Tate v. Bishop 2015 ONSC 742
COURT FILE NO.: CV-14-463592
MOTION HEARD: 20150128
REASONS RELEASED: 20150202
SUPERIOR COURT OF JUSTICE – ONTARIO
RE:
SOPHIA TATE
Plaintiff
- and-
DAWN DEBORAH BISHOP, DAVID MACEACHERN,
AND RBC INSURANCE COMPANY OF CANADA
Defendants
BEFORE: MASTER D. E. SHORT
COUNSEL: Adrian Lomaga adrian@suenow.ca
for Plaintiff (moving party) Fax: 416-883-9832
Sloane Bernard Fax: 416- 599-7439
for the Defendants,
Dawn Deborah Bishop
and David Maceachern
HEARD: January 28, 2015
Reasons for Decision
Preamble
[1] Rule 1.04(1) of Ontario's Rules of Civil Procedure, establishes the general principle that the rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
[2] This case demonstrates the possibilities available to counsel to expeditiously get an action on for trial. However, it also requires a consideration of the appropriate manner of dealing with a case which reaches the trial stage much faster than the majority of other serious personal injury cases normally take to reach a courtroom door in Toronto.
I. Motion
[3] The plaintiff moves for an order granting leave to amend the statement of claim to increase the prayer for relief quantum from $950,000 to 2 million dollars.
[4] The first hurdle faced by the plaintiff is that the action was previously set down for trial by her and this motion is being opposed by the defendants.
[5] The underlying difficulty to be considered in this case is that the amount originally sought was within the liability insurance coverage held by the individual defendants. Is the expansion of a claim beyond the available insurance coverage sufficient prejudice to justify denying the requested amendment?
[6] Originally the plaintiff’s own insurer, RBC Insurance was joined as a defendant until it was established that the face values of both parties’ policies were the same, such that there could be no “under insured” coverage issues in this case.
II. Progress of the Action
[7] On March 1, 2012, Ms. Tate’s vehicle was involved in a serious motor vehicle accident which resulted in her car being written off. In September 2012 a statement of claim was issued the responding the statement of defence, dated October 31, 2012, was promptly delivered.
[8] Examinations for discovery have been held, undertakings addressed, defence medicals held and reports filed. The plaintiff passed the Trial Record. Just over a year ago in early January of 2014.
[9] Just two years after the accident, a mediation took place in March of 2014, which failed to result in a settlement.
[10] The trial date was scheduled by Justice Himel at a Trial Scheduling Court held on April 28, 2014. As the trial is estimated to take ten days or less, at that point the Court was able to offer virtually any week in 2015 for the commencement of the trial of the action.
[11] A judicial pretrial is presently scheduled for later this month and the trial is scheduled to commence on June 8, 2015, less than three years after the action was commenced.
[12] This motion was booked on October 20, 2014 and argued on January 28, 2015.
III. Overview
[13] The plaintiff asserts that when her counsel received the defence medical reports relating to this case, it became apparent that there was a real possibility the plaintiff might be unable to resume normal employment for a very extended period.
[14] As a consequence, shortly after the matter was set down for trial, plaintiff’s counsel wrote to counsel opposite with respect to a medical report that indicated his client “is unemployable” and pointed out that the claim “has a potential of exceeding the $1 million policy limits ‘
[15] The email concluded, “Please let me know ASAP whether your client is prepared to proceed to mediation next month, or if you feel you will need to obtain responding reports.” On March 6, 2014, a further email was sent requesting that the defendant’s insurer, “invest the full policy limits so that any accrued interest may be accessed by my client to satisfy a judgment.” That email continued:
“I intend to amend the statement of claim to increase the prayer for relief from $950,000 to $3,000,000. Please advise by March 20 whether your client will consent to this amendment, or whether a motion will be necessary.”
[16] As noted above, and notwithstanding this e-mail exchange the mediation proceeded as scheduled in March 2014.
[17] In my view, the defence was clearly alerted, some 10 months ago, to the probability of a motion being brought for relief in the nature now sought before me.
[18] The previous lawyer with carriage of the defence of this action wrote to plaintiff’s counsel on October 7, 2014, to indicate he understood that the plaintiff was to bring a motion to increase the prayer for relief. His letter went on to indicate “having served a trial record, you are precluded from bringing this motion, and we will be seeking our costs of this unnecessary attendance.”
