Adding a party

Ontario: The finality of motions to add defendants

The Court of Appeal in Prescott & Russell (United Counties) v. David S. Laflamme clarifies some interesting aspects of motions for to add a defendant after the presumptive expiry of the limitation period.

The motion judge held that the plaintiff could add the proposed defendant “as a party to the litigation since its actions to do so were within the limitation period” (presumably meaning that the plaintiff moved to add the proposed defendant within the limitation period).  Like me, you might think this was a finding of timeliness precluding a limitations defence.  Not so, held the Court of Appeal.  The Order was without any language declaring the timeliness of the claims against the proposed defendant, and, notwithstanding the foregoing, the reasons were apparently without any language suggesting that the motion judge made a final determination regarding the limitations defence.

Because the Order did not preclude a limitations defence, it was not a final determination of the proposed defendant’s rights and therefore interlocutory.

These are the relevant paragraphs:

[7]         The distinction between a final and interlocutory order for the purposes of determining the appropriate appellate forum is not always easy to make: see Salewski v. Lalonde, 2017 ONCA 515 (CanLII); Azzeh v. Legendre, 2017 ONCA 385 (CanLII).  In the present context, the order will be said to be final if it deprives WSP of a substantive defence.  If WSP can no longer rely on the Limitations Act defence, the order is final.  However, if WSP can raise the Limitations Act defence at trial, the order is not final. To determine whether the order is final or interlocutory, one must examine the terms of the order, the motion judge’s reasons for the order, the nature of the proceedings giving rise to the order, and other contextual factors that may inform the nature of the order.

[8]         Looking first at the order itself, there is nothing in the language to suggest that any final determination was made on theLimitations Act issue.  The order, presumably drawn with the cooperation of counsel, makes no reference to the Limitations Act or any findings made in respect of that Act. The order simply allows the respondent to add WSP as a defendant.

[9]         The motion judge’s reasons contain no language suggesting that any finding made in respect of the application of the Limitations Act had application beyond the motion itself.  The motion judge did not purport to decide the issue for any purpose other than the determination of the motion to add WSP as a party.

[10]      The nature of the motion is also relevant to the nature of the order arising from the motion. Some motions tend to generate final orders. For example, orders made on r. 21 motions brought to determine a question of law, will generally apply to the litigation as a whole. Depending on the question of law decided, the order may well be final. Motions to add parties that are successful, however, do not as a rule generate findings that are binding in the rest of the litigation.

[11]      We also cannot accept the contention that because the motion judge was required to make a finding as to the application of the Limitations Act, her finding must be regarded as binding in the litigation and therefore final.  Section 21 of the Limitations Actforbids adding a party where the limitation period has expired. It does not foreclose adding a party absent an affirmative finding that the limitation period has not expired.

[12]      Having regard to the factors outlined above, we conclude that the trial judge’s determination that the action was brought within the limitation period was made for the purposes of the motion only. The motion judge was satisfied that, for the purposes of determining whether to add WSP as a party, the limitation period had not expired.

[13]      The order under appeal is interlocutory.  This court has no jurisdiction to hear the appeal.  WSP may, if so advised, seek leave to appeal in the Divisional Court, or it may raise the limitations argument at trial.

I confess that I’m not entirely persuaded by the Court’s reasoning.  It’s settled law (or at least was settled until this decision) that on a motion for leave to add a defendant, the court can determine the timeliness of the claim.  That is, the court can find that the plaintiff has established that it discovered its claim against the proposed defendant within the limitation period.  The court would then make the order denying the proposed defendant leave to plead a limitations defence.

I wonder whether the issue here was nothing more than the plaintiff neglecting to insist on such language in the order given the motion judge’s finding that the plaintiff brought the motion in time.

Lastly, I indulge some pedantry in regards of legal sloppiness:

[3]         On the motion, the respondent contended that its claim against WSP was not reasonably discoverable until a date within the two year limitation period.  WSP contended that the respondent had ample information upon which to base its claim years earlier.  The motion judge accepted the respondent’s position, concluding, at para. 38:

Consequently, I find that the United Counties [respondent] can add WSP as a party to the litigation since its actions to do so were within the limitation period.

[4]         WSP appeals claiming that the motion judge erred in concluding that the claim could not reasonably have been discovered at a point beyond the applicable time limit under the Act.  The respondent argues that the motion judge was correct in her analysis of the Limitations Act provisions.  The respondent also raises a preliminary jurisdictional point.  Counsel argues that the order under appeal is interlocutory and not final, meaning that any appeal lies with leave to the Divisional Court.

