COURT FILE NO.: CV-15-538581 CV-15-538931
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ST. JOSEPH’S HEALTH CENTRE, Plaintiff
AND:
PROBUILT PROFESSIONAL LIGHTING, LLC. et al., Defendants
And
CARILLION CONSTRUCTION INC., Plaintiff
AND:
ACKLANDS-GRAINGER INC. et al., Defendants
BEFORE: MASTER RONNA M. BROTT
COUNSEL: R. Barnable, for the Plaintiff St. Joseph’s Health Centre Email – rory@barnablelaw.ca
D. Fiorita, for the Plaintiff Carillion Canada Email – Dfiorita@cozen.com;
J. Teal, for the Defendant ProBuilt Profession Lighting Email – JTeal@lloydburns.ca
K. Di Tomaso, for the Defendant Carillion Canada Email – KDiTomaso@sblegal.ca
K. McDermott-Berryman, for the Third Party H. Griffiths Email - KMcDermott@orplawyers.com
J. Varcoe, for the Third Party Ozz Electric Email – Jennifer.varcoe@intact.net
ENDORSEMENT
1These two actions arise out of a fire that occurred on October 24, 2013 at St. Joseph’s Health Centre. It is alleged that the fire originated at or within a temporary lighting lamp know as a “wobblelight”. The wobblelight was on site during a large construction project at the hospital.
2In the first action, the plaintiff St. Joseph’s Health Centre (“St. Joseph’s”) issued a Statement of Claim on October 16, 2015 to recover damages of $350,000 from ProBuilt Professional Lighting LLC (“ProBuilt Lighting”) and Carillion Canada Inc. and/or Carillion Construction Inc. o/a Vanbots and/or Vanbots, a Division of Carillion Construction Inc. (“Carillion”). The second action was commenced on October 22, 2105 by Carillion and seeks damages of $1,300,000 from ProBuilt Lighting and Acklands-Grainger Inc. (“Acklands”).
3The plaintiffs allege in their pleadings that ProBuilt Lighting designed, manufactured, distributed, supplied and sold the wobblelight to Carillion through Acklands. The Carillion action has been dismissed as against Acklands. In its Statements of Defence served in or about April 2016, ProBuilt Lighting pleads:
In the St. Joseph’s action:
Probuilt admits that it manufactured the Wobblelight 36” 400 watt Metal Halide Work Light (“Wobblelight”) , but denies that the Defendant, Carillion Canada Inc. (“Carillion”) used it, or any other lamp designed, manufactured or assembled by Probuilt, during its construction operations at the St. Joseph’s Health Centre (“Premises”) as described in the statement of claim.
If Carillion did use a Wobblelight at the Premises, Probuilt further denies that the fire occurring at the Premises as described in paragraph 112 of the statement of claim originated at or within the Wobblelight but states that it did so at another and unrelated area of the Premises.
In the Carillion action:
Probuilt admits that it manufactured the Wobblelight 36”, 400 watt Metal Halide Work Light (“Wobblelight”), but denies that the plaintiffs used it, or any other lamp designed, manufactured or assembled by Probuilt, during their construction operations at the St. Joseph’s Health Centre (“Premises”) as described in the statement of claim.
If Carillion did use a Wobblelight at the Premises, Probuilt further denies that the fire occurring at the Premises as described in paragraph 8 of the statement of claim originated at or within the Wobblelight but states that it did so at another and unrelated area of the Premises.
THIS MOTION
4The pleadings in the Carillion action were closed in December 2016 and the pleadings in the St. Joseph’s action were closed in June 2017. Examinations for discovery were held for three days in July 2018.
5Immediately prior to the examination for discovery of Mr. Gerth, President and representative on behalf of ProBuilt Lighting, defence counsel Mr. Foulds advised all parties that ProBuilt Lighting was not the manufacturer of the wobblelight. He further advised that the manufacturer of the wobblelight was Wise Plastics Technologies Inc. (“Wise Plastics”).
