NEWMARKET

COURT FILE NO.: CV-11-102625

DATE: 20131008

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Diane Desbiens

Plaintiff

– and –

Steve Lim, World Famous Chicken Cuisine Inc., State Farm Mutual Insurance Company

Defendants

John Cannings, for the Plaintiff

Heather J. Vaughan, for the Non-Party, Honda Canada Finance Inc.

HEARD: September 27, 2013

REASONS FOR DECISION

EDWARDS J.:

Overview

[1] The plaintiff seeks to add Honda Canada Finance Inc (“Honda Finance”) as a defendant in this action, pursuant to the doctrines of discoverability and misnomer. This motion raises, in part, the extent of the evidence required to meet the fairly low threshold of due diligence as it relates to the discoverability issue. As to the misnomer issue, this court is required to address the question of whether or not the “litigation finger” was pointing at Honda Finance as the owner of the vehicle in addition to the named defendant, World Famous Chicken Cuisine Inc. (“World Chicken”).

The Facts

[2] The plaintiff was injured in a rear-end motor vehicle accident on January 30, 2009 (the “accident”). The driver of the vehicle, who hit the plaintiff’s vehicle, is described in the statement of claim as Steve Lim (“Lim”). The owner of the vehicle is described in the statement of claim as World Chicken.

[3] In determining who was the owner and driver of the rear-ending vehicle, the solicitor retained by the plaintiff (not Mr. Cannings who argued this motion) would appear to have relied on a document that he refers to in his affidavit as the “accident report”. A closer review of this document which I will refer to as “the document”, however, makes it patently clear that it is not the accident report prepared by the investigating police officer. The document is headed “When You Are In an Accident”. The document invites someone involved in an accident to fill in information concerning the name of the “other driver” in the accident. The document goes on to ask a question “What happened? Describe damage to vehicles and property”. In response to those questions, whoever filled in this document states: “I was stopped at light. He hit from behind.”

[4] Given that the plaintiff, in her statement of claim, describes the accident as a rear-end motor vehicle accident, it is fair to assume that the document was not filled in by Lim as it refers to the fact that the accident occurred when “hit from behind”. It would appear that Lim is the rear-ending driver. The only inference that I can draw from the document is that it was most likely filled in by the plaintiff herself. What is particularly noteworthy from a review of the document is that the information concerning the other driver invites an answer to the question “Vehicle Owner’s Name (if not the driver)”. That portion of the document is left blank. The document then invites an answer to “Vehicle Owner’s Address” which is filled in “Company Car” and then there is a reference to company “World Famous Chicken Cuisine Inc. 6080 Yonge Street”.

[5] While there are a number of inferences that can be drawn from the document, one neutral conclusion that can be reached is that the ownership of the vehicle is far from conclusive.

[6] Despite the information contained in the document, plaintiff’s counsel, for whatever reason, does not appear to have undertaken fairly basic inquiries that would have ultimately determined the ownership of the vehicle. There is no indication in the affidavit evidence from plaintiff’s counsel that he undertook a search in relation to the subject motor vehicle, specifically a search with respect to the license plate of Lim’s vehicle that is disclosed in the document as “BETJ828”. There is absolutely no evidence, as well, that plaintiff’s counsel requested the motor vehicle accident report that would have been prepared by the investigating police officer and which was ultimately provided to plaintiff’s counsel under cover of correspondence from the lawyers for State Farm Mutual Insurance Company (“State Farm”) dated May 25, 2012.

[7] The statement of claim naming Lim and World Chicken was issued on December 13, 2010, well within the limitation period. The statement of claim that was issued on December 13, 2010 was administratively dismissed on August 8, 2011.

[8] Plaintiff’s counsel issued a second statement of claim on January 26, 2011 naming the plaintiff’s own automobile insurer, State Farm. The second action again was commenced well within the limitation period. State Farm was added to the claim as a result of plaintiff’s counsel having been advised by the insurer for World Chicken that there was no insurance on the vehicle at the time of the motor vehicle accident.

[9] Lim has apparently disappeared. World Chicken continues on as a corporation. World Chicken filed a defence to both the first statement of claim and the second statement of claim. In both statements of defence, World Chicken admitted that it was the owner of the vehicle. There has been no attempt on the part of World Chicken to revoke such admission.

[10] The plaintiff takes the position that throughout the proceedings, up until it received the affidavit of documents from counsel for State Farm, that she, through her lawyer, had every reason to believe World Chicken was the owner of the defendants’ vehicle. In support of that assertion, plaintiff’s counsel argues that it was reasonable for him to rely on the admission of ownership made in the statement of defence by the defendant World Chicken.