[5]         The respondent acknowledges that if the order is not final, the respondent cannot claim that the order is binding on the trial judge, meaning that WSP can re-litigate the limitation issue at trial.  Counsel has raised the issue, however, because in his submission, the jurisprudence from this court dictates that the order is interlocutory and cannot be appealed to this court.

A claim is not discoverable within a limitation period.  Pursuant to s. 4 of the Limitations Act, it is the discovery of a claim that causes the limitation period to run.

The proper question on these motions is whether the plaintiff discovered the claim within two years of the motion.  This isn’t because the limitation period runs retrospectively two years from the date of the motion.  Rather, it’s because discovery of the claim any earlier than two years from the motion means the limitation period commenced earlier than two years from the motion, and therefore expired before the motion.

Ontario: the evidentiary threshold for adding a defendant after the limitation period’s presumptive expiry

The Court of Appeal’s decision in Mancinelli v. Royal Bank of Canada is now a leading decision on the addition of a defendant to proceeding after the presumptive expiry of the limitation period.  The Court set out the test, and held that it applies equally to limitations periods that are not subject to the discovery provisions in the Limitation Act:

[23]      When a person opposes a plaintiff’s motion to add it as a defendant on the basis of the apparent expiry of a limitation period, the motion judge is entitled to assess the record to determine whether, as a question of fact, there is a reasonable explanation on proper evidence as to why the plaintiff could not have discovered its claim through the exercise of reasonable diligence. If the plaintiff does not raise any credibility issue or issue of fact about when its claim was discovered that would merit consideration on a summary judgment motion or a trial and there is no reasonable explanation on the evidence as to why the plaintiff could not have discovered the claim by exercising reasonable diligence, the motion judge may deny the plaintiff’s motion: Arcari v. Dawson, 2016 ONCA 715 (CanLII), 134 O.R. (3d) 36, at para. 10. 

[24]      However, the evidentiary threshold that must be met by a plaintiff on such a motion is low: Pepper v. Zellers Inc. (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), at para. 14; Burtch v. Barnes Estate (2006), 2006 CanLII 12955 (ON CA), 80 O.R. (3d) 365, at paras. 26-27. The plaintiff’s explanation should be given a “generous reading”: Wakelin v. Gourley (2005), 2005 CanLII 23123 (ON SC), 76 O.R. (3d) 272, at para.15, aff’d 2006 CarswellOnt 286 (Div. Ct.). Whether the plaintiff and its counsel acted with reasonable diligence must be considered in context: Fanshawe College of Applied Arts and Technology v. Sony Optiarc Inc., 2014 ONSC 2856, at para. 45 (the “Fanshawe Pleadings Motion”.)

[25]      While Arcari, Pepper and Wakelin dealt with motions to add defendants that were opposed based on the apparent expiry of the limitation period under the Act, the same approach, and the same low threshold, is warranted where the motion is opposed or also opposed based on the apparent expiry of any statutory limitation period subject to the discoverability principle: see, for example, Fanshawe Pleadings Motion.

[…]

[30]      A plaintiff’s failure to take reasonable steps to investigate a claim is not a stand-alone or independent ground to find a claim out of time. Instead, the reasonable steps a plaintiff ought to take is a relevant consideration in deciding when a claim is discoverable under s. 5(1)(b): Galota v. Festival Hall Developments Ltd., 2016 ONCA 585 (CanLII), 133 O.R. (3d) (C.A.), at para. 23; Fennel v. Deol, 2016 ONCA 249 (CanLII), 265 A.C.W.S. (3d) 1029, at paras. 18, 24.

[31]      Where the issue on a motion to add a defendant is due diligence, the motion judge will not be in a position to dismiss the plaintiff’s motion in the absence of evidence that the plaintiff could have obtained the requisite information with due diligence, and by when the plaintiff could have obtained such information, such that there is no issue of credibility or fact warranting a trial or summary judgment motion: Wong v. Adler (2004), 2004 CanLII 8228 (ON SC), 70 O.R. (3d) 460 (Ont Master), at para. 45; Pepper, at para. 18.

The Court overturned the motion judge’s decision (which I noted for its summary of the relevant principles) for applying too high a standard to high an evidentiary threshold.

