COURT FILE NO.: CV-21-120-0000
DATE: 2022 08 16
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ANH-HUY PHAM, a person under disability by his litigation guardian, BAO HOANG UNG, and BAO QUAN NGUYEN, a person under disability represented by his litigation guardian, BAO HOANG UNG
Ryan Caesar for the plaintiffs
Plaintiffs
- and -
DERONE PENNANT and CERTAS HOME AND AUTOMOBILE INSURANCE
No one appearing for the defendants
Defendants
- and -
COACHMAN INSURANCE COMPANY
Riley Groskopf for the statutory third party
Statutory Third Party
COACHMAN INSURANCE COMPANY
Christian Genova for the proposed defendant
Proposed Defendant
HEARD JULY 29, 2022
REASONS FOR DECISION
C. Chang J.
[1] This is a motion by the plaintiffs for leave to amend the statement of claim in accordance with the draft amended statement of claim, which can be found at Schedule “A” to the notice of motion dated June 28, 2022.
[2] Those draft amendments propose to add the statutory third party, Coachman Insurance Company (“Coachman”), as a defendant to this action and to advance certain claims against that party.
Facts
[3] The material facts relevant to this motion are not disputed.
[4] The plaintiff, Anh-Huy Pham (the “plaintiff Pham”), allegedly suffered significant injuries resulting from a collision on October 28, 2019 involving his motor vehicle and a motor vehicle owned by the defendant, Derone Pennant (the “individual defendant”).
[5] At the time of the collision, the plaintiff Pham’s vehicle was insured by the defendant, Certas Home and Automobile Insurance. The individual defendant’s vehicle was insured by Coachman.
[6] By way of statement of claim issued January 13, 2021, the plaintiff Pham claims damages for injuries suffered as a result of the October 28, 2019 collision and the plaintiff, Bao Quan Nguyen, asserts claims pursuant to the Family Law Act, R.S.O. 1990, c. F.3, as amended.
[7] Coachman obtained an order dated February 3, 2022 to have it added as a statutory third party to this action pursuant to s. 258(14) of the Insurance Act, R.S.O. 1990, c. I.8, as amended, (the “Insurance Act”).
[8] The individual defendant was noted in default on February 9, 2022.
Proposed Amendments
[9] By way of the draft amended statement of claim, the plaintiffs propose to add Coachman as a defendant to this action and to advance certain claims against it. Those proposed claims are as follows:
a. declarations related to Coachman’s Policy X75091453-0 respecting:
i. the validity and enforceability thereof on October 28, 2019,
ii. the coverage limits available thereunder, including in respect of any conditions or exclusions affecting the availability of payment, and
iii. “the rights of the Plaintiff in respect to payment” thereunder;
b. an accounting “of all funds paid out, if any” under the said policy;
c. an order “for production of all supporting records and documentation”;
d. pre-judgment and post-judgment interest; and
e. costs, including “enhanced costs for failure to attempt to settle as expeditiously as possible in accordance with Section 258.5(1) and (5) of the Insurance Act”.
[10] The plaintiffs also propose to amend the statement of claim to plead facts in support of the above claims against Coachman.
Issue
[11] The sole issue to be determined on this motion is whether I should grant leave to the plaintiffs to amend the statement of claim in accordance with their draft amended statement of claim.
Applicable Law
[12] Rule 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended, mandates that, at any stage of a proceeding, this court shall grant leave to amend pleadings on such terms as are just unless prejudice would result that could not be compensated for by costs or an adjournment.
[13] On a motion under rule 26.01, the court can consider whether the proposed amendment: 1) constitutes an abuse of process; 2) conforms with the rules of pleading; and 3) is, on its face, tenable at law (Damiani v. Toronto Hydro Corporation, 2019 ONSC 284 (Div.Ct.), at para. 5). Tenability is determined based on the Rule 21 “plain and obvious” test: the proposed amendment will be denied only if, assuming the veracity of the facts pleaded, it is plain and obvious that same discloses no reasonable cause of action (Damiani, supra, at paras. 6-7).
[14] Rule 5.04 provides this court with discretion to add, delete or substitute a party on such terms as are just unless prejudice would result that could not be compensated for by costs or an adjournment.
[15] A motion under rule 5.04(2) is subject to the same legal test as the one under rule 26.01, but the court retains discretion to refuse to add a party based on principles of fairness and judicial efficiency. In particular, under rule 5.04(2), the court has the discretion to deny the proposed addition of a party despite the absence of non-compensable prejudice; a discretion which is not to be invoked often (Steel Tree Structures Ltd. v. Gemco Solar Inc., 2016 ONSC 955 (Div.Ct.), at paras. 22 and 24).
[16] The applicable test for a motion under rule 5.04(2) (see Steel Tree, supra, at para. 23) is as follows:
a. the proposed amendments respecting the proposed added party must meet the test under rule 26.01;
b. joinder of the proposed added party should either be appropriate under rule 5.02(2) or required under rule 5.03;
c. joinder of the proposed added party should not be inappropriate under rule 5.05 (i.e., joinder would unduly complicate or delay the hearing and/or cause undue prejudice to the party proposed to be added);
d. joinder should not be permitted if it is shown to be an abuse of process.
