Endorsement

COURT FILE NO.: CV-12-44587800A1
DATE: 20140619

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DAVID CARDENAS, a minor under the age of eighteen years represented by his Litigation Guardian, CARMEN VICTORIA CARDENAS, EVELYNE CARDENAS and CARMEN VICTORIA CARDENAS, personally, Plaintiffs

AND:

EUGENIO SALLESE, Defendant

AND:

CITY OF TORONTO, RODRIGO CARDENAS and THE ESTATE OF FRANCESCO CAVALLO and ROSA CAVALLO, Third Parties

BEFORE: B. P. O’Marra J.

COUNSEL:
Jean-Claude Rioux, for the Defendant/Respondent

David Bierstone, for the Third Parties/Applicants

HEARD: June 12, 2014

overview

[1] The insurers of third parties to a very serious personal injury claim mistakenly believed that their insured had been served with the claim. The insurer instructed counsel to file a defence. Counsel for the third parties now seeks to set aside the defence.

chronology

[2] On June 25, 2008 the minor plaintiff, David Cardenas, was riding a bicycle which was struck by a motor vehicle operated by the defendant Sallese. David Cardenas sustained a catastrophic head injury. The incident occurred near a residence owned by Rosa Cavallo.

[3] In August of 2008 the home owner insurance company for Cavallo (Economical) was put on notice of a claim by the defendant’s auto insurer.

[4] On October 23, 2008 Economical denied liability in a letter to the defendant’s insurer.

[5] On February 7, 2012 the main action was commenced.

[6] On September 7, 2012 the defendant issued a third party claim against various parties including Rosa Cavallo and the estate of Francesco Cavallo. The third party claim was never served on Rosa Cavallo. Her husband, Francesco, had passed away before the incident occurred. She was the sole trustee of his estate. Rosa Cavallo moved back to Italy sometime in 2008.

[7] On September 25, 2012 Economical received a letter from counsel for the defendant enclosing a copy of the third party claim and advising it was “currently out for service”. The file was assigned to a claims representative.

[8] On September 27, 2012 the claims representative sent the file to counsel with instructions to file a defence on behalf of the third party insured.

[9] On September 28, 2012 a Notice of Intent to Defend on behalf of the third party insured was served on the defendant.

[10] On March 27, 2013 a defence and cross-claim on behalf of the third party insured as well as a jury notice were served on the defendant.

[11] On November 25, 2013 counsel for the third party insured wrote to defendant’s counsel asking whether the third parties had in fact been served.

[12] On December 3, 2013 the plaintiff, Carmen Victoria Cardenas, was examined on discovery. Examinations for discovery of the defendant and the third party, City of Toronto, are scheduled for August 27, 2014.

[13] On January 27, 2014 counsel for the third party insured sent a further letter to defendant’s counsel asking if the third parties had in fact been served. On the same day he received a response. Counsel for the defendant indicated that they had attempted to serve Rosa Cavallo at her last known address but found that she had moved to Italy. They did not pursue service after that attempt upon receipt of the Notice of Intent to Defend.

[14] Counsel for the third party insured contacted Rosa Cavallo’s son-in-law to find an address in Italy where she could be located as well as to find out who the estate representatives were. Rosa Cavallo’s daughter and son-in-law unfortunately had become estranged from Rosa and they had no information as to where she was living in Italy. A search of records indicated that Rosa Cavallo was the only estate trustee.

[15] The parties agree that it is almost certain that Rosa Cavallo is unaware of the claim that is being pursued in Ontario. The instructions to defend on behalf of the third party insured in this case were based on the mistaken assumption that they had in fact been served.

[16] The limit of liability on the Economical insurance policy is $1 million. The Statement of Claim in this case seeks a sum of $7.25 million plus costs and interest.

analysis

[17] A party who has not been served with the originating process but delivers a defence, notice of intent to defend or notice of appearance shall be deemed to have been served with the originating process as of the date of delivery.

Rules of Civil Procedure, Rule 16.01(2).

[18] The Rules are to be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

Rule 1.04(1).

[19] Where it is necessary in the interest of justice the court may set aside the proceeding or a step, document or order in the proceeding in whole or in part.

Rule 2.01(1)(b).

[20] Both parties to this application agree that it was an oversight that prompted the instruction to file a defence on behalf of the insured. This situation should not trigger the deemed service in accord with Rule 16.01(2). The interests of justice must be considered so that there is not the triumph of form over substance.

Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2004 14550 (ONSC) at para. 8, upheld at 2005 1042 (ON CA), [2005] O.J. No. 160 (C.A.).

[21] The court may, by order, extend or abridge any time prescribed by the Rules on such terms as are just.

Rule 3.02(1).

result

[22] The defences filed on behalf of the third party insured being the estate of Francesco Cavallo and Rosa Cavallo will be set aside. The defendant Sallese will be permitted six months from today’s date to attempt personal service of the claim on Rosa Cavallo. Mr. Bierstone, on behalf of the third parties, has indicated that he will use his best efforts with Economical Insurance to cooperate and provide whatever information they may have to counsel for the defendant to locate Rosa Cavallo, if at all possible, for service of the claim.

costs

[23] The defendant submits there should be no order as to costs of this motion. The defendant’s counsel understandably took no further steps to have personal service of the claim on the third party insured after receipt of the Notice of Intent to Defend.

[24] The third party/applicant seeks costs on this motion since they were successful. They also acknowledge that the motion involved a novel issue with little case law for guidance. There is no suggestion that the defendant caused any unnecessary delay or refused to admit anything that should have been admitted.

[25] In the particular circumstances there will be no order as to costs.

B. P. O’Marra J.

Date: June 19, 2014