Glen White Industries Ltd. v. 1544951 Ontario Inc., 2015 ONSC 601

COURT FILE NO.: 2469/10 (14-21191 Windsor)

DATE: 2015/01/30

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Glen White Industries Ltd. o/a Steel Way Building Systems (Plaintiff)

- and -

1544951 Ontario Inc. o/a Piroli Construction (Defendant)

BEFORE: Justice H. A. Rady

COUNSEL: Michael Polvere, for the plaintiff

Angelo C. D’Ascanio, for the defendant and Rob Piroli Construction Inc.

HEARD: January 23, 2015

ENDORSEMENT

Introduction

[1] The plaintiff moves to amend its statement of claim to add Rob Piroli Construction Inc. (RPCI) as a defendant together with appropriate associated allegations. The defendant opposes the motion for several reasons, which will be detailed below.

The Facts

[2] This is a breach of contract claim arising from the construction of a twin pad arena in Essex, Ontario. The plaintiff supplied steel building components and materials and related services. The claim was commenced by notice of action dated October 15, 2010 followed by statement of claim on October 28, 2010. The plaintiff seeks payment of $127,000 (in round terms) pursuant to an agreement dated April 30, 2008.

[3] The agreement identifies “Piroli Construction” at 3850 Dougall Avenue, Windsor as the customer. From time to time, invoices were sent to Piroli Construction Inc. at the Dougall Avenue address.

[4] A payment for three invoices was sent to the plaintiff by cheque dated October 9, 2008, which identified the payor as 1544951 Ontario Inc., o/a Mario Piroli Co.

[5] Following default in payment, the plaintiff had two corporation profile reports undertaken. Piroli Construction Inc. is shown as cancelled as of November 26, 1990. The numbered company is shown as active. Its registered office address is 3850 Dougall Ave. and Mario Piroli is listed as president. The notice of action and statement of claim followed.

[6] A statement of defence was filed on behalf of 1544951 Ontario Inc. o/a Piroli Construction by the defendant’s former solicitor. At paragraph 3, it states:

The Defendant admits that the Plaintiff at all material times was a supplier of steel buildings and steel building products and that it contracted with the Plaintiff for the supply of steel building components, materials and accessories for an improvement known as the Essex Twin Pad Arena, in the County of Essex, Province of Ontario (“the arena”).

[7] Ultimately, on August 5, 2014, this action was ordered to be tried together, or one following the other, with three other actions started in Windsor arising from the same arena project.

[8] Examinations for discovery were conducted in the Windsor actions but not in this one. Plaintiff’s counsel in this action, Mr. Sarasin, did not participate in the Windsor examinations for discovery. He has since received copies of the transcripts.

[9] Prior to the August 5, 2014 order being made, all of the parties participated in a mediation and mediation briefs were filed on behalf of the parties. Unfortunately, the parties were unable to resolve the disputes. The mediation briefs are of importance to the defendant’s position and will be discussed below.

The Parties’ Positions

[10] The plaintiff says that given the particular facts in this case, at a minimum there is a triable issue respecting when the plaintiff knew or ought to have known the identity of the proper defendant. It submits that an order adding RPCI is the appropriate correction of a misnomer.

[11] The defendant submits the following:

1. there is no genuine issue requiring trial that the claim against RPCI ought reasonably to have been discovered on October 22, 2012 (the date of the failed mediation);

2. this motion was brought on December 15, 2014 more than two years after the plaintiff ought reasonably to have discovered its claim against RPCI;

3. section 21(1) of the Limitations Act precludes a plaintiff from adding a party as a defendant where the two year limitation period in respect of the proposed claim has expired;

4. a proposed amendment to add a party as a defendant where the limitation period has expired is considered to be an amendment which is untenable at law and will not be permitted under the Rules of Civil Procedure.

The Evidence

[12] In support of the motion, the plaintiff submitted affidavits sworn by a lawyer with the plaintiff’s law firm, Ms. VanBunderen.

[13] The defendant filed an affidavit from Ms. Wood, a law clerk at its lawyer’s office. Included is an exchange of email correspondence between Mr. D’Ascanio and the defendant’s former solicitor, Mr. MacDonald. Mr. MacDonald writes that he told the Mr. Sarasin at the mediation that he had named the wrong defendant.

