Mota et al. v. The Regional Municipality of Hamilton-Wentworth Police Services Board

[Indexed as: Mota v. Hamilton-Wentworth (Regional Municipality) Police Services Board]

63 O.R. (3d) 737

[2003] O.J. No. 1100

Docket No. C38382

Court of Appeal for Ontario

Carthy, Laskin and Cronk JJ.A.

April 1, 2003

Limitations -- Public authorities -- Crown ward under care of Children's Aid Society leaving residential treatment home operated by OFGC without permission and injuring plaintiffs nine days later -- Plaintiffs moving to add OFGC as defendant to personal injury action more than three years later -- Motions judge properly dismissing motion on grounds that claim against OFGC was statute-barred -- OFGC operating home as agent of Children's Aid Society -- OFGC having public duty to supervise youth -- Six-month limitation period in Public Authorities Protection Act applying to OFGC -- Motions judge not erring in refusing to exercise his discretion to add OFGC as defendant despite expiry of limitation period -- Plaintiffs filing no evidence to suggest that OFGC would not be prejudiced if it were added as defendant -- OFGC entitled to rely on presumption of prejudice -- Public Authorities Protection Act, R.S.O. 1990, c. P.38, s. 7(1) -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 5.04(2).

OFGC operated a residential treatment home for youth on behalf of the Children's Aid Society. In 1998, a Crown ward under the care of the CAS who resided in the OFGC residence left the residence without permission. While driving a stolen car and being chased by the police, he lost control of the car and crashed through the wall of the plaintiffs' house, injuring the plaintiffs. The plaintiffs brought an action in December 1998 against the police and others, but not OFGC. Over three years later, they moved to amend their statement of claim to add OFGC as a defendant, alleging that OFGC was negligent in failing to keep a reasonable watch over its Crown ward, in failing to keep reasonable control of him, and in not taking reasonable steps to find him after discovering he was missing.

The motions judge held that OFGC was protected by the six- month limitation period in s. 7(1) of the Public Authorities Protection Act, R.S.O. 1990, c. P.38 (the "PAPA"). He exercised his discretion by refusing to add OFGC after the expiry of the limitation period, holding that the expiry of the limitation period created a presumption of prejudice which the plaintiffs had failed to rebut and that there were no special circumstances justifying the proposed addition of OFGC. The plaintiffs appealed.

Held, the appeal should be dismissed.

OFGC was a public authority and its failure to properly supervise the youth was a breach of its public duty under s. 15(3) of the Child and Family Services Act, R.S.O. 1990, c. C.11. Children's Aid societies, which are established under the Child and Family Services Act, are entities for whom the protection of the PAPA was intended. Agents carrying out public duties on a society's behalf are similarly entitled to the protection of the PAPA. OFGC was licensed under the Child and Family Services Act and its corresponding regulations to operate the residence, and it entered into an agreement with the Children's Aid Society to operate the residence on behalf of the Society. Thus, OFGC was the Society's agent. OFGC was, therefore, a public authority within the class of entities for whom the limitation [page738] period was intended. OFGC had a duty to protect, care for and supervise the youth. These duties were owed not just to one particular person, but to all members of the public. The duties were not subordinate to OFGC's public role; they lay at the very core of that role. The duty of supervision relied on by the plaintiffs in asserting a claim against OFGC was, therefore, a public duty. The supervision by OFGC of youths residing in its home was inherently of a public nature, rather than of an internal or operational nature having a predominantly private aspect. The plaintiffs' claim against OFGC correlated exactly with OFGC's public duties. The plaintiffs alleged that OFGC failed to properly supervise and control the youth and failed to take reasonable steps to find him after he was discovered missing. These allegations corresponded to OFGC's public mandate in s. 15(3) of the Child and Family Services Act to protect, care for and supervise children assigned to its supervision. OFGC could rely on the limitation period in s. 7(1) of the PAPA.

Under rule 5.04(2) of the Rules of Civil Procedure, the court retains discretion at any stage of a proceeding to add a party to an action "on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment". The court can invoke this rule by adding a defendant to an existing action even though the limitation period applicable to that defendant has expired. The motions judge in this case did not commit a reviewable error in exercising his discretion to dismiss the plaintiffs' motion. An important consideration supporting the motions judge's order was the plaintiffs' inaction for over three years after the accident. During that time, OFGC had no knowledge of the claim. The plaintiffs gave no real explanation for why they took no action to add OFGC for over three years. OFGC filed no evidence that it would be prejudiced by the proposed amendment, and the plaintiffs filed no evidence that OFGC would not be prejudiced if it were added as a defendant. Absent evidence on either side, the question of prejudice had to be determined by the failure of the plaintiffs to rebut the presumption of prejudice which was created by the passage of time. On the unusual record in this case, OFGC was not required to put forward evidence of actual prejudice. It was entitled to rely on the presumption of prejudice because the plaintiffs had led no evidence to suggest otherwise. The plaintiffs failed to meet the requirements of rule 5.04(2).

APPEAL by the plaintiffs from an order dismissing a motion to add a defendant.

