COURT FILE NO.: CV-14-5738-00 DATE: 2018 11 19
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Toronto Standard Condominium Corporation No. 1786
Plaintiff
Fernbrook Homes (Wilson) Limited, Westmount-Keele Limited, Dominus Construction Corporation, Dominus Construction Group, Garlrich Restoration Inc., Joseph Ieradi (a.k.a. Joe Ieradi), Giorgio Marchi (a.k.a. George Marchi) and Konstantinos Koutoumanos (a.k.a. Gus Koutoumanos)
Defendants
BEFORE: Bloom, J.
COUNSEL: A. Casalinuovo for the Plaintiff, Moving Party,
N. Khouri for Fernbrook Homes (Wilson) Limited, Dominus Construction Corporation, and Dominus Construction Group, Responding Parties
C. Hunter and J. Langley for Westmount-Keele Limited and Joseph Ieradi, Responding Parties
E N D O R S E M E N T
I. INTRODUCTION
[1] The Moving Party, a condominium corporation, moves to amend the Statement of Claim to add a claim for damages in respect of the repair and replacement of a transformer located in the condominium. That motion is opposed by Fernbrook, Westmount, and Ieradi. Dominus Construction Corporation and Dominus Construction Group take no position. Koutoumanos has not appeared before me and is taking no position. Marchi is the subject of a default judgement. Garlrich has not appeared before me, and is taking no position.
[2] The motion is resisted on the basis that the amendment sought would put forward a claim which is statute-barred, and on the basis of an abuse of process argument grounded on a duplication of proceedings, being this action and an arbitration. Not all three of the Responding Parties, who have argued before me, have raised both arguments.
II. PROCEDURAL CONTEXT
A. New Causes of Action Subject of the Amendment
[3] The Plaintiff is a condominium corporation. The condominium property is located on Keele St. in Toronto. It was a hotel prior to its conversion to a condominium.
[4] Westmount was the developer of TSC 1786 and was also its declarant under applicable condominium legislation.
[5] As already noted the motion seeks to leave to amend the Statement of Claim. The limitations argument turns on whether the Plaintiff seeks to add a cause of action after the expiry of a limitation period.
[6] In Paul M. Perell and John W. Morden, The Law of Civil Procedure in Ontario 3d ed (Toronto, Ontario: LexisNexis Canada Inc. 2017) at para. 2.371 the authors explain that “[a] cause of action is a set of facts that entitles a person to obtain a judgment in his or her favour from a court exercising its common law, equitable or statutory jurisdiction.” At the same paragraph the learned authors note that in some cases the plaintiff may argue “that no new cause of action is being pleaded [in the amendment sought to the Statement of Claim] but rather that he or she is simply pleading new or alternative remedies based on the same facts and already pleaded causes of action.”
[7] The parties in the case before me agree that the amendment would introduce at least one new cause of action against each of the Responding Parties. However, given the above principles, the Plaintiff is entitled in my assessment of whether I ought to grant leave to make the amendment, to rely on facts already pleaded in the Statement of Claim. The issue on the limitations branch of the argument is whether I should, in view of the applicable rules of civil procedure and principles governing limitation periods, grant leave to add facts to the Statement of Claim which would alone or in combination with already pleaded facts, create a new cause of action.
[8] Against that analytic background, it is necessary to set out the key facts in the Statement of Claim as currently constituted and then the new causes of action subject of the amendment.
[9] The Statement of Claim as currently framed makes the following allegations: the Plaintiff is a condominium corporation, the duties of which are to manage the condominium property consisting of 238 residential dwelling units with appurtenant common interests located on Keele St. in Toronto; the Defendant, Westmount, was the developer of and declarant for the condominium project; the principal and controlling-directing mind of Westmount was at material times the Defendant, Ieradi; Ieradi was also at material times President of the Board of Directors of the Plaintiff; Fernbrook was assigned all the interests and obligations of Westmount as declarant by way of agreement dated August 11, 2011 between Westmount, Fernbrook, and the Plaintiff; among the obligations assigned to Fernbrook was a warranty for five years covering the condominium units and common elements; on September 26, 2013 at an annual general meeting of the unit owners Ieradi was voted off the Board of Directors of the Plaintiff, an action upheld by the Ontario Court of Appeal on April 1, 2014.
