Court File and Parties

COURT FILE NO.: 3756/11 DATE: 2016/09/23 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Teresa Jalowiec and Andrzej Jalowiec (Plaintiffs) AND: David Duchene and Enterprise Rent-A-Car (Defendants) AND: State Farm Mutual Automobile Insurance Company (Third Party) AND: Maria Trzop and 2027980 Ontario Limited, carrying on business as Jack’s Bar (Fourth Party)

BEFORE: Justice J. C. George

COUNSEL: J. Armstrong, for the Plaintiffs T. Durcan, for the Defendants D. Nash, for the Third Party No one appearing for the Fourth Party

HEARD: September 7, 2016

Endorsement

Background

[1] The plaintiffs seek leave to amend the Statement of Claim.

[2] Although not sought initially, they now wish to claim punitive and aggravated damages in the amount of $50,000, and costs pursuant to the Victims’ Bill of Rights, 1995, S.O. 1995 c.6. Although not initially pleaded, they now seek to prove that the defendant Mr. Duchene (Duchene) drove impaired, and did so in a deliberate, intentional and reckless manner.

[3] This motion is opposed by the defendants Duchene and Enterprise Rent-A-Car (Enterprise), and statutory third party State Farm Mutual Automobile Insurance Company (State Farm). The added fourth party Maria Trzop and 2027980 Ontario Limited operating as Jack’s Bar (Jack’s), did not attend on this motion.

[4] The plaintiff Teresa Jalowiec was injured in a motor vehicle accident (MVA). She was a passenger. Plaintiff Andrzej Jalowiec is a Family Law Act claimant. Duchene operated a motor vehicle rented to him by Enterprise. He collided with the vehicle in which the plaintiff was a passenger. The plaintiff says Duchene is fully liable and claims this collision caused emotional harm, and injuries to her head, neck, back, shoulders.

[5] In a related criminal proceeding, arising from these same events, he pleaded guilty to and was found guilty of impaired driving. He was fined and received a one year driving prohibition.

[6] The plaintiff’s insurer, State Farm, has denied coverage. It was added as a statutory third party, thereafter filing a fourth party claim bringing Jack’s into the fold. It is alleged a Jack’s employee served alcohol to Duchene before the accident.

The Issue Broadly Stated and Framework

[7] The issue is whether the plaintiffs have satisfied the test for amendment. At this stage leave is required; it cannot be done as of right.

[8] The plaintiffs rely on Rule 26.01 of the Rules of Civil Procedure. It provides that:

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.

[9] This provision is in place to ensure compliance with the principles set out in rules 1.04(1) and 2.01(1). Rule 1.04(1) provides that:

These rules shall be liberally construed to secure the just, most expeditious and least expensive determinations of every civil proceeding on its merits.

[10] Rules 2.01(1) provides that:

A failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court,

(a) may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute…

[11] The onus of proving an amendment would cause prejudice, which could not be remedied either in costs or an adjournment, lies with the party opposing it.

[12] Have the defendants and State Farm met its onus? Has actual prejudice been established?

[13] Also, do the proposed amendments amount to a new cause of action, in which case prejudice would be presumed? This is a threshold issue as an action cannot be brought outside of its limitation period.

Defendant’s Position - Duchene and Enterprise-Rent-A-Car

[14] The defendants argue the proposed amendments amount to a new cause of action, and that the limitation period has passed.

[15] The alternative position is; should I not accept this is a new cause of action, that actual prejudice would be suffered if leave were granted.

[16] Amendments should be allowed unless it would cause an injustice not compensable in costs. The defendants agree this is the test.

[17] The defendants urge me to conclude that the combination of what they say is a new “set of facts”, and the new prayer for relief, amounts to a new cause of action. The new facts, which are contained in para. 8 of the amended Statement of Claim, allege an intentional tort, which is separate and distinct from what was initially pleaded (negligence).

[18] The defendants differentiate this case from one where simply further particulars of an already pleaded fact or claim are being provided. Respecting a complaint of fraud, malice or intent, the defendants argue this should have been strictly pleaded at the outset, and that these ‘new’ allegations could not have been inferred from the original Statement of Claim.

[19] To the defendant’s alternative position, would granting the plaintiff’s motion cause an injustice that could not be remedied through costs or an adjournment? In this respect, counsel provided significant background to this litigation which, he argues, makes the prejudice apparent.

[20] Two years ago, after State Farm declined to cover Duchene, Enterprise filed a Statement of Defence. State Farm declined coverage as the claim included an allegation Mr. Duchene had consumed alcohol before driving. In setting out the distinctions between an auto insurance company and a rental car agency, I was told the rental agency does not have that same luxury. It is a party and it has no choice but to defend its rights in the litigation. It is the owner of the vehicle and is vicariously liable, up to a million dollars, even if it denied assistance to Duchene.

