Court File and Parties

COURT FILE NO.: CV-01-218464CM3 DATE: 20170704 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Atomic Energy of Canada Ltd. AND: Allianz Global Risks US Insurance Company formerly Allianz Insurance Company of Canada

BEFORE: Madam Justice J.T. Akbarali

COUNSEL: Ahab Abdel-Aziz and David Woodfield for the plaintiff Brian Brock and Eric Adams for the defendant

HEARD: June 21, 2017

Endorsement

Overview

[1] In 1998, the defendant Allianz Global Risks US Insurance Company, formerly Allianz Insurance Company of Canada, (“Allianz”) sold an occurrence-based, all risks course of construction insurance policy to Atomic Energy of Canada Limited (“AECL”). The policy insured AECL against “all risks of physical loss or damage” in respect of a project involving the construction and commissioning of two Maple reactors and an isotope production facility. This is the MMIR Project.

[2] “AECL a/o MDS Nordion and other affiliated, subsidiary companies” was the principal named insured under the policy. The policy named as additional insureds “all contractors of any tier, architects, engineers, consultants and all individuals or firms providing services or materials to or for the named insured”.

[3] AECL alleges that the installation of tubing, including swagelok connections, in the MMIR project was deficient, and that as a result of those deficiencies, the operating systems of the MMIR Project became contaminated and sustained physical damage to its vital systems and structures. On October 1, 2001, AECL commenced a claim seeking indemnity under the policy. It sought payment sufficient to compensate it “for all losses, damages and extra expense sustained as a result of physical loss and damage to the MMIR Project in the course of construction, installation, reconstruction and repair”. It implicated a company it engaged, Comstock Canada Limited, in the defective work.

[4] Although not particularized in the original statement of claim, the loss relates to the failure of the shut off rods (SORs), which occurred after the injection of nuclear fuel into the reactor.

[5] In its amended as fresh statement of defence, Allianz resists AECL’s claim on several bases. It argues that the claim was not issued within the limitation period. It argues that AECL delivered no Proof of Loss as required by the policy. It argues that coverage under the policy ceases once fuel is introduced into the reactor, and that the damage was sustained after fuel was first introduced into the reactor, such that the policy does not respond to the loss. It argues that “the occurrence(s) underlying the losses” were caused by defective design or mechanical or electrical breakdown, both of which constitute exclusions under the policy.

[6] The action has been ongoing for a long time. It is scheduled to proceed to a seven week trial in February 2018, a date that is peremptory to both parties. Some 11,000 documents comprising around 230,000 pages have been produced; almost all of these documents are AECL’s. Discoveries have taken place, including eleven days of examination of AECL’s representative.

[7] Issues canvassed on discoveries include alternative ways by which the operating systems of the MMIR project may have become contaminated. Allianz also examined on whether AECL has already recovered some or all of its losses from amounts paid to AECL by others, including Comstock and MDS Nordion.

[8] Between September 1, 2016 and April 6, 2017, Allianz delivered expert reports which implicate other causes in the failure of the SORs, including weld spatter, galling and passivation. The reports also address whether AECL is seeking double recovery in this action in view of the payments it has received from Comstock and MDS Nordion.

[9] On April 12, 2017, AECL delivered a proposed draft amended statement of claim to Allianz. AECL argues the amendments are necessary to regularize the pleadings so that they define the issues on which the parties will join at trial, as those issues have been developed in Allianz’s expert reports.

[10] Allianz objects to three paragraphs in the proposed amended pleading, as follows:

a. Allianz objects to para. 5, which alleges that pursuant to the policy, AECL is agent and trustee in respect of any loss payable under the policy for MDS Nordion and the additional insureds including Comstock. The paragraph also alleges that MDS Nordion and Comstock assigned their rights under the policy to AECL in settlements concluded in 2006 and 2003 respectively. It pleads that AECL is entitled to payments of any amounts due to MDS Nordion and Comstock under the policy.

b. Allianz objects to para. 10, which alleges that “work improperly performed during construction, including the installation of the tubing, caused particles to be introduced into the operating systems of the MMIR Project, which particles caused the SORs to fail”, and

c. Allianz objects to para. 11, which alleges that as a result of the “work improperly performed during construction (and therefore before fuel load) on the MMIR Project”, the operating systems of the project became contaminated and sustained physical damage to their vital systems and structures.