6On this motion ProBuilt Lighting seeks to amend paragraphs 5, 6, 7, 8, 9 of the Statement of Defence in the St. Joseph’s action and paragraphs 5, 6, 7, 8, 9 in the Carillion action. Should it be found that the amendments constitute a withdrawal of an admission, then ProBuilt Lighting seeks to withdraw the admissions. St. Joseph’s and Carillion are opposed to the motion and the Third Parties are taking no position.
7Rule 26.01 of the Rules of Civil Procedure (“rules”) provides:
GENERAL POWER OF COURT
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.
8Rule 51.05 of the Rules provides:
WITHDRAWAL OF ADMISSION
An admission made in response to a request to admit, a deemed admission under rule 51.03 or an admission in a pleading may be withdrawn on consent or with leave of the court.
9The law is clear that where the effect of an amendment to a pleading is to withdraw an admission, Rule 51.05 supercedes Rule 26.01 because it is more specific. (Antipas et al. v Coroneos et al., 1988 10348 (ON SC), [1988] O.J. No. 137 (Ont. H.C.J.) at para. 12)
Is ProBuilt’s pleading an admission? Do the proposed amendments amount to a withdrawal of an admission?
10The Divisional Court has defined an admission for the purposes of Rule 51.05 as “an unambiguous deliberate concession to the opposing party”. Admissions made in parties’ pleadings are generally regarded as conclusive as they are drafted in a way to define and limit issues in a proceeding. I find that the wording in the paragraphs in issue in the Statements of Defence of ProBuilt Lighting are an admission by the company that it manufactured the wobblelight. The wording is clear and unambiguous. Accordingly, the proposed amendments amount to a withdrawal of ProBuilt’s admissions that it manufactured the wobblelight.
Withdrawal of an Admission
11The test for a party seeking to withdraw an admission in its pleading requires the moving party to establish all of the following:
The proposed amendment gives rise to a triable issue;
The admission was inadvertent or resulted from wrong instructions and there is a reasonable explanation for the change in position; and
The withdrawal of the admission will not result in prejudice that cannot be compensated by costs.
Triable issue
12The threshold to satisfy the first element is low. Carillion pleads in its Statement of Claim that it purchased from Acklands the wobblelight that is alleged to have caused the fire, in 2009. The St. Joseph’s representative on discovery had no evidence regarding when the light was purchased or how long it had been at the hospital.
13On November 8, 2019 Carillion produced, in an answer to an undertaking given at its examination for discovery, an invoice from Acklands for an order of a wobblelight with a ship to “St. Joseph’s Hospital”. The “order date” and “invoice date” is October 29, 2010 and a “first payment date” is March 4, 2019.
14ProBuilt Lighting was incorporated as a limited liability company under the laws of the State of Illinois on July 2, 2010. It commenced business on August 1, 2010. Pursuant to the ProBuilt Lighting APA dated July 30, 2010, ProBuilt Lighting purchased the assets of ProBuilt Professional Products, LLC (”ProBuilt Products”), a Delaware limited company that was engaged in the business of designing, manufacturing, marketing and distributing lighting solutions for the construction industry, including the wobblelight.
15ProBuilt Lighting asserts that the wobblelight was ordered and/or purchased prior to their corporate existence. They contend that all wobblelights sold by ProBuilt Lighting were manufactured after August 1, 2010 or were manufactured within 30 days prior to August 1, 2010, and were within the inventory that ProBuilt Lighting assumed upon closing of ProBuilt Lighting APA. If the light was purchased by Carillion in 2009 as pleaded by the plaintiffs, then it was not manufactured by ProBuilt Lighting. If the wobblelight was sold to Carillion by Acklands on October 29, 2010 as the invoice suggests, it was not a wobblelight for which ProBuilt Lighting was responsible if it was in Acklands inventory prior to July 2, 2010.
16The plaintiffs contend that ProBuilt Lighting’s evidence fails to raise a triable issue. They submit that there is no documentary evidence nor any affidavit evidence from Mr. Gerth to explain why ProBuilt Lighting believes that the wobblelight was purchased as they now allege. It is their submission based on the production of the invoice, that the wobblelight was ordered and purchased in October 2010 and was therefore manufactured by ProBuilt Lighting.
