SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-12-461021

MOTION HEARD: February 4, 2015

Re: YAACOV HEN

Plaintiff

v.

MARK FRANCIS BANDURA, AARON JUSTIN BROWN AND

614128 ONTARIO LTD. carrying on business as TRISAN CONSTRUCTION

Defendants

BEFORE: Master Lou Ann M. Pope

APPEARANCES: Michael Blois, articling student, Howie, Sacks & Henry LLP for moving plaintiff

(Fax: 416-361-0083)

Karen Chee, Withrow & Associates for responding defendants and proposed defendant, Metro Toronto Condominium Corporation No. 696:

(Fax: 1-855-836-1495)

REASONS FOR ENDORSEMENT

[1] The plaintiff, Yaacov Hen, seeks an order to amend the statement of claim to add the proposed defendant, Metro Toronto Condominium Corporation No. 696 (“MTCC”). At issue on this motion is whether the amendment should be permitted after the expiry of the limitation period based on the principles of actual knowledge and the discoverability principle.

Background

[2] This action arises out of alleged injuries that Mr. Hen sustained in an accident which occurred on August 17, 2010. Mr. Hen claims that he fell to the ground when the stairway he was climbing collapsed.

[3] The fall occurred at property known municipally as 114 Sackville Street, Toronto, Ontario, which is a condominium building (“the subject property”).

[4] Mr. Hen issued a statement of claim on August 10, 2012 in which he claimed damages for personal injuries sustained in the fall. The named defendants are Mark Francis Bandura, Aaron Justin Brown and 614128 Ontario Ltd. carrying on business as Trisan Construction. The action has been discontinued against 614128 Ontario Ltd. carrying on business as Trisan Construction.

[5] The defendants, Bandura and Brown, resided in one of the condominium units in the subject property at the relevant time and one or both of them worked for the property management company.

[6] In the statement of claim, Mr. Hen claims that the former defendant, Trisan Construction, had entered into a contract with Bandura and Brown to perform repairs to the subject property. The uncontroverted evidence is that DNL Development Inc. (“DNL”) had entered into a contract with MTCC prior to the fall to remove an existing concrete porch and construct a new porch. Mr. Hen owned and controlled DNL. It was during the time of construction on the porch that the plaintiff allegedly sustained injuries when the stairwell collapsed.

[7] In their statement of defence, filed on February 26, 2013, the defendants deny that they were the occupiers of the subject property. They pleaded that the subject property was owned by MTCC and that the stairway where Mr. Hen allegedly fell was a common element of the condominium corporation.

[8] Following service of the statement of defence, counsel for the parties had discussions regarding whether the plaintiff would amend the statement of claim to add MTCC.

[9] It was not until March 18, 2014, Mr. Hen’s counsel conducted a property search which revealed that the subject property was owned by MTCC.

[10] This motion to add MTCC was brought by the plaintiff returnable February 4, 2015. The plaintiff’s motion record was served on the defendants and MTCC on January 22, 2015 – some 4 and one half years after the alleged fall.

Position of the Parties

[11] The position of the defendants and MTCC is that the motion should be dismissed for several reasons. Firstly, the limitation period expired on August 17, 2012, which was two years from the date of the plaintiff’s alleged fall. Secondly, Mr. Hen had actual knowledge of the potential liability of MTCC in August 2010 when the fall occurred. Thirdly, if it is not accepted that Mr. Hen had actual knowledge, based on the principle of discoverability, he ought to have known of the potential liability of MTCC prior to the expiration of the basic limitation period in August 2012 had he taken reasonable steps to ascertain the name of the owner of the property. MTCC submits that Mr. Hen has presented no evidence that he exercised due diligence to ascertain the owner and occupier of the subject property. MTCC relies on section 4 of the Limitations Act, 2002, S.O. 2002, c.24, Sched. B, which sets out the basic limitation period of two years from the day on which the claim was discovered. They also rely on subsection 5(1) of the Act for the definition of when a claim is “discovered” and subsection 21(1) which provides that if the limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.

[12] Mr. Hen submits that he did not discover that MTCC was potentially liable for his injuries until February 26, 2013 when his counsel was served with the statement of defence where it was pled that MTCC was the owner of the subject property where his fall occurred. Thus, the plaintiff submits that this motion was brought within two years of February 26, 2015, the expiry of the two-year limitation period based on the discoverability principle. The plaintiff submits further that based on rule 26.01, the court should add MTCC as a party to this action and that it is an improper use of court time on this motion to consider the issues raised by the defendants and MTCC regarding the limitation period. After being added as a party, MTCC can plead the limitation period defence then bring a summary judgment motion on the grounds that the claim against MTCC should be struck based on the limitation defence.