[11] AECL states that it is not advancing a claim as assignee of MDS Nordion or Comstock. Rather, it pleads that it has been assigned their causes of action and is “agent and trustee” in respect of any loss payable under the policy for MDS Nordion and the additional insureds (which include Comstock) to address the double recovery argument. It argues that its original pleading incorporated the policy in its entirety, so this adds nothing new; that AECL is agent and trustee is set out in the policy itself.

[12] AECL also states that it is not attempting to run a new causation theory. It maintains that the work improperly performed was the installation of the tubing which caused particles to be introduced into the operating systems of the MMIR project, which particles caused the SORs to fail. It argues that until Allianz delivered its expert reports, AECL did not know which of the many alternative causation theories Allianz would run at trial. AECL maintains that the theories of Allianz’s experts are wrong. However, AECL wants to be in a position to argue that those theories (or some of them), if accepted at trial, still lead to liability under the policy.

[13] Allianz argues that the amendments amount to new causes of action. It argues these new causes of action are without sufficient particulars. It argues that the claim related to the assignment of rights from MDS Nordion and Comstock is not tenable at law. It argues that the amendment cannot be allowed because it would result in prejudice to Allianz that cannot be compensated for by costs or an adjournment. It alleges prejudice because it claims the limitation period has expired for what it states are new causes of action. It alleges presumed prejudice due to the inordinate passage of time. It alleges actual prejudice due to the death of a former AECL employee and the loss of records of companies that were involved in the MMIR project.

Issues

[14] On this motion, I must determine the following issues:

a. Do the proposed amendments raise new causes of action?

b. Do the proposed amendments create prejudice to Allianz? Specifically,

i. Would the proposed amendments involve prejudice due to the expiry of a limitation period?

ii. Has there been an inordinate delay giving rise to presumed prejudice? If so, has AECL rebutted the presumption of prejudice?

iii. Would granting the proposed amendments cause actual prejudice?

c. Is the proposed amendment related to the assignment of rights from MDS Nordion and Comstock to AECL tenable at law?

d. Do the proposed amendments contain sufficient particulars?

Principles that Govern the Amendment of Pleadings

[15] Rule 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides:

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.

[16] The parties agree on the general principles that inform an analysis as to whether to allow amendments to a pleading. In 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42 at para. 25, 2017 CarswellOnt 369, the Court of Appeal summarized these as follows [citations omitted]:

a. The rule requires the court to grant leave unless the responding party would suffer non-compensable prejudice, the amended pleadings are scandalous, frivolous, vexatious or an abuse of the court’s process, or the pleading discloses no reasonable cause of action;

b. The amendment may be permitted at any stage of the action;

c. There must be a causal connection between the non-compensable prejudice and the amendment. The prejudice must flow from the amendment and not from some other source;

d. The non-compensable prejudice may be actual prejudice, i.e. evidence that the responding party has lost an opportunity in the litigation that cannot be compensated as a consequence of the amendment. Where such prejudice is alleged, specific details must be provided;

e. Non-compensable prejudice does not include prejudice resulting from the potential success of the plea or the fact that the amended plea may increase the length or complexity of the trial;

f. At some point the delay in seeking an amendment will be so lengthy and the justification so inadequate, that prejudice to the responding party will be presumed;

g. The onus to prove actual prejudice lies with the responding party;

h. The onus to rebut presumed prejudice lies with the moving party.