[10] The allegations and claims in the amendment relevant to my analysis are: damages are claimed against the Responding Parties before me in the amount of $735,387.16 for the repair and replacement of a transformer which violated the PCB Regulations made pursuant to the Canadian Environmental Protection Act, 1999; pursuant to a notice from Environment Canada dated January 29, 2015 the Plaintiff was required to replace the transformer, the cost of which replacement is the sum claimed; Ieradi had as President of the Plaintiff’s Board of Directors been provided by an officer of Environment Canada’s Enforcement Branch on or about March 1, 2011 notice that the transformer was in breach of the PCB regulations; a copy of the notice was never turned over to the current Board of Directors subsequent to the removal of Ieradi as President of the Board; Ieradi’s knowledge that the transformer contained illegal PCB’s required Westmount to rectify the problem at its own expense under the warranty, and because it had constructed a transformer unit contrary to the Environmental Protection Act, as well as because it owned the transformer when the March 1, 2011 notice was issued; in the event that Ieradi concealed the March 1, 2011 notice from the Plaintiff, that action was in bad faith and in breach of his statutory obligation as a member of the Board of Directors pursuant to Condominium Act; Ieradi gave instructions to issue a status certificate on behalf of the Plaintiff to Fernbrook and withheld a copy of that document from the Plaintiff, so that its current Board of Directors was unaware of its contents until approximately August 29, 2016 when a copy of the certificate was provided by counsel for Fernbrook; and as an alternative claim, the Plaintiff seeks payment from Fernbrook of $ 735,387.16 under the Condominium Act for the repair and replacement of the transformer because of Fernbrook’s failure to do that work.
B. The Arbitration
[11] There is pending an arbitration commenced by the Plaintiff against Fernbrook seeking recovery of one-half the cost of replacing the transformer. The amendment seeks recovery from Fernbrook of the whole cost, namely the sum of $ 735,387.16 to which reference has been made above.
C. Service of the Notice of Motion
[12] The notice of motion was served October 3, 2016 and was returnable October 28, 2016.
III. GOVERNING PRINCIPLES
A. The Rules
[13] The applicable rules are as follows:
GENERAL POWER OF COURT
Rule 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 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
Rule 26.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 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.
[14] Rule 26.02 (c) permits a party to amend the party’s pleading with leave of the court. Rule 26.01 obliges the court to 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.” (See Maynes v. Allen-Vanguard Technologies Inc., 2011 ONCA 125 at para. 38).
[15] In the case at bar Rule 26.01 is the provision on the application of which the matter turns. The irremediable prejudice alleged to exist by Fernbrook is the expiry of a limitation period and an abuse of process by virtue of the existing arbitration; the irremediable prejudice alleged to exist by Ieradi and Westmount is the expiry of a limitation period.
[16] With respect to the issue of prejudice and the expiry of a limitation period, in The Law of Civil Procedure in Ontario 3d ed, supra at paras. 2.372 to 2.374 the learned authors discuss when an amendment should be made and possible terms for allowing such an amendment:
2.372 In the circumstances where the proposed amendment does appear to assert a cause of action not already covered by the original pleading, sometimes the plaintiff may be able to rely on the discoverability principle to postpone the running of the limitation period, and if there is some doubt concerning the application of the discoverability principle, the approach of the courts is to allow the amendment with leave of the defendant to plead the limitation period defence, which defence will then be decided on the full evidentiary record of the trial…
2.373 For an amendment, it is incumbent on the plaintiff to lead some evidence of the steps he or she took to ascertain the identity of the responsible party and provide some explanation as to why the information was not obtainable with due diligence before the expiry of the limitation period. However, at the pleadings amendment stage, the plaintiff will not require much evidence to establish that there is a triable issue that a proposed defendant could not have been identified with due diligence within the limitation period ….
