|
Small Claims Court - Striking Pleadings. 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. . Olusegun v. Carleton
In Olusegun v. Carleton (Ont Divisional Ct, 2025) the Divisional Court dismissed a CJA s.31(a) appeal from a Small Claims Court, here where the appellant sued several parties including a university, several professors and the CPAO (Chartered Professional Accountants of Ontario) [the latter of which this appeal involves].
Here the court consider Small Claims Court Rule R12.02 ['Motion to Strike out or Amend a Document']:[13] Rule 12.02(1) of the Rules of the Small Claims Court is situated somewhere between a motion to strike and a motion for summary judgment under the Rules of Civil Procedure. 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": Van de Vrande v. Butkowsky, 2010 ONCA 230, 99 O.R. (3d) 641 (C.A.), at paras. 19-21. . Xia v. His Majesty the King in right of Ontario
In Xia v. His Majesty the King in right of Ontario (Div Court, 2024) the Divisional Court dismissed an appeal from the Small Claims Court, here which struck the appellant's negligent claim against the Family Responsibility Office (FRO) on the ground that no duty of care was owed:[8] In 2021, the appellant brought a negligence claim in the Small Claims Court alleging financial, mental and personal credit damage caused by the “mishandling” of his child support payment case and a “groundless wrongful negative credit score”.
[9] The respondent brought a motion to dismiss the claim under r. 12.02 of the Small Claims Court Rules. That rule asks 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: Van de Vrande v. Butkowsky, 2010 ONCA 230, at para. 19. Affidavit evidence is permitted: Van de Vrande, at para. 17. The respondent put forward an affidavit. Although the appellant did not do so, the Deputy Judge acknowledged his submissions.
[10] The motion was granted. The Deputy Judge found that there was no duty of care, and also agreed with the respondent’s alternative submission that even if there was, the standard of care had been satisfied.
[11] The appellant raises essentially the same arguments on this appeal that he raised before the Deputy Judge. The appellant submits that the issue is the service he did not receive from FRO because FRO did not reply to his communications in May 2019 and following. He submits that he should have had what he calls a normal level of service, analogizing that level of service to the relationship between a realtor and their client.
[12] Using the legal terminology that applies to a negligence claim, the appellant submits that FRO owed him a duty to reply to his correspondence, and failed to do so repeatedly, causing him damage.
[13] The issues are therefore whether FRO owed the appellant a duty and, if so, whether the standard of care was breached. The appellate standard of review applies to this appeal, specifically correctness for errors of law or extricable errors of principle, and palpable and overriding error for findings of fact or findings of mixed fact and law.
[14] The appellant has not shown that the Deputy Judge erred in granting the motion to dismiss. I understand that the appellant is drawing his analogy from his own experience with real estate transactions, but the duties of FRO are not comparable.
[15] The Deputy Judge correctly applied the legal principles regarding a r. 12.02 motion, properly assumed that the facts alleged in the claim were true and read the claim generously. The
Deputy Judge also accepted the respondent’s affidavit evidence, as she was entitled to do.
[16] The Deputy Judge then applied the test to establish a duty of care as set out by the Supreme Court of Canada in Cooper v. Hobart, [2001] 3 S.C.R. 537, 2001 SCC 79. She considered the relevant provisions of the Act and the specific interactions between the parties, in keeping with the principles in Am-Stat Corporation v. Ontario, 2018 ONCA 877, at para. 6. The Deputy Judge concluded that the appellant had not established a duty of care and made no error in doing so. The Decision is also consistent with other cases that were put forward by the respondent at the hearing (although not expressly referred to in the reasons for decision), in which FRO was found not to owe a duty of care.
[17] Since there was no duty of care owed to the appellant, there is no need to address the standard of care. . Wurdell v. Paramount Safety Consulting Inc. & Ben Scipione
In Wurdell v. Paramount Safety Consulting Inc. & Ben Scipione (Div Court, 2023) the Divisional Court considered the test for R12.02 ['Motion to Strike out or Amend a Document'] under the Rules of the Small Claims Court:[6] Rule 12.02(1) of the Small Claims Court provides:Motion to Strike out or Amend a Document
12.02 (1) The court may, on motion, strike out or amend all or part of any document that,
(a) discloses no reasonable cause of action or defence;
(b) may delay or make it difficult to have a fair trial; or
(c) is inflammatory, a waste of time, a nuisance or an abuse of the court’s process. ....
[36] There appears to be some debate about the correct test to be applied to a motion brought under Rule 12.02 of the Small Claims Court Rules. However, after reviewing the caselaw submitted by counsel and given that the Respondents’ motion to strike was made under Rule 12.02(1)(c) and not (a), in my view, the apt test is “no meaningful chance of success” as was held in O’Brien v. Ottawa Hospital, 2011 O.J. No. 66 (Div. Ct.), at paras. 14 and 16.
