ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 12-CV-445410

DATE: 2013-01-03

BETWEEN:

TENDER CHOICE FOODS INC.

Plaintiff

– and –

VERSACOLD LOGISTICS CANADA INC.

Defendant

Michael Swartz, for the Plaintiff

Marina E. Sampson, for the Defendant

HEARD: December 13, 2012

REASONS FOR DECISION

Perell j.

I. INTRODUCTION

[1] Pursuant to Rule 21.01(1)(a), the Defendant, Versacold Logistics Canada Inc. (formerly known as Atlas Cold Storage Limited), brings a motion to dismiss the claim of the Plaintiff, Tender Choice Foods Inc., as statute-barred under the Limitations Act, 2002, S.O. 2002, c. 24.

[2] Versacold submits that it is plain and obvious that Tender Choice discovered it had a claim against Versacold in July 2006, when Versacold informed Tender Choice that produce stored at the Versacold’s cold-storage facility had gone missing. On February 1, 2012, five and a half years later, Tender Choice sued Versacold for the value of the lost produce. Versacold submits that Tender Choice’s claim comes too late.

[3] Alternatively, Versacold argues that Tender Choice’s claim is an abuse of process as a collateral attack on court orders made by Master Dash and Justice Herman in an action commenced in March, 2008 by Tender Choice. See Tender Choice Foods Inc. v. Aviva Insurance Co. of Canada, 2011 ONSC 510.

[4] In this parallel proceeding, Tender Choice sued its insurer, Aviva Insurance Company of Canada. Aviva had insured Tender Choice’s produce from theft, and Tender Choice sued it for denying coverage of Tender Choice’s insurance claim. Versacold argues that Tender Choice’s position in the case at bar; i.e., that its claim against Versacold is not statute-barred, is the opposite to the position it took in its action against Aviva, where Tender Choice blocked an amendment to Aviva’s defence by submitting that the amendment was prejudicial to Tender Choice because its claim against Versacold was statute-barred.

[5] Further, Versacold argues that Tender Choice’s claim in the case at bar is res judicata based on the Rule from Henderson v. Henderson (1843), 67 E.R. 313, 3 Hare 100 (V.C. Ct.), which extends the operation of a res judicata to causes of action that ought to have been pleaded. Versacold submits that Tender Choice’s claim against Versacold could and ought to have been added to Tender Choice’s action against Aviva by joining Versacold as a co-defendant.

[6] Tender Choice resists the motion to have its action dismissed on any of these grounds. It submits that Versacold’s Rule 21.01(1)(a) motion is jurisdictionally unsound, because it relies on evidence extrinsic to the material facts pleaded in Tender Choice’s Statement of Claim. In any event, Tender Choice denies that its claim is an abuse of process.

[7] Further, Tender Choice submits that its claim against Versacold was not discovered in 2006 but was discovered in 2010. It submits that it has pleaded in its Statement of Claim that it first became aware of Versacold’s wrongdoing (i.e., it only discovered its claim against Versacold) on February 6, 2010, when Versacold released an internal report about its inadequate security practices and procedures. Tender Choice submits that the action at bar, commenced less than two years later, is timely or that it is not plain and obvious that it is untimely.

[8] For the reasons that follow, I disagree with Versacold’s arguments that Tender Choice’s action is an abuse of process or re judicata, but I do agree that the action is statute-barred. Accordingly, I grant Versacold’s motion.

II. THE ABUSE OF PROCESS ARGUMENTS

[9] During oral argument, Versacold was emphatic that its motion was brought exclusively under Rule 21.01(1)(a), one of the three branches of Rule 21, and that it was not relying on evidence, which is prohibited under the clause (1)(a) branch, except with leave of a judge or on consent. Rather, Versacold submitted that based on Tender Choice’s Statement of Claim and based on documents incorporated by reference into the pleading, it was plain and obvious that either: (a) Tender Choice’s action was an abuse of process (collateral attack or res judicata); or, (b) the action was statute-barred under the Limitations Act, 2002.

[10] Rule 21.01 states:

WHERE AVAILABLE

To Any Party on a Question of Law

21.01 (1) A party may move before a judge,

(a) for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs; or

(b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence,

and the judge may make an order or grant judgment accordingly.

