COURT FILE NO.: CV-19-336 DATE: 2024/05/27

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Erin Townley Plaintiff – and – Robert Saunders, Irene Spike, and Security National Insurance Company Defendants – and – Perth Insurance, added by order pursuant to section 258(14) of the Insurance Act, R.S.O. 1990, c.I.8, as amended Dennis Holden, Courtney Boomhower, and Pancreatic Cancer Canada Foundation Third Parties

Counsel: Rachel Law and Warren WhiteKnight, for the Plaintiff Kyle Smith, for the Defendant, Security National Allison Klymyshyn, for Perth Insurance Robert Sugar for Dennis Holden and Courtney Boomhower Linda Moazzam for the Pancreatic Cancer Canada Foundation Ted Brooks for the Proposed Third Parties, Gordon Townley and People on Bikes Inc. Marin Forget for the Proposed Third Party, His Majesty the King in Right of Ontario

HEARD: February 22, 2024 (Kingston)

Motion decision re third party claim

Somji J

[1] This motion addresses Security National’s request to add additional defendants to a third party claim after the expiry of statutory limitation period in an action commenced six years ago.

[2] On May 27, 2018 during a charity bike ride (“ride”) to raise money for pancreatic cancer research, the Defendant Robert Saunders collided with his motor vehicle into a group of people who were waiting on the side of a road tending to an injured cyclist. One person died and others were injured. The Plaintiff Erin Townley was one of the persons struck and seriously injured. On June 1, 2021, following a criminal trial, Mr. Saunders was convicted of dangerous driving causing death and dangerous driving causing bodily harm, the latter count in relation to striking and injuring Erin Townley: R v Saunders 2021 ONSC 3961. Mr. Saunders was sentenced to four years imprisonment: R v Saunders 2021 ONSC 6149.

[3] On September 24, 2019, Erin Townley commenced a civil action against Mr. Saunders, her insurer Security National responsible for her SEF-44 coverage, and Irene Spike, the owner of the vehicle. Mr. Saunders and Ms. Spike were both noted in default on November 1, 2022.

[4] Security National filed a Statement of Defence on November 11, 2019. It included a crossclaim against Robert Saunders and Irene Spike but did not name any third parties.

[5] On September 14, 2022, after the limitation period for bringing a third party claim had expired, Security National sought and was granted leave to file a third party claim for contribution and indemnity against three other parties: Dennis Holden and Courtney Boomhower who were respectively the owner and driver of another vehicle travelling ahead of Mr. Saunders as well as Pancreatic Cancer Canada Foundation (“PCCF”) who Security National understood to be the ride operator (“Third Party Defendants”).

[6] In January 2024, almost six years after the bike incident, Security National seeks to add three more defendants to the third party claim: People on Bikes, Gordon Townley, and His Majesty the King in Right of Ontario as represented by the Minister of Transportation (“MTO”), collectively the “Proposed Defendants”. Gordon Townley is the father of the Plaintiff and founded the charity bike ride in memory of his mother.

[7] Security National brings the motion pursuant to Rule 29.02(1.2) Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which permits the issuance of a claim against third parties with the consent of the plaintiff or leave of the court unless the plaintiff would be prejudiced thereby. The Plaintiff claims prejudice by the delayed application.

[8] Security National argues that any delay is the result of Erin Townley actively attempting to deceive and obstruct Security National from identifying the ride organizers so as to avoid bringing them into this action. Security National pleads that it was only upon reviewing the criminal file in April 2023 (the “WAGG production”) and during Examinations for Discovery held between May 2-5, 2023 (“discoveries”) that they learned keys facts that would support a third party claim against the Proposed Defendants. To disallow the application would deny Security National legitimate defences in this matter.

[9] The Plaintiff opposes the application on several grounds. First, Security National is out of time and has breached multiple deadlines under the Rules as well as the Limitations Act, 2002, S.O. 2002, c. 24 Sched. B., to either issue a third party claim or amend the existing third party claim to add the Proposed Defendants. Second, adding third parties will further delay matters and result in actual prejudice to Erin Townley who has been waiting six years since the collision and requires closure to complete treatment for her injuries. Third, the Proposed Defendants are not proper third parties and the application has no merit. Security National’s purpose in bringing this application is an abuse of process intended to delay matters and disentitle Erin Townley access to coverage under her SEF-44 policy.

