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Civil Litigation - Amending Pleadings and Limitation Periods


MORE CASES

Part 2


. Shwaluk v. HSBC Bank of Canada

In Shwaluk v. HSBC Bank of Canada (Ont CA, 2023) the Court of Appeal considered the frequently-present tension between amending pleadings and adding new claims which might be limitation-barred:
(2) Did the motion judge err in concluding the request for relief from forfeiture was statute-barred?

[45] An amendment that adds a new claim may be refused on the basis that it creates non-compensable prejudice to the responding party if the limitation period for advancing the claim has expired: Klassen v. Beausoleil, 2019 ONCA 407, 34 C.P.C. (8th) 180, at paras. 26-27.

[46] However, an amendment is not an assertion of a new claim if it merely pleads an alternative claim for relief arising from the same facts already alleged, different legal conclusions drawn from the same facts, particulars of an allegation already pleaded, or additional facts upon which the original right of action is based. In making the assessment of whether a new claim is advanced, the original pleading is to be read generously, with some allowance for drafting deficiencies: Klassen, at paras. 29-30.

[47] The motion judge tied her finding that Ms. Shwaluk’s request for relief from forfeiture was a new statute-barred claim directly to her view that an admission had been withdrawn. She stated:
I find that the amendments sought by [Ms. Shwaluk] are an attempt to include new claims and allegations. By withdrawing her admission that she had not filed an LTD claim in her reply, [Ms. Shwaluk] is statute-barred from now asserting relief from forfeiture on new facts that had not been previously pled and were not previously disclosed or alleged. They do not arise from the same facts already admitted and pled, and to permit the amendments proposed would result in fundamentally different claims than those originally pleaded.
[48] Ms. Shwaluk makes two arguments in opposition to this conclusion. First, she argues that a request for relief from forfeiture is not a “claim” within the meaning of the Limitations Act and is never subject to the two-year limitation period that the motion judge apparently applied.[3]

[49] Second, Ms. Shwaluk argues that, even if a request for relief from forfeiture is a “claim” under the Limitations Act, the request is not a new claim that is statute-barred. In her submission, the amendments are “factually intertwined with the existing allegations and can reasonably be viewed as falling within the four corners of the existing claim and reply. Similarly, the pleading of relief from forfeiture is an alternative claim for relief arising out of the same facts previously pleaded”.

[50] It is not necessary to decide whether relief from forfeiture can ever be considered a “claim” within the meaning of the Limitations Act. Even if a request for relief from forfeiture is a “claim”, here it is not a new claim within the meaning of Klassen. The motion judge’s view to the contrary was tainted by her incorrect finding that an admission was being withdrawn in favour of new facts and positions not previously advanced. Viewed from the correct perspective, the facts asserted in the amendments are particulars of alleged facts in the original pleadings, read generously; relief from forfeiture is the legal conclusion alleged to flow from those facts, including the factual admission which continues.

[51] The original statement of claim referred to Ms. Shwaluk’s request for STD and LTD benefits and asserted the failure to pay both was unreasonable and unjustified in light of facts, documents, and information provided or available to Sun Life. The proposed amendments assert that the information provided or available to Sun Life by June 2015 in connection with STD benefits was sufficient information regarding LTD benefits and included notice that both STD and LTD benefits were being sought, so Sun Life was not prejudiced by the failure to file an LTD benefits application/proof of claim by December 2015. This is a particularized version of the facts already alleged.

[52] Considered more generally, Ms. Shwaluk’s original statement of claim and reply alleged that her claim to payment under the policy should be allowed, given the facts, even though she had not timely filed an application/proof of loss for LTD benefits. Sun Life was always facing a lawsuit that was premised on that position. Relief from forfeiture may in some cases be granted even if not expressly raised at trial, where the facts warrant it: MacIvor v. Pitney Bowes Inc., 2018 ONCA 381, 143 O.R. (3d) 633, at paras. 28-29, leave to appeal refused, [2018] S.C.C.A. No. 223. Relief from forfeiture, which is expressly requested in Ms. Shwaluk’s proposed amendments, is a legal conclusion that she seeks in order to give effect to her originally advanced position.

[53] In light of my conclusion that the request for relief from forfeiture in the amended pleadings is not a new claim, such a request is not statute-barred. Sun Life will not suffer non-compensable prejudice from the amendments. Accordingly, leave to amend should have been granted.
. Boyer v. Callidus Capital Corporation

In Boyer v. Callidus Capital Corporation (Ont CA, 2023) the Court of Appeal considered an appeal of a motion to amend pleadings, here with a limitations aspect:
Issue 3: Did the motion judge err by refusing leave to amend the statement of claim?