[11] In May 2012, State Farm delivered its affidavit of documents which disclosed the existence of the police report. The actual report was sent to plaintiff’s counsel by counsel for State Farm on May 25, 2012. The motor vehicle accident report describes the rear-ending vehicle as being driven by Hyun C. Lim, not Steve Lim as described in the statement of claim. The owner of the vehicle is described as Honda Finance. The insurer of the defendant’s vehicle is shown as ING. ING had notified plaintiff’s counsel under cover of its letter dated January 10, 2011 that the policy of insurance covering the defendant’s vehicle had been cancelled effective January 13, 2009. Plaintiff’s counsel was provided with a copy of the registered letter sent to World Chicken by ING on December 22, 2008.

[12] At the commencement of the motion, I raised with counsel a potential conflict that I might have in hearing the motion as a result of a number of potential conflicts that I might have had. Firstly, the fact that, in my earlier life as counsel, I had done work for LawPro and I surmised that Mr. Cannings who was appearing on behalf of the plaintiff was reporting to LawPro. I also indicated to counsel that I had at one time represented Honda Finance as an insured of Lombard Canada. I surmised that Ms. Vaughan was reporting to Lombard Canada as the insurer of Honda Finance. Ms. Vaughan confirmed that she now reports to Northbridge, which is a successor corporation to Lombard. Both Mr. Cannings and Ms. Vaughan agreed that they had no difficulty with me hearing the motion.

Discoverability

[13] The starting point for a motion to amend the statement of claim to add Honda Finance as a party is Rule 26 and Rule 5 of the Rules of Civil Procedure. Rule 26.01 is mandatory in nature. Where an amendment is sought at any stage of an action, the court “shall grant leave to amend” on such terms as are just unless prejudice would result that cannot be compensated for by costs or an adjournment.

[14] Pursuant to the provisions of Rule 5.04(2), the court “may” add a party or correct the name of a party incorrectly named, again on such terms as are just unless prejudice would result that cannot be compensated for by costs or an adjournment.

[15] Counsel for Honda Finance correctly concedes that there will not be any prejudice to Honda Finance, other than the possible expiry of the limitation period. In other words, there is no suggestion that any potential witness is no longer available, nor is there any evidence that there are documents that might have been lost or misplaced or no longer available, such as medical records.

[16] The real issue in this case is whether or not at this stage of the action (i.e., a pleadings motion seeking to add Honda Finance) the plaintiff can meet the relatively low threshold of establishing due diligence. Plaintiff’s counsel takes the position that the evidence before the court meets the low threshold due diligence test that has been adopted by our courts in motions like this. The law in this regard was reviewed extensively by Master Dash in Wong v. Adler, 2004 8228 (ONSC), which sets forth the principles to be followed on a motion where the plaintiff, like the plaintiff in our case, relies on the discoverability principle in seeking to add a defendant after the expiry of a limitation. The decision in Wong was affirmed by the Divisional Court[^1]. The following passage at paragraphs 45 and 46 are particularly apropos.

What is the approach a judge or master should take on a motion to add a defendant where the plaintiff wishes to plead that the limitation period has not yet expired because she did not know of and could not with due diligence have discovered the existence of that defendant? In my view, as is clearly implied in Zapfe, the motions court must examine the evidentiary record before it to determine if there is an issue of fact or of credibility on the discoverability allegation, which is a constituent element of the claim. If the court determines that there is such issue, the defendant should be added with leave to plead a limitations defence. If there is no such issues, as for example where the evidence before the motions court clearly indicates that the name of the tortfeasor and the essential facts that make up the cause of action against such tortfeasor, were actually known to the plaintiff or her solicitor more than two years before the motion to amend, the motion should be refused. 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. That is not to say that such motion could never be denied 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.

If the court does not look at the evidentiary record to determine if there is a basis for the claim that a limitation period has not expired because the plaintiff was unaware of the existence of a tortfeasor, and could not with due diligence have earlier discovered that information, then all a plaintiff has to do is say the magic word “discoverability” and the motions court will act as a “rubber stamp” and add the proposed defendant at any time without special circumstances and leave to a trial or summary judgment court the question of the date the cause of action accrued. Although stated in the context of considering special circumstances, the words of Killeen J. in Woolford v. Lockhart, supra, quoted above bear repeating in the context of motions to add defendants based on discoverability when the essential facts were already known to the plaintiff’s solicitor: “Should the Courts develop a set of rules for the exercise of a discretionary remedy whose aim…is designed primarily to protect solicitors from malpractice exposure? [Should] the rules be so tortured in their application that it becomes almost axiomatic for the errant solicitor to escape liability for his sins of omission by the simple step of asking the Court for an amendment to the action?”

