Simon's Megalomaniacal Legal Resources

Limitations Act - Adding Parties [s.21]

. Zimmerman v. McNaull [limitation period defences] [pldgs amendment to add parties] [IMPORTANT]

In Zimmerman v. McNaull (Ont CA, 2026) the Ontario Court of Appeal granted a motion to quash an appeal, here on interlocutory versus final appeal route grounds.

This case involved the related issues of whether "an order adding parties" and "an order finally determining a limitation period defence" were interlocutory or final - and the frequent issue of whether the amendment was barred by a limitation period [under LA s.21.1], here in a joinder of parties context. The court delves into these issues at length, usefully exploring relevant practice issues:

[3] The moving parties seek to quash the responding parties’ appeal, arguing that the order appealed from is interlocutory and that the appeal therefore lies to the Divisional Court, with leave, pursuant to s. 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43. The responding parties maintain that the order is final because the motion judge finally determined and thus precluded their substantive limitation period defence, on which they say they can no longer rely.

[4] We start our analysis with some general principles.

[5] It is common ground that an order adding parties is an interlocutory order and that an order finally determining a limitation period defence is a final order because it deprives the defendant of a substantive defence: Prescott & Russell (United Counties) v. David S. Laflamme Construction Inc., 2018 ONCA 495, 142 O.R. (3d) 317, at paras. 4-7, 10-12; Lawrence v. International Brotherhood of Electrical Workers (IBEW) Local 773, 2017 ONCA 321, 138 O.R. (3d) 129, at para. 13, aff’d 2018 SCC 11, [2018] 1 SCR 267; and Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375, at paras. 16-17.

[6] Section 21(1) [SS: 'Adding party'] of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, provides that: “If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.”

[7] Accordingly, on a motion to add parties, the motion judge must make, at least on a preliminary basis, findings of fact as to when the plaintiffs knew of the matters listed in s. 5(1)(a) of the Limitations Act, 2002, in relation to their claims against the proposed defendants and, under s. 5(1)(b), as to when they ought reasonably to have known of such matters: Morrison v. Barzo, 2018 ONCA 979, 144 O.R. (3d) 600, at para. 3.

[8] These factual findings are not necessarily final and for all purposes. Rather, the motion judge must only determine whether the evidentiary threshold is met for the requested amendments: Morrison, at para. 3; Mancinelli v. Royal Bank of Canada, 2018 ONCA 544, at paras. 23-25; and Prescott, at paras. 10, 12. As this court observed in Prescott, at para. 10: “Motions to add parties that are successful, however, do not as a rule generate findings that are binding in the rest of the litigation.”

[9] As a result, for the limited purpose of determining an amendment motion, a motion judge may make a provisional, non-binding determination that a limitation period has not expired without finally disposing of it, or any limitation period defence. In such a case, the limitation period defence is left for final determination on a motion for summary judgment, if appropriate, or at trial: see e.g., Morrison, at paras. 6, 66; Mancinelli, at para. 34; and Di Filippo v. Bank of Nova Scotia, 2024 ONCA 33, at para. 72, leave to appeal refused, [2024] S.C.C.A. No. 88.

[10] On the other hand, if the record permits, it is open to a motion judge on an amendment motion to make a final determination that a limitation period has expired and deny the amendment motion: Morrison, at para. 27. As this court explained in Arcari v. Dawson, 2016 ONCA 715, 134 O.R. (3d) 36, at para. 10, leave to appeal refused, [2016] S.C.C.A. No. 522:

When a plaintiff's motion to add a defendant is opposed on the basis that her claim is statute-barred, the motion judge is entitled to assess the record to determine whether, as a question of fact, there is a reasonable explanation on proper evidence as to why she could not have discovered the claim through the exercise of reasonable diligence. If the plaintiff does not raise any credibility issue or issue of fact that would merit consideration on a summary judgment motion or at trial and there is no reasonable explanation on the evidence as to why the plaintiff could not have discovered the claim through the exercise of reasonable diligence, the motion judge may deny the plaintiff's motion. [Citation omitted.]

See also C & C Nestco Corporation v. Starr, 2025 ONCA 792, at paras. 2-3, leave to appeal to S.C.C. requested, 42184.

