Justin Gushue Plaintiff And: South Coast Insurance AGENCY LIMITED Defendant, 2022 NLSC 115

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Gushue v. South Coast Insurance Agency Limited , 2022 NLSC 115 Date : July 13, 2022 Docket : 201904G0055 Between: Justin Gushue Plaintiff And: South Coast Insurance AGENCY LIMITED Defendant Before: Justice Peter N. Browne Place of Hearing: Corner Brook, Newfoundland and Labrador Date of Hearing: June 21, 2022

Summary: The Plaintiff made an interlocutory application to amend his Statement of Claim following a previous order dismissing the Defendant’s application pursuant to Rules 14.24 and 17A. The Defendant opposed the application stating it was an entirely new cause of action which was statute-barred and comprised of insufficient facts so as to allow the Court to exercise its discretion under Rule 15.02. The Court permitted the Plaintiff’s application. In exercising its discretion to do so, it considered the relevant jurisprudence from this jurisdiction regarding the factors to be considered.

It also granted the Defendant costs on a Column 5 basis for the delay caused by the Plaintiff’s inaction earlier in the litigation process. Appearances:

Robert M. Matthews, Q.C. Appearing on behalf of Justin Gushue Gregory A. C. Moores Appearing on behalf of South Coast Insurance Agency Limited Authorities Cited: CASES CONSIDERED: Gushue v. South Coast Insurance Agency Limited, 2021 NLSC 124; Butler v. Kloster Cruise Ltd. (1992), (NL SC), 98 Nfld. & P.E.I.R. 138, 311 A.P.R. 138 (Nfld. S.C. (T.D.)); Petten v. E.Y.E. Marine Consultants (1994), (NL SC), 120 Nfld. & P.E.I.R. 313, 373 A.P.R. 313 (Nfld. S.C. (T.D.)); Hollett v. St. John's (City), 2007 NLTD 210;Kavanagh v. Newfoundland (Minister of Education), 2000 NFCA 2; Snow (Guardian ad litem of) v.

Kashyap (1995), (NL CA), 125 Nfld. & P.E.I.R. 182, 433 A.P.R. 321 (Nfld. S.C. (App. Div.)); Baumhour v. Williams, (NS CA),[1977] 22 N.S.R. (2d) 564, 2 A.C.W.S. (C.A.); Harness Horse Owners Assn. of Halifax (County) v. Sussex Racetracks Inc. (1989), (NS CA), 94 N.S.R. (2d) 449, 247 A.P.R. 449 (S.C.(App. Div.)); Hunt v. Carey Canada Inc., (SCC),[1990] 2 S.C.R. 959; Dempsey v. Envision Credit Union, 2006 BCSC 750; Lundrigan v. Short, 2000 CarswellNfld 242, N.J. No. 239(S.C. (T.D.)); Lacroix v. Macdonald and Hoffe Appraisals Ltd., 2015 NLTD(G) 85; Furlong Estate v.

Non-Members Underwriters,Lloyd’s London (1997), (NL SC), 153 Nfld. & P.E.I.R 245, 475 A.P.R. 245 ( Nfld. S.C. (T.D.)); and Marsh v.Imperial Oil, 2001 NFCA 32 STATUTES CONSIDERED: Limitations Act, S.N.L. 1995, c. L-16.1 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch.

D REASONS FOR JUDGMENT Browne, J.: INTRODUCTION [1] The Plaintiff, Justin Gushue, makes application to amend his Statement of Claim following the decision of Murphy, J.dismissing the application of the Defendant, South Coast Insurance Agency Limited (“South Coast”) pursuant to Rule 17A and Rule14.24 of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D (see Gushue v. South Coast Insurance Agency Limited, 2021NLSC 124). [2] Pursuant to Murphy, J.’s ruling, Mr. Gushue was permitted the opportunity to apply for leave to amend the existing Statementof Claim.

