Court File and Parties

COURT FILE NO.: CV-13-488760 MOTION HEARD: 201 61209 REASONS RELEASED: 201 70406

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

ZHENG HOU HUA and QIHONG ZHAO Plaintiffs

• and-

THE ESTATE OF SHAO MING DENG represented by his Estate Trustee, JIANG YUN YEU, TDX LOGISTICS INC, and MOTORS INSURANCE CORPORATION Defendants

BEFORE: MASTER D. E. SHORT

COUNSEL: Harvey S. Consky Fax: 416-848-6998 -for the Plaintiffs

Dave Dhillon Fax: (416) 369-0665 -for the Defendants (moving parties)

REASONS RELEASED: April 6, 2017

Reasons for Decision

Preamble: “Not entitled to commence an action”

“28. (1) A worker employed by a Schedule 1 employer, the worker's survivors and a Schedule 1 employer are not entitled to commence an action against the following persons in respect of the worker's injury or disease:

1. Any Schedule 1 employer…

2. (1) A party to an action…may apply to the Appeals Tribunal to determine,

(a) whether, because of this Act, the right to commence an action is taken away;

(b) whether the amount that a person may be liable to pay in an action is limited by this Act; or (c) whether the plaintiff is entitled to claim benefits under the insurance plan.

(2) The Appeals Tribunal has exclusive jurisdiction to determine a matter described in subsection (1).

Finality of decision

(3) A decision of the Appeals Tribunal under this section is final and is not open to question or review in a court.”

Workplace Safety and Insurance Act, 1997

I. Overview

[1] The plaintiff Zheng Hou Hua was an Ontario trucker. He leased his transport truck from its owner, the Defendant, TDX Logistics Inc. It is asserted on behalf of the defendants that at the time of the accident in question, Hua and Shao Ming Deng were co-drivers of a 2011 Volvo tractor-trailer, “which they were operating on behalf of TDX”.

[2] On September 13, 2011, Mr. Deng was the operator of the truck in which Hua, was a passenger. This truck rear-ended another tractor trailer on Highway 11 in Grenfell Twp. in the District of Timiskaming. That collision resulted in the death of Deng and caused Hua to sustain permanent and serious injuries.

[3] The Plaintiff’s issued a Statement of Claim against the Defendants on the second anniversary of the accident, September 13, 2013. The Plaintiff, Qihong Zhoa, is Hua’s spouse who asserts a claim under the Family Law Act. The Defendant, Motors Insurance Company, is the uninsured, underinsured and unidentified motorist coverage carrier. At this point they have not filed a Statement of Defence to this action and did not participate in this motion.

[4] This is a motion brought by the defendant pursuant to Rule 26 of the Rules of Civil Procedure for leave to amend the Statement of Defence, in order to plead additional defences.

[5] The proposed additions relate to the potential availability of a statutory barrier to a civil action as a result of the application of provisions of the Ontario Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sched. A ("WISA").

[6] In the Statement of Defence dated October 18, 2013, the Defendants did not plead that Hua's right to bring an action was in any way compromised by the provisions of the WISA set out above.

[7] By notice of motion filed October 14, 2016 the moving defendants, for the first time, sought leave to amend their joint Statement of Defence to add these assertions:

16. These Defendants plead that pursuant to section 28(1) of the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Schedule A a worker employed by a Schedule 1 employer is not entitled to commence an action against any Schedule 1 employer or a worker employed by any Schedule 1 employer, for injuries occurring in the course of his or her employment.

17. These Defendants plead that at all material times, the Plaintiff, Zheng Hou Hua was a Schedule 1 worker in the course and scope of his employment with a Schedule 1 employer. As the late Shao Ming Deng was also a Schedule 1 worker in the course and scope of his employment with a Schedule 1 employer, and as the Defendant TDX Logistics Inc. is also a Schedule 1 employer, the Plaintiffs' action as against these Defendants is statute barred pursuant to the provisions of the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Schedule A as amended.

[8] The Plaintiff, Hua opposes the granting of these amendments sought by the Defendants in relation to the alleged Schedule 1 employee classification, “as these amendments do not raise a tenable claim and they are statute barred.”

[9] To appreciate the issues in play on this motion, a review is necessary of the implications of the concept of an “owner-operator” under the relevant statutory provisions and the specific contractual arrangements, in place both at the time of the accident and subsequently.

II. Background WSIB Documentation

[10] Given the potential serious consequences that can flow from a determination of the true nature of the relationship between the parties in disputes such as this, I was directed to a number of documents the WSIB has produced, addressing the decisions to be made.

[11] One standard form, provided to me is entitled “Determining Worker / Independent Operator Status: Trucking Industry”. In part, the “Introduction” section of that document (with my assorted emphasis added) reads:

Your response to the statements in Part 2 will indicate whether you are an independent operator or a worker under the Workplace Safety & Insurance Act (the Act).

Workers are automatically entitled to benefits provided by the Act and their employers must pay premiums to the Workplace Safety & Insurance Board (WSIB).

Independent operators are not automatically covered under the Act but may elect to be considered "workers" and covered under the Act. If independent operators choose to be covered, they must obtain optional insurance in their own WSIB accounts. The independent operator is responsible for paying for their own WSIB insurance. Once they have obtained optional insurance with the WSIB, the independent operators and their dependents may lose their right to sue for damages resulting from a work-related accident. The amount of optional insurance selected must reflect the independent operator's annual earnings for labour. ...

[12] In the present case, there is no doubt that the plaintiff did not obtain this “optional insurance”.

[13] The form continues with these definitions and descriptions again with my emphasis added:

Principal means the company, carrier or shipper that hires you to transport goods.

