Gerlitz v. Mawani, 2010 ABQB 249

Court of Queen ’ s Bench of Alberta Citation: Gerlitz v. Mawani, 2010 ABQB 249 Date: 20100427 Docket: 0401 15335 Registry: Calgary Between: Kelsey Gerlitz, Anne Gerlitz and Wayne Gerlitz Plaintiffs - and - Dr. Salim Mawani, Dr. Julian Chew, Dr. Richard Morris, Peter Lougheed Centre and the Calgary Health Region Defendants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice M.C.

Erb _______________________________________________________ [ 1 ] The Applicants seek an Order to amend their pleadings to add the provincial Crown as a party to this medical malpractice claim to facilitate recovery of the cost of medical and hospital services paid by Alberta Health. The Respondents ask for dismissal of the Application on the basis that the limitation period has not only expired, it had already expired when the Crown received notice of the existence of the claim.

The Respondents also say that they will suffer prejudice if the Order is granted. [ 2 ] The Plaintiffs allege that the Defendant doctors failed to diagnose and treat Kelsey Gerlitz for a diabetic condition which led to a stroke with attendant damages and loss. Litigation Event Time Line

[ 3 ] The time line on events and filing dates is not disputed. The Plaintiffs filed an amended statement of claim on October 28, 2004 with respect to medical complaints and treatment commencing March 28, 2003. The Defendant doctors’ statements of defence were filed on December 20, 2004, and a discontinuance of action against the Defendant hospitals was filed on April 17, 2006. The Plaintiffs advised the Crown about their action through its director of third party liability, Alberta Health, in June 2008. A retainer agreement was concluded between counsel for the Plaintiffs and the Crown on March 26, 2009.

The limitation date for bringing a claim on behalf of the Crown for recovery of Alberta Health’s costs and expenses is six months after the Plaintiffs’ limitation period expired, that is October 14, 2006.

The Applicants notified the Respondents of their intention to bring this Application in April 2009 and attended to its actual filing on November 23, 2009. [ 4 ] A pre-trial conference was held on December 10, 2009, and at that time Clark J. granted a certificate of readiness setting a time table for the bringing of this application and allowing the Defendants to conduct examinations for discovery to update damages no later than three months prior to the date set for the trial.

A certificate of readiness and record of pleadings were filed January 25, 2010 and a 19-day trial has been pre-booked commencing January 31, 2011. Positions of the Parties [ 5 ] The Applicants argue that the Crown should be added as a party as permitted by s. 6(3) (

c) of the Limitations Act , R.S.A. 2000, c. L-12 , to facilitate the recovery of the medical and hospital expenses paid. They also submit that the failure to name the provincial Crown as a party to the action was inadvertent and that it was always the Applicants’ intention to have all costs and expenses incurred paid by the Respondents. The evidence in support of that allegation is an affidavit sworn by the Applicants’ counsel’s legal assistant based on information and belief.

The Respondents placed before the Court a copy of the transcript of the assistant’s cross- examination on that affidavit and argued that it discloses no such intention. They are also dismissive of the Applicants’ argument that there is a need to facilitate enforcement of their own judgment on the basis that the Crown, under the Hospitals Act , R.S.A. 2000, c. H- 12 , is entitled to bring its own separate claim.

For that reason the Crown is a “true stranger” to the action and should not be added as a party at this late date. [ 6 ] The prayer for relief in the original pleadings references a claim on behalf of each of the Plaintiffs for “Special damages including medical, hospital, rehabilitation and other expenses in an amount to be quantified at Trial.” The Plaintiffs, in addition to Kelsey Gerlitz, are her parents.

Applicable legislation [ 7 ] The Alberta Rules of Court allow amendments to pleadings with leave: Rule 132: The court may at any stage of the proceedings allow any party to alter or amend his pleadings or other proceedings in such manner and on such terms as may be necessary for the purpose of determining the real question in issue between the parties. [ 8 ] As Macklin J., citing other authorities, noted in his very recent decision in Andritz Ltd. v.

