COURT FILE NO.: 18-78765
DATE: 2021/04/26
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Ken Ward and The Cross Bar Inc., Plaintiffs
AND:
The City of Ottawa, Defendant
BEFORE: Somji J.
COUNSEL: Matthew Miklauci, Counsel, for the Plaintiffs
Jeremy Wright, Counsel for the Defendant
HEARD: January 26, 2021
reasons for decision on
application to amend statement of claim
Introduction
[1] The Plaintiffs Ken Ward and Cross Bar Inc. (“Ward”) seek leave to amend the Statement of Claim (“Claim”) with the following proposed paragraphs set out in the Amended Statement of Claim (“Amended Claim”) dated July 20, 2020: 1(f), 6, 13(h), 18, 19, 20, 38, 39, 47 and 49.
[2] Ward rented a space inside the Ray Friel Arena in Orleans, Ontario (the “Property”) to operate a sports bar and restaurant. The Defendant, City of Ottawa (“City”), was the owner and landlord of the Property. Ward brought a claim for negligence and damages flowing from the City’s failure to advise and remediate the existence of toxic mold on the Property. The City disputes the claims alleging that any loss or damage resulting from the mold was caused or contributed by Ward’s negligence in failing to properly clean and maintain the Keg Room and Dumbwaiter which it used to store and deliver draft beer served at the bar and restaurant.
[3] Ward’s Claim was issued on December 19, 2018. In June 2020, Ward retained new counsel, and the following month, filed an Amended Claim seeking to add additional particulars and alternative relief. The City agreed to some of the proposed amendments in November 2020, but not all. The amendments that are in dispute relate to Ward’s request for, one, relief under the Occupiers’ Liability Act, R.S.O. 1990, c. 0.2 (“Act”); two, additional paragraphs to support the claim under the Act; and three, a request for alternative relief in the form of punitive damages. Ward argues that the proposed amendments do not constitute new causes of action because the facts in support of them were pled in the original Claim. Furthermore, the City is a sophisticated municipality and will not be prejudiced by the proposed amendments.
[4] The City disagrees. They argue that Ward’s original Claim did not seek relief under the Act and does not contain any factual allegations to support such a claim of relief. In particular, the City argues that no facts were initially pled alleging that the City was an occupier of the Property. Furthermore, the right to claim relief under the Act expired on June 7, 2019. To add such a claim now is, in effect, to issue a new claim that is statute barred and would result in a non-compensable prejudice to the City. The City also argues that Ward’s Claim did not seek punitive damages nor allege any facts that would support such relief.
[5] The primary issue in this motion is whether Ward’s proposed amendments amount to new causes of action that are statute barred such that to allow them at this stage of the proceedings would result in a form of non-compensable prejudice to the City.
The legal framework for analyzing amendments to pleadings
[6] Rule 26.02(c) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) allows a party to amend its pleadings with leave of the court.
[7] Rule 26.01 sets out requirements for granting leave to amend pleadings. The provision states as follows:
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.
[8] The use of the word “shall” makes it clear that the court’s discretion is limited. Unless the amendments result in a prejudice to the opposing party that cannot be compensated for by way of costs or an adjournment, the motion judge must grant the amendment sought: Mazzuca v Silvercreek Pharmacy, 2001 CanLII 8620 (ON CA), 2001 CarswellOnt 4133 at para 20.
[9] In Klassen v Beausoleil, 2019 ONCA 407, the Ontario Court of Appeal acknowledged that the expiry of a limitation period can constitute a form of non-compensable prejudice. However, the Court also stated that if the amendments proposed do not assert a new cause of action because the facts to support them were already pled in the original statement of claim, then the amended claim does not constitute a new cause of action and is not statute barred. As the court in Klassen explained at para 28:
Put somewhat differently, an amendment will be refused when it seeks to advance, after the expiry of a limitation period, “a fundamentally different claim” based on facts not originally pleaded: North Elgin at para. 23.
[10] Hence, in assessing whether to grant Ward leave to amend the Claim, it is necessary to examine the original Claim to determine if the factual basis for the proposed amendments and alternative relief was previously pled. When engaging in this exercise, the motions’ judge must read the original claim generously and with some allowance for drafting deficiencies: Klassen at para 30. Provided that the defendants have notice in the original pleadings of the factual matrix out of which the proposed claim for relief arises, the amendments will not constitute a new cause of action: Sweda Farms Ltd v Ontario Egg Producers, 2011 ONSC 6146, [2011] O.J. No. 4886 (Ont. SCJ) at para 25; Farmers Oil and Gas Inc. and Talisman Energy Inc. v Her Majesty the Queen in Right of Ontario, 2016 ONSC 6359, 134 O.R. (3d) 390 at para 22.