I. Who should complete this form?

• Owner-operators • the principals that hire them (or their respective representatives).

After completing Part 2 of this form, if the responses indicate that the owner-operator is an independent operator, the owner-operator and the principal must sign the form on page 2 to verify that the statements reflect the work relationship and send it to the Workplace Safety & Insurance Board, Employer Service Centre … for confirmation.

[14] Part 2 of this key document requires the signed verification by the Principal (i.e. TDX) and Mr. Hua for his company. That part contains these understandings between the parties participating in such arrangements (with my emphasis added):

Owner-operators will be treated as independent operators, for workplace safety and insurance purposes only, when the work relationship contains all the following features:

(a) The owner-operator pays for the truck and a majority of the equipment or other related property (such as payments for gas, maintenance of the truck, licence and storage) and is not required to finance the truck and equipment/related property through company sources.

(b) The owner-operator has the right to exercise a choice in selecting and operating the vehicle and has market mobility in that he/she has discretion to enter into contracts of any duration to transport goods and maximize profits.

(c) The principal does not have the right to control where or from whom products/services are purchased by the owner-operator (however, this does not preclude the owner-operator from exercising his/her option to purchase products/services from the company). Also, the principal does not have the right to exercise control over the owner-operator's operations except to the extent that loads are offered, and destinations and delivery schedules are established by the principal's contract with the shipper and except for the joint responsibilities set out in federal and provincial licensing and related statutes.

(d) The principal and the owner-operator state that the relationship is one of a contract for service and not that of employer and employee.

(e) The principal does not issue a Canada Revenue Agency T4, T4A or make statutory deductions for E.I. and/or C.P.P.

[15] Both parties as part of this process sign to acknowledge the following:

To the best of my knowledge, information and belief, the work relationship contains all the features stated above.

I/we understand that the WSIB reserves the right to verify that the work relationship contains all the features stated above.

If the work relationship does not have all of these features, the WSIB may reverse the determination of status retroactively to the date that the relationship began.

[16] This Form1149A then requires the signatures of both the “Owner-Operator” and the Principal together with the Principal’s “WSIB Account Number”.

[17] It seems odd that the parties can execute such documents and then, after a very serious accident occurs, seek a “do-over”. However that determination of the application of the foregoing criteria is not the specific issue presently before me.

[18] However, of some relevance are other documents placed before me, which were generated by from the WSIB. With respect to an available option to be covered under the Act, the following disclosures and potential waivers were outlined:

Optional Insurance Declaration

Please read the following information carefully. It explains how Optional Insurance changes your status under the Workplace Safety & Insurance Act (referred to here as "the Act").

I understand that:

1. Owners, partners, executive officers and independent operators are not automatically entitled to benefits under the Act, unless they are included in compulsory coverage in the construction industry.

2. I am voluntarily requesting to be considered a worker by the WSIB by applying for optional insurance as I am exempt from WSIB compulsory coverage.

3. I must have optional insurance for a minimum of three (3) consecutive months.

4. With optional insurance, I am entitled to all benefits due to a worker.

5. I am giving up my right to sue workers and employers whose industries are covered under Schedule 1 of the Act for damages sustained in a workplace injury.

6. The WSIB may cancel or deny renewal of my optional insurance if the employer paying for it is in arrears, or the WSIB determines I am compulsorily covered under the Act. If any premium is owing on my optional insurance, the amount of the unpaid premium may be deducted from my benefits.

7. The effective date for new optional insurance requests, changes to or cancellations of optional insurance will either be the date that the completed form 1574A is received by the WSIB, or the requested date, whichever is later.

8. If the WSIB determines I am compulsorily covered, the effective date of changes to, or cancellation of, my optional insurance may be made retroactively. [my emphasis]

[19] The only sworn evidence before me is that no such application was ever made by the plaintiff. Rather there is a signed document which reflects just the opposite intention by both parties to this arrangement. (i.e. Hua was clearly not giving up his right to sue a Schedule 1 employer)

[20] Thus the plaintiff was the owner of a company that provided trucking services to TDX and did not exercise the available option to be covered under the WISA.

[21] This was the clear business relationship established at the time between Hua and TDX and those structural arrangements are reflected in a Contract made between the parties prior to any work being performed by Mr. Hua or his company.

III. Initial Agreement between the Parties

[22] The affidavit of Mr Hua annexes a copy of that Contract dated as of “Jan.1, 2011” which was a nine page, apparently standard, form used by TDX (defined therein as the “COMPANY”), which was signed on its behalf and by Hua’s company, Happy Life Enterprises Ltd. (the “CONTRACTOR”). That document (with my emphasis added) read in part:

WHEREAS the COMPANY is licensed to transport goods ("the business") within the terms of its authorities.

AND WHEREAS the CONTRACTOR wishes to work with the COMPANY under the terms and conditions as set out hereinafter.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration Of the mutual covenants and agreements herein contained, the COMPANY and the CONTRACTOR hereby covenant and agree as follows;

1. INDEPENDENT CONTRACTOR

The CONTRACTOR represents and warrants that the CONTRACTOR hereby desires to engage in the business as an independent contractor and is fully qualified and adequately equipped to carry on such business. The CONTRACTOR'S drivers, as a condition of his continued use by the COMPANY, must be able to be bonded and have the legal ability to service all the customers of the COMPANY. The CONTRACTOR agrees to perform such transportation and ancillary services including loading and unloading as requested by the COMPANY.

The parties agree that the relationship between them reflects a contract for service according to Schedule A.

2. TENDER OF FREIGHT OBLIGATION TO PROVIDE SERVICES

(a) The COMPANY agrees to tender freight, goods, merchandise and cargo of such kinds and descriptions for the purposes of custody or transport and agrees to compensate the CONTRACTOR for the services performed by the CONTRACTOR….