Quality Fabricating and Supply Ltd., 2010 ABQB 101 at para. 43 : The power of a court to amend is a discretionary one and the discretion is to be exercised generously rather than restrictively. The general rule has been that an amendment should be allowed, no matter how careless or late, unless there is prejudice to the other side.

Even that is no obstacle if the prejudice is repaired. [ 9 ] Justice Macklin also set out the rules applicable to amendments to pleadings that add or substitute a party at para. 46: As a general rule, an amendment should always be allowed if it clarifies the issues or claims that are being advanced. Where the relevant limitation period has expired and the amendment requested adds or substitutes a claimant or changes the capacity in which a claimant

sues, then the amendment will be granted unless the court is satisfied that: (

a) it will create prejudice that cannot be ameliorated by costs, consequent amendments, an adjournment, or other measures; (

b) it does not disclose a cause of action and is not relevant to a cause of action; in other words, it is hopeless; (

c) it would have been improper as an original pleading, i.e. no amendment will be allowed if it could have been struck as being vexatious, embarrassing, an abuse of process, etc.; (

d) it is not in proper form, or is insufficiently particularized; (

e) it is made after a limitation has passed and....[the provisions of s. 6 (3) of the Limitations Act were then inserted]. [ 10 ] The Applicants seek to amend the pleadings by adding a claimant so it is s. 6(3) of the Limitations Act which is of particular relevance here. Section 6(3) provides that when a claim is added to a proceeding previously commenced either through a new pleading or an amendment to pleadings, which adds or substitutes a claimant or changes the capacity in which a claimant sues, the defendant is not entitled to immunity from liability, notwithstanding the expiration of the relevant limitation period, provided the following conditions are satisfied: (

a) the added claim must be related to the conduct, transaction or events described in the original pleading in the proceeding, (

b) the defendant must have received, within the limitation period applicable to the added claim plus the time provided by law for the service of process, sufficient knowledge of the added claim that the defendant will not be prejudiced in maintaining a defence to it on the merits, and (

c) the court must be satisfied that the added claim is necessary or desirable to ensure the effective enforcement of the claims originally asserted or intended to be asserted in the proceeding. [ 11 ] Section 6(5) establishes the burden of proof required and states:

(5) Under this section, (

a) the claimant has the burden of proving (

i) that the added claim is related to the conduct, transaction or events described in the original pleading in the proceeding, and (ii) that the requirement of subsection (3)(

c) if in issue, has been satisfied, and (

b) the defendant has the burden of proving that the requirement of subsection 3(

b) or 4(b), if in issue, was not satisfied. [ 12 ] It is not disputed that the proposed amendment is related to the conduct, transaction or events described in the original pleading. However, the Respondents vigorously dispute that there was sufficient knowledge of the added claim within the limitation

period such that they will not be prejudiced in maintaining a defence on the merits, and further dispute that the claim is necessary or desirable to ensure the effective enforcement of the claims originally “asserted or intended to be asserted in the proceeding.” [ 13 ] It is necessary then to assess the evidence in the context of the requirements Macklin J. identified in Andritz . Does the Amendments Prejudice the Defendants? [ 14 ] It is “actual” prejudice which is at issue: Stout Estate v.

Golinowski Estate , 2002 ABCA 49 , 299 A.R. 13. [ 15 ] The Respondents argue that because they were not aware that the Crown was or would be advancing a claim, they did not know the full extent of what they faced in the litigation. While it was always clear that the Plaintiff, Kelsey Gerlitz, had received hospital and medical treatments, the Crown had the option of proceeding with a claim or declining to do so in accordance with the provisions of

Part 5 of the Hospitals Act . [ 16 ] The Applicants say the original pleadings which claim special damages for “medical, hospital and rehabilitation costs” are sufficiently broad to capture the hospital and medical treatments.

