Court File and Parties
COURT FILE NO.: CV-14-00500258
MOTION HEARD: 20190911
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Craig Daniell, Plaintiff
AND:
Chris Moffitt, Tech Labels Inc., Allied Hercules Inc., Peter Anderson, William Trotter and William Trotter and Associates, Defendants
BEFORE: Master B. McAfee
COUNSEL: J. E. Bogle, Counsel, for the Moving Party, the Plaintiff C. Chang, Counsel, for the Responding Parties, the Defendants
HEARD: September 11, 2019
REASONS FOR DECISION
Nature of the Motion
[1] This is a motion brought by the plaintiff pursuant to Rule 26.01 of the Rules of Civil Procedure for leave to amend the statement of claim.
[2] The impugned proposed amendments are found at paragraphs 1(d), 1(e), 53, 54, 62-64, 66-68, 78 (last sentence only), 80, 82-83, 88, 91-92, 95, 106 (part of first sentence “…in inducing the Plaintiff to sell his shares on terms highly favourable to the Defendants.” and part of second sentence “…and further, have deprived him of the agreed upon consideration for his shares of the Pridamor Group.” only) and 110 (part of first sentence “…the fact that the Plaintiff was misled into entering into the Share Purchase and Voting Agreement.” and last sentence only) of the proposed amended statement of claim.
[3] With respect to the proposed amendment at paragraph 103 of the proposed amended statement of claim, the defendants do not oppose the proposed amendment on the condition that the word “director” is replaced with “trustee.” The plaintiff agrees to replace the word “director” with “trustee.”
[4] The balance of the proposed amendments are unopposed.
[5] The proposed amended statement of claim does not contain the proper title of proceedings and no amendment to the title of proceedings was sought.
[6] An order shall go granting leave to amend the statement of claim with respect to the unopposed proposed amendments on the following conditions:
(a) in paragraph 103, the word “director” shall be replaced with the word “trustee;”
(b) the proposed amended statement of claim shall contain the proper title of proceedings as set out in the original statement of claim issued on March 14, 2014.
Preliminary Issue
[7] On June 20, 2019, the parties appeared before me and consented to an order striking various paragraphs of two affidavits filed by the plaintiff for this motion (see my endorsement dated June 20, 2019). There was no request to file further material and the parties agreed that no further material would be filed.
[8] At the return of this motion the plaintiff confirmed that reference in my June 20, 2019, endorsement to the affidavit of Eric Blau sworn April 25, 2019, also applies to the affidavit of Eric Blau sworn May 30, 2019. The plaintiff confirmed that the two affidavits are the same, save for the date of swearing. The earlier version was served on the defendants and the latter version was filed with the court.
The Action
[9] This action was commenced on March 14, 2014. A statement of defence was delivered on or about April 29, 2014. A reply was delivered on or about January 12, 2015.
[10] In this action the plaintiff claims general damages in the amount of $350,000.00, aggravated damages in the amount of $1,470,000.00 and, in the alternative, damages for the return of the share for a valuation to be made a trial.
[11] The defendants deny any liability and plead that the action is statute barred.
Position of the Parties
[12] The main issue argued on this motion is whether the limitation period has expired with respect to the impugned proposed amendments, save for the proposed amendment at paragraph 54. The parties agree that these impugned proposed amendments constitute new causes of action of specific performance and rescission.
[13] The plaintiff argues that these impugned proposed amendments ought to be permitted with respect to the new claims on the basis of discoverability.
[14] The defendants argue that these impugned proposed amendments ought to be denied on the basis of the expiry of the limitation period. In the alternative, the defendants argue that these impugned proposed amendments are otherwise untenable. The defendants also argue that these impugned proposed amendments ought to be denied on the basis of undue delay.
[15] With respect to the proposed amendment at paragraph 54, the defendants do not take the position that this particular amendment is statute barred but argue that it is untenable.
Law and Analysis
[16] Rule 26.01 of the Rules of Civil Procedure provides as follows:
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.
[17] Sections 4 and 5 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (the Act) provides in part as follows:
Basic limitation period
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 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).
[18] For the purposes of this motion, the plaintiff has not overcome the presumption in s. 5(2) of the Act (Mancinelli v. Royal Bank of Canada, 2018 ONCA 544 at para. 18).
[19] In support of the motion for leave to amend the plaintiff delivered the affidavit of Chelsea Murphy, legal assistant, sworn March 11, 2019, and the affidavit of Eric Blau sworn April 25, 2019, and May 30, 2019. In argument the plaintiff confirmed that he is relying on paragraphs 7, 8 and 9 of the Blau affidavit in support of his position with respect to the limitation period issue. The affidavits do not state when the plaintiff had actual knowledge of the facts underlying the new claims nor do the affidavits state that the plaintiff did not know that he had the new claims at any time prior to two years before the bringing of the motion.
[20] In oral submissions, plaintiff’s counsel submitted that the plaintiff did not know about the matters giving rise to the new claims until September 12, 2017, when plaintiff’s counsel received the receivership documents that included, in particular, the Forbearance Agreement. There is no specific evidence in this regard.
