SUPERIOR COURT OF JUSTICE - ONTARIO
RE: JAMIE HOWELL – and – AHILESWARY JATHEESKUMAR and MILAN AUTO INC.
BEFORE: Justice LeMay
COUNSEL: Y. Jabbour for the Plaintiff
No one appearing on behalf of the Defendant
ENDORSEMENT
1This motion arises from a motor vehicle accident that took place in Scarborough on or about August 27th, 2012. The Plaintiff is bringing a motion seeking to add TD General Insurance Company as a Defendant to this action. In addition, the Plaintiff has yet to serve the statement of claim on the Defendant, Milan Auto, and seeks a motion extending the time for service of the Statement of Claim as well as an order for Substituted service.
2For the reasons that follow, the Plaintiff’s motion to add TD General Insurance Company as a party is granted on conditions. The motion to extend the time for serving the Statement of Claim on Milan Auto is denied, as is the Order for substituted service.
The Facts
3The Plaintiff was involved in a motor vehicle collision with the Defendant on or about August 27th, 2012. It is alleged that the Plaintiff has suffered severe and permanent injuries as a result of this collision. The accident report discloses that the vehicle was owned by Milan Auto, and that Arch Insurance was the insurer of the vehicle.
4The Statement of Claim in this matter was issued against Ms. Jatheeskumar and Milan Auto Inc. on August 22nd, 2014, within the time limits under the Limitations Act. I will review the facts relating to each party separately.
a) Arch Insurance
5On April 19th, 2013, approximately seven and a half months after the accident, the Plaintiff’s lawyers sent what they describe as “a third party notice letter” to Arch Insurance. It simply advises that a claim may be coming.
6The next contact that the Plaintiff’s counsel has with Arch Insurance is more than two years later when, on August 19th, 2015, a follow up letter was sent to Arch Insurance. A copy of that letter was not disclosed on the motion. The circumstances in which that follow up letter came to my attention are described below.
7The next day, there was a conversation between a representative of Arch Insurance and a student-at-law in the Plaintiff’s counsel’s office spoke. The representative of Arch Insurance advised that this was not their insurance policy, and that the Defendant Milan Auto was not their insured.
8On January 21, 2016, approximately five months after finding out that Arch was not Milan Auto’s insurance company, Plaintiff’s counsel served the Plaintiff’s own automobile insurer, TD General Insurance Company, with this motion by sending a copy by regular letter mail to an address in Burlington, Ontario.
b) Milan Auto
9The Plaintiff made an attempt to serve Ms. Jatheeskumar on August 26th, 2014, and Milan Auto on August 27th, 2014. On both occasions, the process server was told that the Defendants had moved at least two years prior to service.
10No further steps were taken to find and serve either Defendant until after the time period for serving the Statement of Claim under Rule 14.08 had expired. This time period expired on February 22nd, 2015.
11On April 21st, 2015, the Plaintiff’s counsel conducted a residence search for the Defendant Jatheeskumar. Based on that address search, the Plaintiff was able to serve the Defendant Jatheeskumar on the first attempt, which took place approximately a month later, on May 21st, 2015. The Plaintiff has not, however, asked the Court to extend the time for serving the Statement of Claim on the Defendant Jatheeskumar, so I make no further comment about whether such relief should be granted.
12On June 9th, 2015, a legal assistant in the office of Plaintiff’s counsel conducted a corporate address search for Milan Auto Inc., and determined that they were located at 4932 Sheppard Avenue East. Efforts to actually serve Milan Auto were not made until late August of 2015. On two occasions (August 20th and 25th, 2015) a process server attended at the address for Milan Auto. No one with authority to accept the Statement of Claim was present on either occasion.
13Then, on September 2nd, 2015, the process server again attempted to serve Milan Auto. On that occasion, the process server called the owner of the company and left him a voice mail message. A return phone call was made by the owner to the process server later the same day. The owner advised the process server that he would be away for one week, and then became belligerent, swore and hung up the telephone. No further efforts were made to serve Milan Auto.
14Approximately four and a half months later, on January 21st, 2016, this motion record was served on Milan Auto at the address where service had been attempted in September of 2015. No efforts were taken to update the corporate records search or confirm whether Milan Auto was still at the Sheppard Avenue East address. In addition, no efforts were taken to send any documents to Milan Auto in a form where proof of delivery could be provided to the Court. I will return to this issue below.
The Proceedings Before Me
a) The Need for a Re-attendance
15These motions were originally returnable on February 5th, 2016. At that time, a student-at-law from the Plaintiff’s law firm, Kalsi and Associates, attended before me to argue the motion. She argued the motion admirably. However, I reserved my decision as I was concerned about the significant delays in this case and the dilatory manner in which the Plaintiff had been prosecuting this action.
