SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: CV-13-377

DATE: 2015-08-21

RE: Brantford Engineering and Construction Ltd., Plaintiff

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The Corporation of the City of Brantford, Defendant

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Conestoga Rovers and Associates Inc., Third Party

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LVM Inc., Fourth Party

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Extreme Drilling Inc.

BEFORE: The Honourable Mr. Justice R.D. Reilly

COUNSEL: Paul Amey, Counsel for the Plaintiff / Moving Party

David M. Sundin, Counsel for the Fifth Party, Extreme Drilling Inc.

HEARD: July 8, 2015

ruling ON A MOTION

by the honourable mr. justice r.d. reilly

[1] By this notice of motion dated March 16, 2015, the plaintiff seeks an order adding the fifth party, Extreme Drilling Inc., as a defendant to the action and an order amending the title of proceedings accordingly. I will first summarize the history of this proceeding.

[2] In August of 2012, the plaintiff, Brantford Engineering and Construction Ltd. entered into a contract with the defendant, The Corporation of the City of Brantford, whereby the plaintiff agreed to complete in part the construction of a sanitary sewer along Greenwich Street and under the Mohawk Canal in the City of Brantford. The plaintiff engaged Extreme Drilling Inc. to conduct the drilling operations, which included the digging of a tunnel under the Mohawk Canal. Extreme Drilling Inc. (Extreme) completed its work for the day on the 17th of November 2012. When the parties returned to continue the project on the 19th of November, it was discovered that the tunnel under construction had collapsed and was flooded with water from the canal. Work on the tunnel continued and the project was completed in the Spring of 2013.

[3] On the 24th of May 2013, the plaintiff sent an invoice to the defendant City. The plaintiff’s position is that pursuant to their usual business dealings, the plaintiff expected payment of the invoice within approximately 30 days. Suffice to say the amount claimed from the City was increased as a result of additional work necessary to compensate for the tunnel collapse. The City refused to make payment in full.

[4] On the 4th of November 2013, the plaintiff filed a statement of claim naming the City as defendant and claiming payment in full.

[5] On the 24th of February 2014, the City filed a statement of defence to the claim by the plaintiff. In that statement of defence, the City of Brantford took the position that the tunnel collapse and cost to repair and compensate for that collapse was due to negligence on the part of Extreme Drilling, which had been retained by the plaintiff. On the 14th of April 2014, the plaintiff prepared a draft amended statement of claim naming Extreme Drilling as a defendant to the principle action. Extreme Drilling Inc. takes the position that the plaintiff’s attempt to add Extreme Drilling as a defendant is barred by the Statute of Limitations. In the interim, Extreme Drilling retained an engineering consultant (Keewatin) to investigate the cause of the tunnel failure. That report suggested that the cause of the tunnel failure was the soil conditions in the area, not negligent excavation performed by Extreme Drilling. The plaintiff takes the position that until it reviewed the City’s statement of defence (filed on the 24th of February 2014), it did not appreciate the claim in negligence that was being made against Extreme Drilling and therefore, until that date, it had no reason to join Extreme Drilling as a party to the action. Extreme Drilling takes the position that the triggering event for the running of the Statute of Limitations was the date the tunnel collapse was discovered on the 19th of November 2012. Therefore, submits Extreme Drilling, the notice of motion seeking to add Extreme Drilling as a party offends the Limitations Act.

[6] The Limitations Act provides in part in sections 4 and 5 as follows:

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 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).

(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.

[7] The Limitations Act goes on to say in section 21:

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.

[8] The Limitations Act must be read in conjunction to Rule 5.04 (2) which states:

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, unless prejudice would result that could not be compensated for by costs or an adjournment.

[9] As noted above Extreme Drilling takes the position that the two year limitation began to run when the tunnel collapse was discovered on the 19th of November 2012. Therefore, the plaintiff’s notice of motion to add Extreme Drilling as a defendant to the principal action conflicts with the Statute of Limitations. The plaintiff takes the position that the two year period did not begin to run until the plaintiff was made aware by the City’s statement of defence on the 24th of February 2014 that Extreme Drilling might be liable in negligence. Thus says the Plaintiff, it has until the 24th of February 2016 to add Extreme Drilling as a Defendant.

[10] Extreme Drilling mounts a further argument before the court. Even if the attempt by the plaintiff to add Extreme Drilling as a party is not in violation of a Statute of Limitations, joining Extreme Drilling as party would result in prejudice to Extreme Drilling that could not be compensated for by costs or an adjournment and therefore is inconsistent with Rule 5.04 (2) of the Rules of Civil Procedure.

[11] I have carefully considered the jurisprudence cited by the parties. I note for instance the case of Kowal v. Shyiak, 2012 ONCA 512 cited by the respondent. This is an excellent decision from the Ontario Court of Appeal. At paragraph 18 of the decision, Justice Pepall stated:

Certainty of a defendant’s responsibility for the act or omission that caused or contributed to the loss is not a requirement. It is enough to have prima facie grounds to infer that the acts or omissions were caused by the party or parties identified (citing authority). Expert opinions are not required in all cases (citing new authority).

[12] This same point was made by Master J. Haberman in the Superior Court of Justice in the case of Lima v. Moya, 2015 ONSC 324. Master Haberman stated at paragraphs 71-76:

[71] In summary, as long as the identity of a potential tortfeasor is known and there is some information on which a court could make a finding of liability, there is no room for discoverability to delay the starting point of the limitation period. Having enough information to form an allegation of negligence is quite different from having a winning case against a particular defendant – it is only the former that is required for the limitation clock to start running.

