Superior Court of Justice Endorsement

DATE: 2023/06/30

Plaintiff: UNDERGROUND SOLUTIONS INC. Counsel: Joel Sénécal

Defendant: Canadian Barge Builders Inc. (noted in default) Counsel: unrepresented

Defendant: Drake Cartier (no appearance) Counsel: unrepresented

Defendant: 2565845 Ontario Inc. (noted in default) Counsel: unrepresented

Defendant/Moving Party: LOWE, GRAVELLE & ASSOCIATES INC. (also known as EFI ENGINEERING) Counsel: SHELDON INKOL

[1] Two motions are before the court today:

1. The Plaintiff, Underground Solutions Inc., brings a motion seeking an order compelling the Defendant, Drake Cartier (“Mr. Cartier”), to produce and serve his affidavit of documents; and
2. The Respondent, Lowe, Gravelle & Associates Inc (also known as EFI Engineering), seeks an order granting leave to amend its Statement of Defence, and if necessary, leave to withdraw admissions.

[2] This action involves the capsizing of a barge owned by the Plaintiff. The alleged incident occurred in or around September 14, 2020. For the purposes of this motion, the relevant chronology of these proceedings, as between the moving parties, is as follows:

• May 7, 2021: Statement of Claim against the three Defendants is issued;
• May 12, 2021: Statement of Claim is served;
• May 14, 2021-May 20, 2021: exchanges between the representatives for Lowe, Gravelle & Associates Inc. (“EFI”) and Plaintiff’s counsel occur;
• June 18, 2021: EFI’s Notice of Intent to Defend is served;
• June 19, 2021: EFI sends a Request to Inspect Documents under Rule 30.04(2);
• August 24, 2021: Plaintiff responds, and produces 2 of the 3 documents requested by EFI, and demands that the Statement of Defence be served within 10 days;
• September 2, 2021: EFI delivers Statement of Defence and Cross Claim;
• February 10, 2023: Plaintiff delivers Affidavit of Documents, and requests Affidavit of Documents from EFI and Mr. Cartier within 21 days;
• March 7, 2023: EFI delivers Affidavit of Documents, and requests consent to amend pleadings;
• June 26, 2023: Plaintiff serves this motion on Mr. Cartier mid-afternoon;
• Examinations for discovery have not yet been held.

Motion 1: Mr. Cartier’s affidavit of documents

[3] Rule 30.03 is clear and uncontroversial: a party must serve an affidavit of documents. Evidence presented by the Plaintiff shows that at least two follow-up requests were made, but Mr. Cartier has yet to deliver his affidavit of documents. As such, this court orders Mr. Cartier to deliver his affidavit of documents by no later than August 1, 2023.

[4] As we all know, disclosure is a cornerstone of our judicial system, and motions of this kind should never have to be brought. This is the reason the Rules of Civil Procedure are so clear on this issue. With that said, this motion was short served on Mr. Cartier, and he received less than four days of notice, as opposed to the seven days required under Rule 37.07(6). For this reason, the order is granted, but no costs are awarded against Mr. Cartier.

Motion 2: Leave to Amend Statement of Defence

[5] After delivering their Notice of Intent to Defend, EFI had requested from the Plaintiff the naval architect engineering report and the relevant photos of the barge in question, along with two other documents. When the Plaintiff responded a few months later, it included the two other documents, but not the naval architect engineering report and photos. This response, furthermore, demanded that EFI deliver its Statement of Defence within 10 days. In meeting the Plaintiff’s imposed deadline, EFI prepared its Statement of Defence without having reviewed the naval architect engineering report and photos.

[6] In February and March 2023, EFI received the Plaintiff’s affidavit of documents, and prepared its own. At this time, EFI discovered new information leading them to realize that the barge in the naval architect engineer assessment report and photos did not match their own engineering drawings. As a result, it sought to amend its Statement of Defence.

[7] Rule 26.01 states:

General Power of 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. (emphasis added)

[8] The language of Rule 26.01 is mandatory. The court must allow the amendments, unless:

(i) they would result in prejudice that cannot be compensated by costs or an adjournment; (ii) they are shown to be scandalous, frivolous, vexatious or an abuse of the court's process; or (iii) they disclose no reasonable cause of action.

(See: Klassen v. Beausoleil, 2019 ONCA 407, at para.25.)

[9] The onus to prove prejudice therefore lies with the responding party, and to do so they must show that a causal connection exists between the amendment and the non-compensable prejudice. In other words, the prejudice must flow from the amendments, and not from some other source (See: 1588444 Ontario Ltd. v. State Farm Fire and Casualty Company, 2017 ONCA 42, at para. 25)

[10] The Plaintiff puts forward the position that if EFI amends its Statement of Defence, it may have to add another party to the claim, but it is statute barred from doing so as a result of the Limitations Act, 2002 S.O. 2002 c. 24. This, the Plaintiff argues, would cause the Plaintiff to suffer a cause that cannot be compensated. I disagree.

