SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 09-51751A2
DATE: 2013-02-05

RE: Scotia Mortgage Corporation, plaintiff

AND: Boguslawa Chmielewski, Patrick Chmielewski, Mariusz Chmielewski, defendants

AND: Scotiabank and Canada Life Assurance Company, third parties

AND: TD Home and Auto Insurance Company, fourth party

BEFORE: Mr Justice Ramsay

COUNSEL:
Mr J. Naganobu for the fourth party, moving

Mr Sean Oostdyk for the defendant, responding

Mr Adrian Visheau for the plaintiff

No one for the third parties

HEARD: 2013-02-05 at St Catharines

ENDORSEMENT

[1] The fourth party moves to strike out the fourth party claim.

[2] According to the defendant’s pleadings, this is what has happened: The defendant Boguslawa Chmielewski defaulted on her mortgage (which was co-signed by her two sons, the other defendants) because she was disabled in a car accident in 2006 and her insurer would not pay her claim. The lender, Scotiabank Mortgage Corporation, is now suing the Chmielewskis on the mortgage. The Chmielewskis filed a statement of defence and filed a third party claim against the mortgage broker and the broker’s mortgage disability insurance provider. The defendants then filed a fourth party claim against TD Home and Auto Insurance Company (“TD Home and Auto”), who insured Boguslaw Chmielewski against losses suffered in car accidents at the hands of unidentified motorists. In 2006 Boguslaw Chmielewski filed two actions against TD Home and Auto, one claiming under the unidentified driver provisions of the policy and the other claiming under the accident benefits provisions. In both actions she pleaded breach of contract and bad faith and claimed exemplary and aggravated damages. The same claims are made in the fourth party claim here.

[3] TD Home and Auto challenges the validity of the fourth party claim on five grounds:

a. A fourth party claim cannot be commenced by a defendant, but only by a third party;

b. At the time of service of the fourth party claim, the defendant did not serve on it all the other pleadings;

c. The fourth party claim is barred by the Limitations Act, 2002;

d. The fourth party claim is an abuse of process; and

e. The fourth party claim discloses no reasonable cause of action.

[4] The first two grounds may be dealt with readily. Rule 29 provides that a defendant can issue a third party claim. Third parties can join fourth parties. Fourth parties can join fifth parties, and so on. A defendant cannot join a fourth party. The fact that TD Home and Auto has been named a fourth party instead of a third party, however, has caused it no irremediable prejudice. If it were the only problem, the appropriate remedy at this point would be to re-name the fourth party claim a third party claim and grant leave to add it.

[5] When the defendant served the fourth party claim, she should have served on TD Home and Auto a copy of all the pleadings to that date. She did not, but she has since remedied her omission. Again, there was no irremediable prejudice and the omission does not constitute sufficient reason to invalidate the fourth party claim.

The prescription period

[6] The Limitations Act, 2002 provides:

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.

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).

15. (1) Even if the limitation period established by any other section of this Act in respect of a claim has not expired, no proceeding shall be commenced in respect of the claim after the expiry of a limitation period established by this section.

(2) No proceeding shall be commenced in respect of any claim after the 15th anniversary of the day on which the act or omission on which the claim is based took place.

18. (1) For the purposes of subsection 5 (2) and section 15, in the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought shall be deemed to be the day the act or omission on which that alleged wrongdoer’s claim is based took place.

(2) Subsection (1) applies whether the right to contribution and indemnity arises in respect of a tort or otherwise.

[7] Reading the relevant sections together, a claim for contribution and indemnity, whether in tort or otherwise, now has a two-year limitation period that is presumed to run from the date when the person who seeks contribution and indemnity is served with the plaintiff's claim that gives rise to its claim over. This is the only limitation period in the Act that applies to claims for contribution and indemnity: Waterloo Region District School Board v. CRD Construction Ltd., 2010 ONCA 838, ¶24.

