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Civil Litigation Dicta - Trial Listing (2). Loney v. John Doe
In Loney v. John Doe (Ont CA, 2024) the Ontario Court of Appeal considered the granting of leave to amend pleadings, here after the action is set down for trial and in a case of misnomer:B. THE TEST FOR GRANTING LEAVE TO AMEND PLEADINGS AFTER AN ACTION HAS BEEN SET DOWN FOR TRIAL
[9] Rule 48.04(1) provides that “a party who has set an action down for trial shall not initiate or continue any motion or form of discovery without leave of the court.” Under this rule, some courts have required the moving party to show a “substantial or unexpected change in circumstances” such that refusal to grant leave would be “manifestly unjust”, while others have granted leave even in the absence of such a change, if granting the order is “necessary in the interests of justice”. Under either analysis, the interpretation of Rule 48.04(1) and the decision as to whether to grant leave is shaped by the rule governing the proposed amendment: Horani v. Manulife Financial Corporation, 2023 ONCA 51 at paras. 17-19.
[10] In this case, the rule governing the proposed amendment is Rule 5.04(2) which addresses the doctrine of misnomer and permits the court to correct the name of an incorrectly named party: Mazzuca, at paras. 47-48.
[11] Rule 5.04(2) provides that “[a]t any stage of a proceeding the court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment” (emphasis added). This is a permissive provision while the provision in Rule 26.01, by contrast, provides that “the court shall grant leave to amend […] unless prejudice would result that could not be compensated for by costs or an adjournment.” (emphasis added).
[12] There are two considerations under Rule 5.04(2) that must be met: (i) the moving party must satisfy the “litigating finger” test, and (ii) the amendment must not result in non-compensable prejudice.
[13] The “litigating finger” test will be satisfied if a person with knowledge of the facts would be aware of the true identity of a misnamed party by reading the statement of claim: Spirito Estate v. Trillium Health Centre, 2007 CanLII 41901 (ON SC) at para. 3, aff’d in 2008 ONCA 762, 302 DLR (4th) 654. See also: Essar Algoma Steel Inc. v. Liebherr (Canada) Co., 2011 ONSC 1688, 280 O.A.C. 243, at paras. 15-16.
[14] If the “litigating finger” test is met, a plaintiff seeking to correct a misnamed party need not establish due diligence in its efforts to identify the true defendant where the claim was brought within the limitation period: Stechyshyn v Domljanovic, 2015 ONCA 889, 129 O.R. (3d) 236 at para. 1, citing Kitcher v. Queensway General Hospital (1997), 1997 CanLII 1931 (ON CA), 44 O.R. (3d) 589 (C.A.), at paras. 1 and 4. The time taken to amend the pleading after discovering a defendant’s actual name however, remains a factor to be considered under Rule 5.04(2): See O’Sullivan v. Hamilton Health Sciences Corp., 2011 ONCA 507.
[15] Second, the defendant will be substituted unless there is evidence of non-compensable prejudice: Spirito trial decision at para. 3, citing Davies v. Elsby Brothers Ltd., [1960] 3 All E.R. 672; Moreau v. Northwestern General Hospital (1988), 1988 CanLII 4810 (ON SC), 65 O.R. (2d) 128 (S.C.); Rakowski et al. v. Mount Sinai Hospital et al. (1987), 1987 CanLII 4113 (ON SC), 59 O.R. (2d) 349 (S.C.); and McArthur v. Kaal (2006), 30 C.P.C. (6th) 150 (Ont. S.C.).
[16] Non-compensable prejudice may include the inability to conduct a timely investigation into the circumstances of the incident, the inability to take contemporaneous witness statements and preserve evidence, the inability to conduct early surveillance, the inability to obtain a timely defence medical assessment, and diminished witness recollection and memory: Lyman v. Chan, 2018 ONSC 4037, 88 C.C.L.I. (5th) 142.
[17] Where the delay between the initiation of proceedings and the filing of the motion to amend is “exceptional” or “inordinate”, courts will presume prejudice to the responding party: 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42, 135 O.R. (3d) 681. This presumption can be rebutted by either an adequate explanation for the delay or evidence that there is no non-compensable prejudice based on the facts of the case: State Farm Fire, at para. 37.
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[44] As set out above, under Rule 48.04(1) of the Rules of Civil Procedure, the onus is on the moving party to satisfy the court on a balance of probabilities that leave should be granted. The court may allow the correction of a misnomer at any stage provided there is no prejudice that cannot be compensated for by costs or an adjournment. While there is some disagreement as to the threshold to be met to grant leave, there must be (a) a “substantial or unexpected change in circumstances” between the passing of the trial record and service of the motion such that refusal would be manifestly unjust; or (b) a finding that “the interlocutory step is necessary in the interests of justice”: Horani at paras. 17-18.