[26]      In the context of a motion to add defendants in a class action alleging a secret conspiracy brought before any statements of defence had been filed or any discoveries had taken place, the motion judge required the appellants to meet too high an evidentiary threshold.

[27]      Giving the requisite generous, contextual reading to the appellants’ explanation, the appellants provided a reasonable explanation why they could not have identified the respondents as co-conspirators before July 20, 2014. I note that in the Fanshawe Pleadings Motion, the motion judge permitted plaintiffs alleging a price-fixing conspiracy to amend their statement of claim to add defendants on evidence as to due diligence that essentially consisted of reviewing publically available documents, albeit a more detailed list of those documents was provided.

[28]      In the face of the appellant’s evidence of their search for other potential defendants, the respondents led no evidence of further reasonable steps that the appellants could have taken to ascertain their identities before July 20, 2014. Rather, the motion judge suggested that the appellants should have taken further steps to investigate whether the respondents were co-conspirators. At least some of the steps he suggested go beyond those a reasonable plaintiff would have taken in the circumstances, indicating that he held the appellants to too high an evidentiary standard. By way of example, it is not apparent how a plaintiff alleging a conspiracy that the defendants took active steps to conceal and that was conducted through secret “chats” could have possibly obtained the suggested Anton Pillar and Norwich orders. The evidentiary foundation required to obtain such orders is high.

[29]      Further, a representative plaintiff is not akin to the investigative arm of a regulator. Regulators often have investigative powers that civil plaintiffs do not. There was no evidence that any of the sophisticated regulators investigating the alleged conspiracy had identified any of the respondents as co-conspirators before the UBS proffer.

The decision is also noteworthy for what is arguably the addition of a new consideration to the test.  The Court criticized the motion judge for having failed to determine with sufficient precision when the plaintiffs ought to have discovered their claim.  Prior to this decision, I think it was generally understood that when a proposed defendant argues that leave is inappropriate based on evidence that the plaintiff could through reasonable diligence have discovered the claim within two years of the motion, it wasn’t necessary for the proposed defendant to provide an exact date on which discovery ought to have occurred.  Going forward, should the court neglect to make a finding in regards of the date when discovery ought to have occurred, there may be ground for appeal:

[32]      As the respondents appropriately conceded, there was no evidentiary foundation for the motion judge’s finding that the respondents’ identities as co-conspirators could have been established with reasonable diligence. The fact that UBS – one of the co-conspirators and a participant in the “collusive chats” – was able to identify other participants in the secret chats is no indication that the appellants, who were not co-conspirators, could have done so.

[33]      Nor did the motion judge determine with sufficient precision by when the appellants ought to have discovered that they had a claim. As noted above, the appellants claim would be statute barred only if the s. 5(1)(b) date were before July 20, 2014. The motion judge found the identity of BMO and TD could have been established “before the expiry of the limitation period”. It is not clear what the motion judge meant by “the expiry of the limitation period”. The respondents submitted that the limitation period expired on December 31, 2015 (two years after the end of the alleged conspiracy period). If the motion judge’s intended finding were that the appellants could have established the identities of BMO and TD by December 31, 2015, then the appellants’ claim against them would not have been statute-barred.

Ontario: Adding a party after the presumptive expiry of the limitation period requires evidence

The decision in Laurent-Hippolyte v. Blasse et al. is a reminder that on a motion to add a party after the presumptive expiry of the limitation period, the plaintiff needs to file evidence of due diligence:

[21]           TWD argues that the motion must be dismissed because the Plaintiff nor any other affiant has provided any evidence as to discoverability during the relevant time period – that being the two-year period after the date of loss. TWD asserts that the absence of any such evidence is fatal to the motion.

[22]           I agree with TWD. There is absolutely no evidence in this case as to what occurred between the date of loss and the time that the Statement of Claim was issued.  While I accept that Plaintiffs should not be required to send pro forma letters and that the expectations placed on unrepresented Plaintiffs to identify tortfeasors should be low, this does not mean that a Plaintiff can succeed on these motions with absolutely no evidence on the issue.

[23]           At the very least the Plaintiff, or other affiant, could have explained what was happening in the relevant two-year period and/or describe the abilities that the Plaintiff did or did not have in pursuing the Claim. Without any evidence to this effect, a Court cannot determine, as stated in section 5(1)(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).” I was provided with no evidence on the Plaintiff’s abilities or circumstances. I have no evidence of diligence or an explanation for any lack of diligence. When was counsel retained? What steps did counsel take if counsel was retained? If no steps were taken, why not?

