COURT FILE NOS.: 08-CV-362334 and 13-CV-479895
MOTION HEARD: November 4, 2014, November 4 and 18, 2015 and December 16, 2015
SUPERIOR COURT OF JUSTICE – ONTARIO
08-CV-362334
Re: X, Y, their child B, a minor by his Litigation Guardian X and A Plaintiffs
v.
Industrial Alliance Insurance and Financial Services Inc., Claude R. Catellier and LabOne Canada Inc. Defendants
And Between:
13-CV-479895
X, Y, their child B, a minor by his Litigation Guardian X and A Plaintiffs
v.
LabOne Inc., McLean & Kerr LLP, D. Faye Caldwell, John Doe (corporation) and John Doe (law firm) Defendants
BEFORE: Master Thomas Hawkins
APPEARANCES: R. Douglas Elliott and Elena Mamay for moving and responding plaintiffs F (289) 293-0318
Sharon M. Addison for moving and responding defendant LabOne Canada Inc. and proposed defendant LabOne Inc. F (416) 366-4183
No one for other defendants
REASONS FOR DECISION
Nature of Motion
[1] I have several motions before me. The main motion is a motion by the plaintiffs for an order
(a) granting the plaintiffs leave to amend the fresh as amended statement of claim in this action, (action 08-CV-362334) in part by adding LabOne Inc. as a defendant to this action;
(b) consolidating this action with a related action by the same plaintiffs against LabOne Inc., McLean & Kerr LLP, D. Faye Caldwell, John Doe (corporation) and John Doe (law firm) being court file number 13-CV-479895 (the "Related Action"); and
(c) in the alternative to (b), an order that actions 08-CV-362334 and 13-CV-479895 be heard at the same time.
[2] The main motion is opposed by the defendants other than Industrial Alliance Insurance and Financial Services Inc. ("Industrial Alliance") and Claude R. Catellier. Those defendants took no position on this motion. Before argument of this motion was completed, the 2013 Related Action was discontinued as against McLean & Kerr LLP and D. Faye Caldwell.
Background Facts
[3] The plaintiffs X and Y are husband and wife, with X being the wife and Y being the husband. A is their adult daughter and B is their minor son. They sue using pseudonyms rather than their real names because on September 11, 2008 they obtained an order from Janet Wilson J. permitting them to do so. Corbett J. made a similar order in the 2013 Related Action on May 4, 2013.
[4] In 1998 both X and Y applied for life insurance with the defendant Industrial Alliance and provided blood samples for testing. Y was turned down because he was HIV positive. X was turned down because she might become HIV positive. She was not then HIV positive. At that time no one told X and Y their HIV status.
[5] In 2005 X and Y applied to a different underwriter for life insurance. On September 21, 2006 public health officials in Ottawa contacted Y and told him that he was HIV positive as revealed by testing of a blood sample he had provided in connection with his 2005 insurance application. Until September 21, 2006 Y neither knew nor suspected that he was HIV positive.
[6] Y immediately told his wife X that he was HIV positive. X promptly made arrangements to have herself tested for HIV. The test results as disclosed to X showed that she had become HIV positive. The plaintiffs allege that between 1998 and 2006 X became infected with HIV as a result of sexual contact with Y.
[7] In the 2008 action the plaintiffs allege that each of the defendants owed Y an independent duty to advise him in 1998 of his positive HIV test results and that each of the defendants had a similar duty to warn X in 1998 that she was at risk of acquiring HIV from Y.
[8] If the plaintiffs' motion for leave to amend the fresh as amended statement of claim in the 2008 action and to add LabOne Inc. as a defendant is granted, the plaintiffs intend to allege that LabOne Inc. also had a duty to advise Y in 1998 of his positive HIV test results and to warn X in 1998 that she was at risk of acquiring HIV from Y.
[9] I shall first deal with the plaintiffs' motion for leave to amend the fresh as amended statement of claim. Motions for leave to amend a pleading are governed by rule 26.01. This rule provides as follows.
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.
[10] Rule 26.01 contains a reverse onus in favour of granting leave to amend. Leave to amend is to be granted unless the result would be prejudice to the responding party which cannot be compensated for by costs or an adjournment.
[11] Because the proposed amendments to the fresh as amended statement of claim involve the addition of a new party to this action, namely the proposed defendant LabOne Inc., subrule 5.04(2) is relevant. This subrule provides as follows.
At any stage of a proceeding the court may by order add, delete or substitute a party or correct he 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.
[12] The proposed defendant LabOne Inc. opposes the motion to amend and add it as a defendant to this action because it submits that the proposed claim against it had already become statute barred by the time the plaintiffs' motion record for leave to amend was served in March 2013.
[13] The plaintiffs dispute this. They take the position that because of the operation of the discoverability doctrine, the running of the limitation period as regards claims against LabOne Inc. was postponed such that it did not expire before corrective steps were taken.