[19] Upon receipt of that letter counsel responded:
I have already filed my motion requisition form and have drafted my notice of motion. That will be served once the date is confirmed. I urge you to review the case law, before I begin preparing my motion record and factum. This sort of motion can be quite time-consuming and costly for the defeated party.”[my emphasis]
[20] At that time counsel for the Plaintiff also set out a condensed version of his argument on this motion:
“The legal test required your clients to prove that they would suffer prejudice which cannot be compensated for by way of costs or an adjournment. If no such prejudice exists, then the court has no discretion but to allow the amendment. I do not see any prejudice which your clients would face. If I am mistaken, please advise
[21] Clearly no agreement was reached between counsel and the motion had to proceed.
IV. Applicable Law
[22] Rule 26.01 of the Rules of Civil Procedure sets out the relevant test:
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. [my emphasis]
[23] I accept that relief is available at any stage even if an action has been set down by a plaintiff. In Hill v. Church of Scientology, 1992 7516 the court gave effect to the mandatory relief allowed for in Rule 26.01. In that case, the plaintiff originally sought $400,000 for general damages and $400,000 in aggravated damages. After a jury returned a verdict for $300,000 in general damages, $500,000 in aggravated damages, and a further $800,000 in punitive damages, the trial judge allowed the plaintiff to amend the statement of claim so that it conformed to the jury's verdict.
Similarly, in Vladetic v. Silvestri, [1990] O.J. No. 642 (ON SC) at paras. 13-14, the court allowed the plaintiff to amend the prayer for relief even after the action had been set down for trial. Justice Philp relied on the principles of law outlined in 370866 Ontario Ltd. v. Chizy, 1987 4122; 57 O.R.(2d) 587; 34 D.L.R. (4th)404 (ONSC) where Justice Barr states that “the onus is upon the party who opposes an application for amendment to show, on a balance of probabilities, that prejudice will result if the amendment is allowed.” [my emphasis]
[24] I conclude from the case law that in relying upon prejudice, a party is not permitted simply to make vague suggestions about what might or might not have been done if the action had been differently pleaded in the first instance. Prejudice has been interpreted to mean that, “the amendment, if allowed, would alter the case to be met and that costs or an adjournment would not permit the defendant the opportunity or ability to fairly meet it.” Here the same case is to be met on liability; it is only an increase in the quantum of damages being sought, in the event liability is established.
[25] Counsel for the defendant argues that if the Plaintiff is permitted to more than double her claim with the trial scheduled to begin in less than 5 months, it would be unjust and highly prejudicial to the Defendants.
[26] It is asserted that for more than two years, “the Defendants did not require excess counsel, as the Plaintiff's damages as alleged in her Statement of Claim, fell within the Defendants' policy limits.” The argued position of the defendants continues:
“The Plaintiff seeks to increase her Prayer for Relief in the amount of more than $2,000,000.00. This will exceed the Defendants' policy limits and expose them personally in excess of $1,000,000.00, which is more than double their policy limits with less than five months before trial.
At a time less than five months before trial, the Defendants are looking to retain excess counsel at their own expense.”
[27] The Plaintiffs rely upon the Court of Appeal’s decision in Family Delicatessen Ltd. v. London (City) (2006), 2006 5135 (ON CA), 145 A.C.W.S. (3d) 1006, [2006] O.J. No. 669 in support of the proposition that while delay is not in and of itself a basis for refusing an amendment, where the delay is so long and the justification for the said delay so inadequate, some prejudice to the Defendants will be presumed.
[28] In Ontario Securities Commission v. MacLachlan, [2009] O.J. No. 1993 in considering the decision in Family Delicatessen Ltd., the Divisional Court noted that the above principle was not limited to cases where the Plaintiff seeks amendments after an expired limitation period.
[29] There ,the Motion Judge in the court below [at 2008 O.J. No. 5279], stated that the moving party is required to lead evidence to support not only the proposed amendments, but evidence to support their claim that they were otherwise unable to make this motion until the time it was brought.
[30] There is a need for an explanation of the delay in seeking the amendments and the presence or absence of prejudice to the opposite party and the need to show a nexus between the proposed amendments and the facts or evidence said to be recently discovered.
[31] Relying upon Robinson v. Robinson (1989), 1989 4165 (ON SC), 70 O.R. (2d) 249 and Pace v. DelZotto, [1996] O.J. No. 143 Plaintiffs’ counsel submits that in some cases “amendments should not be allowed that are late and substantially alter the case to be met.
[32] However I am not satisfied that this is such a case. The case to be met is unchanged. Only the damages claimed are sought to be increased and within a reasonable period in the circumstances.
