2013 ONSC 6535

U-Pak Disposals (1989) Limited v. The Regional Municipality of Durham: CV-11-427137

Motion heard: July 23/13

In attendance: C.J. Staples for moving parties 416-218-1847 (f.)

A.J. Heal, for the responding party 416-583-5905 (f.)

By the court:

[1] U-Pak and the proposed plaintiffs, 1680925 Ontario Inc., McPherson Transfer Limited and 1063192 Ontario Limited (collectively, the “U-Pak Group”), seek an Order for leave to amend the statement of claim to add 1680925 Ontario Inc., McPherson Transfer Limited and 1063192 Ontario Limited as plaintiffs and to, inter alia, add claims against the defendant for negligent misrepresentation, breach of by-laws and guidelines, and abuse of public office. The defendant opposes the motion on a few bases. Namely, it says that the proposed claims (save those in paragraphs 69-71 of the proposed amended statement of claim—which it does not oppose) are statute barred as they relate to the existing plaintiff; and, it says that the three affiliates of the plaintiff sought to be added as parties plaintiff made a decision not to sue in a timely fashion and, thus, are barred, by operation of the Limitations Act, 2002, from now asserting any claims against the defendant.

[2] The plaintiff is an Ontario corporation that carries on the business of providing waste management services in and around the GTA. It is part of a group of family-owned companies that include the proposed parties plaintiff. All of the U-Pak Group of companies, though separate and distinct corporate entities, are commonly owned and operated.

[3] In early 2010, the U-Pak Group was notified by the defendant’s manager of waste management that the contract for the receiving, unloading and haulage of non-hazardous municipal solid waste in the Regional Municipality of Durham would be put out to tender. The evidence of the principals of the plaintiff is that the plaintiff and 1680925 Ontario Inc. modified a waste transfer facility located in Pickering, with input from the defendant, in anticipation of the opportunity to bid and in order to comply with a request for tender, once issued.

[4] Pursuant to a September 2010 request for tender, the defendant issued the anticipated waste tender (the “RFT”—which RFT had a closing date of September 23/10). The RFT provided for a bid for transfer station operations and haulage of waste to a designated disposal site and an optional bid for transfer operations and haulage of organic waste to a waste composting site in Pickering.

[5] The plaintiff submitted a tender bid for the waste but failed to include a bid for the optional transfer and haulage of organic waste. The evidence of the principals of the U-Pak Group of companies is that the bid was submitted on the plaintiff’s behalf and on behalf of all of the members of the U-Pak Group but, as a matter of expediency, in the name of the plaintiff, only. Timothy O’Connor, Sr., President of the U-Pak Group of companies, deposes that the U-Pak Group members act collectively, with “…the assets of each…used together to carry out the business and contracts of the group” and with the separate incorporations being primarily for “accounting and tax purposes”.

[6] Two bids were received by the defendant, with the plaintiff being the low bidder. It is the evidence of Timothy O’Connor, Sr. that the U-Pak Group expected to be awarded a contract, in accordance with its bid. Instead, the plaintiff received correspondence from the defendant, dated October 13/10, purporting to cancel the RFT. However, and of note, the defendant went on to say that it would be “…reviewing and revising the terms and conditions of the Tender” and expected that “the revised” (i.e. as opposed to a “new” or “replacement”) tender would be issued within the next few weeks. Immediately thereafter, the plaintiff, through its lawyers, raised objection to the defendant’s actions and sought clarification from the defendant. The plaintiff made it clear that it reserved its right to take legal action.