(c) The CONTRACTOR agrees that he and his drivers will not operate the EQUIPMENT for any other carrier or operator while the EQUIPMENT is operating under the COMPANY'S license and insurance. The CONTRACTOR agrees not to use the EQUIPMENT as a personal vehicle.

3. EQUIPMENT OF CONTRACTOR

The COMPANY agrees to utilize the motor vehicle hereinafter referred to as. "EQUIPMENT'' which is owned or leased by the CONTRACTOR. Any substitution or replacement of equipment must be approved by the COMPANY in writing. During the term of the Agreement the CONTRACTOR shall have full control and possession of the EQUIPMENT and the CONTRACTOR have to provide it's maintenance record to the COMPANY.

[23] This document makes it clear, at least to me, that TDX was stressing, requiring, and thus practically mutually agreeing to the independence of the plaintiff’s company. PDX now seeks to assert the direct opposite by way of the proposed amendment.

IV. The Accident & the Workplace Safety Insurance Appeals Tribunal

[24] It appears to me this arrangement was made in an effort by TDX to have the operators of its freight transport units treated as independent contractors. If that were the case they would not not treated as direct employees with the various attendant employer obligations including those under the Workplace Safety & Insurance Act, CPP, unemployment insurance, health insurance, together with Revenue Canada obligations, etc.

[25] The history of workers’ compensation has included the framing of legislation pursuant to which otherwise existing rights of civil action can be barred where injuries are suffered in an accident which occurs while an employee is “on the job”.

[26] Instead, under the legislation other benefits are provided on a no-fault basis.

[27] In the present case, a number of years after the accident the defendants elected to submit a “Right to Sue Application” with the Workplace Safety Insurance Appeals Tribunal for a determination of whether the plaintiff was a Schedule 1 employer at the time of the accident and thus prevented by statute from seeking a normal motor vehicle accident tort recovery against the owner of the vehicle in which he was riding.

[28] If Hua was found to be a Schedule 1 employee the recourse of the plaintiff would be limited to that available under the Act.

[29] Of significance in this fact situation is the apparent policy adopted by the WSIAT that the Tribunal is only prepared to make a determination where an existing pleading asserts that the prohibition of Section 28 is applicable.

[30] Apparently unless and until there is a live issue raised in a pleading, the WSIAT will not rule upon the applicability in accord with Section 28. As a consequence this motion is now brought to permit compliance with that requirement.

[31] The plaintiff objected to this motion on the basis that the factual matrix demonstrated that the defendant was not entitled to obtain the amendments sought at this stage of the litigation.The determination of that issue requires a consideration of the applicable provisions of the Rules of Civil Procedure and the Courts of Justice Act.

V. Applicable Test under the Rules

[32] Rule 26.01 of the Rules of Civil Procedure provides the following with respect to pleading amendments:

"On a 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" [emphasis added]

[33] It is well settled that the use of the mandatory language in Rule 26.01, the word "shall", has reduced the Court's former discretion to refuse an amendment. Amendments to pleadings, at any stage of the action (including at trial).are “presumptively approved”. That is the general principle. However approval is not automatic.

[34] The test to amend pleadings was reiterated by my colleague Master Muir in Opper v 1706737 Ontario Limited, 2014 ONSC 2530. He again canvassed this area in his decision in Greenwald v. Ridgevale Inc. 2016 ONSC 3031; 131 O.R. (3d) 774. In that case he noted, at para 21, that the applicable principles, where no new party is sought to be added, are as follows:

“ * the amendments must not result in prejudice;

• the amendments must be legally tenable;
• the amendments must comply with the rules of pleading;”

[35] Importantly he also observed that the addition of a party will not be permitted if it is shown to be an abuse of process.

[36] These are the factors and principles I have endeavoured to apply in determining the issues on this motion. My analysis required consideration of a variety of reported decisions.

VI. Amendments must be Legally Tenable and Comply with the Rules of Pleading

[37] In Schembri v Way (2012 ONCA 620), the Plaintiffs moved to amend the pleadings to add a director and officer alleged to have participated in an impugned way on an oppression action. The Court of Appeal held:

"Where a party wishes to amend a claim or add a new party within the limitation period, the facts pleaded are taken to be true and provable (subject to unprovable, assumptive or speculative conclusions) and the court is to assess the tenability of the claim on that basis."

[38] I am, of course, obliged to follow this guidance.

[39] Similarly in the Court of Appeal decision of Spar Roofing and Metal Supplies Ltd v. Glynn, 2016 ONCA 296, 2016 O.J. No. 2152, Justice Weiler focused on the appropriate stage to consider the legal consequences of a proposed amendment at para 40):

"The purpose of the amended claim would be to obviate the question of standing at the pleading stage and to avoid a later argument that the legal theories and consequences flowing from the facts as proven were not pleaded."

[40] Justice Weiler went on to discuss (at para 43) the correct approach on such motions:

"The respondent's submission is in effect a submission that the court should considerthe merits of the factual and legal basis for the proposed amendment at the pleading stage and not at a later stage of the proceedings.

That is not the law under r. 26.01"

[41] Here both parties made submissions on the applicability of the “right to sue” provisions. As the form of the amendments complies with the Rules, it would be my view that if the only problem was whether the WSIB act applied in this fact situation, I would permit the amendments sought, leaving the issue of applicability for trial. But in the circumstances of this case, permitting the amendment, gives rise to a high possibility that there never can be a trial.

[42] However taking the facts asserted in support of the proposed amendments by the defence as entirely proven, does not resolve the issues presently before me.