Ontario: More on adding defendants (and some pedantry)

Bhatt v. Doe has a good analysis of adding a defendant to proceeding after the presumptive expiry of the limitation period.  If you want to cite a recent decision, this is a good option.

In the spirit of pedantry I have two quibbles.  First, this:

[11]           The passing of a limitation period is fatal to a motion to add a party (Limitations Act, 2002, s. 21(1)). The doctrine of special circumstances is no longer applicable (Joseph v. Paramount Canada’s Wonderland, (2008), 2008 ONCA 469 (CanLII), 90 O.R. (3d) 401 at paras. 27 and 28 as cited in Parent v. Janandee Management Inc., [2009] O.J. No. 3763 (Master) at para. 29).

It’s now ten years since the Court of Appeal held that the special circumstances doctrine is no longer generally available.  Why do bar and bench feel compelled to make this point?   Who still argues special circumstances?

Second, this:

[12]           With respect to claims pursuant to the provisions of unidentified automobile coverage, discoverability is triggered when the insured knew or ought to have known about the material facts on which the claim is based. As stated by Justice Mackinnon in July v. Neal, 1986 CanLII 149 (ON CA), [1986] O.J. No. 1101 (C.A.) at para. 16:

…I have concluded that the time begins to run under such circumstances as the instant case, when the material facts on which the claim is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence: Central Trust Co. v. Rafuse et al. [reported 1986 CanLII 29 (SCC), 31 D.L.R. (4th) 481], Supreme Court of Canada, released October 9 1986 – Le Dain J. (for the court) at p. 99 [p.535 D.L.R.].

See also July at para. 32, Hier v. Allstate Insurance Co. of Canada, 1988 CanLII 4741 (ON CA), [1988] O.J. No. 657 (C.A.) at para 35, Galego v. State Farm Mutual Automobile Insurance Co., 2005 CanLII 32932 (ON SCDC), [2005] O.J. No. 3866 (Div.Ct.) at paras. 8 and 9, Wilkinson v. Braithwaite, [2011] O.J. No. 1714 (S.C.J.) at paras. 31-35.

With respect to any claim, s. 5 of the Limitations Act determines discovery.  There is no “trigger” beyond knowledge of the discovery matters.  Cases decided under the former limitations scheme, and applying the common law discovery rule, are not helpful because, as here, they cause the court to frame the issue incorrectly.

Ontario: in an MVA claim, obtaining an accident report isn’t necessarily sufficient due diligence

 

Obtaining a motor vehcile accident report is not in all circumstances sufficient due diligence in identifying a potential defendant.  In Harold v. Quigley, Justice Broad held that there was no evidence to suggest that the police officer who completed the MVAR had investigated whether the proposed defendant had maintained and kept the highway in repair as the plaintiff proposed to plead.  The plaintiff was not entitled to assume that the officer had done so.  These are the relevant paragraphs:

[17]         There is nothing in the motion material which would suggest that the plaintiff’s abilities and circumstances affected her ability to investigate and understand the facts upon which the claim might be based.

[18]         The affidavit of George B. Dietrich, the managing lawyer at the Dietrich Law Office, did not disclose any steps taken by the plaintiff or her lawyers to discover the identity of all responsible parties within the two-year limitation period following the accident other than to obtain the MVAR. The plaintiff argues that nothing further was required in the exercise of due diligence. Mr. Dietrich stated that his firm relied upon the MVAR which reported that the defendant Quigley hit an icy spot, left the road into the median and flipped over and that he was driving too fast for the conditions. No enquiries were initiated on behalf of the plaintiff respecting the nature and extent of the winter road maintenance carried out by the Crown and Carillion in the period leading up to the accident.

[19]         The plaintiff relies upon the Court of Appeal decision in Lingard v. Milne-McIssac (2015), 2015 ONCA 213 (CanLII), 125 O.R. (3d) 118 (C.A.) for the proposition that “reliance on the information contained in a motor vehicle accident report is reasonable and sufficient and constitutes due diligence.” She also points to the case of Todhunter v. Owles, 2015 ONSC 5656 (CanLII), 2015 ONSC 5656 (S.C.J.) in which Tausendfreund, J. referred to Linguard  and rejected the proposition that “each action arising out of an MVA in winter conditions would require the addition of municipalities as defendants to address the standard of care regarding winter maintenance.”