[21] Even if there was evidence in this regard, the statement of claim issued March 14, 2014, and the plaintiff’s reply dated January 12, 2015, refer to specific provisions of the Forbearance Agreement. These pleadings pre-date when the plaintiff submits to have had actual notice of the facts underlying the new claims.
[22] Paragraph 136 of the plaintiff’s proposed amended statement of claim refers to the date of discovery as “sometime between January and June 2013.” Even assuming that the two references to 2013 are typographical errors and the year should read 2017 as submitted by the plaintiff, the date range is not consistent with the oral submissions of the plaintiff nor was I referred to evidence in support of these two dates in 2017.
[23] There is an absence of evidence from the plaintiff or his agents of the plaintiff’s knowledge. (Nicholson v. McDougall, 2017 ONSC 7000 (Ont. S.C.J.) at paras 31-40). It cannot be inferred that the plaintiff did not have actual knowledge of the matters giving rise to the new claims until September 12, 2017.
[24] The plaintiff’s failure to rebut the statutory presumption means that, in accordance with s. 5(2) of the Act, the claims were discoverable when the act or omission took place, which was more than two years prior to the bringing of the motion. There was no submission that the act or omission took place within two years of the bringing of this motion. It is pleaded that the plaintiff’s month-to-month employment relationship was terminated on February 23, 2011.
[25] Having found that the plaintiff failed to rebut the statutory presumption, it is not necessary for me to consider whether the plaintiff has a reasonable explanation on proper evidence as to why the new claims could not have been discovered through the exercise of reasonable diligence prior to two years before the bringing of this motion. It is also not necessary for me to consider the defendants’ alternative basis for opposing these impugned proposed amendments.
[26] The impugned proposed amendments, save for the proposed amendment at paragraph 54, are statute barred. Leave is not granted with respect to these proposed amendments.
[27] The defendants do not oppose the proposed amendment at paragraph 54 on the same basis as the other impugned proposed amendments. The defendants argue that the proposed amendment at paragraph 54 is untenable. The defendants argue that this proposed amendment is in direct contradiction with the express wording of the Share Purchase Agreement at clause 3.1.
[28] Limited submissions were made in support of this proposed amendment. What is being relied upon in support of this pleading that contradicts the express wording of clause 3.1 is unclear.
[29] The plaintiff’s proposed pleading at paragraph 54 is not tenable as pleaded. The pleading contradicts the express wording of the Share Purchase Agreement. I am not granting leave with respect to the proposed amendment at paragraph 54 on a without prejudice basis.
Costs Thrown Away
[30] The defendants seek costs thrown away of the examination for discovery of the plaintiff on February 19, 2019, on a substantial indemnity basis in the all-inclusive amount of $5,101.52 and in the alternative on a partial indemnity basis in the all-inclusive amount of $3,614.15. The plaintiff submits that no costs thrown away ought to be payable. The plaintiff further submits that if costs thrown away are found to be payable, the fair and reasonable amount is $2,000.00.
[31] During the first few minutes of the examination for discovery of the plaintiff, the plaintiff produced, for the first time, a proposed amended statement of claim containing substantial proposed amendments. The transcript indicates that the examination commenced at approximately 10:30 a.m. and was adjourned at approximately 11:00 a.m.
[32] The defendants are entitled to costs thrown away. Had there been notification of a proposed amended pleading in a reasonable time in advance of the discovery, those costs thrown away could have been avoided.
[33] I am not satisfied of conduct that warrants costs on a substantial indemnity scale. In my view the all-inclusive sum of $2,500.00 is a fair and reasonable amount that the plaintiff could expect to pay for costs thrown away. This amount includes approximately $550.00 in disbursements for the examination fee and transcript.
Costs of the Motion
[34] If successful on the motion the defendants sought costs of the motion in the all-inclusive sum of $9,648.15. If successful on the motion the plaintiff sought costs of the motion in the all-inclusive sum of $9,000.00.
[35] The defendants were successful and are entitled to costs on a partial indemnity basis in the all-inclusive sum of $9,648.15, which the plaintiff acknowledged to be a fair and reasonable amount.
Summary of Order
[36] Order to go as follows:
- Leave to amend the statement of claim is granted with respect to the unopposed proposed amendments on the following conditions:
(a) in paragraph 103, the word “director” shall be replaced with the word “trustee;”
(b) the proposed amended statement of claim shall contain the proper title of proceedings as set out in the original statement of claim issued on March 14, 2014.
Leave to amend the statement of claim is not granted with respect to the impugned proposed amendment at paragraph 54 of the proposed amended statement of claim, without prejudice.
Leave to amend the statement of claim is not granted with respect to the balance of the impugned proposed amendments of the proposed amended statement of claim.
Costs thrown away of the aborted examination for discovery of the plaintiff held on February 19, 2019, are fixed in the all-inclusive sum of $2,500.00 payable by the plaintiff to the defendants within 30 days.
Costs of the motion are fixed in the all-inclusive sum of $9,648.15, payable by the plaintiff to the defendants within 30 days.
Master B. McAfee
Date: October 11, 2019