He has done so pursuant to Rule 15.02 of the Rules of the Supreme Court, 1986. [3] In response, South Coast argues the application must be dismissed because: a. Mr. Gushue now seeks to substitute his original claim for breach of contract for that of a claim in negligence. His applicationoccurs more than two years from the date of his right to do so; therefore, a claim in negligence would be statute-barred; b. Mr. Gushue has not met the requirements set forth in subsection 11(3) and (4) of the Limitations Act, S.N.L. 1995, c.

L-16.1 (“theAct”) regarding the amending of pleadings following the expiration of the requisite time period under subsection 5(b); and c. The Court should not exercise its discretion under Rule 15.02 to allow the amendment as Mr. Gushue has not provided a sufficientfactual basis to permit it to do so. BACKGROUND [4] The background of this matter arises from a fire on May 5, 2018 in which Mr. Gushue’s house and contents were completelydestroyed. The day previous, on May 4, 2018, Mr. Gushue alleges he placed what he believed was a homeowner’s insurance policy onthe property.

He made a subsequent claim for his losses but was denied coverage. [5] On February 20, 2019, he initiated legal proceedings against South Coast for denial of coverage under the policy. In itsDefence filed June 7, 2019, South Coast alleged that it was an insurance broker not an insurer and, therefore, it did not owe Mr. Gushue alegal duty to reimburse him for his losses.

[ 6 ] On August 11, 2021, Murphy, J. heard South Coast’s application pursuant to Rules 14(24)(1)(

b) and 17A. He dismissed both applications and provided Mr. Gushue’s counsel with a 30 day window to apply to amend the original Statement of Claim. [ 7 ] In his written reasons, Murphy, J. noted that during oral argument, Mr. Gushue’s legal counsel acknowledged that South Coast was not an insurer and that it did not have a policy of insurance with Mr. Gushue. Nevertheless, Murphy, J. found that there may be a triable issue as to whether South Coast breached a duty owed to Mr. Gushue that had yet to be pleaded. [ 8 ] In my view, it is on this basis he granted Mr. Gushue leave to amend his Statement of Claim.

In so doing, however, he ordered costs against Mr. Gushue on a Column 5 basis for the delay caused by the failure to address this discrepancy much earlier in the legal process and, thus, avoiding the necessity of South Coast’s interlocutory application. [ 9 ] For the reasons that follow, I will allow the application of Mr. Gushue to amend his Statement of Claim in the manner provided in the draft attached to the interlocutory application. [ 10 ] In so doing, I, like Murphy. J, recognize the path to this point could have been very easily avoided had Mr. Gushue’s legal counsel availed of Rule 15.02(1)(

a) and made the proposed amendments not later than 20 days following the close of pleadings. His failure to do so has led to two unnecessary interlocutory applications. Accordingly, I will also order that South Coast is entitled to it costs of this application on a Column 5 basis in any event of the result. THE LAW [ 11 ] Mr. Gushue’s application to amend his Statement of Claim raises the following Rules of Court and subsequent jurisprudence interpreting them. Rules of the Supreme Court, 1986 Adding or amending a party to a proceeding 15.01.

(1) On such terms as it thinks just and in accordance with Rule 7, the Court may at any time, on application or on its own motion, grant an amendment which: (

a) adds, substitutes or corrects the name of a party to a proceeding; (

b) alters the capacity of a party to a proceeding.

(2) A proceeding may be discontinued against a party in accordance with Rule 19.

(3) Notwithstanding the expiry of a relevant period of limitation, the Court may allow an amendment under paragraph (1) to rectify a mistake even if the effect of the amendment will be to add a new party if the Court is satisfied that the mistake was genuine and not misleading or such as to cause any reasonable doubt as to the identity of the party intending to bring or oppose the proceeding. Amending the text of pleadings filed with the Court 15.02.

(1) If an amendment does not include the addition, deletion, substitution or correction of the name of a party to a proceeding, a party may amend a pleading filed by that party other than an order: (

a) once without the leave of the Court if the amendment is made not later than 20 days from the date the pleadings are deemed to be closed or 5 days before the hearing under an originating document; (

b) at any time with the written consent of all of the parties filed with the Court; or (

c) at any time with leave of the Court on such terms as it thinks just.

