Court File and Parties

COURT FILE NO.: CV-16-564417

MOTION HEARD: 20190730

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Seenergy Foods Ltd., Plaintiff

AND: Ready Go Transport Inc., Freight Plus International, and Keith Machinery Corp., Defendants

BEFORE: Master Jolley

COUNSEL: C. Allen, Counsel for the Moving Party Plaintiff Harold Rosenberg, Counsel for the Responding Party, the Proposed Defendant SH Pan Transport Inc.

HEARD: 30 July 2019

REASONS FOR DECISION

Background

[1] The plaintiff seeks leave to amend its statement of claim to add SH Pan Transport Inc. (“SH Pan”) as a defendant. SH Pan argues that the limitation period to add it has expired at least by 19 January 2019 and the motion should be dismissed.

[2] The incident that gave rise to this action occurred on 27 November 2014. It is alleged that the defendant Ready Go Transport Inc. (“Ready Go”) transported industrial kettles to the plaintiff under a bill of lading from the defendant Keith Machinery Corp. It is alleged that two of the kettles were damaged during unloading.

[3] The plaintiff understood that the truck driver Sukhpreet Singh Panjeta (“Panjeta”), who operated the truck and unloaded the kettles, was an employee of Ready Go. In the discussions that immediately followed the incident, Ready Go confirmed that Panjeta was its driver and agreed to pay for the repair cost of the kettles.

[4] The principal of Ready Go, Ajaypal Singh Virk (“Virk”) was examined for discovery on 26 January 2018. During that examination Virk suggested that Panjeta was not an employee of Ready Go but was a separate “broker” and that SH Pan was the service company Panjeta used to do work for Ready Go. Virk stated on the record that the entity was called SH Pan Transport Inc. but he undertook to confirm that that was the correct legal name of the corporation. It was not until 12 November 2018, on the eve of the plaintiff’s motion to compel answers to undertakings, including that undertaking, that Ready Go confirmed that the company name was indeed SH Pan Transport Inc. Two days later, on 14 November 2018, the plaintiff obtained a corporate search of SH Pan and thereafter, by motion dated 8 February 2019, sought to add SH Pan Transport Inc. as a defendant.

The Law

[5] Rule 5.04(2) provides that at any stage of a proceeding the court may by order add a party on such terms as are just unless prejudice would result that could not be compensated for by costs or an adjournment.

[6] Rule 26.01 provides that 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 by an adjournment.

[7] Superimposed on these Rules concerning adding parties is the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. The two year limitation period and the principle of discoverability are codified in sections 4 and 5 of that Act, as follows:

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

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).

[8] SH Pan argues that the plaintiff knew on 19 January 2017 that it had a cause of action against SH Pan. Alternatively, it argues that the plaintiff reasonably should have known more than two years before this motion that it had a claim against SH Pan. It argues that the plaintiff not only failed to exercise reasonable due diligence, but that it exercised no diligence to determine the identity of SH Pan until after the limitation period had passed.

Issue One: Did the plaintiff know it had a cause of action against SH Pan on or about 19 January 2017?

[9] SH Pan argues that the plaintiff knew on 19 January 2017 that it had a cause of action against SH Pan. On that day, the plaintiff received the pleading of Ready Go pointing the litigation finger at SH Pan. In that pleading, which Ready Go styled as a statement of defence and crossclaim, it described SH Pan as the operator of the truck that delivered the materials. Further it alleged that any damages suffered by the plaintiff were as a result of the negligence of SH Pan. Finally, the pleading provided an address for SH Pan that should have at least been the subject of some follow up.

[10] While it would have been prudent for the plaintiff to make inquiries after reviewing the pleading, I accept that the pleading was exceedingly unclear. In its statement of defence, Ready Go pleaded that it was responsible for the transportation of the load from the shipper to the plaintiff consignee, that it delivered the shipment to the plaintiff and that completed the shipment. It denied being responsible for offloading the shipment. In its crossclaim, Ready Go did not allege that SH Pan offloaded the kettles. It pleaded only that SH Pan was the operator of the truck and that its negligence contributed to any damages suffered by the plaintiff.

