2015 MBCA 108, 2015 MBCA 108

Citation: Moskal v Costco Wholesale Corporation, Date: 20151130 2015 MBCA 108 Docket: AI14-30-08305 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Barbara M. Hamilton Mr. Justice Marc M. Monnin Madam Justice Diana M. Cameron BETWEEN : ) M. G. Finlayson JOSEPH MOSKAL ) for the Appellant ) (Plaintiff) Respondent ) A. L. Guerra and ) D. C.

Mazur - and - ) for the Respondent ) COSTCO WHOLESALE CORPORATION ) Appeal heard: ) April 28, 2015 (Defendant) Appellant ) ) Decision pronounced: ) November 30, 2015 MONNIN JA [ 1 ] Costco Wholesale Corporation, the defendant (Costco), appeals from the dismissal of its motion to amend its statement of defence to raise a defence under section 5(1) of The Occupiers’ Liability Act , CCSM c O8 (the Act ). For the reasons that follow, the appeal should be dismissed. [ 2 ] On February 4, 2011, Joseph Moskal, the plaintiff (Moskal), was injured in a slip and fall in the parking lot of Costco.

He filed his statement of claim on August 15, 2011. At its core, the claim submits that Costco, as occupier, had a duty of care to keep its parking lot free from ice and snow and failed to take all reasonable precautions to that end. [ 3 ] Soon after Costco filed its statement of defence which pled, in part, that it had “implemented a reasonable maintenance regime with respect to its parking lot”. It also pled and relied upon the provisions of the Act , but did not specify which sections. [ 4 ] In the ensuing months, the parties exchanged documents.

Those documents set out that Costco had retained a third- party contractor, Green Drop Lawns Ltd. (Green Drop), to clear the parking lot on the date of the accident and to apply an ice-treating chemical.

At examinations for discovery held in April 2012, the role of Green Drop as the contractor hired to clean the parking lot was discussed. [ 5 ] In the months after the examination for discovery, Moskal and his counsel, after discussions with individuals in the snow-clearing industry, found and retained an expert who provided them with an opinion to the effect that Green Drop had applied the wrong chemical. [ 6 ] By the time the expert’s report was obtained by Moskal’s counsel in October 2013, the limitation period to bring an action against Green Drop had expired.

Moskal therefore brought an application under subsections 14(1) and 14(6) of The Limitation of Actions Act , CCSM c L150 (the LA Act ), to continue the action against Green Drop and to amend its pleading accordingly. This application was filed on December 13, 2013. [ 7 ] Costco, a few months later and before the hearing of the application, filed a notice of motion to amend its statement of defence to allow it to plead and rely upon section 5(1) of the Act . Section 5(1) provides as follows:

Damage caused by independent contractor 5(1) Notwithstanding subsection 3(1), where damage is caused to persons or property on premises solely by the negligence of an independent contractor engaged by the occupier of the premises, the occupier is not on that account liable under this Act if, in all the circumstances, (

a) the occupier exercised reasonable care in the selection and supervision of the independent contractor; and (

b) it was reasonable that the work that the independent contractor was engaged to do should have been done. [ 8 ] It further sought to amend its statement of defence to set out the facts associated with pleading that defence. It purported to amend its pleadings under Manitoba, Court of Queen’s Bench Rules , Man Reg 553/88, r 26.01 and r 26.02(d), which provide as follows: General power of court 26.01 On motion at any stage of an action the court may grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. When amendments may be made 26.02 Generally, a party may amend a pleading, . . . (

d) with leave of the court. [ 9 ] Both motions were heard by the same motion judge at the same time. Green Drop opposed the application to add it as defendant. Costco took no position on that application. [ 10 ] In a short endorsement, the motion judge dismissed Moskal’s application to add Green Drop as a defendant on the basis that Moskal knew by April 24, 2012, at the examination for discovery, that Green Drop had applied a chemical to Costco’s parking lot. According to the motion judge, that was sufficient information for him to allege responsibility on the part of Green Drop for his injury.

Moskal had not proceeded with the required due diligence and the application was dismissed. No appeal has been taken from that decision. [ 11 ] As to Costco’s motion to amend its pleadings to raise a section 5(1) defence, the motion judge, erroneously characterizing it as a motion to add Green Drop as a third party, dismissed it as well.

Relying upon the decision of Goodman v East St Paul (Rural Municipality) , 2011 MBQB 111 , 265 ManR (2d) 115 , he concluded that Moskal, not being able to add Green Drop as a third party because of a limitation issue, was prejudiced in a manner that could not be overcome by an award of costs or adjournment. It is that decision which is presently before this Court. Issue [ 12 ] Costco correctly set out the issue as being whether the amendment sought by it would cause prejudice to Moskal.