VII. “The Amendments Must Not Result in Prejudice”

[43] Counsel for the moving party referred me to my colleague Master Muir’s decision in Jubenville v. O’Brien 2016 ONSC 6410, which in turn referred to decision in Tate v. Bishop, [2015] O.J. No. 482; 2015 ONSC 742. There I observed that Rule 26.01 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]”

[44] At paragraph 23 of that decision I considered the proper test to be applied:

“…Similarly, in Vladetic v. Silvestri, [1990] O.J. No. 642 (ONSC) 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; 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]”

[45] In Tate, as in this case, I concluded from my analysis of 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.”

[46] In my decision I went on to consider cases discussing the impact of delay:

“ 27 The Plaintiffs rely upon the Court of Appeal's decision in Family Delicatessen Ltd. v. London (City) (2006), 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), 70 O.R. (2d) 249 and Pace v. DelZotto, [1996] O.J. No. 143 Plaintiffs' counsel [in Tate] submits that in some cases "amendments should not be allowed that are late and substantially alter the case to be met.” [my emphasis added]

[47] While I recognize that many of theforegoing decisions were decided under former iterations of the Rules, nevertheless I still believe that unexplained delay under the present Rules can give rise to a presumption of unacceptable prejudice. I thus turn to the evidence in support of the requested amendments.

VIII. The Evidence of Moving Party

[48] The only affidavit evidence filed on behalf of the moving party is from a lawyer at their law firm which asserts that fact and states counsel “as such, l knowledge of the matters to which I hereinafter depose.”

[49] There is no first hand evidence from TDX as to the intent of the parties at the time of contracting, nor in how the company’s business is generally structured. Rather, after describing the factual background to the litigation, including the filing of a Statement of Defence on October 18, 2013,the deponent provides this outline with supporting exhibits:

‘8. On March 10, 2016, the Defendants filed an application with the Workplace Safety Insurance and Appeals Tribunal (WSIAT) for a determination of whether the right of the Plaintiffs to bring the within action against all Defendants in this action was taken away by operation of Section 28 of the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16 (WSIA).

9. On May 18, 2016, Plaintiff's counsel, Mr. Harvey Consky, wrote to WSIAT and advised that the Defendants did not plead Section 28 of the WSIA as to whether the Plaintiff Zheng Hou Hua was an independent contractor. Mr. Consky wrote that "pleading that section is a requirement prior to a Section 31 Application being accepted to be heard by the Appeals Tribunal". …

10. On June 9, 2016, Mr. Walter Aronovitch, a partner of our office, wrote to Mr. Consky and asked that he consent to the proposed Amended Statement of Defence. The amendments included changes that Mr. Consky took issue with in his letter of May 18, 2015 to WSIAT. …

11. On October 3, 2016, our office wrote to Mr. Consky and requested his position to the within motion. Mr. Consky responded that his office opposed the within motion. …

12. The Defendants seek to amend the Statement of Defence to plead that the Plaintiff is precluded from bringing this action to this Court on the basis of Section 28 of the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16.”

[50] I observe that there is neither any explanation as to why this issue was not raised in the original pleading in 2003, nor any explanation of the grounds supporting her stated beliefs. Further, there does not appear to be any explanation for the over three year delay in seeking to amend the defence.

[51] Moreover, there is no reason disclosed for the apparent 180° change in the position of TDX as to the nature of the business relationship between the parties.

[52] In her affidavit the affirming lawyer further asserts:

“13 I verily believe that the Plaintiffs will not suffer any prejudice from the moving Defendants amendment of the Statement of Defence that is not compensable by costs or an adjournment.

14. I believe that the proposed amendments have been made following the letter from Mr. Consky to WSIAT of May 18, 2016, attached as Exhibit "A", and his position of opposing this motion has necessitated the Defendants bringing the within motion in person.

15. I verily believe that the granting of such an Order will result in considerable savings of time and expense to the Court and to the parties.”

[53] Thus, at present we have an innocent passenger in an insured vehicle bringing a claim, where it is difficult to imagine a basis whereby there is any question as to liability, and in which all that practically remains is a damage assessment.

[54] I further note that the affidavit does not address in any way a signed document required by TDX from the plaintiffand executed by both parties following the accident

IX. The Post Accident Agreement

[55] In his affidavit sworn in opposition to the present motion, Mr Hua swears that six months after the accident he was asked to sign the following document with TDX as a condition of TDX returning a deposit related to the vehicle lease to him. The entire substance of the agreement with my emphasis added reads:

“Statement Mar.16 2012

I, Zheng Hou Hua, owner of Happy Life Enterprise Ltd., have current lease-operator contract with TDX Logistics Inc dated Oct 22 2010 to operate, maintain, hire drivers, manage truck unit #789 …. I'm independent owner-operator and not an employee at TDX Logistics Inc. As independent employer, I hired Mr. Shao Ming Deng in Aug 2011; Unfortunately, Sept 13 2011 due to fatal accident Mr. Shao Ming Deng has deceased. I understand that, as an adequate [sic independent?] employer, l have a responsibility for WSIB premiums and all other charges that may occur in regards to this accident.

Due to-above mentioned accident truck unit #789 has been totaled. I declare that lease-operator contract between TDX Logistics Inc has been mutu ally terminated. I confirm receipt of Six Thousand Dollars ($6,000.00 CAD) as a return of previously deposited security funds according to the lease-operator contract with TDX Logistics Inc. I understand that remaining Four Thousand Dollars ($4,000.00 CAD) will be used towards deductible for the accident. I understand and confirm that there is no any balance [sic] owed by TPX logistics Inc, or/and Cantus Logistics Inc to me in regards to lease-operator Contract of Unit# 789.

