COURT FILE NO.: 14-45485
DATE: 20220118
SUPERIOR COURT OF JUSTICE - ONTARIO
B E T W E E N :
ORIANA CIRAOLO, ERICA CIRAOLO, and DAMIANO CIRAOLO
by their Litigation Guardian GIOVANNA GIORNOFELICE,
LUIGI CIRAOLO, and the said GIOVANNA GIORNOFELICE
Plaintiffs
- and -
ROBERT ALAN RICCI, and/or
ROBERT ALAN RICCI by his Estate Trustee ARLENE LANCTOT, and/or
ROBERT ALAN RICCI, deceased by his Litigation Administrator MATT LALANDE, and/or
ROBERT ALAN RICCI by his Estate Administrator JOHN DOE, and
THE CO-OPERATORS GENERAL INSURANCE COMPANY
Defendants
BEFORE: Justice L. Sheard
COUNSEL: Mary Grosso, Agent for Paul Barrafato, counsel for the Plaintiffs
Shawn O’Connor, counsel for the Defendants,
Caley Ross, counsel for The Co-Operators General Insurance Company
HEARD: January 13, 2022
REASONS FOR DECISION ON MOTIONS
[1] There were three motions before me today:
The plaintiffs’ motion for an order allowing them to amend the Trial Record by removing from it the Amended Statement of Defence dated October 13, 2017 (the “Amended Defence”) served on behalf of Robert Alan Ricci (“Ricci”) and his personal representatives (the “Ricci Defendants”) and replacing it with the Statement of Defence of the Ricci Defendants dated June 24, 2014;
The Ricci Defendants’ cross-motion granting them leave to amend their statement of defence as per the Amended Defence; and
The plaintiffs’ motion for an order to set aside the order of Justice Reid dated May 28, 2015 (the “Reid Order”) dismissing the plaintiffs’ action as against the defendant, The Co-Operators General Insurance Company (the “Co-Operators”).
Disposition on the Motions
[2] For the reasons set out below, I make the following orders:
(i) the plaintiffs and the Ricci Defendants are granted leave to bring their motions;
(ii) the Ricci Defendants’ motion to amend their statement of defence as per the Amended Defence is granted;
(iii) the plainitffs’ motion to amend the Trial Record by removing the Amended Defence is dismissed;
(iv) the Trial Record shall remain unchanged, except that this order shall be added to it; and
(v) the plaintiffs’ motion to set aside the Reid Order is dismissed.
Summary of Facts
[3] The key evidence on these three motions is contained in the affidavits sworn by the parties’ counsel and by the Claims Representative of the Co-Operators[^1]. There were no cross-examinations on these affidavits. The facts set out below are taken from these affidavits.
[4] This action arises out of a motor vehicle accident that occurred on February 1, 2012 when the motor vehicle operated by the plaintiff, Oriana Ciraolo (“Ciraolo”), was struck from behind by a motor vehicle driven by the defendant, Robert Alan Ricci (“Ricci”). The police were involved and a Motor Vehicle Accident Report (“MVA Report”) was prepared.
[5] The MVA Report notes that Ricci told the investigating officer that the collision occurred when Ricci was attempting to move out of the way of a vehicle that was attempting to merge from a parking space into the lane.
[6] Ricci died approximately six months after the accident.
[7] The statement of claim was issued on January 31, 2014. The plaintiffs named the Co-Operators as defendants - Ciraolo’s own motor vehicle insurer – out of concern that the unidentified vehicle referenced by Ricci in the MVA Report might have some liability for the accident. Pursuant the Family Protection Endorsement, OPCF 44R, of Ciraolo’s Co-Operators policy, she had insurance coverage of $1 million for injuries suffered in accidents involving “unidentified or uninsured automobiles”.
[8] On June 24, 2014, the Ricci Defendants delivered a statement of defence, denying liability. Paragraph 4 of the defence asserted that at the time of the accident, Ricci “was responding to a situation of emergency created by an unidentified vehicle operated by persons unknown (the “unidentified vehicle”) which attempted to merge from a parking space” into Ricci’s path.
[9] By email dated August 20, 2014, and by letter dated September 22, 2014, as required by law, (then) counsel for Ricci confirmed to plaintiffs’ counsel that there was an insurance policy responding to the claim against the Ricci Defendants with a $1 million coverage limit, and that defence counsel was not aware of any coverage issues.
[10] The parties and Co-Operators agree that the Co-Operators’ policy would become available to the plaintiffs only in the event that the unidentified vehicle was 100% at fault for the accident. Were the Ricci Defendants even 1% at fault, their $1 million insurance policy would respond to the plaintiffs’ claim.
[11] By letter (incorrectly) dated April 23, 2014[^2], counsel for the plaintiffs advised counsel for the Co-Operators and the Ricci Defendants that as the defendants’ policies of insurance were both limited to $1 million, the plaintiffs were in a position to release the Co-Operators from the action. Although the plaintiffs had not executed a full and final release in favour of the Co-Operators, on the plaintiffs’ motion, the Reid Order was granted, on consent, dismissing the plaintiffs’ action as against the Co-Operators.
[12] In his affidavit of February 12, 2021, at para. 5, counsel for the plaintiffs stated that his clients determined to let the Co-Operators out of the action because, in his view, the Ricci Defendants’ liability for the accident was not strongly contested “given the mechanics of the collision” and that it was likely that the Ricci Defendants “would be found 1% liable for the collision”.