[11] The question here, then, is to determine whether the motion judge finally determined the limitation period issue and precluded the defence. As we shall explain, we conclude that he did not.

[12] Confusion about the effect of the order under appeal has arisen in this case because 1) in their factum on the motion to amend their pleadings, the moving parties sought an order allowing the amendments without leave to the responding parties to plead a limitations defence; and 2) the definitive language that the motion judge used in his reasons to determine the amendment motion suggests a final determination of the limitation period issue. For example, he concluded in para. 2 of his reasons: “For the reasons set out, I find that the claim is not statute-barred, that it was discovered in June 2018, within the two-year period and that it could not have been discovered earlier with the exercise of reasonable diligence. The motion to file the amended statement of claim is allowed.”

[13] However, when the motion judge’s reasons are read as a whole – and especially alongside the issued and entered order – it becomes clear that his factual findings were preliminary and only for the purpose of determining the amendment motion.

[14] In his reasons, the motion judge followed the analytical framework in Morrison and found that the moving parties had met the requisite evidentiary threshold to demonstrate that the limitation period had not expired for the purpose of adding the responding parties as defendants to their action. Importantly, he did not accede to the moving parties’ request that the responding parties be precluded from relying on a limitation period defence. Indeed, as this court observed in Prescott, at para. 9, “[t]he motion judge’s reasons contain no language suggesting that any finding made in respect of the application of the Limitations Act had application beyond the motion itself.” Further, the issued and entered order confirms that there was no final determination of the limitation period issue nor that the responding parties’ limitation period defence was precluded: Prescott, at para. 8. It is well established that an appeal lies from the order and not the reasons and that in most cases, it is the content of the formal order that is integral in determining what has been decided and is binding against a party: Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2016 ONCA 404, 131 O.R. (3d) 455, at para. 33. That is the case here.

[15] With respect to the amendment, the order succinctly reads: “The Plaintiffs are granted leave to amend their Statement of Claim in accordance with the proposed Amended Statement of Claim attached to this Order”. The only other provision is that costs of the motion are payable to the moving parties. There is no reference to a limitation period defence: the order does not state that the limitation period defence is precluded. Accordingly, the responding parties are at liberty to plead and rely upon a limitation period defence in the action.

[16] It would have been clearer had the motion judge explicitly signaled that he was determining the limitation period issue for the purposes of only the amendment motion and that the moving parties’ request to finally determine the limitations period was denied. However, the fact that the order does not explicitly state that the responding parties are precluded from raising a limitation defence, in the face of such a request from the moving parties on the motion, signals that no such relief was granted.

[17] Moreover, to avoid any ambiguity, it would have been better had the order included an explicit term that the responding parties were not precluded from relying on the limitation period defence. Such as, for example, the terms included in the dispositions in Morrison, at para. 66: “the respondents are at liberty to plead the expiry of the limitation period as a defence”; and in Di Filippo, at para. 72: “the respondents ... are not precluded from pleading a limitations defence ... with the issue to be determined at trial or on summary judgment”. Such provisions avoid the uncertainty and additional costs exemplified by this case. However, as explained above, we are nevertheless satisfied that the responding parties are not precluded from raising a limitation period defence.

[18] For these reasons, we conclude that the order under appeal is interlocutory, and the appeal lies to the Divisional Court with leave.

. Diarez v. David Murphy et al.

In Diarez v. David Murphy et al. (Ont Div Ct, 2025) the Ontario Divisional Court dismissed an employee's appeal of a Small Claims dismissal of a wrongful dismissal action, this resulting from a successful defendant's motion to strike amended pleadings on limitation grounds.

The court considers Small Claims Rules R12.02(1)(a) ['Motion to Strike out or Amend a Document'], here where a defendant was added after the expiration of a limitation period:

(ii) The motion to strike

[10] Pursuant to r. 12.02(1)(a) of the Rules of the Small Claims Court, O. Reg. 258/98 (the “Small Claims Court Rules”), the Respondents brought a motion to dismiss the Amended Claim as against CIE on the basis that the Appellant added CIE after the expiration of the limitation period. The Respondents also sought to dismiss the claim against David and Aileen on the basis that they were both officers and directors of CIE and the Amended Claim does not allege that either acted outside the scope of their respective authority.

