Court File and Parties

COURT FILE NO.: CV 17-31

DATE: 2018 August 13

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Paulsan Construction Inc., Plaintiff/Defendant by Counterclaim

AND:

Eric Thomsen and 2444250 Ontario Inc., Defendants/Plaintiffs by Counterclaim

BEFORE: The Honourable R. J. Harper

COUNSEL: Michael A. Jaeger, Counsel, for the Plaintiff/Defendant by Counterclaim

Kristine J. Anderson, Counsel, for the Defendants/Plaintiffs by Counterclaim

HEARD: August 2, 2018

ENDORSEMENT

Issue

[1] Can the Defendants amend their Defence and Counter Claim in order to add a party, Sandor D’Ambrosi and claim damages against him for negligent misrepresentation?

Background

[2] The Plaintiff brought an action against the Defendants for breach of contract. The Plaintiff entered into two contracts relative to certain construction renovations and new construction of a building on lands that the Defendants purchased at 274 Lynden Road, Brantford Ontario.

[3] Contract #1, dated July 24, 2015, and involved the construction of a new building at 274 Lynden Road, at the rear of the premises.

[4] Contract #2, was entered into in or about March 2016. This contract involved substantial revisions to the originally planned building in Contract #1.

[5] The labour, services and materials for Contract #2 were supplied from April 18, 2016 to October 31, 2016.

[6] The Defendants failed to pay for the construction services and an action by the Plaintiff was commenced on January 25, 2017.

[7] The Defendants filed a statement of Defence and Counter Claim against the Plaintiff dated February 24, 2017.

[8] An Amended Statement of Claim dated May 16, 2017 was served and filed.

[9] An Amended Statement of Defence and Counter Claim dated May 29, 2017 was served and filed.

[10] A Reply to the Amended Statement of Defence and Counter claim dated July 14, 2017 was also served and filed.

[11] The Motion before me is dated April 16, 2018.

[12] An Affidavit of Eric Thomsen, in support of the Motion, sworn April 6, 2018 was served with this Motion.

[13] Sandro D’Ambrosi served and filed an Affidavit sworn May 6, 2018 in reply to the Motion of the Defendants and Affidavit of Eric Thomsen.

The Law

[14] The relevant Rules of Civil Procedure applicable to this motion are Rules 26(1) and Rules 5(1) they read as follows:

General Rule

5.03 (1) Every person whose presence is necessary to enable the court to adjudicate effectively and completely on the issues in a proceeding shall be joined as a party to the proceeding. R.R.O. 1990, Reg. 194, r. 5.03 (1).

GENERAL POWER OF COURT

26.01 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. R.R.O. 1990, Reg. 194, r. 26.01.

WHEN AMENDMENTS MAY BE MADE

26.02 A party may amend the party’s pleading,

(a) without leave, before the close of pleadings, if the amendment does not include or necessitate the addition, deletion or substitution of a party to the action;

(b) on filing the consent of all parties and, where a person is to be added or substituted as a party, the person’s consent; or

(c) with leave of the court. R.R.O. 1990, Reg. 194, r. 26.02.

[15] At the outset of this motion counsel agreed that the only issue that I must decide is whether or not the Limitations Act prohibited the moving party from amending the pleadings and adding a party at this stage.

[16] The relevant portions of the Limitations Act, 2002, SO 2002, c 24, Sch B, read:

4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. 2002, c. 24, Sched. B, s. 4.

Discovery

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a). 2002, c. 24, Sched. B, s. 5 (1).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. 2002, c. 24, Sched. B, s. 5 (2).

[17] The Plaintiff submits that there is no evidentiary record or pleading that rebuts the presumption set out in section 5(2) of the Limitations Act. The Plaintiff argues that neither the original Statement of Defence and Counter Claim, nor the proposed Amended Statement of Defence and Counter Claim provide any basis on which the court can find that the presumption is rebutted.

[18] In support of the Plaintiff’s argument, counsel referred me to the case of Laurent-Hippolyte v. Blasse et al., 2018 ONSC 940. In that case, Master Sugunasiri was dealing with a claim that arose out of a motor vehicle accident on December 15, 2013. The Plaintiff in that case commenced her action in April 2015. However, in January 2017 the Plaintiff received documents from HMQ that revealed that TWD Roads Management Inc. was the snow removal contractor for the relevant portion of the highway at the time of the accident. The Plaintiff then sought to add TWD as a party. The limitation period expired on December 15, 2015.

[19] Master Sugunasiri referred to Rule 21(1) of the Rules of Civil Procedure that states:

If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.