[13] As the policy limits of the two insurers were the same, the only benefit to keeping the Co-Operators in the action was to have that policy available to the plaintiffs, in the event that the Ricci Defendants were found 0% at fault and any liability was attributed to an underinsured or unidentified automobile.
[14] In submissions, it was made clear that in deciding to dismiss the action against the Co-Operators, plaintiffs’ counsel was exercising his judgment that the risk or likelihood that the Ricci Defendants would be found 0% liable was very minimal.
[15] It is not in dispute that even if 0% liability was attributed to the Ricci Defendants, to be entitled to recovery from the Co-Operators, the plaintiffs would have to establish the liability of the unidentified motor vehicle.
[16] Pursuant to the terms of OPCF 44R, the claimant’s evidence of the involvement of such automobile must be corroborated by other material evidence. On this motion, the only evidence of the existence of an unidentified automobile was the statement made by Ricci to the police.
[17] As of the date of the Reid Order, the Co-Operators had not delivered a defence, the Ricci Defendants had not delivered an affidavit of documents, and examinations for discovery had not taken place.
Progress of the Litigation after the Reid Order
[18] On September 8, 2016, the examination for discovery of Ciraolo commenced but was not completed. Counsel for the plaintiffs states that in mid to late 2016, there were communications between the parties about narrowing the issues and the Ricci Defendants admitting liability, in exchange for the plaintiffs’ limiting the claim to coverage limits. That did not happen.
[19] In February and June 2017, then counsel for the Ricci Defendants pursued the plaintiffs for answers to undertakings.
[20] On or about September 28, 2017, the current law firm assumed carriage of the defence of the Ricci Defendants. On October 13, 2017, counsel for the Ricci Defendants wrote to the plaintiffs’ lawyer enclosing the Amended Defence and asking for the plaintiffs’ consent to the amendment. The Amended Defence contained only one substantive change from the previous defence: paragraph 5A, which reads as follows:
In the alternative, this defendant was suffering from a brain tumour unbeknown to him which caused him to believe or perceive that he was avoiding an accident at the time of the incident and he that he was not negligent as it was an inevitable accident.
[21] Plaintiffs’ counsel did not respond to letter of October 12, 2017 or the request to consent to the Amended Defence.
[22] There is no evidence before this court as to the contents of any communications between counsel for the plaintiffs and counsel for the Ricci Defendants between October 13, 2017 and December 13, 2018. However, the parties agree that during that period, the plaintiffs did not indicate their position on the Amended Defence.
[23] On January 9, 2019, the plaintiffs served, and filed with the court, a Trial Record. The Trial Record contained the Amended Defence as well as the Solicitor’s Certificate, signed by plaintiffs’ counsel and dated December 13, 2018. The Solicitor’s Certificate is required by rule 48.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) and confirmed that the Trial Record contained the documents required by r. 48.03 (a) to (g).
[24] Counsel for the Ricci Defendants says that his receipt of the Trial Record containing the Amended Defence left him “with the impression” that the plaintiffs had consented to the Amended Defence.
[25] On the morning of February 25, 2019, plaintiffs’ counsel emailed counsel for the Ricci Defendants to ask if steps had been taken to amend the defence as the plaintiffs had no record of a motion or an order. Defence counsel instructed his office to reply to the plaintiffs’ inquiries, but they failed to do so.
[26] On February 25, 2019, the plaintiffs conducted an examination for discovery of the Ricci Defendants. The discovery was conducted based on the Amended Defence. The plaintiffs’ counsel had been provided with the medical report of Dr. Fazl and requested further medical documents from the Ricci Defendants. At no time during this examination for discovery did the plaintiffs’ lawyer indicate that he or the plaintiffs had not consented to the Amended Defence or objected to the proposed amendment.
[27] On May 9, 2019, counsel for the Ricci Defendants inquired of his office staff about the status of the Amended Defence. He was reminded that that the Amended Defence was contained in the Trial Record, although it had not been filed with the court. On May 10, 2019, defence counsel served the Amended Defence and, believing that the plaintiffs had consented to it based on its inclusion in the Trial Record, filed the Amended Defence and affidavit of service with the court.
[28] On July 12, 2019, a “Consent to Pre-Trial & Placement on Trial Sittings List” was filed by the plaintiffs’ counsel. This was signed by plaintiffs’ counsel who also signed as agent for defence counsel. By this document, the parties confirmed that the action was ready to proceed, they consented to a pre-trial conference and to the action being placed on the trial list for the trial sittings commencing November 2020.
[29] On August 20, 2020, the parties engaged in a mediation. For use on the mediation, counsel for the Ricci Defendants served a mediation brief containing the medical legal report of Dr. P Cooper, neuroradiologist, in support of the defence raised in the Amended Defence of “inevitable accident”. At the mediation, the Ricci Defendants relied upon that defence, taking the position that there was no negligence on the part of Ricci. Counsel for the plaintiffs states that it was not until this time, that he learned that the Amended Defence had been filed with the court in May 2019.
[30] The mediation was unsuccessful. On consent, the action was struck from the trial list to allow the plaintiffs to seek an order for this action to be tried with a companion action.
[31] On August 27, 2020, plaintiffs’ counsel corresponded with counsel for the Ricci Defendants asking for a copy of the Consent filed to the Amended Defence. No response was received.
[32] On August 28, 2020, following an attendance at the Hamilton Courthouse, plaintiffs’ counsel became aware that the Amended Defence had been included in the Trial Record filed by the plaintiffs.