[21] However, because of the specific claim, and in light of the fact punitive damages were not sought, Enterprise made the decision to defend Duchene. Doing so wasn’t going to increase its risk exposure.

[22] The prejudice lies in this new exposure. In other words, by making the decision it did, which it did not have to, Enterprise is now at risk for punitive damages, if ordered. It wasn’t before. If Enterprise had known that punitive damages were being claimed, it would not have assisted Duchene in defending this action.

[23] Counsel spent time discussing the purpose behind punitive damages which is, obviously, intended as a punishment for the wrongdoer; and that, in these circumstances, it would not be fair or reasonable to punish Enterprise (and possibly State Farm) for the acts of Duchene.

[24] The defendants argue that any amendment to include reference to the Victims’ Bill of Rights would be inappropriate, in large part because Duchene has already been punished in a criminal proceeding. As noted earlier, upon a plea in that case he received a fine and driving prohibition.

[25] Enterprise contends the Legislature could not have contemplated personal injury matters involving impaired driving, when considering this particular victim rights framework. Counsel points to the fact there has yet to be a reported decision where s. 4(6) of the Victims Bill of Rights has been deemed appropriate for a personal injury matter. He argues the Act is meant to punish a criminal in a non MVA context. As the argument goes, if the section applied in the case of a personal injury matter involving impaired driving, it is the insurer who would be punished with substantial indemnity costs, not the criminal. Amending this part of the claim would expose several parties, other than the actual wrongdoer, to a greater costs award.

[26] State Farm adopts the defendant’s position.

New Cause of Action?

[27] Do the proposed amendments amount to a new cause of action?

[28] The answer is no.

[29] A cause of action is a factual situation, the existence of which entitles one person to obtain from the court a remedy against another. It is worth reproducing the proposed factual amendment, which is found in para. 8 of the amended Statement of Claim:

8. The Plaintiff states that the Defendant Adam David Duchene’s impaired driving was deliberate, intentional, reckless and deserving of an award of punitive damages, the particulars of which are as follows: (a) he decided to drink excessively; (b) he was driving at an excessive speed while intoxicated; and (c) he showed a conscious and reckless disregard for the safety and lives of others.

[30] This statement of fact, even when considered with the proposed amendment respecting damages, could not possibly be considered “new facts”. Duchene has acknowledged drinking before driving, even pleading guilty to the criminal offence of impaired driving; an offence, by the way, arising out of this exact same transaction. The driving in question both informed the finding of guilt in the criminal proceeding, and is the subject of this very litigation. Even though the precise words “drinking and driving” were not used in the initial Statement of Claim, it would be abundantly clear to anyone with knowledge of this case that this was and is a part of the complete factual picture. State Farm seems to understand this basic fact by virtue of its claim against Jack’s.

[31] To further plead, given the context, that drinking before driving is reckless and an act done in complete disregard of others on the road, is a clarification of the facts surrounding this MVA.

[32] The defendants argue the whole spectre of intentionality dramatically changes the nature of this case. This is an overstatement. While it will likely be a challenge to prove intentionality, the defendants are just pointing out that challenge and potential weakness in the plaintiff’s case.

[33] In circumstances like this, a new cause of action could only be found if there was an alternative claim for relief arising out of different facts than those pleaded. This isn’t a new fact set. There was a motor MVA; the same MVA pleaded originally. And as already indicated Duchene consumed alcohol before driving and becoming involved in this very MVA. This basic fact will be disclosed at trial, regardless of what I do on this motion.

[34] The defendants point to the case of Ascent Incorporated v. Fox 40 International Inc. [2009] O.J. No. 2964 (Ont. Master), a 2009 motion before the Superior Court. The court outlines the test to determine whether amendments plead a new cause of action. The presiding Master makes it clear that if amendments add a markedly different and new set of facts to fashion liability, and if that consequently creates a new statute-barred claim, leave should not be granted.

[35] Examples of improper amendments would include an attempt to turn an initial claim of breach of contract into an allegation of fraudulent misrepresentation; to add a defendant to the claim; or to plead facts that would alter an allegation of corporate responsibility into one of personal responsibility on the part of officers or directors.

[36] The plaintiff’s proposed amendments are, first, akin to the provision of particulars related to Duchene’s driving; and second, given this characterization, tantamount to a claim for increased damages based on facts already known and generally pleaded. It is similar to a request that the court draw different legal conclusions from the same set of facts, which is permissible.

[37] Should I be wrong, and if there are ‘new’ facts, this question remains - whether the proposed amendments are more like an attempt to fashion liability in a different way, which would be prejudicial as the statute of limitations would bar it, or is it the inclusion of some additional facts upon which the original right of action was based?