[10] People on Bikes and Gordon Townley adopt the submissions of the Plaintiff and argue that the application also prejudices them. Like the Plaintiff, they argue that Security National has improperly relied on Rule 29.01(1.2) which governs issuance of a third party claim and not the amendment of a claims. Security National has an existing third party claim commenced with leave of the court in September 2022 with the Third Party Defendants, and therefore Security National ought to have brought a motion pursuant to Rule 5.04(2) to amend that claim to add the Proposed Defendants to it.

[11] Rule 5.04(2) governs joinder of parties. If that rule applies here, it requires consideration of prejudice not only to the Plaintiff, but also to the Proposed Defendants. The Proposed Defendants argue that there is prejudice because the limitation period for Security National to seek contribution and indemnity from third parties expired. Therefore, Security National is statute barred from expanding its third party claim. While there is an exception to add parties after the expiry of a limitation period, Security National has failed to meet the test by demonstrating the information was not discoverable earlier.

[12] Similarly, MTO argues that information related to road conditions suggestive of any liability on road authorities was discoverable earlier. In support of their position, MTO relies on the materials filed by the Plaintiff, People on Bikes, and Gordon Townley.

[13] The issues to be decided are: a. What is the governing rule for Security National’s claim to add the Proposed Defendants? b. If Rule 5.04(2) applies, are the Proposed Defendants and Plaintiff prejudiced by the request? c. Alternatively, if Rule 29.01(1.2) applies, is the Plaintiff prejudiced by the request?

Issue 1: What is the governing Rule for adding the Proposed Defendants?

[14] Rule 29 governs the procedures for the issuance of third party claims by defendants. A defendant may assert a third party claim against any party who is not already party to an action and who may be liable to the defendant for all or part of the plaintiff’s claim: Rule 29.01(a).

[15] There are, however, time limitations for such claims. Rule 29.02(1) states that a third party claim shall be issued within 10 days after the defendant delivers a statement of defence or at any time before the defendant is noted in default. Thereafter, the plaintiff’s consent or leave of the court is required: r. 29.02(1.2) Here, Security National delivered its defence on November 11, 2019, and therefore the time period under the Rules for issuance of a third party claim expired in December 2019. Furthermore, and as discussed below, the period for issuance of claims for contribution and indemnity against third parties under the Limitations Act expired in September 2021, two years after the filing of the Statement of Claim.

[16] Notwithstanding these expiration periods, Security National sought leave pursuant to Rule 29.02(1.2) to issue a third party claim against the Third Party Defendants. The Plaintiff initially opposed the motion but after several months, in an effort to progress the action, consented to the motion on the condition that it be granted on a without prejudice basis to advance arguments of estoppel and a limitation defence and to permit amendment to the Statement of Claim. Muszynski J granted leave on September 14, 2022, and Security National issued the claim against the Third Party Defendants on the following day.

[17] The basis of the third party claim brought by Security National in September 2022 was to identify others ride organizers whose conduct may have, in addition to Mr. Saunders, contributed to the resulting harm to Erin Townley. Security National’s present request to add the Proposed Defendants is a similar claim for contribution and indemnity. Therefore, I find that Security National is not seeking to issue a new third party claim, but to amend its existing third party claim by adding the Proposed Defendants to it. Consequently, the applicable rule for adding a party to an existing claim is Rule 5.04(2) which reads:

Adding, Deleting or Substituting Parties

(2) At any stage of a proceeding the court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[18] The distinction in the wording of Rule 5.04(2) and Rule 29.02(1.2) is relevant. Under Rule 29.02(1.2) Security National need only satisfy the court that the delayed request will not prejudice the Plaintiff. However, where Rule 5.04(2) applies, the court must also concern itself with prejudice to the proposed parties. As discussed below, the Proposed Defendants argue they are prejudiced because Security National is statute barred under the Limitations Act from bringing any further claims for contribution and indemnity and has not demonstrated it falls under an exception to that limitation.