[33] On this motion, no evidence has been provided respecting whether there was any communication between counsel for the parties between August 27, 2020, and service of the plaintiffs’ motion in February 2021.
[34] In his affidavit, counsel for the Ricci Defendants states that it was not until the plaintiffs’ motion was brought in February 2021 that the plaintiffs indicated that they did not and would not consent to the Amended Defence. At para. 19 of his affidavit sworn February 25, 2021 defence counsel further states as follows:
I had assumed, based on the inclusion of the pleadings [Amended Defence] in the trial record, the certification, the service of the medical reports, the examination for discovery on the amended pleading, the mediation, and the many interactions including the plaintiff being served twice with the amended statement of defence without any objection, that the plaintiff had consented to the amended defence.
[35] By contrast, beginning at para. 21 of his affidavit sworn February 12, 2021, counsel for the plaintiffs asserts that:
(a) the plaintiffs have had no fair opportunity to respond or tender evidence in relation to the defence raised in the Amended Defence, as it was the plaintiffs’ belief that this was not part of the pleadings;
(b) it was not the plaintiffs’ intention to consent to the Amended Defence or to have it form part of the Trial Record;
(c) the plaintiff did not consent to the Amended Defence and the Ricci Defendants should not be allowed to plead “inevitable accident” as it is not properly pleaded and put before the Court; and
(d) if accepted, the defence of “inevitable accident” is a complete defence to the action. The plaintiffs would not have released the Co-Operators from the action because if the evidence given to the investigating police officer is accepted, there would be exposure to the Co-Operators.
[36] In oral submissions, counsel for the plaintiffs acknowledged that the decision to dismiss the action as against the Co-Operators was a judgment call made by plaintiffs’ counsel who, based the information available as of April or May 2015, including the statement of defence delivered on June 24, 2014, concluded that Ricci would be found at least 1% liable for the accident. In that event, the Co-Operators policy would not come into play and keeping the Co-Operators in the action would expose the plaintiffs to unnecessary costs without any benefit: as Ricci’s policy limits and the amount available under the Co-Operators policy were both $1 million.
[37] In his evidence, plaintiffs’ counsel asserts that the Amended Defence and, in particular, para. 5A, had an impact on the assessment of the risk and/or the likelihood that Ricci would be found at least 1% liable for the accident. The defence of inevitable accident based on Ricci’s brain tumour, created a possibility that Ricci could be found 0% at fault for the accident. Had the plaintiffs been served with the Amended Defence sooner, they would not have released the Co-Operators. Should the Ricci Defendants be found 0% liable and it is determined at trial that there was an unidentified vehicle with any liability, having let the Co-Operators out of the action, the plaintiffs could be left with no means of recovery.
[38] In his evidence, defence counsel states that he believes there to be no prejudice to the plaintiffs as a result of the Amended Defence. He states that the Amended Defence does not change the defence allegation, pleaded in the original defence, that Ricci was not liable for the accident and that the Ricci Defendants still plead that the accident was caused by an unidentified vehicle, which was always “a complete defence”.
- Motion to Amend the Trial Record
Leave Required under R. 48.04
[39] As a preliminary issue, the plaintiffs acknowledge that, having set down their action for trial, r. 48.04 (1) requires them to seek leave of this court to bring any motion. That hurdle is also faced by the defendants because they consented to setting the action down.
[40] I accept that the law applicable to granting leave to bring motions is as set out in the plaintiffs’ factum – specifically, that the more established test requires a moving party to show “a substantial or unexpected change in circumstances” whereas other courts have adopted a less stringent approach finding that a substantial or unexpected change in circumstances to be unnecessary and concluding that a court may grant leave where the interlocutory step is necessary in the interest of justice: BNL Entertainment v. Rickets 2015 ONSC 1737 at para. 12.
[41] At para. 13, the court in BNL noted the “long-established exception to the substantial or unexpected change in circumstances test when dealing with inadvertence or where serious matters affecting substantive rights are in issue” citing AGC Mechanical Security Inc. v. Rizzo, 2013 ONSC 1316.
[42] The plaintiffs submit that leave should be granted under either test, given the plaintiffs’ alleged inadvertence in including the Amended Defence in the Trial Record and the alleged prejudice to the plaintiffs if the Amended Defence is permitted to remain in the Trial Record.
[43] The defendant submits that the narrower approach should be taken and that the plaintiffs have failed to establish a substantial or unexpected change in circumstances arose since the action was set down, as might justify the granting of leave. Counsel for the Co-Operators echoes that submission.
[44] I am of the view that in this case, the plaintiffs and the Ricci Defendants have met the test under either approach. There is an abundance of evidence of inadvertence and miscommunication applicable to the plaintiffs and to the Ricci Defendants. I conclude that it is in the interests of justice that I exercise my discretion to allow the plaintiffs and the Ricci Defendants to bring their motions. In addition, having determined to grant leave to the plaintiffs to move to amend the Trial Record, it would be unfair to deny leave to the Ricci Defendants to bring their motion to amend the defence, which motion would not have been necessary, had the plaintiffs been denied leave.
[45] Separately, while there is no evidence of any “inadvertence” that applies to the plaintiffs’ motion to set aside the Reid Order, having determined to granted leave to the Ricci Defendants to amend the defence, it would be unfair to the plaintiffs not to grant them leave to bring a motion to set aside the Reid Order.
Grounds for Motion to Amend the Trial Record
[46] Central to the plaintiffs’ motion to amend the Trial Record is the assertion that the Ricci Defendants never properly amended their statement of defence: the plaintiffs did not consent to the Amended Defence nor, until these motions, did the Ricci Defendants seek or obtain an order allowing them to deliver the Amended Defence.