(2) No evidence is admissible on a motion,

(a) under clause (1) (a), except with leave of a judge or on consent of the parties;

(b) under clause (1) (b). R.R.O. 1990, Reg. 194, r. 21.01(2).

To Defendant

(3) A defendant may move before a judge to have an action stayed or dismissed on the ground that,

Jurisdiction

(a) the court has no jurisdiction over the subject matter of the action;

Capacity

(b) the plaintiff is without legal capacity to commence or continue the action or the defendant does not have the legal capacity to be sued;

Another Proceeding Pending

(c) another proceeding is pending in Ontario or another jurisdiction between the same parties in respect of the same subject matter; or

Action Frivolous, Vexatious or Abuse of Process

(d) the action is frivolous or vexatious or is otherwise an abuse of the process of the court,

and the judge may make an order or grant judgment accordingly.

[11] There are three branches to Rule 21.01: (1) clause 21.01(1)(a); (2) clause 21.01(1)(b); and (3) rule 21.01 (3). Evidence is permitted under the second and third branches but not necessarily under the first branch. The second and the third branch are typically used when a defendant makes the arguments that the plaintiff’s claim is statute-barred or is an abuse of process or is res judicata. As will be noted below, Rule 20, the summary judgment rule can also be used to decide whether a claim is statute- barred.

[12] As already noted, Versacold was emphatic that its motion was not brought under clauses 21.01(1)(b) or Rule 21.01(3), and its argument was that based on the statement of claim and the documents incorporated by reference, it was plain and obvious that Tender Choice’s claim was an abuse of process or res judicata.

[13] The abuse of process and res judicata arguments fail for two and perhaps three reasons.

[14] First, assuming that its motion is under clause 21.01(1)(a), then, despite Versacold’s submissions to the contrary, it is indeed relying on evidence - largely unsworn evidence disguised as legal argument in its factum - to provide the factual background to its abuse of process arguments. The court, however, did not grant leave for the admission of evidence under the clause 21.01(1)(a) branch of the rule, and Tender Choice did not consent, and, indeed Tender Choice vigorously objected to how Versacold advanced its first branch argument based on evidence outside the Statement of Claim. I agree with Versacold’s protest, and, accordingly, I dismiss Versacold’s abuse of process and res judicata arguments.

[15] Second, assuming both that the factual background to Versacold’s abuse of process and res judicata arguments were properly before the court and also that Versacold established the constituent elements for an abuse of process or res judicata argument, it would not necessarily follow that Tender Choice’s action should be dismissed.

[16] The court has a discretion in regards to estopping a litigant from re-litigating an issue, and the court will not preclude a litigant from proceeding with its claim, if a bar would lead to an injustice: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460 at paragraph 19 (S.C.C.). See also: Minott v. O’Shanter Development Co. (1999), 1999 3686 (ON CA), 42 O.R. (3d) 321 (C.A.); Rasanen v. Rosemount Instruments Ltd. (1994), 1994 608 (ON CA), 17 O.R. (3d) 267 (C.A.); Monteiro v. Toronto Dominion Bank (2008), 2008 ONCA 137, 89 O.R. (3d) 565 at paragraphs 53-54 (C.A.).

[17] In my opinion, in the circumstances of the case at bar, excepting the limitation period defence, it would be unjust to bar Tender Choice from having its claim against Versacold determined on the merits.

[18] Third, assuming that the factual background to Versacold’s abuse of process and res judicata arguments was properly before the court, it is arguable that it is not plain and obvious that Versacold has established the constituent elements for an abuse of process or res judicata to bar to the action.

[19] Because of the first and second reasons, which are mutually independent, it is not necessary for me to decide the merits of the third reason.

[20] Based on two reasons, my conclusion is that Versacold’s abuse of process arguments do not succeed, and I will move on to consider Versacold’s argument that Tender Choice’s claim is statute-barred.

III. PROCEDURAL AND STATUTORY BACKGROUND TO THE LIMITATION PERIOD ARGUMENTS

[21] Versacold relies exclusively on Rule 21.01(1)(a) to argue that Tender Choice’s claim is statute-barred.