[19] In addition, to proceed under Rule 29.02(1.2) as relied upon by Security National would result in the issuance of a new and additional third party claim. There is nothing in the language of Rule 29.02(1.2) to allow for multiple third party claims. Moreover, to proceed in this manner would violate the principle of avoiding a multiplicity of proceedings. In this regard, it should be noted that there already five related actions in this matter with actions in two different provinces given the number of people harmed in the collision.

[20] For these reasons, I find that the applicable Rule for determining Security National’s motion to add the Proposed Defendants to the action is Rule 5.04(2) and not Rule 29.02(1.2).

[21] Given that Rule 5.04(2) requires consideration of prejudice to the Proposed Defendants, I find these issues are to be carefully considered as part of this motion and not at a later date after the parties are added to the third party claim as suggested by Security National. To do so otherwise would allow the Proposed Defendants to incur additional unnecessary costs in circumstances where they have made clear in the materials filed that they would move to strike any new third party claim. Consequently, the Proposed Defendants have standing in this matter, and their materials and submissions have been duly considered in deciding this matter.

Issue 2: Does the motion result in prejudice to the Proposed Defendants?

[22] Section 21 of the Limitations Act prohibits the addition of a party to an existing proceeding after the limitation period has expired. It states:

Adding party

21(1) If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.

[23] In this case, the governing limitation period for Security National’s request is set out in Section 18 of the Limitations Act which provides that a claim for contribution and indemnity is presumed to be discovered on the date that a defendant is served with the Statement of Claim:

Contribution and indemnity

18 (1) For the purposes of subsection 5(2) and section 15, in the case of a claim by one alleged wrongdoer against another for contribution and indemnity, the day on which the first alleged wrongdoer was served with the claim in respect of which contribution and indemnity is sought shall be deemed to be the day the act or omission on which that alleged wrongdoer’s claim is based took place.

[24] Section 5(1) and (2) of the Limitations Act states the following with respect to discovery:

Discovery

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).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved. 2002, c. 24, Sched. B, s. 5 (2).

[25] The Plaintiff served a Statement of Claim on Security National on September 24, 2019, and therefore, that is the relevant discovery date for Security National with respect to claims for contribution and indemnity. Section 4(1) of the Limitations Act prohibits a third party claim from being commenced after two years of the discovery date. The provision reads:

Basic Limitation Period

4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. 2002, c. 24, Sched. B, s. 4.

[26] Consequently, pursuant to ss. 4(1), 5(1), 5(2), 18(1), and 21(1) of the Limitations Act, Security National was presumptively statute barred as of September 24, 2021 from bringing any further claims for contribution and indemnity against others, including the Proposed Defendants.

[27] In support of this motion, Security National’s Counsel filed an affidavit from his paralegal Cassandra Adams, dated November 22, 2023, and a supplemental affidavit dated February 20, 2024. In her supplemental affidavit Ms. Adams attests that the Plaintiff filed a second Statement of Claim in Alberta on May 21, 2020 because the insurance policy at issue is an Alberta policy. Security National’s counsel has neither argued nor do I find that the Alberta Statement of Claim modifies the date of discovery for a third party claim in the Ontario action.

[28] The court has discretion to add parties after the expiration of a limitation period. In exercising its discretion, the court must examine both the length of time expired under the limitation period and the principles of discoverability. As explained in Higgins v Barrie (City), 2011 ONSC 2233 at para 17:

In considering whether or not to use its discretion, the court will look to the limitation period and the principles of discoverability, because the passing of a limitation period gives rise to a presumption of prejudice. The prejudice arises from three purposes of limitation periods:

(a) A potential defendant has the right to expect that after the expiry of a limitation period, his or her obligations are put to rest;

(b) A potential defendant should no longer be concerned about the preservation of evidence relevant to a claim after the expiry of the limitation period;

(c) Finally, plaintiffs are expected to act diligently and not “sleep on their rights;” statutes of limitation are an incentive for plaintiffs to bring suit in a timely fashion:.”

[29] To add a party to a third party claim after the expiry of a presumptive limitation period, the moving party “must give a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence”: Yaacov Hen v Bandura, 2015 ONSC 1511 at para 29; Higgins at para 19. More specifically, the court must examine the evidentiary record to determine whether Security National ought to have known the identity of the Proposed Defendants and whether they took any steps to determine that identity: Pepper v Zeller’ Inc., [2006] O.J. 5042 (CA) at paras 19-20; Higgins v Barrie at para 34.

