Court File and Parties

COURT FILE NO.: CV-19-00002927-0000

DATE: 2022-08-12

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Green Scene Landscaping Inc., Plaintiff

AND:

Arlini Mooruth Singh and Kishore Singh, Defendants

BEFORE: Kurz J.

COUNSEL: Robert Kennaley, for the Plaintiff Cameron Neil, for the Defendants

HEARD: July 5, 2022

ENDORSEMENT

[1] In this construction lien action, the Defendants move to both amend their statement of defence and counterclaim and to substitute the affidavit evidence of a new expert witness for one who died after preparing his report. They seek this relief after affidavits for trial have been exchanged but before the trial has taken place.

[2] The Defendants rely on three main arguments. First, they would be prejudiced if forced to rely on their present expert’s evidence, as he cannot testify at trial, while the Plaintiff’s expert will be available to do so. Second, after previously receiving leave to deliver (i.e. serve and file) amended pleadings, their previous counsel failed to properly do so. He improperly drafted and then failed to file those amended pleadings with the court. Third, the Defendants have discovered further problems with the work performed by the Plaintiff on their property. They wish to include claims arising from those concerns in their pleadings. They claim that the basis of their defence and counterclaim remains the same: that the Plaintiff’s work was deficient and in need of remediation.

[3] The Plaintiff objects to the Defendants’ attempt to amend their pleadings. It places great reliance on the “summary” nature of construction lien proceedings. It argues that the Defendants already received one chance to amend their pleadings, yet they seek to do so yet again. The Plaintiff further asserts that it would be prejudiced if the Defendants’ pleadings were amended. Finally, while not consenting, the Plaintiff does not strongly object to the substitution of a new, living expert for the deceased one. But it says that the Defendants’ pleadings and expert evidence should be limited to the contents of the improperly drafted and unfiled amended statement of defence and counterclaim that the Defendants now reject.

[4] For the reasons that follow, I allow the Defendants to amend their pleadings in the manner set out in the draft attached to their notice of motion. I also grant them leave to file the evidence of their new expert while withdrawing the evidence of their deceased expert. As set out below, I direct the parties to agree to a new litigation schedule for the exchange of material, and if unable to do so, may arrange to appear before me to do so.

Background

[5] This action arises out of a backyard landscaping construction project carried out by the Plaintiff contractor at the Defendants’ home in Burlington. The Plaintiff seeks payment of an outstanding invoice for that work. But the Defendant homeowners deny liability for the claim and seek damages for alleged defective workmanship.

[6] This action was commenced over three years ago, on July 11, 2019. It was set down for trial on January 8, 2020. At the Pre-Trial Conference for this action, Fowler Byrne J. ordered that all evidence in chief, including expert evidence, be tendered by affidavit. She set out a timetable for the exchange of these materials. She also ordered that if either party sought an adjournment of the trial, they may bring a motion no later than April 9, 2021.

[7] The parties attended before Chown J. on May 10, 2021. They requested an adjournment of the trial in order to retain an expert engineer. The expert was needed to review what the Defendants described as newly discovered problems with their hot tub. Although no evidence was filed, counsel represented that the hot tub had settled or shifted, and that major repairs may be required.

[8] The Defendants also sought to amend their pleadings but asserted that they could not do so without first obtaining the expert report they were seeking to obtain.

[9] The adjournment and amendment requests appear to have been hotly contested. However, Chown J. granted the relief sought, writing:

The Court of Appeal repeatedly tells trial judges that we need to strive to hear cases on their merits. The defendants are not ready for trial and have raised additional issues. In the circumstances, so that this matter can be dealt with on its merits, the adjournment is necessary and will be granted.

[10] In granting the order, Chown J. also set out an amended litigation timetable, including amended pleadings and the exchange of further affidavits for trial. He confirmed that evidence in chief would be by affidavit. He granted the Plaintiff its costs thrown away of $3,500. Those costs were paid.

[11] The Defendants thereafter obtained an engineering report from Gordon Amos Hawley, dated June 7, 2021. Not long after releasing his report, Mr. Hawley died.

[12] At some point after receipt of the Hawley report, the Defendants’ former counsel prepared and served an amended statement of defence and counterclaim. But he failed to file it. I will have more to say about that draft pleading below.

