Court File and Parties

COURT FILE NO.: CV-10-400547

DATE: 20130704

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ANNETTE SULTANA, Applicant/Plaintiff

AND:

PAUL VELEY, 570059 Ontario Ltd. o/a VELEY ENTERPRISES LTD. o/a ROBERTSON CUSTOM ELEVATORS, 660448 Ontario Ltd. o/a HAL-BRANT ELEVATOR SERVICES LTD., DELTA ELEVATOR (BARRIE) LIMITED, SIMCOE ELEVATOR & LIFT CO. LTD., 1067674 Ontario Ltd. o/a ELEVATOR ONE INC., THE CITY OF MISSISSAUGA, 985314 Ontario Ltd., and 4494105 ONTARIO LTD., o/a THYSSENKRUPP NORTHERN ELEVATOR CORPORATION, Defendants

BEFORE: J. Macdonald J.

COUNSEL:
Bryan D. Rumble, for the Applicant/Plaintiff.

Charles Gastle, for the Respondent/proposed Defendant, Delta Elevator Company Limited

Catherine Ayre and L. Chow also in attendance.

HEARD: June 25, 2013

ENDORSEMENT

[1] The applicant moves for an order substituting the respondent, Delta Elevator Company Limited, (to which I will refer as “DEC”) for the named defendant, Delta Elevator (Barrie) Limited, (to which I will refer as “DEB”). The motion is brought after expiry of the limitation period, and is opposed.

[2] I disposed of two preliminary issues at the hearing. This motion should have been made returnable before a Master. Applicant’s counsel asked me to hear it, having set it down in Motions Court, in order to avoid delay. Respondent’s counsel did not oppose that. I agreed to hear it because I had the time available and because adjourning it would increase both costs and the time until disposition of this action. In addition, I granted leave to the respondent to file and to rely upon the contents of its Cross-Motion Record dated February 5, 2013 and returnable on February 13, 2013, to which the applicant did not make objection.

[3] The applicant was injured in the fall of a home elevator on April 16, 2008. She has sued parties involved in the design, approval, supply, assembly, installation, removal, relocation and reinstallation, and maintenance of the elevator in issue.

[4] A Statement of Claim was issued in late 2009. A further Statement of Claim, instituting this action was issued on April 7, 2010. This Statement of Claim alleged that DEB maintained the elevator in issue from 2005 until 2008, when it fell, and was negligent in the service it provided. Another named defendant, Simcoe Elevator Lift Co. Ltd., has been sued as the company responsible for maintenance of the elevator from 2000 to 2005.

[5] I find as a fact, based on the affidavit of Chris Morrison sworn February 5, 2013 and the elevator repair tickets exhibited therein, that DEC, not the defendant named, DEB, maintained the elevator from 2005 to 2008. I also find as a fact, based on the affidavit of Barry Munro sworn January 17, 2013 that DEB was the corporate name to which Simcoe Elevator and Lift Co. Ltd. changed, and that DEB then changed its corporate name to Elevator One Inc., which is also a named defendant.

[6] DEB is therefore one of the former names of the company sued for maintaining the elevator between 2000 and 2005 but is named and sued in this Statement Claim as the company which maintained the elevator between 2005 and 2008. I find, therefore that DEB is a misnomer of the party intended to be sued, DEC. This conclusion is also supported by the Munro affidavit’s contents, to which I will refer.

[7] I find as a fact, based on the aforesaid affidavit of Barry Munro, a lawyer with the firm representing the applicant, that:

• when the present Statement of Claim was issued, the intent was to name as defendants the companies which serviced and maintained the elevator prior to the accident, being Simcoe Elevator and Lift Co. Ltd. and its corporate successors, and DEC.

• on June 9, 2008, the applicant’s lawyer advised DEC by registered and ordinary mail that the applicant intended to sue it as a result of the aforesaid accident.

• the law firm had conducted a corporate search on Simcoe Elevator and lift Co. Ltd. which disclosed that it had changed its name to DEB.

• through inadvertence, DEC was not named as a defendant. Instead DEB was named and sued when it was a successor name of Simcoe Elevator Lift Co. Ltd. and a predecessor name for Elevator One Inc., both of which were named as defendants.

• on June 12, 2008, the applicant’s law firm advised Simcoe Elevator and Lift Co. Ltd. by registered and ordinary mail that the applicant intended to sue it as a result of the aforesaid accident.