[7] The response proffered on behalf of the defendant set out the defendant’s position as to deficiencies in the plaintiff’s bid and, in addition, indicated that “…[a]ny court proceedings [would]…be considered in evaluating [the plaintiff’s] submission in subsequent procurements undertaken by the Region”. Then too, and as pointed out by Mr Staples, the RFT itself specifically provided that the defendant’s “…assessment of acceptable qualifications and related business experience [would] be based on a range of measures including…any outstanding litigation” (Article 1.21). It is Mr. (Timothy) O’Connor, Sr.’s evidence that he understood from this that the plaintiff (and its affiliates) would be disqualified from participating in or would otherwise be unsuccessful under the promised revised tender if it were to sue the defendant as at then. While the defendant suggests that the plaintiff’s potential claims should have and did crystallize then, the plaintiff says that, by virtue of the fact that a revised tender was forthcoming, until its rights under the revised tender were known and determined (i.e. until the nature and extent of the damages suffered in part one and part two of the tender process were concretized), its potential claims (and the potential claims of its affiliates) could not and did not crystallize.

[8] The revised tender (bearing the same number as the RFT but with the suffix “B”) was issued in early November 2010 and was amended by a November 9/10 addendum (the “Second RFT”). The closing date for the Second RFT was November 25/10. The evidence before me suggests that the only effective change between the RFT and the Second RFT was the removal of the option to bid on organic waste (on which the plaintiff had not bid before and which the plaintiff says was severable from the RFT, in any event). The November 25/10 closing date was extended by the defendant by various and varied addenda until, on February 16/11, a recommendation that the Second RFT be cancelled was discussed at a Durham Region Council meeting. Representatives of the U-Pak Group made submissions, which the plaintiff (and the proposed plaintiffs) understood would be studied and considered. It was not until March 9/11 that a recommendation was made to Council for the cancellation of the tender process. On March 9/11, the defendant voted to cancel the Second RFT. Its decision was communicated to the plaintiff on March 11/11.

[9] This motion was originally made returnable on March 4/13—within 2 years of the decision with respect to the cancellation of the Second RFT having been made by the defendant and communicated to the plaintiff (and the U-Pak Group). The adjournment of the motion to July 23/13 was consensual and of no consequence to my consideration of the timing issues herein. And while this action was commenced in 2011, it is still in its nascent stages--with examinations for discovery not yet having taken place (such that the practical implications of amendment, assuming there is no non-compensable prejudice, are neutral).

[10] It is trite law that, on a motion at any stage of an action, the court shall grant leave to amend a pleading on such terms as are just, unless non-compensable prejudice would result. It is also trite law that, on a motion to amend a statement of claim, the court has “…limited jurisdiction to review a proposed pleading for legal tenability” and “…should only refuse a pleading amendment as legally untenable if it is clearly impossible of success” (Chinook Group et al. v. Foamex International Inc., 2004 33017 (Ont. S.C.J.), at para. 13). The onus of proving prejudice is on the party alleging it, unless a limitation period has expired. In the latter case, the onus shifts and the party seeking the amendment must lead evidence to explain the delay and to displace the presumption of prejudice.

[11] At paragraphs 40-57 of the moving parties’ factum, the elements of the proposed pleas encapsulated in the proposed amendments are set out. For its part, the defendant does not dispute that the proposed claims of negligent misrepresentation and misfeasance in public office, as drafted (leaving aside, for the moment, the limitations concerns raised), disclose causes of action and are drafted in a manner that accords with the rules of pleading. Where the defendant and the moving parties part company, though, is that the defendant says that the time for the plaintiff to have made those claims has long passed and that the time for the entities sought to be added as parties plaintiff to make any claim has also long passed.

[12] Mr. Staples argues, persuasively, that in respect of U-Pak (the original plaintiff), no new facts are pleaded and/or such facts as were originally pleaded are simply particularized: i.e. negligent misrepresentation, abuse of public office and breach of by-laws. He points to paragraphs 22-51 of the statement of claim, in its present form, and says that the actions of the defendant that constitute negligent misrepresentation and the fact of the alleged deliberate and unlawful conduct of the defendant in public office are already pleaded. On a plain reading and comparison of the original and proposed amended claim, I am inclined to agree that, as concerns the plaintiff (U-Pak Disposals (1989) Limited), no new facts are pleaded. The proposed amendments simply particularize the plaintiff’s claims. These amendments sought by the plaintiff (as they relate to the plaintiff) do not advance new and discrete causes of action but arise from the core factual nexus of the tender process (see: Gladstone v. Canadian National Transportation Limited, (2009) 38789 (Ont. Div. Ct.), at paras. 38-44).