[14] This is denied in a supplementary affidavit from Ms. VanBunderen.

[15] In particular, the deponent sets out what Mr. Sarasin recalls:

6. I have been advised by Mr. Sarasin that, contrary to Ms. Wood’s belief, Mr. MacDonald did not raise the issue of the Defendant possibly being the wrong party at the mediation and Mr. Sarasin was not aware of the issue at that time.

7. According to Mr. Sarasin, the only issue raised by Mr. MacDonald at the mediation relating to the Defendant was the solvency of the Defendant. Near the end of the mediation Mr. MacDonald entered the break out room Mr. Sarasin was in with the three representatives of the Plaintiff and advised that the Defendant had no assets and was not operating. Accordingly, even if successful, the Plaintiff would get nothing.

8. Mr. Sarasin responded to Mr. MacDonald advising that as long as the Defendant was pursuing litigation for payment in relation to the same construction project, which Mr. MacDonald confirmed it was, there were potential assets which could be used to pay the Plaintiff and which would be impressed with a trust under the Construction Lien Act to ensure such payment. Mr. MacDonald then left the room and the mediation ended shortly thereafter.

[16] Obviously, there is contradictory evidence about what discussions may have occurred between Mr. MacDonald and Mr. Sarasin at the mediation. It is impossible to resolve that evidentiary conflict at this juncture.

[17] The defendant relies on the mediation briefs filed and in particular, that of the general contractor for the project, Loaring Construction. In that brief, the following information is disclosed:

Loaring retained Rob Piroli Construction Inc. (Piroli) to provide labour and material to erect the pre-fabricated steel building system for Arenas A and B. Piroli in return retained Steelway.

Piroli retained Steelway as its subcontractor.

[18] The defendant submits that when the plaintiff or its solicitor read this, they should have realized that there was an issue respecting the identity of the proper defendants and the failure to investigate demonstrates a lack of due diligence.

The Law

[19] Rule 5.04(1) and (2) provide as follows:

(1) Proceeding not to be defeated – No proceeding shall be defeated by reason of the misjoinder or non-joinder of any party and the court may, in a proceeding, determine the issues in dispute so far as they affect the rights of the parties to the proceeding and pronounce judgment without prejudice to the rights of all persons who are not parties.

(2) Adding, deleting or substituting parties – 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.

[20] Rule 26.01 provides:

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.

[21] The relevant provisions of the Limitations Act, 2002 are the following:

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. 2002, c. 24, Sched. B, s. 4.

Discovery

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 claim first ought to have known of the matters referred to in clause (a). 2002, c. 24, Sched. B, s. 5 (1).

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. 2002, c. 24, Sched. B, s. 5 (2).

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. 2002, c. 24, Sched. B, s. 21 (1).

Misdescription

(2) Subsection (1) does not prevent the correction of a misnaming or misdescription of a party. 2002, c. 24, Sched. B, s. 21 (2).

Analysis

[22] For the reasons that follow, I have concluded that the proposed amendments should be permitted.

[23] First, it must be kept in mind that this is a pleadings motion and not a motion for summary judgment. The evidentiary threshold is lower as will be discussed below. Amendments to pleadings are governed by Rule 5.04 and 26 of the Rules of Civil Procedure.

[24] Rule 26 is mandatory and provides that an amendment shall be granted absent non-compensable prejudice. An intervening limitation period may be cause to refuse an amendment. Rule 5.04 is discretionary but the test remains the same – is there non-compensable prejudice?

[25] Rule 5.04 and 26.01 must be interpreted in light of the Limitations Act, 2002, which does not permit the extension of a limitation period by virtue of special circumstances: Joseph v. Paramount Canada’s Wonderland (2008), 2008 ONCA 469, 90 O.R. (3d) 401 (C.A.). However, the concept of discoverability is preserved in the Act.