Even if they are correct, during their examinations there was no particularization of the claim and it appears to have been treated as the Plaintiffs’ claims for their out-of-pocket expenses. [ 17 ] In any event, I see no evidence of actual prejudice to the Respondents that cannot be “ameliorated by costs, consequent amendments, an adjournment, or other measures.” In fact, examination on damages has been specifically permitted by the Order of the case management justice, up to three months prior to the trial date.

Is the Amendment Relevant to the Cause of Action? [ 18 ] There is no dispute that the claim proposed on behalf of the Provincial Crown as a Plaintiff is directly linked to the costs and expenses incurred in rendering medical and hospital treatment to Kelsey Gerlitz. Further, since only “modest evidence” in required to support an amendment, that requirement is clearly met. Are the Amendments Improper as in Embarrassing? [ 19 ] There is no dispute that the proposed pleading is proper in the manner required.

Are the Amendments Sufficiently Particularized? [ 20 ] The amendment is to add the provincial Crown as a party. The present pleadings reference medical and hospital expenses. Ordinarily, no one has hospital expenses other than the Provincial Crown. This is not a case in which the fact of delivery of the service or even quantification of the service is ordinarily subject to challenge. Entitlement to recovery is addressed in

Part 5 of the Hospitals Act , and verification of the amounts paid is provided by Alberta Health statements based on its records. Is s. 6(3) of the Limitations Act Satisfied? [ 21 ] The Alberta Court of Appeal considered the purpose of the Limitations Act and s. 6(3) in Voong v. Wong , 2004 ABCA 216 (at para. 10 ) and determined that the modernization of such statutes was undertaken with a view to framing them in a manner that “balances the interests of both plaintiff and defendant.” It also adopted the approach of the Supreme Court of Canada in Novak v. Bond , 1999

685 (SCC), [1999] 1 S.C.R. 808 (paras. 64-67) in which the Court observed that the best

interpretation of a limitation statutegives effect to each of the following four objectives: (

i) to define a time at which potential defendants may be free of ancient obligations; (ii) to prevent the bringing of claims where the evidence may have been lost to the passage of time; (iii) to provide an incentive for plaintiffs to bring suits in a timely fashion; and (iv) to account for the plaintiff’s own circumstances, as assessed through a subjective/objective lens, when assessing whether a claimshould be barred by the passage of time. [22] The Alberta Court of Appeal in Stout (para. 100) also found that in applications of this kind a court must evaluate whethereach of the requirements of s. 6 of the Limitations Act is made out in the circumstances of the particular case.

With respect to whether s.6 has been satisfied, I interpret the requirement to mean a weighing of the evidence before the court as well as the pleadings. Is the Added Claim Related under s. 6(3)(a)? [23] The Applicants have the burden of proving that the claim sought to be added is related to the “conduct, transaction or events”described in the original pleading. They submit that the claim for expenses of the Crown is inextricably linked to the medical andhospital treatments.

No one is denying that the treatments were provided to Kelsey Gerlitz, and no one is disputing that the Crown paidfor those treatments. [24] The Respondents say that the Crown is in fact a “true stranger” to the litigation, in the same way as the plaintiff was inVoong, a case in which an application for an amendment post- limitation period was denied. In that case, there were multiple individualsinvolved in a motor vehicle accident. Ms. Voong initially decided not to proceed with a claim but then changed her mind. Counselinadvertently failed to file her claim within the limitation period.

She applied to have her injury claim added to the existing claim of theother injured parties. The court found that she was a “true stranger” to the lawsuit because her injuries were different and distinct from,and bore no relationship to, the injuries allegedly suffered by the named plaintiff. [25] The Respondents further argue that the Crown has the right, accorded by

Part 5 of the Hospitals Act, to proceed on its ownbehalf with an independent claim or alternatively, not to make a claim at all for cost efficiency or other reasons. The Crown, however,also has the right to proceed together with the Plaintiffs by entering into a retainer agreement with the Plaintiffs’ counsel for thatpurpose.