16On reflection, it was clear to me that I should not hear and decide this matter on the basis of the submissions of a student-at-law, regardless of how well she argued the case. It was, in my view, possible that this motion would result in a final determination of the Plaintiff’s rights. As a result, pursuant to the Law Society of Upper Canada’s document entitled “Rights of Appearance for Lawyer Licensing Candidates”, this motion required the attendance of counsel.
17I was not given any cases to support the Plaintiff’s position on this motion either in advance of the original hearing, or at the original hearing. In the time period between the first and second appearances I conducted some case-law research on the issues raised by the motion. On February 9th, 2016, I issued an endorsement directing that a lawyer from Kalsi and Associates (and not Mr. Savoie, who had sworn the Affidavit) appear before me to provide submissions on the matter. I provided a list of cases that I had reviewed that I thought might be relevant, and invited counsel to both review those cases and provide their own.
18The matter was then re-argued on February 12th, 2016. At that time, Mr. Jabbour appeared on behalf of the Plaintiff. He provided me with Schmitz v. Lombard General Insurance Company of Canada (2014 ONCA 88, leave to appeal refused by the Supreme Court of Canada, August 14th, 2014 (Docket No. 35816)) as well as Collins v. Cortez(2014 ONCA 685). I have considered these cases as well as the ones listed in my endorsement of February 9th, 2016. I have also had reference to a couple of additional cases that support the Plaintiff’s position in making my decision.
19In the course of argument, I asked Mr. Jabbour to advise me whether the Affidavit filed on this motion detailed every step that had been taken by his firm to pursue this matter. After taking a break to consult with others, Mr. Jabbour advised me that there was one additional step that was taken, which was that Arch Insurance received an additional letter from Plaintiffs’ counsel dated August 19th, 2015. Although that letter was not part of the record before me, I accept that it was sent and will consider it as having been sent in disposing of this motion.
20In addition, during argument I asked Mr. Jabbour whether his process server had advised Milan Auto about the nature of the claim. His response was to advise me that the Plaintiff’s process server had no obligation to advise the Defendant of the nature of the claim. I agree with that view. The reason I was asking the question, however, was to determine whether there was any chance that Milan Auto had actually known what claim they were facing. It was clear from Mr. Jabbour’s answers that Milan Auto did not know the nature of the claim they were facing.
b) Concerns With the Materials
21In argument, I raised with both Ms. Athersley (the student-at-law) and Mr. Jabbour, my concerns about the manner in which the Plaintiff’s lawyers have pursued this claim.
22In the materials before me, Mr. Savoie, who is counsel in this matter, swore an Affidavit that stated:
To date, I do verily believe that the Plaintiff has been unable, using all practical and necessary attempts, to effect prompt, personal service of the Statement of Claim upon the Defendant Milan. I believe it has become necessary for the Plaintiff to obtain an Order Extending Time for Service, and permitting Substituted Service of the Statement of Claim upon the Defendant Milon by sending a copy of the Statement of Claim via mail to the address of the corporation at: 4932 Sheppard Avenue East, Scarborough, Ontario M1S 4A7; and to receive such other relief from this Honourable Court that may be necessary to permit the Plaintiff to serve the Defendant Milan with the Statement of Claim in this matter.
As more information became available, Kalsi & Associates, I do verily believe, has moved expeditiously to resolve any irregularities and has worked diligently to amend the pleadings and name the appropriate Defendant, TD General Insurance Company, to this action.
23These statements are, in my view, problematic. As far as I can see, there is no basis to either fact or law to conclude that the Plaintiffs’ counsel has moved promptly or been diligent.
24I start with the request to add TD General Insurance as a defendant to this case. Although Kalsi and Associates put Arch Insurance on notice of this claim in April of 2013, they did nothing to follow up with Arch Insurance for more than two years. Although there are statutory provisions dealing with the notice that was provided to Arch Insurance, it seems to me that counsel that was working diligently to resolve any irregularities would have followed up with Arch Insurance some time before August of 2015. I am also of the view that counsel that was working diligently would have sought to add TD General Insurance promptly after finding out that Arch was not the Defendant’s insurer, rather than waiting nearly six months to bring this motion.
25I now turn to the issues relating to Milan Auto. Even though Plaintiff’s counsel was aware within a week that Milan Auto had moved, they took no steps whatsoever to find the company’s new address for a period of eight months. Rule 14.08(1) states that Statements of Claim must be served within six months of being issued, or they must (absent an order extending service) be re-issued. In other words, Kalsi and Associates let the Statement of Claim expire before they took any steps to try and effect service on any of the Defendants.