[17] In Marks v. Ottawa (City), 2011 ONCA 248 at para. 19, 2011 CarswellOnt 2165, the Court of Appeal noted there is no absolute right to amend pleadings. The court has a residual right to deny amendments where appropriate. Factors to be considered include:

a. An amendment should be allowed unless it would cause an injustice not compensable in costs;

b. The proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious;

c. No amendment should be allowed which, if originally pleaded, would have been struck;

d. The proposed amendment must contain sufficient particulars.

Do the proposed amendments plead new causes of action?

[18] Before considering the sufficiency of the proposed amendments or the prejudice they are alleged to cause, it is necessary to properly characterize them. Allianz argues that they are new claims. This characterization is essential to its claims of prejudice and whether the amendments are tenable at law. AECL argues that they are not new claims, but rather particulars, or additional facts upon which the original right of action is based.

[19] In Ascent Incorporated v. Fox 40 International Inc., Master Dash considered whether proposed amendments pleaded new causes of action. He wrote:

A “cause of action” has been defined as a “factual situation the existence of which entitles one person to obtain from the court a remedy against another person”. The key is whether substantially all of the material facts giving rise to the “new cause of action” have previously been pleaded or whether new facts are sought to be added that are relied upon to support a new cause of action. A new cause of action is not asserted if the amendments simply plead an alternative claim for relief arising out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon which the original right of action is based. [cites omitted]

[20] Penny J. quoted this passage with approval in GMIC Inc. v. Ola, 2010 CarswellOnt 10767 at para. 14 (S.C.J.).

The Causation Amendments

[21] Allianz argues that the proposed amendments amount to a new cause of action because they allege a new occurrence – a new set of alleged facts that led to the contamination and physical damage to the vital structures of the MMIR Project. It points to the policy which defines “occurrence” as “any one loss, disaster or casualty or series of losses, disasters or casualties arising out of one event”. It points to the discovery transcripts where counsel for AECL repeatedly affirms that the “occurrence” that forms the basis of the claim is the installation of the tubing.

[22] Allianz is correct that the policy is occurrence-based. However, the policy also provides that “[i]f the property insured…be lost, destroyed or damaged by a peril for which insurance is provided…the Insurers will indemnify the Insured against the direct loss so caused…” The policy insures against “All Risks of physical loss or damage” except as specifically excluded.

[23] Allianz points to the policy which requires an insured to deliver, as soon as practicable, to the insurer a proof of loss that, among other things, must state “when and how the loss occurred…” I note that this requirement is qualified. The insured must state when and how the loss occurred “so far as the insured knows or believes”.

[24] In its original pleading, AECL clearly pleads that deficient work resulted in the operating systems of the MMIR Project becoming contaminated and sustaining physical damage to their vital systems and structures. This is the physical loss or damage which AECL claims is covered. AECL also pleads that the cause of the physical loss or damage was the installation of tubing, including swagelok connectors. Then and now, so far as AECL knows or believes, the installation of tubing is how the loss occurred.

[25] In my view, there is only one occurrence. It is the physical loss or damage that resulted from the contamination of the vital systems of the MMIR Project. The cause of that contamination might have been the installation of the tubing. It might have been weld spatter or passivation or any of the other causes advanced by Allianz’s experts. The trial judge will determine that issue [1].

[26] In its original pleading, AECL alleges that it is entitled to full indemnity for all losses, damages and expenses sustained as a result of physical loss and damage to the MMIR Project in the course of construction, installation, reconstruction and repair. It pleads the policy of insurance, which is incorporated into the pleading by reference. It alleges that the operating systems of the MMIR Project became contaminated and sustained physical damage to their vital systems and structures, and as result thereof, AECL suffered loss, damage and delay. AECL pleads it is entitled to full indemnity pursuant to the policy of insurance. This is the cause of action: Dimartino v. Gacek, 2010 ONSC 2124 at paras. 22-23. In my view, alleging a different cause of the physical loss or damage – the contamination – does not amount to alleging a new cause of action. The mechanism by which the vital systems and structures of the MMIR project were damaged are additional facts upon which the original cause of action is based, not the cause of action itself.