• on June 5, 2009, the report of the plaintiff’s (applicant’s) expert stated to her lawyers that the repair time tickets of both Simcoe Elevator and Lift Co. Ltd. and DEC contained the phrase “Members of the Allied Elevator Group of Companies”.

• on October 8, 2008, the applicant’s parents received a letter from Mr. Morrison, the insurance adjuster acting on behalf of “Delta Elevator and Elevator One”, who were described as “insureds”. The letter stated that the adjuster had received notice of the intended claims sent by the applicant’s lawyer. The adjuster stated that his clients, if pursued, would cross-claim against the applicant’s parents.

• on January 21, 2010, Mr. Morrison faxed a letter to the applicant’s counsel requesting an indulgence with respect to filing Statements of Defence to the original action, on behalf of a number of defendants. The adjuster, to his credit, also mentioned that DEC had not been sued and that DEB and Simcoe Elevator and Lift Co. Ltd. were predecessor names of 1067674 Ont. Ltd. operating as Elevator One Inc.

• Mr. Morrison’s fax of January 21, 2010 was received in the offices of the applicant’s lawyers but went to an employee who did not notify anyone of its contents and who did not put the fax in the applicant’s file.

• Applicant’s counsel realized that the wrong Delta Elevator entity had been named and sued at the Examinations for Discovery on October 16, 2012, when adverse counsel handed over productions which included Mr. Morrison’s fax of January 21, 2010. A copy of that fax was not in the applicant’s file. Applicant’s counsel conducted inquiries to ascertain whether it had been received and if so, by whom.

[8] Mr. Morrison also spoke with Mr. Munro about the difference between DEC and DEB. The Statement of Defence delivered on behalf of Elevator One Inc. also pleaded that DEB was its prior name. All of this happened either before expiry of the limitation period (the conversation) or well before October 16, 2012 (Elevator One Inc.’s Statement of Defence delivered). Neither of these prompted applicant’s counsel to realize that the misnomer of DEB for DEC had taken place. As I’ve held, this was not realized until October 16, 2012, by reason of inadvertence, meaning lack of appropriate attention. I also infer and find that the substantial similarities in the corporate names, DEB and DEC, contributed to this inadvertent oversight, as did the multitude of defendants sued.

[9] Pursuant to the Limitations Act, 2002, S.O. 2002 c. 24, the limitation period herein was two years. It is not in issue that it commenced to run on the date of the accident, April 16, 2008. The Limitations Act, s. 21 states:

s. 21(1) 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.

s. 21(2) Subsection (1) does not prevent correction of a misnaming or misdescription of a party.

[10] As was held by the Court of Appeal in Lloyd v. Clark, 2008 ONCA 343 at para. 4:

“The case law amply supports the proposition that where there is a coincidence between the plaintiff’s intention to name a party and the intended party’s knowledge that it was the intended defendant, an amendment may be made despite the passage of the limitation period to correct the misdescription or misnomer. See Ladouceur v. Howarth, 1973 30 (SCC), [1973] S.C.J. No. 120 (S.C.C.); Kitcher v. Queensway General Hospital, 1997 1931 (ON CA), [1997] O.J. No. 3305 (O.C.A.) and J.R. Sheet Metal and Manufacturing Ltd. v. Prairie Rose Wood Products, (1980) Ltd., 1986 ABCA 4, [1986] A.J. No. 7 (Alta. C.A.).”

See also Spirito Estate v. Trillium Health Care, 2008 ONCA 762 (O.C.A.) and Ormerod v. Strathroy Middlesex General Hospital (2009), 2009 ONCA 697, 97 O.R. (3d) 321 (C.A.).

[11] The evidence demonstrates conclusively that the applicant intended to name DEC as a party defendant, for the following reasons:

1. The applicant put DEC on written notice of her intent to sue it for the accident in issue.

2. On a fair reading of the present Statement of Claim’s allegations against DEB, it is clear that the applicant intended to sue the company that maintained the elevator from 2005 to 2008, which was DEC.

3. DEB and DEC had confusingly similar names and closely related roles in respect of the elevator in issue, as well as being related corporations by reason of being part of the Allied Elevator Group of Companies which were probably insured under the same policy, which I infer from their representation by the same adjuster despite their potential adversity of interest in this litigation.

4. Their confusingly similar names and closely related roles contributed to the inadvertent misnomer of DEB when DEC should have been sued, and to the applicant’s lawyers being unaware of the significance of what the adjuster, Mr. Morrison, told them about DEC and DEB. I reject the submission that the applicant’s lawyers chose to sue the wrong party. They made a mistake in choosing the wrong corporate name when they intended to sue DEC.