[56] This document is signed by Zheng Hou Hua, on behalf of “Happy Life Enterprise Ltd.” and Eugene Kogay for “TDX Logistics Inc”. It is witnessed by a representative of “7057822 Canada Inc.”

[57] I find this document to be totally contrary to the position now sought to be argued on behalf of TDX.

[58] In such circumstances, is a defendant still entitled to amend their statement of defence? Does such an amendment facilitate an expeditious determination on the merits?

X. “Right to Sue” Application with the WSIAT

[59] While called right to sue applications,it seems to me that what these applications generally are about, is a denial of the right to sue on the basis that the appropriate response should be under the Worker’s Compensation legislation.

[60] In their factum, the defendants rely on a number of decisions by the Workers Safety Insurance Appeals Tribunal where individuals injured in various accidents in the past were denied the ability to rely on their assertion that they were independent contractors and thus were found not to have a “right to sue”.

[61] For example the “Law” section of their factum concludes with this paragraph:

23. Finally, the Decision No. 1720/10 (2010) of the WSIAT with respect to Mr. Bhatti, a plaintiff in a civil action, is helpful in assessing whether the plaintiff in the within action may be deemed an independent contractor or employee. Mr. Bhatti was injured in the process of driving a truck for Sky Network Express. He reported that the common intention between himself and Sky Network was that he was to be an independent contractor. However, Mr. Bhatti did not own the truck. He was required to display a Sky Network logo on his truck at all times. Those factors, amongst others led to the conclusion that Mr. Bhatti was not an independent contractor, but a Schedule I worker, and his right to sue was extinguished.

[62] Clearly, this was a similar situation to the one presently before me. I have reproduced in Schedule A to these reasons, extracts from the decision, which may well make it distinguishable. That issue may not arise before the WSIAT if it continues to maintain the view that it will not proceed in the absence of a specific pleading in a civil action between the parties and the amendment is refused.

[63] In this regard I reiterate the statutory prevision quoted at the outset of these reasons:

“(3) A decision of the Appeals Tribunal under this section is final and is not open to question or review in a court.”

[64] Is being placed into such a situation of unreviewable finality, a prejudice that ought to prevent the granting of leave to amend in this case?

[65] While I am not to weigh the strengths of the parties positions with respect to the possible result of the new theory of the case advanced through the proposed amendments, I still am entitled and required to consider all the circumstances of the case.

[66] I acknowledge that there is little doubt in my mind that a motion to strike the proposed paragraphs, had they been included in the original statement of defence would probably probably have failed. But again, that is not the present situation.

[67] I believe that what does matter is, the conduct of the parties. I am concerned that if the motion is granted. The insurer for the moving defendant company will in effect, obtain a windfall by no longer being responsible under the policy of insurance that was held by TDX.

[68] For six years, the plaintiff would seem to of had an entitlement to statutory accident benefits and related entitlements. Moreover, in reliance on the contractual situation between the parties, the plaintiff has retained counsel who has represented him in what to all intents and purposes, was in normal tort action.

[69] In my view it is too late, now that various limitation periods have expired and all parties have proceeded, on a mutually recognized fact situation.

[70] I am not aware of any case law, where appropriate compensation to counsel probably working on a contingent fee basis, are entitled to compensation, not for costs incurred but for their expectation interest with respect to what would have seemed to be a probably winnable case.

[71] Will the plaintiff be obliged to repay the statutory accident benefits received? Where will the funding for that potential liability come from?

XI. Resolution

[72] In present day Ontario the cost of litigating a major personal injury claim would be prohibitive for most victims, but for the possibility of conducting actions with the assistance of counsel that are prepared to work on a contingent fee basis. Litigants of limited means, who could not otherwise afford the necessary medical examinations, detective work and legal research, would be denied access to the courts litigants of limited assets..

[73] Here from the outset, there was no indication that the action was anything other than a personal injury accident to which normal insurance law and case law for such tort claims, would apply. Now, with perhaps six years invested by counsel, the moving parties seek to ensure that there will be no recovery on the tort claim and that the only recovery will be that available under the WISA.

[74] I perceive a clear prejudice to the counsel for the innocent passenger, who will not be entitled to a meaningful costs award from the defendants that realistically reflects the anticipated tort recovery, if the claim is transferred to an entirely different regime.

XII. Courts of Justice Act and Equity

[75] It is sometimes forgotten that in addition to the statutory law and contents of related regulations, the court must also apply equitable principles.

[76] Moreover, when equity and the rules conflict, it is equitable principles that should govern. This is made clear by section 95 of the Courts of Justice Act which reads:

Rules of law and equity

96 (1) Courts shall administer concurrently all rules of equity and the common law. R.S.O. 1990, c. C.43, s. 96 (1); 1993, c. 27, Sched.

Rules of equity to prevail

(2) Where a rule of equity conflicts with a rule of the common law, the rule of equity prevails. R.S.O. 1990, c. C.43, s. 96 (2); 1993, c. 27, Sched.

Jurisdiction for equitable relief

(3) Only the Court of Appeal and the Superior Court of Justice, exclusive of the Small Claims Court, may grant equitable relief, unless otherwise provided.;

[77] This would seem to preclude the application of equitable principles in the decision-making process of the WSIAT.

[78] The defendants factum cites the decision of the Divisional Court in Blatz v Workplace Safety and Insurance Appeals Tribunal (2016 ONSC 7259) as supporting the proposition that the Workplace Safety Insurance Appeals Tribunal has the exclusive jurisdiction to determine whether the right to sue is removed by the Act.