The Double Recovery Amendments

[27] The paragraph in the pleading with respect to double recovery states:

Pursuant to the policy, AECL is agent and trustee, in respect of any loss payable under the policy, for MDS Nordion and the additional insureds, including Comstock Canada Limited (“Comstock”). Furthermore, MDS Nordion and Comstock assigned their rights under the policy to AECL in settlements concluded in 2006 and 2003, respectively. To the extent that any amount is due to MDS Nordion or Comstock, under the policy, then AECL is consequently entitled to payment of those amounts.

[28] Allianz argues that this is a new cause of action because it asserts AECL’s right to recover amounts owing to MDS Nordion and Comstock. These rights have never been asserted by MDS Nordion or Comstock.

[29] AECL argues this pleading does not amount to a new cause of action. To assert MDS Nordion’s or Comstock’s rights under the policy, AECL would have had to plead the losses of the assignors, a breach of contract by the insurer with respect to the assignors and the interest of the assignors in the property lost or damaged, none of which it has done. It argues that its status as agent and trustee is not a new pleading at all, since it is set out in the policy which was incorporated in the original pleading by reference. According to AECL, all this pleading does is defend against the double recovery argument. AECL states that it made payments to others including MDS Nordion and Comstock, which funded repairs and loss at a time when the insurer was not responding. AECL refunded those payments and settled with MDS Nordion and Comstock, which settlement included taking an assignment of their rights under the policy.

[30] I accept AECL’s argument that the first sentence of the impugned paragraph is not a new pleading. AECL’s status as agent and trustee is set out clearly in the policy which was specifically pleaded in the original claim and thus incorporated by reference into the pleading.

[31] However, the second sentence of the paragraph does raise a new cause of action. In it, AECL asserts a right it did not assert before: the right to MDS Nordion’s and Comstock’s recovery under the policy due to the assignment. Although I agree with AECL that the proposed amendments are not sufficient to plead this new cause of action, that does not mean that AECL has not pleaded a new cause of action; rather it means it has not fully pleaded a new cause of action.

[32] The claim to entitlement to amounts due to MDS Nordion and Comstock based on the assignment of their rights under the policy is not an alternative claim for relief based on facts previously pleaded nor a different legal conclusion from the same set of facts already pleaded - it relies on the pleading of the assignment. Nor can the pleading of the assignment be considered particulars of an allegation already pled or additional facts upon which the original right of action was based, when the original pleading did not raise the issue of MDS Nordion’s or Comstock’s entitlement under the policy, and they never asserted it themselves.

[33] The third sentence of the impugned paragraph relates to both, the first and second sentence. To the extent it claims an entitlement to proceeds under the policy due to MDS Nordion and Comstock as a result of the assignment, it is a new cause of action. To the extent it claims entitlement to those proceeds based on AECL’s status as agent and trustee set out in the policy, it is not a new cause of action because the policy was incorporated by reference in the original claim. Thus, any such claim advanced was advanced in the original claim. The original claim may have been defective in that it did not set out all the material facts on which the plaintiffs relied. However, the insurer had to be aware of the reasons for its potential liability under the policy, including AECL’s status as agent and trustee for the other insureds. The original claim thus met the test of requiring a minimum level of material fact. The original deficiencies are cured by these proposed amendments if they are allowed: MacGregory v. Royal and Sun Alliance Insurance Co. of Canada, [2009] O.J. No. 1564 at paras. 4-6 (S.C.J.).

Do the proposed amendments create non-compensable prejudice?

Would the proposed amendments involve prejudice due to the expiry of a limitation period?

[34] The loss of a limitations defence gives rise to a presumption of prejudice: Frohlick v. Pinkerton Canada Ltd., 2008 ONCA 3 at para. 28.