[38] I have concluded that the latter is true, and as such find the proposed amendments do not amount to a new cause of action. I am unable to conclude that the plaintiff is attempting to, or that the net result of her motion would be to, plead a new cause of action beyond the expiration of a limitation period. I also cannot conclude that if the proposed amendments were initially pleaded, they would have been struck.

Assessment of Prejudice

[39] The question to next consider is whether an amendment would cause prejudice, which could not be remedied either by a cost order or adjournment?

[40] I will address each objection raised by the defendants. First, and this ties back in some respects to the issue of a new cause of action, the Ontario Court of Appeal has held that claims of negligent misrepresentation, professional negligence, and conspiracy could be added to an amended pleading; and not only that, but such a request should be presumptively approved. This runs counter to the clear line the defendants attempt to draw between a claim of negligence and an intentional tort. What I will say is this, which will hopefully button up my discussion on causes of action; while there is an obvious distinction between these two types of tort claims, for a proposed amendment to be barred, it would have to, in my view, be accompanied by a new set of alleged facts. As I have already concluded, this is not present in our case.

[41] Second, the defendants assert that the proposed amendments are not tenable in law. Counsel notes that punitive damages may only be awarded in situations where the defendant’s conduct is so malicious, oppressive and high-handed that it offends the court’s sense of decency. He points out that for cases involving a MVA, a court has only once before allowed an award of punitive damages; McIntyre v. Grigg, 2006 ONCA 732, 83 O.R. (3d) 161.

[42] The defendants distinguish McIntyre from our case, in three ways. First, witnesses testified at trial that the impaired defendant was speeding and took no evasive measures. Second, the defendant’s blood alcohol level was shown to be two to three times the legal limit. And third, that the defendant was not punished criminally, only receiving a $500 fine for a Highway Traffic Act infraction.

[43] McIntyre is described as a unique circumstance. While this might be true, and while Canadian courts are indeed reluctant to grant punitive damages where there has been a criminal punishment, this is not for me to determine at this stage. On the question of whether proposed amendments are “untenable in law”, Moldaver J., in Andersen Consulting Ltd. v. Canada (Attorney General), [2001] O.J. No. 3576 (ONCA) writes the following:

Rather, the law is clear that unless the facts alleged are based on assumptive or speculative conclusions that are incapable of proof, they must be accepted as proven and the court should not look beyond the pleadings to determine whether the action can proceed. With respect, I view the latter error as symptomatic of the motion judge’s erroneous approach to the matter before him. That approach resulted in his weighing the evidence, interpreting controversial contractual provisions and making findings of fact, all matters that should have been avoided at the pleading stage. In short, I believe that the motions judge effectively treated the motion to amend as if it were a motion for summary judgment, if not a trial.

[44] I am in no position to determine that the facts and circumstances of our case are different than those found in McIntyre. Also, the mere fact a criminal sentence was imposed does not in and of itself prevent a claim for punitive damages. It is a factor, but not determinative. What does strike me about this, however, is how the defendants are at once trying to feign ignorance of the whole impairment part of this piece, because it was not strictly pleaded, and suggest the finding of guilt for impaired driving and related sentence is a bar to a claim for punitive damages.

[45] The defendants have established that punitive damages would be rare in these circumstances. They have established that there are weaknesses in the plaintiff’s claim for punitive damages. However, I am not to weigh the merits and make a final determination on entitlement. The claim for aggravated and punitive damages is tenable at law.

[46] Defendant counsel points out, correctly, that aggravated damages are not a separate head of damage; it’s compensatory in nature and considered a part of general damages. This alone will not prevent the proposed amendment. The trial judge will know this to be case, and will assess and apportion damages appropriately.

[47] The defendants contend that a different course would have been taken by Enterprise had this been pleaded initially. While this may well be true, I disagree that this is prejudicial to the point it should act as a bar to amendment. It is a vague assertion about what Enterprise might have done, if things were different. Can it really be said that the proposed amendment would alter the case to meet, to the point that any related prejudice could not be compensated by costs or an adjournment? I think not.

[48] The proposed amendment, and the potential that it increases damages beyond the insurer’s policy limits, does not amount to prejudice. While I accept Duchene may require additional counsel, this is likely one of the very scenarios anticipated when the rules were drafted, and why it’s specifically contemplated that costs and adjournments are the acceptable remedies.

[49] The defendants have not satisfied me that, to the extent there is prejudice, it could not be compensated through costs or an adjournment.