[11] Further, the pleading was styled as a crossclaim, which was incorrect on its face as SH Pan was not a party to the action. It spelled the name of SH Pan in two different ways in the course of the pleading and it provided an incorrect address for SH Pan (although this was unknown to the plaintiff as it did no search at that time.)

[12] Given these myriad of issues, I find that the plaintiff did not know on review of the defence and counterclaim that SH Pan caused or contributed to the damages it alleged suffered. It was understandable that the plaintiff chose to wait for examinations for discovery to reconcile Ready Go’s admissions that it was responsible for and did carry out the transportation with its further statement that SH Pan was the operator of the truck.

Issue Two: Could the plaintiff have known with the exercise of reasonable due diligence that it had a cause of action against SH Pan by no later than 8 February 2017, two years before this motion?

[13] SH Pan argues that the plaintiff could have ascertained with reasonable due diligence that it had a cause of action against SH Pan more than two years prior to bringing this motion. While there are due diligence inquiries that the plaintiff could have made to ascertain the name and role of SH Pan before Ready Go confirmed the name by answer to undertaking in November 2018, I find that it was reasonable for the plaintiff to wait for that undertaking to be answered, particularly in light of multiple pieces of information it had that pointed to Panjeta being an employee of Ready Go.

[14] It was reasonable for the plaintiff to assume, at least until Virk’s examination on 26 January 2018, if not until 12 November 2018 when Ready Go answered its undertaking, that Panjeta was employed by Ready Go. It had a statement from Panjeta that named Ready Go as the “company” in question. It had a statement from Ready Go acknowledging that Panjeta was its driver. Panjeta provided the plaintiff with insurance information of Ready Go when he was asked about insurance. All this would lead the plaintiff to believe that Panjeta was employed by Ready Go and insured by Ready Go.

[15] Panjeta deposed that he told Virk about the incident the following day and Virk advised him that he would try to settle directly with the plaintiff and not make an insurance claim. There is no evidence that Virk advised the plaintiff at any point before his examination for discovery that Panjeta was not an employee of Ready Go. To corroborate the employment relationship, the plaintiff also had information from Ready Go on or shortly after the date of the incident where it represented to the defendant Freight Plus that Panjeta was Ready Go’s driver and that Ready Go was going to pay the repair cost of the damaged goods.

[16] Other than the crossclaim, which is an unclear piece of drafting at best, it was not until Virk’s examination for discovery that Ready Go took the position that Panjeta was not its employee and that it was not responsible for his actions. While Panjeta argues that the plaintiff could and should have conducted a plate search to determine the owner of the truck, Ready Go had admitted that Panjeta was its driver and had stepped up to cover the repair costs.

[17] I find that until that “admission” of responsibility for the plaintiff’s damages was withdrawn (that date is not set out in the material before me but presumably occurred after the plaintiff’s claim grew from a small repair claim to a significant economic loss claim), it was reasonable for the plaintiff to believe that it had named the party responsible for the damage. Following the reasoning in Madrid v Ivanhoe Cambridge, 2010 ONSC 2235 at paragraph 17, if Ready Go had taken the position that it was not liable for the damages because another party had transported and/or delivered the goods, then the plaintiff would have been on inquiry to locate that other person. Here, not only did Ready Go not take the position that someone else was responsible for the damages, it stated that Panjeta was its driver and that it would cover the cost of the repairs.

[18] I find the plaintiff did conduct reasonable due diligence in (a) obtaining a witness statement from Panjeta where he identified his company as Ready Go; (b) being advised by Panjeta that his insurer was the insurer of Ready Go; (c) receiving correspondence from Ready Go which identified Panjeta as its driver; and (d) receiving confirmation from Ready Go that it would pay the repair cost of the freight. This was sufficient until at least January 2018 when Ready Go then took the position that Panjeta was not its employee and it was not responsible for the plaintiff’s loss.