[13] The Defendants thereafter changed counsel, retaining their present representation. In the absence of a live expert, counsel retained another engineer, Edward J. Poon. Mr. Poon’s report of February 4, 2021 was very critical of the work of the Plaintiff. It set out various ways in which the Plaintiff is alleged to have failed to meet applicable Ontario Building Code requirements. It also raised concerns with the quality of the Plaintiff’s work that were not found in the previous pleadings or the Hawley report. Among those previously undisclosed, alleged deficiencies were the following:

a. The armour stone retaining wall and associated construction, such as soil retention and backfill, did not meet minimum industry standards for design or construction.

b. The ceiling of the cabana meant to house the Defendants’ hot tub was built too low to accommodate the opening and closing of the hot tub’s lid. Thus, the construction of the cabana fell below minimum industry standards and the standard of care for such construction.

c. The completed structures on the subject property, including the above-grade exterior deck and the cabana structure, did not meet the requirements of the Building Code, including the requirement for a building permit.

[14] The Poon report, unlike the Hawley report, also offers opinion evidence as to the costs of remediating the alleged deficiencies.

[15] The Defendants assert that they were unaware of the alleged defects cited above until they were identified by the Poon report. Thus, they say that the defects were not discoverable until the delivery of Mr. Poon’s report. The Defendants seek to incorporate those new concerns into both their pleadings and the evidence of Mr. Poon.

[16] The Defendants argue that they are not trained in construction or building practices. They had previously noted in their trial affidavit that their rear fence, located near the stone retaining wall, was “bowing”. But they had previously attributed that effect to “rubble fill”. They say that they now understand that this bowing was in fact a symptom of larger construction issues identified in the Poon report.

[17] They also argue that they already raised the general issue of the negligence of the Plaintiff’s work in the original pleading, including deviations from the Building Code, so the Plaintiff cannot claim to have to respond to a completely new set of claims.

[18] While the Defendants’ previous counsel prepared and served an amended statement of defence and counterclaim, as permitted by the Chown J. order, the Defendants point out that it was never filed with the court. Moreover, they say that the amended pleading served by their former counsel is so flawed that they do not wish to rely upon it. If it were filed, it would have to be amended because, among its flaws, it fails to set out the amount of the counterclaim, contrary to Rule 25.06(9)(a) of the Rules of Civil Procedure (the “Rules”). The Defendants point out that their original counterclaim did include a monetary claim.

[19] Rather than rely on what they believe to be a flawed pleading, which they would then have to file and then seek to amend yet again, the Defendants seek to serve and file the pleading prepared by their present counsel. A draft is attached to their notice of motion.

[20] The Defendants rely on Rule 26.01, which, as set out below, grants broad leeway to amend pleadings at any stage of a civil proceeding. They also point out that they have not yet filed any amended pleading, as called for in the order of Chown J. of May 10, 2021.

[21] The Plaintiff objects that construction lien actions are not ordinary civil matters. Rather, they argue that such actions are statutorily required to be “summary” proceedings. The amendments requested would raise new issues and require a further exchange of evidence. That is far from summary.

[22] Further, the Plaintiff claims that it would be prejudiced should the Defendants be allowed to amend their pleadings as they have requested. That is in part because they say that the amended pleadings are statute barred. In addition, they would have to seek the evidence of the person who supervised the job site and a former subcontractor. They are uncertain whether the former site supervisor will be able to recall the events in question and do not know the location of the former subcontractor.

Issues

[23] This motion raises the following issues:

a. Should the Defendants be granted leave to amend their pleadings at this stage of the proceedings?

b. Should the Defendants be granted leave to substitute the evidence of Mr. Poon for that of the late Mr. Hawley?

c. If so, should there be any limits to that evidence?

Issue No 1: Should the Defendants be granted leave to amend their pleadings at this stage of the proceedings?

[24] As this is a motion for interlocutory relief in a construction lien matter, leave is required to bring the motion under s. 13 of O. Reg. 302/18 under the Construction Act (formerly section 67(2) of the Construction Lien Act). Under that provision, leave will be granted only when that the interlocutory step is “necessary or would expedite the resolution of the issues in dispute”.

[25] The Plaintiff’s opposition to this motion was not centred on the issue of leave. But it does point out that leave is required for any interlocutory motion in a construction lien action. It also points out that the issue of leave is related to the summary nature of construction lien actions.

[26] In Industrial Refrigerated Systems v. Quality Meat Packers, 2015 ONSC 4545, at para. 73, Perell J. discussed the hollowness of the process of requesting leave to bring an interlocutory motion in a construction lien action, when it has already been scheduled and argued. He found that leave should rarely be denied, writing:

[73] … speaking practically or pragmatically, unless a motion for leave is brought as a preliminary motion, it is hollow to discuss the leave requirement once the court schedules or approves a timetable for the summary judgment motion. Of course, the court cannot abrogate a statutory leave requirement, but where the moving party does not bring a preliminary motion for leave or the responding party does not move to quash the motion for want of leave having been obtained, the court, having prepared for the motion being argued, should grant leave and hear the motion, which is what I did in the case at bar. After preparing for and hearing the motion on its merits, it would be specious to refuse leave, because refusing leave would just be a pretense for dismissing the motion on its merits. Refusing to grant leave in the circumstances of the case at bar is to close the judicial barn door after the parties’ horses have gone to run their race.