Victims’ Bill of Rights

[50] I will deal now with the proposed amendment that would allow the plaintiffs to seek costs on a substantial indemnity basis pursuant to the Victims’ Bill of Rights. The relevant provisions within that Act are as follows. Section 3(1) provides that:

A person convicted of a prescribed crime is liable in damages to every victim of the crime for emotional distress, and bodily harm resulting from the distress, arising from the commission of the crime.

[51] Section 4(6) provides that:

A judge who makes an order for costs in favour of a victim shall make the order on a solicitor and client basis, unless the judge considers that to do so would not be in the interests of justice.

[52] The regulations go on to describe which crimes are prescribed for the purposes of s. 3(1). Impaired driving is not an included offence. This, I believe, precludes any claim for damages and or costs on a substantial indemnity basis, pursuant to the provisions of this Act. Should there be any doubt, all one needs to do is read the sections and regulation just noted, together with section 1 which sets out that all Criminal Code offences are prescribed for the purposes of ss. 2(1) para. 3 and 4 of the Act. This is important as s. 2(1) speaks to the requirement that victims be notified of steps in the criminal court proceeding; of any release by the accused or escape from custody; and of hearing dates respecting fitness or criminal responsibility. It limits the application of the Act, respecting all offences, to those notice provisions. This distinguishes the collective group of all offences from those specifically listed under s. 3(1).

[53] It is clear that the offence of impaired driving, while it would have entitled the plaintiff to notifications and information emanating from the criminal proceeding, does not entitle her to claim damages or costs pursuant to the Act. This would have been struck had it been pleaded initially.

[54] I will add that, while I am compelled to deny leave to make this amendment to the Statement of Claim, it is not for the reasons advanced by the defendants and State Farm. It was counsel’s position that to allow that amendment would be a “game changer”, and would alone amount to a new cause of action. I disagree. While it is correct to say negligence involves an apportionment of liability, in this case, the application of the Victims’ Bill of Rights would not have fundamentally altered that function. Section 4(6) simply provides an alternative basis for a costs award, the same costs already claimed.

[55] Furthermore, I do not accept the idea that there is “missing” information the search for which would unduly prolong and complicate this matter. I am referring to victim impact statements or any other materials that may have been filed at the sentencing phase of the criminal proceeding.

[56] While this argument is dubious, even if this were the case, it would not have barred an amendment. To obtain the victim statements, should they exist, either from the Crown or the court file, would not have been an onerous task. There otherwise would have been no need to ascertain the victim’s level of involvement in that proceeding, as it would be irrelevant for our purposes. A summary conviction trial court does not have the ability to award damages or assess costs to a victim, which is not be confused with the victim fine surcharge, which is another matter entirely. The victim fine surcharge is governed by the Criminal Code and mandates the sentencing judge to levy fines which do not go to individual victims, but into a general fund. It is prescribed, either as a percentage of a fine, or as a fixed amount depending on whether the Crown proceeded summarily or by indictment.

[57] On both the issue of prejudice, and the Victims’ Bill of Rights, I reject completely the idea that the issue of intent, and the plaintiff’s onus to now prove that element, would prolong a trial to the point it becomes an irremediable problem for the defendants. Would the granting of leave create an inconvenience? Potentially, but inconvenience does not bar an amendment.

Order(s)

[58] For these reasons, I make the following Order:

1. The plaintiffs are granted leave to amend the Statement of Claim to now include a request for punitive and aggravated damages in the amount of $50,000.
2. The plaintiffs are granted leave to amend the Statement of Claim and plead that the defendant Duchene operated his motor vehicle when his ability to do so was impaired, and that he was travelling at an excessive speed.
3. The plaintiffs are granted leave to include para. 8 of the proposed amended Statement of Claim.
4. The plaintiffs are granted leave to correct the defendant Duchene’s name within the Statement of Claim, and any other minor typographical errors, as well as leave to include a reference to the Family Law Act as a relied upon statute.
5. The request to include a claim for substantial indemnity costs pursuant to the provisions of the Victims’ Bill of Rights is dismissed.

Costs

[59] While a successful party on a motion is entitled to their costs - in this case the plaintiffs - the problem is a prejudice has been alleged by the defendants, and I have concluded that to the extent prejudice does exist, it could be remedied in a costs award. I refer counsel to para. 49 of these reasons.

[60] Costs in the cause is not an order which finally disposes of this issue, rather it subjects it to the final discretion of the trial judge. In this case would that person not be better able to determine what additional expenses were incurred by the defendants on account of these amendments? It seems that this would only become known in the fullness of time, as all I can do is determine each party’s costs in advancing and defending this particular motion.

[61] Should counsel take a different on how the issue of costs should be approached at this stage, I invite them to make brief written submissions. Each party has 30 days to do so.

Justice Jonathon C. George Released: September 23, 2016