[11] Finally, it is important to note that even where the proposed amendments constitute a new cause of action that is statute barred, there may be special circumstances in which they can be added to the pleadings. However, these circumstances will be rare and the court’s discretion to permit a new cause of action after the expiry of the limitation period should be exercised sparingly: Ascent Inc. v Fox 40 International Inc, [2009] O.J. No. 2964 at paras 22 to 24.
Analysis of the proposed amendments
A. The facts and relief sought in the Claim
[12] In the Claim, Ward pleads damages as a result of the City’s failure to advise and remediate the existence of toxic mold on the Property. Ward also alleges damages for breach of the terms of the lease entered into with the City as well as other corollary relief.
[13] Ward alleges the City entered into a lease with Cross Bar in December 2008 which was renewed in November 2013 for a period up to November 2018. The premises leased from the City consisted of spaces for a restaurant, a café, and a patio service. Under the lease, Ward was entitled to operate a restaurant, coffee shop, and a family oriented sports bar serving alcohol beverages. The sale of draft beer represented more than 70% of Ward’s revenue.
[14] A Keg Room was located on the lower level of the Property. Ward transported draft beer from the Keg Room to the restaurant at the upper level via tubes running through the ceiling. A Dumbwaiter elevator system was also used to transport the beer from the Keg Room to the restaurant area. Neither the Keg Room nor the Dumbwaiter were part of the leased premises. Ward alleges the City, as landlord and owner, was responsible for the Keg Room and Dumbwaiter.
[15] Ward alleges that on/around November 2016, issues arose with the air quality in the Keg Room and the City conducted mold samplings of the leased premises. According to the Claim, the City did not advise Ward that mold had been found or that renovations were being done to remedy the mold infestation. In April 2017, as a result of worsening physical and mental symptoms, Ward became suspicious that mold may be present. The City undertook a mold inspection and by June 2017, the City determined that the Keg Room could not be used or occupied while the mold remained. The City took possession of the Keg Room from June 2017 until December 2017 and according to the Claim, did not advise Ward of what was occurring until mid-December 2017. When the Keg Room became accessible in December 2017, there were further complications with refrigeration rendering the Keg Room completely inoperable.
[16] Ward alleges he lost $250,000 of revenue during the period the Keg Room was inaccessible in 2017 and further loss of future profits when the Keg Room became unavailable for which he claims damages. Ward also alleges damages in the Claim for physical and emotional health problems suffered as a result of the presence of the mold on the Property of which the City failed to inform him and remediate. Finally, Ward alleges in the Claim that a camera which had a direct view of the Keg Room had been in place from 2014 to August 2017 and was removed by the City to spoil evidence related to the claims made by Ward and to prevent the production of new surveillance evidence.
[17] The City disputes the claims. The City alleges in its Statement of Defence and Counterclaim that the Keg Room was used solely by Ward and at all relevant times, was in his care and control. The City alleges that the mold formed in the Keg Room was the result of Ward’s failure to properly maintain and clean the Keg room. The City alleges that any loss or damage which resulted from the mold was caused or contributed to by Ward’s negligence and breach of contract including but not limited to, failing to clean and maintain the Keg Room and Dumbwaiter, failing to identify the presence of mold, failing to notify the City of mold, and failing to cooperate with remediation. The City claims the camera was removed for reasons unrelated to this matter and before any person was aware of the possible presence of mold in the Keg Room.
B. The proposed amendments in the Amended Claim
[18] In this case, Ward’s proposed amendments can be divided into three general categories:
Category 1: Paras 38 and 49 plead a breach of the Act. Ward argues these amendments amount to a different legal conclusion based on facts already pled.
Category 2: Paras 6, 13(h) and 18, 19, and 20 are particulars to causes of action already pled and additional facts upon which the existing claim for negligence is based.
Category 3: Paras 1(f) and 47 plead punitive damages as an alternative form of relief based on facts already pled.
[19] Each of these sets of amendments are examined in turn below.
C. Should leave be granted to permit the amendments in paragraphs 38 and 49?
[20] The wording of the proposed amendments in paragraphs 38 and 49 in the Amended Claim is as follows:
Paragraph 38: Further or in the alternative, the Plaintiffs say and fact is that the City failed to keep the Keg Room in reasonably safe condition in breach of the Act.