[75] The case law tends toward the proposition that the leave requirement is a statutory anomaly and rarely should be refused.

See also: Summa Engineering Limited v. Selectra Contracting Ltd. et al, 2017 ONSC 6380 at para. 31 and Concord Plumbing & Heating Ltd. v. Canadian Tire Real Estate Limited, 2018 ONSC 6361 at para. 13, both of which came to similar conclusions.

[27] Here, I grant leave for the reasons cited by Perell J. and the cases immediately above. In addition, I do so because I find that the determination of this motion is necessary to deal with the concerns raised by the death of the original expert, the alleged discovery of further claims against the Plaintiff regarding the quality of its work that arise from the second expert report, and the problems that arise from the original amended statement of defence and counterclaim. The report of the new expert, Mr. Poon, ostensibly raises issues whose answers are necessary for the fair determination of this matter on its merits. I will have more to say about that in my analysis below.

Rules of Civil Procedure

[28] Rule 1.04(1) directs that the Rules be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

[29] Rule 26.01 grants parties and the court broad rights to amend pleadings at virtually any stage of a proceeding. The relevant provisions are the following:

General Power of the Court

26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

When Amendments may be Made

26.02 A party may amend the party’s pleading,

(a) without leave, before the close of pleadings, if the amendment does not include or necessitate the addition, deletion or substitution of a party to the action;

(b) on filing the consent of all parties and, where a person is to be added or substituted as a party, the person’s consent; or

(c) with leave of the court.

[30] In Yvonne Andersen et al. v. St. Jude Medical, Inc. et al., 2010 ONSC 77, Lax J. explained the effect of Rule 26.01 at para. 11:

11. Rule 26 clearly contemplates that pleadings may be amended on motion at any stage of an action and amendments are frequently granted on "the eve of trial", at trial, and during trial unless prejudice is demonstrated that cannot be addressed by costs or an adjournment.

[31] In Horani v. Manulife Financial Corporation, 2022 ONSC 2350, at para. 47, Vermette J. summarized the test for amending pleadings in civil proceedings, previously articulated by the Court of Appeal for Ontario in 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42, at para. 25, as follows:

a. Rule 26.01 requires the court to grant leave to amend unless the responding party would suffer non-compensable prejudice; the amended pleadings are scandalous, frivolous, vexatious or an abuse of the court’s process; or the pleading discloses no reasonable cause of action.

b. The amendment may be permitted at any stage of the action.

c. 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.

d. 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.

e. 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.

f. 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.

g. The onus to prove actual prejudice lies with the responding party.

h. The onus to rebut presumed prejudice lies with the moving party.

Construction Lien Act s. 67

[32] Despite the breadth of Rule 26.01, the Plaintiff points out that this motion is also governed by a set of statutory rules for construction lien actions. It relies on s. 67 of the Construction Lien Act, R.S.O. 1990 c.C30 (the “CLA”), which was in effect at the time that this action commenced. That provision has been incorporated, in its entirety, into the new Construction Act, R.S.O. 1990, c.C30, s. 50 and O. Reg. 302/18, s.13). Section 67, as it was at the relevant time, reads as follows:

67 (1) The procedure in an action shall be as far as possible of a summary character, having regard to the amount and nature of the liens in question.

(2) Interlocutory steps, other than those provided for in this Act, shall not be taken without the consent of the court obtained upon proof that the steps are necessary or would expedite the resolution of the issues in dispute.

(3) Except where inconsistent with this Act, and subject to subsection (2), the Courts of Justice Act and the rules of court apply to pleadings and proceedings under this Act.

[33] The Plaintiff relies on s. 67(1)’s reference to “a summary character” of construction lien actions. It argues that the summary character is mandatory.

[34] That being said though, the plain wording of s. 67(1) does not simply say that all construction lien actions are to be of a summary character. The wording of the provision is more equivocal than that. It offers two qualifiers to the notion of a summary character to the procedure under the CLA. First, while it should be of “a summary character”, it is only required to adopt that character “as far as possible”. Second, the application of a summary character is to be judged “having regard the amount and nature of the liens in question.” In other words, the requirement of a summary character is to be judged relative to and within the context of the action as a whole. Put more simply, some cases can be determined in a more summary fashion than others.