17In my view, given the plaintiffs’ pleadings (that the light was manufactured in 2009), the very late production of the invoice (2019), the fact that the invoice was generated only in 2019, the inconsistencies, uncertainties and conflicting timeframes and the low threshold required for this aspect of the test, there is a triable issue.
Is there a reasonable explanation
18The party seeking to withdraw an admission must provide an explanation for the change in position. The test requires the moving party to convince the court that the admission was made either:
a. through inadvertence; or
b. resulted from wrong instructions.
19ProBuilt Lighting’s evidence is that Dave Vrioni, the general manager of ProBuilt Lighting, who was handling the litigation, did not provide the Statement of Defence to Mr. Gerth for his review and approval. Neither Mr. Vrioni nor defence counsel, Mr. Burns were aware of the fact that ProBuilt Lighting did not exist until July 2, 2010 or of the existence of the ProBuilt Lighting APA when the Statement of Defence was delivered in April 2016. The respondents submit that ProBuilt’s evidence is inadequate and unsatisfactory but they chose not to cross-examine Mr. Gerth.
20In Hughes v Toronto Dominion [2002] O.J. No. 2145, Master Graham states: “The governing principle of our rules as set out in Rule 1.04(1) is not furthered if parties are not allowed to correct mistakes in pleading if a full exploration of the facts and documents reveals them.” Master Graham continues at para 28 citing Vassos v Enterra Holdings Ltd., 2019 ONSC 661: “Evidence that a pleading is based on ‘incomplete and therefore erroneous information’ can both support a conclusion that the pleading did not constitute an admission in the first place and provide the explanation necessary to satisfy the second party of the test.”
21Mr. Gerth’s affidavit in support of this motion makes clear that the Statements of Defence were drafted with “incomplete and erroneous information”. Mr. Gerth states that upon speaking to his lawyer, it became clear that the lawyer did not know that ProBuilt Lighting did not exist before July 2, 2010.
22In my view the Affidavit of Mr. Gerth provides sufficient evidence to satisfy this part of the test. It was not necessary, as submitted by the responding parties, to provide additional evidence from either Mr. Vrioni or Mr. Burns. As stated by Grace J. at para 18 in Shannon and Nicholson v BGC Partners, 2011 ONSC 3077;
“If the moving party is able to establish there is a good reason to doubt [i.e. the admitted fact’s] correctness, the second element will almost always be satisfied and the court should move on to the issue of prejudice and compensation. The reason the admission was made at the first instance is of limited and secondary importance.
23I am satisfied that ProBuilt Lighting’s evidence constitutes a good reason to doubt that ProBuilt manufactured the subject wobblelight. Further, Mr. Gerth has provided an explanation for the admission and/or for the admission being based on erroneous and incomplete information.
Prejudice
24The third branch of the test requires the moving party to convince the court that the withdrawal of the admission will not result in prejudice to the responding parties that cannot be compensated for in costs. This third requirement is the most significant. Such prejudice must arise from the change in position sought by the amendment. The responding parties submit that the irreparable prejudice arises from the following:
a. Delay in bringing this motion;
b. The expiry of a limitation period;
c. Carillion’s agreement to dismiss the action as against Acklands;
d. The destruction of key documents and/or death or unavailability of witnesses.
Delay
25The responding parties rely on cases which have held that a long delay would cause non-compensable prejudice as the action must be reset back to the pleadings and discovery phase. In these actions, it has been approximately five years since the Statements of Claim were issued and two and a half years since Mr. Gerth’s evidence that ProBuilt Lighting did not manufacture the wobblelight.
26As well, the respondents rely on Kostruba & Sons Inc.v Pervez, 2011 ONSC 4894 (Ont. S.C.J.) at para 41 which notes that “the stage of the action at which the withdrawal of the admission is requested is relevant. Early on in the action, the reliance of the opposite party on the admission will not be as great. It will not be as difficult for the opposite party to reformulate its case. Later, after discoveries have been held and evidence for trial has been marshalled, it will be more difficult. Prejudice will be more apparent.”
