Court File and Parties
COURT FILE NOS.: CV-16-553766 & CV-16-55376600A1 MOTION HEARD: January 15, 2019
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Marco Rojas Plaintiff/Moving Party
AND:
Princia Porto A.K.A. Patricia Porto, and Corporation of the City of Toronto Defendants
AND:
Residence Engineering and Filipe Sousa Third Parties/Responding Parties
BEFORE: Master J. Josefo
COUNSEL: N. Canizares, Counsel for the Moving Party Plaintiff on the Motion Email: equinoxgroup@bellnet.ca
M. Delgado, Counsel for the Third Parties and Responding Parties on the Motion Email: mdelgado@dolden.com
HEARD: January 15, 2019
Reasons for Decision and Order
Introduction
1There are two Court File numbers in this matter, as noted above. The main action was started by the Plaintiff through the issuance of its Statement of Claim on May 31, 2016. One of two defendants in this action, the Corporation of the City of Toronto (“Toronto” or “the municipality”), on August 1, 2016 provided its Statement of Defence. On August 10, 2016 Toronto issued its Third Party Claim against the Third Parties, Residence Engineering and Filipe Sousa (“Third Parties”).
2The motion before me is brought by the Plaintiff. The motion record is dated October 4, 2019. It was served on or about October 9, 2018. The Plaintiff seeks to add the Third Parties as Defendants in the main action. The Third Parties resist the motion, asserting that the proposed claim of the Plaintiff is statute-barred. The question for me is whether the proposed claim of the Plaintiff is out of time. To answer that, I must decide when the existence of a claim by the Plaintiff against the Third Parties was “discoverable”.
Factual Context
3Before reviewing the applicable law, it is helpful to further situate this case in its factual context. The actions arise out of alleged negligent renovation work to a residential home in Toronto. The newly renovated home was purchased (through the ostensible use of trustee relatives) by the Plaintiff on December 27, 2013 from the defendant, Porto. Pursuant to the November 27, 2018 affidavit of the Plaintiff (paragraph 16), the Plaintiff knew in July 2015 of the renovation defects. The Plaintiff in his affidavit swore as follows: “In July 2015 we first discovered that the two story rear addition had been erected on two rows of cinder block and that there was no foundation or footings supporting the two story rear addition”.
4The Third Parties submit in their factum that by “August 25, 2015, at the very latest, the Plaintiff was fully aware of the foundation problem”. Based on the evidence of the email of that date found in the responding motion record, I agree with that.
5The record is also clear that, on February 22, 2016, the Plaintiff obtained his own engineering report from B Design Engineering Services Inc. The report sets out that engineers’ understanding that the municipality would rely on an Engineer’s letter addressed to the city. The report further concludes that the foundations “were not reviewed” by the prior engineer(s) involved, and that such is contrary to good construction practice.
6On May 31, 2016 the Plaintiff commenced the main action, including against the municipality. The allegations of the Plaintiff against the municipality are, inter alia, that Toronto had the obligation to ensure inspections were done and the renovations were completed pursuant to the Ontario Building Code (paragraph 7 of the Claim) and, in essence, the municipality was negligent in not doing so. The Plaintiff alleges that as a result extensive renovations will be required to ensure the residence is Code compliant.
7As summarized above, Toronto commenced its Third Party action on August 10, 2016, after defending the main action on August 1, 2016. Toronto in its pleading clearly blames the Third Party engineering firm and the engineer Mr. Sousa for their, in essence, negligence in the (purported lack of) inspection of the subject house when it was being renovated, and for negligent oversight during the construction or renovation period. Toronto also pleads that Toronto relied on the Third Party engineer, and on their letters to which were affixed their engineers’ stamps.
8On or about September 20, 2017 Toronto delivered its Affidavit of Documents. Examinations for Discovery of the Third Party Mr. Sousa, the engineer who ostensibly had provided stamped letters to the municipality confirming that the house was constructed to Code, occurred on October 19, 2017. As summarized by the Plaintiff in his factum, Mr. Sousa purportedly acknowledged when examined for discovery that he had not actually seen the footings and foundation wall supporting the two story addition to the home. Rather, based on what Ms. Porto purportedly told him, he “assumed” all was satisfactory; and he issued his report so asserting. His report is part of Toronto’s documentary productions (at tab 23).
9About a year after those Examination for Discovery, counsel for the Plaintiff sought to add the Third Party defendants as defendants to the main action. Mr. Canizares submitted that, until Mr. Sousa admitted his actions and his error at his October 19, 2017 discovery, the Plaintiff could not have known with certainty of his liability. Thus, the Plaintiff asserts that the negligence of the Third Party was only “discoverable” when Mr. Sousa was Examined for Discovery on October 19, 2017. The Plaintiff further asserts that, as the two year time limit begins to run from October 19, 2017, he was well within time to add the Third Parties as defendants to the main action in early October 2018.