[11] The Plaintiff relies on the wrong discoverability clock in calculating the applicable limitation period. The clock actually starts to run when there is actual or constructive knowledge of material facts upon which a plausible inference of liability may be made (See Grant Thornton LLP v. New Brunswick, 2021 SCC 31).

[12] The common law discoverability rule is codified in Ontario’s Limitation Act, at section 5:

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

i) that the injury, loss or damage had occurred, ii) that the injury, loss or damage was caused by or contributed to by an act or omission, iii) that the act or omission was that of the person against whom the claim is made, and iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a). 2002, c. 24, Sched. B, s. 5 (1).

[13] No reasonable person could have known that the drawings did not match photos of the barge in question until the two could be compared. In order to compare them, that reasonable person would need to have both in her or his possession. EFI’s ability to compare the two documents occurred when the report and photos were actually shared, which based on the evidence, appears to have been in February 2023. Even if these had been shared in August 2021, the limitation period would still not have elapsed yet.

[14] This material fact undoubtedly leads to a plausible inference of liability, and the two-year limitation period has not elapsed such that the Plaintiff would be statute barred from amending its Statement of Claim, if needed, once the Amended Statement of Defence is filed (the draft of which is before the court).

[15] Thus, no prejudice will be suffered as alleged by the Plaintiff if the Statement of Defence is amended.

Withdrawal of admissions

[16] The Plaintiff further opposes EFI’s request to amend its Statement of Defence submitting that, pursuant to Rule 51.05, EFI should not be able to withdraw the admission that it designed the barge subject to the claim.

[17] While rule 51.05 states that “an admission in a pleading may be withdrawn on consent or with leave of the court,” the Statement of Defence makes no such admissions. The amendments sought merely seek to update the Statement of Defence with the newly discovered information, and not allowing it to do so would go against the interest of justice, as it would be contrary to the litigation principles of disclosure and efficiency.

[18] The Plaintiff especially takes issue with the fact that EFI seeks to clarify its possible role in the design of the barge in question. In particular, it argues that I should make a finding that, regardless of the differences between the drawings and the photographs, Mr. Cartier had relied on EFI’s drawings, so EFI is therefore liable. Such findings are for the trial judge, however. This court’s role on this motion is determine if admissions were made, and if they were, whether or not the court should exercise its discretion to allow them to be withdrawn.

[19] I find that no admissions were made, and therefore none need to be withdrawn. I further find that, even if I am incorrect in my finding that the amendments were not admissions, I would grant leave to withdraw them because the new knowledge of a material fact very clearly raises a triable issue, EFI could not have known this material fact ahead of time since it did not have the documents necessary to make the discovery in its possession, and the withdrawal of such an admission will not cause non-compensable prejudice to the Plaintiff.

Conclusion

[20] It is not for the motions judge to determine who relied on what, and whether or not that reliance gave rise to liability. That is a finding to be made for the trial judge. In reviewing the evidence put forward, it is clear that the Plaintiff would not be statute barred from amending its Statement of Claim if it found it necessary after EFI were granted leave to amend its Statement of Defence.

[21] In addition, allowing newly discovered information to be included in pleadings is not only of no prejudicial effect to the Plaintiff, the interest of justice mandates it so. Disclosure, and efficiency in how transparency is fostered, is crucial to the trial judge’s role.

[22] I further find that a proper review and understanding of the law would have led the Plaintiff to consent to EFI’s request to amend the Statement of Defence, and that this motion was not necessary. For this reason, the motion is granted, and costs must be awarded against the Plaintiff.

[23] I therefore order the following:

1. The Plaintiff’s motion is granted, and the Defendant, Drake Cartier, shall deliver his Affidavit of Documents by no later than August 1, 2023, with no costs payable to the Plaintiff;
2. The Defendant, Lowe, Gravelle & Associates Inc. (also known as “EFI Engineering”), is granted leave to amend its Statement of Defence;
3. The Plaintiff, Underground Solutions Inc., is granted leave to amend its Statement of Claim after the Amended Statement of Defence is filed, if they choose to do so;
4. The Plaintiff shall pay the Defendant, Lowe, Gravelle & Associates Inc., also known as EFI Engineering, costs on a partial indemnity basis in the amount of $3,995.18, all inclusive.

[24] The parties may submit draft orders for my review and signature.

Justice J. Richard June 30, 2023