IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Zhu v. Aston Martin Lagonda Limited, |
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2018 BCSC 46 |
Date: 20180115
Docket: S153599
Registry: Vancouver
Between:
Jessica Ying Zhu
Plaintiff
And
Aston Martin
Lagonda Limited, Ford Motor Company,
Visteon Systems, LLC, Pi Innovo Ltd., 0880984 B.C. Ltd. dba
MCL Motor Cars (2010), and
Ho International Airways Inc.
Defendants
And
0880984
B.C. Ltd. dba MCL Motor Cars (2010) and
Ho International Airways Inc.
Third Parties
Before: The Honourable Madam Justice Iyer
Reasons for Judgment
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Counsel for the Plaintiff: |
J.L. Thornback |
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Counsel for the Defendant and Third Party Ho International Airways Inc. |
S.H. Stephens |
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Counsel for the Defendant and Third Party 0880984 B.C. Ltd. |
R. Benham-Parker |
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Place and Date of Hearing: |
Vancouver, B.C. November 24, 2017 |
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Place and Date of Judgment: |
Vancouver, B.C. January 15, 2018 |
Table of Contents
Reasons for Delay and Explanation for It
Connection Between Existing and Proposed Claims
Is it Just and Convenient to Add the Proposed Defendants?
[1] This is an appeal from a decision of Master Baker, dated August 17, 2017, granting the application made by the plaintiff, Ms. Zhu, to add the appellants as defendants to her personal injury action. The appellants say that the Master erred in law in concluding that the plaintiff had met the test for adding a party under s. 6‑2(7)(c) of the Supreme Court Civil Rules, B.C. Reg. 168/2009.
[2] The underlying personal injury action arose out of a serious multi-vehicle collision that occurred on May 8, 2013 (“Collision”) in which one person died and three others were seriously injured, including Ms. Zhu. Ms. Zhu was driving an Aston Martin DB9 (“Car”) at the time of the Collision. She claims that the Car’s unintended acceleration caused the Collision.
[3] There are five other ongoing actions relating to the Collision (“Related Actions”). The issue of liability in all except one of them will be tried at the same time, commencing in November 2018. The trial is set for 30 days.
[4] The appellants in this proceeding are Ho International Airways Inc. (“Ho International”) and 0880984 B.C. Ltd. dba MCL Motor Cars (2010) (“MCL Motor”). Ho International was formed out of the amalgamation of four companies, one of which was MCL Motor Cars (1992) Inc., a motor vehicle dealership. In 2010, MCL Motor Cars (1992) Inc. was sold to the numbered company. It continued in the same motor vehicle dealership business as MCL Motor.
[5] The facts relevant to this appeal are not disputed.
[6] Ms. Zhu owned the Car. It was serviced by MCL Motor Cars (1992) Inc., now Ho International, and after 2010, by MCL Motor.
[7] As noted, the Collision occurred on May 8, 2013. On May 4, 2015, Ms. Zhu commenced a civil claim. She named as defendants the companies involved in the design and manufacture of the Car (“Defendants”), and alleged that the Defendants were responsible for the Collision on the basis that defects in the engine management system of the Car caused it to accelerate just prior to the Collision.
[8] The limitation period for Ms. Zhu’s claims relating to the Collision expired on May 8, 2015, and the additional one year within which notice of the civil claim could have been served expired on May 8, 2016.
[9] On May 7, 2015, one of the Related Actions was commenced, Rafer v. Aston Martin Lagonda Limited, Vancouver Registry S153736 (“Rafer Action”). MCL Motor was named as a defendant in this action on the basis that MCL Motor caused or contributed to the Collision by allowing a BMW floor mat (“Floor Mat”) to be installed in the Car, which interfered with the gas pedal and caused the Car to accelerate.
[10] On December 15, 2016, Master Scarth ordered that the issue of liability in the Related Actions be tried together and determined before issues of quantum.