2.374 If, however, the plaintiff does not show that there is an issue to be decided about whether he or she was unaware of the claim despite due diligence, and it is clear that the claim was discovered or ought to have been discovered, then the amendment will be refused. In other words, if there is no issue requiring a trial, and it is established that the limitation period defence is available, the court will refuse the amendment.
[17] The issue of the onus of proof is discussed below; and it dovetails with this explanation of the law.
B. The Limitation Period
[18] Counsel for all parties agree that the Limitations Act, 2002 applies to the case at bar.
[19] The following provisions of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B are relevant to my analysis:
Definitions
s. 1 In this Act,
“claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission; (“réclamation”)
Basic Limitation Period
Basic limitation period
s. 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
s. 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).
Demand obligations
(3) For the purposes of subclause (1) (a) (i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made. 2008, c. 19, Sched. L, s. 1.
Successors
Principals and agents
s. 12 (2) For the purpose of clause 5 (1) (a), in the case of a proceeding commenced by a principal, if the agent had a duty to communicate knowledge of the matters referred to in that clause to the principal, the principal shall be deemed to have knowledge of the matters referred to in that clause on the earlier of the following:
The day the agent first knew or ought to have known of those matters.
The day the principal first knew or ought to have known of them. 2002, c. 24, Sched. B, s. 12 (2).
Same
(3) The day on which a predecessor or agent first ought to have known of the matters referred to in clause 5 (1) (a) is the day on which a reasonable person in the predecessor’s or agent’s circumstances and with the predecessor’s or agent’s abilities first ought to have known of them. 2002, c. 24, Sched. B, s. 12 (3).
[20] In Colin v. Tan, 2016 ONSC 1187 at para. 65 Justice Perell discussed the onus of proof in respect of a limitations defense:
65 When a limitation period defence is raised, the onus is on the plaintiff to show that its claim is not statute-barred and that it behaved as a reasonable person in the same or similar circumstances using reasonable diligence in discovering the facts relating to the limitation issue: Durham (Regional Municipality) v. Oshawa (City), 2012 ONSC 5803 at paras. 35-41; Bolton Oak Inc. v. McColl-Frontenac Inc., 2011 ONSC 6657 at paras. 12-14; Bhaduria v. Persaud (1985), 40 O.R. (3d) 140 (Gen. Div.). That the onus is on the plaintiff accords with the presumption in s. 5(2) of the Act that a person with a claim shall be presumed to have discovered the claim on the day the act or omission on which the claim is based took place, unless the contrary is proved.
[21] Justice Norheimer in Toronto Standard Condominium Corporation No. 2073 v. The Printing Factory Lofts Inc., 2017 ONSC 2908 (Div. Ct.) discussed at para. 16 the question of the inquiries a plaintiff is expected to make:
There is, therefore, no evidence that the appellant took steps available to it to discover the potential liability of the respondent even though it had information, in its possession, that would have suggested the existence of that potential liability. The appellant cannot fail to make reasonable inquiries and then suggest that it could not have earlier discovered the facts upon which its claim is now advanced.
[22] In Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156 at paras. 54 and 61 Justice LaForme for the Court explained what is necessary for the cause of action to accrue and to start the limitation period:
54 The City's position that damage occurred when the Devonshire notes matured also fails to appreciate the distinction between damage and damages. Damage is the loss needed to make out the cause of action. Insofar as it relates to a transaction induced by wrongful conduct, as I have explained, damage is the condition of being worse off than before entering into the transaction. Damages, on the other hand, is the monetary measure of the extent of that loss. All that the City had to discover to start the limitation period was damage.
61 The authorities make it very clear that "some damage" is sufficient for the cause of action to accrue and to start the limitation period. The Supreme Court of Canada set out the discoverability principle in Peixeiro v. Haberman, [1997] 3 S.C.R. 549, at para. 18:
Once the plaintiff knows that some damage has occurred and has identified the tortfeasor (see Cartledge v. E. Jopling & Sons Ltd., [1963] A.C. 758 (H.L.), at p. 772 per Lord Reid, and July v. Neal (1986), 57 O.R. (2d) 129 (C.A.)), the cause of action has accrued. Neither the extent of damage nor the type of damage need be known. To hold otherwise would inject too much uncertainty into cases where the full scope of the damages may not be ascertained for an extended time beyond the general limitation period.