(2) The Court may allow an amendment notwithstanding the effect of the amendment will be to add or substitute a new cause of action, if the new cause of action arises out of the same or substantially the same facts as the original cause of action. The Act 11.

(1) Notwithstanding

section 17, where an action to which this or another Act applies has been commenced, the lapse of time limited for bringing an action is no bar to (

a) a counterclaim; (

b) a third party claim; (

c) a claim by way of set-off; or (

d) the addition of a new party under the Rules of the Supreme Court, 1986

respecting a claim relating to or connected with the subject matter of the original action. (2) Subsection (1) does not operate so as to interfere with a judicial discretion to refuse relief on grounds unrelated to the lapse of timefor bringing an action.

(3) Where an application for an amendment to an action to which this or another Act applies is made after the expiration of thelimitation period for that action, the court may allow that amendment (

a) to change the pleading or originating process; or (

b) to substitute or change the plaintiff or defendant, provided that (

c) that amendment involves a non-prejudicial error and that it arises out of the facts set out in the original pleadings.

(4) The court may allow an amendment under subsection (3) on terms as to costs that the court considers just, notwithstanding thatbetween the issuance of the originating documents and the application for amendment, a new cause of action disclosed by theamendment would have been barred by a lapse of time. Limitation period of 2 years 5. Following the expiration of 2 years after the date on which the right to do so arose, a person shall not bring an action (

a) for damages in respect of injury to a person or property, including economic loss arising from the injury whether based on contract,tort or statutory duty; (

b) for damages in respect of injury to person or property including economic loss arising from negligent misrepresentation andprofessional negligence whether based on contract, tort or statutory duty; (

c) for trespass to property not included in paragraph (a); (

d) for defamation other than defamation referred to in

section 17 of the Defamation Act ; (

e) for false imprisonment; (

f) for malicious prosecution; (

g) for conspiracy to commit a wrong referred to in paragraphs (

a) to (e); (

h) which is a civil action, to recover a fine or other penalty and to recover a fine or penalty imposed by a court or law; (

i) under the Fatal Accidents Act; or (

j) under the Privacy Act . ANALYSIS [12] At the core of the submission provided in South Coast’s Memorandum of Fact and Law is that the amendments proposed byMr. Gushue effectively replace the original pleadings. They argue Mr. Gushue is relying on new facts and asserting a new cause ofaction based on those facts. It is for these reasons the Court should not exercise its discretion to allow the amendments. [13] During oral submissions, counsel for South Coast focused primarily on Rule 15 and the exercise of my discretion to allow theamendments in the absence of a sufficient factual framework. However, in its Memorandum of Fact and Law, counsel focused more onthe intersection of Rule 15 with

section 11 of the Act. Nevertheless, counsel did acknowledge this issue was still in play as particularizedin their written argument. Accordingly, I will deal with both submissions. Factors to be considered when exercising discretion under Rule 15.02 [14] Pursuant to Rule 15.02 of the Rules of the Supreme Court, 1986, a party may amend the body of a pleading at any time withleave of the Court on such terms as the Court thinks fit. [15] The law in relation to this issue has been thoroughly canvased in three cases of this Court: Butler v.

Kloster Cruise Ltd. (1992), (NL SC), 98 Nfld. & P.E.I.R. 138, 311 A.P.R. 138 (Nfld. S.C. (T.D.)); Petten v. E.Y.E. Marine Consultants (1994), (NL SC), 120 Nfld. & P.E.I.R. 313, 373 A.P.R. 313 (Nfld. S.C. (T.D.)); and Hollett v. St. John's (City), 2007 NLTD210. [16] Russell, J. in Butler noted four factors that must be considered when determining whether to exercise judicial discretion toallow an amendment: a. It must not cause injustice to the other side;

b. It must raise a triable issue; c. It must not be embarrassing; and d. It must be pleaded with particularity. [17] This statement of the law has also been approved by the Court of Appeal (see Kavanagh v. Newfoundland (Minister ofEducation), 2000 NFCA 2, at para. 22.). [18] Underscoring these factors is the primary consideration that a court in deciding whether to grant an amendment must ensurethe proceedings are structured so as to allow the real issues between the parties to be decided: Snow (Guardian ad litem of) v. Kashyap(1995), (NL CA), 125 Nfld. & P.E.I.R. 182, 433 A.P.R. 321 (Nfld. S.C. (App.