Law

[13] This motion is brought pursuant to rule 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which governs the power of the court to amend a pleading.

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 could not be compensated for by costs or an adjournment.

[14] The defendants and MTCC rely on rule 5.04(2) of the Rules which deals specifically with the addition of a party.

5.04(2) At any stage of a proceeding the court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[15] Thus, a motion to add a party under rule 5.04(2) is discretionary as the issue of prejudice must be considered before adding a party. The court in Higgins v. Barrie (City), 2011 ONSC 2233 at para. 16, cited the Court of Appeal in Pepper v. Zeller’s Inc. (2006), 83 O.R. (3d), 2006 42355 (ON CA), [2006] O.J. 5042 (C.A.) at para. 14, which held that a rule 5.04(2) motion to add parties after the expiry of a limitation period is discretionary. The Court of Appeal stated:

Contrary to the appellants’ argument the motion was not akin to a rule 26.01 motion to amend a pleading, which “shall” be granted absent compensable prejudice. Rather, a rule 5.04(2) motion to add parties and, in this case, to add parties after the apparent expiration of a limitation period, is discretionary.

[16] In considering whether to grant leave to add a party to an existing proceeding, the court will consider the limitation period and the discoverability principle as the passing of the limitation period will give rise to a presumption of prejudice. (Higgins supra at para. 17; Frohlick v. Pinkerton Canada Ltd., [2008] O.J. No. 17, 2008 ONCA 3, at paras. 17-18)

[17] The following are the relevant provisions of the Limitations Act, 2002 that apply to this motion:

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.

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 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.

Adding party

21(1) If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.

[18] Section 5(2) contains a presumption that a person with a claim is 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. It follows that the onus of proof is on the plaintiff to prove why he was unable to comply with the relevant limitation period; that is, August 17, 2012, in the case herein.

[19] Lastly, section 21 of the Limitations Act prohibits the addition of a new party to an existing action after the limitation period has expired.

Analysis

[20] The issue to be determined on this motion is whether to allow the addition of the proposed defendant to this action more than two years after the date of the alleged fall. Further, faced with the plaintiffs’ discoverability claim, what evidence is required to be adduced by the plaintiffs to avoid the presumption of knowledge contained in section 5.(2) of the Limitations Act.

[21] The presumption of knowledge contained in section 5.(2) of the Limitations Act required that an action against MTCC be commenced by August 17, 2012, two years from the date of the alleged fall, unless the plaintiff proves the contrary.

[22] Based on section 5, a claim is discovered on the day that a reasonable person with the abilities and in the circumstances of the plaintiff first ought to have known the identity of the tortfeasor, in this case MTCC. The plaintiff submits that he first discovered the identity of MTCC on February 26, 2013, the date the statement of defence was served. Therefore, he submits that the action against MTCC is not statute barred as this motion was served on January 23, 2015 within two years of the expiration of the limitation period based on the discoverability principle.

[23] Given that the plaintiffs have the onus to disprove the presumption of knowledge, it follows that the plaintiffs must satisfy the court that they did not know or could not reasonably have known until February 26, 2013 that MTCC was the owner of the subject property and its potential liability.

[24] The Supreme Court of Canada in Central Trust Co. v. Rafuse, 1986 29 (SCC), [1986] 2 S.C.R. 147 at para.177, held that a cause of action has been discovered for the purposes of commencement of a limitation period when the material facts on which it is based have been discovered, or ought to have been discovered by the plaintiff by the exercise of reasonable diligence.

[25] The authorities are clear that when a party is seeking to apply the discoverability rule, the court should afford a degree of latitude to that party before declaring that the limitation period has begun to run. In practical terms, the question is not whether the plaintiff believes he could not have known the identity of MTCC until February 26, 2013, but whether there is a sufficient body of evidence available to be placed before the trial judge that has a reasonable chance of persuading the trial judge, on the balance of probabilities, that the plaintiff could not have known the identity of MTCC until February 26, 2013. (Wong v. Adler (2004), 2004 8228 (ON SC), 70 O.R. (3d) 460 (S.C.J.))

[26] The authorities are also clear that it is not appropriate for a motions judge or master to resolve a limitation issue where the application of the discoverability rule is central to its resolution for the following reasons. It is a question of fact when the cause of action arose and thus when the limitation period commenced. The applicability of the discoverability rule is premised on the finding of these facts; that is, when the plaintiffs learned that they had a cause of action against the proposed defendant; or, when through the exercise of reasonable diligence, they ought to have learned they had a cause of action against the proposed defendant. These facts constitute genuine issues for trial and as such it is not appropriate for a motions judge or master to assume the role of the trial judge by resolving them.