Paragraph 49: The Plaintiffs plead and rely upon the Negligence Act, R.S.O. 990, c. N.1 as amended and the Act, R.S.O. 1990, c. 0.2
[21] The definition of occupier is set out in s. 1 of the Act:
Definitions
1 In this Act,
“occupier” includes,
(a) a person who is in physical possession of premises, or
(b) a person who has responsibility for and control over the condition of premises or the activities there carried on, or control over persons allowed to enter the premises,
despite the fact that there is more than one occupier of the same premises; (“occupant”)
[22] It is clear from the definition that there can be more than one occupier of the same premises: MacKay v Starbucks, 2017 ONCA 350 at para 14. The determination of occupier status requires a case by case factual analysis and an application of those facts to the definition of occupier in the Act. There is no blanket rule: Starbucks at para 35. It is ultimately a determination whether a party had the requisite responsibility and exerted the requisite amount of control over the area in dispute: Starbucks at para 24.
[23] The City argues that the fact that a party is a landlord does not necessarily make them an occupier. It is a question of mixed fact and law. There must be some factual basis in the pleadings to advance a claim in occupiers’ liability. The City argues none of the facts pled in the Claim would bring the City under the definition of occupier to ground such a claim of relief.
[24] Ward argues that there are material facts in the Claim that allege relief under the Act. In addition to pleading that the City was the owner and landlord of the Property, the Claim also pled that one, the City had control and possession of certain parts of the Property (para 29 of the Claim); two, the City was responsible for the proper functioning and safety of the Property (para 17 of the Claim); and three, the City had responsibility to warn Ward about the toxic mold and remediate the problem (paras 30, 33, and 34 of the Claim). Ward argues that these facts that were already pled allege the City as an occupier of the Property and as having breached its duty of care under the Act.
[25] The exact wording of these facts in the original Claim are as follows:
Para 17: The City is responsible as landlord and owner, for the Keg Room and Dumbwaiter elevator.
Para 29: The city had effective control and possession of the Keg Room from June of 2017 to December 23, 2017. During that period, the City failed to properly remediate the mold located in the Keg room.
Para 30: Due to the City’s failure to provide a remediated and working Keg Room, the Plaintiffs have been unable to carry on the business operated by the Cross Bar, and as of the date of this statement of claim, have not retaken possession of the Leased Premises.
Para 33: The City’s failed attempts to remove the mold in the Leased Premises were woefully insufficient and did not properly remove or remediate the mold problem, as a result of which the Plaintiffs suffered, continued to suffer and will suffer economic damage and loss, including but not limited to ….
Para 34: The Plaintiffs state that the City’s failure to warn them that mold was present in the Leased Premises and failure to remove and properly remediate the Keg room and Dumbwaiter elevator areas and Leased Premises caused the damages claimed above.
Para 38: As a result of the City’s failure to warn Ward of the presence of mold in the Leased Premises and to properly remediate and remove the mold, Ward has suffered the above described damages, which damages will be fully quantified at trial, but are in excess of $1,000,000.
[26] Paragraph 17 of the Claim refers specifically to the City as a landlord and owner of the Property with no reference to its role as an occupier. I do not find it can be relied on to establish a factual basis for a claim under the Act.
[27] However, paragraph 29 refers to the City having control and possession of the Keg Room for the period of June 2017 to December 23, 2017. While it may be that the City’s control and possession was for a limited duration and strictly for the purposes of completing renovations as per its responsibility as owner and landlord of the Property, the use of the words possession and control do potentially bring the City under the definition of occupier. An occupier is defined under the Act as a person who has possession of the premises which it was pled the City did have over the Keg Room for various periods. Alternatively, an occupier is defined under the Act as a person who has responsibility for and control over the condition of premises or the activities there carried on or control over the persons who enter such premises. Paragraph 17 of the Claim pled the City had control over the Keg Room during the renovation period from June 2017 to December 2017 as well the period after December 2017 when the Keg Room was rendered inoperable and unavailable for use by Ward.
[28] I would also add that paragraphs 18 and 19 of the Claim make reference to the City engaging a company to take mold samplings in November 2016 and undertaking renovations to the Keg Room from December 26, 2016, to January 10, 2017. In both these instances, the Claim pleads that the City was also in control and possession of the Property so as to potentially meet the definition of occupier.