[63] The motion judge dismissed the appellant’s motion to amend the Statement of Claim to add a claim for payment of deferred bonus payment on the ground that it was a new cause of action that was statute barred. The trial judge found that the appellant discovered his claim no later than September 6, 2016, as on this date he sent a letter to the President of Callidus notifying that the company had failed to arrange for the payment of “those elements of deferred compensation”. He concluded that the motion for leave to amend, brought on April 20, 2022, came more than two years after the date of discovery.

[64] The appellant submits that the motion judge erred by characterizing the claim as a new cause of action. Rather, he submits that it is a head of damage arising out of his wrongful dismissal action. The respondent submits that it is an entirely separate action that has nothing to do with an additional head of damages.

[65] In Ridel v. Cassin, 2014 ONCA 763, this court considered a motion for leave to amend a claim in a cross-appeal. The action was for damages arising out of a failed investment. The trial judge had dismissed leave to amend on the basis the claim was statute barred. This court allowed the amendment. At para.10:
In our view, this was not the assertion of a new cause of action, which would have been barred by the Limitations Act, 2002, but was simply a claim for additional damages arising from an existing cause of action. The tax liability arose out of the wrongful and unauthorized trading activity of the appellants. It was a dead loss to the respondents that is simply to be added to the loss of their investment money. [Citations omitted]
[66] When an amendment is “simply a claim for additional damages arising from an existing cause of action”, an “elaboration of the original pleading”, or “can reasonably be seen as falling within the four corners of the existing claim” it will be permitted, and the amendment will not trigger the statute of limitations: Ridel, at para. 10; Britton v. Manitoba, 2011 MBCA 77, 270 Man. R. (2d) 43, at paras. 34-40; Farmers Oil and Gas Inc. v. Ontario (Natural Resources), 2016 ONSC 6359, 134 O.R. (3d) 390, at para. 31 (Div. Ct.). See also Cahoon v. Franks, 1967 CanLII 77 (SCC), [1967] S.C.R. 455.

[67] In a wrongful dismissal action, the plaintiff claims the amounts owing as a result of the dismissal. A claim for deferred bonus payments falls squarely within the four corners of the claim. The motion judge erred in principle by concluding it was a separate cause of action.

[68] Under r. 26.01, the court shall grant leave to amend a pleading unless it would result in prejudice that “could not be compensated for by costs or an adjournment”. Although the motion judge referred to prejudice to the respondent arising from having to defend a new claim that is statute barred, once the amendments are properly considered, there is no evidence of specific prejudice relating to this head of damages.

[69] I would grant leave to amend the Statement of Claim.
. Reimer v. City of Toronto [for numbered cites see the case link]

In Reimer v. City of Toronto (Div Court, 2023) the Divisional Court considered an issue of amending pleadings to add parties where a limitation period has likely expired:
Adding Defendants

[13] The Master quoted the relevant provisions of the Limitations Act and Rule 5.04(2) of the Rules of Civil Procedure. He correctly found that expiration of the applicable limitation period was a complete bar to adding a party: Morrison v. Barzo, 2018 ONCA 979, paras. 26-27.

[14] The Master noted that s.5(2) contains a presumption which, if not rebutted, would have the limitation period commence on the date of the Incident (February 7, 2017). The Master found that the plaintiff was not aware of Maple-Crete’s involvement until March 13, 2019, nor of Royalcrest’s involvement until October 22, 2019. These findings are not contested on appeal.

[15] The Master then found that “the plaintiff must also provide a reasonable explanation on proper evidence as to why the identity of the proposed defendants could not have been discovered earlier through the exercise of reasonable diligence.” The Master noted that this evidentiary burden is “low” and that the plaintiff’s evidence on this issue “must be given a generous reading” (Decision, para. 28). These statements of principle disclose no error.

[16] The Master found that there was “no evidence to suggest that anything was done to determine the identity of the proposed defendants prior to January 9, 2019” when the plaintiff’s counsel first contacted Toronto’s adjuster on this issue. This finding is rooted in the record and discloses no palpable and overriding error. 

[17] The Master found that the plaintiff had counsel in July 2018, when the Notice Letter was sent to the City. The Master made no finding as to when the plaintiff first retained counsel. The plaintiff’s first solicitors, Diamond and Diamond LLP, were retained prior to the Notice Letter being sent (July 2018). Some time in late July or early August 2018, the file was transferred to the plaintiff’s current counsel: Cross-examination of Janet Young, January 20, 2020, QQ 62-63.