Analysis
[17] Coachman does not oppose the plaintiffs’ motion herein on the basis that its joinder is neither appropriate nor required under rules 5.02(2) and 5.03, respectively. It also does not argue that the proposed amendments fail to conform with the rules of pleading.
[18] Coachman opposes the plaintiffs’ motion based on its argument that its joinder and the accompanying proposed amendments to the statement of claim:
a. would cause prejudice to Coachman in the form of delay and additional legal cost, as it would have to (as it has for this motion) retain separate legal counsel to act for it in its capacity as statutory third party and defendant, respectively;
b. are not tenable in law, as:
i. the declaratory relief sought against it by the plaintiffs, if granted, would have no practical utility – it would only serve to confirm what the parties’ respective legal positions already are, and
ii. the plaintiffs’ claims for that declaratory relief would be superfluous – Coachman hasn’t reduced its coverage position, but, rather, has only reserved its rights to do so later; and
c. constitute an abuse of process, as, if granted, they would “eviscerate” s. 258(1) of the Insurance Act by “opening the floodgates” to these types of motions and render meaningless insurers’ statutory right under s. 258(1) “to defend claims as they deem fit”.
[19] I do not accept any of these arguments.
Coachman’s Alleged Prejudice
[20] Coachman’s arguments respecting non-compensable prejudice are not persuasive.
[21] The prejudice referred to by Coachman is limited to the time, effort and cost associated with participating in the legal process; nothing that cannot be compensated for by costs (if appropriate) in the litigation itself. This is not a basis on which to deny the proposed joinder and amendments.
[22] Of note here is the fact that, during oral argument, I did not receive a response to my specific question of counsel as to why Coachman required two separate law firms to act for it in this one matter (representatives of both such firms having attended on the motion). I was also unable to find any evidence in Coachman’s motion materials that might be responsive to that question.
[23] For these reasons, I do not accept that Coachman will suffer any non-compensable prejudice resultant from the proposed joinder or amendments.
Tenability
[24] Coachman’s arguments respecting the tenability of the proposed amendments are also not persuasive.
[25] Coachman argues that the proposed added claims are superfluous and, as a result, have no practical utility. Therefore, according to Coachman, the proposed amendments would add nothing to the litigation beyond time and expense.
[26] The specific wording of the proposed amendments themselves provides a complete response to Coachman’s tenability arguments.
[27] None of the claims for declaratory relief in the proposed amendments serves to, as Coachman puts it, simply confirm what the parties’ respective legal positions already are respecting coverage.
[28] Also, in accordance with its own argument, Coachman has not yet taken any position respecting coverage, but, rather, has only reserved its right to take such a position (whatever position that may ultimately be) later on.
[29] If leave is granted to assert the plaintiffs’ proposed claims, the parties’ respective positions on the coverage issue (including that of Coachman), once taken, would inform the court’s ultimate adjudication of that issue at trial or dispositive motion.
[30] Furthermore, there is no question that this court has jurisdiction to hear the coverage issue raised in the proposed amendments and there is, in my view, no question that the issue raised is real (as opposed to theoretical) or that the plaintiffs have a genuine interest in the resolution of that issue (Daniels v. Canada (Indian Affairs and Northern Development), 2016 SCC 12, at para. 11).
[31] Accordingly, in my view, there is no issue that the requested declaratory relief sought in the proposed amendments (if sufficiently supported by the evidence at trial) would have practical utility by settling a “live controversy” between the parties.
[32] Therefore, the proposed claims for declaratory relief cannot reasonably be characterized as either lacking any practical utility or being superfluous.
[33] For these reasons, I do not accept that the proposed amendments are untenable at law.
Abuse of Process
[34] The majority of Coachman’s oral submissions was dedicated to its argument that the proposed joinder and amendments would constitute an abuse of process, as same would eviscerate s. 258(1) of the Insurance Act.
[35] As I understand Coachman’s argument on this point, I should deny the requested leave, as granting same would set a precedent that would “open the floodgates” to similar orders going forward. The cumulative effect thereof, according to Coachman, would be to eviscerate insurers’ statutory right under s. 258(1) of the Insurance Act to “defend claims as they see fit”.
[36] Firstly, I do not read s. 258(1) of the Insurance Act as, in any way, conferring on insurers the statutory right described by Coachman and I do not accept that any such statutory right is provided for therein.
[37] In addition, and in any event, s. 258(1) neither prescribes the exclusive means by which a plaintiff must proceed against a defendant’s insurer for payment of insurance proceeds nor precludes a plaintiff from seeking applicable declaratory relief (see: Williams v. Pintar, 2014 ONSC 1606, at para. 29; Rooplal v. Fodor, 2018 ONSC 399, at para. 48; and Gagnon v. Sivasamboo, 2021 ONSC 3853, at para. 21).
[38] Secondly, Coachman’s own arguments on the issue of tenability are fully responsive to this “evisceration” argument.