[17] As to the evidentiary record required on this type of motion, Master Dash reviews this issue in Wakelin v. Gourley, (2005) 2005 23123 (ON SC), 76 O.R. (3d) 272, and at paragraph 14 states:

The question is how much evidence must the plaintiff put in at the pleadings amendment stage to establish that the proposed defendants could not have been identified with due diligence within the limitation period? The short answer is: not very much. As stated by the Court of Appeal in Zapfe: “In most cases one would expect to find, as part of a solicitor’s affidavit, a list of the attempts made by the solicitor to obtain information to substantiate the assertion that the party was reasonably diligent” and provide “an explanation for why she was unable to determine the facts.”

Therefore, as long as the plaintiff puts in evidence as to steps taken to ascertain the identity of the tortfeasors and gives a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence then that will be the end of the enquiry and the defendants will normally be added with leave to plead a limitations defence. This is not a high threshold.

If there is any doubt whether the steps taken by the plaintiff could not amount to due diligence then this is an issue that must be resolved on a full evidentiary record at trial or on summary judgment. The strength of the plaintiff’s case on due diligence and the opinion of the mater or judge hearing the motion whether the plaintiff will success at trial on the limitations issue is of little or no concern on the motion to add the defendants. The only concern is whether a reasonable explanation as to due diligence has been provided such as to raise a triable issue.

On The Facts Before The Court

[18] Plaintiff’s counsel deposes that he relied on the document. There is no explanation in the evidentiary record as to why he did not do a motor vehicle licence search on the vehicle driven by Lim, nor is there any explanation as to why he did not obtain the police officer’s motor vehicle accident report. These may be self evident pieces of information that plaintiff’s counsel should have obtained prior to issuing a statement of claim. That, however, may ultimately be an issue that can be better addressed on a more fulsome evidentiary record.

[19] The threshold evidence required on a motion like this is a relatively low threshold. Plaintiff’s counsel relied on the document, which I have already inferred was a document likely completed by his client. There is no evidence before this court from any expert with experience in the area of personal injury law. Such expert evidence would assist the court in determining the minimum threshold below which a solicitor acting for the plaintiff could be deemed by the court to have taken inadequate steps to properly determine the name of the owner of the vehicle driven by the alleged at fault defendant. While it may very well be that plaintiff’s counsel did fall below the threshold, that is not an issue at this stage of the proceedings that I can determine. As such, I will allow the amendment sought to add Honda Finance but with the proviso that Honda Finance may, if it chooses to do so, plead the Limitations Act and thereafter move for summary judgment or deal with the limitation issue on a full evidentiary record at trial.

[20] As to the misnomer argument, had I decided that the plaintiff was not entitled to add Honda Finance as a party, I would have determined that this was not a case of misnomer. While there can be no doubt that plaintiff’s counsel intended to sue the owner of the vehicle, and in that regard named World Chicken as the owner, there is absolutely no evidence that Honda Finance (i.e., the intended defendant) had any knowledge that it was the intended defendant.

[21] Section 21 of the Limitations Act, 2002 allows for the amendment of a pleading after the expiry of a limitation period if it is just a question of mis-description of a defendant. In a situation where there is a coincidence between the plaintiff’s intention to name a party and the intended party’s knowledge that it was, in fact, the intended defendant, then an amendment may be made despite the expiry of a limitation period so as to correct to the mis-description of the misnomer; see Lloyd v. Clark, 2008 ONCA 343.

[22] There have also been cases where it is clear to the representative of the mis-described defendant that, in fact, the “litigation finger” is pointing at another individual other than the individual named in the statement of defence. In that regard, Ramsay J. in Cappello v. Quantum Limousine Service Inc.[^2] stated at paragraph 12:

Furthermore, in applying the Davies test the court is not limited to considering what the litigant would know, but may, in addition, consider the knowledge of the intended litigant’s representatives when they received the statement of claim: Ladouceur v. Howarth 1972 167 (SCC), [1974] S.C.R. 111 (S.C.C.).

[23] On the facts of this case, however, there is no evidence that, in fact, Honda Finance’s insurer, who could be described as the “intended litigant’s representative”, had any knowledge that Honda Finance would be brought into an action arising out of the subject motor vehicle accident. The insurer of World Chicken, as described in the police motor vehicle accident report is ING, or as it is now known Intact. Honda Finance is insured by Northbridge. There is no suggestion that Northbridge had any knowledge of the subject motor vehicle accident until this subject motion was served. As such, this is not a case of misnomer. I would not have allowed the amendment on that basis.

[24] Given my determination with respect to the discoverability issue, the plaintiff shall have leave to add Honda Finance as a defendant. This is a case where the plaintiff is seeking an indulgence of the court, as a result of what would, on its face, appear to have been a sloppy investigation by plaintiff’s counsel. As such, I do not see this as a case where the plaintiff should be entitled to any costs. There will be no order as to costs.

Justice M.L. Edwards

Released: October 8, 2013

[^1]: 2004 73251 (ON SCDC), 2005 O.J. No. 1400.

[^2]: 2012 Carswell 4884.