Div.)), at para. 87, per Mahoney J.A. [19] Rule 15.03(1) also contemplates that sometimes a complete redrafting is appropriate: 15.03(1) Where any amendment would make a document difficult or inconvenient to read, a new document, as amended, and bearing thedate of the original document, shall be filed, and served upon all the parties. [20] Finally, it is important to note that there are no limitations contained in the wording of Rule 15 that restrict piecemeal orwholesale redrafting or, for that matter, the number of occasions a pleading can be amended. [21] I will now apply the factors outlined by Russell, J. in Butler to the facts of the present application. a.

It must not cause injustice to the other side [22] The proceeding was initiated in February 2019 with the Defence filed in June 2019. Since that time the litigation has notadvanced that far, save and except for the interlocutory application before Murphy, J. and present one. [23] The entire focus of the parties since November 2020 has been spent almost entirely on the state of the pleadings.

South Coasthas not demonstrated that any relevant documents it had in its possession have been destroyed or that there is any change in theavailability of information or witnesses. [24] The law with respect to the first principle is that leave to amend will be granted when the applicant is acting bona fide and noinjury is done to the other party which cannot be compensated by costs or otherwise (Butler at para. 16 citing Baumhour v.

Williams, (NS CA), [1977] 22 N.S.R. (2d) 564, 2 A.C.W.S. (C.A.); and Harness Horse Owners Assn. of Halifax (County) v.Sussex Racetracks Inc. (1989), (NS CA), 94 N.S.R. (2d) 449, 247 A.P.R. 449 (S.C.(App. Div.))). [25] In the present case, Mr. Gushue’s counsel should have acted immediately to amend the Statement of Claim following receipt ofthe Defence so as to avoid the necessity of South Coast having to bring an application under Rule 14.24 and Rule 17. During the hearingbefore Murphy, J., Mr. Gushue’s counsel acknowledged this and as a result costs on a Column 5 basis were awarded against Mr.

Gushue. [26] I find that Mr. Gushue is acting on a bona fide basis in making the current application following the ruling of Murphy, J. andany injury to South Coast caused by the delay can be addressed with a costs order. b. It must raise a triable issue [27] In Petten, at para. 98, Green J., in referencing the triable issue principle, stated that the party seeking an amendment must passthe threshold requirement of being able to show that the amendment discloses a reasonable cause of action.

He cautioned, however, thatat this stage the Court must not try the merits of the claim. [28] The threshold test is low being the same as that which is applied when an application is taken under Rule 14.24 to strike out apleading because no cause of action is disclosed. The Court referred to the test as set out by the Supreme Court of Canada in Hunt v.Carey Canada Inc., (SCC), [1990] 2 S.C.R. 959 which has become known as the "plain and obvious" test.

Is it plain andobvious that the proposed pleading discloses no reasonable claim and that it is certain to fail? [29] In the written reasons that accompanied Murphy, J.’s ruling he stated that while the original pleadings did not raise a genuineissue for trial, the facts, as stated, did raise a triable issue in relation to whether South Coast breached a duty owed to Mr. Gushue “whichhas not been pleaded” (see paras. 12 and 13 of Gushue v.

South Coast). [30] I agree with the conclusion of my colleague, Murphy, J. [31] The current iteration of the proposed Amended Statement of Claim alleges that South Coast is an insurance broker and Mr.Gushue was a customer who attended their offices on May 4, 2018 after being directed to do so by one of its employees during atelephone conversation on May 1, 2018. [32] It further alleges that when Mr. Gushue did so he signed what he understood was a homeowner’s policy and relied upon SouthCoast to make the appropriate policy change. A fire occurred later that night destroying Mr. Gushue’s home and contents.