[11] The Respondents’ motion to dismiss was heard on August 23, 2019. In an oral decision released the same day, the Deputy Judge granted the Respondents’ motion as against CIE and dismissed the motion in relation to David and Aileen.[1] With respect to CIE, the Deputy Judge found as follows:

My conclusion is as follows. It appears to me that as of September the - or sorry, March the 24th of 2017, when the plaintiff was terminated, that in a sense crystallized the commencement of the limitation period. It appears that his claim against the personal defendants, which I understand was issued on March the 15th , 2019, was issued within the limitation period and that's a valid claim. However, on June 14th 2019, which is about two and a half months, more or less, after the expiry of the limitation period, he amended his claim by adding the corporate defendant, which I'll call CIE. I am of the view that pursuant to s. 21(1) of the Limitation Act there is an absolute and very clear prohibition against adding a person by way of amendment to a claim after that claim has expired against that person. And I take person generally. In law, a person means person or corporate entity. So, I am of the view that, pursuant to s. 21(1) of the Limitation Act the corporate defendant was added outside of the limitation period and therefore, insofar as that defendant is concerned, the claim will be dismissed.

....

C. Analysis and findings

(i) Standard of review

[16] Rule 12.02(1) of the Small Claims Court Rules is situated somewhere between a motion to strike and a motion for summary judgment under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. A Rule 12.02(1) motion is “…brought in the spirit of the summary nature of Small Claims Court proceedings and involves an analysis of whether a reasonable cause of action has been disclosed or whether the proceeding should be ended at an early stage because its continuation would be ‘inflammatory,’ a ‘waste of time’ or a ‘nuisance’ (see Van de Vrande v. Butkowsky, 2010 ONCA 230, 99 O.R. (3d) 641, at paras. 19-21)

[17] Owing to the unique nature of a r. 12.01(1) motion and the summary nature of Small Claims Court proceedings, an appeal from a deputy judge’s decision on a r. 12.02(1) motion is afforded deference. An appellate court should intervene only if the motion judge misdirected themselves, came to a decision that was so clearly wrong as to be an injustice, or gave no or insufficient weight to relevant considerations (see Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141, at para. 38)

[18] If an appeal is based upon an error of law, the standard of review is correctness. If an appeal is based on an error of fact, the standard of review is a palpable and overriding error. Further, if there is an alleged error of mixed fact and law, the standard of review is palpable and overriding error (see Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at para. 36).

(ii) Governing principles

[19] Pursuant to s. 21(1) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (the “Limitations Act”), a person cannot be added to an existing proceeding if the two-year limitation period in respect of a claim against the person has expired. As a result, the clear expiration of a limitation period is an absolute bar to the addition of a party to an existing action (see Arcari v. Dawson, 2016 ONCA 715, 134 O.R. (3d) 36 at para. 7, leave to appeal refused, [2016] S.C.C.A. No. 522). Section 21(1) does not prevent the correction of a misnaming or misdescription of a party (see s. 21(2)).

[20] Unlike the Rules of Civil Procedure, the Small Claims Court Rules do not require a plaintiff to bring a motion to add a defendant as a party to the action (see r. 5.04(2) of the Rules of Civil Procedure). Rather, r. 12.01 of the Small Claims Court Rules permits a plaintiff to amend their claim, by right, by filing the amended claim at least 30 days before the trial date (see rr. 12.01(1)-(3)).

[21] The procedural ability of a plaintiff to add a defendant to a claim at least 30 days before the trial date under the Small Claims Court Rules does not supersede the prohibition under s. 21(1) of the Limitations Act. Where a party is added as a defendant following the commencement of a Small Claims Court action, then the added party may move to have the claim dismissed as against them, pursuant to r. 12.02(1)(a), based on a clear expiration of a limitation period.

[22] The claim against CIE is subject to the two-year limitation period in s. 4 of the Limitations Act. The limitation period runs from the date the claim is discovered. Section 5 of the Limitations Act sets out when a claim is discovered. Given its importance to this appeal, I have reproduced s. 5 of the Limitations Act below:

5(1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[23] Pursuant to s. 5, the date of discovery is the earlier of the two dates under subsections 5(1)(a) and (b). If either of these dates is more than two years before the claim was issued, the claim is statute-barred (Fennell v. Deol, 2016 ONCA 249 at para. 20).

