Ontario: a pleading read generously

When considering whether an amendment raises a fundamentally new claim and is therefore statute-barred, the court must read the pleading generously.  The decision in Virji v. Kotton is an example of what this generosity looks like.  The court “teased out” the necessary causes of action in a pleading drafted with “understatement”:

[26]           Accordingly, if the amended pleading is not to be seen as putting forward a new cause of action, an existing claim in fraud and conspiracy would have to be teased out of the language in paragraphs 35 and 50. Both of those suggest that the false representations of value issued by Bosley Farr were knowingly done. Knowledge, of course, is generally considered to be distinct from intention, and so it is questionable whether these two paragraphs really set out something like the causes of action that Plaintiff counsel attributes to them.

[27]           That said, context is everything when it comes to matters of interpretation. Under the circumstances, I do not think that what the Plaintiff meant by alleging that Bosley Farr “knowingly” made false representations is that Bosley Farr knew it was making representations of value; rather, I assume that what the Plaintiff meant was that Bosley Farr knew of the falsehood of the representations it was making but made them anyway. Read in this way, there is an element of intentionality embedded in the allegation of “knowingly”.
[28]           In addition, in the context of Bosley Farr having been retained to do a valuation by Kotton, the suggestion behind the value having been knowingly misrepresented is that it was done for Kotton’s benefit. While this is only indicated in an oblique fashion, nothing else would really make sense. I cannot assume that the Plaintiff meant to allege that Bosley Farr knowingly misrepresented the value of an investment property just for the sake of doing so. Instead, I understand the allegation to be that it did so for the purpose of collaborating with the party that retained it and that would stand to benefit from the misrepresented value – i.e. Kotton.
[29]           With all due respect, there is good reason that the Plaintiffs have sought to amend the Statement of Claim. As originally drafted, it does not convey its own meaning very well. However, if one brings a generous attitude to the task of deciphering it, and one digs deep enough into its barely stated implications, one can see that there is a glimmer of a fraud and conspiracy allegation peeking through the fog.
[30]           As Perell J. stated in Kaynes v. BP, PLC2019 ONSC 6464, at para 87, where a pleading is sought to be amended after the limitation period has expired, the key to the analysis is “whether substantially all of the material facts of the tendered cause of action have already been pleaded, in which case, the amendment will be allowed, or whether new material facts are sought to be added to support the cause of action, in which case, the amendment will not be allowed or if already pleaded, it will be struck.” The present pleading meets the test of the material facts of fraud and conspiracy having already been pleaded, but just barely.
[31]           It is safe to say that had counsel for the Plaintiffs not gone to some effort in this motion to point out the fact that the basic elements of fraud and conspiracy – intentionality and collusion – were already pleaded, I would have missed them. I assume most other readers, including the Defendants, might have missed them as well.
 [32]           I do not know whether the Statement of Claim was deliberately drafted with this level of understatement or whether the intentionality and collusion ingredients made their way into a couple of paragraphs by chance; however, I do see that now that my attention has been fully drawn to them and to the context in which they are stated. Given this recognition, I am compelled to conclude that the proposed amendments represent embellishments on causes of action that were already contained in the Statement of Claim.