[22] The test for Rule 21.01(1)(a) is whether it is plain and obvious that the plaintiff’s claim cannot succeed: Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959. If it is plain and obvious that the claim is statute-barred, then the action may be dismissed under Rule 21.01(1)(a).

[23] In applying the plain and obvious test, the court must accept the facts alleged in the pleading as proven, unless they are patently ridiculous or incapable of proof: A-G. Canada v. Inuit Tapirisat of Canada, 1980 21 (SCC), [1980] 2 S.C.R. 735; Canada v. Operation Dismantle Inc., 1985 74 (SCC), [1985] 1 S.C.R. 441; Nash v. Ontario (1995), 1995 2934 (ON CA), 27 O.R. (3d) 1 (C.A.); Folland v. Ontario (2003), 2003 52139 (ON CA), 64 O.R. (3d) 89 (C.A.).

[24] The court, however, is entitled to consider any documents specifically referred to and relied on in the pleading: Web Offset Publications Ltd. v. Vickery (1999), 1999 4462 (ON CA), 43 O.R. (3d) 802 (C.A.); Corktown Films Inc. v. Ontario, [1996] O.J. No. 3886 (Gen. Div.); Montreal Trust Co. of Canada v. Toronto-Dominion Bank, [1992] O.J. No. 1274 (Gen. Div.).

[25] As I will discuss in further detail below in the discussion part of these reasons, Versacold’s argument is that based on Tender Choice’s Statement of Claim and the documents incorporated by reference, it is plain and obvious that its claim is statute-barred under the Limitations Act, 2002. For present purposes, the relevant sections of that Limitations Act, 2002 are set out below.

Definitions

1. In this Act, …

“claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission; …

Basic limitation period

4. 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.

Discovery

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).

Presumption

(2) 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] I will discuss Versacold’s argument and examine the operation of the Limitations Act, 2002 in more detail after setting out the factual background to the limitation period arguments in the next section of these reasons.

IV. FACTUAL BACKGROUND TO THE LIMITATION PERIOD ARGUMENTS

[27] I take the factual background to Versacold’s limitation period arguments by assuming that the material facts pleaded in Tender Choice’s Statement of Claim are true. I do not rely on extrinsic evidence.

[28] Tender Choice processes and distributes meat and poultry products across Canada. Versacold operates cold storage facilities throughout Canada, including a facility at 590 Nash Road North, Hamilton, Ontario.

[29] Tender Choice has stored product with Versacold or its predecessors for more than 40 years. Tender Choice pleads that it was induced to do so because Versacold represented that: (a) the product was properly secured; (b) it had staff that were properly trained and proper security practices would be implemented; (c) access to the premises was secure; (d) doors and entrances were properly monitored and alarmed, including individual locks on the freezer doors where product was being stored; (e) surveillance included CCTV monitoring; (f) equipment was secured so as not to be available for use by any would-be thieves; (g) the facility was managed by personnel who had sufficient time and resources to devote to their duties and responsibilities; (h) only authorized out-bound loads left the premises; (i) all documentation and records were maintained to monitor the delivery of in-bound and out-bound loads; (j) inventory counts were properly completed so that product could be easily and readily confirmed as being in safe storage; and (k) security review reports were reviewed on a frequent and ongoing basis.

[30] Tender Choice pleads that the above representations were part of its contract with Versacold.

[31] In its Statement of Claim, Tender Choice refers to its contract with Versacold; however, Tender Choice does not plead the details of its contract with Versacold. The contract details, however, are incorporated by reference. The details are that there was a letter agreement between the parties dated December 29, 2005 that set out the applicable rates of storage and terms and conditions of storage.

[32] The December 29, 2005 contract letter draws attention to a Warehouse Receipt that contained terms strictly limiting Versacold’s liability for lost or damaged product. The letter indicates that while Versacold maintained warehouseman’s legal liability insurance; it did not insure Tender Choice’s products.

[33] The Warehouse Receipt contained the following provisions:

Limited Liability of Storer:

The responsibility of the Storer is the care and diligence required of the Storer by the laws of the province where the goods are stored.