[12] I am also wholly satisfied and find that DEC knew, both itself and through its adjuster and insurer, that it was the party intended to be sued for negligent maintenance of the elevator from 2005 to 2008, and not DEB which, under another name, maintained the elevator from 2000 to 2005. My reasons are as follows:

1. DEC was put on written notice of the applicant’s intent to sue it, for this accident.

2. The adjuster responded to the notice letter by adopting on DEC’s behalf a litigation posture which was premised on the applicant’s intent to sue it.

3. The Statement of Claim sought recourse against the company which maintained the elevator from 2005 to 2008. DEC was that company. DEC knew that, so did its adjuster and thus so did its insurer.

4. The adjuster and thus the same insurer also represented “Elevator One”, one of the various names for DEB from time to time. I infer and find that the adjuster and insurer, on behalf of DEC, knew that DEB was not the company which maintained the elevator from 2005 to 2008, despite what was pleaded.

5. From the adjuster’s fax letter dated January 21, 2010, I conclude that the adjuster and thus DEC’s and DEB’s insurer knew that naming DEB as the party responsible for maintaining the elevator from 2005 to 2008 was a misnomer of the party to be sued.

[13] Consequently, an amendment may be made to name DEC in place of DEB as a party defendant herein, despite the passage of the limitation period. However, while that may be done, on the authorities, DEC takes the position that it should not be done, because:

(a) To do so will cause non-compensable prejudice to DEC, and

(b) The applicant has delayed in bringing this motion.

[14] Both Rules 5.04(2) and 26.01 permit amendments. Under both, a pleading amendment is not to be made if non-compensable prejudice would result. R. 5.04(2) imports a discretionary power in contrast to R. 26.01, as explained in Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 2001 8620 (ON CA), 56 O.R. (3d) 768 (Ont. C.A.) at para. 25 ff. While delay is not specifically mentioned therein, it is a factor in the exercise of the discretion in issue: see Kitcher v. Queensway General Hospital (supra). However, based on the ratio in Kitcher (supra), it is a factor of potentially limited significance.

[15] I regard the phrase “non-compensable prejudice” as being the functional equivalent of the phrase “irremediable prejudice”, which the respondent used in argument.

[16] When considering prejudice in this context, the issue is prejudice arising from the requested amendment to the name DEC in place of the name DEB: see Mazzucca v. Silvercreek Pharmacy Ltd. (supra), at para. 64. Prejudice which would have existed for DEC if it had been made a named defendant before expiry of the limitation period “cannot be viewed as prejudice arising from the requested amendment”, per Cronk, J.A., and is therefore not a reason to refuse the requested amendment.

[17] The respondent’s prejudice argument is based upon its alleged inability to investigate fully the cause of the elevator falling. The applicant’s expert has opined that the chain, which both suspended and propelled the elevator within the shaft, broke. The respondent asserts that there is a likely alternate cause which is inconsistent with negligence on DEC’s behalf in maintaining the elevator. That is a sudden and unforeseeable electrical problem which caused the electric motor (which drove the chain which propelled the elevator) to malfunction, causing the elevator to fall but at a slower rate than if it were freefalling as a result of breakage of the chain. The respondent asserts that it is prevented from investigating and thus from proving that alternate, non-negligent cause of the accident because the elevator’s “controller”, the device which governed the electric motor’s operation, has not been preserved and is now unavailable.

[18] The respondent asserts that, without the actual controller which was in place at the time of the accident, it is impossible to determine how it was wired or how it operated; without it it is impossible to know the age of its components and thus their ability to function properly. Consequently, the respondent asserts, it can’t complete its own analysis of the accident and it can’t refute the plaintiff – applicant’s theory that the chain broke, causing the elevator to fall. This is said to significantly prejudice the respondents’ ability to defend itself, the prejudice cannot be remedied, and the amendment sought, to make DEC a named defendant, should therefore be refused.

[19] I reject the respondent’s contention that irremediable or non-compensable prejudice exists, and that such prejudice as does exist is a basis for refusing the requested amendment. It appears to be correct that the controller is not available now. I find as a fact, for the purpose of this motion only, that it was never taken into the possession of the applicant’s expert when certain other components of the elevator were taken into his possession and preserved. I infer from that finding that the controller, not having been taken for the purpose of preservation, was left in place, in the home where the accident happened. I base this finding on the affidavit evidence of the applicant’s expert, Robert J. Shirer, sworn June 19, 2013. From the same affidavit I also find as a fact that the applicant’s family installed a new elevator in early 2009. On the basis of these two findings of fact and one inference, I also infer that the controller probably was removed and disposed of when the new elevator was installed, in early 2009. I accept that as fact for the purpose of this motion.

