Ontario: adding a party post expiry of the presmuptive limitation period

Edit, September 2016: Having just drafted a factum for a motion to add a defendant after the expiry of the presumptive limitation period, I realise some qualifications are necessary to this post.  First, Klein is problematic because it’s without a discussion of evidence filed by the defendant setting out steps the plaintiff might have taken to discover its claim.  Second, while Tarra discusses this aspect of seeking leave (see paragraph 53, quoted below), it merely quotes the leading case, Wakelin v. Gourley.  Tarra is also problematic because it uses the language of causes of action, which has no place in a limitations analysis for reasons that we’ve discussed in some detail.  I continue to find the most helpful cases to be Higgins, Wakelin, and Lima.  I’ll pay more attention going forward!

There are two recent decisions that set out nicely the principles for adding a party to an action after the expiry of the presumptive limitation period.

The first decision is from the Divisional Court in Klein v. G4S Secure Solutions (Canada) Ltd.  In upholding a decision from Master Short, which we wrote about here, Justice Stewart provides this summary of the law:

[22]           The expiry of a limitation period gives rise to a presumption of prejudice to the proposed defendant, which must be addressed by the bringing of a motion by the plaintiff to add the proposed new party.  To rebut this presumption of prejudice and raise a genuine discoverability issue, it is incumbent on the plaintiff to lead evidence showing that the identity of the proposed added party was not known, or could not reasonably have been known, within the presumptive limitation period.  That requires not only evidence of when the plaintiff actually knew that the party was an appropriate defendant, but also evidence as to when the plaintiff ought to have so known (see:  Pepper v. Zellers, supra; Sloan v. Shave Heating Ltd. (2010)2010 ONSC 3871 (CanLII), O.J. No. 3002 (S.C.J.)).

[23]           This due diligence requirement is not satisfied by waiting for someone else to advise as to the correct party defendant.  Counsel must give evidence of steps taken to ascertain the identity of the proposed defendant.  Where there is a failure to demonstrate the steps taken to obtain information regarding the possible liability of the proposed defendant, this lack of evidence may result in a proper inference that no such steps were taken (see:  Lokett v. Bontin, 2011 ONSC 2098 (CanLII), [2011] O.J. No. 1530 (S.C.J.); Wakelin v. Gourley [2006] O. J. No. 1442 (Div. Ct.)).

[24]           Reasonable efforts to discover the identity of the parties responsible must be made and disclosed in a supporting affidavit by the party seeking to add a new defendant after the initial two-year period.  In most cases, a lawyer’s’ affidavit listing the attempts made by the lawyer to obtain information to substantiate the assertion that the party was reasonably diligent is expected (see: Wolkowicz v. Avignon Inc., 2011 ONSC 5899 (CanLII), 2011 ONSC 5899 (S.C.J.)).

This is helpful.  This area of limitations law has developed rather piecemeal so that the relevant principles are, as these paragraphs make evident, in a multiple decisions.

When drafting a factum for a motion to add a party, you couldn’t do much better than to use the following from Master Pope’s decision in Tarra Engineering Inc. v. Naghshbandi (especially paragraph 53, which deftly articulates the more nuanced aspect of the analysis):

Limitation Period

[47]           The applicable limitation period is contained in section 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Schedule B:

                        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.

[48]           Section 5 of that Act addresses the requirements that must be considered to determine when a claim is “discovered”:

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).

[49]           Section 5(2) contains a presumption that a person with a claim is 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.

[50]           Lastly, section 21 prohibits the addition of a new party to an existing action after the limitation period has expired.

[51]           The authorities are clear that when a party is seeking to apply the discoverability rule, the court should afford a degree of latitude to that party before declaring that the limitation period has begun to run.  In practical terms, the question is not whether the moving party believes, for example, that his injury meets the criteria but whether there is a sufficient body of evidence available to be placed before a judge that, in counsel’s opinion, has a reasonable chance of persuading a judge, on the balance of probabilities that the injury qualifies.  Therefore, when such a body of material has been accumulated, then and only then should the limitation begin to run.  (Wong v. Adler (2004), 2004 CanLII 8228 (ON SC), 70 O.R. (3d) 460 (S.C.J.))

[52]           The authorities are also clear that it is not appropriate for a motions judge or master to resolve a limitation issue where the application of the discoverability rule is central to its resolution, for the following reasons.  It is a question of fact when the cause of action arose and thus when the limitation period commenced.  The applicability of the discoverability rule is premised on the finding of these facts; that is, when Naghshbandi discovered that he had a cause of action against TESC or, when through the exercise of reasonable diligence, he ought to have known he had a cause of action against TESC.  These facts constitute genuine issues for trial and as such, it is not appropriate for a motions judge or master to assume the role of a trial judge by resolving them.

[53]           The motions judge or master must examine the evidentiary record before it determines if there is an issue of fact or of credibility on the discoverability allegation.  As long as the moving party puts in evidence steps taken to ascertain the identity of the tortfeasor and gives a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence, then that will be the end of the enquiry and the proposed party will normally be added with leave to plead a limitations defence.  This is not a high threshold.  If the moving party fails to provide any reasonable explanation that could on a generous reading amount to due diligence the motion will be denied.  If the moving party puts in evidence of steps taken but the proposed party also provides evidence of further reasonable steps that the moving party could have taken to ascertain the information within the limitation period, then the court will have to consider whether the moving party’s explanation clearly does not amount to due diligence.  If there is any doubt whether the steps taken by the moving party could not amount to due diligence then this is an issue that must be resolved on a full evidentiary record at trial or on summary judgment.  The strength of the moving party’s case on due diligence and the opinion of the master or judge hearing the motion whether the moving party will succeed at trial on the limitations issue is of little or no concern on the motion to add the party.  The only concern is whether a reasonable explanation as to due diligence has been provided such as to raise a triable issue.  (Wakelin v. Gourley, [2006] O.J. No. 1442 (Ont. Div. Ct.))