[79] Moreover Justice Thorburn points to the Court of Appeal’s decision in Mills v. (Ontario)WSIAT 2008 ONCA 436, [2008] O.J. No. 2150 indicating that a “very high level of deference is to be afforded WSIAT decisions.”

[80] Thus, if the determination is to be made by that body, based upon seem that they do not have the jurisdiction to import any equitable relief that might be obtained from this court. That decision is not open to review as to factual findings.

[81] I regard the lack of such availability as a factor of prejudice that cannot be addressed by an adjournment nor a costs award.

[82] Rule 37 makes it clear that on motions such as this Masters have all the powers of judges of this court, unless specifically restricted by rule 37.02(2). The relevant portions of that rule read as follows:

Jurisdiction of a Master

(2) A master has jurisdiction to hear any motion in a proceeding, and has all the jurisdiction of a judge in respect of a motion, except a motion,

(a) where the power to grant the relief sought is conferred expressly on a judge by a statute or rule;….

[83] Thus it is appropriate and necessary on a motion such as this to address will relevant equitable principles.

XIII. Lord Denning and Estoppel

[84] It is now been 70 years since Lord Denning defined the equitable principles to be addressed when a party seeks to rely on matters outside the original contractual agreements of the parties in his King's Bench Division decision in Central London Property Trust, Ltd. V. High Trees House, Ltd., [1947] KB 130, [1956] 1 All ER 256, [1946] WN 175.

[85] The headnote describes the nature of the test case heard by Lord Denning:

“Landlords let a new block of flats in 1937 to H. Ltd. (called "the tenants"), on a ninety-nine years' lease at a ground rent of £2,500 a year. Few of the flats had been let at the outbreak of war in 1939, and, in view of the tenants' difficulty in paying the rent out of profits in prevailing conditions, the landlords agreed in writing in 1940 to reduce the rent to £1,250. No duration of the reduction of rent was specified and there was no consideration for it. The tenants paid the reduced rent. By early in 1945 the whole block of flats was let. On Sept. 21, 1945, the landlords wrote asking that the full rent of £ 2,500 should be paid and claiming arrears…”

[86] His Lordship held that the promise of a reduction of rent, being intended to be legally binding and to be acted on, and having been acted on by the tenants, was binding on the landlords to the extent that they would not be allowed to act inconsistently with it, although it was not the subject of estoppel at common law.

[87] His analysis reflects a concern as to the appropriate approach to such cases:

“…If I consider this matter without regard to recent developments in the law there is no doubt that the whole claim must succeed. This is a lease under seal, and at common law, it could not be varied by parol or by writing, but only by deed; but equity has stepped in, and the courts may now give effect to a variation in writing (see Berry v. Berry, [1929] 2 K.B. 316). That equitable doctrine could hardly apply, however, in this case because this variation might be said to be without consideration.

As to estoppel, this representation with reference to reducing the rent was not a representation of existing fact, which is the essence of common law estoppel; it was a representation in effect as to the future -- a representation that the rent would not be enforced at the full rate but only at the reduced rate. At common law, that would not give rise to an estoppel, because, as was said in Jorden v. Money (1854) (5 H.L. Cas. 185), a representation as to the future must be embodied as a contract or be nothing. So at common law it seems to me there would be no answer to the whole claim.

What, then, is the position in view of developments in the law in recent years? The law has not been standing still even since Jorden v. Money. There has been a series of decisions over the last fifty years which, although said to be cases of estoppel, are not really such. They are cases of promises which were intended to create legal relations and which, in the knowledge of the person making the promise, were going to be acted on by the party to whom the promise was made, and have in fact been so acted on. In such cases the courts have said these promises must be honoured. There are certain cases to which I particularly refer: Fenner v. Blake ([1900] 1 Q.B. 426), Re Wickham (4) (1917) (34 T.L.R. 158), Re William Porter & Co., Ltd. ([1937] 2 All E.R. 361) and Buttery v. Pickard (1946) (174 L.T. 144). Although said by the learned judges who decided them to be cases of estoppel, all these cases are not estoppel in the strict sense. They are cases of promises which were intended to be binding, which the parties making them knew would be acted on and which the parties to whom they were made did act on. …. In each case the court held the promise to be binding on the party making it, even though under the old common law it might be said to be difficult to find any consideration for it. The courts have not gone so far as to give a cause of action in damages for breach of such promises, but they have refused to allow the party making them to act inconsistently with them. It is in that sense, and in that sense only, that such a promise gives rise to an estoppel. The cases are a natural result of the fusion of law and equity; for the cases of Hughes v. Metropolitan Ry. Co. (1877) (2 App. Cas. 439), Birmingham & District Land Co. v. London & North Western Ry. Co. (1888) (40 Ch.D. 268), and Salisbury v. Gilmore ([1942] 1 All E.R. 457), show that a party will not be allowed in equity to go back on such a promise. The time has now come for the validity of such a promise to be recognised. The logical consequence, no doubt, is that a promise to accept a smaller sum in discharge of a larger sum, if acted on, is binding, notwithstanding the absence of consideration, and if the fusion of law and equity leads to that result, so much the better. At this time of day it is not helpful to try to draw a distinction between law and equity. They have been joined together now for over seventy years, and the problems have to be approached in a combined sense.

It is to be noticed that in the sixth interim report of the Law Revision Committee, it was recommended that such a promise as I have referred to should be enforceable in law even though no consideration had been given by the promisee. It seems to me that, to the extent I have mentioned, that has now been achieved by the decisions of the courts.

I am satisfied that such a promise is binding in law, and the only question is the scope of the promise in the present case.