Its costs are directly related to the treatment claimed to have occurred and referred to as simply “medical and hospital” expensesin the original pleading. [26] I find that the Applicants have established that the claims are related to the “conduct, transaction or events described in theoriginal pleading in the proceeding.” Did the Defendants have Sufficient Knowledge of the Crown’s Claim under s. 6(3)(b)? [27] The question here is whether the Respondents had sufficient knowledge of the proposed added claim within the limitationperiod to avoid being prejudiced in maintaining a defence.

The burden of proof is on the Respondents.

[ 28 ] The Respondents argue that since the Crown itself did not have knowledge that it even had a right to a claim having not been apprised of this until after the limitation period had expired, the Respondents had no way of knowing about the “added claim.” The Respondents refer to the pleadings themselves and the subsequent examinations for discovery to bolster their position.

The only reference to hospital and medical expenses in the pleadings appears in the claim for “Special damages including medical, hospital, rehabilitation and other expenses in an amount to be quantified at Trial.” All three Plaintiffs make the same claim. No particulars of the claim have been provided other than references to out-of-pocket expenses for medical costs paid by the Plaintiffs themselves. There is no reference in the pleadings or the examinations for discovery of the Hospitals Act . [ 29 ] In cross-examination on their very similar affidavits, Dr. Mawani, Dr. Chew and Dr.

Morris all deposed that they were not aware that the Crown could claim or was claiming recovery for its medical and hospital expenses paid on behalf of Kelsey Gerlitz. Those costs are approximately $265,000. Dr. Chew gave evidence that he thought the reference to medical and hospital expenses in the Plaintiffs’ pleadings referred to their own out-of-pocket expenses. Dr. Morris gave evidence that when Ms.

Gerlitz testified at examinations for discovery, she was asked to provide information about who paid for “medications” and whether there was “any sort of subrogated claim.” Her response did not indicate that she was claiming hospital expenses paid for by the Provincial Crown or the cost of hospital/ health services which is not surprising since she was only asked about “medications.” Dr.

Morris testified that he first became aware of this claim when it was raised by his counsel in January 2010 and that his counsel was first apprised of the claim on April 21, 2009 in correspondence from Plaintiffs’ counsel. [ 30 ] The language employed in s. 6(3)(

b) prescribes the kind of knowledge required as “sufficient knowledge of the added claim that the defendant will not be prejudiced in maintaining a defence to it on the merits.” [ 31 ] The knowledge required is obviously of a kind that would permit a party to mount its defence without facing the concerns the Supreme Court of Canada identified in Novak .

Surely it is the kind of knowledge that would ensure that a party defending would not be prejudiced. [ 32 ] The Respondents knew from the beginning that Kelsey Gerlitz had incurred medical and hospital costs and that certain of those costs were paid in the ordinary course by Alberta Health. The amount of and entitlement to the provincial Crown’s claim was substantiated through production of Alberta Health’s institutional records. The only unknown aspect of the claim is the final amount, which would ordinarily be updated close to the trial date where ongoing treatment is indicated.

This would be the same situation had the claim been made prior to the expiration of the limitation period. [ 33 ] The Respondents only lacked knowledge that they would be expected to pay for Ms. Gerlitz’s hospital/health care. While they clearly should have been notified of this earlier, they have been notified of the added claim well before the date of trial. But for the Applicants’ inadvertence or mistake, the Respondents would normally face a claim for the costs of hospital/health care provided by Alberta Health.