He wassubsequently denied coverage by the insurer for the loss of his household contents and associated living expenses and now alleges SouthCoast was negligent in failing to make the policy change on a timely basis. [33] It is not plain and obvious that the proposed Amended Statement of Claim does not disclose a reasonable cause of action and isdoomed to fail. Whether Mr. Gushue can establish that South Coast’s failure to put the homeowner’s policy in place sufficiently in timeprior to the fire is a matter best determined at a trial. c. It must not be embarrassing

[34] Pleadings have been found to be embarrassing if they "fail to state a real issue between the parties in an intelligible way"(Dempsey v. Envision Credit Union, 2006 BCSC 750, at para. 86; see also Lundrigan v. Short, 2000 CarswellNfld 242, N.J.

No. 239(S.C. (T.D.)), per Russell, J., at para. 4). [35] Other cases have found that a proposed amendment would be embarrassing where it "brings forward a claim that the plaintiff isnot entitled to make use of", "leaves out particular facts which would give the defendant the knowledge of what the basis of the plaintiff'scase is and on which the plaintiff will have to rely at trial in order to make out a case", or "does not comply with the minimumrequirements of the rules of pleading" in some way (Petten, at para. 97). In Lacroix v.

Macdonald and Hoffe Appraisals Ltd., 2015NLTD(G) 85, at para. 25, the Court stated that pleadings will be embarrassing where the opposing party will be left to speculate as to thelegal and factual basis for the claim. [36] As described in my analysis under the second factor, I conclude that the proposed amendments to the Statement of Claim meetthe threshold of stating the real issue between the parties in an intelligible way. [37] In other words, Mr. Gushue’s claim is based on negligence with the factual matrix being as follows: a.

South Coast owned him a duty of care as a customer; b. they breached their duty of care by not putting a homeowner’s policy in place in time before his house fire; c. the failure to put the policy in place caused him to lose insurance coverage for his household contents and associated livingexpenses; and d. he incurred financial losses in having to cover his own living expenses and the replacement costs of his household contents. d. It must be pleaded with particularity [38] I find that the proposed amendments have been pleaded with sufficient particularity.

Should South Coast disagree, they havethe option of issuing a Demand for Particulars. Further, I am prepared to order that South Coast shall have leave to file an amendedDefence if they so choose. The intersection of Rule 15.02 with subsections 11(3)(

c) and (4) of the Act [39] In support of this aspect of their argument, South Coast relies on the decision of Orsborn, J. in Furlong Estate v. Non-MembersUnderwriters, Lloyd’s London (1997), (NL SC), 153 Nfld. & P.E.I.R 245, 475 A.P.R. 245 (Nfld. S.C. (T.D.)) atparas. 20 - 24. [40] In Furlong Estate, the plaintiffs originally made a claim under a policy of insurance on behalf of the estate of the deceased. Thedefendant rejected the proof of loss under the specific insurance policy.

In response, the plaintiffs sought leave to amend the pleadingsby focusing on the adequacy of the coverage and the agent’s negligence in determining the appropriate level of coverage. [41] At paras. 20 - 24, Orsborn, J. refused to allow the amendment to add the broker/agent on the basis it was a new cause of actionthat went well beyond the facts of the original pleadings by asserting new facts and a new cause of action. In so doing however, he leftopen the question of the scope of subsections 11(3)(

c) and (4): 22 Subsections 11(3) and (4) of the new Limitations Act are somewhat confusing. Subs. (3) provides that an amendment may be allowed"to change the pleading" after the expiry of the limitation period, provided that the amendment involves "a non-prejudicial error arisingfrom the facts set out in the original pleadings".

Subs. (4) states that an amendment under subs. (3) may be allowed notwithstanding that"a new cause of action disclosed by the amendment would have been barred by a lapse of time". 23 Subsection (3) appears to allow only amendments arising out of "non-prejudicial" errors, while subs. (4) contemplates new causes ofaction being permitted under subs. (3), even though statute-barred. 24 In any event, it is not necessary to determine the scope of these provisions.