[88] Weighing all the factors in the present case and in particular, the conduct of TDX with respect to contractual documents, both before and most importantly, after the accident is such that it would be neither fair nor just to expose this plaintiff to a potential decision that would deny him the recovery available as the pleading stood, at least up until the bringing of this motion

[89] Lord Denning referred to cases decided in this way, for over 50 years prior to his decision. It has now been 70 more years and I see no reason not to apply an equitable estoppel against the moving party by virtue of its conduct both before and after the plaintiff being injured as a ground for denying the amendment sought.

XIV. General Principles

[90] Ultimately I return to the guidance of Rule 1 with respect to the interpretation of of the Rules generally:

General Principle

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

Proportionality

(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

Matters Not Provided For

(2) Where matters are not provided for in these rules, the practice shall be determined by analogy to them.

[91] In my view there is no doubt that as well, in construing the rules it is necessary to apply appropriate equitable principles.

[92] It is clear from the case law dealing with amendments to pleadings, that where there is no possibility of success. It is not appropriate to amend the pleading, but rather the goals of proportionality and judicial efficiency dictate that the matter should be resolved by simply refusing the pleading sought amendment sought.

[93] The difficulty in part is that we are dealing with additional defenses and not new claims. it may be that a new defence can be raised right up to the close of trial. In such cases costs sanctions may be severe.

[94] After the accident happened would seem that efforts were made to obtain a release of any claims that the Happy Life Enterprise Ltd. Had and in any way whatsoever. A representative of TDX Logistics. Mr Kogay signed the “Statement” that may well have been drafted by his organization to address their potential liabilities.

[95] In such circumstances, I see no reason to give any benefit of the doubt to TDX. If they wished to assert the present position they could have done so immediately following the accident. That would have meant that the plaintiff would have been receiving workers compensation payments for the last six years. Instead, he has been left with a tort claim, which only now, when the size of the claim perhaps is better defined, an amendment is now sought.

[96] Based upon the evidence placed before me, I am not prepared at this stage, to find that there has been “no prejudice” to the plaintiffs that falls outside the category of “not compensable by costs or an adjournment”.

XV. Laches

[97] The Dictionary of Canadian Law (Third Edition) edited by Daphne A. Dukelow, addresses the concept of laches in these terms:

1. Negligent or unreasonable delay in pursuing a remedy.

2. "Unreasonable delay simpliciter is not sufficient to allow a party to succeed in the defence of laches, The defendants must establish that the consequences flowing from the unreasonable delay are such that, having regard to the relative positions of the parties presently, granting injunctive relief would lead to inequitable results." Institut national des appellations d'origine des vins & eaux-de-vie v. Andres Wines Ltd. (1987), 16 C.P.R. (3d) 385 at 446, 41 C.C.L.T. 94, 60 O.R.

[98] Here I am satisfied that the plaintiff (respondent on the motion) has demonstrated such potential inequitable results.

[99] This understanding is confirmed in Black’s Law Dictionary (10th Edition) which defines “laches” as::

1. Unreasonable delay in pursuing a right or claim - almost always an equitable one - in a way that prejudices the party against whom relief is sought. - Also termed sleeping on rights.

2. The equitable doctrine by which a court denies relief to a claimant who has unreasonably delayed in asserting the claim, when that delay has prejudiced the party against whom relief is sought.

[100] The definition then refers to this quotation:

"The doctrine of laches ... is an instance of the exercise of the reserved power of equity to withhold relief otherwise regularly given where in the particular case the granting of such relief would be unfair or unjust." William F. Walsh, A Treatise on Equity 472 (1930).

[101] I believe this aptly describes the present situation.

XVI. Reasons for Refusal

[102] In summary, I am satisfied thatthese reasons in their totality and any one or more of the following grounds dictate that the defendants’ motion should be dismissed.

1. The plaintiff will suffer prejudice that cannot be compensated in costs or an adjournment;

2. There have been laches by the defendants in delaying the bringing of this motion without any explanation;

3. The equitable concept of Promissory Estoppel prevents a party that has had the plaintiff alter its position after the accident from then taking a position in directly contrary to that set out in its agreement

4. In cases of promises which were intended to create legal relations and which, in the knowledge of the person making the promise, were going to be acted on by the party to whom the promise was made, and have in fact been so acted on the courts have said these promises must be honoured.

5. To the extent TDX sought to avoid legal consequences of an employee-employer relationship ab initio the court ought not to assist it in now attempting to resile from that bargain.

6. Prejudice will potentially occur if the amendment is allowed as such permission, 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

7. “ Amendments should not be allowed that are late and substantially alter the case to be met.”

8. This result reflects the mandate of Rule 1.04 for all rules to be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

XVII. Disposition

[103] In the result the the defendants’ motion to amend is dismissed with costs on a partial indemnity basis. Following the argument both counsel accepted that $4000 would be an appropriate costs award in this case. The defendant shall pay that amount to the plaintiffs within thirty days.

Released: April 6, 2017

Master D. E. Short

DS/ R.178

Schedule A

Extracts from following decision with my emphasis added.

WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL

DECISION NO. 1720/10

BEFORE: J. Josefo: Vice-Chair

DATE OF DECISION: October 19, 2010

NEUTRAL CITATION: 2010 ONWSIAT 2327

Decision No. 1720/10

REASONS

(i) The right to sue application - the parties

[1] The applicant, Markel Insurance Company of Canada and the co-applicant Sky Network Express Inc., apply for orders removing the right of the respondent, Mr. Bhatti, to apply for statutory accident benefits and to continue a civil action arising out of a motor vehicle accident ("MVA") occurring on September 22, 2006. Markel specifically applies to remove the right of Mr. Bhatti to receive statutory accident benefits. …. Sky Network Express Inc. is the defendant in that civil action.

