CITATION: Kassouf & Clinton Road Joint Venture v Caterpillar Tunneling Canada Corporation, 2015 ONSC 2462

COURT FILE NO.: 12-38749

DATE: 2015-04-20

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Kassouf & Clinton Road Joint Venture

Plaintiff

• and -

Caterpillar Tunneling Canada Corporation previously known as Lovat Inc.

Defendant

COUNSEL:

P. Kennedy, for the Plaintiff

N. Henderson, for the Defendant

HEARD: April 2, 2015

REASONS FOR JUDGMENT

INTRODUCTION:

[1] The Plaintiff brings this motion seeking leave under Rule 26 of the Rules of Civil Procedure to amend its Statement of Claim, on the basis that the proposed amendment raises no new cause of action.

[2] The Defendant is opposed to the amendment for several reasons.

FACTS:

[3] The Plaintiff intended to bid on an infrastructure project that required a specific piece of equipment that would bore a tunnel.

[4] It is alleged that the Plaintiff approached the Defendant with the required specifications for the equipment and a price to build it was quoted by the Defendant. The Plaintiff then successfully bid on the project and ordered the required equipment from the Defendant which was delivered.

[5] It is alleged that the equipment did not perform as required or pursuant to the specifications supplied to the Defendant. As a result of these alleged equipment failures the Plaintiff pleads that it ultimately lost the job and suffered damage.

[6] The Statement of Claim was issued on December 21, 2012. Pleadings have been exchanged and oral discoveries were completed on May 1, 2014.

[7] The Defendant was advised by letter on August 20, 2014 that the Plaintiff intended to amend its Statement of Claim and on October 14, 2014 the Defendant refused to consent to the proposed amendment.

[8] The Statement of Claim seeks damages for negligent misrepresentation, breach of implied condition and fundamental breach of contract. The Plaintiff now wishes to add the claim of negligence in the design and manufacture of the equipment.

POSITION OF THE PARTIES

[9] Both parties agree that the limitation period to add a new claim has expired. I agree.

[10] The Plaintiff argues that all the facts necessary to make out a claim in negligence were pleaded in the original claim. It further asserts that no new facts whatsoever are being put forward in the proposed amendment. As such the Plaintiff urges me to find that the proposed amendment claiming negligence is not a new cause of action but simply an alternate claim for relief arising from the same facts already pleaded.

[11] The Defendant argues the claim for negligence is a completely new claim and therefore statute barred under the Limitations Act.

[12] In the alternative the Defendant argues the new claim amounts to a negligence claim for recovery of pure economic loss caused by a non-dangerous product defect and is therefore not sustainable in law. In the further alternative the Defendant argues that the damages sought for negligence are excluded pursuant to the terms of the Sale Agreement between the parties.

ANALYSIS

[13] I conclude that the facts pleaded in the original Statement of Claim are extensive, specific and thorough. I also find that no new facts are being pleaded in the proposed amendment to the Statement of Claim.

[14] The Plaintiff has already claimed negligent misrepresentation. The facts as pleaded in the original claim, in my view, encompass a claim for negligent design and manufacture of the equipment.

[15] R. 26.01 states:

“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.”

[16] This rule clearly indicates that amendments are to be presumptively approved.

[17] The Courts have defined a cause of action as a factual situation the existence of which entitles one party to obtain from the Court a remedy against another party. When a proposed amendment relates to material facts that were not substantially pleaded in the original claim or are essential to support the claim being advanced, the amendment will be ruled as raising a new cause of action. Ascent Inc. v Fox 40 International Inc [2009] O.J. No. 2964 at para. 3. Bank of Nova Scotia v PCL Constructors Inc. [2009] O.J. No. 4347 at paras 12-20.

[18] On the other hand, it has long been recognized that the mere pleading of an alternative ground for relief arising from the same facts does not constitute the raising of a new cause of action. MacGregor v Royal and Sun Alliance Insurance Co. of Canada, [2009] O.J. No. 1564 at para 46; aff’d 2010 ONSC 3558 (Div. Ct.)

[19] In essence the proposed amendment must rely on facts which have been substantially pleaded in the initial Statement of Claim. Bank of Montreal v Morris [2013] O.J. No. 3090 at para. 46. Timbers Estate v Bank of Nova Scotia 2011 ONSC 3639 at paras 10-14.

[20] It is trite law to state that the elements of a negligence claim include; a duty owed by the Defendant to the Plaintiff; a breach of that duty; the breach was the cause of the Plaintiff’s injury; the breach proximately caused the Plaintiff’s injury; and the Plaintiff suffered damages.

[21] In my view the facts pleaded in the original Statement of Claim substantially set out all the above elements for a claim of negligence in design and manufacture and how those elements were breached by the Defendant which then caused damage to the Plaintiff.

[22] I therefore conclude that the proposed amendment to the Statement of Claim is not raising a new cause of action.

[23] There is no prejudice to the Defendant in allowing the amendment once it has been concluded, as here, that no new cause of action is involved. Nor did counsel for the Defendant make any submissions regarding prejudice. The same witnesses will be called. There is no delay in getting the trial. Indeed counsel advised the Court that they had a date for a summary judgment motion within the next two months.

[24] The second reason the Defendant argues that the amendment should not be allowed is because it is a claim in negligence for pure economic loss for a non-dangerous product and such a claim is not tenable in law. I am not prepared to conclude, on a pleadings amendment motion, that Ontario law is as argued by the Defendant.