The quality, quantity, condition, contents and value of goods stored under this Receipt are not known to the Storer except as declared by the Holder [Tender Choice] as described on the face of this Receipt.

The goods described by this Receipt are not insured by the Storer.

Declared Valuation:

The legal liability of the Storer is strictly limited to the lesser of the monetary amount of the damage incurred or 100 times the monthly storage rate on any one container or stored unit to a maximum of $50 per container or stored unit, whichever is less, unless the Holder specifically requests a higher limit in writing and declares an excess value on the Receipt, in which case the Warehouseman may, at its option, accept liability and assess an additional charge to the monthly storage or other applicable rate.

Contract:

This Receipt and the contract for the storage of goods described herein (the 2005 Storage Agreement) is governed by and subject to the laws of the Province in which the goods are stored. This Receipt, including, without limitation, the terms and conditions set out herein, when delivered or mailed to the Holder or Depositor of the goods at the last known address, shall constitute the contract between the Holder and Storer provided that the Holder or Depositor may, within 20 days after delivery or mailing, notify the Storer in writing that it does not accept the contract and forthwith thereafter shall pay any Storer’s lien for outstanding charges and remove the goods. In the event no such notice is given, the Receipt and the terms and conditions contained herein constitutes the contract between the Storer and the Holder.

Notice of Claim:

The Storer shall not, in any event, be liable for any claim of any type whatsoever with respect to the stored goods unless such claim is presented in writing within 30 days after the Holder discovered or ought to have discovered the loss or damage to the goods. Any Court action in respect of such loss or damage must be commenced within nine [9] months of the date of the Holder discovered or ought to have discovered the loss or damage.

[34] Versacold provided Tender Choice with a weekly list of the goods in storage and Tender Choice paid fees based on the amount of product in storage.

[35] Included on the weekly lists was reference to the products that were ultimately stolen from the Nash Road Facility in or about 2006 and which form the subject matter of Tender Choice’s losses.

[36] On July 19, 2006, after Tender Choice contacted Versacold to request the return of some of the stored product, Versacold advised Tender Choice that it was unable to locate any of the product from Lot 1, which consisted of 4000 cases of “Exceldor” turkey tenderloins.

[37] On July 24, 2006, Versacold advised Tender Choice that it was unable to find Lot 1 anywhere in the facility. Tender Choice was not told that Versacold had contacted the Hamilton Police Services to report Lot 1 as stolen. Tender Choice was not told about the police investigation until it obtained a two-page copy of the police report in March 2007. The report concluded that Lot 1 had been stolen.

[38] In what I regard as a particular significant pleading of material facts, Tender Choice alleges that in 2006 and 2007, it sought compensation from Versacold for the full value of the stolen Lot 1. Versacold refused to fully compensate Tender Choice on the basis that its liability was limited by a contractual term. Tender Choice denies that there is any such term limiting liability.

[39] In October 2006, Versacold informed Tender Choice that Lot 2, which consisted of 210 cases of “Exceldor” chicken breasts, and Lot 3, which consisted of 685 cases of Tender Choice’s turkey tenderloins, had also been stolen from the facility.

[40] Again Tender Choice sought compensation from Versacold for the value of those stolen Lots. Versacold again refused to fully compensate Tender Choice on the basis that its liability was limited by limited liability clause in its warehousing contract. Again, Tender Choice denies that there is any such term limiting liability, and it maintains that it is entitled to full compensation from Versacold for the value of Lots 1, 2 and 3.

[41] In its Statement of Claim, Tender Choice does not provide the details of its claim for compensation from Versacold or the details of Versacold’s refusal. For the purposes of this motion nothing turns on it, but the details are found in the Statement of Defence. By letter dated September 13, 2006, Tender Choice included an invoice dated September 12, 2006, claiming $290,648.70. Subsequently, it provided invoices: (a) dated November 27, 2006, claiming $13,602.41; (b) dated February 27, 2007, claiming interest of $13,790.35; and (c) dated March 31, 2007, claiming interest of $3,807.77. The claims totalled, with interest, $321,849.23. These details do not change the pleaded material fact that Tender Choice made demand for compensation from Versacold for the lost lots 1, 2, and 3 in 2006 and 2007 and that Versacold refused to pay.