(ii) Background facts and issues to be determined

[5] The facts which underpin this application are not in any significant dispute. Briefly, on September 22, 2006, while operating a 2006 freightliner truck, Mr. Bhatti was involved in a single vehicle accident. The accident occurred near Thunder Bay, Ontario. Mr. Bhatti was driving the truck when it went into a ditch, returned to the road, and then rolled over.

[6] As a result of the MVA Mr. Bhatti applied for statutory accident benefits through Markel. On September 5, 2008 Mr. Bhatti also commenced his civil action against Sky Network Express Inc. Sky Network Express Inc. defended the civil action and asserted in its pleading that "at all material times the defendant was a Schedule 1 employer and the plaintiff was a Schedule 1 employee ... accordingly the plaintiff's action is statute-barred pursuant to section 28 of the Workplace Safety and Insurance Act, 1997".

[7] The sole issue which must be determined in this proceeding is whether Mr. Bhatti was, at the time of the MVA, a worker of a Schedule 1 employer or whether he was an independent operator.

[11] On January 1, 2006 Mr. Bhatti's company BHS Logistics Inc. and Sky Network Express Inc. entered into a contract. The description of BHS Logistics Inc., "of the second part" of the contract is as follows:

Hereinafter referred to as the " independent contractor", "contracted driver", or "company driver".

[12] The contract thus discusses terms that apply to an independent contractor, contracted driver or company driver. …

[13] Finally, the signature line for Mr. Bhatti is headed "independent contractor, contracted driver or company driver". In the case of Mr. Bhatti the phrase "company driver" is circled.

[16] I agree that Mr. Bhatti may have in some fashion considered himself to be an independent operator. Thus, I agree with counsel for the respondent that the intention of the parties is an important factor to be considered. That being stated, however, the intention must, first, be a mutual one between the two contracting parties, and it also must be supported by the facts and evidence.

[17] In this case, having reviewed the agreement which Mr. Bhatti's corporate entity entered into, it is by no means clear to me that the other contracting party, Sky Network Express Inc., considered Mr. Bhatti to be an independent operator. Indeed, the contract, which is somewhat ambiguous given it appears to attempt to cover multiple scenarios, seems to indicate that Mr. Bhatti was to be considered as a "company driver", given that line was circled on the contract. Thus, even if Mr. Bhatti may, in some way, have considered himself to be an independent operator, I am unable to conclude that Sky Network Express Inc. considered him to be anything other than its employee.

[18] Moreover, in this case, despite the possible intention of Mr. Bhatti, which I find more likely relates to his ability to claim income tax deductions for certain expenses rather than a genuine desire to be an independent operator, the facts discussed above simply do not lead to a conclusion that Mr. Bhatti was an independent operator. Quite simply, there was no chance whatsoever of profit beyond the fixed amount which Mr. Bhatti knew he would be paid based upon mileage, nor was there any risk of loss which Mr. Bhatti could suffer in the course of operating the truck.

[20] In my view, Tribunal Decision No. 1370/06 is applicable to these facts. That earlier decision also involved a truck driver who, while having some trappings of independence, was ultimately found to be an employee. Tribunal Decision No. 1370/06 discussed the law and facts in that case, which facts I note are similar to the matter before me, and came to the following conclusions:

In cases such as this it is rare to find a truly "black and white" relationship. Usually there are nuances and indicia of both sorts of relationship that must be carefully parsed in order to determine the correct result. The example of a "continuum" often applies to these cases: at one end of the continuum there is most clearly established a relationship between worker and employer, while at the other end of the continuum the relationship has all the hallmarks of independence, with the result of a relationship between independent contractor and principal.

I so conclude because, as Mr. Jovanovic well summarized when referring to Tribunal Decision No. 659/91, the issue is "the substance and not the form" of the relationship. In this case, I find that the substance of the relationship between the parties is more accurately described as that of worker and employer, rather than independent contractor and principal.

In my view the line of "trucking cases" relied upon by the Applicant more accurately fit the fact scenario in this matter. Tribunal Decision No. 105/93 makes it clear that, despite the intention of the parties, the Plaintiff was a truck driver who had entered into an employment relationship with the purported contractor. Considering the lack of chance of profit or risk of loss, that Panel concluded that the Plaintiff was a worker in the course of employment with thus no right to sue.

Out of the reasoning on this matter has evolved a test referred to as the "business reality" or "hybrid" test. The leading case in the development of this test was Decision No. 921/89, 14 W.C.A.T.R. 207. At page 225, the Panel, in that decision offered the following reasoning of the development of this particular test:

The actual name applied to the test whether "integration" test, "organization" test, "hybrid" test or "business reality" is not important. What is important is that parties have an idea of the factors to be considered by the Appeals Tribunal in determining status as a "worker" or "independent operator". By referring to these factors parties may themselves develop a sense of the character or reality of the business relationship and thus make a realistic assessment of the situation. It is the opinion of this panel that the factors enumerated in this decision assist in this goal to a greater extent than merely asking whether the work is "integral" to the overall business. The question to be asked is, "what is the true nature of the service relationship between the parties, having regard to all relevant factors impacting on that relationship"?

[21] In my view, considering the facts of this matter before me, there can be no doubt that Mr. Bhatti was a worker and was in the course of his employment when the unfortunate MVA occurred on September 22, 2006. Thus, Mr. Bhatti's right to claim statutory accident benefits arising out of that MVA is taken away. Similarly, Mr. Bhatti has no right to sue and to continue the earlier described civil action arising out of that MVA, but he may claim WSIB benefits within the time limits provided when such civil actions are found to be statute-barred.