[25] I agree with the reasoning of Master MacLeod in Chinook Group Ltd. V. Foamex International Inc. 2004 CanLII 33017 (ON SC), [2004] O.J. No. 4118 where he stated at paragraph 13:

“It must be remembered this is a pleadings motion. While I have a limited jurisdiction to review a proposed pleading for legal tenability at this stage, I should only refuse a pleading amendment as legally untenable if it is clearly impossible of success. The opposition of the plaintiff to the third party claim and to the counterclaim depends entirely on Giffels being a complete bar. That determination, however, depends on certain findings of fact and construction of documents based on evidence and not on the pleading or proposed pleading itself. An evidence-based argument is more properly a defence than a basis for refusing an amendment.”

[26] See also Vogler v. Lemieux 2014 ONCA 825 at para. 4 where the court stated on a pleadings motion “…At this early stage of the proceedings, when material facts remain contested, in our view it cannot be said that the proposed claim is unsound or that it is clearly impossible that the claim could succeed at trial.”

[27] In Martel Building Ltd. v. Canada 2000 SCC 60, [2000] S.C.J. No. 60 the court indicated that the common law traditionally did not allow recovery of economic loss where a plaintiff had suffered neither physical harm nor property damage, but the law now recognizes five categories of compensable economic loss and the categories are not closed. At paras 37 and 38 the Court stated:

“Over time, the traditional rule was reconsidered. In Rivtow and subsequent cases it has been recognized that in limited circumstances damages for economic loss absent physical or proprietary harm may be recovered. The circumstances in which such damages have been awarded to date are few. To a large extent, this caution derives from the same policy rationale that supported the traditional approach not to recognize the claim at all. First, economic interests are viewed as less compelling of protection than bodily security or proprietary interests. Second, an unbridled recognition of economic loss raises the spectre of indeterminate liability. Third, economic losses often arise in a commercial context, where they are often an inherent business risk best guarded against by the party on whom they fall through such means as insurance. Finally, allowing the recovery of economic loss through tort has been seen to encourage a multiplicity of inappropriate lawsuits.” See D’Amato, supra, at para. 20, and A. M. Linden, Canadian Tort Law (6th ed. 1997), at pp. 405-6.

(a) 38 In an effort to identify and separate the types of cases that give rise to potentially compensable economic loss, La Forest J., in Norsk, supra, endorsed the following categories (at p. 1049):

1. The Independent Liability of Statutory Public Authorities;

2. Negligent Misrepresentation;

3. Negligent Performance of a Service;

4. Negligent Supply of Shoddy Goods or Structures;

5. Relational Economic Loss.

See B. Feldthusen, “Economic Loss in the Supreme Court of Canada: Yesterday and Tomorrow” (1990-91), 17 Can. Bus. L.J. 356, at pp. 357-58; Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., 1995 CanLII 146 (SCC), [1995] 1 S.C.R. 85, at para. 12; and D’Amato, supra, at para. 30.

[28] In Arora v. Whirlpool Canada LP, 2013 ONCA 657 at paras 80-83 the Court of Appeal stated that “…Winnipeg Condominium did not settle that there is no recovery in tort for economic loss caused by defective, non-dangerous consumer products.”

[29] In the case at bar the Plaintiffs are certainly alleging the negligent supply of shoddy goods. Whether those facts can be proven is a question for the trier of fact and not a question for a judge on a pleading amendment motion where the record is far from complete for such a determination. Indeed, the record on this motion is not sufficient for me to conduct an Anns analysis as suggested in Martel. That would be much better done on the summary judgment motion with a complete record. Based on the material before me I am not prepared to conclude that the claim as proposed by the Plaintiff is impossible of success.

[30] This ruling is without prejudice to the parties raising the economic loss issue before the summary judgment judge. It will be left to the discretion of that judge to decide if the record at that time is sufficient to allow a determination to be made on the issue.

[31] The final argument of the Defence is that the claim for damages is excluded by the Sale Agreement. This motion is not the forum for such a determination which will depend on certain findings of fact and construction of documents based on evidence and not solely on the pleading or proposed pleading itself. As stated in Chinook an evidence based-argument is more properly a defence than a basis for refusing an amendment. See also Montreal Trust Co. of Canada v. Toronto Dominion [1992] O.J. No. 1274; Sattva Capital Corp. v. Creston Moly Corp. 2014 SCC 53, [2014] S.C.J. No. 53 at paras 47-50.

[32] The Court will need to interpret the contract in the context of evidence for such things as the scope of the Agreement, the effect and significance of the warranty, the effect of the language limiting the warranty, whether there is any effect on the warranty if not honoured in a timely manner and whether that even occurred and the effect of Section 11 regarding potential indemnity, to name but a few potential areas of inquiry.

CONCLUSION:

[33] The motion of the Plaintiff to amend its claim as per the draft supplied is granted, without prejudice to the Defendant arguing, if so advised, that certain claims are untenable at law before the summary judgment judge on a fulsome record.

[34] The Defendant may file an amended defence if so advised within 20 days of the receiving the amended claim. The parties are at liberty to arrange and conduct further discoveries on the amendments in their respective pleadings only.

[35] The parties requested that I fix costs on a partial indemnity basis based on the outcome of the motion and they provided me with draft bills of costs. I have reviewed those bills and find the amount requested by the plaintiff excessive for a motion of this sort. I feel the bill of the Defendant to be much more reasonable. I therefore fix costs for the Plaintiff at $7,500.00 inclusive payable by the Defendant in 30 days.

ARRELL, J.

Released: April 20, 2015

CITATION: Kassouf & Clinton Road Joint Venture v Caterpillar Tunneling Canada Corporation, 2015 ONSC 2462

COURT FILE NO.: 12-38749

DATE: 2015-04-20

Kassouf & Clinton Road Joint Venture

Plaintiff

• and -

Caterpillar Tunneling Canada Corporation previously known as Lovat Inc.

Defendant

Released: April 20, 2015