[13] In respect of the criticisms levelled by the Mr. Heal, as highlighted at paras. 15 and 16 of the defendant’s factum, and in respect of the motion to add the proposed plaintiffs, I accept that there are, indeed, timing issues that might give one pause. Mr. Staples says that those timing issues ought not to foreclose the amendments being made at this time. He submits that, on the particular facts of this case, whether the limitation period elapsed before March/13 and/or whether the original bid, as made, was made by the plaintiff for itself alone or, also, as agent and/or trustee for its affiliate companies ought to be issues for trial.

[14] With the two tenders being, on the defendant’s own admission, connected (see its answer to the undertaking given at p. 6 of Mr. Curtis’ July 9/13 cross-examination), it could be argued that the RFT and the Second RFT were part of an ongoing tender process that ended in March/11. It could be argued that, until March/11, it was not clear that the “turning point” referenced in Linett v. Linett, [2012] CarswellOnt 15634 (S.C.J.) was reached (thus starting the running of the limitation period). And, it could be argued too that it was not legally appropriate (the Court of Appeal having interpreted the phrase “appropriate means” in s. 5(1)(a)(iv) of the Limitations Act, 2002 to mean “legally appropriate”: Markel Insurance Company of Canada v. Federation Insurance Company of Canada, [2012] ONCA 218, at para. 34) for claims in respect of the whole of the tender process (RFT and second RFT) to be asserted until after March 11/11—having regard to the legal and practical implications of taking action, as articulated by the defendant. These arguments (proffered by the moving parties), Mr. Staples posits and I accept, are not clearly impossible of success.

[15] Relying on the Regional Municipality of Durham v. The Corporation of the City of Oshawa, [2012] CarswellOnt 13523 (S.C.J.), at paras. 38, 41 and 50, Mr. Staples also says, and I agree, that the argument could reasonably be made that the claim in this proceeding was discovered on March 11/11—the date on which the Second RFT was cancelled in accordance with the Council’s resolution and the decision was communicated by Council to the defendant.

[16] The moving parties do not say that the limitation period has been tolled, as the defendant suggests, but that, whether the commencement of court proceedings would have been “legally appropriate” until the tender process (having regard to the RFT and second RFT, both) was completed is, at the very least, a triable issue. The moving parties posit, reasonably, that it could be argued that until the bid process under the Second RFT was complete, the rights and obligations of the parties did not crystallize (see para.7, supra). They say that the cancellation of the RFT was part of a series of events, culminating with the cancellation of the Second RFT—which series of events, taken as a whole, gave rise to a claim for damages, as of March 11/11.

[17] While it is true that letters were written on behalf of the plaintiff as early as October/10 evincing dissatisfaction with the tender process and indicating that the plaintiff was reserving its rights to and would “….take such legal proceedings as it deems appropriate”, as Mr. Heal points out, that does not necessarily mean that the moving parties could have and should have commenced litigation in respect of the issues raised in the proposed amendments--as at then and before the cancellation of the second RFT.

[18] I cannot agree that the opposed proposed amendments are necessarily statute barred or that it is plain and obvious that the proposed parties plaintiff are seeking to insinuate themselves into this litigation after a limitation period has passed. At best, I can agree that the question of whether or not any of the moving parties’ claims (with which the defendant takes issue) are statute barred could be a question for another day. There are reasonable arguments as to why they are not statute barred—arguments that satisfy me that the proposed amendments are not clearly impossible of success.

[19] In all, therefore, the moving parties’ motion is granted--with leave to the defendant to amend its defence to plead the Limitations Act, 2002.

[20] Failing agreement as to the costs of the motion, I may be spoken to.

October 21/13 ________________________________