[35] However, for prejudice relating to the expiry of a limitation period to be relevant to a pleadings amendment, the amendments must raise a new cause of action. I have found the amendments relating to causation do not raise a new cause of action. Therefore, there is no prejudice relating to the expiry of a limitation period with respect to paragraphs 10 and 11.

[36] With respect to paragraph 5, I have found that the first sentence and the last sentence (to the extent it relates to the first sentence) do not raise a new cause of action. Rather, to the extent they raise a claim to proceeds to which MDS Nordion or Comstock were entitled, or to which AECL was entitled as agent and trustee, that claim was raised in the original pleading. However, the second sentence of the paragraph raises a new cause of action for which the limitation period has clearly expired. There is thus non-compensable prejudice related to the second sentence of paragraph five. Therefore, leave is denied to plead the claim for entitlement to the proceeds due to MDS Nordion or Comstock on the basis of the assignment.

[37] Since I have denied leave to plead the second sentence of paragraph 5 on this basis, the analysis that follows considers only the first and third sentences of paragraph 5, and paragraphs 10 and 11.

Has there been an inordinate delay giving rise to presumed prejudice that is not rebutted?

[38] Allianz argues that after an inordinate period of delay, prejudice to the defendant is presumed to exist. It argues that delay is measured from the outset of the action: 1588444 Ontario Ltd. at para. 44; Robins v. PriceWaterhouseCoopers LLP, 2017 ONSC 1778 at para. 9. Presumed prejudice relates to matters that are difficult to prove, like the natural degradation of human memory over time. Allianz argues that the delay at issue here is sixteen years, being the time that has passed since the claim was first issued. It argues this is inordinate delay, and prejudice is presumed as a result. It argues that AECL has failed to rebut the presumption of prejudice. Thus, even if the pleadings do not raise a new cause of action, the amendments should be denied because of presumed prejudice.

[39] AECL argues that the delay should be measured from the time it was aware it should amend its pleadings. Allianz’s last expert report was delivered less than a week before it delivered its proposed amended pleadings. It thus argues there is no inordinate delay. In any event, it argues that there is justification for the delay, because it was only after Allianz’s expert reports were delivered that AECL understood the causation theory Allianz would run at trial, and was able to seek to amend its pleading. AECL also argues that there is no prejudice. It points to the full discovery that Allianz has had on the possible causes of the contamination and the double recovery issues. It points to the documentary production which included documents relating to AECL’s investigation of the cause of the contamination, and double recovery. It points to the fact that Allianz has produced expert reports affirming alternative causes of the contamination and addressing the double recovery argument. AECL points out that non-compensable prejudice which can defeat an amendment must flow from the amendment. Since Allianz intends to join these issues at trial in any event, any prejudice does not flow from the amendments.

[40] In Family Delicatessen Ltd. v. London (City), 2006 CarswellOnt 1021 at para. 6 (C.A.), the Court of Appeal noted that delay is not in and of itself a basis for refusing an amendment. However, there is a point where the delay is so long and the justification so inadequate that prejudice to the defendants will be presumed. In that case, the moving party could have brought their motion at any time after the outset of the proceedings. There was no justification for the delay.

[41] For purposes of this argument, I assume without deciding that inordinate delay should be measured from the commencement of the action. The delay in this case is thus sixteen years, and inordinate.

[42] However, I find that AECL has rebutted the presumption of prejudice arising from the inordinate delay. In particular, (i) AECL’s voluminous productions, (ii) the lengthy discovery of its representative that included questions on double recovery and other possible causes of the contamination, and (iii) the fact that Allianz has apparently developed a sufficient factual record to enable its experts to opine on other possible causes of the contamination and double recovery all point to a lack of prejudice. Allianz intends to argue double recovery and the alternative causes of the contamination at trial. It is difficult in these circumstances to see how the passage of time has prejudiced Allianz with respect to these amendments.