[30] Subsequently on July 27, 2023, and presumably on the basis of this testimony, Security National sought the Plaintiff’s consent to add People on Bikes, Gordon Townley, and the MTO to their third party claim. Plaintiff’s counsel refused consent. Security National suggested that the Plaintiff was being obstructionist and had an obligation to cooperate with Security National.

[31] Security National’s counsel argues that the factual basis for a third party claim against the Proposed Defendants came from a review of the WAGG production. However, other than a brief reference to obtaining the WAGG production in April 2023, the Adams affidavits provide no explanation what the WAGG Production revealed and why that information was not readily available earlier.

[32] I find Security National has not established that the identity and information on the role of the Proposed Defendants at the ride was not obtainable earlier with due diligence.

[33] Security National relies on Ms. Adams’ two affidavits in support of its motion. In her initial affidavit, Ms. Adams attests that the Plaintiff and other witnesses gave evidence at discoveries at which time Security National learned that Gordon Townley was the principle organizer of the charity event, that he owns People on Bikes, and that this was the entity through which he organized the ride. Ms. Adams attests that neither Gordon Townley nor People on Bikes implemented safety procedures with respect to the event. Ms. Adams does not identify, however, the discovery transcript references from where she gathered this information and arrived at these conclusions.

[34] In her supplemental affidavit, Ms. Adams reiterates that Security National learned of the Proposed Defendants’ involvement in the ride during the Plaintiff’s examination of discovery and from the WAGG Production. For example, Ms. Adams attests, this time with transcript references, that Erin Townley testified at discovery that her father organized the charity event with the Trottiers but his role was that he typically planned the bike routes. Erin Townley also stated that People on Bikes was a company her father started, and that while they sponsored the event, they were not an organizer.

[35] On this basis, Security National argues that Erin Townley knew her father and People on Bikes were the true ride organizers, and she was responsible for informing them of this, or at minimum, correcting their misapprehension that PCCF was the ride organizer. However, it is not clear from my review of the excerpts of Erin Townley’s discovery cited by Ms. Adams that she holds this view. Erin Townley stated that People on Bikes was a sponsor. She also qualified the nature of Gordon Townley’s role as an organizer who determined the bike routes. Furthermore, even if her testimony could be interpreted to suggest that Gordon Townley and People on Bikes were ride organizers, Ms. Adams’ affidavits do not to explain why information about their involvement was unavailable earlier particularly given that in April 2021, there was a six day criminal trial in relation to this matter. A large number of witnesses testified including Erin Townley and Robert Saunders. Those criminal proceedings were open the public.

[36] In addition, on June 1, 2021, the Honourable Justice Beaudoin released a 37-page decision on the criminal matter. In that decision, Erin Townley testified to what she stated at discovery which is that she participated in a ride that had been started by her father in 2012. Furthermore, Beaudoin J reports that another witness Fred Roberts testified that he was “….related to the Townleys who organized the event.” Hence, as early as June 1, 2021, there were references to the involvement of Gordon Townley in the ride.

[37] As the Proposed Defendants point out, there were also other sources of publicly held information available even earlier which a large and sophisticated insurance company such as Security National could have relied on to gather information about ride organizers. For example, Erin Townley attests in her affidavit dated February 15, 2024, that a simple Google search for “7 days in May” would have provided information with respect to the organization of the ride. In addition, her father Gordon Townley posted daily recap videos on Vimeo during the ride which were accessible to the public and widely shared on social medial platforms. A few further corporate searches would likely have revealed that Gordon Townley was one of the directors of the corporation People on Bikes who Security National could have contacted directly for additional information. Hence, I find the information regarding the identity of Gordon Townley and People on Bikes and their role in the ride was available to Security National long before discoveries and even before Security National sought leave to issue their initial third party claim in September 2022.

[38] Security National posits that because the Plaintiff is herself a lawyer, she would have been aware that the SEF-44 coverage in question only applies if there is no other party who is at least 1% liable for the accident. Security National argues that the practice in cases involving an SEF-44 policy is “ for the Plaintiff to add all potentially relevant defendants to the action from the day the Statement of Claim is issued, and it is not supposed to be the SEF-44 insurer’s job to add these potential defendants to the action.”