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[48] Second, she noted that the purpose of originally using placeholder names was to preserve the limitation period against those parties and this motion was an attempt to replace those placeholder names long after the limitation period had expired. She noted that “significant unexplained delay in bringing a misnomer motion long past the expiry of a limitation period” has, in other cases, resulted in denial of the motion for leave: See Mohabir v. Mohabir, 2014 ONSC 5484; Brown-Vidal v. Doe, 2015 ONSC 3362, 50 C.C.L.I. (5th) 301.
[49] Third, the motion judge held that “it would be unjust to grant the relief in this case because of the unexplained, significant delay in moving to amend the pleading after learning of the correct name of [Mr. Mills]” and considering “the public policy reasons for adhering to limitation periods” (emphasis added).
[50] I agree with the motion judge that the unexplained significant delay in moving to amend the pleading long after learning of Mr. Mills’ name, coupled with the public policy reasons for adhering to limitation periods, would render it unjust to grant the relief sought. This court has held that while granted in certain circumstances, “amendments to pleadings which [have] the effect of relieving against a limitation period” are generally not allowed: Mazzuca v. Silver Creek Pharmacy Ltd. (2001), 2001 CanLII 8620 (ON CA), 56 O.R. (3d) 768 (C.A.) at paras 30-32.
[51] I note, as did the motion judge, the policy reasons for these requirements as identified by the late Associate Judge Muir in Mohabir, at paras. 24 and 25:There are important public policy considerations supporting limitation periods. At some point a proposed defendant should be free from having to account for past obligations when arranging his or her affairs. A proposed defendant should not be required to preserve relevant evidence for an unlimited period of time. Limitation periods promote the early resolution of civil disputes.
[T]he very purpose of limitation periods would be seriously undermined by allowing a plaintiff to simply name John Doe defendants as part of a claim issued on the eve of the expiry of the limitation period and then do nothing to identify those defendants for several years thereafter. [52] Finally, I note that these facts are similar to those in O'Sullivan v. Hamilton Health Sciences Corporation (Hamilton General Hospital Division), 2011 ONCA 507 where this court held that the motion judge:did not err [in denying the motion to amend] by taking into account the appellants’ essentially unexplained significant delay in moving to amend their pleading after learning of the correct name of the defendant and the public policy reasons supporting adherence to established limitation periods” (emphasis added). [53] Further, it was proper for the motion judge to consider other circumstances, such as the fact that “the respondent had no knowledge of the potential claim against it until five years after the incident”: O’Sullivan, at paras. 3-5.
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[55] The appellants’ second and third grounds of appeal are interrelated. They essentially assert that the motion judge erred in finding the appellants did not rebut the presumption of non-compensable prejudice caused by the delay and erred in finding that the respondents would suffer actual prejudice if the motion were granted such that leave to amend should be denied.
[56] The onus to rebut presumed prejudice lies with the moving party; the onus to provide evidence of actual prejudice lies with the responding party: State Farm Fire, at para. 25.
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[60] There is no dispute that the appellants did not satisfy the first prong of the test as they have not provided an explanation for the delay in bringing the motion to seek leave after learning of the identity of the truck driver.
[61] The appellants submit however, that they have satisfied the second prong of the test by demonstrating that there is no non-compensable prejudice. They submit that Mr. Loney’s medical records, police records, and damage documents have been preserved, and Intact conducted an examination for discovery of Mr. Loney in 2016 for which there is a transcript, such that there would be no non-compensable prejudice from granting the motion.
[62] Despite the preservation of some evidence, I agree with the motion judge that the lengthy delay in this case would create non-compensable prejudice as the lawsuit has proceeded for more than nine years and numerous steps have already been taken in the litigation. Nor was the motion judge required to simply assume that the examination for discovery conducted by Intact as a defendant was sufficient from the standpoint of the respondents.
[63] As a result of the delay, the respondents have been denied the opportunity to undertake important discovery tools in a timely fashion, including the opportunity to conduct early surveillance of the appellant Loney, examine the appellants in respect of these claims at any early stage of the proceeding in the fashion they might choose to conduct, and obtain their own timely defence medical assessment.
[64] The loss of these opportunities related to proper discovery constitutes actual prejudice that cannot be compensated by costs or an adjournment.
[65] Given the circumstances of this case, that is, the unexplained and significant delay in bringing the motion for leave both before and after the trial record was served including for a considerable period after discovering the names of the proposed defendants, as well as the fact that ten years have passed since the accident occurred and actual prejudice would result, I see no palpable and overriding error in the motion judge’s exercise of her discretion not to grant leave to amend the statement of claim.
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