[47] Rule 26.01 sets out how a pleading may be amended and, if a pleading is amended after the close of pleadings, requires the consent of all the parties or leave of the court. Through their own inadvertence, the Ricci Defendants did not pursue either course of action. It is only by virtue of the inadvertence of the plaintiffs that the Amended Defence found its way into the Trial Record.
[48] The Ricci Defendants do not dispute that the plaintiffs did not formally consent to the proposed amendment but ask this court to accept, which I do, that they believed that the plaintiffs had consented to the Amended Defence. The reasons for that belief are enumerated at para. 19 of defence counsel’s affidavit.
[49] I also accept that at no time prior to bringing this motion, did the plaintiffs indicate that they did not, and would not, consent to the Amended Defence and that the Ricci Defendants would be required to bring a motion to amend the defence. Notwithstanding that, I must find that the Amended Defence was not amended in accordance with the Rules and, for that reason alone, absent a court order permitting otherwise, the Amended Defence ought not to be included in the Trial Record.
Disposition: Motion to amend the Trial Record
[50] For the above reasons, I find that the Amended Defence was not amended as required by r. 26.01 and, as such, was not properly included in the Trial Record. However, for the reasons set out below, I have granted an order permitting the Ricci Defendants’ to amend their defence as per the Amended Defence. The effect of that order is to validate the inclusion of the Amended Defence in the Trial Record. As a result, the Amended Defence is ordered to remain in the Trial Record which is to be amended only to include this order.
- Defendant’s Motion to amend the Statement of Defence
[51] Rule 26.01 provides 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 by an adjournment.
[52] In support of their motion, the Ricci Defendants rely on the evidence they put forth in response to the plaintiffs’ motion to amend the Trial Record. That evidence need not be repeated here.
[53] The Ricci Defendants submit that r. 26.01 requires that they be granted leave to amend the statement of defence as the amended pleading does not result in prejudice to the plaintiffs. They submit that, to the contrary, to deny the amendment would cause prejudice to the Ricci Defendants who would be deprived of the opportunity to advance the defence of inevitable accident, first raised more than three years prior to the plaintiffs’ motion to amend the Trial Record, and acted upon by both parties.
[54] The Ricci Defendants assert that they, not the plaintiffs, would be caught by surprise if the Amended Defence were not permitted to be included in the Trial Record. The Ricci Defendants assert that “through their silence and their actions” the plaintiffs allowed the Ricci Defendants to proceed with the litigation on the basis that the plaintiffs had consented to the Amended Defence.
[55] The evidence supports that assertion.
[56] The plaintiffs had notice of the Amended Defence when they conducted their examination for discovery of the Ricci Defendants. On and after the examination for discovery of the Ricci Defendants, the plaintiffs were provided with relevant medical documents and expert reports. The mediation was conducted based on the Amended Defence. The plaintiffs placed the action on a trial list based on the Trial Record, which contained the Amended Defence.
[57] A tremendous unfairness would be caused to the Ricci Defendants if they were now deprived of the ability to defend the plaintiffs’ claim on the basis of the Amended Defence and to have the issues determined on a full and proper record.
[58] There is no evidence, nor suggestion, that the plaintiffs’ decision to consent to a dismissal of the action as against the Co-Operators was made at the behest of or reliance upon any promises or admission of liability made by the Ricci Defendants.
[59] The uncontradicted evidence is that early in the litigation, the plaintiffs’ counsel made his own evaluation of the risks and benefits of letting the Co-Operators out of the action. The decision was made knowing that the Ricci Defendants denied liability and attributed fault for the accident on an unidentified vehicle. While it is conceded that the judgment was based on the fact Ricci rea-ended Ciraolo, which gave rise to a presumption of liability, the Ricci Defendants submit that plaintiffs’ counsel knew that the Rules permit amendments to pleadings at any time – even after trial, a consideration that should have been weighed when letting out the Co-Operators.
[60] In oral submissions, counsel for the plaintiffs stated that it is not unheard of for plaintiffs to add their own insurer after a decision at trial. However, in this case, counsel for the plaintiff submits that such an option may not be available to the plaintiffs because they obtained an order dismissing their action as against the Co-Operators. The plaintiffs’ decision to seek the Reid Order was made at a time when plaintiffs’ counsel he knew, or ought to have known, that there was a possibility or risk that liability for the accident would be attributed to an unidentified (or underinsured) automobile.
[61] The Ricci Defendants submit that when r. 26.01 speaks of prejudice, the prejudice contemplated is that created by the amendment to the pleadings and not the prejudice that has been created, as in this case, by a decision or judgment call made by the plaintiffs.
[62] In 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42, at para. 25, the court summarized the law regarding leave to amend motions, referencing the general principles and related caselaw. While all are to be applied here, the general principles identified below are taken from those set out in para. 25 that are particularly applicable to the facts in this case:
A. There must be a causal connection between the non-compensable prejudice and the amendment. In other words, the prejudice must flow from the amendments and not from some other source: Iroquois Falls Power Corp. v. Jacob Canada Inc, [2009] O.J. No.2642, 2009 ONCA 517, 75 C.C.L.I. (4th) 1, at paras. 15-16, leave to appeal to S.C.C. refused [2009] S.C.C.A. No. 367, 2010 CarswellOnt 425 at paras. 20-21; and Mazzuca v. Silvercreek Pharmacy Ltd. 2001 (ON CA), at para. 65.