[20]         The Crown and Carillion argue that the plaintiff’s motion material does not contain evidence of any due diligence to displace the presumption in s. 5(2) of the Limitations Act, 2002. They say that certainty of a defendant’s responsibility for the act or omission that caused or contributed to the loss is not a requirement for discoverability, citing the case of Kowal v. Shyiak, 2012 ONCA 512 (CanLII), 2012 ONCA 512 (C.A.) at para. 18-19, and that neither is knowledge of the standard of care or whether conduct fell below it, citing Cassidy v. Belleville (Police Service), 2015 ONCA 794 (CanLII), 2015 ONCA 794 (C.A.) at para. 13.

[21]         In my view the Lingard and Todhunter decisions are not determinative of the question as to whether the plaintiff has provided a reasonable explanation as to why information was not obtainable with respect to the possible claims against the Crown and Carillion within the limitation period. The Court of Appeal in Pepper v. Zellers Inc.  2006 CanLII 42355 (ON CA), [2006] O.J. No. 5042 (C.A.) at para. 14 confirmed that a motion under rule 5.04(2) to add parties after the apparent expiration of a limitation period is discretionary and involves a fact-based inquiry. The court observed that, while the threshold of such a motion is low, the motion judge is entitled to consider the evidentiary record to determine whether there is a live issue of fact or credibility about the commencement date of the limitation period.

[22]          Lingard dealt with information set forth on a MVAR with respect to insurance coverage of the defendant driver, holding that it was reasonable for the plaintiff to assume that the police officer who completed the report asked the defendant for proof of insurance and that the plaintiff was justified in relying upon the motor vehicle accident report for that information.

[23]         In the present case, there is nothing to suggest that the police officer who completed the MVAR conducted an investigation into whether the Ministry of Transportation and its contractor had maintained and kept the highway in repair, nor that the plaintiff was entitled to assume that the police officer had done so. Although the MVAC identified that the road was icy, it did not comment on whether the icy condition was connected to a failure of the Ministry and its contractor to keep the highway in a reasonable state of repair.

[24]         Teusendfreund, J. in Todhunter was considering a motion for leave to appeal to the Divisional Court from a decision of Tranmer, J. to grant leave to the plaintiff to amend to add two municipalities as defendants. Tranmer, J. found that the plaintiff had demonstrated due diligence in determining the parties liable for the accident by obtaining the MVAR, by moving to discovery and in bringing the motion shortly thereafter. He found that the MVAR did not suggest negligence on the part of either municipality with regard to road maintenance and it was not until the defendant’s examination for discovery that any issue with respect to the existence of black ice was identified.

[25]         As indicated above, Teusendfreund, J. rejected the proposition that each action arising out of an MVA in winter conditions would require the addition of municipalities as defendants. However, he did not hold that plaintiffs should be relieved in all circumstances from any obligation to carry out due diligence on whether the relevant authority had failed to maintain and keep the subject highway or road in repair, particularly when she or he is in possession of information that such may be the case.

[26]         In the present case the MVAR noted that the road was icy. The plaintiff has led no evidence that, armed with this information, she took any steps to attempt to ascertain whether the icy condition may have been a result of a failure of the authority having responsibility to maintain and repair the highway to the requisite standard. As indicated by the Court of Appeal in Kowal at para. 18, certainty of a party’s responsibility for an act or omission that caused or contributed to the loss is not a requirement and that it is enough to have prima facie grounds to infer that the acts or omissions were caused or contributed to by the party or parties identified. In Cassidy, at para. 13, the Court of Appeal held that discovery of sufficient material facts to trigger the commencement of a limitation period does not depend on precise knowledge of the applicable standard of care and whether the party’s conduct fell below it.

[27]         In contrast the situation in Todhunter, the plaintiff in the present case had knowledge of the existence of an icy road surface which contributed to the accident.  In her application for statutory accident benefits dated February 27, 2014, the plaintiff described the mechanism of the accident as involving the vehicle hitting black ice on Highway 11. As indicated above, the MVAR, received by the plaintiff’s counsel on January 9, 2015, had noted the presence of black ice on the highway.

[28]         It is noteworthy that counsel for the plaintiff requested the consent of Crown and Carillion to the amendment to add them as defendants prior to receipt of any documentation or records from their counsel respecting maintenance of the highway during the relevant time period. No new facts were discovered by counsel for the plaintiff prior to making the determination to amend her pleading.