[23] In The Law of Civil Procedure in Ontario 3d ed, supra at para. 2.310 the authors note that “[i]n determining whether a plaintiff knew or ought to have known of the facts giving rise to a claim, the knowledge of his or her solicitors is imputed to the plaintiff.”
[24] S. 5(3) of the Limitations Act, 2002 applies to a category of debt obligations, namely demand obligations. It has no application to the case at bar, in my view, despite the argument of the Plaintiff.
[25] In 407 ETR Concession Co. v. Day, 2016 ONCA 709, [2016] O.J. No. 5006 (Ont. C.A.) Justice Laskin for the Court at paras. 32 to 53 discussed the meaning of “appropriate means” in s. 5(1)(a)(iv) of the act:
This first issue on the appeal turns on s. 5(1)(a)(iv): when should 407 ETR have known that a civil action against Mr. Day was an "appropriate means" to recover its loss?
33 The appropriateness of bringing an action was not an element of the former limitations statute or the common law discoverability rule. This added element can have the effect -- as it does in this case -- of postponing the start date of the two-year limitation period beyond the date when a plaintiff knows it has incurred a loss because of the defendant's actions.
34 Also, when an action is "appropriate" depends on the specific factual or statutory setting of each individual case: see Brown v. Baum, 2016 ONCA 325, 397 D.L.R. (4th) 161, at para. 21. Case law applying s. 5(1) (a)(iv) of the Limitations Act, 2002 is of limited assistance because each case will turn on its own facts.
35 In the case before us, the date when a civil action would be an "appropriate means" for 407 ETR to recover its loss must be assessed not only in the context of the purpose of that element of s. 5(1) (a) and the words that qualify it, but also in the context of the statutory regime under which 407 ETR operates.
39 A civil action only becomes appropriate when 407 ETR has reason to believe it will not otherwise be paid -- in other words, when the usually effective licence plate denial process has run its course. Thus, the date when a vehicle permit expires for the failure to pay a toll debt is the date a civil action is an appropriate means to recover that debt. This date starts the two-year limitation period. For Mr. Day, this date is December 31, 2011. I say this for four reasons.
40 First, under s. 5(1) (a)(iv) of the Limitations Act, 2002, the date a proceeding would be an appropriate means to recover a loss must have "regard to the nature of the ... loss". So, in fixing the appropriate date, it may not be enough that the loss exists and the claim is actionable. If the claim is the kind of claim that can be remedied by another and more effective method provided for in the statute, then a civil action will not be appropriate until that other method has been used. Here, a claim will not be appropriate until 407 ETR has used that other method, without success.
41 As the Divisional Court recognized it its 2005 decision, and the motion judge recognized in this case, the other method for toll collection provided for in the Highway 407 Act, 1998 -- licence plate denial -- is far more effective than a civil action. By providing for licence plate denial, the legislature must be taken to have recognized its effectiveness. People who cannot renew their vehicle permits until they deal with their toll debts have a powerful incentive to pay. notice to the Registrar -- is too early in the process. It comes at the beginning of the process instead of where I think it should come, at the end. The licence plate denial process should be allowed to run its course. As the statistics show, most people, fearing the consequences, eventually pay after receiving a s. 22 notice. Only if the process fails to prompt payment does litigation become an appropriate means to recover the debt.
44 Second, in determining when a claim ought to have been discovered, s.5(1) (b) of the Limitations Act, 2002 requires the court to take account of "the circumstances of the person with the claim". 407 ETR's "circumstances" differ from those of many other creditors. Highway 407 itself is enormously busy: 380,000 trips on an average workday. As a consequence, 407 ETR must process an enormous number of invoices, almost all for amounts of no more than a few hundred dollars apiece. And unlike, for example a credit card company, which can cancel a customer's credit card for non-payment of a debt, 407 ETR cannot bar a defaulting debtor's access to the highway.
