ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-13-0111
DATE: November 18, 2013
B E T W E E N:
JACK HANSEN and SUSAN HANSEN operating as OTTER CREEK FARM
Ms. L. Kruse, for the Defendants, moving parties
Defendants
- and -
STRONE CORPORATION, STRONE INC., STRONE MANAGEMENT SERVICES INC. and MICHAEL MACCIOCCHI
Mr. D. Dooley, for the Plaintiffs, responding parties
Plaintiffs
HEARD: November 7, 2013
at Thunder Bay, Ontario
Regional Senior Justice H.M Pierce
Reasons on Summary Judgment Motion
Introduction
[1] This is a subrogated claim on a fire insurance policy. On August 26, 2008, the plaintiffs’ home was destroyed by fire. The insurer immediately caused an investigation to be started. On September 24, 2010, the insurer issued a statement of claim to recover monies it paid out to the home owners on their fire insurance policy.
[2] The defendants move for summary judgment dismissing the claim on the grounds that the plaintiffs’ claim is statute barred by the Limitations Act, 2002, S.O. 2002, c. 24. The defendants argue that the claim was discovered or discoverable by August 28, 2008, such that the two year limitation period began on August 29, 2008 and expired on August 29, 2010.
[3] The plaintiffs argue that by reason of the discoverability rule in section 5 of the Act, the time to issue a claim did not expire until September 25, 2010. Since the claim was issued on September 24, 2010, the plaintiffs submit they are within time to bring the claim.
Chronology
[4] The facts of the case are not complex. The plaintiffs’ home was insured for fire by North Waterloo Farmers Mutual Insurance Company. Waterloo’s adjuster was Mr. Maitland. On August 27, 2008, the day after the fire, the plaintiffs contacted Park MacKay about the fire loss. Mr. MacKay was known to the plaintiffs because he had adjusted a previous claim they had on their policy with North Waterloo. Mr. Maitland subsequently retained MacKay to investigate the fire and administer the fire loss claim. Mr. MacKay retained an engineering firm to assist with the fire investigation.
[5] Mr. MacKay went to the site of the fire on August 27, 2008 and interviewed the fire chief, the plaintiff, Mr. Hansen, and Mr. Hansen’s girlfriend. At the time of the fire, a contractor had been working staining the deck at the property. The fire chief advised that he suspected the fire may have been caused by a bag of debris the contractor left on the deck of the home, and that the fire would be declared “undetermined accidental.”
[6] Mr. MacKay duly reported his findings to Mr. Maitland on August 27, 2008 including his statement, “It is presumed that articles in the bag placed by the contractor ignited through spontaneous combustion.”
[7] The engineering investigation began on August 27, 2008 and continued the following day.
[8] In the course of his investigation, Mr. MacKay took a statement from Mr. Hansen who advised that the defendant, Mr. Macciocchi, had been staining the deck at the property and left a large plastic bag on the deck when he left at the end of the day. Mr. Hansen described an open bag with cardboard sticking out. An hour after he saw the bag, fire was observed on the outside wall of the house at the deck location.
[9] Mr. MacKay interviewed Mr. Macciocchi on August 28, 2008. Mr. Macciocchi indicated that before the fire he used two products on the deck, a varnish called Quick 15 and Old Master stain. He stated that he placed his construction materials, including the stain and varnish, in the bag. When he left at 5:10 p.m., the garbage bag was on the deck. This interview was discussed with the engineer, Mr. Wood, the same day.
[10] Mr. Wood advised Mr. Maitland on August 28, 2008 that the fire likely originated in the garbage bag on the deck but further investigation was necessary to determine the contents of the bag.
[11] After the Macciocchi interview, Mr. MacKay obtained a can of the same type of varnish in order to review the label; however, he did not obtain a can of the stain that had been used.
[12] On August 29, 2008, Mr. MacKay notified Mr. Maitland that Mr. Wood would analyse the stain and varnish. MacKay stated that the origin of the fire appeared to be in the bag of varnishing materials. The same day, Mr. Maitland notified North Waterloo’s reinsurer:
…The contractor was in the premises on the date of loss … doing some varnishing. The contractor had placed some varnishing waste items in a garbage bag and placed it on the deck. The fire originated in that plastic bag. The fire has totally consumed the dwelling and all of its contents. Recovery against the contractor appears likely.
[13] The defendants say that the events following August 29, 2008 did not materially change or contribute to the facts already known. The plaintiffs contend that even though Mr. Wood and Mr. MacKay were aware that the garbage bag was the possible source of the fire, by late August they had no knowledge of the cause of the fire. On August 30, 2008 the fire chief reported that the cause of the fire was undetermined and that the origin of the fire was in the rear of the dwelling on the deck near the door area.
[14] Mr. MacKay re-interviewed Mr. Macciocchi on September 25, 2008 at which time smoking was eliminated as a cause of the fire. He brought to the interview cans of the varnish and stain he had used on the deck. The label on the stain warned that rags may burn spontaneously and should be soaked in water. Mr. MacKay advised Mr. Wood about the risk of spontaneous combustion identified on the label. He also advised that Mr. Macciocchi left the staining rag out overnight and didn’t use it the day of the fire, believing it was aired out and harmless. Mr. MacKay concluded to Mr. Wood, “It would appear safe to say the stain did it.”
[15] Mr. Maitland was first told about the label on the stain on October 28, 2008 during a call from Mr. Wood. He concluded that the contractor or his employee had disregarded the warning label on the stain that the product was susceptible to self-heating.