[8] The plaintiff served the statement of claim on the defendants on November 28, 2009. The fourth party claim was issued on February 12, 2012. On the admitted facts, then, the limitation period expired on November 28, 2011. There is no need for a trial to determine this fact.

[9] I take it that the presumption in s.18 of the Limitations Act is conclusive. Even if it is not, Mrs Chmielewski’s evidence could not rebut it. All she says is that in December 2011 the bank’s first attempt to sell the house failed. That fact did not change her situation. She had been injured in a car accident, her insurer had not paid her claim, and she had defaulted on her mortgage.

[10] This is sufficient to dispose of the motion in the fourth party’s favour.

Abuse of process

[11] The defendant argues that her outstanding actions against TD Home and Auto do not constitute “another proceeding between the same parties in respect of the same subject matter” within the meaning of Rule 21(3) (c). The loss of her house, she says, is an additional element. I do not agree. Mrs Chmielewski has already sued her insurer for failing to pay her claims and for the way it handled her claims. The alleged result of the wrongs is a loss of money and property and psychological harm. The exact form which this loss took does not constitute an additional element. The fourth party claim duplicates outstanding litigation and as such it constitutes an abuse of process.

Failure to state a reasonable cause of action

[12] Rule 29 does not provide for the defendant to join TD Home and Auto in the present circumstances. Rule 29.01 provides:

29.01 A defendant may commence a third party claim against any person who is not a party to the action and who,

(a) is or may be liable to the defendant for all or part of the plaintiff’s claim;

(b) is or may be liable to the defendant for an independent claim for damages or other relief arising out of

i. a transaction or occurrence or series of transactions or occurrences involved in the main action, or

ii. a related transaction or occurrence or series of transactions or occurrences; or

(c) should be bound by the determination of an issue arising between the plaintiff and the defendant.

[13] On the facts that are pleaded, TD Home and Auto is not liable for the plaintiff’s claim. It has no obligation to the plaintiff, Scotia Mortgage Corporation. Nor is the claim an independent claim arising out of a related transaction or a transaction that is involved in the main action. Finally, there is no reason why any issue arising between the plaintiff and the defendants should be binding as between the defendants and TD Home and Auto. Whether the defendants owe money to Scotia Mortgage Corporation has nothing to do with TD Home and Auto, and whether TD Home and Auto owes money to Boguslaw Chmielewski has nothing to do with Scotia Mortgage Corporation.

[14] The defendants argue that the Negligence Act supports their position. I do not agree. The Negligence Act simply provides that a person who may be responsible for the damages claimed may be added as a defendant or third party. For the Act to apply, it must be possible that the added person be responsible, in whole or in part, for the plaintiff’s loss. There is no possibility in the present case that TD Home and Auto could be responsible for Scotia Mortgage Corporation’s loss.

[15] A defendant who is sued for failure to repay a loan is not by that fact entitled to add any or all of his or her alleged debtors and say, “If they had paid, I would have paid.” That is not a reasonable cause of action or defence within the meaning of Rule 21(1) (b).

[16] I note that the joinder of TD Home and Auto to the present action does nothing to further the just, expeditious and least expensive determination of the proceedings. On the contrary, it detracts from that public purpose in two ways. It forces TD Home and Auto to defend itself twice; and it obstructs Scotia Mortgage Corporation in the enforcement of its security by forcing it to participate in a trial of issues between its debtors and one of their debtors.

[17] I also note that none of the arguments advanced by the defendants would have had any application to Patrick and Mariusz Chmielewski, who have pleaded nothing whatsoever to support their claim against TD Home and Auto.

[18] The motion is granted. The fourth party claim is struck without leave to amend. Counsel agreed at the end of oral argument that the unsuccessful party should pay $3,500 costs to the successful party within 30 days. I order the defendants to pay those costs to the fourth party accordingly.

J.A. Ramsay J.

Date: 2013-02-05