[35] The Plaintiff adds that, under CLA s. 37, a construction lien action shall be set down for trial within two years. That has occurred here. Thus, the Plaintiff concludes that the request to amend pleadings in the manner sought by the Defendants is “inconsistent” with the “summary” requirements of s. 67(1) as it will delay the trial of this proceeding even further.

[36] To buttress its argument, the Plaintiff claims, without authority, that the parties are actually in the middle of the trial of this action. It offers this assertion because the parties have exchanged affidavits representing evidence in chief for the trial, in accord with the trial directions of Fowler Byrne J.

[37] While not conclusive, as amendments can even be allowed mid-trial under Rule 26, I do not find that the trial of this action has commenced. The trial in this action was adjourned before it began over a year ago and has not since been called to trial. No trial judge is assigned and the trial has not even been re-scheduled. There have been no opening statements and no examinations in chief or cross.

[38] The Plaintiff places great reliance on the decision of the Divisional Court in Atlas-Gest Inc. v. Brownstones Building Corp., [1996] O.J. No. 1530, 46 C.P.C. (3d) 366 (Ont. Div. Ct.) (“Atlas-Gest”). There, the court upheld a decision refusing to allow a last-minute pleading amendment. The court relied on the facts that the action had been ongoing for years, the party seeking the amendment had been on notice for almost a year and a half of the need to seek an amendment if it wished to advance a certain defence, and the fact that the amendment was sought on the eve of trial. The Divisional Court concurred with the case management judge below that the timing of the motion was so prejudicial to the responding party that the amendment should be refused.

[39] In doing so, the Divisional Court relied on the summary nature of construction lien proceedings and on s. 67(2) of the CLA. It also noted that the trial of the action had already commenced by the time the appeal came before the appellate court. It wrote:

3 We rely upon s.67(2) to illustrate the policy of the legislation that prejudice for the purposes of Rule 26 is to be inferred unless there is sufficient proof to the contrary. Moreover, the trial having been commenced, it is inappropriate for another court to consider an interlocutory matter which is now in the exclusive domain of the trial judge including all issues of costs, except for the costs of this appeal.

[Emphasis added.]

Whether the amendment would have been allowed at an earlier stage of the proceeding remained unanswered.

[40] I will have more to say about the inference of prejudice below.

[41] In Dean's Standard Inc. v Siljub Toronto Ltd, 2016 ONSC 5254 (S.C.J.), Master Albert explained why she had refused to grant leave to amend the statement of claim at the end of a constriction lien trial, notwithstanding Rule 26.01. In a comment that the Plaintiff relies upon, she wrote:

[44] I mention briefly that in argument Dean’s, having discovered that it had not based its claim in the alternative on unjust enrichment, asked for leave to amend its pleading. The test for leave to amend a pleading is different in an action under the Construction Lien Act. The Act prevails over the rule 26 when the provisions are inconsistent. In my view the requirement in section 67 of the Act to resolve construction lien claims expeditiously overrides the broad discretion in rule 26 to grant leave to amend pleadings in almost every case.

[45] Leave to amend the statement of claim to add a claim for unjust enrichment after having adduced all trial evidence was denied. Such an amendment would have changed nature of the case considerably. Granting leave would have been prejudicial to the defendant and the prejudice could not have been overcome by costs or an adjournment of the trial. Parties to litigation develop a litigation and settlement strategy based on the allegations pleaded and their understanding of the strengths and weaknesses of their case. If the scope of the claim changes after trial evidence has been called then there is no opportunity to turn back the clock and prepare or present one’s case differently. The requested amendment is different from merely changing the quantum of the claim. It is a substantive and different cause of action from that pleaded and upon which the trial was based and granting leave would have been contrary to section 67 of the Construction Lien Act.

[42] Nonetheless, as the Defendants point out, that case can be distinguished from the present one because the trial in this case has not begun or even been scheduled. Thus, the factors that Master Albert relied upon with regard to one side being presented with an entirely new case after all of the evidence was in does not apply here. I add that it is likely, on the facts enunciated by Master Albert, that leave to amend would have been denied in even a non-construction lien case due to the extreme prejudice that the proposed pleading raised.

[43] I also note that in Gowanbrae Realty Developments Ltd. v. McLean-Peister Ltd., 2005 46627, [2005] O.J. No. 5378 (Ont. C.A.), at paras. 5 and 6, the Court of Appeal for Ontario dismissed a motion to amend a statement of claim during the course of an appeal, to add a new cause of action. The Court’s rationale for refusing to do so centred on the Rules and by implication the test under Rule 26.01. In rejecting the request on the basis of prejudice, the court made no reference to s. 67 of the CLA.