[42] Tender Choice pleads that that because of Versacold’s refusal to fully compensate it for the value of the stolen lots, Tender Choice filed a claim under an insurance policy it held with Aviva Insurance Company of Canada, which policy was in effect from April 1, 2006 to April 1, 2007.

[43] Tender Choice pleads that Aviva denied coverage on the basis that the loss was the result of a “mysterious disappearance” rather than the result of a theft, which was a recoverable loss. Tender Choice pleads that it sued Aviva seeking a declaration that the loss is covered under the Aviva Policy and that Aviva commenced a Third Party claim against Versacold.

[44] Tender Choice’s action against Aviva was commenced on March 17, 2008. Aviva’s third party claim against Versacold was commenced on May 6, 2008.

[45] In its Statement of Claim in the case at bar, Tender Choice pleads that on or about February 9, 2010, Versacold produced an internal investigation report that Versacold had commissioned to investigate thefts that had been taking place at the Nash Road facility. The investigation report revealed that Versacold was aware that thefts were occurring as early as January 2006, and that some of the thefts included Tender Choice’s products.

[46] Once Tender Choice learned about Versacold’s internal investigation report, it notified Zurich Insurance Company Ltd. of a possible claim it might have for the stolen product. Zurich denied coverage on the basis that Tender Choice was out of time to make a claim under the Zurich Policy.

[47] On February 1, 2012, Tender Choice sued Versacold for breach of contract, negligence, misrepresentation, and breach of a duty of care.

[48] Tender Choice pleads that through the disclosure of that investigation report, Tender Choice became aware for the first time that Versacold had misrepresented to Tender Choice the quality of Versacold’s services. The report revealed that Versacold’s representations were false.

[49] Tender Choice states that Versacold failed in its duty of care owed to Tender Choice and that the damages and loss it suffered was caused or contributed by Versacold or the employees for whom Versacold is vicariously liable.

[50] Tender Choice pleads that Versacold had a duty to warn Tender Choice of the thefts but that Versacold neglected or otherwise failed to do so and, therefore, it breached its duty to warn.

[51] Tender Choice pleads that Versacold breached its contract by charging for the safe and secure storage of its product when that product had already been stolen from the facility and was, therefore, no longer in safe and secure storage. Tender Choice also pleads a claim for negligent misrepresentation.

V. DISCUSSION

[52] The discoverability principle governs the commencement of a limitation period and stipulates that a limitation period begins to run only after the plaintiff has the knowledge, or the means of acquiring the knowledge, of the existence of the facts that would support a claim for relief: Kamloops v. Nielson (1984), 1984 21 (SCC), 10 DLR (4th) 641 (S.C.C.); Central Trust Co. v. Rafuse, 1986 29 (SCC), [1986] 2 S.C.R. 147; Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 549.

[53] The date upon which the plaintiff can be said to be in receipt of sufficient information to cause the limitation period to commence will depend on the circumstances of each particular case: Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851 at para. 71 (C.A.); Kenderry-Esprit (Receiver of) v. Burgess, MacDonald, Martin and Younger (2001), 2001 28042 (ON SC), 53 O.R. (3d) 208 (S.C.J.) at para. 19.

[54] With respect to the basic limitation period of two years under the Limitations Act, 2002, a claim is “discovered” on the earlier of the date the claimant knew — a subjective criterion — or ought to have known — an objective criterion — about the claim. The discoverability principle conforms with the idea of a cause of action being the fact or facts which give a person a right to judicial redress or relief against another: Lawless v. Anderson, 2011 ONCA 102 (C.A.) at para. 22; Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 954 (ON CA), 38 O.R. (3d) 161 (C.A.) at p. 170.

[55] The plaintiff is required to act with due diligence in acquiring facts in order to be fully apprised of the material facts upon which a claim can be based: McSween v. Louis, 2000 5744 (ON CA), [2000] O.J. No. 2076 (C.A.) at para. 46; Soper v. Southcott (1998), 1998 5359 (ON CA), 39 O.R. (3d) 737 (C.A.) at p. 744.

