SUPERIOR COURT OF JUSTICE – ONTARIO
Court File No.: 8290-12
Date: 2014/07/23
RE: 970708 Ontario Inc., Norfolk Knitters Limited and Waterloo Textiles Limited (Plaintiffs)
- and -
PCS Security Systems Inc., Dickie’s Sprinkler Service Incorporated and John Doe (Defendants)
Before: Justice A. K. Mitchell
Counsel:
A. Graham, for the plaintiffs/moving parties
C. Wydrzynski, for the proposed defendants, John Fabac, c.o.b. as Armor Security Automation and Thomas Forrest, c.o.b. as Armor Security Automation
Heard: June 11, 2014
ENDORSEMENT
Introduction
[1] The plaintiffs bring this motion for an order granting leave to amend the statement of claim to substitute John Fabac (“Fabac”), c.o.b. as Armor Security Automation and Thomas Forrest (“Forrest”), c.o.b. as Armor Security Automation (“Armor” and together with Fabac and Forrest, the “proposed defendants”) in place of the named defendant, “John Doe”, as defendants in this proceeding.
[2] This action was commenced by statement of claim issued on September 26, 2012.
[3] This litigation arises from a water escape caused by a faulty sprinkler head forming part of the water sprinkler system located at premises municipally described as 215 Queen Street West, Cambridge, Ontario (the “Premises”).
The Parties
[4] The plaintiff, 970708 Ontario Inc. (“970”), is the owner of the Premises. The plaintiffs, Norfolk Knitters Limited (“Norfolk”) and Waterloo Textiles Limited (“Waterloo” and together with Norfolk and 970, the “plaintiffs”) are commercial tenants of the Premises.
[5] Waterloo hired PCS Security Systems Inc. (“PCS Security”) to provide security monitoring of the Premises including fire safety inspection and maintenance services in respect of the water sprinkler system located at the Premises (the “Sprinkler System”).
[6] Dickie’s Sprinkler Service Incorporated (“Dickie’s”), assisted PCS Security with inspecting and testing the Sprinkler System in 2007 and 2008.
Background Facts
[7] On June 30, 201l, PCS Security conducted its annual fire alarm/sprinkler and fire hydrant testing and inspection of the Premises.
[8] The incident and ensuing water damage occurred on October 18, 2011.
[9] The insurers for the plaintiffs repaired the damage to the Premises and brought this subrogated action.
[10] In the files provided by the insurers to plaintiffs’ counsel were two (2) service work orders issued in 2007 and 2008 relating to inspections of the Sprinkler System which work orders identified Dickie’s. Dickie’s was named as a defendant in these proceedings.
[11] No other service work orders were contained in the files of the plaintiffs for inspections of the sprinkler system conducted in years subsequent to 2008.
[12] At the time the statement of claim was issued, the plaintiffs were aware that one or more technicians had attended with PCS Security at the inspection of the Sprinkler System conducted in June 2011 – three and a half months prior to the incident.
[13] At the time the statement of claim was issued, the identity(ies) of this technician(s) was unknown to the plaintiffs. The plaintiffs knew that additional information would be required from PCS Security in order to identify these individuals.
[14] As a precautionary measure, the plaintiffs named “John Doe” as a defendant in these proceedings. In doing so the plaintiffs intended to capture any technician or entity other than Dickie’s who may have assisted PCS Security with the inspection of the Sprinkler System conducted in June 2011.
[15] The statement of claim was served on PCS Security and Dickie’s on September 26, 2012 and October 2, 2012, respectively.
[16] On December 19, 2012 and July 25, 2013, respectively, PCS Security and Dickie’s served their respective statement of defence and cross-claim.
[17] The parties exchanged productions and discoveries were scheduled for November 2013.
[18] In June 2013, plaintiffs’ counsel enquired of counsel for PCS Security as to the identity of any subcontractor or technician contracted by PCS Security to inspect, maintain and/or service the Sprinkler System.
[19] In July 2103 as part of their disclosure obligations, PCS Security produced a document to the plaintiffs dated June 30, 2011 (the “Document”).
[20] The plaintiffs acknowledge having a copy of the Document in their files at the date the action was commenced; however, with one notable difference – the text of the Document had been placed on the letterhead of PCS Security on the copy of the Document contained in the plaintiffs’ files whereas the copy of the Document produced by PCS Security from its files had not been similarly placed on PCS Security letterhead.
[21] The text of the Document was authored by Forrest and his name is located on the Document. An inspection report appended to the Document letter identified Fabac as a technician who assisted in the inspection of the Sprinkler System.
[22] Until that time, the plaintiffs had assumed Fabac and Forrest were employees of PCS Security and therefore not separately liable for the plaintiffs’ damages.
[23] In August 2013, after receiving the productions of PCS Security, plaintiffs’ counsel undertook a “LinkedIn” search which identified both Fabac and Forrest as managers of a business having the name “Armor Security Automation”.
