Ontario: the limitation of adding new claims to a proceeding


Justice Nordheimer’s decision in Farmers Oil and Gas Inc. v. Ontario (Natural Resources) has a useful overview of the jurisprudence of amending a pleading to add a new cause of action after the expiry of the limitation period.  It will be a good starting point if you encounter the issue:

[14]           As I have said, the central issue between the parties is whether the proposed amendments give greater clarity or particularity to the existing claim, or whether they advance new claims.  On that point, the appellant relies heavily on the decision in 1309489 Ontario Inc. v. BMO Bank of Montreal (2011), 2011 ONSC 5505 (CanLII), 107 O.R. (3d) 384 (S.C.J.)where Lauwers J. addressed this same issue.  In that decision, Lauwers J. referred to the two different approaches to determining whether a claim is a new cause of action.  On the one hand, one can see a cause of action as a factual matrix.  On the other hand, one can see a cause of action simply as the legal basis upon which the claim for relief is based.  Lauwers J. concluded that the trend of the case law was to favour the broader factually oriented approach to the meaning of a cause of action.  Under that broader approach, if the defendant has notice of the factual matrix underlying the claim being advanced, then amendments that arise out of, or do not depart from, that factual matrix do not constitute “new” causes of action that would not be allowed by way of amendment.  On that point, Lauwers J. said, at para. 27:

A plaintiff is not required to name or specify the technical cause of action as an essential part of pleading; in saying this, I do not resile from the requirement noted in Morden and Perell, supra, that ordinarily the facts as originally pleaded, or as better particularized in the proposed new pleading, must be able to sustain the technical cause of action.  [emphasis added]

[15]           A very short time later, Lauwers J. had to deal with this same issue a second time.  In Sweda Farms Ltd. (c.o.b. Best Choice Eggs) v. Ontario Egg Producers, [2011] O.J. No. 4886 (S.C.J.) the plaintiff sought to amend the statement of claim to advance a conspiracy claim, along with other amendments.  The defendant objected on the basis that any such claim was barred by the expiration of the limitations period.  In allowing the amendments to be made, Lauwers J. again addressed the meaning of a cause of action and said, at para. 25:

I find that the broader, factually-oriented approach to the meaning of “cause of action” in interpreting and applying rule 26.01 is the correct approach.  It is consistent with the trend of the cases and is also consistent with a purposive approach to the interpretation of limitations legislation.  This means that the defendant’s basic entitlement is to have notice of the factual matrix out of which the claim for relief arises.  In my view the existing set of pleadings raises the factual matrix of concern to the plaintiffs and within which the defendants’ possible liability is to be located.  The proposed Fresh Statement of Claim simply reframes those allegations of fact.

[16]           The approach taken by Lauwers J. was tacitly approved by the Court of Appeal in Rausch v. Pickering (City),[2013] O.J. No. 5584 (C.A.) where Epstein J.A. said, at para. 95:

As Lauwers J. (as he then was) emphasized in BMO Bank of Montreal, at para. 27, as long as the existing pleading “raises the factual matrix of concern to the plaintiff and within which [the defendant’s] possible liability is to be located[,] it successfully asserts a cause of action within the meaning of rule 21.01(1)(b).”  Thus, even if the plaintiff does not explicitly set out the technical cause of action on which it relies, if the facts as pleaded implicitly advance such a claim, the court ought not to strike the pleadings: BMO Bank of Montreal, at paras. 26-27.

[17]           I say that the approach was tacitly approved only because the issue that was before the Court of Appeal in Rauschhad less to do with the expired limitation period and more to do with whether the proposed amendment disclosed a cause of action.