[56] Thus, a limitation period commences when the plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence.

[57] The discoverability of a claim for relief involves not only the identification of the tortfeasor but also the discovery of an act or omission that constitute liability: Aguonie v. Galion Solid Waste Material Inc., (1998), 1998 954 (ON CA), 38 O.R. (3d) 161 (C.A.). It is not enough that the plaintiff has suffered a loss and has knowledge that someone might be responsible; the identity and culpable acts of the wrongdoer must be known or knowable with reasonable diligence: Mark v. Guelph (City), 2010 ONSC 6034 (S.C.J); Zurba v. Lakeridge Health Corp. (2010), 2010 ONSC 318, 99 O.R. (3d) 596, (S.C.J.); Greenway v. Ontario (Minister of Transportation) (1999), 1999 14797 (ON SC), 44 O.R. (3d) 296 (Gen. Div.).

[58] The question is whether the prospective plaintiff knows enough facts to base a cause of action against the defendant, and, if so, then the claim has been discovered and the limitation period begins to run: Lawless v. Anderson, 2011 ONCA 102 at para. 23; Soper v. Southcott supra; McSween v. Louis (2000), 2000 5744 (ON CA), 132 O.A.C. 304 (C.A.); Gaudet v. Levy (1984), 1984 2047 (ON SC), 47 O.R. (2d) 577 (H.C.J.) at p. 582.

[59] However, the discovery of a claim does not depend upon the plaintiff knowing that his or her claim is likely to succeed; the limitation period runs from when the prospective plaintiff has or ought to have had, knowledge of a potential claim, and the later discovery of facts which change a borderline claim into a viable one does not postpone the discovery of the claim: Oakville Hydro Electricity Distribution Inc. v. Tyco Electronics Canada Ltd. (2004), 2004 13633 (ON SC), 71 O.R. (3d) 330 (S.C.J.) at paras. 10-13; Giakoumakis v. Toronto (City), [2009] O.J. No. 55 at para. 20 (S.C.J.).

[60] Discovery does not depend upon awareness of the totality of the defendant’s wrongdoing. Section 5(1)(a) of the Limitations Act, 2002 prescribes that discovery occurs when the plaintiff knows or ought to know of an injury caused by an act or omission of the defendant and having regard to the nature of the injury legal proceedings would be an appropriate way to seek a remedy. For the limitation period to begin to run, it is enough for the plaintiff to have prima facie grounds to infer that the defendant caused him or her harm, and certainty of a defendant's responsibility for the act or omission that caused or contributed to the loss is not a requirement: Kowal v. Shyiak, 2012 ONCA 512 at para. 18; Gaudet v. Levy, supra.

[61] The circumstance that a potential claimant may not appreciate the legal significance of the facts does not postpone the commencement of the limitation period if he or she knows or ought to know the existence of the material facts, which is to say, the constitute factual elements of his or her cause of action. Error or ignorance of the law or legal consequences of the facts does not postpone the running of the limitation period: Nicholas v. McCarthy Tétrault, 2008 54974 (ON SC), [2008] O.J. No. 4258 (S.C.J.), aff’d [2009] O.J. No. 686 (C.A.), leave to appeal to S.C.C. ref’d [2009] S.C.C.A. 476.

[62] Applying these principles to the case at bar, in 2006 and in 2007, the pleaded material facts are that Tender Choice knew that it had a claim against Versacold.

[63] Indeed, Tender Choice pleads that it made a claim for compensation in 2006 and 2007, and it pleads that its claim was rebuffed by Versacold, which relied on the exculpatory provisions in the warehousing contact. Those contract terms it may be noted apply to “any claim of any type whatsoever.”

[64] In 2006 and 2007, Tender Choice quantified its claim, and it demanded payment. It did everything but sue. And that is the precisely the point. It could have sued in 2006 and 2007, but it decided to just pursue the insurance claim, which seems a reasonable choice having regard to what it knew about the freely contracted exculpatory provision.