[18] The Master found that, after being asked, it took about two months for Toronto’s adjuster to provide information about the identity of Crupi and Maple-Crete. The Master also found that this information would have been readily available to the plaintiff if she or her counsel had called the City at its 311 telephone number, or had made simple internet inquiries. These findings were available to the Master and disclose no palpable and overriding error.

[19] Based on these facts, the Master found that the commencement of the limitation period should be extended from the date of the Incident for four months to the end of June 2017 “at the latest” (Decision, para. 34). In my view, this finding was generous to the plaintiff.

[20] This is not a case where a plaintiff (or her counsel) had no reason to believe there was some unnamed person who should be included as a party defendant. The plaintiff was represented by counsel experienced in personal injury claims, holding themselves out as experienced in personal injury claims, and no explanation was provided as to why the first inquiry to the City to identify the City’s contractors was not made until the eve of expiry of the limitation period. In these circumstances, on the record before the Master, it was reasonable for the Master to find that the requirement to exercise reasonable diligence to identify contractors began on about the date of the accident and could not be used to extend the limitation period for more than four months. Thus, the Master made no error in finding that the motion initiated in September 2019 to add Maple-Crete and Royalcrest as defendants was brought after expiry of the limitation period.
. 1734934 Ontario Inc. v. Tortoise Restaurant Group Inc.

In 1734934 Ontario Inc. v. Tortoise Restaurant Group Inc. (Ont CA, 2022) the Court of Appeal heard an appeal of a Superior Court motion judge, which in turn set aside a master's procedural order to add a party and amend a Claim. One issue was the denial of an amendment to the Claim which was limitation statute-barred:
[33] The motion judge was correct in finding that the Associate Judge erred in not considering these issues. He was also correct in proceeding to consider the proposed amendments afresh and with the proper factors in mind. In that regard, I agree with the motion judge’s conclusion that the claims are statute-barred. The appellants were aware of the facts underlying these claims more than two years prior to bringing the motion to amend. On that point, I note that the expiry of a limitation period is one form of non-compensable prejudice: Klassen v. Beausoleil, 2019 ONCA 407, 34 C.P.C. (8th) 180, at para. 26. Further, it is a basic principle that a party cannot circumvent the operation of a limitation period by amending their pleadings to add additional claims after the expiry of the relevant limitation period: Klassen, at para. 26.
. Taylor v. Mayes

In Taylor v. Mayes (Ont CA, 2022) the Court of Appeal considered an issue of adding a new defendant after the two-year limitation had expired:
[6] The motion judge dismissed the motion. She applied the two-stage test, essentially mirroring the wording of sections 5(1)(a) and 5(1)(b) of the Limitations Act, enunciated by this court in Morrison v. Barzo, 2018 ONCA 979, at paras. 31-32:
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. 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).

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. [Citation omitted.]
. Polla v. Croatian (Toronto) Credit Union Limited

In Polla v. Croatian (Toronto) Credit Union Limited (Ont CA, 2020) the Court of Appeal considered the law on amending pleadings to plead a new cause of action that could be limitation-barred:
[32] The general rule respecting the amendment of pleadings is that an amendment shall be granted at any stage of a proceeding on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 26.01. The expiry of a limitation period in respect of a proposed new claim is a form of non-compensable prejudice, where leave to amend to assert the new claim will be refused: Klassen v. Beausoleil, 2019 ONCA 407, 34 C.P.C. (8th) 180, at para. 26.

[33] There is no real dispute between the parties about the applicable test. In 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848, 409 D.L.R. (4th) 382, this court observed that an amendment to a statement of claim will be refused if it seeks to assert a “new cause of action” after the expiry of the applicable limitation period. As this court explained, at para. 19, in this context, a “cause of action” is “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person” (as opposed to the other sense in which the term “cause of action” is used – as the form of action or legal label attached to a claim: see the discussion in Ivany v. Financiere Telco Inc., 2011 ONSC 2785, at paras. 28-33).

[34] The relevant principles are summarized in Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 4th ed. (Toronto: LexisNexis Canada, 2020), at pp. 220-21, as follows:
A new cause of action is not asserted if the amendment pleads an alternative claim for relief out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon [which] the original right of action is based.
This passage has been cited with approval by this court. See 1100997 Ontario Limited, at para. 20, Davis v. East Side Mario’s Barrie, 2018 ONCA 410, at para. 32, and Klassen, at para. 29.

...