[39] There are two concerns with this argument. First, while Security National views Gordon Townley and People on Bikes as “potential relevant defendants” that position is not necessarily shared by Plaintiff’s counsel who may view liability differently. For example, when Security National’s counsel Mr. Smith sought consent from Plaintiff’s Counsel Warren WhiteKnight for the initial third party claim in 2022, Mr. WhiteKnight made clear that he did not see the basis for liability against the proposed Third Party Defendants, noted that some of these parties were not insured, and remarked that “I look at all of this in detail before issuing my pleadings.” In short, the determination to include defendants is not as automatic as Security National suggests.

[40] Second, whether or not the Plaintiff chooses to include certain defendants does not absolve Security National of its own responsibility in exercising due diligence in the face of limitation periods and to await disclosure of this information from others. As stated in Zellers, it is not sufficient for a party to simply say “no one gave us the information” to establish due diligence: at paras 19-20. It was incumbent on Security National to discern of its own accord and with its own resources which entities, whether individuals or corporations, participated in any aspect of the organization of the ride so as to narrow down the entities against whom they might seek contribution and indemnity. The Adams’ affidavits do not identify what, if any such steps, Security National took towards obtaining the information earlier.

[41] Security National also argues that the factual basis for a third party claim against the Proposed Defendants came from a review of the WAGG production. However, other than a brief reference to obtaining the WAGG production in April 2023, Ms. Adams’ affidavits do not explain why the relevant information was not readily available earlier, particularly given the 2021 criminal decision referred extensively to witness testimony and race conditions.

[42] With respect to MTO’s involvement, Security National suggests that the Plaintiff knew the condition of the roadway because she was present for the incident whereas they did not have information about the condition of the roadway until the WAGG productions in April 2023. I find this argument has little merit. Security National has not explained how Erin Townley, who was by the side of the road for a brief period, a victim of the collision and seriously injured, and who was taken away by ambulance very quickly after, knew or would have even been in a position to know about the precise condition of the roadway at the time.

[43] Ms. Adams states in her initial affidavit that MTO was a named defendant in a related action and MTO counsel participated at discovery. It was at that time that Security National learned that the collision with Ms. Townley occurred after a bicyclist hit a large pothole on the roadway informing their basis for a claim against MTO.

[44] However, I find this same information was also available to Security National from the criminal trial decision wherein Beaudoin J refers at paragraph 5 to the “pothole” the cyclist struck. Beaudoin J also describes in detail the road conditions and posted traffic and construction signs. I note that there is no reference to Mr. Saunders striking a pothole prior to the collision. Nonetheless, if Security National considered the road conditions to be a contributing cause for the collision and relevant to liability, information about those road conditions was available well before discovery. Ms. Adams does not discuss what steps Security National took to examine the roadway or google photos of the roadway, speak with others present or involved in the ride, or consult other information sources at the earliest opportunity to determine the potential responsibility of MTO as the authority responsible for maintaining the roadways.

[45] For all these reasons, I find that the Proposed Defendants are prejudiced by Security National’s delayed application which falls markedly outside the limitation period. I find Security National has failed to demonstrate that the reason for delay is because the information was not discoverable with due diligence.

Issue 3: Does the motion result in prejudice the Plaintiff

[46] Even if I am incorrect in my analysis regarding the applicable rule and Security National has properly proceeded under Rule 29.02(1.2), I find that issuing a third party claim against the Proposed Defendants would result in prejudice to the Plaintiff at this stage of the action.

[47] As per Farrell v Costco Wholesale, 2015 ONSC 7783 at paragraph 45, the court may consider several factors in finding prejudice under this rule:

i. the length of time between the notification of the claim to when the Defendant opts to issue a third party claim; ii. the time between service of the claim and the Defendant raising the Third Party claim; iii. the availability of the underlying facts to the Defendant from the time the incident occurred; iv. the absence of any explanation for the failure to comply with the statutory deadline; v. the inexplicable delay in applying for leave thereafter; vi. the discernable absence of merit to the third party claim; vii. the unlikelihood that a separate action against the third party would result in an inconsistent verdict; viii. the fact that examinations for discovery have happened and need to happen again; ix. the delay in scheduling trial; and x. the ongoing adverse effects of the injury on the Plaintiff.