26The problem with this dilatoriness is that, if the time for serving the Statement of Claim on Milan Auto is not extended, then the action against them is subject to a Limitations Act claim. Counsel who was proceeding “diligently” would have been cognizant of this issue, and would have taken steps (including seeking the assistance of the Court) during the time when the Statement of Claim could still have been served under Rule 14.08(1) without an extension. I reject unreservedly the claims by the Plaintiff’s counsel that they were working diligently in this case.
27The failure of Plaintiffs’ counsel to proceed with this matter in a timely way is of great concern to the Court. If the test for granting the relief that the Plaintiff is seeking in this case was whether their counsel had moved promptly to take the appropriate and necessary steps, I would have no hesitation in dismissing these motions. Although these concerns are not relevant to my disposition of this motion, I have detailed them because it was clear to me that the lawyers involved did not believe that there was any issue with the way that they had handled the claim.
28The failures of Plaintiff’s counsel are not, however, the test to be applied. The tests to be applied relate to the prejudice that would be suffered by the Defendants. In addition, the Court must ensure that meritorious disputes are resolved on their merits, rather than on preliminary motions or preliminary issues. (See Mader v. Hunter (2004 17834, 183 O.A.C. 294 (C.A.)). As a result, the fact that it is clear that it is the Plaintiff’s lawyers who have been dilatory in pursuing this claim is actually a factor that assists the Plaintiff, as he should not be held responsible for the conduct of his counsel. I now turn to the merits of the two motions.
Adding TD General Insurance
29I am of the view that TD General Insurance should be added as a party to this action.
30The starting point in my analysis is the Insurance Act. As Mr. Jabbour pointed out in argument, there is an obligation under section 258.4 of the Insurance Act for an insurance company to respond promptly to any notice provided to them under section 258.3 of the Insurance Act. It is clear that a notice with relevant information (the insures name and the policy number) was provided to Arch Insurance on April 19th, 2013, and that no response was received from them.
31Under section 258.3, this notice should have been provided by Plaintiff’s counsel by sometime in late December of 2012. It was served late. However, in the first instance it does not seem unreasonable for the Plaintiff’s counsel to have expected a reply from Arch to this notice, and to have waited at least some time before involving the Plaintiff’s insurer in this action. For reasons that I am going to outline below, however, I am not going to resolve the question of how long the Plantiff’s counsel should have waited.
32This brings me to the Court of Appeal’s decision in Joseph v. Paramount Canada’s Wonderland (2008 ONCA 469)/. This decision considers issue of whether new claims (and parties) can be added to a claim after the limitation period expires. The Court specifically addressed the question of whether the doctrine of ‘special circumstances’ continued to exist after the new Limitations Act came into force. More specifically, the Court considered s. 21(1) of the Limitations Act.
33The Court found that the doctrine did not continue to exist, and made some significant observations about the new Limitations Act at paragraphs 21 to 24:
Turning to the interpretation of s. 20 in the context of the common law doctrine of special circumstances, the requirement in s. 20 that the extension must be "by or under another Act" clearly precludes any extension that may be granted at common law as opposed to statute. [page408]
However, the extension need not be provided only "by" an Act but can also be provided "under" an Act. The Rules of Civil Procedure are enacted by the Civil Rules Committee under the authority of s. 66 of the Courts of Justice Act, R.S.O. 1990, c. C.43. Although the Rules are permitted to alter the substantive law in matters relating to practice and procedure, s. 66(3) provides that the Rules may not conflict with an Act.
In accordance with s. 66(3), rules 5.04 and 26.01 must not conflict with the new Act, or with the former Act. These rules apply to the amendment of pleadings and the addition of parties at any stage of proceedings. They do not by their terms apply to extend the statutory limitation periods provided in the new Act, nor could they. But they have been used for that purpose through the application of the common law doctrine of special circumstances.
Because the Rules themselves are authorized to be made by the Courts of Justice Act, they are arguably made "under another Act". However, it is only the interpretation of the Rules by application of the common law that has incorporated the doctrine of special circumstances to extend limitation periods by adding parties or claims after the expiry of a limitation period. The Rules themselves do not do this. In my view, it would be extending the meaning of "under another Act" too far to interpret it as including the application of common law principles used to apply the Rules, even though the Rules themselves are made by regulation "under another Act".