10In the factum of the Plaintiff, counsel asserts somewhat differently, as follows: “It was only when the City produced its Schedule A documents on September 20, 2017 that the Plaintiff reasonably became aware of the possible liability of the Third Parties in having issued a false report upon which the City would rely”. Mr. Canizares submitted, however, that in any case that is less than two years before he served this motion in early October 2018.
11Addressing a procedural point, Court staff informed me that this motion was brought only in the Third Party action file. Mr. Canizares submitted that his assistant may have simply used the wrong court file number when preparing the Record. In any case, it was agreed by both counsel that this motion pertains to both the main action as well as to the related, Third Party action. That is why I have used both Court File numbers in this decision.
12Turning to the applicable law, the Limitations Act, 2002, particularly sections 4 and 5, along with Rule 5.04 (2) of the Rules of Civil Procedure, are I find what applies in this matter. Section 4 of the Act sets out the general principle that “a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered”. Section 5(1) addresses when a claim is discovered, thus, “discoverability”. Section 5 (2) of the Limitations Act I agree with counsel for the Plaintiff (as he submitted in his factum) “is a reverse onus provision requiring the Moving Party to explain why by the exercise of due diligence the identity of the party proposed to be add was not discovered on the date when the claim first arose, as well as the determination of any acts or omissions constituting liability”.
13Discoverability is accordingly based on the exercise of reasonable due diligence by a party. The Court of Appeal has made clear that, “a claim arises when the facts on which it is based have been discovered, or ought to have been discovered by the plaintiff by the exercise of reasonable diligence” (Aquonie v. Galion Solid Waste Material Inc, 1998 CarswellOnt 417 (C.A.) at paragraph 24 [emphasis mine]).
14Mr. Canizares relies on the Court of Appeal decision in Galota v. Festival Hall Developments Limited, 2016 ONCA 585. That case involved the Plaintiff Ms. Galota falling off an elevated dance floor at a nightclub called “Republik”, the original defendant. Subsequently, over five years after the event, the Plaintiff purported to sue Festival Hall as the occupier of the nightclub. On the particular facts involved in that case, Ms. Galota was on appeal permitted to add the new defendant Festival Hall.
15I find, however, that those facts are quite different from the facts involved in this within matter. In Galota, neither the insurance adjuster nor the original defendant nightclub alleged that Festival Hall or any other party may be responsible for the damage which the Plaintiff sustained. As indeed the Court of Appeal found (paragraph 25), “Festival Hall’s potential liability as owner and landlord was not obvious”.
16The Court of Appeal in Galota seemed to agree with the motions Judge that “a plaintiff must investigate on a reasonable basis with a view to determining the proper defendants to the claim”. My colleague Master Sugunasiri held in Laurent-Hippolyte v. Blasse et al, 2018 ONSC 940 that “due diligence is not about information arriving at one’s doorstep—it is about actively taking steps outside the door”. In other words, simply resting on ones laurels is not enough. Doing nothing is clearly not being duly diligent. Yet the motions Judge in Galota also commented that “a pre-discovery discovery of an adverse party is not required”.
17In this within matter, however, the Plaintiff really had to do very little investigation—if any at all. Certainly, a “pre-discovery discovery” was not what would have been required for the Plaintiff to ought to have known, if not actually to have known, of the existence of the Third Parties, and that they likely should be added as party defendants to the main action. Rather, I find that the Plaintiff was in essence “spoon-fed” the relevant information pertaining to the Third Parties, so the Plaintiff could and should have acted far sooner than it did act.
18With respect to counsel for the Plaintiff, waiting until discovery in this matter was insufficient. It allowed, without valid reason, time to slip away, and ultimately to slip past the limitation period. Later in these reasons I review when the limitation in this case actually began to run. Returning to the notion of waiting until discovery, so to use that process as investigative of putative claims or defendants, the Court of Appeal at paragraph 30 in Zapfe v. Barnes held as follows: “The discovery process was never to be used as a tool to investigate possible causes of action. The Plaintiff’s obligation is to investigate and, if so advised, to commence proceedings, within time, against those who may have caused or contributed to the injury…” or to the damage [emphasis added].
19In the decision of Malamas v. Edmonton Park Construction Ltd, the Court of Appeal, quoting from a Supreme Court of Canada decision (Peixeiro v. Haberman, [1997] S.C.R. 549) reiterated that, “the exact extent of the loss of the plaintiff need not be known for the cause of action to accrue. Once the plaintiff knows that some damage has occurred and has identified the tortfeaser, the cause of action has accrued”.