[26] In Pepper v. Zellers Inc. (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), Justice Lang commented on the discretionary nature of an order under Rule 5.04(2) as follows:

[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. While the threshold on such a motion is low, the motion judge is entitled to consider the evidentiary record to determine whether there is a live issue of fact or credibility about the commencement date of the limitation period.

[27] She quoted with approval from the well-known and often cited decision of Master Dash in Wong v. Adler (2004), 2004 CanLII 8228 (ON SC), 70 O.R. (3d) 460 (S.C.J.); aff’d 2004 CanLII 73251 (ON SCDC), [2005] O.J. No. 1400 (Div. Ct.):

What is the approach a judge or master should taken on a motion to add a defendant where the plaintiff wishes to plead that the limitation period has not yet expired because she could not know of and could not, with due diligence, have discovered the existence of that defendant? In my view, as is clearly applied in Zapfe [v. Barnes, (2003), 2003 CanLII 52159 (ON CA), 66 O.R. (3d) 397 (C.A.)], the motions court must examine the evidentiary record before it to determine if there is an issue of act or credibility on the discoverability allegation, which is a constituent element of the claim. If the court determines that there is such issue, the defendants should be added with leave to plead the limitations defence. If there is no such issue, as for example, 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 of [sic] her solicitor more than two years before the motion to amend, the motion should be refused. If the issue is due diligence rather than actual knowledge, this is much more likely to involve issues of credibility requiring a trial or summary judgment motion, provided of course that the plaintiff gives a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence. That is not to say that such motion could never be denied if the evidence is clear and uncontradicted that the plaintiff could have obtained the requisite information with due diligence such that there is no issue of fact or credibility.

[28] In Wakelin v. Gourley (2005), 2005 CanLII 23123 (ON SC), 76 O.R. (3d) 272 (S.C.J.), Master Dash referred to his earlier decision. He noted that “it will be rare that the applicability of the discoverability principle based on due diligence will be determined on a motion to add a party.” As to the amount of evidence required by a plaintiff on such a motion, Master Dash observed:

The question is how much evidence must the plaintiff put in at the pleadings amendment stage to establish that the proposed defendants could not have been identified with due diligence within the limitation period? The short answer is: not very much. As stated by the Court of Appeal in Zapfe: In most cases, one would expect to find, as part of a solicitor’s affidavit, a list of the attempts made by the solicitor to obtain information to substantiate the assertion that the party was reasonably ‘diligent’ and to provide ‘an explanation for why she was unable to determine the facts’.

[29] Master Haberman provides a useful review of the law respecting discoverability and due diligence in Lima v. Moya, 2015 ONSC 324. She makes the point that “…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.”

Disposition

[30] The evidence here is not clear and uncontradicted. I cannot say that there is no issue of fact or credibility that would support a denial of the relief sought.

[31] First, there is a clear and unequivocal admission in the statement of defence that the correct party has been named. Mr. D’Ascanio advised that he does not seek to withdraw the admission. Second, the mediation brief filed by the defendant does not clearly identify RPCI as the contracting party. Rather, it identifies Rob Piroli, Piroli Construction Inc. (“Piroli”) as the contracting party. On the other hand, in the title of proceedings, RPCI is listed as the defendant in the Steelway action. However, in that part of the brief dealing specifically with the plaintiff’s claim, there is no suggestion the wrong defendant has been named.

[32] Moreover, payment of some of the plaintiff’s invoices were made by the numbered company from an address disclosed in the profile report to be the company’s address.

[33] Even the excerpts from the examinations for discovery of Mr. Caruana on October 19, 2010 and April 7, 2011 do not assist in resolving the issue. Portions of his testimony are reproduced below:

October 19, 2010

Q. All right. And your relationship with the plaintiff, Rob Piroli Construction Inc.?

A. I work for one of the other companies in the Piroli Group of companies.

Q. Who do you work for?

A. It’s the numbered company, 1544951.

Q. Do you do any work for… I’m going to call it Piroli Construction. It’s just easier.

A. Yeah.

Q. Do you do any work for Piroli Construction?

A. I do.

Q. All right. What do you do for Piroli Construction?

A. Right now I’m acting as general manager. I also act as a site supervisor and project manager.

Q. I take it you’re subbed out from the company that employs you to do work for Piroli Construction.

A. Yes.

April 7, 2011

Q. And where are you employed?

A. Piroli Construction.

Q. Is that Rob Piroli Construction Inc.?

A. Yes.

Q. And how long have you been employed by Rob Piroli Construction Inc.?

A. Six years.

Q. And what is your position presently?

A. General Manager.

Q. And how long have you been the general manager?

A. Four years.

[34] Mr. Caruana seems unclear about the correct identity of his corporate employer.