[63] The Ricci Defendants submit that the prejudice identified by the plaintiffs does not flow from the Amended Defence but from some other source namely, the plaintiffs’ decision to obtain an order dismissing the action as against the Co-Operators. The Ricci Defendants assert that they have always asserted that there was no negligence on the part of Ricci and that the accident was caused by an unidentified vehicle; the Amended Defence does not change that position, or pleading, but particularizes the basis for that defence.
[64] I agree with the Ricci Defendants. The Amended Defence is not the “causal connection” between the alleged non-compensable prejudice. It is that the plaintiffs have changed their assessment of their own case; they are now less confident that a court will affix liability of even 1% as against the Ricci Defendants.
B. The non-compensable prejudice may be actual prejudice, i.e., evidence that the responding party has lost an opportunity in the litigation that cannot be compensated as a consequence of the amendment. Where such prejudice is alleged, specific details must be provided: King's Gate Developments Inc. v. Drake (1994), 1994 416 (ON CA), 17 O.R. (3d) 841, [1994] O.J. No. 633 (C.A.), at paras. 5-7; and Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1995), 1995 7105 (ON SC), 25 O.R. (3d) 106, [1995] O.J. No. 2220 (Gen. Div.), at para. 9.
[65] Despite that the Ricci Defendents did not bring a motion to amend the defence until 2021, they submit that their delay in doing so has not caused any prejudice to the plaintiffs. Unlike the cases referenced under B., above, in which witnesses died and evidence was unavailable, here, the plaintiffs have had the Amended Defence since October 2017; they conducted an examination for discovery of the Ricci Defendents based on the Amended Defence, were provided with expert reports relating to the Amended Defence and requested, and received, Ricci’s medical records.
[66] I accept the submissions made by the Ricci Defendents that the plaintiffs have not lost an opportunity in the litigation as a consequence of the amendment.
C. Non-compensable prejudice does not include prejudice resulting from the potential success of the plea or the fact that the amended plea may increase the length or complexity of the trial: Hanlan v. Sernesky, 1996 1762 (ON CA), [1996] O.J. No. 4049, 95 O.A.C. 297 (C.A.), at para. 2; and Andersen Consulting v. Canada (Attorney General), 2001 8587 (ON CA) at paras. 36-37.
[67] I understand the position of the plaintiffs to be that the real prejudice arising from the Amended Defence is that it changes the plaintiffs’ initial evaluation of the potential success of their claim as against the Ricci Defendants. The plaintiffs believe that they now face a greater risk that they will not be successful as against the Ricci Defendants and regret having let the Co-Operators out of the action.
[68] I accept the submissions made by the Ricci Defendents, that the prejudice alleged by the plaintiffs is not the type of prejudice referred to in r. 26.01. As noted in Hanlan, prejudice of that kind is not what is contemplated by r. 26 “[I]f it were, only unmeritorious amendments would be allowed – an obviously ludicrous proposition” (at para. 2).
D. At some point, the delay in seeking an amendment will be so lengthy, and the justification so inadequate, that prejudice to the responding party will be presumed: Family Delicatessen Ltd. v. London (City), [2006] O.J. No. 669, 2006 5135 (C.A.), at para. 6.
[69] The Ricci Defendents submit that until February 2021, when the plaintiffs brought their motion to amend the Trial Record, the Ricci Defendents were not only unaware that the plaintiffs had not, and would not, consent to the Amended Defence, but the plaintiffs’ conduct was such that the Ricci Defendents reasonably believed that the plaintiffs had already impliedly consented to it. The evidentiary record on these motions fully supports those submissions; I conclude that there has been no prejudice to the plaintiffs caused by any delay, perceived, or real, and the bringing of this motion.
E. The onus to prove actual prejudice lies with the responding party: Haikola v. Arasenau (1996), 1996 36 (ON CA), 27 O.R. (3d) 576, [1996] O.J. No. 231 (C.A.), at paras. 3-4; and Plante v. Industrial Alliance Life Insurance Co. (2003), 2003 64295 (ON SC), 66 O.R. (3d) 74, [2003] O.J. No. 3034 (Master), at para. 21.
[70] Based on the evidentiary record and oral submissions on these three motions, it is clear that the plaintiffs can succeed in a claim as against the Co-Operators only if it is determined that:
i) no liability is attributable to the Ricci Defendants; and
ii) any liability is attributable to an unidentified or underinsured motor vehicle.
[71] The Ricci Defendants have always denied that Ricci was at fault for the accident and asserted that liability lay with an unidentified automobile. The Amended Defence does not change that position. On this motion, it is not appropriate, nor possible, for the court to examine the merits of the Amended Defence; nor is there any allegation that the Amended Defence is lacking in merit. The opposite is asserted: in the plaintiffs’ assessment, the Amended Defence appears to increase the risk that they may be unsuccessful as against the Ricci Defendants.
[72] That is not “prejudice” or an appropriate basis on which to deny an amendment.
[73] Also, and as stated above, there was no assertion that any specific witnesses are no longer available and, for that reason, the motion to allow the Amended Defence should be dismissed. The crux of the amendment in the Amended Defence is that Ricci suffered from a brain tumour that caused him to perceive or believe that he was avoiding an accident.
[74] Ricci died long before the Statement of Claim was issued. Ricci’s evidence as to what he perceived or believed he saw prior to the collision, is limited to statements he may have made to others. Similarly, the impact, if any, of the brain tumour upon Ricci’s perception or belief about what he saw prior to the collision, comes from what may have been observed by others and/or recorded in medical records. To the extent evidence comes from the observations by others, those memories may now have faded due to the passage of time.