34As my colleague, Bloom J. noted in Pollari v. Famous Players Ltd. (2015 ONSC 5121):
5An examination of what constitutes due diligence in the context under discussion is a critical aspect of the analysis to be made. In Zapfe v. Barnes, 2003 52159 (ON CA), 2003 52159 (ON C.A.) at para. 35 the Ontario Court of Appeal stated, “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.” Absent an explanation setting out unusual circumstances, as Justice Bielby observed in Slack v. Bednar, 2014 ONSC 3672 at paragraph 67, “Doing nothing cannot equate to due diligence.”
35When these cases are read together, it becomes clear that there are three possible outcomes to a motion such as this one. First, the Court could determine that there was insufficient due diligence on the part of the Plaintiff and her counsel, and that there was no other to extend the time limits, thereby defeating any claim that the Plaintiff may have to extend the time limits as a result of the principles of discoverability. Second, the Court could determine that there was a triable issue about the issues of discovery and whether the claim was timely as a result of the application of those principles. This triable issue could include any question of whether there was any other Act by or under which the limitations period could be extended. Finally, the Court could determine on the materials filed that there was clearly an issue of discoverability that made the claim timely.
36That brings me to the facts of this case. It is clear from the decisions of the Ontario Court of Appeal in Schmitz v. Lombard General Insurance Company of Canada, supra and Markel Insurance Company of Canada v. ING Insurance Co. of Canada ((2012) 2012 ONCA 218, 109 O.R. (3d) 652) that there are good arguments available to the Plaintiff to defeat any limitations claim advanced by TD General Insurance. As noted in paragraph 26 of Schmitz:
Finally, as in Markel, the limitation period applicable to a claim for indemnity under the OPCF 44R does not start to run when the demand for indemnity is made. Rather, as held in Markel, default must first occur. Thus, following Markel, the limitation period starts to run the day after the demand for indemnity was made and paragraph two of the motion judge’s order should be amended accordingly.
37In this case, the Plaintiff has a reasonable argument that the claim against TD General Insurance was not discoverable until August of 2015. However, there may be issues relating to the Plaintiff’s due diligence that TD General Insurance may wish to raise. As a result, I am prepared to find that this claim falls at least into the second category, that there was a triable issue about discovery. As a result, the claim should be amended.
38The Plaintiff is not required to plead any discoverability issues at this stage (see Collins v. Cortez, supra at paragraph 15). Instead, if TD General Insurance raises a Limitations Act issue in its defence, then the Plaintiff will be required to plead the relevant facts on discoverability in reply to TD’s defence.
39Plaintiff’s counsel also argued that TD was served with the motion materials for this action. If they felt that they were prejudiced, they could have attended on the motion and argued against being added as a party. This fact may be significant in assessing whether TD General will suffer any actual prejudice. While there appears to be some force to this argument, I do not have to resolve it in this case. I would also note that granting the amendment sought by the Plaintiff in the manner that I have chosen to does not affect TD General Insurance’s rights to advance arguments under the Limitations Act.
40The Plaintiff’s motion to add TD General Insurance as a party to this action is granted, subject to TD’s rights to advance claims under the Limitations Act.
Milan Auto
41I am of the view that the motions with respect to Milan Auto should be dismissed. I start from the premise, as noted by Bielby J. in Noori v. Grewal (2011 ONSC 5213 at paragraph 25, that the expiration of a limitation period “creates a presumption, however slight in some cases, of prejudice to the defendants.”
42Then, as a matter of law, it is clear that the Plaintiff has the onus of proving that the Defendants would not suffer any prejudice. As Bielby J. noted in Noori, supra (at paragraph 58):
Clearly, the onus is on the plaintiff to prove the lack of prejudice. While I agree with the plaintiff’s authority that the defendants have some obligation to provide some detail of the prejudice, surely, it is incumbent on the plaintiff to provide some evidence to rebut the onus, such as what evidence and witnesses are available. A bald statement stating there is no prejudice falls short of meeting the onus.
43In this case, the Plaintiffs have only offered a bald statement that the Defendant, Milan Auto Inc., will not suffer any prejudice. There is no evidence whatsoever to support this claim. The Plaintiffs argue, however, that the Defendant should not be entitled to create prejudice by its failure to do something that they reasonably could have or ought to have done. In other words, the failure of the Defendant to accept service of the Statement of Claim precludes them from arguing that there is any prejudice.
44The problem with this argument is twofold. First, no efforts were made to either serve the Defendant Milan Auto with this claim or otherwise bring it to Milan Auto’s attention. Second, Milan Auto did not try and evade service until after the limitations period had actually expired. I reject this argument. I also note that there is an open question of whether Milan Auto actually tried to evade service, given that the owner of the company returned the process server’s telephone call and was prepared to advise that he was travelling for a week.