[44] The Plaintiff also places great reliance on Salter Farrow Pilon Architects Inc. v. Thunder Bay Regional Hospital, 2006 39470 (S.C.J.) (“Salter”). There, Platana J. dismissed the defendant’s motion to add a $10,000,000 counterclaim to its statement of defence or to join the defendant’s separate action against the plaintiff to the construction lien action.

[45] Platana J. reviewed a number of authorities dealing with pleading amendments in construction lien matters. He found that Rule 26.01 sets out a “presumptive” test for pleading amendments, allowing them at any stage of a proceeding unless prejudice could be demonstrated. However, the test for the amendment of pleadings under the CLA is “permissive”, rather than “presumptive”.

[46] In other words, pleading amendments are not presumed to be allowed unless the responding party can prove non-compensable prejudice. Rather, the granting of leave to amend is an exercise of discretion, which the moving party must convince the court to exercise in its favour. That is because of the CLA’s reference to a “summary” nature to a construction lien proceeding. In addition, Platana J. referred to the CLA’s leave requirements, both for bringing interlocutory motions and for the adding of third-party claims after the statement of defence has been served and filed.

[47] Platana J. distinguished Kappeler Masonry Corp. vs. Van-Con General Contractors Ltd., [2005] O.J. No. 1239 (S.C.J.), where Glithero J. applied Rule 26.01 in a construction lien action to permit the addition of a counterclaim for contribution and indemnity from the plaintiffs. As Platana J. pointed out, Glithero J. made no reference to the provisions of the CLA cited above.

[48] Platana J. similarly distinguished the decision of Moldaver J.A. for the Ontario Court of Appeal, as he then was, in Andersen Consulting Ltd. vs. Canada (Attorney General), [2001] O.J. No. 3526 (Ont. C.A.). There, the appeal court set aside a motion judge’s decision refusing a pleading amendment. While the subject matter of the contract in Andersen related to construction, the proceeding was not a construction lien action.

[49] Ultimately, Platana J. refused to both allow the addition of the counterclaim or the joinder of the separate action to the CLA action.

[50] He refused leave to add the counterclaim because:

a. The defendant had failed to issue a counterclaim along with its statement of defence, despite the CLA’s requirement that it do so. Thus, it was required to seek leave of the court to issue its counterclaim.

b. The proposed counterclaim would have included other parties as defendants to the counterclaim, once again requiring leave of the court.

c. While the construction lien claim was originally for $1.2 million, over the course of the action, the remaining amount in issue was boiled down to a fraction of that amount. Thus, the original construction lien claim would be dwarfed by the counterclaim.

d. Section 52(1) of the CLA forbids trust claims being joined to lien claims in CLA matters. The proposed counterclaim was based on a trust claim.

e. If the counterclaim were allowed, the defendant would be prejudiced in that it would have to seek leave to issue a third-party claim under the CLA.

[51] In refusing to grant the request for joinder of the defendant’s separate civil action to the construction lien action, Platana J. noted several factors that would mitigate in favour of a joinder of the actions under Rule 6. They included the facts that the parties are essentially the same in the two actions, that they have facts in common, that the claims may be interweaved and that the claims arise from the same contract. Further, the two actions are at similar stages of their litigation.

[52] Nonetheless, Platana J. relied on the decision of Master Polika in GTA Structural Steel Ltd. v. 20 Ashtonbee Holdings Ltd., [2005] O.J. No. 4999 (S.C.J.). There, the Master referred to the special regime under the CLA for the resolution of construction lien proceedings. It was not simply the process found in the Rules. The motion before the Master was for security for costs, a remedy not expressly enumerated in the CLA.

[53] What is absent from the analysis in Salter, and not cited by the Plaintiff is that Master Polika granted the motion for security for costs. He did so despite his explicit reference to the differences between the ordinary civil process under the Rules and the CLA process. Master Polika found that an order for security for costs would be procedurally fair and encourage settlement. Thus, as he wrote at para. 40, the order “would have the effect of expediting the resolution of the issues in dispute”.

[54] In light of the authorities cited above, I find that the relief requested in this motion is available to the Defendants in this case, if not by right, then with the leave of the court. That leave is available upon proof that the relief sought would meet both the test for leave under s. 67(2) and a modified version of the test to amend pleadings under Rule 26.01. The former test is met when the step is necessary or would assist to expeditiously resolve the action. Under the latter test, the court will look to whether the amendment would cause prejudice that could not be compensated for by costs or an adjournment. The modification in CLA cases comes in the court’s approach to the issue of prejudice, as set out below.