[29]         In Wong v Adler, 2004 CanLII 8228 (ON SC), [2004] O.J. No. 1575 (Master) aff’d 2004 CanLII 73251 (ON SCDC), [2005] O.J. No. 1400 (Div. Ct.) Master Dash stated, at para. 45, that if the court determines that there is an issue of fact or credibility on a discoverability allegation the defendant should be added with leave to plead a limitations defence, whereas, if there is no such issue, the motion should be refused. In my view there is no issue of credibility on the question of whether simply obtaining the MVAR constituted sufficient due diligence on the part of the plaintiff in the circumstances. The court on this motion is in as good a position to determine that issue as would a judge on a summary judgment motion or at trial.

[30]         In my view the plaintiff has failed to discharge the onus on her show, by evidence, that discoverability delayed the commencement of the running of the limitation period. Her motion to amend the Statement of Claim to add the Crown and Carillion as defendants must therefore be dismissed.

 

Ontario: remember the amendment principles

Master Muir provides a helpful summary of amendment principles in Concord Adex Inc. v. 20/20 Management Limited:

[20]           The law in relation to motions seeking leave to amend a pleading is well settled and was not seriously in dispute on this motion. The applicable principles are summarized in my decision in Greenwald v. Ridgevale Inc., 2016 ONSC 3031 (CanLII), 2016 ONSC 3031 (Master). At paragraph 21 of Greenwald I set out those factors as follows:

• the amendments must not result in prejudice;

• the amendments must be legally tenable;

• the amendments must comply with the rules of pleading;

• a motion to add a party must meet all of the requirements of a motion under Rule 26.01;

• the addition of the party should relate to the same transaction or occurrence;

• the addition of the party should not unduly delay or complicate the hearing;

• the addition of a party will not be permitted if it is shown to be an abuse of process.

It is useful to keep these in mind when considering whether a motion to add a party of the presumptive expiry of the limitation period.

There is also a reminder that standard of discovery applicable when determining whether to add a proposed defendant after the presumptive expiry of the limitation period is reasonable discovery, not possible discovery:

[47]           With respect to all of these arguments it is important to emphasize that it is reasonable discoverability and not the mere possibility of discovery that triggers a limitation period. See Crombie Property Holdings Ltd. v. McColl-Frontenac Inc., 2017 ONCA 16 (CanLII) at paragraph 35; leave to appeal refused, 2017 SCCA No. 85. The proposed defendants appear to be holding the plaintiffs to a standard of perfection. That is simply not the test.

Ontario: CA on adding a party outside of presumptive limitation period

We overlooked this 2016 Court of Appeal decision in Arcari v. Dawson that considers adding a party to a proceeding after the presumptive expiry of the limitation period.

The Court described the relevant principles:

[10]      When a plaintiff’s motion to add a defendant is opposed on the basis that her claim is statute-barred, the motion judge is entitled to assess the record to determine whether, as a question of fact, there is a reasonable explanation on proper evidence as to why she could not have discovered the claim through the exercise of reasonable diligence. If the plaintiff does not raise any credibility issue or issue of fact that would merit consideration on a summary judgment motion or at trial and there is no reasonable explanation on the evidence as to why the plaintiff could not have discovered the claim through the exercise of reasonable diligence, the motion judge may deny the plaintiff’s motion (Pepper v. Zellers Inc. (2006), 2006 CanLII 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), at paras. 18, 19, 24).

[…]

[15]      There is no evidence to support this submission, such as evidence from the engineer explaining why the issue was not clear to him. As is stated in Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 2d ed. (Markham, Ont.: LexisNexis, 2014), at para. 2.284: “it is incumbent upon the plaintiff to lead some evidence of the steps he or she took to ascertain the identity of the responsible party and provide some explanation as to why the information was not obtainable with due diligence before the expiry of the limitations period.” We also reject the appellant’s submission that merely retaining an engineer was sufficient to discharge the due diligence responsibility and postpone the limitation period indefinitely.

Two facts are noteworthy:

  1. The Court left open the possibility that it will revisit the rule in favour of committing the issue of discoverability to trial:

[17]      Although a motion to add defendants is not a motion for summary judgment, the goal of “a fair process that results in just adjudication of disputes” that is “proportionate, timely and affordable” is relevant in this context as well: Hryniak v. Mauldin, 2014 SCC 7 (CanLII), [2014] 1 S.C.R. 87, at para. 28. It may well be that this court should interpret Pepper in light of Hryniak and re-evaluate the suggestion that Pepper sets a strong default rule in favour of committing the issue of discoverability to trial.  We leave that matter for another day.

