Court File and Parties

COURT FILE NO.: 14-CV-516581 MOTION HEARD: September 20 and October 28, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

Re: Coast Capital Equipment Finance Ltd., Applicant v. Old Republic Insurance Company of Canada, Respondent

Application Under Rules 14.05(3)(d) and (h) of the Rules of Civil Procedure

BEFORE: Master Thomas Hawkins

APPEARANCES: Christopher Reain, for moving respondent Fax: (416) 304-9340

Caroline Gronke, for responding applicant Fax: (416) 366-1466

REASONS FOR DECISION

Nature of Motion

[1] This is a motion by the respondent Old Republic Insurance Company of Canada (“Old Republic”) for leave to deliver an amended factum in response to the application by Coast Capital Equipment Finance Ltd. (“Coast Capital”). The underlying application is one by Coast Capital for a declaration that Coast Capital is entitled to be defended by Old Republic in respect of three actions arising out of a motor vehicle accident.

[2] Coast Capital takes the position that under the terms of a certificate of insurance issued by Old Republic as underwriter, Old Republic is obliged to defend Coast Capital in respect of the three actions.

[3] As part of its response to the underlying application by Coast Capital, Old Republic delivered a factum dated June 16, 2016 and other responding application materials. An issue has arisen as to whether in its original factum of June 16, 2016 Old Republic admitted that it provided liability coverage to Coast Capital under the certificate of insurance which Old Republic issued to the named insured 6225614 Canada Inc. (“622”).

[4] If Old Republic did make such an admission in its original factum, Old Republic seeks leave to deliver an amended factum which does not contain such an admission.

[5] Coast Capital opposes this motion.

[6] The original Old Republic factum of June 16, 2016 is inconsistent on the subject of whether the certificate of insurance which Old Republic issued to 622 provided liability coverage to Coast Capital. Paragraphs 2(ii) and 18 (ii) state that Old Republic did provide liability coverage to Coast Capital. By contrast, paragraph 25 of that same factum denies that Old Republic provided any liability coverage to Coast Capital.

[7] The affidavits and exhibits which Old Republic delivered in response to the underlying application do not contain any admission that Old Republic provided any liability coverage to Coast Capital.

Guiding Principles

[8] Rule 51.03 of the Rules of Civil Procedure deals with the subject of withdrawing admissions. However the scope of this rule does not extend to the withdrawal of admissions made in a factum.

[9] In my view this is a motion seeking leave to withdraw an admission of law or of mixed fact and law. The factual element is the wording of the certificate of insurance which Old Republic issued to 622. Old Republic is not seeking to alter the evidence as to the wording of that certificate of insurance. Old Republic is seeking to withdraw the legal conclusion that the correct conclusion of law to draw from the wording of the certificate of insurance in question is that the certificate of insurance did provide liability coverage to Coast Capital.

[10] In Serra v Serra, 2009 ONCA 105, 93 O.R. (3d) 161 R.A. Blair J.A. (who delivered the judgment of the Court of Appeal for Ontario) dealt with the principles to apply on motions to withdraw admissions of law and admissions of mixed fact and law. He expressed himself as follows (at paragraphs 114 and 115).

114 In adopting this stance, the trial judge remained true to a theme running through the jurisprudence relating to the withdrawal of admissions of mixed fact and law: an admission may be withdrawn if, in all the circumstances, there is a triable issue that out to be tried in the interests of justice rather than left to an admission of fact: see Norlympia Seafoods Ltd. v. Dale & Co. (1982), 141 D.L.R. (3d) 733 (BCCA), at pp. 735-737; Gardiner v. Minister of National Revenue, [1964] S.C.R. 66 (per Cartwright J. in Chambers), at p. 68; Zellers Inc. v. Group Resources Inc. (1995), 21 O.R. (3d) 522 (Gen Div.), at pp. 531-533. In Abacus Cities Ltd. v. Port Moody (1981), 26 B.C.L.R. 381, at p. 383 (C.A.) Chief Justice Nemetz observed:

It seems to me that … a judicial admission should be allowed to be withdrawn if, in the circumstances, the court is satisfied that it is in the interest of justice to withdraw same.

115 While the principles cited above have evolved in circumstances where it is the person making the admission who seeks to withdraw it or to lead evidence contradicting the admission, I see no reason why they are not applicable to situations like the case at bar. Mr. Serra is not seeking to withdraw his admission or to resile from the withdrawal of his answer to the trust claims. The principle remains valid nonetheless: although the fact of the admission and the circumstances surrounding it may influence the court’s determination of what effect to give to it, the court is not bound to give effect to an admission of law, or of mixed fact and law, if in all the circumstances the interests of justice dictate that the issue should be determined at a trial rather than by way of admission.