[55] Having granted leave because I found that the motion was necessary, I look to prejudice that would arise should leave to amend be granted. The Plaintiff argues both that prejudice should be inferred in this case, citing Atlas-Gest, above, and that it would suffer actual prejudice if the Defendants were allowed to amend their pleadings. It says this because:

a. It treats the inference of prejudice as a presumption of prejudice, which the Defendants must rebut.

b. Its site supervisor, who was on the job site daily, is not, as far as it knows, any longer in Canada.

c. Its subcontractor on the job left the job after a dispute with the Defendants. It is concerned with the passage of time on his evidence.

d. It would seek to issue a third-party claim against the subcontractor. But it claims that it would be unable to do so due to the alleged expiry of applicable limitation periods. It cites Pyne (In Trust) v. Footman, 2007 CarswellOnt 3018 (S.C.J.), where the amended pleading, which claimed misrepresentation, was delivered more than six years after the original cause of action arose. While issues of discoverability or the term of the warranty may save the claim from a limitation defence, the risk of losing the right was found to be sufficiently prejudicial as to disallow the amendment.

e. The Plaintiff would also be required to take a number of additional steps including:

i. deliver an amended defence to the counterclaim;

ii. deliver amended (and potentially additional) trial affidavits;

iii. requisition and deliver a fresh expert’s report;

iv. prepare for and conduct of additional discoveries (on the assumption that leave for same would be granted; and, only then,

v. re-prepare for cross-examinations upon the “recommencement” of trial.

[56] I also note that the Plaintiff argues that prejudice to the Defendants, if the amendments are not allowed, is an irrelevant consideration.

Analysis

[57] Under former CLA s. 67(3), the Rules apply to all procedural matters in civil proceedings unless they conflict with the CLA. Further, the caselaw cited above did not include a definitive prohibition on pleading amendments. Nor did it restrict procedural steps to those set out in the CLA. In fact, nothing in the CLA directly conflicts with Rule 26.

[58] As set out above, in determining whether an amendment to a pleading should be allowed under Rule 26, the presumption favours the amendment unless prejudice can be shown that cannot be compensated for by costs or an adjournment. The issue under Rule 26.01, then, is not simply the existence of prejudice, but rather the depth of the prejudice.

[59] Even under the CLA, absent a presumption in favour of an amendment, there is a permissive ability to amend pleadings. Of course, the bar to be overcome in order to be granted permission is not quite as low as that for ordinary civil proceedings. Leave is required to even move. And, as the Divisional Court indicated in Atlas-Gest, prejudice is inferred, subject to evidence to the contrary. But that is still a step away from saying that prejudice is deemed or even presumed. As the Court of Appeal for Ontario pointed out in defining the term, an inference is not necessarily a conclusion. Watt J.A. wrote the following for the court in R. v. Tsekouras, 2017 ONCA 290, at para. 229:

An inference is a deduction of fact that may logically and reasonably be drawn from another fact or group of facts found or otherwise established by evidence adduced at trial. An inference is a conclusion that may, not must, be drawn in the circumstances.

[Emphasis added.]

[60] All that is required to overcome the inference of prejudice, according to the Divisional Court in Atlas-Gest, is “sufficient proof to the contrary”. What that evidence should look like is not set out by the court. I am unaware of caselaw that sets out what such evidence must look like to avoid the inference. That is likely because it will vary in each case. Further, as set out above, the summary nature of construction lien actions, which is the basis of the somewhat higher standard of proof regarding prejudice, is contextual rather than absolute.

[61] Thus, in considering pleading amendments in CLA actions, previous decisions have looked to non-compensable prejudice, just as the court would under Rule 26.01. But they looked at it within the framework of permissiveness rather than entitlement.

[62] Perhaps another way of putting it is that with some element of prejudice inferred from the fact that construction lien proceedings are to be “as far as possible of a summary character”, the level of proof of prejudice needed to defeat a request to amend pleadings is somewhat lower for the party resisting the amendment. If there is no evidence otherwise, the inferred prejudice will suffice to reject the amendment. If the resisting party is able to provide evidence of actual prejudice, the onus that shifts to the moving party to overcome the finding of prejudice increases. Nonetheless it is open to the moving party to disprove the inferred or alleged actual prejudice.

