Court File and Parties
COURT FILE NO.: 10-49174 DATE: 2016/09/07 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: MAXRELCO INC., Plaintiff AND: JIM PATTISON INDUSTRIES LTD. c.o.b. as PATTISON SIGH GROUP and LUMIPRO INC. c.o.b. as LUMIPRO SIGNS AND LIGHTING SERVICES, Defendants
BEFORE: MR. JUSTICE CALUM MACLEOD
COUNSEL: Martin A. Smith, counsel, for the Defendant Lumipro (Moving Party) Brian C. Elkin, counsel, for the Plaintiff (Responding Party)
HEARD: In writing
DECISION ON MOTION FOR LEAVE TO APPEAL
Introduction
[1] The defendant Lumipro Inc. (Lumipro) seeks leave to appeal from the order of Mr. Justice Robert J. Smith dated May 31, 2016. In that order, the motion judge dismissed a summary judgment motion brought by this defendant and directed that the action proceed to trial. He also granted a motion to substitute a subsidiary corporation for the plaintiff originally named in the action even though the limitation period had ostensibly expired.
[2] The defendant seeks leave to appeal the order correcting the misnomer.
Background
[3] By way of background, the action involves a fire at a restaurant and hotel in Casselman, Ontario which resulted in a loss valued at more than $1 million. The facts underlying the claim and of the history of the litigation itself are more fully described in the decision of Justice Smith. [^1] I need not repeat them at length.
[4] The land and premises where the fire occurred are owned, occupied, or leased to various related and subsidiary corporations. In particular, the land is owned by Maxrelco (Immeubles) Inc. That company is a fully-owned subsidiary of the plaintiff, Maxrelco Inc. Other sister corporations of Maxrelco (Immeubles) Inc., also owned by the plaintiff, are the owners and operators of the various franchise restaurants located at the premises.
[5] The losses were covered by insurance and were fully paid by the insurer (La Souveraine), which now seeks to recover damages from the party responsible for the fire pursuant to its right of subrogation. In the statement of claim it is alleged that the fire was the result of negligence on the part of the defendant Lumipro.
[6] According to the evidence, the insurer paid all insurance funds to the plaintiff and the plaintiff distributed those funds to the appropriate subsidiaries. When the statement of claim was issued it was commenced in the name of the plaintiff (the parent corporation) and not in the name of Immeubles (the subsidiary)Immeubles is not only the registered owner of the land, it is also the landlord to all of the other tenant corporations.
[7] When the defendant learned of the corporate structure and the actual ownership of the land following discovery and beyond the limitation period, it launched a summary judgment motion. There were two parts to the motion. The first part was based on the assertion that the plaintiff did not have standing to sue the defendant because it is not the owner of the land and was merely a shareholder of the owner. Although the plaintiff argued that it did have standing and an insurable interest due to the fact that it owns 100% of the subsidiary, Justice Smith did not decide that point. That is because he granted the plaintiff’s motion to substitute Maxrelco (Immeubles) Inc. as the plaintiff. He accepted the evidence that it had always been the intention to sue on behalf of the registered owner of the property, that the failure to name the correct corporation was simply an error, and that the defendant was not prejudiced. He held that this was a case of “misnomer” and that from the outset of the litigation all parties had operated on the basis that the claim was brought on behalf of the owner of the premises which suffered the damage.
[8] In the second part of the motion, the defendant sought summary judgment on the basis that the plaintiff could not prove Lumipro or Lumipro’s work caused the fire. After reviewing the expert reports and the evidence of the various witnesses in their affidavits and under cross-examination, Justice Smith found that the “issue of the cause of the fire needs to be determined at a trial and cannot be decided fairly and justly on a summary motion even if I decided to use the powers under Rule 20.04 (2.1).” [^2] He refused to grant summary judgment, and ordered that the matter proceed to trial. Neither party seeks to appeal that finding.
Test for Leave to Appeal
[9] The test for granting leave to appeal under Rule 62.02(4) has been considered on many occasions. Leave is not to be lightly granted and the test to be met is strict. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and, in each case, both aspects of the two-part test must be met.