45 407 ETR's "circumstances" strongly suggest that requiring it to sue before finding out whether licence plate denial has achieved its purpose would be inappropriate. An important case on the significance of a plaintiff's "circumstances" is the majority judgment in Novak v. Bond, [1999] 1 S.C.R. 808. In that case, McLachlin J. considered s. 6(4)(b) of British Columbia's Limitations Act, R.S.B.C. 1996, c. 266, which provided that time did not begin to run against a plaintiff until "the person whose means of knowledge is in question ought, in the person's own interests and taking the person's circumstances into account, to be able to bring an action" (emphasis added). At para. 85 of her reasons, McLachlin J. discussed "interests and circumstances" and cautioned against the potential unfairness of requiring a plaintiff to bring an action at the time a claim first materializes:
Litigation is never a process to be embarked upon casually and sometimes a plaintiff's individual circumstances and interests may mean that he or she cannot reasonably bring an action at the time it first materializes. This approach makes good policy sense. To force a plaintiff to sue without having regard to his or her own circumstances may be unfair to the plaintiff and may also disserve the defendant by forcing him or her to meet an action pressed into court prematurely. [Emphasis added; footnotes omitted.]
46 Similarly here, holding that time begins to run against 407 ETR before it knows whether licence plate denial has prompted payment would be unfair, or to use the word of our statute, would not be "appropriate".
47 Holding that the two-year period begins after the licence plate denial process fails to prompt payment does not raise the concern Sharpe J.A. referred to in Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218, 109 O.R. (3d) 652, at para. 34. There, he said that "appropriate" must mean "legally appropriate". By using that phrase he signified that a plaintiff could not claim it was appropriate to delay the start of the limitation period for tactical reasons, or in circumstances that would later require the court to decide when settlement discussions had become fruitless. In this case, however, 407 ETR seeks to delay the start of the limitation period for a legally appropriate reason: waiting until a statutorily authorized process has been completed.
48 A third consideration is what I take to be an important purpose of s. 5(1)(a)(iv). The overall purposes of limitation statutes are well-established and well-known: certainty, finality and the unfairness of subjecting defendants to the threat of a lawsuit beyond a reasonable period of time. But it seems to me one reason why the legislature added "appropriate means" as an element of discoverability was to enable courts to function more efficiently by deterring needless litigation. As my colleague Juriansz J.A. noted in his dissenting reasons in Hare v. Hare (2006), 83 O.R. (3d) 766 (C.A.), at para. 87, courts take a dim view of unnecessary litigation.
49 If the limitation period runs concurrently with the licence plate denial process, as would be the case under the motion judge's start date, then there would be the real possibility of numerous Small Claims Court claims. And these claims would be needless because the vast majority of defendants would likely pay their debts to avoid having their vehicle permits expire. The evidence in the record shows that as of June 2014, for invoices outstanding for 23-24 months, 10,144 separate court actions would be required. The average amount of each claim would be $497. Only one to two per cent of claims would exceed $5,000.
51 Finally, although 407 ETR has discretion when and even whether to send a s. 22 notice to the Registrar, that discretion does not detract from the appropriateness of using the end of the licence plate denial process as the start of the two-year limitation period. In theory, I suppose, as Mr. Day contends, 407 ETR could use its discretion to manipulate the start date. But why, one may ask rhetorically, would it do so? Its commercial interests dictate otherwise.
53 Also, even accepting that 407 ETR has discretion when to send the s. 16 and s. 22 notices, the end date of the licence plate denial process is a date that is certain and easily ascertainable. It is the date when the holder's vehicle permit comes up for renewal. If the holder's debt has not been paid by this date, then an action becomes an appropriate means to recover the debt and the two-year limitation period begins to run.