[16] Mr. MacKay reported in writing to North Waterloo on October 29, 2008 (received on November 4, 2008) that the fire had started by spontaneous combustion within the plastic garbage bag Mr. Macciocchi left on the deck of the house.
[17] On December 23, 2008, Mr. Wood provided his engineering report, confirming Mr. MacKay’s conclusions.
[18] On September 20, 2010, counsel for the plaintiffs issued a notice of action, followed by a statement of claim on September 23, 2010. This statement of claim was not served and was later abandoned after searches showed the corporate defendants were improperly named. The within action was issued on September 24, 2010 and not on September 25, 2010 as alleged in the plaintiffs’ factum. The statement of claim alleges negligence against the defendants in that:
• he/it applied stain with rags to wood product and failed to properly store or discard those rags which then spontaneously combusted;
• he/it placed stain soaked rags at a location where they were exposed to direct sunlight and knew or ought to have known of the danger that those rags could spontaneously combust;
• he/it left work materials in an unsafe place that created the risk for combustion and fire damage;
• he/it failed to heed warnings on the products he was utilizing to complete his carpentry work;
• he/it failed to properly store and/or clean work products which he knew or ought to have known were potentially hazardous.
Summary Judgment
[19] The law relating to summary judgment is well-settled. Rule 20.04(2) of the Rules of Civil Procedure stipulates that a court shall grant summary judgment if “there is no genuine issue requiring a trial with respect to a claim or defence….” In making this determination, Rule 20.04 (2.1) permits the motions judge to
• weigh evidence;
• evaluate credibility of a deponent; and
• draw any reasonable inference from the evidence unless it is in the interest of justice for these powers to be exercised only at trial.
[20] In Combined Air Mechanical Services v. Flesch, 2011 ONCA 764, the Court of Appeal held that whether “there is a genuine issue requiring a trial” turns on whether a trial must be conducted for the judge to get a “full appreciation” of the evidence and issues in order to make findings.
Limitations and Discoverability
[21] The Supreme Court of Canada identified a three-fold purpose for limitation periods. In Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R., 549, para. 34, the court held:
(a) There comes a time when a potential defendant should be secure in his reasonable expectation that he will not be held to account for ancient obligations;
(b) There is a desire to foreclose claims based upon stale evidence. Once a limitation period has lapsed, the potential defendant should no longer be concerned about preservation of evidence relevant to the claim; and
(c) There is an expectation on plaintiffs to act diligently and not “sleep on their rights.” Statutes of limitations are an incentive for plaintiffs to bring suit in a timely fashion.
[22] Section 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. states:
Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
[23] Section 5(1) of the Act deals with discoverability. It states:
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 damages 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).
[24] Key to the analysis is the plaintiff’s knowledge of circumstances. Then the court must consider whether an objectively reasonable person ought to have known or ought to have taken steps to find out about a potential cause of action.
[25] Subsection 5(2) provides:
A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.
[26] The plaintiff must exercise reasonable diligence in discovering the material facts on which a cause of action is founded for purposes of a limitation period: Central & Eastern Trust Co. v. Rafuse, 1986 29 (SCC), [1986] 2 S.C.R. 147, 1986 CarswellNs 40 at para. 89. The plaintiffs concede that it is their onus on this motion to prove that their claim was not discovered on the date of the fire, but rather at a later date.
[27] What information is required in order to discover a cause of action? Naturally, the cases are fact-driven. The Court of Appeal in Lawless v. Anderson, 2011 CarswellOnt 626 at para. 36 held that, in order to discover a claim, “the plaintiff need only have in her possession sufficient facts upon which she could allege negligence.”
[28] In my view, the plaintiffs were not in a position to allege negligence until they knew the cause of the fire. It would be irresponsible to commence a claim alleging negligence until there were sufficient particulars to ground such a claim. The fire could have been accidental; it might have been caused by vandalism. As of August 30, 2008, the plaintiffs knew the source of the fire but not whether its origins could be characterized as tortious. The fire chief then described the cause of the fire as undetermined. More investigation was then required. The cause of the fire came to the plaintiffs’ attention on September 25, 2008 when Mr. MacKay concluded to Mr. Wood, “It would appear safe to say the stain did it.” From that moment forward, the plaintiffs were on notice of the negligence they alleged in their statement of claim.
[29] As the statement of claim was issued a day before the second anniversary of this date, it is not statute-barred. Nor am I persuaded that the plaintiffs did not proceed with due diligence to investigate the cause of the fire. It is apparent that the plaintiffs took immediate steps to interview Mr. Macciocchi about his work on the deck and to engage an expert to determine the cause of the fire.
[30] The plaintiffs’ claim is within time. The motion for summary judgment is therefore dismissed.
[31] If the parties cannot agree on costs, either party may apply to the trial coordinator within thirty days to obtain an appointment to argue costs thereafter, failing which costs will be deemed to be settled.
“original signed by”
Regional Senior Justice H.M. Pierce
Released: November 18, 2013
COURT FILE NO.: CV-13-0111
DATE: November 18, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
JACK HANSEN and SUSAN HANSEN operating as OTTER CREEK FARM
Defendants, moving party
- and –
STRONE CORPORATION, STRONE INC., STRONE MANAGEMENT SERVICES INC. and MICHAEL MACCIOCCHI
Plaintiffs, responding party
REASONS ON SUMMARY JUDGMENT MOTION
Pierce J.
Released: November 18, 2013
/nf