[20] The controller was therefore lost, for litigation purposes, in early 2009, a time well within the two year limitation period which ran from the date of loss to April 16, 2010. If there is prejudice to the respondent from its loss, that prejudice began within the limitation period. That prejudice is therefore not prejudice which arises from allowing the requested amendment.

[21] Further, while it appears that the controller is not now available for examination or testing in respect of the suggested electrical fault, respondent’s counsel conceded that photographs of the controller are available, and that they show burn marks on the controller. Counsel also conceded that the electrical motor which is said to have malfunctioned by “backdriving” or reversing its direction has been preserved, and it too has burn marks on it.

[22] From the above, I make the following findings in respect of the assertion of prejudice:

• The existing photographs of the controller provide evidence of electrical malfunction affecting it,

• The electric motor has been preserved and provides evidence of electrical malfunction affecting it,

• The available evidence of electrical malfunction affecting the controller and motor provides substantial means to the respondent with which to develop and prove its alternate theory of how the loss was caused,

• The testing which cannot be done without the controller is thus limited in terms of its impact on the ability/inability of the respondent to develop and prove its alternate theory,

• The assertion that inability to test the actual controller or to examine it is prejudicial is based on the respondent’s desire to achieve a full and perfect understanding of what happened. That is well beyond the standard of proof which will be applicable in this civil action, which is on the balance of probabilities. In any event, the respondent, as a defendant, will not bear the burden of proving that it is not negligent on the balance of probabilities. The applicant as plaintiff bears that burden in respect of its theory of how the accident happened. As well, as found, the respondent has substantial means available to it to develop and prove its alternate theory of how the accident happened.

[23] I observe as well that the respondents’ assertion of a sudden electrical malfunction would not necessarily absolve it of all negligence. If there is a basis in fact for asserting that there was a real risk of the controller suddenly failing or malfunctioning, then there was also a basis in fact for the respondent inspecting, overhauling or replacing this controller before that risk could manifest itself.

[24] Lastly, I note that the respondent’s adjuster, who has elevator maintenance credentials and expertise, was allowed by the applicant and her counsel to be present while the applicant’s expert examined and tested the elevator, in the plaintiff’s home. The respondent attempts to make much of how limited an opportunity was given to its agent to test or inspect the elevator at that time. I see it differently. The fact that the respondent’s adjuster was not excluded completely, in the circumstances, is remarkable.

[25] On the whole of the evidence, I conclude that the respondent has not been prejudiced in its ability to defend itself except to an insignificant extent. The insignificant amount of prejudice is wholly unrelated to allowing the requested amendment, and is not a reason to refuse the requested amendment.

[26] The respondent also submits that the applicant has delayed excessively in moving to correct the name of the defendant to that intended, namely DEC. The respondent calculated the period of delay from January 21, 2010 when the adjuster sent his fax to applicant’s counsel mentioning that DEC had not been sued. It is correct, as the respondent asserts, that this information, and similar information communicated to applicant’s counsel by telephone, could have led applicant’s counsel to realize at those much earlier times that the misnomer of DEB in place of DEC had taken place. However, on all the evidence, I find that it did not.

[27] Respondent’s counsel asks me to infer that applicant’s counsel consciously chose to sue DEB. I do not do so because that is not a reasonable inference, for the reasons previously given. Even DEB’s and DEC’s adjuster knew, from reading the Statement of Claim, that that is not what was intended.

[28] I think it is much more reasonable to infer that counsel believed that the right names had been used in naming all the defendants, and was thus blind to the import of what the adjuster said, particularly because of the confusing similarities in the names DEC and DEB.

[29] I accept that applicant’s counsel became aware of the misnomer on October 16, 2012. In my view, the period of delay starts then. The time from October 2012 to now is not excessive delay in the current litigation environment, where it takes several months to get a date for hearing a motion, and potentially longer to get a date convenient to all involved counsel.

[30] The misnomer of DEC by describing it as DEB should be corrected. The Limitations Act, s. 21(2) contemplates that. Justice requires it. Motion relief granted. In the circumstances, no costs.

“Mr. Justice John Macdonald”

Date: July 4, 2013