[48] Below I discuss the application of some of these factors in this case.

Delay

[49] It is clear that Security National has breach several statutory deadlines in this case. Security National failed to issue a third party claim within 10 days after the defendant delivered a statement of defence pursuant to Rule 29.02(1). They also failed to include the Proposed Defendants when they sought leave to bring the original third party claim in September 2022. They were in breach of the Limitation Act period for claims for contribution and indemnity in 2022 and are again now.

[50] Security National argues that the delays are attributable to the Plaintiff’s conduct. As already noted, I do not find that claim is borne out in the evidence provided.

[51] Counsel for Security National argues that the application would not delay the legal proceedings because the parties have to wait over a year to obtain a qualified mediator. Even if true, it overlooks a considerable number of other procedural delays that would result.

[52] These consequential delays must be examined in light of the fact that September 2024 marks the fifth anniversary of the commencement of the action and Rule 48.14(1) requires that an action shall be dismissed for delay if it has not been set down for trial by that time.

[53] First, all the parties will have to reconsider their trial strategies and will likely seek leave to amend their claims or defences to respond accordingly.

[54] Second, the Proposed Defendants will have to file defences which will delay matters. In this regard, I note that seven months transpired between the time Security National issued its claim against the Third Party Defendants (September 2022) and when the Third Party Defendants filed their Statements of Defence (April 2023). In fact, the issuance of the late third party claim resulted in discoveries scheduled for June 2021 being delayed until March 2023.

[55] Third, adding defendants will likely result in further discoveries and delay. An indication of the length of delay is reflected in an email from Security National counsel dated January 24, 2024, proposing that Gordon Townley be discovered wherein he states, “the history of scheduling things on this file tells us that just coordinating counsel for a question of Mr. Townley could required another 9 months or so.”

[56] Fourth, even before defences could be filed, the Proposed Defendants have indicated they would move to strike the third party claim against them. That motion will likely delay any scheduled discoveries as well as mediation.

[57] Finally, there are several civil actions flowing from the collision. Security National cited the number of actions within multiple jurisdictions and the involvement of multiple counsel, as a factor for the delay in bringing this application. Adding three more defendants and their counsel will inevitably add to the complexity of this matter just on scheduling alone.

[58] These consequential effects will not only prolong the proceedings but result in increased costs to the Plaintiff who has been waiting over six years since the collision and action to obtain a conclusion on this matter.

[59] In sum, I find the delay in bringing this application is far from trivial and has significant cost and time consequences that are in and of themselves prejudicial to the Plaintiff.

The merits of the third party claim

[60] The Plaintiff argues that there is no merit to the third party claim against the Proposed Defendants, and consequently, this court should not grant leave for an application that does not enhance a timely and cost-efficient civil proceeding. In this regard, the Plaintiff relies on Rule 1.04 which requires that the rules “shall be liberally construed to secure the just, most expeditious and least expensive determination of every evil proceeding on its merits.”

[61] The Statutory Third Party, Perth Insurance issued a motor vehicle insurance policy to Irene Spike, but have denied coverage for the accident because under that policy, Ms. Spike had an excluded driver endorsement which excluded her son Robert Saunders as a driver of her vehicle. This means that Robert Saunders, who was found criminally responsible for the collision, was driving without valid insurance.

[62] Erin Townley purchased an optional family protection policy endorsement, an SEF-44. The purpose of the SEF-44 is to provide insurance coverage to her in an accident involving an uninsured or underinsured driver. Consequently, Erin Townley seeks to rely on her SEF-44 to provide insurance coverage for the damages she sustained from Mr. Saunders’ conduct. However, the SEF-44 policy is not available if any other party, over and above Mr. Saunders, is responsible for even 1% of the Plaintiff’s claim. This would immunize Security National as the Plaintiff’s SEF-44 insurer to pay for any coverage under that policy. Erin Townley argues that Security National owes her a statutory duty of good faith as her SEF-44 insurer.

[63] Security National is correct in that it is entitled to recover under the policy from others. Security National would undoubtedly have known of the SEF-44 policy and certainly contemplated seeking contribution and indemnity from other third parties when it filed its original third party claim.