[24] On August 19, 2013, counsel for PCS Security advised plaintiffs’ counsel that it would enquire of its client as to the identity of the person(s) who conducted the inspection of the Sprinkler System on June 30, 2011.
[25] On November 5, 2013, the plaintiffs were advised that the proposed defendants had been retained by PCS Security to perform the annual inspection of the Sprinkler System.
[26] The examinations for discovery were cancelled at the request of PCS Security to allow PCS Security to bring a third party claim against the proposed defendants.
[27] In November 2013, counsel for the plaintiffs advised counsel for PCS Security that the plaintiffs intended to add the proposed defendants as defendants in this action. Accordingly, PCS Security did not commence a third party action.
[28] This motion to amend the statement of claim to add the proposed defendants was originally returnable on January 21, 2014.
Legal Principles
[29] The applicable legal principles are not in dispute.
[30] Rules 26.01 and 26.02 of the Rules of Civil Procedure (the “Rules”) are broadly worded. These rules provide as follows:
26.01 On motion at any stage of an action, the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that would not be compensated for by costs or an adjournment.
26.02 A party may amend the party’s pleading,
(a) without leave, before the close of pleadings, if the amendment does not include or necessitate the addition, deletion or substitution of a party to the action;
(b) on filing the consent of all parties and, where a person is to be added or substituted as a party, the persons consent; or
(c) with leave of the court.
[31] Rule 5.04 (2) of the Rules applies if the motion seeks to add, delete or substitute a party. This rule provides as follows:
At any stage of a proceeding, the court may by order add, delete or substitute a party or correct a name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
[32] One obvious limit on the court’s broad discretion under Rule 5.04(2) is the expiration of a limitation period. Section 21(1) of the Limitations Act, 2002,[^1] specifically addresses the situation as follows:
If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding a person as a party to any existing proceeding.
[33] The proposed defendants take the position that the plaintiffs are proceeding in a manner contrary to section 21(1) of the Limitations Act, 2002 and are therefore prohibited from adding the proposed defendants to these proceedings. The proposed defendants contend the limitation period expired on October 11, 2013.
[34] The plaintiffs take the position that they are well within the two year limitation period since they were unable to discover the identity of the proposed defendants until PCS Security produced its copy of the Document as part of its documentary production in August 2013.
[35] The plaintiffs’ main position on this motion is that the relief sought is merely curative in nature and rely on section 21(2) of the Limitations Act, 2002. That section provides that the expiration of a limitation period “does not prevent the correction of a misnaming or misdescription of a party”. That is, the correction of a misnomer or misdescription does not “add” a party to a proceeding and therefore does not trigger a consideration of whether or not the limitation period has expired.
[36] Alternatively, the plaintiffs argue that sufficient evidence has been filed on this motion to render the issue of discoverability a live issue and one requiring a trial for its resolution.[^2] The plaintiffs assert that such an approach is appropriate in circumstances where it is not clear that non-compensable prejudice would result from the addition of the proposed defendants.
The Issues
[36] This motion raises two issues:
(a) Is the addition of the proposed defendants simply correcting a misnomer?
(b) If the answer to (a) is in the negative, applying the principle of discoverability has the limitation period expired?
Analysis
Is the addition of the proposed defendants simply correcting a misnomer?
[37] According to the evidence of Ms. Butkus, “John Doe” was added as a defendant as a “precaution in the event that PCS had retained a technician or entity other than Dickie’s to assist with annual inspections in the year leading up to the date of loss”.[^3]
[38] In Dukoff v. Toronto General Hospital[^4] the court noted the practice of using fictitious names where the identities of the parties are not known. In Dukoff, a negligence action was commenced against a number of defendants including two fictitious names. Each was alleged to belong to a “doctor of medicine” at the defendant hospital.
[39] In allowing the appeal, Saunders J. adopted the test enunciated by Lord Devlin in Davies v. Elsby Brothers Ltd., [1960] 3 All E.R. 672 (C.A):
How would a reasonable person receiving the document take it? If, in all the circumstances of the case, in looking at the document as a whole he would say to himself: “of course it must mean me, but they have got my name wrong”, then there is a case of mere misnomer. If, on the other hand, he would say: “I cannot tell from the document itself whether they mean me or not and I shall have to make inquiries”, then it seems to me that one is getting beyond the realm of misnomer.
[40] In Dukoff, Saunders J. allowed the appeal and concluded that the insertion of the names “John Doe and Jane Doe” were not mere misnomers. After reviewing the statement of claim Saunders J. was unable to identify any particulars of the alleged negligent conduct of either Jane Doe or John Doe. In that instance, the defendant hospital would have serious doubt as to the identity of John and Jane Doe when reading the pleading.