[14] If it is clear on the evidence before me that the proposed claim against LabOne Inc. was statute barred when the plaintiffs' motion record for leave to amend was served in March 2013, the proposed claim against LabOne Inc. is an untenable plea. Leave to amend to raise an untenable plea should not be granted.
[15] The Limitations Act, 2002, S.O. 2002 c.24 Sched. B (the "Limitations Act") governs this action. Subsection 21(1) of the Limitations Act is another bar to the motion to add LabOne Inc. if it is clear that the proposed claim against LabOne Inc. was statute barred in March 2013.
[16] Subsection 21(1) of the Limitations Act provides as follows.
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.
[17] The main provisions of the Limitations Act relevant to this motion are sections 4 and 5.
[18] Section 4 of the Limitations Act sets out the two year limitation period applicable to this action. Section 4 provides as follows.
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.
[19] Section 5 of the Limitations Act sets out the principles governing the discoverability doctrine. Section 5 provides as follows.
(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
(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 in proved.
[20] Some of the main issues on this motion are the following.
[21] When did X and Y first know that they had a claim against LabOne Inc. for failure to warn them in 1998 of their test results as regards their HIV status? Did they or did they not first know this less than two years before March 2013?
[22] If X and Y did not actually know this until less than two years before March 2013, ought they to have known this more than two years before March 2013?
[23] On March 21, 2013 Carolyn Figliano, an articling student in the offices of the plaintiffs' lawyers, swore an affidavit in support of this motion. In her affidavit Ms. Figliano states in part as follows, with reference to a letter which defence counsel Ms. Addison sent to the plaintiff's law firm.
On May 12, 2011, counsel for LabOne Canada Inc. sent a letter to Mr. Elliott stating counsel's understanding that some unnamed third-party collected samples and forwarded the samples directly to the United States entity LabOne, Inc.:
LabOne Canada Inc. is not a laboratory testing facility. It is a sales office for LabOne Inc., which provides laboratory testing services to insurance companies for use in their policy underwriting process. In this particular situation, it is our understanding that a third-party collected the samples and forwarded the samples directly to LabOne Inc. Lastly, LabOne Canada Inc. did not report the results of HIV testing in this matter to Industrial Alliance Insurance and Financial Services Inc….
We are also advised that at no time did LabOne Canada Inc. have in its possession any specimens from your client or any results of the HIV testing.
If you have any facts or documents that would suggest otherwise, we suggest that we address it sooner rather than later so that, if possible, unnecessary costs can be avoided.
[24] Ms. Addison's letter did not state what laboratory actually did conduct tests on the samples taken from X and Y in 1998. This was clarified on October 30, 2014 when Serdal Mikael Citak (one of the lawyers for LabOne Inc. and LabOne Canada Inc.) was cross-examined on an affidavit which he swore in response to this motion. On October 30, 2014 Mr. Citak stated that the testing of the samples taken from X and Y was done by LabOne Inc. in Lenexa, Kansas, one of the United States of America.
[25] Elsewhere in the same affidavit Mr. Citak stated.
"The facts relating to LabOne's involvement with the testing of the samples were known or ought to have been known by the plaintiffs in or about March of 2009."
[26] When Mr. Citak was cross-examined on this statement, the following exchange took place.
So my question to you is what facts were known or ought to have been known to the plaintiffs in March of 2009, and are you saying that it's just the Statement of Defence is all they knew or ought to have known in March of 2009?
A. I think that's a fair statement, yes.
MS. ADDISON: I think it goes to what they ought to have known, because that's going to be legal argument, but certainly what information had been provided to them at that time is in the Statement of Defence.
[27] The statement of defence of LabOne Canada Inc. was delivered in March 2009. This statement of defence disclosed that LabOne Canada Inc. is a subsidiary of LabOne Inc. It alleges that in 1998 LabOne Canada Inc. did not do any testing of blood and urine samples and did not own or operate a laboratory testing facility. Further, the statement of defence of LabOne Canada Inc. alleges that it has no knowledge of the application made by X and Y to Industrial Alliance for life insurance and that it denies that it tested blood and urine samples of X and Y. However that statement of defence does not disclose who did conduct tests on bodily fluids taken from X and Y in 1998.
[28] I now turn to the subject of what X and Y knew from time to time about who tested their bodily fluid samples in 1998 in connection with their 1998 life insurance applications (one for X and one for Y) to Industrial Alliance.
[29] In late 1998 and early 1999 Industrial Alliance wrote to each of X and Y advising them that their life insurance applications had been turned down. However, Industrial Alliance did not tell them and they did not know why their applications had been turned down. They made inquiries through their insurance broker and learned that they had been turned down for medical reasons. No specific medical condition was indicated.