[35] In the particular circumstances of this case, given the unequivocal admission in the statement of defence (and which will not be withdrawn), the payment made by the numbered company, and the seemingly casual way in which the defendant is referred to or has used its corporate identity, a triable issue exists about what the plaintiff reasonably knew or ought to have known about the identity of the correct defendant during the two years prior to this motion being brought.

[36] On this basis alone, I would permit the amendments sought, with leave to the added defendant to plead the limitation period. There is no evidence of prejudice to either of the defendants.

[37] I would also permit the amendments on the basis of misnomer although I note that the added defendant is not being substituted for the existing defendant or for a fictitious name. I had occasion to consider misnomer in Ismail v. Nitty’s Food Services Limited, 2014 ONSC 4140. I referred to Master Muir’s decision in Demarti v. Benefit Plan Administrators Limited, 2014 ONSC 1847. She wrote:

The applicable law regarding misnomer is summarized in my decision in Spribille v. Rockcliffe Nursing Home, ONSC 5408 (S.C.J. – Master). Paragraphs 7 and 8 of that decision read as follows:

7. The law relating to misnomer has been thoroughly reviewed in recent years by the Court of Appeal. See Ormerod v. Strathroy Middlesex General Hospital, [2009] ONCA 697; Spirito Estate v. Trillium Health Centre, [2008] ONCA 762 and Lloyd v. Clark, [2008] ONCA 343. Misnomer requires a finding that the litigation finger be clearly pointed at the intended defendant. Would a reasonable person receiving and reviewing the statement of claim, in all the circumstances of the case, and looking at it as a whole, say to himself or herself ‘of course it must mean me, but they have got my name wrong’? The Court of Appeal adopts this test at paragraph 12 of Spirito, where the court states as follows:

8. In Dukoff et al v. Toronto General Hospital et al (1986), 1986 CanLII 2648 (ON SC), 54 O.R. (2d) 58 (H.C.J.), Saunders J. noted the practice, adopted in this case, of using fictitious names where the identity of the parties are unknown. If it was a case of misnomer, the statement or claim could be corrected by replacing the fictitious name (John Doe in that case) for the correct name, even though the correction was sought after expiry of the limitation period. He adopted the following test from Davies v. Elsby Brothers, Ltd., [1960] 3 All E.R. 672 (C.A.), at p. 676:

The test must be: How would a reasonable person receiving the document take it? If, in all the circumstances of the case and 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.

8. Where fictitious names, such as John Doe, are used in the statement of claim the assessment of whether the proposed defendant knew that he or she was the intended defendant becomes seminal in the analysis. See Urie v. Peterborough Regional Health Centre, 2010 ONSC 4226 at paragraph 107. Vague and non-specific allegations in a statement of claim will weigh heavily, if not definitely, against a finding that a misnomer is present. See Urie at paragraph 108.

[38] In the Ismail case, the addition of a proposed defendant was denied because the plaintiff failed to lead evidence that he took reasonable steps to ascertain the proposed defendant’s identity.

[39] That is not the case here, largely for the same reasons outlined above. In this case, the litigation finger was clearly pointed at the proposed defendant or the party actually named. As between the two, they would certainly know which of them contracted with the plaintiff.

[40] Nor do I agree that the plaintiff is raising new causes of action against the proposed defendant. Rather, the proposed allegations simply reflect what appears to have been what I have termed the casual way in which the defendants have used their corporate identity.

[41] The relief is granted. If the parties cannot agree, I will receive brief written submissions on costs from the plaintiff by February 13, 2015 and the defendant by February 23, 2015.

“Justice H. A. Rady”

Justice H. A. Rady

Date: January 30, 2015