[75] However, as noted above, the parties conducted themselves as if the Amended Defence was in effect and, for that reason, since 2017, when they were provided with the Amended Defence, the plaintiffs had an opportunity to gather the evidence from witnesses.
[76] I conclude that the plaintiffs have not met their onus to prove that they will suffer actual prejudice by reason of the Amended Defence.
[77] In oral argument, counsel for the Ricci Defendants referred the court to the 1983 Ontario Court of Appeal decision in Graham v. Hodgkinson, (1983), 1983 1775 (ON CA), 40 O. R. (2d) 697. Notwithstanding the age of this decision, counsel advised that Graham is the most recent decision that he could find that speaks to the doctrine known as “inevitable accident”. In Graham, the court noted that counsel conceded that a plea of inevitable accident “is simply a denial of any negligence on the part of the defendant” (at p. 11).
[78] Also found at p. 11 is Court quoting the Lord Escher M. R., in Schwan –The Albano, [1892] P.419 at p. 429, who stated:
In my opinion, a person relying on inevitable accident must shew that something happened over which he had no control, and the effect of which could not have been avoided by the greatest care and skill.
[79] Further on p. 11 of Graham, the Court noted that the Supreme Court of Canada held in Rintoul v. X-Ray and Radium Industries Ltd. et al., 1956 16 (SCC), [1956] S.C.R. 674, that a defendant “need only establish that he could not have avoided the accident by the exercise of reasonable care.” The Court stated as follows:
A defendant thus may be called upon to establish that he could not have avoided the accident by the exercise of reasonable care in certain situations, for example, where he collides with the plaintiff’s car on the plaintiff’s side of the highway or where, as in this case, he runs into the rear of the plaintiff’s car.
[80] The Ricci Defendants submit that the analysis of the doctrine of inevitable accident set out in Graham should be applied to this case. They submit that amending their defence to plead “inevitable accident” is nothing new but is consistent with the position taken from the outset by the Ricci Defendants, namely, a denial of any negligence on the part of Ricci.
[81] I accept those submissions.
[82] For the foregoing reasons, an order is made granting the Ricci Defendants leave to amend their defence as per the Amended Defence.
- Motion To set aside the Reid Order
[83] The plaintiffs’ motion to set aside the Reid Order was brought in the event that the Amended Defence was permitted to remain in the Trial Record and is to be relied upon by the Ricci Defendants. The Ricci Defendants, while sympathetic to the plaintiffs, acknowledge that they have no legal right to add the Co-Operators and take no position on this motion.
[84] The Co-Operators opposes the plaintiffs’ motion.
[85] The plaintiffs bring their motion to set aside the Reid Order pursuant to R. 59.06 (2), which permits a party to bring a motion to set aside a court order on the ground of fraud or of facts arising or discovered.
[86] The plaintiffs submit that when it entered into an agreement to dismiss their claim as against the Co-Operators, they did so based on the information then known to them and on the statement of defence that had been filed by the Ricci Defendants.
[87] The plaintiffs assert that, although the Ricci Defendants did deny liability on the basis of an unidentified driver, there was nothing to suggest to the plaintiffs that the Ricci Defendants would not be found at least 1% responsible for the accident, which would be a reason to keep the Co-Operators in the action.
[88] The plaintiffs assert that they would not have released the Co-Operators in 2015, had they known that the Ricci Defendants would plead the “uncommon” defence of inevitable accident. As a result, the plaintiffs assert that “all parties were mistaken about the matters at issue in the action when they agreed to release the Co-Operators”.
[89] On this motion, the plaintiffs rely on the same evidence put forth on their motion to amend the Trial Record, which evidence has been referenced earlier in these reasons and need not be repeated here.
Analysis
[90] The plaintiffs submit that the Amended Defence should be characterized as a “material change in circumstances”; that the assertion that Ricci had a brain tumour that affected his perception and belief was unexpected and changed the “factual matrix.”
[91] In Sri Guru Nanak Sikh Centre Brampton v. Rexdale Singh Sabha Religious Centre, 2017 ONSC 6252, from and after para. 42, the court provided a survey of the law applicable to motions to set aside consent orders, which may be summarized as follows:
(a) The court has discretion to set aside a settlement where, in the totality of the circumstances, it would not be appropriate to enforce the parties’ agreement. However, as a matter of public policy, a settlement ought to be enforced by the court unless enforcement would create a risk of clear injustice. Ruter v. 1049077 Ontario Ltd., [2014] O.J. No. 3595 (S.C.J.) at para. 6;
(b) The fact that a settlement has been implemented by a consent order does not preclude the court from exercising its discretion respecting enforcement of the settlement and a party may move to set aside the court order on a ground set out under rule 59.06 (2);
(c) Attempts to reopen matters that are the subject of a final judgment must be carefully scrutinized and the moving party must demonstrate circumstances that warrant deviation from the fundamental principle that a final judgment, unless appealed, marks the end of the litigation: Tsaoussis (Litigation Guardian of) v. Baetz, 1998 5454 (ON CA), 165 D.L.R. (4th) 268 (ONT. C.A.), at para. 20 and Catalyst Fund General Partner Inc. v. Hollinger Inc., 2006 23918, at para 17;
(d) A consent order may be set aside on any ground that invalidates the underlying settlement agreement or on a material change in circumstance after the order was made. Such grounds include common mistake, misrepresentation, fraud, or any other ground which would invalidate contract or, a material change in circumstance occurring after the consent order. Joshi v. Joshi, 2014 ONSC 4677;
(e) The court in Joshi also endorsed the principle that a consent judgment is binding and final, and that finality is important in litigation because the parties reached their bargain on the premise of an allocation of risk and the implicit understanding that they would accept the consequences of the settlement. For those reasons, r.59.06 limits the avenues to set aside a settlement and consent dismissal;
(f) Even where a material change in circumstances is established, the court has discretion to refuse to set aside the order based on factors such as prejudice to the other parties or unreasonable delay in bringing the motion. Hodge v. Toronto Police Service, 2015 ONSC 5508; and
(g) In all cases, the onus is on the moving party to show that circumstances warrant making an exception to the fundamental rule that final judgements are, in fact, final.
