COURT FILE NO.: CV-12-111481 (NEWMARKET)

MOTION HEARD: 2018 05 02

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Marsha Sukhu and Seeta Roopwatie

v.

Jeffrey Bascombe and Toronto Transit Commission

BEFORE: MASTER R.A. MUIR

COUNSEL: Kimberly Newton, agent for the lawyers for the plaintiffs/moving parties Stephen Sargent for the defendants and proposed defendant/responding parties

REASONS FOR DECISION

[1] This is a motion brought by the plaintiffs pursuant to Rules 5.04(2) and 26.01 of the Rules of Civil Procedure, RRO 1990, Reg. 194 (the “Rules”) for an order granting them leave to amend their statement of claim. The plaintiffs seek to add TTC Insurance Company Ltd. (“TTC Insurance”) as a new defendant. As part of their proposed amended claim, the plaintiffs seek a declaration that the plaintiff Marsha Sukhu is an insured person under the TTC Insurance unidentified motorist coverage. The proposed new defendant is opposed.

BACKGROUND

[2] Ms. Sukhu was a passenger on a TTC bus on November 5, 2011. She alleges that the bus came to an abrupt stop which caused her to be thrown forward from her seat and into a metal bar in front of her. Ms. Sukhu alleges she suffered serious injuries as a result.

[3] This action was started on October 9, 2012. The plaintiffs named the driver of the TTC bus and the Toronto Transit Commission as defendants. The statement of defence of the defendants stated that the accident was caused when an unidentified minivan failed to stop at a stop sign. The plaintiffs’ lawyer at the time received the statement of defence in May 2013. In November 2013, the plaintiffs’ lawyer received a copy of the Toronto Police file concerning the incident. The police file also made reference to the unidentified minivan.

[4] Despite receiving this information in 2013, the plaintiffs’ lawyer took no steps to add TTC Insurance as a defendant. Apparently, the plaintiffs’ lawyer was satisfied that the defendants would be found at least partially responsible for the accident. If so, Ms. Sukhu would not have to look to the TTC Insurance unidentified motorist coverage for payment.

[5] The plaintiffs changed lawyers in the fall of 2017. Adrian Lomaga was retained as the plaintiffs’ lawyer. When Mr. Lomaga reviewed the plaintiffs’ file he concluded that TTC Insurance should be added as a party defendant. A notice of change of lawyer was served in February 2018. A draft amended statement of claim was provided to the defendants on February 7, 2018. A notice of motion was served on or about March 26, 2018.

PRELIMINARY ISSUE

[6] At the outset of argument I advised counsel that this action had been administratively dismissed by the registrar on January 16, 2018. It appears that the parties did not know about this order. In any event, counsel for the defendants advised the court that his clients were prepared to consent to an order setting aside the dismissal order.

THE PARTIES’ POSITIONS

[7] The plaintiffs take the position that leave should be granted to amend the statement of claim and add TTC Insurance as a defendant.

[8] First, the plaintiffs argue that the relief they are seeking is simply declaratory in nature and no consequential relief is being requested. In this regard, they rely on section 16 of the Limitations Act, 2002, SO 2002, c 24, Sch B (the “Limitations Act”) which provides that no limitation period applies in such circumstances. This submission was not strongly advanced during the course of argument.

[9] Second, the plaintiffs submit that the applicable two year limitation period set out in the Limitations Act has not yet expired. In fact, the plaintiffs argue that the applicable limitation period has not yet begun to run. They take the position that the limitation period for a claim under the unidentified motorist coverage provided by TTC Insurance does not begin until there has been a finding that there will be no liability on the part of the current defendants and Ms. Sukhu has made a demand on TTC Insurance for coverage, which has been denied. None of these events has taken place.

[10] In response, TTC Insurance submits that the plaintiffs’ proposed amendments seek more than a simple declaration. The amendments state that TTC Insurance is liable to pay any judgment if Ms. Sukhu’s injuries and damages were caused by an unidentified motorist. This amounts to consequential relief and TTC Insurance therefore argues that section 16 of the Limitations Act does not apply.

[11] The main argument advanced by TTC Insurance is that the applicable limitation period began to run when Ms. Sukhu discovered or ought to have discovered the accident involved the negligence of an unidentified vehicle. The plaintiffs knew of the involvement of the unidentified minivan by November 2013 at the very latest when their lawyer received a copy of the police file. This motion was brought more than four years later. The claim against TTC Insurance is therefore statute barred. The proposed amendments should not be permitted.

ANALYSIS

[12] I do not accept the plaintiffs’ first argument involving section 16 of the Limitations Act. Section 16(1)(a) states that there is no limitation period in respect of a proceeding for a declaration if no consequential relief is sought. This is not the situation on this motion. The proposed pleading states that TTC Insurance must pay Ms. Sukhu’s damages in the event they are found to have been caused by the negligence of the unidentified motorist. This is obviously consequential relief, namely the payment of damages. See Tapak v. Non-Marine Underwriters, Lloyd’s of London, 2018 ONCA 168 at paragraph 14. The Court of Appeal has also emphasized that declaratory relief must be read narrowly so that section 16(1)(a) is not used as a means to circumvent a limitation period. See Alguire v. Manufacturers Life Insurance Company (Manulife Financial), 2018 ONCA 202 at paragraph 28.

[13] The plaintiffs’ second argument is more persuasive. The starting point is to acknowledge that the Court of Appeal has held that the passing of a limitation period is fatal to a motion to add parties and amend a pleading under Rule 5.04(2). The former doctrine of special circumstances no longer applies. See Joseph v. Paramount Canada's Wonderland, 2008 ONCA 469 at paragraphs 27 and 28.