The amended pleadings here go well beyond the facts inthe original pleadings; completely new facts, and a new cause of action based on those facts, are asserted. [42] Subsequently in Marsh v. Imperial Oil, 2001 NFCA 32, our Court of Appeal distinguished the decision in Furlong Estate. Inwriting for the majority, Wells, C.J.N. made several observations regarding the intersection of Rule 15.02 with subsection 11(3)(

c) of theAct, which were as follows: a. An applications judge hearing an application to amend may allow an amendment under subsection (3)(

c) notwithstanding thatbetween the issuance of the originating documents and the application for amendment, a new cause of action disclosed by theamendment would have been barred by a lapse of time (see paras. 30 - 32); b.

Section 11 of the Act simply establishes a clear limitations policy with respect to commencing peripheral but related procedures. Itallows amendments to pleadings in an existing action where limitations periods in relation to the factual matters involved in the actionhave expired by the time the peripheral procedure or amendment is sought. Such amendments may be allowed provided undersubsection (3)(c) “that amendment involves a non-prejudicial error arising from the facts set out in the original proceedings" (see para.34); and c. Citing Petten, Wells, C.J.N. interpreted this phrase to mean those events and interrelated circumstances that are part of the

relationship between the parties in respect of which the original statement of claim was issued. In other words, as long as they derive from “the same factual context” or “the same events that are, in a general sense already before the court” (see paras. 37 and 43); [ 43 ] At paragraphs 55 and 56, he concluded: 55 The whole of s. 11 deals with the lapse of time not being a bar to the taking of the procedural steps, including amendments to pleadings, identified in the various subsections.

Yet, the applications judge concluded that, even though the amendment sought by the appellant is otherwise proper under the Rules and does not result in an injustice, nevertheless, because of the lapse of time, the amendment would result in a loss of a limitations defence, which would cause such substantial prejudice to the respondents as to preclude his allowing the amendment.

That produces a result which is diametrically the opposite of the result that the legislature intended to flow from s. 11 . 56 As noted above, the appearance of a loss of the limitations defence in respect of the action, arising from the proposed amendment, cannot possibly be a basis for finding substantial prejudice justifying refusal of leave to amend. . . . [ 44 ] Given the comments of Wells, C.J.N. in the above cited paragraphs, I am obligated to determine, using Green, J.’s analysis in Petten , whether the proposed amendments fall within the meaning of “a non-prejudicial error” under subsection 11(3) (

c) of the Act . [ 45 ] I find that the events pleaded in the proposed Amended Statement of Claim fundamentally derive from the same factual context that were pleaded in the original Statement of Claim. The factual matrix remains the same; however, what has changed is: a. the legal capacity of South Coast (i.e. an insurer to an insurance broker; and b. the claim for breach of contract to a claim in negligence. [ 46 ] It is appropriate, therefore, for this Court to grant leave to Mr. Gushue to amend his Statement of Claim in the manner proposed in his application.

The granting of such leave does not predetermine the validity or applicability of any limitations defence South Coast may wish to plead in response to the Amended Statement of Claim should they determine there is a valid basis for doing so. [ 47 ] That, however, will be a question for a trial judge or even a judge hearing a

summary trial application under Rule 17A after having heard all of the evidence that bears on the issue. The mere fact that the proposed amendment is being requested after the expiration of the limitation period for the same occurrence or series of events pleaded in the original Statement of Claim is not a valid basis for refusing the application to amend under Rule 15.02 . Costs [ 48 ] As noted previously by my colleague, Murphy, J., the current series of interlocutory applications could have been avoided had Mr.

Gushue’s counsel acted sooner in making an application to amend the original Statement of Claim. [ 49 ] This failure to act should not prevent Mr. Gushue from making the necessary amendments to the pleadings which ensure the necessary issues are before this Court to be decided. Unfortunately, the collateral consequences are that I am ordering costs on a Column 5 basis against him as a result. DISPOSITION [ 50 ] Mr. Gushue’s application for leave to amend the Statement of Claim is granted. [ 51 ] South Coast is granted leave to amend its Defence should it feel necessary to do so.

The issue of South Coast’s defence under the Act remains a substantial triable issue. _____________________________ Peter N. Browne Justice