[20] He went on to state commencing at para 17:

[17] Finally, if a plaintiff does not raise any issue of credibility or issue of fact that would merit consideration on a summary judgment motion or at trial and there is no reasonable explanation on the evidence as to why the plaintiff could not have discovered the claim by exercising reasonable diligence, the Court may deny the motion. On the other hand, if there is an issue of fact or credibility with respect to the Plaintiff’s discovery of her claim, the appropriate remedy is to allow the amendment without prejudice to the added party raising the limitations defence in its pleading.[8]

[21] Master Sugunasiri stated further at para 23:

[23] At the very least the Plaintiff, or other affiant, could have explained what was happening in the relevant two-year period and/or describe the abilities that the Plaintiff did or did not have in pursuing the Claim. Without any evidence to this effect, a Court cannot determine, as stated in section 5(1)(b), “the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).” I was provided with no evidence on the Plaintiff’s abilities or circumstances. I have no evidence of diligence or an explanation for any lack of diligence. When was counsel retained? What steps did counsel take if counsel was retained? If no steps were taken, why not?

[22] In the case of Skribans v. Nowek, 2012 ONSC 532, Master Glustein reviewed what has become known as the Wakelin test that deals with the doctrine of discoverability. He stated commencing at para. 15

[15] In Wakelin, Master Dash set out two general principles. First, Master Dash reiterated the importance of the court reviewing the evidentiary record. Master Dash relied on his earlier decision in Wong v. Adler (2004), 2004 CanLII 8228 (ON SC), 70 O.R. (3d) 460 (S.C.J. – Mast.) (“Wong”), in which Master Dash held that the court must review the evidentiary record to determine if there is a triable issue on discoverability. Master Dash held (Wong, at 476-77, cited at Wakelin, at paras. 3 and 4):

the motions court must examine the evidentiary record before it to determine if there is an issue of fact or of credibility on the discoverability allegation, which is a constituent element of the claim. If the court determines that there is such issue, the defendant should be added with leave to plead a limitations defence. If there is no such issue, as for example where the evidence before the motions court clearly indicates that the name of the tortfeasor and the essential facts that make up the cause of action against such tortfeasor, were actually known to the plaintiff or her solicitor more than two years before the motion to amend, the motion should be refused. If the issue is due diligence rather than actual knowledge, this is much more likely to involve issues of credibility requiring a trial or summary judgment motion, provided of course that the plaintiff gives a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence. That is not to say that such motion could never be denied if the evidence is clear and uncontradicted that the plaintiff could have obtained the requisite information with due diligence such that there is no issue of fact or credibility. [emphasis added]

[16] Second, Master Dash in Wakelin reviewed the “evidentiary threshold” required to establish a triable issue on discoverability. Master Dash held that the onus is on the moving party to (i) lead evidence on steps taken to ascertain the identity of the tortfeasor and (ii) give a reasonable explanation on proper evidence as to why the identity of the tortfeasor was not obtainable with due diligence. Master Dash held (Wakelin, at para. 15):

Therefore, as long as the plaintiff puts in evidence as to steps taken to ascertain the identity of the tortfeasors and gives a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence then that will be the end of the enquiry and the defendants will normally be added with leave to plead a limitations defence. This is not a high threshold. … The only concern is whether a reasonable explanation as to due diligence has been provided such as to raise a triable issue. [emphasis added]

[23] The court recognize that the threshold in establishing an evidentiary record to rebut the presumption is low. However, there must be some evidentiary record that gives an explanation as to why the losses claimed to have been incurred by the Plaintiff relative to Mr. D’Ambrosi were not discoverable earlier.

[24] The Defendant’s proposed claim against Mr. D’Ambrosi is essentially that:

Mr. D’Ambrosi is an expert in investments and property development;

He was a friend for 10 to 15 years and as a friend who was an expert, he relied on Mr. D’Ambrosi’s advice that buying property and building his own building was better than renting;

He entered into two contracts with the Plaintiff in order to construct and renovate buildings on the property he purchased. He used to rent a portion of the property; and

As the construction progressed multiple changes needed to be made and the costs continued to escalate. It was these escalating costs that were partly due to the negligence of the Plaintiff that made him realize that Mr. D’Ambrosi negligently misrepresented to him that buying was better than renting and that he should use the Plaintiff’s as contractors.

[25] I do not feel that the Defendant has met even the low threshold that he must meet with the evidentiary record presented before me. He makes allegations without any material evidence to support them. He does not provide any dates for the increased costs he started to incur nor any dates relative to the alleged negligent work done by the Plaintiff. It is not possible on this record to determine the date of reasonable discoverability. The pleadings and the affidavit evidence is simply lacking.

[26] As a result of my findings I am of the view that the Defendant has not rebutted the presumption on the Limitations Act. His motion to amend the pleadings and to add Mr. D’Ambrosi is dismissed.

[27] If counsel are not able to agree on costs within 30 days the trial coordinator may be contacted in order to arrange a time to make submissions on costs.

The Honourable R. J. Harper

Date: August 13, 2018