[38] In conducting this assessment, the court must read the pleadings generously in favour of the proposed amendment: Klassen, at para. 30; Rabb Construction Ltd. v. MacEwen Petroleum Inc., 2018 ONCA 170, 29 C.P.C. (8th) 146, at para. 8. The existing pleadings, together with the proposed amendment, must be considered in a functional way – that is, keeping in mind that the role of pleadings is to give notice of the lis between the parties. As such, the question in this case is whether the respondents would reasonably have understood, from the Amended Statement of Claim and the particulars provided on discovery, that the appellant was pursuing a claim in respect of the matter addressed by the proposed amendment.
. 1100997 Ontario Limited v. North Elgin Centre Inc.

In 1100997 Ontario Limited v. North Elgin Centre Inc. (Ont CA, 2016) the Court of Appeal usefully canvasses the principles that apply to amending pleadings where a limitation period may have run out:
(b) Legal Principles Regarding the Amendment of Pleadings

[19] A cause of action is “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”: Letang v. Cooper, [1965] 1 Q.B. 232 (C.A.), at pp. 242-43, as adopted by this court in July v. Neal (1986), 1986 CanLII 149 (ON CA), 57 O.R. (2d) 129 (C.A.), at para. 23.

[20] In Morden & Perell, The Law of Civil Procedure in Ontario, 2nd ed. (Markham: LexisNexis Canada Inc., 2014), at p. 142, the authors state:
A new cause of action is not asserted if the amendment pleads an alternative claim for relief out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon which the original right of action is based. [Footnotes omitted.]
[21] In Dee Ferraro Ltd. v. Pellizzari, this court noted the distinction between pleading a new cause of action and pleading a new or alternative remedy based on the same facts originally pleaded. The appellants had commenced an action against their lawyer claiming damages for breaches of contract, trust and fiduciary duty and for fraud and negligence. The appellants then sought to amend their pleading. This court, in overturning the motion judge’s dismissal of the motion to amend, concluded that the proposed amendments, such as claims for a mandatory order and a constructive trust over shares, could be made because they flowed directly from facts previously pleaded.

[22] By contrast, a proposed amendment will not be permitted where it advances a “fundamentally different claim” after the expiry of a limitation period: Frohlick v. Pinkerton Canada Ltd. In that case, the court did not permit the plaintiff in a wrongful dismissal action to amend the statement of claim to assert a claim for damages for constructive dismissal on the basis that the limitation period had expired. This court dismissed the appeal. The amendment regarding constructive dismissal related to events that occurred prior to the events described in the original statement of claim that were unrelated to that claim. The defendant was unaware of the new allegations prior to the plaintiff seeking the amendments, and the events were not put in issue or encompassed within the original claim.

[23] Based on the foregoing, an amendment will be refused when it seeks to advance, after the expiry of a limitation period, a “fundamentally different claim” based on facts not originally pleaded.
. Klassen v. Beausoleil

In Klassen v. Beausoleil (Ont CA, 2019) the Court of Appeal considered the test for amending pleadings in light of the expiry of limitation periods:
(1) The test to be applied

[24] I begin with the text of r. 26.01 of the Rules. It provides:
On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. [Emphasis added.]
[25] The rule is framed in mandatory terms: the court must allow the amendment, unless the responding party would suffer non-compensable prejudice, the proposed pleading is scandalous, frivolous or vexatious, or the proposed pleading fails to disclose a reasonable cause of action: 158844 Ontario Ltd v. State Farm Fire and Casualty Co., 2017 ONCA 42, 135 O.R. (3d) 681, at para. 25; Iroquois Falls Power Corp. v. Jacobs Canada Inc., 2009 ONCA 517, 264 O.A.C. 220, at paras. 15-16.

[26] The expiry of a limitation period is one form of non-compensable prejudice. A party cannot circumvent the operation of a limitation period by amending their pleadings to add additional claims after the expiry of the relevant limitation period: Frohlick v. Pinkerton Canada Ltd, 2008 ONCA 3, 88 O.R. (3d) 401, at para. 24; 1100997 Ontario Ltd. v. North Elgin Centre Inc., 2016 ONCA 848, 409 D.L.R. (4th) 382, at paras. 21-23; United Food and Commercial Workers Canada, Local 175 Region 6 v. Quality Meat Packers Holdings Limited, 2018 ONCA 671, at paras. 64; Davis v. East Side Mario’s Barrie, 2018 ONCA 410, at paras. 31-32. In this regard, the “addition of new statute-barred claims by way of an amendment is conceptually no different than issuing a new and separate Statement of Claim that advances a statute-barred claim” (emphasis added): Quality Meat Packers, at para. 64; citing Frohlick, at para. 24.