[64] However, Security National seeks to assert its recovery rights in this application against Gordon Townley and People on Bikes who are not insured and as a result, are not parties from whom Security National would be entitled to contribution and indemnity. As explained by Counsel WhiteKnight in his affidavit dated February 15, 2024 Security National as the SEF-44 provider is able to deduct money recoverable only from:

(i) the insurers of the inadequately insured peters and from bonds, cash deposits or other financial guarantees given on behalf off the inadequately insured motorist; (ii) the insurers of any person jointly liable with the inadequately insured motorist for the damages sustained by an insured person; (iii) the “Régie de l'assurance automobile du Québec”: (iv) an unsatisfied judgment fund or similar plan or which would have been payable by such fund or plan had this endorsement not been in effect; (v) the uninsured motorist coverage of a motor vehicle liability policy; (vi) any automobile accident benefits plan applicable in the jurisdiction in which the accident occurred; (vii) any policy of insurance providing disability benefits or loss of income benefits or medical expense or rehabilitation benefits; (viii) any Worker's Compensation Act or similar law of the jurisdiction applicable to the injury or death sustained; (ix) any Family Protection Coverage of a motor vehicle liability policy.

[65] As Mr. WhiteKnight explains, the Proposed Defendants Gordon Townley and People on Bikes are uninsured parties that do not fit into any of these categories. Although Security National was granted leave to file a supplemental affidavit, it did not address this particular argument raised by Mr. WhiteKnight or counsel. In the absence of evidence to the contrary, one can reasonably infer that Security National’s application to add Gordon Townley and People on Bikes has little merit. To allow a meritless application to proceed with time and cost consequences to the Plaintiff and Proposed Defendants would result in prejudice.

[66] The Plaintiff argues that Gordon Townley’s claim is also without merit for the additional reason that it names him individually. According to Counsel Ted Brooks, if a claim is issued Mr. Downey will apply to strike the claim on the basis that he had no personal involvement in the ride and was acting as an officer and director at all relevant times. To allow him to be added as a third party personally for actions he took as a director of People of Bikes would require Security National to pierce the corporate veil.

[67] Furthermore, it is important to note that Gordon Townley is not the only director of People on Bikes, and yet, Security National has not made any efforts to identify or bring a claim against any other officers of People on Bikes. Security National has also not brought a claim against the Trottiers who Erin Townley also identified at the discoveries as being involved in the organization of the ride. These strategic decisions by Security National for which they have provided no explanation lends credence to the Plaintiff’s argument that this application is tactical and designed to draw out the litigation through delay.

Actual prejudice to Erin Townley

[68] Erin Townley attests that she has suffered the following injuries from the incident: traumatic brain injury, an open fracture of the right humerus, a fracture to the right elbow, a tear of the right triceps, eight broken ribs, abrasions, a traumatic pneumothorax of the right chest, multiple lacerations and contusions, dorsalgia, sprained and strained ankle, shoulder lesions, nausea and headaches, amongst other injuries.

[69] Ms. Townley testified to many of these injuries at her criminal trial and her evidence was accepted and referred to by the trial judge in his decision.

[70] It has been just over six years since the collision, and Ms. Townley attests that she continues to have injuries and impairments including chronic pain, weakness, numbness, diminished energy, stiffness, emotional trauma, discomfort, scarring, and movement limitations. She also reports to have depression and anxiety and Post Traumatic Stress Disorder, amongst other lasting impairments.

[71] In addition, Ms. Townley seeks to undergo Eye Movement and Desensitization Reprocessing Therapy (“EMDR”), a type of psychological therapy to create new mental pathways to help overcome trauma. However, Ms. Townley’s counsellor who she continues to see advised her that EMDR can effect memory and recall and thus, Ms. Townley has been reluctant to proceed with EMDR until she gives her evidence at any further civil trial.

[72] These proceedings, but particularly Security National’s conduct is a source of continued stress for Ms. Townley. She explains that she purchased the SEF-44 policy for peace of mind and expected her own insurer to protect her. Instead, Security National has charged her with being “obstructionist” a claim which she denies and explains in her affidavit. They have also refused to acknowledge findings of facts made at the criminal trial which included that she and all the other cyclists were lawfully standing on the side of the road when Mr. Saunders, unexpectedly and contrary to the standard of reasonable driver, drove up the shoulder and struck them.