[11] In February 2017, within the limitation period for claims of contribution and indemnity, the Defendants commenced third-party proceedings against Ho International and MCL Motor, alleging that the Floor Mat had caught on the Car’s gas pedal and caused the acceleration, and that Ho International and MCL Motor had failed to warn or remove the Floor Mat when servicing the Car.
[12] On July 12, 2017, Ms. Zhu applied to add Ho International and MCL Motor as defendants to her action in order to plead, in the alternative to her main claim of defects in the engine, that the unintended acceleration was caused by the Floor Mat catching on the gas pedal.
[13] In her Notice of Application, Ms. Zhu stated she was seeking to add Ho International and MCL Motor as defendants “to mirror their addition as third parties by the other defendants in this action.” She also stated, in explaining the reasons for not having acted before expiry of the limitation period, that Ho International and MCL Motor:
…were not added as a defendant prior to this date because the plaintiff does not believe that the accident was caused by interference from the floormat. Once [Ho International and MCL Motor] were added as a third party, this became a live issue in the case. The plaintiff is adding [Ho International and MCL Motor] in the alternative in case the defendants are successful in advancing this theory.
[14] In his oral reasons for judgment, pronounced at the conclusion of the hearing of the application, Master Baker identified the central question arising under Rule 6‑2(7)(c) as whether “it is just and convenient” to add the appellants as defendants. He referenced Teal Cedar (cited at para. 21 below) as setting out the factors to consider when making this assessment.
[15] Master Baker found that there was no prejudice to the appellants, despite the expiry of the limitation period, because they had been involved in the litigation for some time as third parties in the Related Actions. He referred to the Court of Appeal’s decisions in Strata Plan VIS3578 v. Canan Investment Group Ltd., 2010 BCCA 329 and Amezcua v. Taylor, 2010 BCCA 128, as holding that no prejudice arises within three years after the date the claim arose. He did not interpret the Court of Appeal as establishing that prejudice necessarily exists after expiration of the three years. Rather, he considered that expiry of a limitation period is one aspect of prejudice, but is not always determinative. He referred to cases saying that a party must show actual prejudice, and continued as follows:
We cannot just presume out of thin air that there is prejudice. I say that, and I dwell on this point because the logic, I think, of the Court of Appeal, if I could presume, in saying all that is that the limitations mean something, the year for service means something. This presumption of prejudice, in my respectful view, can be nullified, or offset is a better word, by active knowledge of a claim or a pending claim against that party in that time.
[16] It is clear that the Master accepted that there is a presumption of prejudice, but found that it had been “offset” in this case because the appellants had been joined as third parties in the Related Actions for some time.
[17] The Master also considered and rejected the argument that the reason for delay was a tactical decision by counsel. He noted that, in complex litigation such as this, there are good reasons not to name every conceivable defendant at the outset, and a “scattergun” approach should be discouraged. He accepted Ms. Zhu’s argument that denying her application would mean that she could not recover from the appellants if they were found contributorily negligent as third parties.
[18] The appellants say that the Master made errors of law that attract review by way of rehearing, without deference. Ms. Zhu says that because the decision to add a party is an interlocutory order, the “clearly wrong” standard applies.
[19] There is ample authority that the deferential standard of review applies when reviewing a Master’s decision to add a defendant: see for example Strother v. Darc, 2017 BCSC 348; Gairdner v. Dhaliwal, 2014 BCSC 1831. However, Ms. Zhu stated that she was content to argue the appeal based on the rehearing standard. I will therefore apply that standard since, if she succeeds on the more rigorous standard of review, she would necessarily succeed on the more deferential standard.
[20] The broad issue in this appeal is whether it is “just and convenient” within the meaning of Rule 6‑2(7)(c) to add Ho International and MCL Motor as defendants to Ms. Zhu’s action.