[29] Under s. 3 of the Act, occupiers owe a duty to take care as is reasonable in the circumstances to ensure persons entering the premises are reasonably safe. The legislation states:
Occupier’s duty
3 (1) An occupier of premises owes a duty to take such care as in all the circumstances of the case is reasonable to see that persons entering on the premises, and the property brought on the premises by those persons are reasonably safe while on the premises.
[30] Paragraphs 30, 33, 34, and 38 of the Claim allege the City failed to warn or remove the mold on the Property which could have prevented the medical and financial harm and damages to Ward. These paragraphs refer, effectively, to the City’s failure to keep the Property reasonably safe. While it is not precisely the same wording as used in the Act which refers to a breach of a duty of care, it is sufficient to give the City notice of the factual matrix out of which the claim for relief under the Act arises.
[31] Read generously, I find that substantially all of the material facts giving rise to a claim under the Act have previously been pled and therefore, the amendments proposed under paragraphs 38 and 49 in the Amended Claim do not constitute a new cause of action and therefore, are not statute barred. The City does not allege any other non-compensable prejudice other than the statutory limitation. Therefore, leave is granted per Rule 26.1 to allow Ward to amend the Claim by adding paragraphs 38 and 49 of the Amended Claim.
D. Should leave be granted to permit the amendments in paragraphs 6, 13(h) and 18, 19, and 20?
[32] Ward also seeks to add paragraphs 6, 13(h) and 18, 19, and 20 of the Amended claim. The precise wording of these paragraphs is as follows:
Paragraphs 6: The City is a body corporate and politic, duly incorporated pursuant to the Municipal Act, S.O. 2001, c. 25. as amended. At all material times, the City was an occupier pursuant to the Occupier Liability Act, R.S.O. 1990, c. O.2, as amended.
Paragraph 13(h): Pursuant to the express or implied terms of the Lease, the parties agreed, inter alia: (h) the City will ensure the reasonable safety of all occupants in and around the Ray Friel Complex not part of the Leased Premises.
Paragraph 18: At all material times, the City owned and had access to the Keg Room and the Dumbwaiter.
Paragraph 19: The City is responsible, as landlord and owner and occupier, for the Keg Room and Dumbwaiter elevator.
Paragraph 20: The Plaintiffs say and the fact is that the City was responsible for the maintenance, repair and good working order of the Keg Room and Dumbwaiter.
[33] Ward claims that if the court grants leave to add a claim under the Act, then these amendments are simply particulars for a cause of action already pled. Alternatively, these paragraphs constitutes additional facts for the negligence action. The City, on the other hand, argues that these particulars are being added precisely because the Claim did not provide sufficient facts to plead relief under the Act.
[34] In Ascent Inc. v Fox 40 International Inc, [2009] O.J. No. 2964, Master Dash found that a new cause of action is not asserted if the amendments plead an alternative claim for relief or provide particulars based on facts or allegations already pled. In Ascent, the plaintiffs originally pled a breach of contract and fiduciary duty. They later sought to amend their claim by adding particulars that pled conspiracy and fraudulent misrepresentation. Master Dash found that while the plaintiffs had originally alleged that promises were made which were later breached, they had never alleged that the promises themselves were fraudulent and made by agreement with an intent by the defendants to mislead at the time they were made. There were no facts in the original claim that alleged an agreement, a necessary element of conspiracy, or fraudulent misrepresentation. Master Dash found the claims of conspiracy and fraudulent misrepresentation constituted new causes of action which were statute barred. Therefore, any facts related to these new allegations were not permitted. However, the remaining facts which sought to particularize the promises made (absent a fraud intent), the reliance and the work done, and the breaches of the promises were permissible as those claims were already alleged: Ascent at paras 10 to 13.
[35] In this case, I have found that the claim under the Act does not constitute a new a cause of action, and therefore, any amendments that seek simply to particularize those allegations may be added. The amendments proposed in this case particularize the plaintiffs claim that that the City was, at least during the period of various renovations, in control and possession of parts of the Property, and thereby an occupier. The amendments further particularize the City’s responsibility over various parts of the Property flowing either from its role as owner, landlord, or occupier. None of the facts propose a new cause of action and leave is granted to add them to the pleadings.
E. Should leave be granted to permit the amendments in paragraphs 1(f) and 47?
[36] Finally, Ward seeks leave to amend the pleadings to add paragraphs 1(f) and 47 of the Amended Claim which seek alternative relief for punitive damages. Ward argues that the request for punitive damages relates to the City’s conduct with respect to the removal of a camera which they alleged at paragraphs 31 and 32 of the original Claim was undertaken to spoil evidence. The proposed amendments do not constitute a new cause of action, but are particulars for a claim for alternative relief arising out of the same factual matrix.