[73] Erin Townley seeks closure of the events so that she can properly heal both mentally and physically. As she explains in her affidavit:

The longer I am delayed in setting this matter down for trial, the more I am forced to relive my trauma and ruminate on all that I have lost. It is mentally and emotionally wearing to continue to speak about my injuries, and the accident itself, without being able to move forward toward resolution.

[74] Ms. Spike and Mr. Saunders are uninsured and she cannot recover from them. Ms. Townley understands from her counsel that in bringing a claim to add the Proposed Defendants, Security National seeks to reduce its own exposure at trial, potentially to zero. If successful, Ms. Townley would potentially have no financial recourse at the end of the case for the injuries resulting from Mr. Saunders’s conduct.

[75] That would not have been the case had Security National brought its application in a timely manner. Security National pled in their that Defence that the collision was caused or contributed to by Robert Saunders and that he and the owner of the vehicle are responsible in law. Security National pled that Mr. Saunders was driving in such an erratic manner and with such complete disregard for the other drivers that any collision was inevitable and unavoidable.

[76] I note that Beaudoin J made similar findings of fact in his trial decision at paragraph 177:

[177] In these proceedings, we have the evidence of the standard of care of a reasonable person and that is found in the evidence of Mr. Holden. He foresaw the risks, when observed the cyclists on the road that day. He had reduced his speed because of their presence. He saw the cyclists at the side of the road and moved over the centre line as an additional precaution. The risks were there to be seen and Mr. Saunders’ lack of attention to his surroundings and his aggressive driving that day prevented him from appreciating and foreseeing the risks he ultimately encountered. This failure to foresee the risks was a marked departure from the standard of care expected of a reasonable person in the accused’s circumstances.

[77] Security National did not name any third parties when they filed their statement of defence. It was only after the expiration of the two-year limitation period that Security National brought its initial third party claim. Had Security National brought any of its third party claims within the two-year limitation period, either against the Third Party Defendants or the Proposed Defendants, Erin Townley would have had an opportunity to consider doing so herself, thereby preventing any prejudice to her.

[78] In conclusion, I find that the consequential litigation delays from adding the Proposed Defendants to a third party claim at this late stage pursuant to Rule 29.02(1.2) would adversely impact Ms. Townley’s mental and physical recovery and therefore, results in actual prejudice to her. In addition, I find that Security National’s delay in bringing the motion would prejudice Ms. Townley by foreclosing her ability to recover for damages caused by Mr. Saunders.

Conclusion and Order

[79] Security National’s motion to add the Proposed Defendants Gordon Townley, People on Bikes, and MTO is denied. There will be an Order that:

a. That leave for the Defendant to issue a third party claim as against Gordon Townley, People on Bikes, and/or His Majesty the King be denied; b. That the Defendant is not permitted to amend its Statement of Defence to include a claim as against Gordon Townley, People on Bikes, and/or His Majesty the King; c. That the Defendant is not permitted to amend its Third Party claim to include a claim as against Gordon Townley, People on Bikes, and/or His Majesty the King;

Costs

[80] The Plaintiff and Proposed Defendants are the successful parties on the motion and presumptively entitled to costs. The parties are encouraged to resolve the issue of costs. If unable to, they may file brief written submissions not exceeding two pages exclusive of Bills of Costs. The Plaintiff shall file her submissions by June 10th, and the Proposed Defendants shall file their submissions by June 24th and the Defendant Security National shall file their reply by July 8th. Costs submissions are to be sent to scj.assistants@ontario.ca and to my attention.

Somji J.

Released: May 27, 2024

COURT FILE NO.: CV-19-336 DATE: 2024/05/27 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Erin Townley Plaintiff – and – Robert Saunders, Irene Spike, and Security National Insurance Company Defendants – and – Perth Insurance, added by order pursuant to section 258(14) of the Insurance Act, R.S.O. 1990, c.I.8, as amended Dennis Holden, Courtney Boomhower, and Pancreatic Cancer Canada Foundation Third Parties

REASONS FOR DECISION ON MOTION Somji J Released : May 27, 2024