27The relevant period for an inquiry into the alleged prejudice suffered by the responding parties is when they became aware of ProBuilt Lighting’s proposed amendment which, in the circumstances, was in July 2018. While the motion is being brought after the examinations for discovery, it is critical to examine what the respondents knew and when they knew it. Here, when Mr. Gerth was examined for discovery, the responding parties knew:
a. ProBuilt Lighting was not incorporated until July 2, 2010;
b. ProBuilt Lighting purchased the assets of ProBuilt Products on July 30, 2010;
c. ProBuilt Products, previously known as Petersen Brands LLC, sold wobblelights;
d. ProBuilt Lighting commenced business on August 1, 2010 selling wobblelights which were the same line of wobblelight products previously sold by ProBuilt Products;
e. Wobblights manufactured before August 1, 2010 were not the products of ProBuilt Lighting but of ProBuilt Products; and
f. The wobblights sold by ProBuilt Lighting after August 1, 2010 were assembled by Wise Plastics from components manufactured or purchased by Wise Plastics.
28These actions were commenced in 2015. The parties were examined for discovery in 2018 and in 2019 they discussed attending a mediation. The proceedings advanced so slowly that but for this motion, these actions would have been dismissed under rule 48.15. Any delay cannot therefore be attributed solely to the defendant ProBuilt Lighting.
29While I have some concerns regarding the two-year delay by ProBuilt Lighting to bring this motion, I am satisfied that the moving party was seeking to obtain the amendments without the necessity of a formal long motion. When consent was not forthcoming, ProBuilt Lighting brought the within motion. In light of the information known by the responding parties at the relevant time, I therefore find that the moving party has satisfied the onus to show that the responding parties will not suffer non-compensable prejudice as a result of any delay.
Limitation Period
30Should this court permit ProBuilt Lighting to withdraw the admission, then the plaintiffs may seek to pursue an action against Wise Plastics based on ProBuilt Lighting’s Affidavit of Documents delivered on May 31, 2018 and Mr. Gerth’s examination for discovery evidence on July 25, 2018.
31The limitation period would have expired within two years from either of the dates noted above but those would have been extended to November 30, 2020 and January 25, 2021 due to the COVID-19 court shutdown from March 16, 2020 to September 14, 2020.
32The responding parties’ affidavits on this motion are all lawyers’ affidavits sworn on information and belief only. They state that they “would have commenced/added Wise/counterclaimed but now that ability to pursue Wise is statute-barred”. These responding parties could have commenced/added/counterclaimed against Wise during the limitation period, and in fact, both Carillion and St. Joseph’s, the plaintiffs in both actions, did actually commence separate actions against Wise Plastics in January 2021.
33At this time it is premature to determine if Wise Plastics will or will not advance a limitation defence, or whether such defence would be successful. Accordingly, I find that this ‘possibility’ does not amount to prejudice that cannot be compensated for in costs. This is particularly so in light of the fact that based on their information and knowledge, the two plaintiffs chose to and did ultimately commence proceedings against Wise Plastics in January 2021.
The Acklands Dismissal
34Acklands was a defendant in the Carillion action in which the plaintiff alleges that it purchased the wobblelight from Acklands and Acklands breached its warranty under the Sale of Goods Act. In October 2017 the plaintiffs in the Carillion action agreed to dismiss the action as against Acklands on condition that ProBuilt Lighting would assume any liability that Acklands has to the plaintiffs under the Sale of Goods Act.
35Carillion asserts that if the amendment/withdrawal of the admission is permitted, they could be put into a situation where they may have to prove a claim against Acklands, a non-party, which would result in irreparable prejudice. They submit that they likely would not have agreed to release Acklands in advance of an exchange of Affidavit of Documents and examination for discovery of an Acklands representative.
36An order granting ProBuilt Lighting leave to amend would not cause prejudice to Carillion as alleged because ProBuilt Lighting has assumed Acklands’ liability with regard to a possible lost opportunity to obtain evidence. Further, Rules 30.10 and 31.10 do provide a mechanism for the plaintiff to obtain relevant information and evidence from a non-party.