[41] In Spirito v. Trillium Health Centre[^5] the motion judge applied the test enunciated by Lord Devlin in Davies v. Elsby Brothers Ltd. and allowed the plaintiffs to substitute two named physicians for ones previously described as Doctors AB and DC. The Court of Appeal upheld the decision of the motion judge and wrote at para. 13:
The motion judge…looked at the statement of claim and particularly paragraphs 15 and 18, which refer to the surgical consult note and the administration of four pints of blood and concluded that as the surgeons involved in the treatment of Mr. Spirito, the appellants would have known that there conduct was at issue. This was primarily a finding of fact that is entitled to deference in this court. I am satisfied that it was reasonably open to the motion judge to come to the conclusion she did.
[42] The test established in Davies v. Elsby Brothers Ltd. has evolved in recent years. The court now considers whether the person said to have been identified by the pseudonym or fictional name would have known upon receiving the claim that the “litigation finger” was being pointed at them.[^6]
[43] In the decision of Skribans v. Nowek,[^7] Master Glustein permitted the amendments to correct the misnomer and noted that the plaintiff’s knowledge of the proposed defendant or the plaintiff’s ability to discover the identity of the proposed defendant at the time the claim is issued is largely irrelevant for purposes of applying the doctrine of misnomer.[^8]
[44] Master Glustein considered the policy underlying the doctrine of misnomer and stated:
From a policy perspective, there is a reasonable argument that the doctrine of misnomer applies despite the passage of a limitation period. If a party knows from the outset that it is the intended defendant, the plaintiff intends to name the defendant, and the “litigating finger” points at the intended defendant, it could be unjust to allow the defendant to permit “one party to perhaps escape its possible liability by relying upon a technical Limitations Act defence.” (Brand Name Marketing Inc. v. Rogers Communications Inc, 2010 ONSC 2892 (Ont. Master) at para. 84).[^9]
[45] In Skribans, the court concluded that at all material times the plaintiff had intended to name the owner of the motor vehicle involved in the subject accident as a defendant and had pleaded all direct allegations of negligence against the owner of the motor vehicle. Similar to the facts before me, the claim in Skribans had been issued prior to the plaintiff becoming aware of the identity of the owner.
[46] Turning to the situation before me, I must ask the question: Upon reviewing the statement of claim would the proposed defendants have known the “litigation finger” was being pointed at them?
[47] The statement of claim sets forth the following identifying particulars with respect to the defendant “John Doe”:
(a) Para. 7: The defendant, John Doe, is either an individual, a sole proprietorship or a corporation, the particulars of which are known solely to the Defendant PSC [sic] Security Systems Inc., and at all material times carried on business as a provider of sprinkler system installation, inspection and maintenance services.
(b) Para. 9: The Defendant, PCS Security Systems Inc., was hired by the Plaintiff, Waterloo Textiles, to perform annual fire alarm/sprinkler and fire hydrant testing and inspections throughout the building located at 215 Queen Street West, Cambridge, Ontario. An inspection of these systems was conducted on June 30, 2011, approximately three and a half months prior to the subject incident.
(c) Para 10: The Plaintiff, Waterloo Textiles, pleads that PCS Security Systems completed testing and maintenance of the sprinkler systems on an annual basis together with a representative on behalf of the Defendants, Dickie’s Sprinkler Service Incorporated and John Doe. Particulars of the defendants alleged breach of contract warranty statutory duty and/or negligence are contained in para. 11 of the statement of claim and such allegations relate to all three defendants including John Doe.
[48] While the plaintiffs are seeking to replace the single name of “John Doe” with the names of the two (2) proposed defendants, which at first blush would suggest the addition of a party rather than simply correcting a misnomer, in my view, nothing turns on this. It is clear from the statement of claim that the plaintiffs intended to pursue all technicians who may have assisted PCS Security in inspecting and maintaining the Sprinkler System.
[49] From a review of the statement of claim, it is readily apparent that the proposed defendants upon reviewing statement of claim would have known that they were the intended defendants. The proposed defendants would have known:
That they were the individuals who had conducted an inspection of Sprinkler System on June 30, 2011 and prepared a report;
That they had subcontracted with PCS Security, correctly named in the statement of claim as a defendant, to perform the annual inspection of the Sprinkler System;
That they had attended at the Premises having the municipal address correctly stated in the statement of claim.
[50] The only evidence before me confirms that the plaintiffs, the insurers and their counsel were unaware at the time the statement of claim was issued of the identity of the proposed defendants. The explanation provided by the plaintiffs for not having identified the technicians who assisted PCS Security at the time the claim was issued or any time prior to August 2013 is reasonable and credible.
[51] The proposed defendants take issue with the efforts undertaken by the plaintiffs, the insurers and their counsel at the time the claim was issued to properly identify the proposed defendants as the technicians who conducted the inspection on June 30, 2011.