[24] Section 5(1)(a) is focused on when the plaintiff had actual knowledge of the material facts underlying the claim (i.e., knowledge of the matters referred to in s. 5(1)(a)(i) to (iv)). Unless the contrary is proved, the plaintiff is presumed to have known of the matters in s. 5(1)(a)(i) through (iv) on the date of the events giving rise to the claim (Fennell at para. 21). While a plaintiff's due diligence is relevant to the finding under 5(1)(b), the absence of due diligence is not a separate basis for dismissing a claim as statute-barred (Fennell at paras. 18 and 24; Galota v. Festival Hall Developments Ltd., 2016 ONCA 585, 133 O.R. (3d) 35 at para. 23).

[25] 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 (see Morrison v. Barzo, 2018 ONCA 979, 144 O.R. (3d) 600 at para. 30; AssessNet Inc. v. Taylor Leibow Inc., 2023 ONCA 577, 168 O.R. (3d) 276 at para. 35).

[26] It may be that the date of reasonable discoverability can only be determined at a later stage in the proceedings and on a complete record. In such a case, the motion to add the defendant should be granted, with leave for the defendant to plead a limitation defence: Morrison, at para. 30. In the context of the Small Claims Rules, this translates into dismissing a motion under r. 12.02(1)(a) and permitting the defendant to plead a limitation defence.

[27] A defendant may rely on the presumption in s. 5(2) that the claim was discovered on the day the act or omission on which the claim is based took place. To rebut the presumption in s. 5(2), the plaintiff is only required to prove that its discovery of the claim within the meaning of s. 5(1)(a) was not on the date of the events giving rise to the claim (Fennell at para. 26; Morrison, at para. 31). 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 (Morrison, at paras. 31-32)

[28] Once rebutted, the burden remains on the defendant to prove that the plaintiff knew or ought reasonably to have known the elements of s. 5(1)(a) more than two years preceding the commencement of the motion to add the defendant (AssessNet Inc., at para. 35) or in the case of a Small Claims Court action, the date on which the amended claim is filed with the Small Claims Court.

. Lloyd v. Clark

In Lloyd v. Clark (Ont CA, 2008) the Court of Appeal applies s.21(2) of the Limitations Act, 2002:

[1] We agree with the appellants that the motion judge erred by refusing their request that the title of proceedings be corrected to name the Regional Municipality of Durham (“Durham”) as a defendant in place of the Town of Ajax and the Corporation of the Town of Whitby pursuant to s. 21(2) of the Limitations Act, 2002, S.O. 2002, c. 24.

[2] Section 21 of the Limitations Act provides:

Adding party

21. (1) If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding. 2002, c. 24, Sched. B, s. 21(1).

Misdescription

(2) Subsection (1) does not prevent correction of a misnaming or misdescription of a party. 2002, c. 24, Sched. B, s. 21(2).

[3] We agree with the submission that on a fair reading of the statement of claim, it was clear that the plaintiff intended to name the Municipality having jurisdiction over and responsibility for the maintenance of the road on which the accident occurred. Moreover, there was clear evidence that Durham immediately knew that it was the intended defendant given the letter sent by Durham’s insurance adjustor to the plaintiff’s solicitor upon receipt of the statement of claim.

[4] 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. See Ladouceur v. Howarth, 1973 CanLII 30 (SCC), [1973]S.C.J. 120 (S.C.C.); Kitcher v. Queensway General Hospital, 1997 CanLII 1931 (ON CA), [1997] O.J. No. 3305 (C.A.) and J.R. Sheet Metal & Manufacturing Ltd. V. Prairie Rose Wood Products, 1986 ABCA 4 (CanLII), [1986] A.J. No. 7 (C.A.).

[5] Accordingly, the appeal is allowed, the order under appeal is set aside and in its place an order shall issue substituting the Municipality of Durham as defendant for the Town of Ajax and the Corporation of the Town Whitby. The appellant does not seek costs.