Has there been a material change in circumstances?
[92] The plaintiffs assert that they and the Co-Operators were operating under a mutual mistake of fact that, although the Ricci Defendants had pleaded the involvement of an unidentified driver, there was little or no basis to suggest that the Ricci Defendants would not held to be at least 1% liable for the accident so as to require the Co-Operators to remain in the action. Their position is that the facts are different as a result of the Amended Defence, and that there is a change in circumstances such as to justify the setting aside of the Reid Order.
[93] I disagree. As explained above, I accept that the plea of “inevitable accident” is another way of expressing a denial of liability, which the Ricci Defendants have pleaded from the outset. In the Amended Defence, the Ricci Defendants continue to deny liability and do not withdraw their defence that the accident was caused by an unidentified driver, which defence and allegation give rise to a potential claim against the Co-Operators.
[94] I find that the Amended Defence simply sets out additional reasons to deny liability on the part of the Ricci Defendants. Paradoxically, the assertion in the Amended Defence that it was a brain tumour that caused Ricci to believe that he was avoiding an accident, may be seen to weaken or undermine the reliability of the statement he made to the police officer of the existence of an unidentified vehicle.
[95] The plaintiffs assert that the Amended Defence, itself, created a material change in circumstances. On a motion to amend the pleadings, it is not for the court to assess the merits of the defence or the strength of the plaintiff’s claim. However, on this motion, the onus is on the moving party to establish that they have met the test under r. 59.06 for setting aside an order.
[96] The plaintiffs assert that when the Reid Order was granted, the parties were operating under a “mutual mistake of fact”. This is disputed by the Co-Operators who argue that what really happened is that when the plaintiffs consented to the Reid Order, they misjudged the level of risk of a finding that an unidentified driver was 100% at fault for the accident. However, that potential outcome has always existed. The Co-Operators dispute that any party was operating under mistake of fact when they consented to the Reid Order.
[97] There is some support for the position taken by the plaintiffs that they and the Co-Operators both anticipated that some liability would be allocated to the Ricci Defendants. That evidence is found in the correspondence between counsel for those parties produced on this motion, the focus of which appeared to be on the fact that the Ricci Defendants’ insurance and the Co-Operators’ policy were both limited to $1 million; if the Ricci Defendants were found liable, there would be no extra insurance available to the plaintiffs under the Co-Operators policy. For that reason, counsel appear to agree that there was no benefit or reason to keep the Co-Operators in the action.
[98] The plaintiffs’ assessment of the success of their claim as against the Ricci Defendants was made prior receiving an affidavit of documents from the Ricci Defendants and before conducting examinations for discovery. Certainly, both those events would have expanded the factual matrix upon which the plaintiffs’ counsel could assess his clients’ claim. However, the plaintiffs’ assessment of their claim, based on information that came to them after the Reid Order, cannot properly characterized as a material change in circumstances.
[99] When the plaintiffs consented to dismiss the action as against the Co-Operators, they knew or ought to have known that they did not then have all the information that might be relevant to the success of their claim as against the Ricci Defendants. Notwithstanding the possibility of new information coming to light in the future, the plaintiffs proceeded to obtain a final order dismissing the action as against the Co-Operators.
[100] Then, as now, it was not a “fact” that the Ricci Defendants would be found even 1% liable to the plaintiffs. Then, as now, it was not a fact that the accident was caused by an unidentified automobile such as would entitle the plaintiffs to seek recovery from the Co-Operators.
[101] Based on the evidence on this motion, I cannot accept the plaintiff’s submissions that the Reid Order was founded on a mutual mistake or mistake of fact. Similarly, I do not accept the plaintiffs’ submissions that the Amended Defence can be properly characterized as a material change in circumstance or a fact arising or discovered after consenting to the Reid Order.
[102] On that basis alone, I would dismiss the plaintiffs’ motion to set aside the Reid Order
[103] The plaintiffs also submitted that the Reid Order may be set aside on the basis that it did not represent an adjudication of the merits of the plaintiff’s claim as against the Co-Operators. I do not accept those submissions.
[104] The Reid Order does state that it is made on consent, but as it affected the rights of parties under disability, the court had to approve the order on behalf of those parties. On this motion, counsel for the plaintiffs asked this court to assume that the Reid Order was properly made. On that basis, I conclude that Reid J. did have to consider whether to make the Reid Order and, to some extent, “adjudicated” the claim, at the least, on behalf of the parties under disability.
[105] However, even if the plaintiffs had been able to establish a material change in circumstances, I would exercise my discretion to refuse to set aside the Reid Order because of the prejudice that would cause to the Co-Operators, and by reason of the unreasonable delay in bringing this motion. With respect to the latter, the plaintiffs have submitted that until the Ricci Defendants moved to amend the defence, there was no reason for the plaintiffs to seek to set aside the Reid Order. I disagree.