[21] The factors to consider in an application to add a party after the expiration of a limitation period were established by the Court of Appeal in Teal Cedar Products (1977) Ltd. v. Dale Intermediaries Ltd. (1996), 19 B.C.L.R. (3d) 282, affirmed in Letvad v. Fenwick, 2000 BCCA 630 and most recently in Byrd v. Cariboo (Regional District), 2016 BCCA 69. Those factors are the extent of the delay, the reasons for the delay and any explanation for it, the extent of connection between the existing claims and the proposed new cause of action, and the prejudice caused by the delay. However, as the Court of Appeal cautioned in Chouinard v. O’Connor, 2011 BCCA 161, these factors are not an exhaustive checklist; the determination is discretionary and is based on the court’s assessment of what is just and convenient in the circumstances (Byrd, paras. 32‑33).
[22] It is not disputed that the application to add was brought 27 months after the expiration of the limitation period, which was 15 months after the expiration of the additional year for service. It was also five months after the appellants were added as third parties in this action in February 2017. Based on the cases to which I was referred, this is neither a minor nor an excessive delay.
[23] Ms. Zhu’s explanation for not having added the Appellants as defendants before expiration of the limitation period was that she did not (and still does not) believe that interference from the Floor Mat caused the Collision. However, once the defendants added the appellants as third parties to her action in February 2017, if the appellants were found liable to the defendants, Ms. Zhu would not be able to recover from them unless she had named them as defendants.
[24] Ho International argues that, as a matter of law, the fact that a proposed defendant is a third party in the proceeding does not justify adding it as a defendant. I do not read either of the two cases relied on for this proposition as establishing this as a general principle. In Lui v. West Granville Manor Ltd., 11 B.C.L.R. (2d) 273 (C.A.), the Court of Appeal did emphasize that avoiding a limitation period is an influential factor militating against adding a party under what is now Rule 6‑2(7)(c). However, the Court’s concern about “piggy-backing” to avoid limitation periods does not arise in this case.
[25] In Crown Trust Co. v. Tod-Hackett Construction Ltd., [1990] B.C.J. No. 1439 (S.C.), the individual sought to be added as a defendant had been made a third party six years previously. In these circumstances, the Court held that the fact that the proposed defendant was a third party was not a sufficient explanation for the delay.
[26] The leading case on adding a defendant after expiration of a limitation period remains Teal Cedar, which established that the exercise of the discretion to add must take into account all of the circumstances, including but not limited to a plaintiff’s explanation for delay. In his reasons, Finch J.A. stated that the inadequacy of the explanation offered does not mean that the application to add will fail (at para. 67).
[27] In Somerville v. Piazza, 2006 BCSC 807, the Court cited Master Bolton’s review of the jurisprudence on this factor in Mah v. City of Vancouver, 2000 BCSC 41, and confirmed that an application to add a defendant may be allowed even where no good reason for the delay is provided at all (at para. 16).
[28] In my view, the fact that a proposed defendant has been added as a third party can, in some circumstances, provide an adequate explanation for the delay. Ultimately, granting an application to add a party depends on an assessment of all of the factors. In this case, I accept that the addition of the appellants as third parties created the risk of prejudice to Ms. Zhu if she did not seek to add them as defendants, so the explanation for the delay is better considered in relation to that factor.
[29] With respect to that five-month period, Ms. Zhu submits that it is attributable to “counsel delay and communications between the parties”. As the appellants pointed out, Ms. Zhu tendered no evidence to support this assertion. Accordingly, I find that no reason or explanation has been given for the delay between February 2017 and the commencement of this application in July 2017.
[30] I conclude that adding a defendant in order to preserve the right to recover if that defendant is found liable as a third party can explain a delay in some circumstances. In this case, there is no explanation for the delay after the appellants were added as third parties.
[31] The appellants argue that there is no connection between the existing claims and the proposed new cause of action because the existing claim is based entirely upon an alleged defect in the Car’s engine management system, whereas the claim against the Appellants arises from the Floor Mat. Ms. Zhu says that there is a strong connection because the allegation regarding the Floor Mat is the basis of the Defendants’ claim against the Appellants as third parties in this action. I agree. In Somerville, this court accepted the fact that the proposed defendant was already a third party as demonstrating a substantial connection between the existing claims and the proposed new defendant. In my view, this factor favours the exercise of discretion to permit the addition.