Prejudice by way of lost or unavailable witnesses and/or documents
37The plaintiffs submit that if the withdrawal of the admission is permitted, then they will be significantly prejudiced by the loss or inability to locate witnesses and/or necessary and relevant documents. The plaintiffs, relying on Wellwood v Ontario Provincial Police, 2010, ONCA 386 at p. 72 submit that because ProBuilt Lighting has failed to provide contact information for Mr. Vrioni, Mr. Mason, Mr. Hunter and Ms. Scott, prejudice should be presumed. Further, even if those witnesses are located, their memories will have faded resulting in irreparable prejudice, non-compensable in costs. The responding parties submit only that this is a risk. There is no evidence in this regard.
38With regard to documents, instruction manuals from ProBuilt Professional Products have not been produced. There are also few, if any, documents in relation to the involvement of Wise Plastics, in regards to the manufacture of the wobblelight.
39Although there are some documents which ProBuilt Lighting has undertaken to produce, and have not yet been produced, there is no evidence that the relevant documents for the period between April 2016 when the statements of defence were delivered, and July 2018, when Mr. Gerth was examined for discovery are lost or unavailable. It is ProBuilt Lighting’s evidence that:
a. The key employees of Wise Plastics advised him in late 2015 or early 2016 that Wise Plastics no longer had any records for lights manufactured prior to 2011;
b. No documents of ProBuilt Lighing were disposed of, destroyed, or lost since Mr. Gerth was served with the statements of claim in these actions;
c. No relevant documents were disposed of destroyed, or lost upon the sale of the assets of ProBuilt Lighting to Southwire Company, LLC in August 2018;
d. All of the key witnesses connected to Wise Plastics remain actively employed by Wise Plastics; and,
e. The current employer and whereabouts of all of the key witnesses connected to ProBuilt Lighting, who were involved in management, product management, sales, and engineering (Dave Vrioni, Gordon Hunter, Dan Wu, Clint Mason, Brandy Harty, Tom Godsell, Jason Warling, Shane Davies, Peter VandeMotter, and Tim Truesdale) are readily available online and all of these individuals continue to reside and work in the United States.
40The responding parties’ affidavits were prepared with no personal knowledge of the reliability or availability of witnesses and they do not state the sources of their belief that the passage of time will cause them irreparable prejudice. Mr. Gerth’s evidence on the other hand, establishes that there is no reason to believe any prejudice to the plaintiffs has arisen with regards to witnesses or production on documentation.
41While the responding parties may suffer prejudice, particularly due to the ‘reset’, it is prejudice which can be compensated for in costs. I find that the prejudice that ProBuilt Lighting would suffer if it was required to proceed to trial with an admission against its interest that is based on what is very possibly an untrue fact (that it manufactured the subject wobblelight before its company was even in existence) amounts to significant prejudice. It must ultimately be left to the trier of fact to make the factual findings. To deny the moving party the right to correct mistakes and to put the corrected factual evidence before the trial judge amounts to prejudice to ProBuilt Lighting. For these reasons,
42THIS COURT ORDERS that leave is granted to the defendant ProBuilt Lighting to withdraw the admission and to amend its statements of defence in accordance with the proposed amended statements of defence and crossclaims.
43THIS COURT FURTHER ORDERS that these actions shall not be dismissed until further Order of this court. The parties shall attempt to reach a consent timetable.
44Costs outlines were exchanged following oral arguments. Counsel agreed to attempt to resolve the issue of costs within thirty (30) days following release of the Endorsement. If unable to come to an agreement on costs, the moving party shall contact my Assistant Trial Coordinator, Christine Meditskos, to request a telephone case conference at which time a date will be set for delivery of costs outlines, costs submissions and the hearing of the costs issue. At that conference, if the parties have been unable to reach agreement on a timetable, that issue will also be addressed.
MASTER RONNA M. BROTT
Date: April 20, 2021