[37] The City argues that there was no request for punitive damages in the Claim and no factual basis alleged for such relief. The City argues that the facts set out in the proposed paragraph 47 forms the factual basis for punitive damages. The precise wording of the proposed amendments at paragraphs 1(f) and 47 of the Amended Claim is as follows:
Paragraph 1(f): The Plaintiffs, Ken Ward (“Ward”) and the Cross Bar Inc. (“Cross Bar”) (collectively, the “Plaintiffs”) jointly and severally claim against the defendant, the City of Ottawa (the “City):
(f) Punitive damages in the amount of $250,000 or such further and other amount as determined by this Honourable Court.
Paragraph 47: The City’s attempts to hide or spoil evidence by removing the Camera located outside of the Keg Room was high-handed, outrageous, oppressive and represents a marked departure from ordinary standards of decent behaviour, justifying an award of punitive damages particularly since:
(i) The conduct was dishonest, deceitful and a breach of the duty of good faith and fair dealing;
(ii) The conduct was motivated by self-interest in keeping the presence of toxic mold undisclosed;
(iii) A substantial award of punitive damages is necessary to demonstrate to the City that it will not be permitted to sidestep its contractual duty of good faith and fair dealing and to deter future commercial landlords from infringing upon their contractual and common law obligations of good faith;
[38] I find that the facts in paragraph 47 further particularize what was already alleged in paragraph 31 and 32 of the Claim and do not constitute a new cause of action. The precise wording of the section in the Claim is as follows:
Camera
The Camera was installed before Ward took possession of Leased Premises in 2014 until August 2017 when it was removed by the City after the City took over possession of the Keg Room. The Camera had a direct view of the Keg Room and was able to store and transmit images taken by it.
The Plaintiffs state that the City removed the Camera so as to spoil evidence related to the claims made in this statement of claim and to prevent the production and recording of new surveillance evidence.
[39] I also note that there is reference in paragraph 1A(d) of the Claim where Ward seeks preservation and production of the video surveillance camera located near the Keg Room.
[40] Paragraphs 31 and 32 of the Claim allege that the City had removed a camera that had a direct view of the Keg Room for the purpose of “spoiling evidence” related to Ward’s claims and to prevent the production and recording of new surveillance evidence. It constitutes, effectively, an allegation of dishonest conduct and bad faith on the part of the City. The proposed paragraph 47(a) refers to the City’s attempts “to hide or spoil evidence by removing the Camera located outside of the Keg Room” and goes on to characterize the conduct as dishonest, albeit in stronger language. The proposed paragraph 47(b) refers to the City keeping the presence of toxic mold undisclosed which was already alleged at paragraphs 34 and 38 of the claim where the plaintiff speaking of the “failure of the City to warn them that mold was present. The proposed paragraph 47(c) refers to the deterrence aspect of punitive damages and does not pled a new fact. Similarly, the proposed paragraph 1(f) constitutes a claim for alternative relief and does not plead new facts. Pleading an alternative claim for relief arising out of the same set of facts previous pled and without relying on new facts does not constitute a new cause of action: Ascent at para 3.
[41] Therefore, leave is granted to add paragraphs 1(f) and 47 of the Amended Claim.
Order
[42] Leave is granted to amend the Claim with the following proposed paragraphs set out in the Amended Claim: 1(f), 6, 13(h), 18, 19, 20, 38, 39, 47 and 49.
Costs
[43] Ward is the successful party on the motion. If the parties are unable to come to an agreement, both parties may file written submissions. The submissions shall not exceed two pages exclusive of the Bills of Costs and Offers to Settle. Ward shall file his submissions by May 15, 2021, the City by May 30, 2021, and Ward will have until June 5th to reply. Please email the submissions to scj.assistants@ontario.ca and to my attention.
Somji J.
Date: April 26, 2021
COURT FILE NO.: 18-78765
DATE: 2021/04/26
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Ken Ward and The Cross Bar Inc., Plaintiffs
AND:
The City of Ottawa, Defendant
BEFORE: Somji J.
COUNSEL: Matthew Miklauci, Counsel, for the Plaintiffs
Jeremy Wright, Counsel for the Defendant
reasons for decision on application to amend statement of claim
Somji J.
Released: April 26, 2021