[32] The Court of Appeal’s most recent consideration of prejudice in the context of an application to add a defendant after expiration of a limitation period was in Byrd. The Court of Appeal dismissed the appeal, affirming the decision of the chambers judge. The chambers judge had reviewed the law as to how the presumed prejudice to a proposed defendant from losing a limitation defence should be balanced against the prejudice to the plaintiff from losing a cause of action, and concluded that the latter generally outweighs the former, quoting Master Bolton’s reasons in Takenaka v. Stanley, 2000 BCSC 242 at para. 41 (Byrd v. Cariboo (Regional District), 2014 BCSC 2239, at para. 34):
Putting aside any issues of actual prejudice in addition to the prejudice resulting from the loss of the cause of action or of the limitation defense, I am satisfied that the prejudice to a plaintiff in the former event will usually be greater than the prejudice to the defendant in the latter. In the former case the plaintiff loses the opportunity to ask the court to consider a claim that the defendant has done something the law of the land considers to be actionable. In the latter, the defendant loses a windfall opportunity to avoid the issue altogether. Their respective situations may be precisely balanced in purely financial terms, but not, I conclude, as a matter of justice. A right to seek justice cannot fairly be equated with a right to cut short the search without an answer.
[33] As noted, the balancing of respective prejudice must also take into account any claim of actual prejudice. In Byrd, the chambers judge rejected the proposed defendant’s claim of actual prejudice as speculative.
[34] The appellants in this case did not claim to have suffered any actual prejudice. However, they say that the Master erred in law by considering that the appellants’ active involvement in the proceedings as third parties “offset” the presumption of prejudice.
[35] I do not agree. Since Teal Cedar, the courts have consistently emphasized the breadth of the discretion under Rule 6‑2(7)(c). I see no reason for excluding consideration of a proposed defendant’s prior knowledge of the litigation arising from its participation as a third party in assessing prejudice. The fact that a proposed defendant is already a third party, and that the same claim is advanced against it in the third-party proceedings as the plaintiff now seeks to allege against it in the main action means that there is less prejudice to the proposed defendant than to someone who has had no prior involvement in the litigation or someone who is defending different claim as a third party. The presumed prejudice arising from the expiry of a limitation period is offset or reduced by the proposed defendant’s prior knowledge of the same claims against it in related proceedings.
[36] In this case, MCL Motor has been a defendant to the Rafer Action since May 7, 2015, prior to the expiry of any limitation period. It has known since that time of the allegation regarding the Floor Mat. Accordingly, any prejudice arising from Ms. Zhu’s application to add MCL Motor is more theoretical than real. Ho International was added as a third party in the Related Actions, based on the same allegation about the Floor Mat, within the limitation period for contribution and indemnity. This also lessens any prejudice arising from the expiry of the limitation period that applies to Ms. Zhu’s claim against it. I conclude that the prejudice to Ms. Zhu in dismissing her application is significantly greater than that to the Appellants in granting it.
[37] As discussed, I regard the extent of delay and the reason provided for it as relatively neutral factors in this case. In my view, the strength of the connection between the existing and proposed claims is a factor that strongly favours the plaintiff. Precisely the same claim against the appellants was going to be litigated in the upcoming trial even if they were not defendants in the Zhu action. There is no suggestion - or evidence - that adding them as defendants to the Zhu action will add time or complexity to the trial. I have also concluded that the factor of prejudice favours Ms. Zhu.
[38] Consideration of the Teal Cedar factors leads me to conclude that it is just and convenient to add the appellants as parties under Rule 6‑2(7)(c).
[39] More broadly, in complex litigation such as this, where claims, defences and counterclaims evolve and the proposed defendants have already been involved in the litigation in some capacity, Master Bolton’s comments in Takenaka are especially apt.
[40] I dismiss the appeal from the order of Master Baker, pronounced August 17, 2017. As Master Baker did not make any order as to costs, I decline to do so.
“IYER J.”