the Statement of Defence fell short of what would be required to constitute a triggering event. I find that the Plaintiffs exercised further diligence through inquiry and discoveries, and then moved within two years of both the triggering event and the time of being furnished with information that pointed the litigation finger at KOB, to seek leave to add that party as a Defendant.

DISPOSITION

[33] For the reasons set out above, the motion is allowed and leave is granted for the Plaintiffs to amend their Statement of Claim to add KOB North Lake Holdings Ltd. as a Defendant to this action. Like Lauwers J (as he then was) in the Madrid case, I feel bound by the Court of Appeal’s decision in Zapfe v. Barnes to make this order without prejudice to KOB to plead any defence open to it, including the limitation period.

COSTS

[34] In the event that the parties are unable to agree on costs of the motion, I order that costs submissions be made in writing according to the following timetable: the Plaintiffs shall serve and file written submissions limited to 3 pages by August 24, 2013; KOB shall serve and file written submissions limited to 2 pages by September 13, 2013; and the Plaintiffs shall serve and file any reply submissions by September 20, 2013.

McCARTHY J.

Date: July 26, 2013