Ontario: two notable misnomer decisions

Master Short’s decision in Frederica Mitchell v. John Doe is notable for its comprehensive summary of misnomer principles.

So too is Master Short’s decision in Livska v. Molina .  It’s an example of the circumstances where the court grants misnomer relief while granting leave to the correct party to plead a limitations defence.  Usually, misnomer relief means the correct party can’t plead a limitations defence because misnomer relief is a correction, not an addition or substitution (although the Court of Appeal is inconsistent on this point).  This means that the correct defendant was always a party to the proceeding, just misnamed, and if the proceeding was commenced in time, there can be no limitation defence for the correct defendant.

In Livska, the plaintiff named Molina, the alleged perpetrator of an assault, as a defendant.  Molina didn’t defend, and the plaintiff noted her in default.  Subsequently, the sister learned that Molina’s sister may have participated in the assault.   Master Short granted misnomer relief on the basis that Molina, correctly named, was in fact both herself and her sister.  Because Molina didn’t defend the action, whether the plaintiff’s proceeding was timely remained a live issue.

Ontario: S. 21 might include mistake as to identity

In Douglas v. Stan Fergusson Fuels Ltd., the Court of Appeal left open the possibility that s. 21 of the Limitations Act might be broad enough to include mistake as to identity rather than merely a misdescription:

[112]   In my view, while the test for misnomer may be broad enough to embrace a mistake as to the identity of the person who should have brought a suit (rather than a misdescription of the person suing),[8] it cannot do so in this case. This is because, as I have explained above, at the time State Farm chose to commence a claim, it did not have capacity to do so in its own name. As a result, it cannot be said that State Farm made a “mistake” in naming the Douglases as plaintiffs instead of itself.

Ontario: the principles of misnomer

 

The decision in Corp. of Township of North Shore v. Grant has a helpful summary of misnomer principles:

[18]           Nonetheless, motions to correct misnomer or misdescription are still permitted pursuant to s. 21 of the Limitations Act, 2002, which provides:

(1)   If a limitation period in respect of a claim against the person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.

 (2)   Subsection (1) does not prevent the correction of a misnaming or misdescription of a party.

 [19]           Section 21 has been held to apply equally to motions in which a plaintiff seeks to substitute a plaintiff in an action, notwithstanding language that appears to refer only to defendants being substituted:  Horgan v. Tanktek Environmental Services Ltd. (2009), 178 A.C.W.S. (3d) 87 (Ont. S.C.), aff’d 2009 ONCA 820 (CanLII).

[20]           There is a debate in the jurisprudence as to whether a request to amend a pleading by adding a party who was omitted altogether from the style of cause is properly characterized as a request to correct a misnomer or misdescription.  Some cases have held that it is not and, instead, have allowed the amendment using the court’s power to cure a “technical irregularity”:  see Hastings v. Halton Condo Corp. to 324 et al.2012 ONSC 175 (CanLII)Toronto Standard Condominium Corporation No. 810 v. King Spadina Development Corporation2014 ONSC 5560 (CanLII)2014 ONSC 5560 (Master).

[21]           Regardless of the manner in which a request to substitute a plaintiff is characterized, the jurisprudence is clear that an amendment will be permitted where there is a “coincidence” between a plaintiff’s intention to sue and the intended defendant’s knowledge of the plaintiff’s intention.  In Lloyd v. Clark2008 ONCA 343 (CanLII), the plaintiff was denied leave by the motion judge to name the Regional Municipality of Durham as a defendant in place of the Town of Ajax and the Corporation of the Town of Whitby.  In a brief endorsement allowing the appeal, the Court of Appeal held:

The case law amply supports the proposition that where there is a coincidence between the plaintiff’s intention to name a party and the intended party’s knowledge that it was the intended defendant, an amendment may be made despite the passage of the limitation period to correct the misdescription or misnomer.  [Citations omitted.]