[30] Y had recently learned that he was diabetic and assumed that this was the reason why he had been turned down. X and Y did not then pursue the matter further.
[31] Industrial Alliance did not tell X or Y and they did not know who had tested their bodily fluid samples in 1998.
[32] I have mentioned that on September 21, 2006 public health officials in Ottawa contacted Y. They told him about the results of tests conducted on the bodily fluid samples which he had provided in connection with his 2005 life insurance application. Those test results showed that Y was HIV positive.
[33] Again, as I have previously mentioned, X then promptly had herself tested for HIV and learned that she had become HIV positive.
[34] Upon learning of these HIV positive test results in 2006, X and Y decided to contact Industrial Alliance to see if their HIV status was the reason why their 1998 life insurance applications had been turned down.
[35] On November 9 and December 5, 2006 at the request of X and Y, Industrial Alliance sent their family physician documents on their 1998 bodily fluid test results. These test result documents showed that in 1998 Y (but not X) was HIV positive.
[36] Both these sets of test result documents were captioned "LabOne Canada Inc." and gave a Markham, Ontario mailing address for LabOne Canada Inc. This led X and Y to believe that it was LabOne Canada Inc. which had tested their bodily fluid samples in 1998. They then had no information to the contrary.
[37] This lack of information about any testing by LabOne Inc. is reinforced by an affidavit which Y swore on May 4, 2015 in support of this motion. In that affidavit Y swears that he first learned of the potential involvement of LabOne Inc. in testing when plaintiffs' counsel received a May 12, 2011 letter from defence counsel Ms. Addison. I recognize that this affidavit does not state when X first learned of the potential involvement of LabOne Inc. in testing. That said, it is inconceivable to me in the circumstances underlying this motion, that X would have sooner learned of the potential involvement of LabOne Inc. in testing and not have immediately told Y.
[38] I deal with the May 12, 2011 Addison letter below beginning at paragraph [61].
[39] The next development in the subject of what X and Y knew from time to time about who had conducted their 1998 bodily fluid sample tests came in early March 2009. At that time LabOne Canada Inc. delivered its statement of defence in this action.
[40] In paragraph 20 of the statement of claim the plaintiffs allege that Industrial Alliance contracted with LabOne Canada Inc. to have blood and urine samples from X and Y tested for various medical conditions and indicators of overall health.
[41] Paragraph one of the statement of defence of LabOne Canada Inc. denies paragraph 20 of the statement of claim, along with 15 other paragraphs of that pleading.
[42] In paragraph five of its defence LabOne Canada Inc. denies that it tested urine and blood samples from X and Y.
[43] In paragraph seven of its defence LabOne Canada Inc. alleges that in 1998 it did not own or operate a laboratory testing facility and did not collect or test urine or blood samples.
[44] In paragraph 13 of the statement of claim the plaintiffs allege that LabOne Canada Inc. is a subsidiary of LabOne Inc. In paragraph three of defence LabOne Canada Inc. alleges that it is a subsidiary of LabOne Inc.
[45] In paragraph three of its defence Industrial Alliance admits that in or about 1998 X and Y applied to it for life insurance. Industrial Alliance further alleges that in the course of the application process, X and Y provided blood samples to it. However Industrial Alliance does not allege what happened to those samples or who tested them.
[46] No one suggests that any other pleading delivered in this action alerted or should have alerted X and Y to the fact that it was LabOne Inc. who tested their 1998 blood and urine samples.
[47] There is no issue between the parties to this motion as to whether or not the 1998 blood and urine samples taken from X and Y were tested. Everyone agrees that those samples were tested. The issue is when X and Y first knew or ought to have known that it was LabOne Inc. that did the testing.
[48] The position taken by LabOne Canada Inc. and LabOne Inc. is that X and Y knew or ought to have known in March of 2009 when LabOne Canada Inc. delivered its statement of defence that it was LabOne Inc. that did the sample testing.
[49] When Mr. Citak was cross-examined on October 30, 2014 he conceded that what was in this LabOne Canada Inc. statement of defence was all that the plaintiffs knew or ought to have known.
[50] As Mr. Elliott points out, that statement of defence alleges that LabOne Canada Inc. did not test samples from X and Y in 1998 but it does not allege who did the testing. Mr. Elliott submits that because this statement of defence does not allege who did do the 1998 tests on the bodily fluid samples taken from X and Y, that statement of defence does not comply with subrule 25.07(2). I agree.
[51] Subrule 25.07(2) provides as follows.
Where a party intends to prove a version of the facts different from that pleaded by the opposite party, a denial of the version so pleaded is not sufficient, but the party shall plead the party's own version of the facts in the defence.
[52] In my view, in order to comply with subrule 25.07(2), having denied the plaintiffs' allegation that Industrial Alliance contracted with LabOne Canada Inc. to have the blood and urine samples from X and Y tested, LabOne Canada Inc. should have gone on to allege its own version of the facts, namely that it was LabOne Inc. that did the 1998 testing. LabOne Canada Inc. did not so plead.