[26] In Giroux Estate v. Trillium Health Centre, [2005] O.J. No. 226 (Ont. C.A.) at paras. 22, 28, 29, and 38 Justice Moldaver for the Court explained the doctrine of fraudulent concealment:
22 Fraudulent concealment has been defined to include "conduct, which, having regard to some special relationship between the two parties concerned, is an unconscionable thing for one to do towards the other". (Kitchen v. Royal Air Force Association, [1958] 2 All E.R. 241 (C.A.) per Lord Evershed M.R. at p. 249, cited with approval in M.(K.) v. M.(H.), [1992] 3 S.C.R. 6 at para. 63. See also, Guerin v. The Queen, [1984] 2 S.C.R. 335).
28 Unlike the discoverability rule, with which Abella J.A. was concerned, the common law doctrine of fraudulent concealment is not a rule of construction. It is an equitable principle aimed at preventing a limitation period from operating "as an instrument of injustice" (see M.(K.), supra, at para. 66). When applicable, it will "take a case out of the effect of statute of limitation" and suspend the running of the limitation clock until such time as the injured party can reasonably discover the cause of action 6 (see M.(K.) supra, at paras. 65 and 66). Its underlying rationale is grounded in the well-established principle, reiterated in Goldin (Trustee of) v. Bennett and Co. (2003), 65 O.R. (3d) 691 at para. 35, that equity will not permit a statute to be used as an instrument of fraud.
29 In other words, unlike the discoverability rule, the doctrine of fraudulent concealment is not dependent upon the particular wording of the limitation provision. When applied, there is no risk that the limitation provision will be construed in a manner not intended by the legislature. Fraudulent concealment is concerned with the operation of the provision, not its interpretation. Stated succinctly, it is aimed at preventing unscrupulous defendants who stand in a special relationship with the injured party from using a limitation provision as an instrument of fraud.
38 Taking the facts as pleaded at their highest, I believe that it would be open for a trier of fact to find that as of August 28, 2001, Dr. Harvey was in a special relationship with the Giroux family, that he attempted to fraudulently conceal from them his failure to diagnose and properly treat Mr. Giroux's illness 7, that his duplicity was unconscionable in the circumstances and that it led the family to believe, on reasonable grounds, that the estate might well not have a cause of action against him - a belief that persisted until March 2003 when the College of Physicians and Surgeons put it to rest.
C. Abuse of Process
[27] The doctrine of abuse of process is discussed in The Law of Civil Procedure in Ontario 3d ed, supra. At paras. 2.241 to 2.246 there is an examination of the scope of the doctrine in terms that has relevance to the argument raised by Fernbrook:
2.241 The court has an inherent and broad jurisdiction to prevent the misuse of its process that would be manifestly unfair to a party to the litigation or would in some other way bring the administration of justice into disrepute.
2.244 The doctrine of abuse of process is a flexible doctrine whose aim is to protect litigants from abusive, vexatious or frivolous proceedings or otherwise prevent a miscarriage of justice, and its application will depend on the circumstances, facts and context of a given case ….
2.245 Courts have applied the doctrine of abuse of process to preclude relitigation but it can also be used to preclude multifarious proceedings and forum shopping for an issue estopppel….
2.246 It may be an abuse of process to commence a new action against new parties when those parties could have been added to an existing action by the plaintiff ….
IV. APPLICATION OF THE GOVERNING PRINCIPLES IN THE CASE AT BAR
A. Arguments of the Parties
[28] The Plaintiff argues that there is neither a breach of the two year limitation period nor an abuse of process which would constitute prejudice justifying a refusal of leave to grant the amendment sought to the Statement of Claim.
[29] Alternatively, the Plaintiff argues that, if there is a triable issue on the limitation period question, the amendment ought to be allowed with leave given to Fernbrook, Westmount, and Ieradi to amend their pleadings and make crossclaims; the trial judge would then decide the limitation matter on a full evidentiary record.
[30] The Plaintiff further asserts that the limitation period as against Fernbrook ran from either the date the Plaintiff received the order to remove the transformer, January 29, 2015, or the spring of 2016 when the Plaintiff knew first of the full costs to remove the transformer; in either event, the amendment would not be statute-barred.