[11] The circumstances surrounding the supposed erroneous admission that Old Republic provided liability coverage to Coast Capital under the certificate of insurance which Old Republic issued to 622 are as follows.

[12] This motion is supported by an affidavit sworn by Patrick Monahan. Mr. Monahan is the lawyer who drafted Old Republic’s initial factum dated June 16, 2016.

[13] In his affidavit Mr. Monahan states that there is another issue before the court on the underlying application, namely that of whether the certificate of insurance was properly cancelled before the date of the accident leading to the three civil actions against Coast Capital.

[14] Mr. Monahan says that he became excessively focused on this cancellation of insurance issue and that in consequence, he failed to notice the erroneous admissions of liability insurance coverage in the factum of July 16, 2016 until he began to prepare to argue the hearing of the underlying application. At that time he prepared and served a revised factum which did not contain any admission of liability coverage for Coast Capital.

[15] Mr. Monahan goes on to state that he never had any instructions from Old Republic to admit that Old Republic ever provided any liability coverage to Coast Capital.

[16] In Serra (at paragraph 115, supra) R.A. Blair J.A. summarized in the following terms the law respecting motions to withdraw admissions. He said that

“… the court is not bound to give effect to an admission of law, or of mixed fact and law, if in all the circumstances the interests of justice dictate that the issue should be determined at a trial rather than by way of admission…”

[17] This statement of R.A. Blair J.A. is consistent with the many cases expressing this court’s strong preference for deciding issues on their merits and not on the basis of factors separate and apart from the merits.

[18] The evidence before me is clear that the admissions in the Old Republic factum of June 16, 2016 that Old Republic provided liability coverage to Coast Capital were not caught and corrected before that factum was served and filed was the result of a solicitor’s error, namely that of Mr. Monahan.

[19] In my view, the interests of justice dictate that the underlying application should be decided on its merits and not on the basis of a solicitor’s error unless the prejudice to Coast Capital if this motion is granted is so great that this motion should be dismissed.

[20] Coast Capital deals with the subject of prejudice to Coast Capital in paragraph 26 of its factum. There counsel for Coast Capital submitted as follows.

“The Applicant [Coast Capital] will be prejudiced by the withdrawal of the admission … [because with] such withdrawal … ‘the Application is fundamentally changed’.”

[21] The quotation “the Application is fundamentally changed” is taken from the endorsement of Goldstein J. of June 23, 2016 when the application in question came on for hearing. On the eve of the hearing Old Republic’s counsel had served and filed a revised factum which did not contain any admission that Old Republic had provided liability coverage to Coast Capital, subject to the issue of whether that coverage was cancelled before the motor vehicle accident in question occurred.

[22] Goldstein J. felt that Old Republic could not withdraw the admission of coverage simply by delivering a revised factum. Goldstein J. stated that a motion by Old Republic was required to determine whether the change in Old Republic’s factum constituted the withdrawal of an admission requiring leave of the court. Goldstein J. went on to timetable the motion by Old Republic for leave to withdraw the admission of liability coverage.

[23] Goldstein J. granted Coast Capital an adjournment of the hearing of its application and an award of $6,000 in costs thrown away as well as the right to seek additional costs for preparation time for the hearing of June 23, 2016.

[24] The fact that Goldstein J. directed Old Republic to bring a motion for leave to withdraw any admissions of liability coverage means that the court was not of the view that the prejudice to Coast Capital was so great that such a motion was pointless.

[25] In summary, I am of the view that the prejudice to Coast Capital despite the adjournment and costs which Goldstein J. awarded to Coast Capital is not so great that this motion should be dismissed.

Result and Terms

[26] For all the above reasons, this motion is granted. Old Republic is hereby given leave to deliver a revised factum in terms of its revised factum of June 22, 2016. This order is subject to the term that Coast Capital may deliver a reply factum and additional affidavit evidence within 45 days.

[27] I am aware that Coast Capital sought additional terms. For above term is the only one I feel is appropriate.

Costs

[28] In disposing of this motion in the way that I have, I have given Old Republic an indulgence. The price of an indulgence is the payment of costs to those who have sought unsuccessfully to prevent its being granted. See Fox v. Bourget (1987), 17 C.P.C. (2d) 94 (Ont. Dist.Ct.) .

[29] I therefore award the costs of this motion fixed at $6,000 to Coast Capital and order Old Republic to pay such costs within 30 days.

(original signed)_______ Master Thomas Hawkins

Release Date: January 25, 2017