[63] That being said, the court determining whether to grant leave to amend a pleading, whether in a CLA or an ordinary civil proceeding, cannot ignore the prejudice to the party seeking the amendment, should the amendment be refused. Rule 1.04 instructs the court to liberally construe all rules (including Rule 26) in a manner that secures the “just, most expeditious and least expensive determination of every civil proceeding on its merits”. That would necessarily include the interests of all parties. Further, in looking to the issue of whether leave should be granted to even bring an interlocutory motion, the CLA instructs the court to look to whether it is “necessary or would expedite the resolution of the issues in dispute”. That determination must consider the interests of both parties.

[64] Here, I can consider both the inference and alleged actual prejudice to the Plaintiff if the amendments sought are granted. But the procedural prejudice claimed by the Plaintiff regarding delay and the need to prepare new materials can be compensated for in costs, as set out below. As set out above, the trial has yet to begin. Further, if the Defendants were forced to rely on their flawed amended pleadings, they would have to move to amend them yet again in any event. Further, much of the delay in getting this matter to trial thus far has been caused by the delays in civil court proceedings arising out of the pandemic.

[65] The actual prejudice claimed by the Plaintiff is two-fold. First, the Plaintiff says that the new claims raised by the Defendants are subject to an expired limitation period and thus it should not have to respond to them. Second, the Plaintiff claims that its ability to provide responding evidence or commence a third-party claim against its sub-contractor is compromised by the delay in making the claim and the expiry of the limitation period.

[66] On the other hand, the Defendants point to the facts that the Plaintiff gave them a five-year warranty. The work was completed in 2018. Their newly amended claims arose within the course of that warranty. Further, as cited above, the Defendants argue that they only recently discovered the alleged problems with the work of the Plaintiff after their second expert delivered his report. In other words, the problems only became discoverable with the release of the second expert report. Thus, the limitation period only begins to run with their receipt of the Poon report. They say that these two points answer any claims to prejudice from the Plaintiff arising out of the application of a limitation period.

[67] Further, the Defendants point to the prejudice that they would suffer if they were unable to fully articulate and litigate their concerns about the quality of work offered to them by the Plaintiff, including the newly discovered alleged deficiencies.

[68] In considering the arguments of both parties, I find that both the inference and evidence of prejudice offered by the Plaintiff have been rebutted. I say that for the reasons that follow.

[69] This is a motion to amend pleadings. The test for granting leave looks to prejudice rather than the merits of the amended pleadings, Thus, I am not called upon at this stage to make a binding determination regarding the applicability of a limitation period to the new claims that the Defendant wishes to advance against the Plaintiff. Even when looking at the limitation period issue within the context of prejudice, at this stage it is far from clear that a limitation period precludes the new claims of the Defendants. Nor is it manifest that a limitation period would prevent the Plaintiff from making a third-party claim against its subcontractor. Even if the amendments are allowed, it will be open to the Plaintiff to plead the application of any limitation periods. The issues then would centre on the terms of the warranty and the question of discoverability. Those issues can be determined at trial or even a summary judgment motion prior to trial.

[70] I also note that no limitation period prevents the Defendants from raising whatever evidence of defective workmanship they wish in defence of the Plaintiff’s claims.

[71] I further point out that nothing prevents the Defendants from issuing a separate claim against the Plaintiff for negligence and/or breach of contract regarding the work performed on the cabana and the retaining wall. Whatever prejudice the Plaintiff can assert if the Defendants are allowed to amend their pleadings would equally apply to that separate claim, which the Defendants could bring by right. But that separate proceeding would raise the risk of duplicative proceedings on substantively the same facts between the same parties, which could lead to inconsistent results. That is something to be avoided as the Court of Appeal for Ontario pointed out within the context of partial summery judgment in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450; CIBC v. Deloitte & Touche, 2016 ONCA 922; and Butera v. Chown, Cairns LLP, 2017 ONCA 783. Enhancing that risk would not lead to the “just, most expeditious and least expensive determination of every civil proceeding on its merits”. Nor would it enhance the goal of a CLA summary process. As the decision of Platana J. in Salter demonstrates, the concerns regarding duplicative proceedings and inconsistent results may not be ameliorated by a joinder of actions.

[72] The other element of actual prejudice claimed by the Plaintiff is with regard to its project manager and the subcontractor who installed the deck. However it has offered no evidence that it has made reasonable or any efforts to locate that project manager. With regard to the subcontractor, again nothing in the evidence demonstrates that the Plaintiff cannot locate him, subpoena him or even serve him with a third-party claim. There is no evidence that the manager has been interviewed to determine what evidence he has to offer regarding either party’s claims. There is no evidence that the passage of time since this action was commenced in 2019 has affected his ability to offer evidence in this proceeding. Thus the alleged actual prejudice regarding those two individuals is purely hypothetical. The absence of evidence on both counts, where evidence could have been offered, is telling.