[18]           The respondent, on the other hand, relies on a different line of cases beginning with Fuda v. Jim McIntosh Petroleum Engineering Ltd., [2013] O.J. No. 5208 (S.C.J.); aff’d. [2014] O.J. No. 2255 (C.A.) where Wilton-Siegel J. granted summary judgment dismissing certain claims, that had been added to the statement of claim by amendment, on the basis that the limitations period had expired.  In addressing the issue whether the subsequent claims could be seen to have been part of the original claim, Wilton-Siegel J. said, at para. 310:

Given the principles set out above, I conclude that each of these causes of action were asserted for the first time in the 2013 Amendment dated February 8, 2013, other than the original cause of action based on the 2003 Reserve Report Representation, which was asserted in the Statement of Claim.  The fact that both the cause of action asserted in the Statement of Claim and the four additional causes of action asserted in the 2013 Amendment lie in negligent misrepresentation is not sufficient to conclude that these remaining causes of action are contained in the Statement of Claim.

[19]           It is of some importance to this conclusion to be aware of how the Court of Appeal approached this conclusion.  In dismissing the appeal, the court said, at para. 9:

The misrepresentation claims that were asserted after the expiry of the limitation period advanced new causes of action that were unconnected to the factual matrix pleaded in the original statement of claim.  [emphasis added]

[20]           The respondent relies on two other authorities.  One is Winnipeg (City) v. Entegra Credit Union Ltd., [2013] M.J. No. 10 (C.A.).  In that case, the motion judge had permitted the plaintiff to amend its statement of claim.  The motion judge found that the proposed amendments did not constitute new causes of action.  The Court of Appeal reversed that finding.  The Court of Appeal found that the motion judge had misunderstood the nature of the claim being advanced by the proposed amendments, that is, a separate and distinct claim for breach of contract that was “independent” of the existing claim.

[21]           The other authority is American Axle & Manufacturing, Inc. v. Durable Release Coaters Ltd., [2010] O.J. No. 2515 (S.C.J.) where the issue was whether certain claims at trial were barred by the expiration of a limitations period.  The claims had been added to the statement of claim by way of amendment with the limitation period issue being expressly reserved for determination at trial.  The trial judge, Newbould J. , found that those claims were barred by the limitation period, and were not saved by any suggestion that they were not “new” causes of action, but rather were encompassed within the same factual situation previously pleaded.  In so concluding, Newbould J. said, at para. 50:

In my view the amendments do not plead alternative claims for relief arising out of the same facts previously pleaded.  The new facts pleaded are relied upon to support new causes of action and new heads of damages arising from those new causes of action.  While it is the same contract as previously pleaded that is claimed in the amendments to have been breached, the contractual provisions and breaches relied on in the amendment are different from the previous pleading and the breaches and resulting damages are different from those previously pleaded.  They constitute new causes of action.

[22]             As may be obvious from the above, the distinction between the authorities relied upon by the appellant, and those relied upon by the respondent, turns on whether the proposed amendments do, or do not, arise out of the same facts, or the factual matrix, that was pleaded in the original statement of claim.  If they do, then the amendments should be permitted.  If they do not, and the limitations period has expired, then the amendments should be refused.

[23]           In determining this issue in this case, I must begin by reading the original statement of claim generously and with due allowance for drafting deficiencies – see Operation Dismantle Inc. v. Canada, 1985 CanLII 74 (SCC), [1985] 1 S.C.R. 441.  In my view, it is clear from a generous reading of the statement of claim that the appellant’s original claim arises out of an alleged course of conduct between it and the Ministry that began in 1991, and continued through to 1995, when the new policy was adopted, and the alleged unfair dealing by the Ministry with the appellant came to light.  It is clear that the appellant was, at all relevant times, interested in obtaining the near shore rights.  The appellant claims that it did not take steps to acquire those rights only because the Ministry told it that it did not need to because, up until 1995, the Ministry was not in a position to grant those rights.  What the appellant alleges, however, is that the Ministry did not tell it that companies could file applications for those rights and, specifically, that one company had filed for the very rights that the appellant was seeking.

[24]           When one then looks at the proposed amendments, they allege facts that are clearly part and parcel of these dealings.  They arise out of the same factual matrix.  In that respect, they fall into the Sweda and related line of cases and are thus distinguishable from the Fuda line of cases.  They provide precisely the type of particulars regarding what was said, and between whom, that ought to have been part of the original statement of claim.  What they do not do, however, is allege some new and distinct claim unrelated to that original claim.