[43] Moreover, I accept AECL’s argument that to deny an amendment on the basis of prejudice requires a finding that the prejudice flows from the amendment. Since the issues raised by the amendments will be argued at trial in any event, I find that any presumed prejudice that exists with respect to these issues does not flow from the amendments.

Would granting the proposed amendments cause actual prejudice?

[44] Allianz points to several items of actual prejudice. First, Allianz provided evidence that many outside contractors involved with the MMIR project are no longer in business or have destroyed their records. The implication is that the evidence of the contractors could be relevant to the cause of the contamination. It is not that the evidence of the contractors could be relevant to the double recovery argument.

[45] The evidence Allianz has led does not establish that the contractors that are unable to provide records had anything to do with the work relevant to the causation theories Allianz’s experts are advancing. Moreover, there is obviously enough evidence available to allow Allianz’s experts to advance their theories. I thus find that there is no evidence of actual prejudice related to the contractors that are not in business or that no longer have records.

[46] I note, although it is not determinative, that Allianz has had production of 11,000 records from AECL. It has never asked for production of Comstock’s records although Comstock was implicated at the outset. I also note that Allianz has discovered exhaustively about other potential causes of the contamination and there is no evidence that until this motion, Allianz made any effort to determine if records are available from the contractors it now identifies.

[47] Second, Allianz points to the death of AECL’s quality surveillance representative for contractors’ work, Mario Baltazar. Mr. Baltazar died in 2010. Allianz notes that his evidence and recollections are now no longer available. AECL argues that Mr. Baltazar authored only two of the 11,000 documents it produced in this litigation, and Allianz made no effort to examine him or seek undertakings to obtain Mr. Baltazar’s recollections earlier. I note that the first day of discovery of AECL’s representative was in March 2010. I do not know when in 2010 Mr. Baltazar died, but Allianz did not argue that it did not have the opportunity on discovery to ask for Mr. Baltazar’s recollections.

[48] In any event, given that Mr. Baltazar authored only two of 11,000 documents, and at least one of those was a summary without comment of other documents, Allianz has not established actual prejudice relating to Mr. Baltazar’s death.

[49] Third, Allianz points to a metallurgical analysis done by AECL in late 2001. It notes that a report was produced and made final in January 2002. However, the drafts of this report are not available. AECL advises it has looked, but cannot find them. I fail to see how this prejudice is caused by the proposed amendments. AECL produced the final metallurgical report among its 11,000 productions. It would have produced the drafts if it could locate them. To the extent there is prejudice to Allianz as a result of not having the drafts, that prejudice pre-existed the proposed amendments.

[50] Finally, Allianz argues that the proposed amendments create significant questions as to when, why and how the loss or contamination occurred and that these questions are relevant to a number of coverage issues. This complaint is not really a complaint of actual prejudice as much as it is a complaint about lack of particulars. I will deal with it in the context of the argument with respect to whether the proposed amendments contain sufficient particulars.

Are the proposed amendments related to the assignment of rights from MDS Nordion and Comstock tenable at law?

[51] Allianz’s argument that the proposed amendment is not tenable at law relates to the claim about the assignment of rights to AECL from Comstock and MDS Nordion. I have already determined that leave is not granted to amend the pleading to add this sentence. It is thus not necessary to address whether the claim was tenable at law.

Do the proposed amendments contain sufficient particulars?

[52] Allianz argues that AECL’s proposed pleading related to the cause of the contamination is deficient because it does not contain sufficient particulars. By referring only to “work improperly performed during construction”, AECL has left Allianz unable to address numerous coverage questions, including the grant of coverage, the nature of the amended claim and whether the work performed actually was improper, the fortuity of the event, the applicability of exclusions and exceptions, the Scope of Coverage provision, the limitations defence, and other issues. It sets out a number of these issues in detail at para. 79 of its factum.

[53] On the motion, AECL stated that the “other work improperly performed during construction” is the work advanced by Allianz’s experts as the cause of the contamination. As is apparent, I have relied on AECL’s statement of its posiiton in my analysis of prejudice.