[10] Under Rule 62.02(4)(a), the moving party must show that there is a conflicting decision of another judge or court in Ontario or elsewhere of at least co-equal jurisdiction. Secondly, the judge hearing the leave motion must be of the view that it is “desirable that leave to appeal be granted.” A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts. [^3]
[11] Under Rule 62.02(4)(b), the moving party must establish that there is “good reason to doubt the correctness of the order” and also that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – that aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is open to “very serious debate”. [^4] To satisfy the second part of the test, the moving party must persuade the Court that the issue is of importance going beyond the interests of the immediate parties and involves questions of general or public importance relevant to the development of the law and administration of justice. [^5]
Analysis
[12] I am not persuaded that there is conflicting jurisprudence, nor am I persuaded there is good reason to doubt the correctness of the decision. The decision in question follows the decision of the Court of Appeal in Mazzuca v. Silvercreek Pharmacy Limited [^6] which was based on very similar facts. While it is true that Mazzuca pre-dated the Limitations Act, 2002 and contains a discussion of “special circumstances” [^7], it is clear from a close reading of Mazzuca that the decision is not based on special circumstances but on an expansive approach to misnomer. Silvercreek’s argument that substituting a new party for a different legal entity was not correcting a “misnomer” was rejected by the Court of Appeal.
[13] The concept of misnomer covers both the “narrow sense of a misdescription of the person suing” and the power to substitute parties “to correct in proper cases the naming of a party by mistake”. [^8] Mazzuca remains good law and has been followed in subsequent decisions. [^9] In fact the Court of Appeal has explicitly stated that the new act does not narrow the power to correct misnomers and that the concept includes both misnaming and misdescription”. [^10] The decision in Investors Group Inc. et al. v. Dentek Inc. et al. [^11], a decision of the Manitoba Court of Queen’s Bench, held that there was “no misnomer” because the solicitor in that case made a deliberate choice of which entity to sue on behalf of when he knew or ought to have known which one was correct. This decision is not conflicting jurisprudence within the meaning of the rule. Firstly, it cannot conflict with the binding authority of our Court of Appeal. Secondly, it involves findings of fact which were not the findings made by Smith J. in the case under consideration.
[14] In his decision, Smith J. found as a fact, that it was apparent to anyone reading the statement of claim that damages were being sought by the owner of the real property damaged in the fire. This finding is entitled to considerable deference. I would go further. The defendant has always known that this was a subrogated action brought in the name of the plaintiff. The defendant was not mislead or taken by surprize by the fact that the nominal plaintiff was intended to be the party with standing to sue for the damage.
[15] Accordingly, in my view, the moving party cannot meet the first part of either branch of the test. The issue of whether a parent corporation has any standing to sue for damages inflicted on its wholly owned subsidiary is not engaged by this motion as Smith J. found it unnecessary to deal with the question. Substituting the subsidiary for the parent corporation puts that issue to bed.
[16] In conclusion, the test for leave to appeal is not satisfied and leave is accordingly denied.
Costs
[17] The responding party plaintiff is presumptively entitled to costs of the leave motion on a partial indemnity scale. No cost outlines were filed.
[18] Unless there were offers to settle which should affect this disposition or counsel wish for other reasons to make submissions on costs, the costs are fixed at $2,500.00 payable within 30 days.
Mr. Justice Calum MacLeod Date: September 2, 2016
Released: September 7, 2016
Footnotes
[^1]: Maxrelco Inc. v. Jim Pattison Industries Ltd., 2016 ONSC 3182. [^2]: Supra, at para 54. [^3]: Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 7 O.R. (3d) 542 (Div. Ct.). [^4]: Nazari v. OTIP/RAEO Insurance Co., [2003] O.J. No. 3442 (S.C.J.); Ash v. Lloyd’s Corp. (1992), 8 O.R. (3d) 282 (Gen. Div.). [^5]: Rankin v. McLeod, Young, Weir Ltd. (1986), 57 O.R. (2d) 569 (H.C.J.); Greslik v. Ontario Legal Aid Plan (1988), 65 O.R. (2d) 110 (Div. Ct.); Brownhall v. Canada (Ministry of National Defence (2006) 80 O.R. (3d) 91 (S.C.J.). [^6]: (2001), 56 O.R. (3d) 768, 207 D.L.R. (4th) 492 (C.A.). [^7]: No longer available in Ontario – see Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469, (2008) 90 O.R. (3d) 401 (C.A.). [^8]: Supra, paras. 46 – 49. [^9]: See for example Greater Toronto Airports Authority Assn., Inc. v. Foster Wheeler Ltd., 2010 ONSC 5891, (2010) 100 C.P.C. (6th) 360 (S.C.J.). [^10]: Spirito Estate v. Trillium Health Care, 2008 ONCA 762, (2008) 302 D.L.R. (4th) 654, 69 C.P.C. (6th) 36 (C.A.). [^11]: (1994) 26 C.P.C. (3d) 10 (Man. Q.B.); revd. on other grounds (1995) 31 C.P.C. (3d) 226 (Man. C.A.).