[65] Put somewhat differently in 2006 and 2007, Tender Choice knew or ought to have known enough to say to Versacold if you do not pay my claim I will sue you. Had Versacold asked what would have been the legal basis of the claim, Tender Choice knew or ought to have known enough to say, my claim is based on breach of contract, or negligence, or negligent misrepresentation, which are the claims it sued for in 2011. It perhaps also had a claim in bailment.

[66] Tender Choice did not need to wait to sue, and it would not have been an exercise of reasonable diligence for a reasonable plaintiff to wait for the defendant to prepare its own report of possible want of care at the Nash Road facility. In 2006 and 2007, Tender Choice knew the identity of the possible tortfeasor or contract breaker. It was Versacold. Assuming the alleged representations were made as pleaded, Tender Choice would have known about them, and it ought to have known that the representations were untrue because, for instance, with lots 1, 2, and 3 gone-missing, a representation that the produce was properly secured would appear to be a false representation.

[67] It is plain and obvious from its own statement of claim that Tender Choice knew or ought to have known in 2006 and 2007 that it had a negligence or negligent misrepresentation claim.

[68] I appreciate that it is rare under Rule 21.01(1)(a) for a defendant to obtain a dismissal of a claim based on a limitation period and this is more likely to occur, if at all, on a motion for summary judgment. However, the case at bar is one of the rare cases where it is plain and obvious based on the pleaded material facts that the plaintiff knew or ought have known that it had a claim to pursue by a lawsuit and it did not do so until after the limitation period had run its course.

[69] The case at bar is not like medical negligence cases where a plaintiff may know about his or her injury and the identity of the tortfeasor(s) but not enough to know the material facts of the wrongdoing. Here, Tender Choice, as revealed by its own pleading, knew enough to demand compensation from Tender Choice and it knew enough to bring an action for its various causes of action, which it eventually did, but too late.

[70] Conceptually, Tender Choice’s unsuccessful argument is similar to the Town of Marathon’s unsuccessful argument in Marathon (Town) v. Clow Darling Ltd., [2009] O.J. No. 1430 (S.C.J.), where the Town’s action was dismissed as statute-barred.

[71] The facts of Marathon were that the Town hired Clow Darling to renovate a recreational complex and Clow Darling retained Cedar Electric as the electrical subcontractor. A fire occurred at the recreational centre on October 6, 2005, and the next day, the Town blamed Clow Darling for causing the fire, and the Town claimed compensation. Two months later, the Town’s insurer reported that both Clow Darning and Cedar Electric might have some liability. However, it was not until more than two years later, on February 1, 2008, that the Town sued both Clow Darling and Cedar Electric. Both parties pleaded that the Town’s claim was statute-barred, and the Defendants successfully moved for a summary judgment dismissing the action.

[72] The Town’s unsuccessful argument in Marathon (Town) v. Clow Darling Ltd. was that it had not discovered its claim in the fall of 2005, because at that time, it was unsure whether it might have been one of its own employees who might have been the cause of the fire. The Town eliminated its own employees as the culprits in February 2007, and the Town submitted that it only knew whom to sue in January 2008, when the Town’s insurer identified a Cedar Electric employee as responsible for the fire. Thus, the Town submitted that it only discovered its claim in January 2008 making its February 2008 action timely. Justice Warkentin disagreed, and she held that the limitation period began to run at the time of the fire, when the Town knew or ought to have known that a cause of action arose.

[73] In my opinion, the case at bar is similar to Marathon (Town) v. Clow Darling Ltd. and the plaintiffs in both cases discovered their claims hard upon learning that their property was damaged or lost.

[74] I conclude that Tender Choice’s claim against Versacold is statute-barred.

VI. CONCLUSION

[75] For the above reasons, I grant Versacold’s motion and dismiss Tender Choice’s action.

[76] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Versacold’s submissions within 30 days of the release of these Reasons for Decision followed by Tender Choice’s submissions within a further 30 days.

Perell, J.

Released: January 3, 2013

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

TENDER CHOICE FOODS INC.

Plaintiff

– and –

VERSACOLD LOGISTICS CANADA INC.

Defendant

REASONS FOR JUDGMENT

Perell, J.

Released: January 3, 2013