 [22]           Although Lloyd was a case in which a plaintiff sought to substitute a defendant, it has frequently been applied in cases in which a plaintiff seeks to substitute or add a plaintiff: see, for e.g., Streamline Foods Ltd. v. Jantz Canada Corp.2010 ONSC 6393 (CanLII), aff’d 2011 ONSC 1630 (CanLII)2011 ONSC 1630 (Div. Ct.)2012 ONCA 174Tetreault v. Nussbaum2015 ONSC 6226 (CanLII)Asset Strategy Corp. v. Rodinia Lithium Inc.2016 ONSC 5337 (CanLII) .

[23]           Thus, an amendment to add the name of one or more plaintiffs to a statement of claim should be permitted notwithstanding the expiry of a limitation period where the court is satisfied that the plaintiffs sought to be added to an action were intended plaintiffs prior to the expiration of the limitation period, that the defendant knew that they were intended plaintiffs, and where no prejudice arises that cannot be compensated for in costs.

[24]           I am satisfied that this is the situation here.  There is ample evidence in this case both of the intentions of the Council Members to claim against the defendant and of the defendant’s knowledge of those intentions.

Ontario: the principles of misnomer

Master Muir’s decision in Martin v. Doe is worth reviewing for its summary of the principles of misnomer:

[26]      The plaintiff also relies on the doctrine of misnomer in support of the relief she is seeking on this motion.

[27]      The law relating to misnomer has been carefully considered in recent years by the Court of Appeal. See Ormerod (Litigation guardian of) v. Strathroy Middlesex General Hospital2009 ONCA 697 (CanLII) and Spirito v. Trillium Health Centre2008 ONCA 762 (CanLII). Misnomer requires a finding that the litigation finger be clearly pointed at the intended defendant. Would a reasonable person receiving and reviewing the statement of claim, in all the circumstances of the case, and looking at it as a whole, say to himself or herself “of course it must mean me, but they have got my name wrong”? The Court of Appeal adopts this test at paragraph 12 of Spirito, where the court states as follows:

12     In Dukoff et al. v. Toronto General Hospital et al. (1986), 1986 CanLII 2648 (ON SC), 54 OR (2d) 58 (HCJ), Saunders J. noted the practice, adopted in this case, of using fictitious names where the identity of the parties are unknown.  If it was a case of misnomer, the statement of claim could be corrected by replacing the fictitious name (John Doe in that case) for the correct name, even though the correction was sought after expiry of the limitation period.  He adopted the following test from Davies v. Elsby Brothers, Ltd., [1960] 3 All ER 672 (CA), at p. 676:

The test must be:  How would a reasonable person receiving the document take it?  If, in all the circumstances of the case and looking at the document as a whole, he would say to himself: “Of course it must mean me, but they have got my name wrong”. Then there is a case of mere misnomer.  If, on the other hand, he would say:  “I cannot tell from the document itself whether they mean me or not and I shall have to make inquiries”, then it seems to me that one is getting beyond the realm of misnomer.

[28]      It must also be noted that even if a plaintiff is successful in establishing misnomer, the court retains a residual discretion under Rule 5.04(2) to refuse the proposed substitutions. This part of court’s analysis on a motion like this one is described by the Court of Appeal in Ormerod at paragraphs 28 to 32 as follows:

28     The framework put forward by the appellants is correct. After finding there was a misnomer the motion judge had the discretion to refuse to permit its correction. The Rules make this apparent. Cronk J.A. in Mazzuca v. Silvercreek Pharmacy Ltd., 2001 CanLII 8620 (ON CA), 207 DLR (4th) 492, analyzed the wording of the two rules that deal with the court’s authority to permit amendment in detail — rules 5.04 and 26.01. She contrasted their wording to note that rule 5.04(2) uses the discretionary “may” unlike rule 26.01, which uses “shall”; she also considered the history and development of these two provisions. She said at para. 25:

        • Under both rules, a pleadings amendment is not to be made if non-compensable prejudice would result. In contrast to rule 26.01, however, the language of subrule 5.04(2) imports a discretionary power rather than a mandatory direction.