[27] In summary, the motions court must examine the evidentiary record before it determines if there is an issue of fact or of credibility on the discoverability claim. If the court determines that there is such issue, the defendant should be added with leave to plead a limitations defence. If there is no such issue, as for example where the evidence before the motions court clearly indicates that the name of the tortfeasor and the essential facts that make up the cause of action against such tortfeasor were actually known to the plaintiff or their solicitors more than two years after the motion to amend, the motion should be refused. (Wong v. Adler, supra)

[28] What are the evidentiary requirements implied by s. 5(2) of the Limitations Act on motions to add parties to an action outside of the limitation period?

[29] The law is clear that a moving party seeking to add a party after the initial two-year limitation period must give a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence.

[30] Did Mr. Hen have actual knowledge that MTCC was the owner of the subject property and its potential liability for his alleged fall by August 17, 2012 being the expiration date of the basis limitation period?

[31] The following is a review of the evidentiary record regarding Mr. Hen’s knowledge.

[32] The contract bid made by Mr. Hen’s company dated August 27, 2010 was addressed to the defendant, Aaron Brown at 114 Sackville St., Toronto, the address of the subject property. Similarly, the Contract Agreement, which notably was drafted by DNL, sets out that the contract was between DNL and Aaron Brown followed by the words “(Property Management Staff).”

[33] Further, the evidence contains two letters sent from Aaron Brown to Mr. Hen both in September 2010 which set out Mr. Brown’s dissatisfaction with DNL’s work. Of importance in the first letter, which is undated but appears to have been sent prior to the second letter dated September 26, 2010, is the first line which states: “My name is Aaron Brown and my condo corp. hired your company, through Mike, to complete a stairs renovation on Aug. 13th.” (my emphasis) In addition, the letter is signed in text as: “Aaron Brown for Metro Toronto Condo. Corp. 696.” (my emphasis) Mr. Brown’s second letter is also signed in text as: “Aaron Brown for MTCC696.” (my emphasis)

[34] In addition, there is evidence of cheques drawn by MTCC payable to DNL during the relevant period which contain the words “Stairs” in the Re line. Notably, the payment for the work on the stairs was not made by Aaron Brown, but by MTCC.

[35] Moreover, the plaintiff failed to take any steps to ascertain the name of the owner of the subject property within the limitation period. The plaintiff’s only evidence with respect to ascertaining the name of the property owner is a property search which was not conducted until March 18, 2014, which indicated that MTCC was the owner. The plaintiff provided no reason to explain why that property search was not or could not have been conducted within the limitation period. It is obvious that had the plaintiff conducted this property search within the limitation period, he would have known that MTCC owned the subject property and the appropriate motion could have been brought before expiry of the limitation period.

[36] The issue of the plaintiff’s due diligence is relevant to the issue of discoverability. It is my view that the plaintiff demonstrated a lack of reasonable or due diligence in failing to conduct a simple property search prior to expiry of the limitation period. That failure, along with the evidence in the plaintiff’s possession; that is, the contract bid, the contract, letters from Mr. Brown and the cheques, demonstrate that the plaintiff ought to have known the property owner’s name prior to expiry of the limitation period.

[37] Based on the evidence as set out above, the plaintiff has failed to establish that he did not know or could not have known that MTCC was the owner of the subject property prior to expiry of the limitation period. I am satisfied that there is sufficient evidence on this motion to establish that Mr. Hen knew or ought to have known that MTCC was the owner of the subject property before the expiry of the basic limitation period. As such, given that Mr. Hen had knowledge prior to expiration of the limitation period on August 17, 2012, section 21(1) of the Limitations Act, 2002 applies and MTCC cannot be added as a party defendant. Therefore, this motion is dismissed pursuant to rules 5.04(2) and 26.01 given my findings above and the presumption of prejudice that exists upon the expiration of a limitation period. I further find that if this motion were granted, there would be prejudice to MTCC that could not be compensated by costs or an adjournment.

[38] The plaintiff’s motion is hereby dismissed with costs to the defendants and MTCC.

[39] The parties did not exchange costs outlines. After hearing submissions on costs, the plaintiff shall pay costs to the defendants and the MTCC of $1,250 payable within 30 days.

(Original Signed)__

March 10, 2015 Master Lou Ann Pope