[54] After the draft claim was delivered to Allianz, counsel for Allianz wrote to counsel for AECL seeking particulars of the “other work improperly performed during construction”. AECL responded by saying that the “other work” includes “any work (in addition to what is already set out in the claim) that the evidence discloses caused particulates to be introduced into the operating systems of the MMIR Project and resulted in, or contributed to, the failure of the SORs”.

[55] AECL’s answer to counsel’s demand for particulars is not consistent with its position advanced on this motion. Based on AECL’s response, Allianz was right to be concerned that AECL was opening up its case to include theories of causation that were as yet undisclosed, on which discoveries had not occurred, and perhaps on which an evidentiary record could not be developed.

[56] The proposed amendments as they stand plead the minimum level of material fact, and further particulars are not required for Allianz to plead. However, I am not dealing only with whether the proposed amendment is sufficient to allow Allianz to plead in response. Rather, especially at this stage in the action, I am cognizant that there is a second purpose to particulars – to prevent surprise at trial. Particulars can be ordered during the discovery process where the complexity of the litigation requires it: Six Nations of the Grand River Band v. Canada (Attorney General) at para 7 (Ont. Div. Ct.).

[57] I agree that the pleading does not contain sufficient particulars to limit the scope of the action to the issues that AECL argued do not cause non-compensable prejudice.

[58] Normally a pleading without sufficient particulars would be struck with leave to amend. In this case, I am dealing with a motion to amend pleadings.

[59] I am case managing this action, which, as I have noted, has a trial date peremptory to both parties in February 2018. Rule 1.04(1) of the Rules of Civil Procedure requires me to construe the Rules “to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits”. Rule 1.04(1.1) directs me to make orders “that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding”.

[60] I find that the most expeditious way to allow for the determination of the issues raised in this proceeding on the merits is to grant leave to AECL to amend its pleading to raise the causation issues asserted by Allianz’s experts, but only those additional causation issues. AECL must amend its proposed amendments to restrict the “other work improperly performed during construction” to only those theories that are advanced by Allianz’s experts as the cause of the contamination.

Conclusion

[61] AECL is granted leave to amend its pleading by adding the proposed first and third sentences to paragraph five, but not the second sentence.

[62] AECL is granted leave to amend its pleading to address the additional causation theories advanced by Allianz’s experts, but it must provide better particulars than are currently pleaded in paragraphs 10 and 11 of the proposed amended pleading, so that the pleading clearly relates only to AECL’s long-standing causation theory (the tubing and swagelok connectors) and to the causation theories advanced by Allianz’s experts.

[63] I also grant AECL leave to amend its pleading to include the rest of the proposed amendments in its draft amended statement of claim, none of which were in dispute on this motion.

[64] With the trial date fast approaching, there is no time to waste in settling the form of the amended claim that will be issued. Accordingly, if there are disagreements as to whether the redrafted paragraphs 10 and 11 provide sufficient particulars as required by these reasons, I may be spoken to. The parties may also direct the draft order to my attention for signature.

[65] In addition, while there is currently a timetable in place for this action, it does not address any additional productions or discoveries that may be necessary as a result of these pleadings amendments. I direct the parties to confer on those issues. If they are able to consent to a timetable, they should advise me what it is. If further productions and discoveries are necessary, and the parties cannot consent to a timetable, they should arrange a case conference with me as soon as possible to set a timetable.

Costs

[66] There is divided success on this motion. If the parties cannot agree on costs, they should confer and propose a timetable to deliver costs submissions. In my view, it would be appropriate for the parties to exchange costs submissions of no more than three pages on the same day, with brief responses of no more than two pages to be exchanged within a few days thereafter.

Madam Justice J.T. Akbarali Date: July 04, 2017.

[1] The implications of the timing of the contamination and the manifestation of the loss or damage is also a matter for the trial judge to determine.