[106] In October 2017, the plaintiffs were put on notice of the Amended Defence and the plea of “inevitable accident”, based on the assertion that Ricci suffered from a brain tumour. The plaintiffs had the Amended Defence when they examined for discovery the Ricci Defendants. Then, and thereafter, including when plaintiffs and the Ricci Defendants engaged in mediation, the plaintiffs had expert evidence and medical documentation from the Ricci Defendants, relevant to the Amended Defence.
[107] I have accepted the submissions of the Ricci Defendants, supported by the evidence, that the parties conducted themselves as if the Amended Defence governed this action. As such, at the least, the plaintiffs could have, and should have, put the Co-Operators on notice that, in the plaintiffs’ view, if the Ricci Defendants sought to rely on the Amended Defence, the plaintiffs would seek to revisit their decision to let the Co-Operators out of the action.
[108] It was not until March 2021 – close to six years after the Reid Order was made, and three and half years after the plaintiffs had become aware of the Amended Defence, that the plaintiffs notified the Co-Operators and ask if it would agree to set aside the Reid Order.
[109] The Co-Operators asserts that, after receiving it in October 2017, the plaintiffs knew the Ricci Defendants would seek to amend their defence and to rely on the Amended Defence. That assertion is easy to accept, given the chronology of events that are outlined above.
[110] The Co-Operators submit that while the plaintiffs assert that upholding the Reid Order would be highly prejudicial to them considering the new defence raised in the Amended Defence, they offer no explanation for their delay in seeking the Co-Operators’ position about setting aside the Reid Order. Delay of that nature may be considered on a motion to set aside a consent dismissal prejudicial: see Mohammed v. York Fire and Casualty Insurance Company, 2006 3954 (ON CA), at para. 44, and Brown v. Municipal Property Assessment Corp., 2014 ONSC 7137.
[111] The Co-Operators submit that the plaintiffs’ delay in putting them on notice and in bringing this motion has resulted in prejudice to the Co-Operators which 1) has lost the opportunity to develop its own litigation strategy; 2) has lost the opportunity to participate and shape the litigation process through participating in potential settlement discussions, examinations for discovery and mediation; and, 3) if the Reid Order is set aside, would also be prejudiced by the loss of a possible limitation defence, which gives rise to a presumption of prejudice: see Frohlick v. Pinkerton Canada Limited, 2008 ONCA 3, at para. 17; and
[112] The Co-Operators submits that if the Reid Order is set aside, it will be prejudiced in its defence of the plaintiffs’ claim: memories have faded and the Co-Operators has been denied the opportunity to marshal the necessary evidence to support its theory on liability and on damages, which would force it to rely on the fact-finding efforts of other parties: see York Fire, at para. 45.
[113] I accept the Co-Operators’ submissions and agree that setting aside the Reid Order, now close to six years old, would be highly prejudicial to it.
[114] For the foregoing reasons, the plaintiffs’ motion to set aside the Reid Order is dismissed.
Costs
[115] It is reasonable for the successful parties on motions to expect that they will be awarded their costs. The Ricci Defendants have obtained the relief they were seeking, and the plaintiffs have been unsuccessful in their motions against the Ricci Defendants and the Co-Operators. As such, both the Ricci Defendants and the Co-Operators might reasonably expect their costs of these motions from the plaintiffs.
[116] At the conclusion of the hearing, the parties were directed to serve their Costs Outlines and file them via email with the Trial Co-Ordinator, with a request, made on my direction, that these not be released to me until after I had decided the three motions.
[117] I would urge the parties to attempt to reach an agreement on costs. If they are unable to do so, then costs submissions shall be made as follows:
Within 21 days of the date of the release of this decision, the Ricci Defendants and Co-Operators shall serve on the plaintiffs and file with the trial co-ordinator their written costs submissions, not to exceed three pages, double-spaced, together with a draft bill of costs, and copies of any relevant offers to settle.
Within 14 days of the service upon them her of the costs submissions of Ricci Defendants and Co-Operators, the plaintiffs shall serve and file their responding submissions of no more than three pages, double-spaced, together with their draft bill of costs, and copies of any relevant offers to settle.
If either party seeks to deliver reply submissions, they may do so within 7 days of service upon them of the plaintiffs’ costs submissions. Reply submissions shall not exceed one page in length.
If no submissions are received within 35 days of the date of the release of these reasons, the parties shall be deemed to have resolved the issue of the costs and costs will not be determined by the court.
L. Sheard J.
Date: January 18, 2022
COURT FILE NO.: 14-45485
DATE: 20220118
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Oriana Ciraolo, Erica Ciraolo, and Damiano Ciraolo by their Litigation Guardian Giovanna Giornofelice, Luigi Ciraolo, and the said Giovanna Giornofelice
Plaintiffs
- and -
Robert Alan Ricci, and/or Robert Alan Ricci by his Estate Trustee Arlene Lanctot, and/or Robert Alan Ricci, deceased bu his Litigation Administraot Matt Lalande, and/or Robert Alan Ricci by his Etstae Administrator John Doe, and the Co-Operators General Insurance Company
Defendants
REASONS FOR DECISION
L. Sheard J.
DATE: January 18, 2022
[^1]: The Record included an affidavit sworn by a lawyer with Grosso Hooper Law based on information and belief.
[^2]: The letter should have been dated April 23, 2015.