[27] An amendment will be statute-barred if it seeks to assert a “new cause of action” after the expiry of the applicable limitation period: North Elgin, at paras. 19-23, 33; Quality Meat Packers, at para. 65. In this regard, the case law discloses a “factually oriented” approach to the concept of a “cause of action” – namely, “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”: North Elgin, at para. 19; Quality Meat Packers, at para. 65.

[28] An amendment does not assert a new cause of action – and therefore is not impermissibly statute-barred – if the “original pleading … contains all the facts necessary to support the amendments … [such that] the amendments simply claim additional forms of relief, or clarify the relief sought, based on the same facts as originally pleaded”: Dee Ferraro, at paras. 4, 13-14; North Elgin Centre Inc., at paras. 20-21; East Side Mario’s Barrie, at paras. 31-32; Quality Meat Packers, at para. 65. Put somewhat differently, an amendment will be refused when it seeks to advance, after the expiry of a limitation period, a "fundamentally different claim" based on facts not originally pleaded: North Elgin, at para. 23.

[29] The relevant principle is summarized in Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3rd ed. (Toronto: LexisNexis, 2017), at p. 186:
A new cause of action is not asserted if the amendment pleads an alternative claim for relief out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon [which] the original right of action is based.[2]
[30] In the course of this exercise, it is important to bear in mind the general principle that, on this type of pleadings motion, it is necessary to read the original Statement of Claim generously and with some allowance for drafting deficiencies: Farmers Oil and Gas Inc. v. Ontario (Ministry of Natural Resources), 2016 ONSC 6359, 134 O.R. (3d) 390 (Div. Ct.), at para. 23.

[31] Finally, the court may refuse an amendment where it would cause non-compensable prejudice. The prejudice must flow from the amendment and not some other source: Iroquois Falls, at para. 20. At some point the delay in seeking an amendment will be so lengthy, and the justification so inadequate, that prejudice to the responding party is presumed. In this event, the onus to rebut the presumed prejudice lies with the moving party: State Farm, at para. 25.

[32] Alternatively, the responding party may resist the amendment by proving actual prejudice – i.e. by leading evidence that the responding party has lost an opportunity in the litigation that cannot be compensated by an adjournment or an award of costs as a consequence of the amendment. It is incumbent on the responding party to provide specific details of the alleged prejudice: State Farm, at para. 25.

[33] Irrespective of the form of prejudice alleged, there must be a causal connection between the non-compensable prejudice and the amendment. The prejudice must flow from the amendment and not from some other source: State Farm, at para. 25.
. The Catalyst Capital Group Inc. v. Dundee Kilmer Developments Limited Partnership

In The Catalyst Capital Group Inc. v. Dundee Kilmer Developments Limited Partnership (Ont CA, 2020) the Court of Appeal discussed when an amended claim runs the risk of a exceeding limitation period:
[75] I accept this submission. The governing principles were stated by this court in Klassen v. Beausoleil, 2019 ONCA 407, 34 C.P.C. (8th) 180, at paras. 27-30:
An amendment [to a statement of claim] will be statute-barred if it seeks to assert a “new cause of action” after the expiry of the applicable limitation period: North Elgin, at paras. 19-23, 33; Quality Meat Packers, at para. 65. In this regard, the case law discloses a “factually oriented” approach to the concept of a “cause of action” — namely, “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”: North Elgin, at para. 19; Quality Meat Packers, at para. 65.

An amendment does not assert a new cause of action — and therefore is not impermissibly statute-barred — if the “original pleading ... contains all the facts necessary to support the amendments ... [such that] the amendments simply claim additional forms of relief, or clarify the relief sought, based on the same facts as originally pleaded”: Dee Ferraro, at paras. 4, 13-14; North Elgin Centre Inc., at paras. 20-21; East Side Mario's Barrie, at paras. 31-32; Quality Meat Packers, at para. 65. Put somewhat differently, an amendment will be refused when it seeks to advance, after the expiry of a limitation period, a “fundamentally different claim” based on facts not originally pleaded: North Elgin, at para. 23.

The relevant principle is summarized in Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3rd ed. (Toronto: LexisNexis, 2017), at p. 186:
A new cause of action is not asserted if the amendment pleads an alternative claim for relief out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon [which] the original right of action is based.
In the course of this exercise, it is important to bear in mind the general principle that, on this type of pleadings motion, it is necessary to read the original Statement of Claim generously and with some allowance for drafting deficiencies: Farmers Oil and Gas Inc. v. Ontario (Ministry of Natural Resources), 2016 ONSC 6359, 134 O.R. (3d) 390 (Div. Ct.), at para. 23.


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