A subset of that issue is whether the ratio of the Goodman decision or any other principle or factor bar Costco’s amendment to its statement of defence to plead section 5(1) of the Act . Standard of Review [ 13 ] Costco’s position is that the applicable standard of review is correctness, relying upon Winnipeg (City) v Columbus Centennial Centre Inc et al , 2013 MBCA 2 , 288 ManR (2d) 133 . That case, also dealing with amendment of pleadings and limitation issues, does not support Costco’s position.

Beard JA, for the Court, stated as follows (at para 21): This ground of appeal involves the motion judge’s conclusion regarding the legal effect of the facts, in other words, the legal effect of the

amendments being proposed by the City, so it appears to be a question of mixed fact and law, which would ordinarily be determined onthe standard of palpable and overriding error. However, I have concluded, for the reasons that follow, that this ground of appeal raisesan extricable question of law and is, therefore, to be determined on the standard of correctness. [14] In my view, we are not dealing here with a question of law, but the motion judge’s discretionary view of whether therewould be prejudice to Moskal by allowing Costco to amend its pleadings.

A discretionary order must be reviewed according to thehighly deferential standard as described in Elsom v Elsom, (SCC), [1989] 1 SCR 1367, that is, an appellate court willnot interfere unless the trial judge misdirected himself or the decision is so clearly wrong as to amount to an injustice. Position of the Parties [15] On appeal, Costco’s position is that the motion judge misconstrued the nature of the motion before him.

In itssubmission, the amendments sought are simply an elaboration to the defence already set out in the original pleading that it had“implemented a reasonable maintenance regime with respect to its parking lot”. That maintenance regime included the attendance byGreen Drop to apply chemicals, which it did in its discretion. [16] According to Costco, it was only when Moskal obtained a report to the effect that the chemical applied wasinappropriate or inappropriately applied, that an issue arose.

In its view, it is entitled to respond to this assertion and to argue thatsomeone else is responsible for the inappropriate use of the chemical. It also argues that if the amendments sought were not allowed, itwould still be permitted to adduce evidence surrounding Green Drop’s contract, its performance and whether it was negligent or not.

InCostco’s submission, neither the issues nor the scope of evidence adduced would be different if the amendment was allowed. [17] Costco also argues that Goodman is distinguishable, because, in that case, the plaintiff could not have known of thepotential defendant or its identity until a number of years after the limitation period had passed. In this case, Costco argues that Moskalwas aware of the participation of Green Drop, or a contractor, more than one year before the limitation period expired. [18] Costco also raises the issue of the effect of failing to allow an amendment at this juncture.

In its submission, itembarked on a valid litigation strategy, namely, focussing the defence upon the issue which was raised by Moskal and which was knownat the time. If it were to have involved Green Drop at the outset on a third-party claim, it would have unnecessarily broadened the scopeof the litigation without facts to support it.

It was only when the expert report was presented that there were facts which suggested thatGreen Drop should become a party to the litigation. [19] Moskal’s position on appeal is that the motion judge properly applied the principles surrounding r 26 dealing with theamendment of pleadings and correctly found prejudice which was not compensable in costs or which could be dealt with by anadjournment. He further says that the motion judge properly relied upon Goodman and the cases referred to therein.

He also notes thatthe material facts upon which Costco would need to rely to raise the independent contractor defence are not in the original defence and,as such, it is not a defence which would be available to Costco absent the amendments to its pleading. [20] Finally, he says that the facts concerning the independent contractor and the role it played in the maintenance of thepremises were known to Costco from the start.

As well, the motion judge noted that Costco could still issue a third-party claim againstGreen Drop if it wished to do so and would suffer comparably less prejudice than would Moskal if the motion was allowed. Analysis [21] While the motion judge incorrectly referred to the motion brought by Costco as one to add Green Drop as a third party,he correctly referred to the rule concerning amendments to pleadings, r 26, and the requirement that he consider prejudice to the otherparties before granting the amendment.

The leading case on r 26 is Ranjoy Sales and Leasing Ltd et al v Deloitte, Haskins & Sells(1989), (MB KB), 62 ManR (2d) 65 (QB), aff’d (1990), (MB CA), 63 ManR (2d) 248 (CA). That case concerned an application to amend a statement of defence, and the following four factors were identified for consideration: 1. The seriousness of the prejudice to the other party; 2. Whether the prejudice that would result could be compensated for by costs or an adjournment; 3. Whether there was a delay on the part of the party moving for the amendment and, if so, whether the delay has been satisfactorilyexplained; and 4.

The nature of the proposed amendment and whether it raises a valid, arguable point that has merit. [22] The motion judge, relying upon Goodman, essentially considered the first two factors set out in Ranjoy for the purposesof reaching his decision, namely, that Moskal would suffer serious prejudice which could not be compensated for by costs or anadjournment. [23] As to the delay in seeking the amendment, Costco has explained that the need for the amendment, in its view, onlyarose once it had obtained a copy of the expert report suggesting that its independent contractor had used an inappropriate chemical, andthat, therefore, the raising of the section 5(1) defence at this stage was an arguable point that had merit. [24] In my view, this case should be decided on the question of whether there will be serious prejudice to Moskal.