45The strongest argument in favour of granting the motions with respect to Milan is the fact that they were served with these motion materials and could have attended on this motion to advance any actual prejudice that they might have suffered.
46The problem that the Court faces in this case is that Milan Auto may not actually know that this claim exists or that this motion is proceeding. An attempt was made to serve them with a Statement of Claim last August. In argument, I asked Mr. Jabbour on a number of occasions whether the process server provided the owner of Milan Auto with any information about the claim. Mr. Jabbour, after repeatedly advising me that his process server had no responsibility to share this information with Milan, also advised me that there was no evidence to show that Milan’s owner had been advised of the nature of the claim. In other words, the limitations period expired eighteen (18) months ago, and Milan Auto still has no idea that this claim exists, unless they received the motion materials that the Plaintiff served by regular mail.
47This makes this case distinguishable from Chiarelli v. Wiens ((2000) 2000 3904 (ON CA), 46 O.R. (3d) 780 (C.A.)). As discussed by Bielby J. in Noori, supra, the Chiarelli decision concerns a case where the Defendants were aware that there was a cause of action well before the limitations period expired. In this case, Milan Auto would not have become aware of this claim until nearly eighteen months after the limitations period expired.
48This brings me to the significant delay (over four months) from the time that service on Milan was attempted and the date of this motion. The problem with the lapse in time is that I have no idea if Milan Auto has moved, gone out of business or otherwise changed in the four months since service was attempted. It is also worth mentioning that the Corporate Records search that the Plaintiffs rely on was some seven months old at the time that this motion was brought.
49I would also note that the Plaintiffs have never served anything with respect to this action on the Defendant Milan Auto by way of personal service. It is counterintuitive to grant the significant relief being sought through this motion without requiring some form of personal service, or some evidence that the Defendants will not suffer prejudice.
50In the circumstances, I am of the view that it is not appropriate to assign blame to Milan Auto for failing to attend on this motion. This is particularly true when the relief sought against Milan Auto will defeat, forever, any limitations argument that they may wish to advance in this case.
51Where the Plaintiff is seeking to rectify a significant procedural defect in their pleading to the disadvantage of the Defendant, it is incumbent on the Plaintiff to provide some evidence that the Defendant will not suffer any prejudice. That evidence is missing in this case, and the motion must be denied.
52The motion for substituted service is a separate question. Rule 16.02(1)(c) states:
16.02 (1) Where a document is to be served personally, the service shall be made,
(c) on any other corporation, by leaving a copy of the document with an officer, director or agent of the corporation, or with a person at any place of business of the corporation who appears to be in control or management of the place of business;
53In this particular case, the question is whether substituted service of an originating process should be ordered. Even if I had extended the time for serving the Statement of Claim, I would not have ordered substituted service in this case for the following reasons:
a) Milan Auto Inc. is a corporation. As a result, it is not necessary to serve the owner of the Company in person.
b) The efforts that have been made at this point to serve the Statement of Claim are, at best, minimal.
c) No follow up was made to see if the owner of Milan Auto or, indeed anyone else employed by the Company, was available to accept service after the September 2, 2015 conversation.
d) The Plaintiff did not attempt any efforts to contact Milan Auto by either registered mail or other methods that would have produced a receipt of delivery.
54In other words, the Plaintiff has not engaged in sufficient efforts to serve Milan Auto personally. As a result, the Plaintiff should not be entitled to an Order for substituted service at this stage.
Disposition
55I am making the following Orders:
a) The Claim may be amended to add TD General Insurance as a proper party to the claim, with such amendment to be taken out with the Court Office within fourteen (14) days of today’s date.
b) The claim is to be served on TD General Insurance within sixty (60) days of the amendment. Any extensions to this time limit will require my leave. The Statement of Claim is to be served on TD General Insurance by personal service under Rule 16.02. Substituted service is not permitted without my leave.
c) TD General Insurance may raise any issue relating to the Limitations Act in their defence, and the Plaintiff shall be required to respond to those pleadings by way of a reply.
d) The motion to extend the time for service as against Milan Auto Inc. is dismissed.
e) The motion for substituted service as against Milan Auto Inc. is also dismissed.
f) I make no Orders with respect to the question of whether the Defendant Jatheeskumar has been properly served. A motion may be necessary to validate the service that was effected on this Defendant.
g) In addition, on the issue of costs, I am ordering that there shall be no costs of this motion recoverable against any of the defendants at any stage in this action.
LeMay J.
DATE: March 7, 2016