[73] The Plaintiff argues that the Defendants should be stuck with the improper amended pleading that it never filed and does not wish to rely upon. Recognizing the problems with that pleading, I do not see how they could be forced to rely on an improper pleading that they have disowned, when the pleading has not even entered the official court record. Further, the counterclaim would have to be amended in any event, even if only to properly set out a monetary amount for the counterclaim. Once again, this would not assist in either meeting the goals of Rule 1.04 or the provision of a summary proceeding.

[74] I add two points regarding the Chown J. order. First, Chown J.’s order did not refer to a specific draft amended pleading. That is because the amended pleading was intended to be based upon the expert report that the Defendants had commissioned. The contents of that report would guide the amendments. Thus, it was anticipated that the amended pleading would raise issues not included in the original pleadings, and it did so. In as much as Chown J.’s order was not appealed and is presumed correct, I can assume that he too considered the issue of prejudice in granting his order under Rule 26.01.

[75] In addition, the terms of the Chown J. order have not yet been fully carried out That order called for the amended pleading to be “delivered”; i.e. both served and filed. But the amended statement of defence and counterclaim has not yet been filed with the court. It thus remains open to the Defendants to withdraw the earlier but unfiled draft and rely instead on the draft proffered during the course of this motion.

[76] Thus, I grant leave to amend the statement of defence and counterclaim in this action upon the terms of the draft attached to the Defendants’ notice of motion.

Issue No 2: Should the Defendants be granted leave to substitute the evidence of Mr. Poon for that of the late Mr. Hawley?

[77] Understanding the prejudice that would arise by forcing the Defendants to rely on the expert evidence of a deceased witness when there is a live witness to take his place, the Plaintiff did not strongly oppose the substitution of experts and expert reports. But they did object to the Defendants being allowed to rely on issues raised in the second report that are not contained in the earlier one. That is because they should only have to rely on the allegations contained in the pleadings (which as set out above, they have argued should not be further amended). They add that they would then have to retain a further expert or their present expert to review and respond to the Poon report.

[78] It would not be in the interests of justice to force the Defendants to rely on the evidence of an expert who is unable to testify when the Plaintiff is able to offer viva voce evidence of its own expert. Thus, I allow the Defendants to rely on the Poon report.

Issue No 3: If so, should there be any limits to Mr. Poon’s expert evidence?

[79] Had I not granted leave to amend the Defendants’ pleadings, I would have limited the scope of Mr. Poon’s report. But having granted the Defendants leave to amend their pleadings as I have, I will not limit the scope of the Poon report.

Conclusion

[80] For the reasons cited above, I grant the Defendants’ motion. Order to go as follows:

a. The Defendants may amend their statement of defence and counterclaim in the form set out in Schedule “A” of their notice of motion. They shall do so within 14 days of the date of release of this endorsement.

b. The Defendants may withdraw the affidavit of Gordon Amos Hawley, containing his expert report, dated June 7, 2021.

c. The Defendants may substitute for the Hawley affidavit and report, an affidavit of Edward J. Poon, containing his expert report of February 4, 2021. They shall serve and file his affidavit, containing his report within 14 days of the date of release of this endorsement.

d. The Defendants will not file any further affidavit evidence, other than in reply to any affidavit(s) of the Plaintiff responding to the counterclaim.

e. I direct the parties to agree upon a new litigation schedule for the exchange of evidence, and if unable to do so, they may arrange to appear before me to do so.

Costs

[81] Despite my request, the parties have not agreed on the costs that should be ordered in favour of the successful party in this motion. However, each party made costs arguments at the conclusion of the hearing of this motion. Ordinarily, the Defendants, as the successful party, would be entitled to the costs of this motion. But they have requested an indulgence of the Plaintiff and the court because of circumstances that have nothing to do with the conduct of the Plaintiff. Some of those circumstances appear to lay at the feet of the Defendants’ former counsel. Thus, it is appropriate to grant the Plaintiff its costs thrown away in this motion and anticipated for the costs of further affidavits. I do not know the costs to the Plaintiff of a new expert report.

[82] Considering the result of this motion, it strikes me as fair, reasonable and proportionate to set costs at $10,000 for both the motion and the drafting of further materials, exclusive of the costs of a new expert report (which the Plaintiff can seek at trial) payable by the Defendants within 30 days. I so order.

“Marvin Kurz J.”

Electronic signature of Justice Marvin Kurz

Date: August 12, 2022