[37] This was also effectively the test described by the Ontario Court of Appeal in Van de Vrande v. Butkowsky, 2010 ONCA 230. At para. 19 of that decision, the Court of Appeal discussed the difference between Rule 12.02 and Rules 20 and 21 of the Rules of Civil Procedure, as follows:Conceptually, I view rule 12.02 as being situated somewhere between the Rules 20 and 21 of the Rules of Civil Procedure. It is not a summary judgment motion involving extensive affidavits and a requirement such as contemplated in Rule 20 of the Rules of Civil Procedure where the responding party must put his “best foot forward”. It is more akin to a Rule 21 motion, although it is worded more broadly and does not have the same prohibition on the filing of affidavit evidence. It is a motion that 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”. The Court of Appeal then went on to hold that it saw no basis to interfere with the motion judge’s findings and conclusions that, in applying Rule 12.02(1)(c), the claims asserted had “no chance of success” and ought to be struck (paras. 23, 24 and 26). . Ramlochan v. Somodi
In Ramlochan v. Somodi (Div Court, 2023) the Divisional Court comments on trial practice in a non-suit motion, here in the context of Small Claims Court:[28] The Appellant’s submission appears to relate to the deputy judge allowing Mr. Siracusa to bring the nonsuit motion during the trial. However, a nonsuit motion is generally brought by the defendant at the close of the plaintiff’s evidence to dismiss the action on the ground that the plaintiff has failed to make out a case for the defendant to answer: FL Receivables Trust 2002-A v. Cobrand Foods Ltd., 2007 ONCA 425, at para. 12. There was no unfairness in the deputy judge hearing the nonsuit motion. . Mundenchira Inc., et al v. Punnasseril et al
In Mundenchira Inc., et al v. Punnasseril et al (Div Ct, 2021) the Divisional Court considered the jurisdiction of the Small Claims Court to entertain a non-suit motion (the court did this without apparently mentioning R12.02):[28] The Appellants argue that the Small Claims Court does not have the jurisdiction to hear a motion for non-suit.
[29] I disagree. The Small Claims Court is a statutory court that derives its jurisdiction solely from the Courts of Justice Act, R.S.O. 1990, c.C.43. S. 23 of the Courts of Justice Act states specifically that the Small Claims Court has jurisdiction in any action for the payment of money or the recovery of property that does not exceed the prescribed limit. Clearly, the Appellant’s claim was for the recovery of money within the prescribed limit, and thus was properly before that court.
[30] Rule 15, of the Small Claims Court Rules also provide for motions. Usually they are on notice, but the court can dispense with notice if the circumstances of the motion make it not necessary (r. 15.03), or if the court finds that it is in the interest of justice (r. 2.02) to dispense with notice. Of note, is that the Appellants did not raise the issue of notice at the trial, not did they cite lack of notice as a ground of appeal.
[31] Finally, the history of the Small Claims Court is one of progressive development toward providing increased access to justice. The Small Claims Court is a place where people can have ready and inexpensive access to civil justice. Procedures are simpler and matters are decided in a summary way under relaxed rules of evidence: Grover v Hodgins, 2011 ONCA 72, 103 O.R. (3d) 721, at 46-47.
[32] Accordingly, I find that the hearing of a motion for a non-suit is within the jurisdiction of a Small Claims Court’s Deputy Judge and was properly heard here.
B. Legal Test for Motion for Non-Suit
[33] The Appellants argue that the Deputy Judge made an error in law by applying the incorrect legal test in the motion for non-suit.
[34] I agree. A motion for “non-suit” refers to a motion brought by the Defendant at the close of the Plaintiff’s evidence to dismiss the action on the ground that the Plaintiff has failed to make out a case for the Defendant to answer. In responding, the Plaintiff must show on this motion that it put forward a prima facie case which, if believed, would allow the trial judge to decide in its favour: FL Receivables Trust 2002-A, at para. 12, 15.
[35] When considering a motion for non-suit, a judge must take into consideration the Plaintiff’s most favourable facts from the evidence led at trial, as well as all supporting inferences. The judge must then decide whether the inferences that the Plaintiff seeks in their favour can be drawn from the evidence adduced if the trier of fact chose to accept it. In order to set aside the granting of a non-suit, the Appellant must show that there is evidence which, if believed, would form the basis for a prima facie case: Calvin Forest Products v. Tembec Inc., 2006 CanLII 12291 (ON CA), 208 O.A.C. 336 (C.A.) at para. 13-14, citing Sopinka, Lederman, and Bryant in The Law of Evidence (2nd ed.).
[36] On a motion for non-suit, the trial judge undertakes a limited inquiry. If the Plaintiff puts forward some evidence on all elements of its claim, the judge must dismiss the motion. If assessing whether the Plaintiff has made out a prima facie case, the judge must assume the evidence to be true and must assign the most favourable meaning to the evidence capable of giving rise to the competing inferences: FL Receivables, at para. 34-35.
.....
[39] If a Defendant moves for a non-suit, they must elect whether they will call any evidence. If they elect to call evidence, then the trial judge will reserve their judgment until the end of the case. If the Defendant elects not to call any evidence, then the judge should rule on the motion immediately after it is argued: See FL Receivables, at para. 13.
|