V. Analysis
[33] I find the 1987 reasons in Chizy to be particularly helpful. This was a case where after the opening of trial, plaintiff’s counsel moved to amend the prayer for relief by increasing the claim for damages from $10,000-$100,000. This was over seven a half years after delivery of the statement of claim and over two years after setting down for trial. Nevertheless, information upon which the plaintiff intended to rely a trial, to justify its damages was all furnished to the defendant, prior to trial. In his judgment, Justice Barr (who previously was a respected trial counsel) observes:
Defence counsel argues prejudice. He urges that the defendant has been lulled into a false sense of security. He says that if faced with the larger claim initially, the defendant might have preferred to pay $10,000 or might have decided to sue the realtor. While these steps are possible, they are improbable. The defendant has had seven and a half years since the delivery of the statement of claim to pay the $10,000 claimed there and has had ample time also to take any action against the realtor. In my view, the onus is upon a party who opposes an application for amendment to show, on a balance of probabilities, that prejudice will result if the amendment is allowed-It is certainly not enough to make vague suggestions about what might or might not have been done if the action had been differently pleaded in the first instance. A lawsuit should be-neither an obstacle course nor a trap where the technicalities of pleading may be used to inhibit or prevent a trial of the action on its merits. Indeed, one may question whether, in light of today's wide discovery procedures which disclose the factual basis of an action or a defence, pleadings are necessary at all. If this idea seems startling, untraditional, or irreverent in failing to perpetuate the tens of thousands of hours heretofore spent by solicitors, counsel, masters and judges in the examination of pleadings, I point out that some of the most complex trials a judge will ever undertake are criminal trials for which the pleadings are usually limited to the indictment and plea. Similarly, civil disputes of a highly technical nature involving large amounts of money have been routinely determined for many years by arbitrators and administrative tribunals without pleadings.
However, so long as we continue to have pleadings we will have motions to amend, motions to strike out and argument as to whether or not the evidence tendered is admissible under the pleadings.
In the instant case, the rule is clear that amendments will be permitted unless prejudice would result that could not be compensated for.
[34] Justice Barr found no such prejudice had been shown, but did award the costs of the motion to the resisting defendant (fixed at $350)
[35] In endeavouring to establish prejudice the Defendant’s factum submits:
“25. In Phillips v. Bongard Leslie & Co. Ltd., Justice Eberle, refused an amendment because it had the effect of doubling the claims and "substantially altering" the case to be met by the Defendants.”
[36] This was a 1985 decision again at trial. In my view that decision would be clearly distinguishable from the present case. There, the amendment related to a claim for prejudgment interest, for which there was no claim for any interest in the original statement of claim. The action related to the valuation of shares that had been misappropriated in 1973. Justice Eberle held that the shares involved in the case, which was heard some 12 years later, ought to be valued as of the closing price at a particular point in time in 1973.
[37] Specifically Justice Eberle held:
Finally, there is the question of pre-judgment interest. It was not claimed in the statement of claim. During the course of reply argument, the plaintiff sought an amendment to claim it. Normally such an amendment is granted but in this case I think it should not be. The reason is that it would far overbalance the amount of the claim if one were to add to it pre-judgment interest for the approximately eight and one-half years since November 1977 and even more so if pre-judgment interest, presumably at a lower rate, were awarded for the period prior to that date. Such interest would approximate a doubling of the claim and would substantially alter the case to be met by the defendants. I think it is too late to make the amendment. Accordingly, the judgment amount will not bear any pre-judgment interest.
[38] However it is not necessary to distinguish this case. In preparing these reasons, I had occasion to search for the above extract online in order to insert the above quotation. To my disappointment, I discovered that Justice Eberle was appealed to the Court of Appeal. In that court’s decision, which I found at [1986] O.J. No. 382; 15 C.P.C. (2d); Justices Morden, Robins and Tarnopolsky dismissed the defendants appeal BUT allowed the cross appeal on the question of interest.
[39] In the circumstances of this motion, I think it is helpful to set out the entire endorsement of Justice Morden , which reads:
MORDEN J.A.:— The appellant submits that the respondent by reasonable diligence should have discovered the conversion of the shares shortly after Mrs. Fyffe's death in March of 1969. The application of the reasonable diligence standard involved the interpretation of the evidence on a whole and we are not persuaded, in the particular circumstances of this case, that the trial judge erred in his interpretation or in the application of this standard to the facts as he found them. Appeal dismissed with costs.