2.  The plaintiff claimed based on injuries resulting from being hit by a car. The plaintiff retained an accident reconstruction expert to produce a report about the cause of the accident.  This engineer found that the driver’s speed was the cause.  The plaintiff subsequently learned that the design of the crosswalk where she was hit may also have contributed to her accident and sought to sue the parties who owned it.  The Court rejected the plaintiff’s submission that merely retaining an engineer to determine the cause was sufficient to discharge the due diligence responsibility.  Arguably, this heightens the responsibility.

Ontario: due diligence and motions to add a defendant

The Court of Appeal recently held in Fennell and Galota that the plaintiff’s due diligence is only factor in the discovery analysis.  This introduced some uncertainty into the test for determining whether to add a defendant after the presumptive expiry of the limitation period, which is, essentially, whether the plaintiff exercised sufficient due diligence to found a discovery argument.

Last June, in Wong v. Salivan Landscape Ltd., Master Haberman held that due diligence is no longer a consideration in determining whether to add a defendant.

[31]         The Court of Appeal has recently asked similar questions in Fennell v. Deol, 2016 ONCA 249 (CanLII).  There, Stewart J. concluded that while due diligence is a factor that informs the analysis of when a claim ought to have been reasonably discovered, lack of due diligence is not a separate and independent reason for dismissing a plaintiff’s claim as statue-barred. 

[32]         Though the issue arose in Fennel in the context of an appeal from a summary judgment motion dismissing the claim against Deol, in my view, a similar approach should be taken in the context of a motion to add a party after the expiry of the presumptive limitation period. A motion should not be dismissed on the basis of a lack of diligence.

[33]         Even before Fennell, the court had already sought to dilute the somewhat heavy onus that some case law had thrust on plaintiffs as a means of demonstrating their due diligence.  As Baltman J. noted (in Welsch v. Peel Standard Condominium Corp. No. 755, 2013 ONSC 7611 (CanLII)),Lauwers J. (as he then was) stated in Madrid v. Ivanhoe Cambridge Inc. 2010 ONSC 2235 (CanLII), that it is not in the interests of justice to impose an overly muscular level of pre-discovery due diligence; the parties should not have to conduct a pre-discovery form of discovery.   Baltman J. confirmed that as each case is unique and will turn on its own facts, whether the steps taken in each case will be sufficient will also vary.

Arguably, this rejects about twelve years of jurisprudence beginning with Master Dash’s decision in Wong v. Adler.  That’s problematic.  The purpose of Master Dash’s test is to require something more of a plaintiff than a mere invocation of discoverability to obtain leave to add a defendant after the presumptive expiry of the limitation period.  Master Dash required the plaintiff to establish reasonable due diligence to ensure there would be some substance to the discoverability argument.   It’s not clear what test Master Haberman proposed to use, if any, instead.

I don’t think that the Court of Appeal intended to change.  I agree with Justice Emery’s analysis in Fontanilla v. Thermo Cool Mechanical:

[34]      The Court of Appeal agreed. Galota does not change the law regarding the expectation that a party will exercise reasonable diligence to determine the facts that would support a claim for which a proceeding may be brought to seek a remedy. The court inGalota relied on the decision of Justice Van Rensburg in Fennell v. Deol,2016 ONCA 249 (CanLII). The court in Fennellrecognized that, although due diligence is a factor that the court must consider at the time a claim ought reasonably to have been discovered, lack of due diligence is not in and of itself a reason for dismissing a plaintiff’s claim as statute barred.

[35]       Instead, due diligence must be considered a part of the analytical process to determine on an objective basis the day on which a reasonable person with abilities and in circumstances of the person affected by the claim first would have known of the matters referred to in s. 5(1)(a) to bring an action. As Justice Van Rensburg explained in Fennell at paragraph 24:

[24]      Due diligence is part of the evaluation of s. 5(1)(b). In deciding when a person in the plaintiff’s circumstances and with his abilities ought reasonably to have discovered the elements of the claim, it is relevant to consider what reasonable steps the plaintiff ought to have taken. Again, whether a party acts with due diligence is a relevant consideration, but it is not a separate basis for determining whether a limitation period has expired.

I expect the courts will prefer Justice Emery’s approach.

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.))