[14] Unlike Rule 5.04, Rule 26.01 is mandatory. Proposed amendments are presumptively approved. However, Rule 5.04(2) provides the court with an element of discretion. Where a limitation period has expired, the amendments should be refused as the Court of Appeal has ruled in Joseph.

[15] However, the plaintiffs say the limitation period has not expired. The plaintiffs rely on two recent decisions of the Court of Appeal in support of their argument that the limitation period applicable to a claim against unidentified motorist coverage does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim.

[16] In Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218, the Court of Appeal held that the limitation period for a loss transfer claim pursuant to section 275 the Insurance Act, RSO 1990 c I.8 does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. See Markel at paragraph 27.

[17] In Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 88; leave to appeal refused, [2014] SCCA No. 143, the Court of Appeal was dealing with the question of when the limitation period began to run for an indemnity claim under the underinsured motorist coverage provided by OPCF 44R optional endorsement to the standard form automobile insurance policy in Ontario. The Court of Appeal applied the reasoning in Markel and concluded that the limitation period does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. See Schmitz at paragraphs 22 to 26.

[18] The reasoning behind Markel and Schmitz was applied in the decision of Justice Lofchik in Chahine v. Grybas, 2014 ONSC 4698. Justice Lofchik was faced with a motion involving facts very similar to the facts before the court on this motion. The plaintiff was involved in an accident and sued the other driver. After the claim was issued, the defendant’s lawyer advised the plaintiff’s lawyer that there was an unidentified motorist involved who may have been responsible for the accident. The plaintiff later confirmed this by obtaining a complete copy of the police report.

[19] The plaintiff then brought a motion to add his own insurer pursuant to the unidentified motorist coverage in OPCF 44R of his policy. Justice Lofchik considered the provisions of the Limitations Act and the decisions of the Court of Appeal in Markel and Schmitz. He concluded that the same reasoning applied to unidentified motorist coverage. The limitation period for unidentified motorist coverage does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. See Chahine at paragraphs 36 to 39.

[20] The plaintiffs also rely on the decision of Justice Leitch in Platero v. Pollock, 2015 ONSC 2922 which followed the decision in Chahine and also relied on the analysis of the Court of Appeal in Markel and Schmitz. See Platero at paragraphs 33 to 35.

[21] TTC Insurance relies primarily on four decisions of the Court of Appeal. Those decisions are July v. Neal, 1986 CanLII 149 (ON CA), [1986] OJ No. 1101 (CA); Johnson v. Wunderlich, 1986 CanLII 2618 (ON CA), [1986] OJ No. 1251 (CA); Hier v. Allstate Insurance Co. of Canada, 1988 CanLII 4741 (ON CA), [1988] OJ No. 657 (CA) and Chambo v. Musseau, 1993 CanLII 8680 (ON CA), [1993] OJ No. 2140 (CA). Those decisions stand for the proposition that the limitation period for a claim under the unidentified motorist coverage of a policy of insurance begins to run when a plaintiff knew or ought to have discovered the accident involved the negligence of an unidentified motorist. TTC Insurance argues that these cases are binding authority and have represented the law of Ontario for decades.

[22] The difficulty I have with the argument of TTC Insurance is that all of the Court of Appeal cases it relies upon were decided prior to the enactment of the current Limitations Act. They were also obviously decided before the decisions of the Court of Appeal in Markel and Schmitz.

[23] The decisions in Chahine and Platero considered specific provisions and language of the current Limitations Act within the context of the Markel and Schmitz decisions. Both judges came to the conclusion that the limitation period for unidentified motorist coverage indemnity claims does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. I am unable to distinguish those decisions from the case before the court on this motion. They appear to be binding on this court.

[24] TTC Insurance cited the contrary decision of Justice Sosna in Wilkinson v. Braithwaite, 2011 ONSC 2356 which held that the limitation period began to run when the plaintiff knew or ought to have discovered that the accident involved the negligence of an unidentified motorist. Although that decision involved the application of the current Limitations Act, it was decided before the Court of Appeal made its decisions in Markel and Schmitz. For this reason, the decisions in Chahine and Platero are to be preferred.

[25] TTC Insurance also relies on the decision of Master McAfee in Bhatt v. Doe, 2018 ONSC 950 (Master) in which she applied the July decision. The decisions in Chahine and Platero are not mentioned by Master McAfee and nor are the Markel and Schmitz Court of Appeal rulings. I do not know whether those cases were considered by her. In any event, the decision of another master is of persuasive value only. I am not bound to follow it, especially in the face of contrary decisions of a judge.

[26] Counsel for TTC Insurance also suggested that the Chahine and Platero decisions were simply incorrect. TTC Insurance submits that the judges hearing those motions did not have the benefit of the earlier Court of Appeal decisions cited by TTC Insurance on this motion. If they had those decisions, those cases might have been decided differently. That may or may not be the case. I do not know. However, it is not the role of this court to question those decisions or the basis on which they were decided. Justices Lofchik and Leitch decided precisely the same issue as the one before me, having regard to specific provisions of the current Limitations Act and within the context of Markel and Schmitz. Decisions of a judge are binding on a master. In my view, I am bound to follow the decisions of Justices Lofchik and Leitch.

ORDER

[27] I therefore order as follows:

(a) the order of the registrar of January 16, 2018 is set aside;

(b) the plaintiffs are hereby granted leave to amend their statement of claim in the form of the draft amended statement of claim at Schedule A to their notice of motion; and,

(c) if the parties are unable to agree on the issue of the costs of this motion and a timetable for the remaining steps in this action, they shall provide the court with brief submissions in writing by June 14, 2018, which may be sent directly to me by email.

Master R.A. Muir

DATE: 2018 05 09