[31] As against Westmount and Ieradi the Plaintiff argues that the limitation period did not begin to run until on or about August 29, 2016 when it learned of the status certificate issued to Fernbrook. In that connection the Plaintiff relies, inter alia, on the doctrine of fraudulent concealment.
[32] The Plaintiff contends that there will be no abuse of process if the amendment of the Statement of Claim is allowed, because the costs of the removal of the transformer will be pursued only in the action, not also in the arbitration.
[33] Fernbrook argues that leave to amend ought not to be granted, because of the prejudice which would be caused to it. That prejudice is argued to be the expiry of the two year limitation period and an abuse of process.
[34] As to the expiry of the limitation period, Fernbrook argues a number of alternative dates for the commencement of the limitation period. The most compelling of these submissions is that the limitations clock ran from the receipt in February of 2014 by the lawyer for the Plaintiff of an order from Environment Canada. That order also referred to a notice given by Environment Canada to the Plaintiff in March of 2011 (a notice referred to in the proposed amendment), and was received by the Plaintiff’s lawyer after the new Board of Directors of the Plaintiff was in place (the change of boards is also referred to in the proposed amendment).
[35] Fernbrook also argues that the amendment would be an abuse or process, because it would allow the making of a claim for the cost of removal of the transformer, when the cost of that removal is subject of the arbitration. Fernbrook relies in this branch of its argument on its contention that the motion to amend has been brought without the Plaintiff’s withdrawing or undertaking to withdraw the issue of the cost of the removal of the transformer from the arbitration.
[36] Alternatively, Fernbrook argues that, if the amendment is allowed, the Plaintiff should be ordered to withdraw from the arbitration the claim for the costs of the removal of the transformer, and to pay Fernbrook’s costs of the arbitration. Additionally, Fernbrook would be permitted to make appropriate amendments to its pleadings, would be granted from the Plaintiff the costs of those new pleadings, and would receive also as against the Plaintiff costs of the motion at bar on a substantial indemnity basis.
[37] Westmount and Ieradi argue that the amendment should not be allowed because of prejudice to them by virtue of the expiry of the two year limitation period. They contend that the limitation period ran from the receipt by the lawyer for the Plaintiff in February of 2014 of the order from Environment Canada.
B. Analysis
[38] In my opinion leave ought not to be granted to amend the Statement of Claim. I, therefore, dismiss the motion at bar. I will now explain the reasons for those conclusions.
[39] I base those conclusions on the view I take that the amendment is statute-barred (by virtue of the expiry of the two year limitation period). I need not, therefore, address further the issue of abuse of process.
[40] In my analysis of the limitation issue, I rely upon the principles articulated above, the procedural context earlier discussed, the arguments of the parties, and additional findings I will set out.
[41] The parties before me accept that John Deacon, the Plaintiff’s corporate solicitor, received contemporaneously with its date, February 10, 2014, an order from the Enforcement Branch of Environment Canada. This order directed the Plaintiff that “[b]y July 31st, 2014 [you] develop and submit to Enforcement Officer Laing a plan including timelines to remove…[the transformer] from your facility and have it sent off site for destruction to an authorized facility.” The order further stipulated that the Plaintiff could request a review of the order within 30 days, but that “[c]ompliance with this… [order] is mandatory, whether you request a review or not.”
[42] The order recited as the reason for its issuance contravention of provisions of law regulating use of chemicals known as PCB’s, and specifically the circumstance that the transformer was in use contrary to those regulations.
[43] The parties additionally accept as true the factual assertion in the order that Ieradi had previously received from Environment Canada on behalf of the Plaintiff a written warning contemporaneously with its date, March 1, 2011, in respect of this situation.
[44] There is no dispute that Deacon received the order after Ieradi’s removal from the Plaintiff’s Board of Directors. Deacon’s knowledge of the order is imputed to the Plaintiff according to the principles I have set out above. Moreover, the doctrine of fraudulent concealment has no application to that order. Ieradi, against whom the Plaintiff has made allegations of fraudulent concealment affecting him and presumably Westmount, was no longer on the Plaintiff’s Board when Deacon received the order.