[39] As outlined above, Coachman argues that the proposed amendments are not tenable in law, as the claims set out therein are superfluous and, as a result, serve no practical utility. Those claims, Coachman argues, if granted, would serve only to confirm what the parties’ respective legal positions already are.
[40] If, as Coachman submits, the relief sought in the proposed amendments is superfluous (i.e., unnecessary in its excess), then could granting leave to make those amendments pose any additional threat of evisceration to s. 258(1) of the Insurance Act beyond that posed by what has already been pleaded?
[41] In my view, the answer is “no”.
[42] The threat of evisceration to s. 258(1) posed by the proposed amendments, if any at all, is, at its highest and best, a “paper tiger”.
[43] Finally, respecting Coachman’s argument that, the granting of leave in the case-at-bar would “open the floodgates”, those floodgates (if they even exist) have already been opened.
[44] This court has already addressed this issue in cases like Williams, supra, Gagnon, supra, and Rooplal, supra. On very similar facts, the subject claims for declaratory relief were left to stand (by granting leave to amend in Williams and Rooplal and by refusing to strike the applicable claims in Gagnon).
[45] Therefore, were I to grant leave to the plaintiffs to advance those claims in the case-at-bar, I would not be setting precedent; I would be following it.
[46] In addition, as s. 258(1) of the Insurance Act remains alive and well almost 8½ years after Williams was decided, it would appear that Coachman’s fears of its evisceration (borrowing from a popular misquote attributed to Mark Twain) “are greatly exaggerated”.
[47] For these reasons, I do not accept that the proposed joinder and amendments constitute an abuse of process, whether by virtue of the potential resultant evisceration of s. 258(1) of the Insurance Act or otherwise.
Summary
[48] Pursuant to rule 26.01, I am required to grant leave to amend at any stage of this proceeding unless same would cause non-compensable prejudice. In determining whether or not such prejudice will result, I am to view the proposed amendments in the potential contexts of abuse of process, conformity with the rules of pleading and prima facie tenability at law.
[49] Pursuant to rule 5.04(2), the same considerations apply, but I am also to consider the requirements for joinder under rule 5.03 and the (in)appropriateness of joinder under rules 5.02 and 5.05.
[50] In the case-at-bar, as outlined above, Coachman will not suffer any non-compensable prejudice if I were to grant leave to amend the statement of claim as requested by the plaintiffs and no difficulties arise pursuant to rules 5.02, 5.03 or 5.05 respecting the joinder of Coachman as a defendant herein.
[51] Accordingly, I am prepared to grant leave to amend as requested by the plaintiffs.
Costs
[52] Given their success on this motion, the plaintiffs are entitled to their costs on a partial indemnity basis.
[53] However, to characterize the amounts sought by the plaintiffs on this motion as “excessive” would be an understatement.
[54] In their costs outline dated July 29, 2022, the plaintiffs – on this unremarkable motion to amend a pleading – seek costs on a partial indemnity scale in the total amount of $17,162.35 (HST-inclusive) for the work of two senior lawyers, a student-at-law and two law clerks.
[55] Among the more concerning amounts claimed in the plaintiffs’ costs outline are: 9.7 hours for internal discussions among senior counsel (who are both from the same law firm), 4 hours for senior counsel to review Coachman’s 8-page factum and 3 hours for senior counsel to prepare the costs outline.
[56] Among the claimed disbursements, the plaintiffs claim $1,416.00 for “Faxes/ photocopying/courier/telephone/postage/mileage”. Aside from the fact that there is no particularization whatsoever, all of the materials served by the plaintiffs’ counsel were via regular mail or email and, contrary to the plaintiffs’ costs outline, all of the applicable attendances were via videoconference, including the cross-examinations. In the context of the court’s brave new digital world, the magnitude of the amount claimed for these disbursement items is troubling.
[57] By comparison, in its costs outline, Coachman sought partial indemnity costs totaling $10,065.36 (HST-inclusive). That said, I also have reservations about this amount by virtue of its own excesses.
[58] I reiterate that this was an unremarkable motion to amend pleadings.
[59] Taking into consideration, among other things, the complexity of the motion, the experience of counsel, the importance of the issues and the reasonable expectations of Coachman as the unsuccessful party, I find the all-inclusive amount of $7,500.00 to be fair and reasonable in the circumstances of this case.
Orders
[60] I therefore order as follows:
a. the plaintiffs are granted leave to amend the statement of claim in accordance with the draft amended statement of claim attached as Schedule “A” to the notice of motion dated June 28, 2022;
b. Coachman shall pay to the plaintiffs their costs of this motion on a partial indemnity scale, which costs are fixed in the amount of $7,500.00, all-inclusive and payable within 30 days.
C. Chang J.
Released:
COURT FILE NO.: CV-21-120-0000
DATE: 2022 08016
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ANH-HUY PHAM, a person under disability by his litigation guardian, BAO HOANG UNG, and BAO QUAN NGUYEN, a person under disability represented by his litigation guardian, BAO HOANG UNG
Plaintiffs
- and -
DERONE PENNANT and CERTAS HOME AND AUTOMOBILE INSURANCE
Defendants
REASONS FOR DECISION
C. CHANG J.
Released: August 16, 2022