[53] In assessing what X and Y knew or ought to have known from time to time about who tested their 1998 bodily fluid samples, one must not lose sight of the following facts.
[54] Throughout the period from late 2006 onward, X and Y had 1998 test result documents. Industrial Alliance sent these documents to X and Y. These test result documents were captioned "LabOne Canada Inc." with a Markham, Ontario address. These were the only documents which X and Y had in their possession indicating who had tested their samples before they commenced this action.
[55] These facts led X and Y to believe that it was LabOne Canada Inc. who conducted the 1998 tests on their bodily fluid samples. They had no documents from LabOne Inc. stating that it was LabOne Inc. which did the 1998 sample testing.
[56] This leads me to three conclusions.
[57] My first conclusion is that in the circumstances set out in paragraphs [48] to [55], it was reasonable for X and Y to infer, as they did, that it was LabOne Canada Inc. which tested their 1998 bodily fluid samples.
[58] My second conclusion is based in part upon the reasonableness of the above inference which X and Y drew as to who tested their 1998 bodily fluid samples and in part upon the wording of the March 2009 statement of defence of LabOne Canada Inc. That statement of defence did not comply with subrule 25.07(2). The LabOne Canada Inc. statement of defence denies that LabOne Canada Inc. tested the 1998 bodily fluid samples taken from X and Y but fails to go on and allege its own version of the facts, namely that it was LabOne Inc. which did the testing.
[59] That leads to my third conclusion. In the circumstances which have led me to make my first two conclusions, I conclude that the delivery of the LabOne Canada Inc. statement of defence in early March 2009 was not an event which led or ought to have led X and Y to "discover" that they had a claim against LabOne Inc. within the meaning of sections 4 and 5 of the Limitations Act. That being so, the two year limitation period under section 4 of the Limitations Act did not begin to run in March 2009 as regards the proposed claim by X and Y against LabOne Inc.
[60] The next event relevant to the issue of when X and Y first discovered or ought to have discovered, that they had a claim against LabOne Inc. because it was LabOne Inc. that tested their 1998 bodily fluid samples and failed to report the test results to them directly or indirectly, occurred when Mr. Elliott received Ms. Addison's May 12, 2011 letter. The relevant contents of that letter are set out in paragraph [23] above.
[61] The May 12, 2011 letter discloses that LabOne Inc. had some involvement with the 1998 samples taken from X and Y but does not actually state that LabOne Inc. tested those samples. Nevertheless that letter, perhaps combined with other more recent events pointing to the involvement of LabOne Inc. as the laboratory where the 1998 samples from X and Y were tested prompted the plaintiffs' lawyers to take the following steps to prevent the expiry of the limitation period for the plaintiffs' proposed claims against LabOne Inc.
[62] First, the plaintiffs brought the present motion for leave to amend the statement of claim and add LabOne Inc. as a defendant to this action. This motion was initially returnable on April 4, 2013. I do not have the affidavit of service of the motion record for this motion but it must have been served before that motion record was filed on March 22, 2013. Service of this motion record crystallises the rights of the parties for limitation of action purposes as of the date of service unless the motion is later abandoned before it is decided. This motion was not later abandoned.
[63] Secondly, on May 10, 2013 the same plaintiffs commenced the Related Action against LabOne Inc. and others arising in part from the same events as those which gave rise to this action amended as proposed, but alleging that LabOne Inc. tested the 1998 samples taken from X and Y.
[64] The commencement of this Related Action had the effect of stopping as of May 10, 2013 the running of the limitation period for the plaintiffs' claims against LabOne Inc. as set out in the Related Action.
[65] Assuming that with Mr. Elliott's receipt of Ms. Addison's May 12, 2011 letter, the plaintiffs are taken to have "discovered" that they had their proposed claim against LabOne Inc., the plaintiffs took the two steps I have described in paragraphs [62] and [63] less than two years later.
[66] I therefore conclude that the proposed claims against LabOne Inc. are not statute barred. That being so, I grant the plaintiffs leave to add LabOne Inc. as a defendant to this action. However because the subject of when the limitation period applicable to the plaintiffs' proposed claims against LabOne Inc. is not utterly free from doubt, I grant LabOne Inc. leave to raise a limitation of action defence to be decided on a motion for summary judgment or at trial on a fuller record than the one before me.
[67] The LabOne defendants also attacked some of the allegations in the proposed amended statement of claim and in the draft consolidated statement of claim (should these actions be consolidated) as not complying with the rules of pleading. I shall deal with those subjects as well as with the costs of the main motion before me in a separate set of reasons for decision.
(Original Signed)
Date: February 10, 2016 Master Thomas Hawkins