The Court of Appeal decision in Morrison v. Barzo sets out in detail the test for adding a party to a proceeding after the presumptive expiry of the limitation period. It’s now the leading decision on the subject.
To obtain leave, the plaintiff must first rebut the presumption in s. 5(2) of the Limitations Act by leading evidence as to the date of subjective discovery. The plaintiff doesn’t need to show evidence of due diligence; due diligence is immaterial to subjective discovery:
 The evidentiary burden on a plaintiff seeking to add a defendant to an action after the apparent expiry of a limitation period is two-fold. First, the plaintiff must overcome the presumption in s. 5(2) that he or she knew of the matters referred to in s. 5(1)(a) on the day the act or omission on which the claim is based took place, by leading evidence as to the date the claim was actually discovered (which evidence can be tested and contradicted by the proposed defendant). The presumption is displaced by the court’s finding as to when the plaintiff subjectively knew he had a claim against the defendants: Mancinelli, at para. 18. To overcome the presumption, the plaintiff needs to prove only that the actual discovery of the claim was not on the date the events giving rise to the claim took place. It is therefore wrong to say that a plaintiff has an onus to show due diligence to rebut the presumption under s. 5(2): Fennell, at para. 26.
Second, the plaintiff must establish a prima facie discovery argument by leading evidence as to why the claim couldn’t have been discovered through reasonable diligence:
 Second, the plaintiff must offer a “reasonable explanation on proper evidence” as to why the claim could not have been discovered through the exercise of reasonable diligence. The evidentiary threshold here is low, and the plaintiff’s explanation should be given a “generous reading”, and considered in the context of the claim: Mancinelli, at paras. 20 and 24.
This is not a due diligence analysis. While a plaintiff’s due diligence is relevant to the finding under s. 5(1)(b), the absence of due diligence is a not a separate basis for dismissing a claim as statute-barred. This is so whether the expiry of the limitation period is at issue in a motion for summary judgment or in a motion to add a defendant.
When a claimant ought reasonably to have discovered a claim requires an evidentiary foundation. The court can’t say merely that the claim was discoverable before the expiry of the limitation period without explaining why. It may be that the court can only determine when discovery ought to have occurred at a later stage of the proceeding. In such a case, the motion to add the defendant should be granted, with leave for the defendant to plead a limitation defence:
 Reasonable discoverability of a claim under s. 5(1)(b) that precludes adding a party contrary to s. 21(1) requires an evidentiary foundation. The court must be satisfied that a reasonable person in the plaintiff’s circumstances ought to have discovered the claim, and the date of such reasonable discovery must be determined. It is not sufficient for the court to say that the claim was discoverable “before the expiry of the limitation period”, without explaining why. It may be that the date of reasonable discoverability can only be determined at a later stage in the proceedings, at trial or on a summary judgment motion. In such a case, the motion to add the defendant should be granted, with leave for the defendant to plead a limitation defence: Mancinelli, at paras. 31 and 34.
Conceptually, I recognise the distinction between the court assessing the plaintiff’s due diligence in investigating the claim against the proposed defendant, and the court assessing whether the plaintiff could through reasonable diligence have discovered the claim against that defendant. However, in practice, I suspect this is a distinction without a difference. In both cases, the plaintiff will lead evidence of the steps taken to investigate the claim—due diligence—and argue that she did what was reasonable to investigate the claim and still didn’t discover it. The proposed defendant will lead evidence of some other step the plaintiff could have taken and argue that it was a reasonable step and would have led to discovery. And so the adequacy of due diligence is always in issue.
The Court also make important points about the findings that are necessary in a limitations analysis. The court must identify the claims in question, and then find when they were discovered. This requires a specific finding of fact that answers the question asked by s. 5(1)(b):
 Instead, the motion judge was required, after clearly defining the nature of the claims against the respondents on the evidence, and after finding no actual knowledge of the claims, to make a specific finding of fact as to when a reasonable person “with the abilities and in the circumstances” of the appellants “first ought to have known of the matters referred to in clause (a)”.