I note,

however, that the material facts which the motion judge used as a basis for denying the application to extend time for the applicationunder

section 14 of the LA Act were known to Costco well before Moskal became aware of them. Costco was aware that a third-partycontractor had performed clearing services on the morning in question. While I have some sympathy for Costco’s position that it wasonly when the expert report emerged that a defence under

section 5 of the Act came into focus, the same reasoning used by the motionjudge to deny an application under

section 14 of the LA Act has some bearing on the question of whether Costco itself acted with duediligence in raising a defence at this stage when the facts it avers in its amendment were known to it some time ago. [25] In any event, turning to the issue of prejudice, the motion judge relied upon Goodman. In that case, the plaintiff wasinjured while a spectator at a hockey game in the defendant Municipality’s arena, when the puck travelled through the area adjacent tothe player’s bench where protective netting was not fully installed.

Almost three years after filing its statement of defence, theMunicipality sought an amendment to plead section 5(1) of the Act to include the independent contractor who had installed the netting. Following upon that, plaintiff’s counsel sought to add the contractor as a party to the action. [26] Dewar J, as in this case, denied the application to extend the limitation period on the grounds that the plaintiff had notexercised sufficient diligence in obtaining material facts of a decisive nature concerning the net installer.

However, as in this case, hedenied the application to raise the section 5(1) defence under the Act, on the basis that the inability of the plaintiff to pursue theindependent contractor was a prejudice which was not compensable by costs or adjournment. [27] In Goodman, Dewar J relied on the often referred to case of Steward v North Metropolitan Tramways Company (1886),16 QBD 556 (CA). In that case, an action was brought against the defendant tramway company for personal injuries resulting from thedefendant not properly maintaining a road.

After the close of pleadings, the defendant sought to amend its statement of defence byasserting that there was a contract between it and the vestry (the road authority in the district) to maintain the road. By this time,however, the limitation period to sue the vestry had expired. [28] The most frequently cited reasons are those of Lord Esher, where he phrased the question as whether “if the amendmentis allowed now, will the plaintiff be in the same position as if the defendants had pleaded correctly in the first instance”.

In consideringthat question, he wrote the following oft-quoted comments on prejudice (at p 558): The Rule of conduct of the Court in such a case is that, however negligent or careless may have been the first omission, and however latethe proposed amendment, the amendment should be allowed, if it can be made without injustice to the other side.

There is no injustice ifthe other side can be compensated by costs: but, if the amendment will put them into such a position that they must be injured, it oughtnot to be made. [29] This reasoning has been followed in a number of cases where defendants have sought to amend their pleadings in orderto raise defences which would be prejudicial to the plaintiff from a limitation standpoint.

See Frobisher Ltd v Canadian Pipelines &Petroleums Ltd et al, (SCC), [1960] SCR 126; Visx Inc v Nidek Co et al (1998), 234 NR 94 (FCA); Langret InvestmentsSA et al v McDonnell (1996), (BC CA), 72 BCAC 252; Sperry Inc v Canadian Imperial Bank of Commerce et al(1985), (ON CA), 8 OAC 79; Meyer v Canada (1985), 62 NR 70 (FCA); and Monchalin v H Woodgate & Son Ltd, (ON CA), [1969] 1 OR 745 (CA). [30] Costco argues that the amendment is not prejudicial as it will still be entitled at trial to present evidence and makesubmissions raising the very issue which it seeks to elaborate in the pleadings.

Therefore, there is no prejudice as the matter will becanvassed at trial. I disagree. [31]

Section 2 of the Act is clear that it replaces the common-law rules respecting occupiers’ liability developed previouslyin the case law, save to a limited extent. That

section reads: Common law rules abolished 2 The common law rules respecting (

a) the duty of care owed by an occupier of premises to persons entering on the premises or to persons, whether on or off the premises,whose property is on the premises; and (

b) the liability of an occupier of premises for the breach of that duty; are no longer the law of Manitoba except for the purposes of determining who is or is not an occupier for the purposes of this Act andthe provisions of this Act apply in place of those common law rules. [32] In a similar vein, section 5(1) of the Act replaces the common-law rules with respect to independent contractors. Unlesssection 5(1) is pleaded and considered by the trial judge, at trial Costco will be limited in its defence to arguing that it implemented a

reasonable maintenance regime with respect to its parking lot. If it convinces the trial judge of that, notwithstanding that its contractor may have used an inappropriate chemical, then it will be successful.

However, it will not be able to deflect the responsibility to its independent contractor. [ 33 ] For this reason, I am of the view that the motion judge was correct when he concluded that there will be significant prejudice to Moskal by allowing the amendment at this stage of the proceedings as Costco will be able to deflect its liability onto a third party against whom Moskal will not be able to seek compensation. Conclusion [ 34 ] I would, therefore, dismiss the appeal with costs to Moskal. JA I agree: JA I agree: JA