[45] I find that the Plaintiff’s knowledge of the order through Deacon in February of 2014 commenced the running of the two year limitation period so that it expired months before the notice of motion before me was served in October of 2016. The order clearly put the Plaintiff on notice of “damage” within the meaning of that concept as discussed in Hamilton (City), supra; full knowledge of the monetary cost which the Plaintiff would incur to remove the transformer was not required.
[46] There is, in my view, no triable issue on the limitation question.
[47] The Plaintiff asserted that the order lacked the finality necessary to start the running of the limitation period, because it was subject to extensions and only required a report; in respect of this argument the Plaintiff relied on the principles governing demand obligations. As noted above, I see no application of those principles to this situation. Moreover, this order clearly demonstrated that the Plaintiff “was worse off”; all that remained was a quantification of its damages.
[48] The Plaintiff’s assertion of a lack of finality in the order because of the availability of possible extensions, was also invoked in its argument that a civil action was not upon receipt of the order “an appropriate means” to seek to remedy its “injury, loss, or damage” within s. 5 of the Limitations Act, 2002.
[49] The order in question, according to its terms, was “mandatory” whether a review was requested or not by the Plaintiff. Consistent with the principles in 407 ETR, supra, I do not see the existence of possible routes by which the Plaintiff could have challenged the order or sought extensions of it as affecting whether a civil action was “an appropriate means” to seek a remedy as against Fernbrook, Ieradi, and Westmount. There is before me no clear alternate route which should be pursued before a civil action is commenced, as was the case in 407 ETR; nor is there any evidence before me that the Plaintiff used or sought to use such a route. I reject the argument based on the language “appropriate means” in s. 5.
[50] The Plaintiff argues that as against Ieradi and Westmount the limitation period did not run until the status certificate was discovered by the Plaintiff in August of 2016. Accepting the allegations of the Plaintiff as contained in the amendment sought, it is clear that the cause of action against Ieradi and Westmount was known to the Plaintiff when Deacon received the order. The authorization by Ieradi of the status certificate and his hiding it from the Plaintiff as alleged in the amendment, are simply additional facts which the Plaintiff would seek to prove at a trial in support of the cause of action regarding the cost of removal of the transformer.
[51] In oral argument the Plaintiff emphasized the falsity of the status certificate in making the point under discussion. However, the cause of action as pleaded in the amendment related to the cost of the removal of the transformer; that “damage” in the Hamilton (City) sense was known when Deacon received the order.
[52] I, therefore, refuse leave to make the amendment, because of the expiry of the two year limitation period after two years from the receipt by Deacon of the order. Accordingly, I dismiss the motion at bar.
V. COSTS
[53] I will receive written submissions as to costs. They shall be limited to three pages, excluding a Bill of Costs. Fernbrook, Westmount, and Ieradi are to serve and file their submissions within 14 days from release of this endorsement. The Plaintiff is to serve and file its submissions within 14 days from service of the last of the costs submissions of those Responding Parties. There shall be no reply.
Bloom, J.
DATE: November 19, 2018
COURT FILE NO.: CV-14-5738-00
DATE: 2018 11 19
SUPERIOR COURT OF JUSTICE – ONTARIO RE: Toronto Standard Condominium Corporation No. 1786 – and – Fernbrook Homes (Wilson) Limited, Westmount-Keele Limited, Dominus Construction Corporation, Dominus Construction Group, Garlrich Restoration Inc., Joseph Ieradi (a.k.a. Joe Ieradi), Giorgio Marchi (a.k.a. George Marchi) and Konstantinos Koutoumanos (a.k.a. Gus Koutoumanos) BEFORE: Bloom, J. COUNSEL: A. Casalinuovo for the Plaintiff, Moving Party, N. Khouri for Fernbrook Homes (Wilson) Limited, Dominus Construction Corporation, and Dominus Construction Group, Responding Parties C. Hunter and J. Langley for Westmount-Keele Limited and Joseph Ieradi, Responding Parties ENDORSEMENT Bloom, J.