29     At para. 42 she added that “proof of the absence of prejudice will not guarantee an amendment”. She also cited the discussion of the inter-relationship of the two rules in Holmested and Watson, Ontario Civil Procedure, Vol. 2 (Toronto: Carswell, 1993). The current edition states at p. 5-34:

  •      the same threshold test applies to a motion to amend under either rule 26.01 or rule 5.04(2) and the moving party must demonstrate that no prejudice would result from the amendment that could not be compensated for by costs or an adjournment; once this threshold test is met, under rule 26.01 the granting of leave is mandatory; however, where it is sought to add parties under rule 5.04(2) the court has to discretion whether to allow the amendment, notwithstanding that the threshold test is satisfied.

30     While the authors refer only to “adding” parties, the permissive “may” in rule 5.04(2) grammatically applies to the correction of the name of a party incorrectly named in exactly the same way as it does to the addition, deletion, or substitution of a party.

31     As I see it, as the scope of what the courts treat as a misnomer broadens, it is appropriate to take a wider view of the court’s discretion to refuse the correction of a misnomer. A “classic” misnomer, one in which the claim contains a minor spelling error of the defendant’s name and is personally served upon the intended but misnamed defendant, prompts the application of a standard historically developed to remedy mere irregularities. Now that the concept of “misnomer” has been broadened to apply to a wider range of situations, the standard used to permit its correction should take into account the extent of its departure from mere irregularity in all the circumstances of the case.

32     The factors the motion judge applied in this case, whether the defendant was misled or was unduly prejudiced, are undoubtedly deserving of the greatest weight. As a general principle, these factors should be determinative. A general principle, however, is not an inflexible rule. Where the mistake in naming the defendant involves more than a mere irregularity or in any particular case with exceptional circumstances, the court may exercise its residual discretion under the rule to refuse to permit its correction. It may well be that the motion judge took a narrow view of his residual discretion to refuse to permit the correction of the misnomer. However, I am satisfied he realized he had a residual discretion since the factors he applied are broader than the rule’s threshold of prejudice that cannot be compensated by costs or an adjournment. While the motion judge in this case might have inferred that the plaintiffs, after learning Dr. Graham’s identity, did not resolve to proceed against her until July 2008, he did not make that inference.

 [29]      Paragraph 32 of Ormerod makes it clear that prejudice to the proposed substituted defendants is the most important factor on this part of the analysis. Prejudice is also an important consideration based on the clear language of Rule 5.04(2).

Ontario: the law requires reasonable investigation, not perfection

In Bowen v Rengro Ltd., Master Dash provides a useful, and likely to be frequently quoted, description of the due diligence plaintiffs must establish when seeking to add a party to an action after the expiry of the presumptive limitation period:

[12]              In my view, it is not to any degree “the standard of perfection” to require counsel to make reasonable, meaningful, endeavors to ascertain the proper owner of the properties involved; but rather it is the reasonable standard of investigation that ought to be expected and provided, in cases such as this.

Master Dash also criticised as unwise the plaintiff’s failure to inspect the site of an accident when ownership may be at issue:

[16]              […] I regard it as unwise to fail to make some investigation of the actual site in cases where ownership is likely to be a key element. However another approach might well be to conduct an examination of the available survey and other information preserved under the province’s Registry System[.]

Ontario: limiting fraudulent conveyance actions

 

In Conde v. Ripley et al., Justice Dunphy held that the limitation period applicable to a claim under section 2 of the Fraudulent Conveyances Act depends on whether the claim is to recover land, in which case the ten year limitation period in the Real Property Limitations Act applies, or for personal property, in which case the general two year limitation in the Limitations Act, 2002 applies.

Section 2 of the FLA entitles a person to commence an action against a transferee of real or personal property to declare the transfer to be void as against “creditors or others” where there was fraudulent intent.