Cross-appeal
The respondent opposes the cross-appeal respecting prejudgment interest on the ground that we should not interfere with the exercise of the trial judge's discretion in refusing it. However, the plaintiff was prima facie entitled to prejudgment interest and we do not think that the reason given for refusing it, that it would substantially increase the amount of the claim, was a valid consideration. We do not see how the addition of prejudgment interest altered the case to be met. Accordingly we think that the trial judge erred.
The cross-appeal is allowed without costs, and the judgment is varied to include an amount for prejudgment interest at 12 1/2% per annum from the date of service of the writ on the defendant Bongard Leslie. [my emphasis]
[40] The question in my mind when I approached looking from the perspective of defendants that have originally been sued for an amount within the insurance coverage which those defendants had chosen to purchase. Are they somehow prejudiced when the amount of the claim is increased to an amount beyond the purchased coverage? It seems to me that in other situations, the defendant may not have any insurance at all. In that situation. The defendant has personal liability for the full amount of damages awarded.
[41] Our system does not permit a plaintiff to refer to the existence of insurance cover in the presence of the jury. It would seem disingenuous to allow a defendant to rely on a lack of insurance cover as a justification for not permitting a claim the full amount of a plaintiff’s damages to be advanced, and, if proven, to be awarded.
[42] In Hall v. Hogarth, [2000] O.J. No. 778, my former colleague Master Polika allowed a plaintiff to increase the prayer for relief from $6,959,000 to $12,750,000, even though the defendants' insurance policy limits were $7,000,000. The potential for personal exposure of the part of those defendants was not considered prejudicial
[43] In the result, I am satisfied that there is no prejudice to the defendants that cannot be compensated in costs.
[44] In the circumstances I am satisfied that the defendants have not met the onus of demonstrating sufficient prejudice to justify my refusing the amendment sought.
VII. Proportionality
[45] However, I continue to seek to apply proportionality in cases such as this, and in particular and reflecting on Lord Woolf’s hallmark of proportionality, with respect to “equality of arms”.
[46] Here, after trial, the defendants may be found liable for an amount in excess of the insurance coverage. In that event, they clearly it will have to be responsible for the fees and costs of “excess counsel” if they choose to retain separate counsel for any portion of this litigation.
[47] Conversely, it may well be that the plaintiff will ultimately prove less than the original amount claimed. In that event the entire liability would have been within the insurance cover and the involvement of “excess counsel” will have been unnecessary.
[48] I determined that it would be an appropriate balancing mechanism to require, (subject to the trial judge making any alternate disposition), to require that in the event the plaintiff to indemnify the defendants for their additional costs in the event the plaintiff fails to obtain judgment for an amount in excess of the available insurance coverage. In that event, the plaintiff will be responsible for paying, on a substantial indemnity basis, the legal fees incurred from this point forward by the individual defendants with respect to retaining counsel to advise them, and to act on their behalf (if so advised) in the trial of this matter.
VIII. Disposition
[49] In the result an order will go permitting the amendments sought by the plaintiff on the condition set out above, with respect to potential costs in the event damages in excess of $1 million are not proven.
[50] In their materials the Defendants requested an order in the event they were unsuccessful, directing that that the trial ought to be adjourned in order to “allow the Defendants time to take all necessary and appropriate steps in the circumstances.”
[51] As this matter is already scheduled for trial. It is my view that a master ought not to interfere with that schedule and that any such adjournment request needs to be brought promptly before a scheduling Judge.
[52] My usual approach in cases such as this, where leave is sought and in effect an indulgence granted, is to either require the plaintiff to pay costs to the defendant or to make no order as to costs.
[53] In this case both parties submitted cost outlines. The partial indemnity amount sought by defendants’ counsel was just over $2600. Plaintiff’s counsel sought partial indemnity costs inclusive of disbursements and HST totalling $4225.75.However, the amount sought for the partial indemnity was only $170 per hour, notwithstanding his actual rate of $350.
[54] I am satisfied that the plaintiff would have had to bring the motion in any event for leave and that costs with respect to the setting down of the motion would have been incurred in any event, and would not normally be for the account of the defendants. However here the motion could have gone on consent on an in writing basis. As well, the position of the defence seems to have at least in part been predicated on a theory that was, in my view, correctly refuted prior to the motion being launched and argued, in part, relying upon an overturned decision.
[55] In all the circumstances I am satisfied that costs should be awarded to the plaintiff for this motion, fixed at $3000 plus HST, payable in 30 days.
Released: February 2 2015
Master D. E. Short
DS/ R. 86