20Accordingly, extrapolating from the case-law, one should not wait for certainty—as that could mean, as in this case, waiting too long. In this case, at the Discovery of Mr. Sousa, there was purportedly that rare “smoking gun” admission of negligence. Yet one should not wait for that degree of certainty before commencing process. Rather, if, after doing ones diligence, one suspects that a party may have caused or contributed to the damage, one must then act with alacrity. If subsequently that defendant should not have been sued, the Rules provide for tools to address such eventualities (Notice of Discontinuance, etc.).
Analysis
21In this case, the timeline identifies a number of points when it could be held that the limitation period began to run, as follows:
- One could convincingly argue that the limitation period began to run against the Plaintiff to add the Third Parties as defendants as early as when the Plaintiff obtained its own engineering report from B Design Engineering Services Inc. on February 22, 2016. After all, that report, while not yet identifying the Third Parties, surely alluded to their existence. It was at least then a matter for careful consideration, if not actual investigation. If nothing else, this report at least ought to have alerted the Plaintiff that something else was brewing.
- If not then, one could even more convincingly argue that when Toronto served its statement of defence on August 1, 2016, the Plaintiff was put on good notice. After all, at that point, at paragraph 27, the municipality identified the Third Parties. An amendment at that point would have been apt, as it could be fairly concluded that the limitation period began to run as of August 1, 2016.
- Yet if not then, then certainly as of August 10, 2016, when Toronto served its Third Party Claim, the Plaintiff could not have had a clearer picture. Paragraph 17 of that pleading lays out in specific and cogent detail the (alleged) negligence of the Third Parties in four sub-paragraphs, (a) through (d). The allegations include that the Third Parties failed to review and inspect the construction, they failed to ensure the work was carried out in accordance with the building permits, they failed to detect deficiencies, and they made false representations to the municipality. In my view, the Third Party claim was also an excellent template for the Plaintiff to use when amending his claim so to add the Third Parties as defendants to the main action.
22My view is that the limitation period likely began in this case to run as of August 10, 2016. In so concluding, I note that I have chosen the latest date, most favourable to the Plaintiff.
23It is accordingly a puzzle that, for the next two years, and almost two months more, the Plaintiff did nothing with the information it had obtained. Again, the heavy lifting re discoverability of the new defendants was done by the municipality. The Plaintiff did not have to investigate, the Plaintiff did not have to take steps to determine the existence or identity of the Third Parties. Rather, all this helpful and relevant information was presented to the Plaintiff. I refer again to what Master Sugunasiri held in Laurent-Hippolyte v. Blasse et al, 2018 ONSC 940: “due diligence is not about information arriving at one’s doorstep—it is about actively taking steps outside the door”. Yet in this case the Plaintiff did not have to step outside the door. Everything was brought to the Plaintiff, very nearly gift-wrapped.
24I am unable to discern from the evidence a reasonable explanation why the Plaintiff did not act on the information which it clearly had before October 4, 2018, a date clearly outside of the limitation period. All the Plaintiff had to do, for two years starting no later than August 10, 2016, was exactly what it did do only when it was too late: seek to amend to add the Third Parties as defendants to the main action.
25By August 10, 2016 there was in my view more than enough information to alert Plaintiff to the likelihood that he “may” have a viable claim against to obtain recovery from the Third Parties. In other words, based on all the information which the Plaintiff obtained cumulatively, by that point it was, I find, sufficiently clear that a viable claim existed against the Third Parties. A claim, again, however, is not a certainty. Yet one does not wait for a certainty. Rather, one investigates to learn if one has a viable claim to assert. In this case, on these facts, again, an investigation was not necessary. All the relevant information was provided to the Plaintiff prior to the discoveries, and within the limitation period. Unfortunately, it was not acted upon until after expiry of the time, when it was too late.
26Waiting for discoveries in my view was unfortunately an error on the part of the Plaintiff. The decisions referenced herein have made it clear that such certainty as was obtained through the (rare) purported admission of Mr. Sousa is not what is required before seeking to add a party. Moreover, waiting for so long, beyond the limitation period, leads in this case to Plaintiff’s claim against the Third Parties being statute-barred. The Plaintiff’s motion to add the Third Parties as defendants in the main action is accordingly dismissed.
Costs
27Turning to costs, if not yet done the parties should exchange their bills of costs. Absent the existence of any offers to settle the motion or other unusual circumstances, if the partial indemnity rates are relatively equal, the plaintiff could agree to pay that or close to that quantum to the Third Parties. After all, it has long been held that if the losing party expected to receive a certain quantum for costs if successful, then such is the amount which the losing party should pay to the successful party.
28If, however, the parties cannot agree on costs, they may book a tele-conference with me through my Assistant Trial Coordinator.
(original signed)
Master J. Josefo
Date: January 16, 2019