[19] Panjeta also argues that this claim is barred by the Carriage of Goods regulation O. Reg 643/06 (the “Regulation”) under the Highway Traffic Act. The Regulation and case law appear to require the contracting party rather than the beneficiary to put the carrier on notice of a claim to goods carried. It seems, based on the information available at this stage, that the plaintiff was not the contracting party with SH Pan or even with Ready Go. The claim alleges that the plaintiff contracted with Keith Machinery for the purchase of the goods in question and the bill of lading notes Keith Machinery as the shipper, Ready Go as the carrier and the plaintiff as the consignee. Further, if the purpose of the Regulation is to ensure that a carrier is aware of a claim to be able to investigate the circumstances, here SH Pan through Panjeta was aware of the incident, aware that Ready Go was going to pay for the repair and then ultimately aware that the plaintiff had commenced an action against Ready Go for further damages. Further, Panjeta took photos of the damaged kettles on the date of the incident and gave them to Virk the following day.

[20] I find that the plaintiff could not have known with the exercise of reasonable due diligence that it had a claim against SH Pan until 12 November 2018 when Ready Go confirmed by answer to undertaking the legal name of SH Pan. Even if it should have known of its claim against SH Pan when Ready Go was examined for discovery on 26 January 2018, that date falls within the limitation period.

[21] Even if there were an issue of fact or credibility on the discoverability allegation, the appropriate result is to grant the plaintiff leave to amend its claim to add SH Pan as a defendant and grant SH Pan leave to plead a limitations defence (Madrid v. Ivanhoe Cambridge, above at paragraph 6).

Issue Three: Will SH Pan suffer non-compensable prejudice if it is added as a defendant at this stage?

[22] SH Pan argues that it will suffer non-compensable prejudice if it is added three years after the commencement of the litigation and five years after the incident. Panjeta argues that he is prejudiced by this delay as he has since lost the cell phone that he used to take photos of the damaged kettles and he has also lost the opportunity to inspect the kettles. I find that the delay in adding SH Pan did not contribute to either of these situations.

[23] First, plaintiff’s counsel deposed on this motion that the kettles were repaired even before the action was commenced so that the opportunity to review the damaged kettles would have been lost to SH Pan even if it had been named as a defendant at the outset. While there appears to be contradictory evidence as to when – and even if - any repairs were done (the affidavit of Mark Mason deposing that repairs were carried out on 19 February 2015 and the information in the plaintiff’s damages report of November 2016 suggesting that the kettles were damaged “beyond repair”), that is not relevant for the purpose of this motion as that contradictory evidence existed as of November 2016.

[24] Similarly, the loss of Panjeta’s cell phone on which he had photos of the damaged goods also occurred in 2015 before the action was commenced and well before 27 November 2016, which would have been the expiry of limitation period had I found that it had started to run on the date of the incident. There is some doubt as to whether the photos are in fact lost as Panjeta deposed that he sent Virk at least some pictures, which Ready Go has since provided to the plaintiff in answer to its undertakings. SH Pan will have all the usual discovery rights including obtaining disclosure of all of the plaintiff’s employees who attended at the incident on the date in question. I do not find that SH Pan will suffer non-compensable prejudice if it is added as a defendant at this stage.

Conclusion

[25] I find that this motion to add SH Pan as a defendant to this action is brought within the limitation period, which expires no earlier than 26 January 2020 (two years after Ready Go’s examination for discovery) and likely 12 November 2020 (two years after Ready Go provided the name of SH Pan in answer to its undertaking) and I grant the plaintiff leave to amend the statement of claim to add SH Pan as a defendant and leave to issue the proposed amended statement of claim in the form that was attached as Schedule “A” to the plaintiff’s motion record. This is without prejudice to SH Pan raising a limitations defence both under the Limitations Act, 2002 and under the Regulation in its defence.

[26] I have already received each party’s bill of costs. If the parties are unable to reach agreement on costs by 30 August 2019, they may deliver any additional submissions relating to offers to settle to me through my assistant trial co-ordinator Ms. Meditskos by email to christine.meditskos@ontario.ca by 13 September 2019.

Master Jolley

Date: 31 July 2019