The defendants in Conde argued that such an action is subject to the Limitations Act alone.  In a well-reasoned and correct decision, Justice Dunphy rejected this position.

Section 2(1)(a) of the Limitations Act provides that the Act doesn’t apply to proceedings subject to the RPLA.  Section 4 of the RPLA applies to “an action to recover any land”.  If the two year limitation period in the Limitations Act applied to an FCA action seeking to invalidate a  transfer of an interest in land while the claim to the land itself is subject to the ten year RPLA limitation period, it would be “inconsistent in the extreme”; the action to set aside the  transfer would be barred before the action to claim the interest.  This result, Justice Dunphy noted, “appears contrary to common sense”. (I wonder whether it is the two year limitation period that would apply to the FCA claim under the Limitations Act; section 16(1)(a) provides that no limitation period applies to claims that seek only a declaration–ie, that a transfer of land is void).

The problem with the defendants’ position was their confusion between standing to bring a claim under the FCA and  the nature of the FCA claim itself:

[40]           In arguing for a two year limitation period, the moving parties have confused standing to bring a claim under the FCA with the nature of the FCAclaim itself.  Standing – which is granted by s. 2 of the FCA to “creditors or others” – is to be distinguished from the nature of the action itself.  As I have explained at some length, standing to bring FCA claims is granted to “creditors or others” whereas a claim, once brought by a creditor with standing, has many of the characteristics of a class proceeding.  For limitations purposes, in my view, it is necessary to consider the nature of the FCA claim and not the standing of the individual claimant.

[41]           An FCA claim, if successful, does no more or less than invalidate the impugned transfer as against “creditors or others” of whom the plaintiff is obviously an exemplar.  Where the conveyance attacked is of real property, such an action is thus quite literally an “action to recover land” since the outcome of the action, if successful, is to “recover” the land to the estate of the transferor (in this case Mr. Ripley) so that – once so recovered – it can respond to the claims of creditors or others as if it had never been transferred.  The outcome of the plaintiff’s claim against the transferor may well be a money judgment – the outcome of the claim against the transferee under the FCA is an order “to recover land” which is then available to satisfy that claim.

[42]           Importantly, even if the underlying claim of the “creditor or others” is a money claim, the outcome of an FCA action is not a money judgment ordering the transferee to pay that claim.  The transferee may well pay the judgment to free the property of the claim – if they so choose.  That, however, is a consequence of choice and not of the order made.

Justice Dunphy found nothing regrettable about the two separate limitation periods applying to FCA actions:

[44]           This might seem somewhat inelegant or even regrettable.  In my view, it is neither.  It is simply the by-product of the FCA being a descendent of a very old statute going back literally hundreds of years upon which has been overlaid a more comprehensive and newly-elaborated system of limitation periods than formerly applied.  FCA actions were once considered to be actions for which no limitation period specifically applied.  The Legislature has seen fit to change that, and in so doing, to differentiate between actions involving recovery of land and other types of actions.  The result, when applied to this old statute, is what I have described.

It’s also worth noting Justice Dunphy’s rather pithy reminder that for the purposes of the limitation period, the law will impute a solicitor’s knowledge on her client:

[67]           The limitation period commences when the plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence:  Tender Choice Foods Inc. v. Versacold Logistics Canada Inc., 2013 ONSC 80 (CanLII) at para. 56.  The plaintiff here had the facts but chose to disbelieve them due to a search conducted without due care and accepted without sufficient examination.  As between the two, it may well be that the solicitor should have found what her client failed to, but I must attribute the knowledge of one to the other.

[68]           To hold otherwise would be, in my view, to provide a solicitor’s negligence exception to the Limitations Act, 2002.  While such a development would, I have no doubt, warm the hearts of lawyer insurance providers everywhere, I can find no support for it in the statute.  Section 5(1)(b) requires the application of an objective test to a consideration of the subjective capacities of the plaintiff.