[52] The plaintiffs were aware that PCS Security contracted with other business entities or individuals to conduct the annual inspection of the Sprinkler System. It is clear that the plaintiffs had actual knowledge of this business practice given Dickie’s involvement in inspections during the years 2007 and 2008. As noted by Ms. Butkus in her evidence, out of an abundance of caution Dickie’s was named as a defendant and as well John Doe was named in the event a different technician had been employed by PCS Security or contracted by PCS Security to perform this work in 2011.
[53] Those precautionary steps have paid off. The situation would be different and my analysis far different in circumstances where the plaintiffs did not have the foresight to name another technician, relying only on Dickie’s. In that situation, due diligence would be relevant and the discoverability principle would apply. However that is not the situation before me. The discoverability principle has no application to an analysis of the misnomer issue.
[54] Curiously, the proposed defendants did not address the doctrine of misnomer in oral argument or in their factum. Instead, the proposed defendants have limited their arguments to the doctrine of discoverability in the context of a Limitations Act defence. For the reasons set forth above, that doctrine of discoverability has no application to an analysis and application of the doctrine of misnomer.
[55] I agree with the plaintiffs that the “litigation finger” is pointed squarely at the proposed defendants and that in all the circumstances of this case, the proposed defendants upon reviewing the statement of claim would know they were the intended recipients of the claim. This is a case of misnomer.
[56] Every case of misnomer does not automatically result in leave to amend. The court retains residual discretion to refuse leave where non-compensable prejudice would result.[^10]
[57] The plaintiffs argue that the only prejudice which the defendants have suffered is the expiration of a limitation period. With respect, the plaintiffs have misconstrued the test. Misnomer does not involve consideration of whether or not a limitation period has run as it does not involve the addition of party. In the case of misnomer, the party has already been identified and named albeit incorrectly.
[58] Delay in correcting the name may be fatal. It is not alleged here that the plaintiffs delayed in bringing this motion to amend. Since receiving their productions, the plaintiffs persisted in following up with counsel for PCS Security inquiring as to the identity of the individuals who conducted the inspection on June 30, 2011. Immediately upon receiving confirmation that Armor was the subcontractor retained by PCS Security to conduct the inspection, the plaintiffs brought this motion approximately two months later. In my view, the relatively short passage of time has been fully explained and there has been no delay.
[59] The action is at an early stage. The identity of the proposed defendants was obtained by the plaintiffs a mere one month following the expiration of the two year limitation period in October 2013.
[60] Based on the record before me, it is not clear what the plaintiffs could or should have done to identify the proposed defendants at an earlier stage. The defendants have not identified any non-compensable prejudice that will result if leave is granted.
If the doctrine of misnomer does not apply, applying the principle of discoverability has the limitation period expired?
[61] Given my disposition with respect to the issue of misnomer, it is unnecessary for me to address the Limitations Act issue raised by the proposed defendants as the motion is not one involving the addition of a party.
Disposition
[62] The plaintiffs’ request for permission to amend the statement of claim to correct the title of proceedings by naming the proposed defendants is hereby granted.
[63] I have considered the costs outlines provided to me by counsel for the parties. The plaintiffs seek partial indemnity costs of the motion in the amount of $6,176.37. By comparison, the responding parties have provided a costs outline indicating their costs of the motion on a partial indemnity basis to be comparable.[^11] Costs should follow the outcome in the circumstances. As successful parties on the motion, the plaintiffs are entitled to their costs on a partial indemnity basis in the amount claimed, namely the sum of $6,176.37 inclusive of disbursements and H.S.T.
“Justice A. K. Mitchell”
Justice A. K. Mitchell
Date: July 23, 2014
[^1]: S.O. 2002, c.24, Sch.B.
[^2]: See Ibrahim v. Alexis Nihon Developments Ltd. [2001] O.J. No. 4595 (SCJ).
[^3]: That excerpt is taken from paragraph 9 of Ms. Butkus’ affidavit sworn March 10, 2014.
[^4]: https://www.canlii.org/en/on/onsc/doc/1986/1986canlii2648/1986canlii2648.html
[^5]: https://www.canlii.org/en/on/onca/doc/2008/2008onca762/2008onca762.html
[^6]: Ormerod v. Strathroy Middlesex General Hospital (2009), https://www.canlii.org/en/on/onca/doc/2009/2009onca697/2009onca697.html at para. 24.
[^7]: https://www.canlii.org/en/on/onsc/doc/2012/2012onsc532/2012onsc532.html
[^8]: Ibid. at para. 37.
[^9]: Ibid. at para. 42.
[^10]: Mazzuca v. Silvercreek Pharmacy Ltd., (2001), https://www.canlii.org/en/on/onca/doc/2001/2001canlii8620/2001canlii8620.html at para.25.
[^11]: $5,987.10