Late notification of the claim will not prejudice the Respondents in maintaining a defence to the claim on the merits. The Respondents seek immunity from liability for a claim that they know they would ordinarily face. [ 34 ] I find that the Respondents have not proved lack of knowledge of a kind that would prejudice their ability to defend this action on its merits. Is the added claim necessary or desirable to ensure the effective enforcement of the claims originally asserted or intended to be asserted under s. 6(3)(c)? [ 35 ] Section 6(3)(

c) contains mandatory and specific language and requires a determination of what claims were asserted or intended to be asserted. It states that: (

c) the court must be satisfied that the added claim is necessary or desirable to ensure the effective enforcement of the claims originally asserted or intended to be asserted in the proceeding. [Emphasis added] [ 36 ] As a result, evidence of intention is important. [ 37 ] The Applicants argue that this situation is on all fours with an unreported decision of this Court, Langefeldt v. Dunham (14 September 2005), Calgary 0001-20146, wherein Justice Bensler granted an application to add the Provincial Crown as a plaintiff in a

medical negligence action where the plaintiff claimed very similar injuries and losses to those claimed by Kelsey. Gerlitz. Justice Bensler found that s. 6(3) (

c) of the Limitations Act had been satisfied. [ 38 ] While the facts in Langefelt bear striking similarities to those in this case, I disagree with the Applicants that it is “on all fours.” The difference is in the evidence. In Langefelt , the plaintiff personally deposed the following in her affidavit: My intention in filing the attached statement of claim was to claim for compensation of all costs and expenses arising from my medical treatment and hospitalization, whether those costs were ultimately recoverable by myself or other parties who incurred these expenses on my behalf. ...

I am also advised [by her counsel] that if an amendment of the Statement of Claim is not allowed, the Minister may have a claim against me for medical treatment and hospitalization costs arising from my Stroke. It has always been my intention that Dr. Dunham be required to pay those costs, and certainly not myself. [ 39 ] In Langefeldt , there was also evidence that if the Crown could not recover its costs, responsibility for them would or may be transferred to the plaintiff. [ 40 ] No such evidence has been provided here.

Counsel relies on the claim itself and a single affidavit of counsel’s legal assistant who was unable to address the Plaintiffs’ intention. Why the Applicants did not file their own affidavits providing evidence of their intentions was not explained. [ 41 ] In Voong , the Court of Appeal found that “something more than an uncommunicated intent to commence proceedings was required”. [ 42 ] Whether the Applicants can effectively enforce the claims originally “asserted or intended to be asserted in the pleading.”requires an examination of the intention of the Applicants.

Here, there is no evidence of their intention other than an oblique reference in the pleadings which I find to be insufficient for the purposes of this s. 6(3) (c). [ 43 ] This Court is not satisfied that the Applicants, at any time prior to the expiration of the limitation period or for some years thereafter, turned their minds to recovery of hospital/health care expenses paid by the provincial Crown. I have no evidence that they did so. There is a brief reference to medical, hospital and rehabilitation costs as special damages in the pleadings.

However, the examinations for discovery indicate that this claim was treated as a claim for the personal expenses of the Applicants. This Court is asked to make a quantum leap on behalf of the Applicants and find that they had an intention to make a claim for the hospital care paid for by Provincial Crown when there is no evidence of that intention.

This does not accord with the “balancing of interests” approach taken by the Supreme Court of Canada in Novak and endorsed by the Alberta Court of Appeal in Voong . [ 44 ] On the basis of what has been placed before this Court, I am not satisfied that the added claim is necessary or desirable to ensure the effective enforcement of the claims originally asserted or intended to be asserted in the proceeding under s. 6(3) (

c) of the Limitations Act . [ 45 ] Because of the evidentiary issues, it is not necessary to consider the Defendants’ argument that the provincial Crown is a “true stranger” to the action. Determination and Costs

[ 46 ] I find that the application to further amend the pleadings to include Alberta Health’s expenses paid for by the provincial Crown is dismissed. [ 47 ] If the parties cannot agree on costs, they may speak to them within a reasonable period of time. Heard on the 30 th day of March, 2010. Dated at the City of Calgary, Alberta this 27 th day of April, 2010. M.C. Erb J.C.Q.B.A. Appearances: R. W. Armstrong, May Jensen Shawa Solomon LLP for the Plaintiffs Megan McMahon, Gowling LaFleur Henderson LLP for the Defendants