[72] Further, while new information may emerge down the road that strengthens the case against the proposed defendant, this will not restart the clock. A plaintiff should not wait until he has a good case against a defendant before starting a claim against him – as long as he has a case he can try to make, he must move within the limitation period.

[73] In terms of what does and does not constitute due diligence in assessing whether grounds to sue a particular individual exist, Master Dash noted in Wakelin v. Gourley et al, 2005 23123 (ON SC), 76 OR (3d) 272, that if all the plaintiff does during the two years after an accident in order to identify tortfeasors is request a copy of the police report, that will not constitute reasonable diligence.

[74] The plaintiffs rely on the case law that dictates the approach the court should take when dealing with motions such as there, where the issue of discoverability is on the table and there is a credibility issue. They maintain that the case law suggests that leave should be granted to add the proposed party, while also allowing the defendant to plead the expiry of the applicable limitation period.

[75] However, it appears clear that such an approach is only advocated when there is an issue of credibility that has to be resolved regarding who knew what and when, such that a trial is a better mechanism for resolving the issue (citing precedence). The “let it go and flesh out the facts at trial” approach is only appropriate when the basis for the discoverability of the claim must be explored in more depth and the evidence about it needs to be tested.

[76] I should not have to point this out in 2015, the plaintiff’s only salvation in the face of an expired limitation period is the application of the discoverability doctrine. The doctrine of “special circumstances” was clearly laid to rest in Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469, a decision of the Ontario Court of Appeal released in February 2008. Cases that talk about lack of prejudice are generally dealing with special circumstances so the presence or absence of prejudice really is not a factor here. When dealing with discoverability, the issue is whether someone discovered, or ought to have, that they have a claim, along with the essential elements that go with it to enable them to start an action. This is a fact-based analysis.

[13] The same point was made by Justice Perell in the Superior Court of Justice in the case of Tenderchoice Foods Inc. v. Versacold Logistics Canada Inc. 2013 ONSC 80 (Sup. Ct.). At paragraph 55, Justice Perell noted that:

A plaintiff is required to act with due diligence in acquiring facts in order to be fully apprised of the material facts upon which a claim can be based (citing precedence).

He went on to state at paragraph 60:

Discovery does not depend upon awareness of the totality of the defendant’s wrongdoing. Section 5 (1)(a) of the Limitations Act 2002 prescribes that discovery occurs when the plaintiff knows or ought to know of an injury caused by an act or omission of the defendant and having regard to the nature of the injury legal proceedings would be an appropriate way to seek a remedy. For the limitation period to begin to run, it is enough for the plaintiff to have prima facie grounds to infer that the defendant caused him or her harm, and certainty of a defendant’s responsibility for the act or omission that caused or contributed to the loss is not a requirement (citing Kowal v. Shyiak).

[14] The same point was made by a unanimous Court of Appeal in the case of Sloan v. Sauve Heating Limited, 2011 ONCA 91. There are certain similarities between the Sloan case and the case at bar as far as the facts are concerned. In Sloan, the Court of Appeal prevented the plaintiff from adding a defendant when plaintiff’s counsel failed to act on information related to the proposed defendant for several months and thereby missed the expiry of the limitation period.

[15] Given the considerable jurisprudence that supports the position taken by the respondent to this motion, after careful consideration, I conclude that the two year limitation period began to run when the tunnel collapsed on the 19th of November of 2012. Extreme Drilling was retained by the plaintiff and the plaintiff would clearly be aware as of the date of the tunnel collapse that there was a possible cause of action against Extreme Drilling, the plaintiff’s own subcontractor. The plaintiff was therefore under an obligation to act with due diligence to confirm the possible liability of Extreme Drilling for negligence. The plaintiff did not have to conclude that its cause of action against Extreme Drilling was guaranteed success. However, the plaintiff was required to take whatever steps were necessary to preserve a possible claim against Extreme Drilling. Otherwise expressed, a motion to add Extreme Drilling as a defendant should have been brought by the plaintiff by the 19th of November 2014.

[16] I note that the project was completed in the Spring of 2013. I note as well that the statement of defence of the City of Brantford, which the plaintiff relies on as triggering the limitations period, was filed on the 24th of February of 2014. Even in the Spring of 2014 the plaintiff had several months to add Extreme Drilling as a party defendant to the action without conflict with the Statute of Limitations. I can only conclude that the failure of the plaintiff to add Extreme Drilling as a defendant to the action until the 16th of March of 2015 demonstrates a lack of due diligence on the part of the plaintiff. I conclude that the plaintiff discovered or ought to have discovered its claim against Extreme Drilling well prior to March 16, 2013.

[17] I would add that had I concluded that the plaintiff was not in conflict with the Limitations Act in this attempt to add Extreme Drilling as a party to the action, I would not have concluded that adding Extreme Drilling would result in prejudice to Extreme Drilling that was not capable of compensation by way of costs or an adjournment. Extreme Drilling was already a party to the action having been brought into the action as a fifth party. Extreme Drilling had already retained its own expert (Keewatin]. Examinations for discovery have not as yet been scheduled and productions have not been exchanged. The events that concern the parties are fairly recent and there is no suggestion that any material evidence has been lost or destroyed. Extreme Drilling has not produced any evidence to suggest prejudice if it were named as a defendant in the action.

[18] However, given the impact of the Statute of Limitations, I deny the plaintiff’s motion to add Extreme Drilling as a party to the action.

[19] I thank counsel for their considerable assistance and commend them on their preparation for the motion. If the parties are unable to agree on the issue of costs they may address me with brief written submissions as to costs at my chambers in Kitchener, within 60 days of publication of this ruling.

R.D. Reilly J.

Released: August 21, 2015