Des Champs v. Conseil des écoles séparées catholiques de langue française de Prescott-Russell, [1999] 3 S.C.R. 281, 177 D.L.R. (4th) 23, 245 N.R. 201, 47 C.C.E.L. (2d) 1, 39 C.P.C. (4th) 1, apld L. (D.) v. Children's Aid Society of the District of Thunder Bay, [1987] O.J. No. 1461 (Quicklaw) (Dist. Ct.), not folld Berardinelli v. Ontario Housing Corp., [1979] 1 S.C.R. 275, 90 D.L.R. (3d) 481, 23 N.R. 298, 8 C.P.C. 100, consd Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 56 O.R. (3d) 768, 207 D.L.R. (4th) 492, 15 C.P.C. (5th) 235, 152 O.A.C. 201, [2001] O.J. No. 4567 (Quicklaw) (C.A.), distd Other cases referred to Bradford Corp. v. Myers, [1916] 1 A.C. 242, 85 L.J.K.B. 146, 114 L.T. 83, 80 J.P. 121, 32 T.L.R. 113, 60 Sol. Jo. 74, 14 L.G.R. 130 (H.L.); C. (Y.) v. Children's Aid Society of Metropolitan Toronto (1998), 37 R.F.L. (4th) 381, [1998] O.J. No. 839 (Quicklaw) (Gen. Div.); Deaville v. Boegeman (1984), 48 O.R. (2d) 725, 6 O.A.C. 297, 14 D.L.R. (4th) 81, 47 C.P.C. 285, 30 M.V.R. 227 (C.A.); Moffatt v. Dufferin County Board of Education, [1973] 1 O.R. 351, 31 D.L.R. (3d) 143 (C.A.); Skewes v. Children's Aid Society of Judicial District of Hamilton- Wentworth (1982), 38 O.R. (2d) 578, 138 D.L.R. (3d) 124 (H.C.J.) [page739] Statutes referred to Child and Family Services Act, R.S.O. 1990, c. C.11, ss. 15(3), Public Authorities Protection Act, R.S.O. 1990, c. P.38, s. 7(1) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 5.04(2)

Stephen E. Sloan, for appellants. Dominic T. Clarke, for respondent Ontario Family Guidance Centre Inc.

The judgment of the court was delivered by

1LASKIN J.A.: -- In September 1998, Robert Benton was a 14-year-old Crown ward under the care of the Halton Children's Aid Society (the "Halton CAS"). He lived at Foundations Residence in Burlington, a residential treatment home for youth operated for the Society by the respondent, Ontario Family Guidance Centre Inc. ("OFGC"). In late August 1998, Robert left the residence without permission. Nine days later, police officers spotted him driving a stolen car in the City of Hamilton. The police followed him. Robert lost control of the car and drove through the wall of the house owned by the appellants, Maria and Manuel Mota.

2Tragically, Robert Benton was killed in the accident and Mr. and Mrs. Mota were injured. In December 1998, the Mota family started an action against the Hamilton-Wentworth Police Services and others, but not OFGC. Over three years later, in February 2002, they moved to amend their statement of claim to add OFGC as a defendant. Festeryga J. dismissed the motion. The Mota family appeals. Their appeal raises two issues:

1. Is OFGC protected by the six-month limitation period in s. 7(1) of the Public Authorities Protection Act, R.S.O. 1990, c. P.38 (the "PAPA")?

2. If the answer to the first question is yes, did the motions judge commit a reviewable error in exercising his discretion to dismiss the appellants' motion?

3I would answer yes to the first question and no to the second question. I would, therefore, dismiss the appeal. [page740]

First Issue: Is OFGC Protected by the Six-Month Limitation Period in S. 7(1) of the Public Authorities Protection Act?

4Section 7(1) of the PAPA states essentially that any action against a public authority for failing to fulfil its public duties or to properly exercise its public powers must be started within six months after the cause of action arose.

7(1) No action, prosecution or other proceeding lies or shall be instituted against any person for an act done in pursuance or execution or intended execution of any statutory or other public duty or authority, or in respect of any alleged neglect or default in the execution of any such duty or authority, unless it is commenced within six months next after the cause of action arose, or, in the case of continuance of injury or damage, within six months after the ceasing thereof.

5The purpose of stringent limitation periods for public authorities was explained by Binnie J. in Des Champs v. Conseil des écoles séparées catholiques de langue française de Prescott-Russell, [1999] 3 S.C.R. 281, 177 D.L.R. (4th) 23, at p. 286 S.C.R.:

Many if not most public authorities in this country are shielded from litigants to some extent by special statutory limitation periods. The public policy underlying these limitations is that public authorities ought not to be unduly prejudiced by the passage of time. Timely notice will promote the timely investigation and disposition of claims in the public interest. After the expiry of a limitation period, the public authority can consider itself free of the threat of legal action, and need not preserve or seek out pertinent evidence. Its fiscal planning can proceed free of the disrupting effect of unresolved claims against the public purse.

6In this case, the appellants sought to sue OFGC long after the six-month limitation period had expired. Therefore, the first question before the motions judge was whether OFGC was entitled to the protection of the PAPA. The motions judge held that it was.

7In their proposed amended statement of claim the appellants allege that OFGC was negligent in failing to keep "a reasonable watch" over its Crown ward, in failing to keep reasonable control of him, and in not taking reasonable steps to find him after discovering he was missing. The motions judge concluded that "the actions or lack of actions by OFGC were undertaken in pursuance or execution of a statutory duty i.e. CFSA" (the Child and Family Services Act, R.S.O. 1990, c. C.11), and, therefore, the six-month limitation period applied. The appellants submit that the motions judge erred in his conclusion, either because the OFGC was not a public authority, or if it was, its alleged negligence amounted to a failure to exercise a private duty for which the protection of the Act was not available.

8I do not agree with this submission. Even though s. 7 "is to be read restrictively and in favour of 'the person whose right of [page741] action is being truncated'", I see no room for doubt in this case: see Des Champs, supra, at p. 313 S.C.R. citing Estey J. in Berardinelli v. Ontario Housing Corp., [1979] 1 S.C.R. 275, 90 D.L.R. (3d) 481 at p. 280 S.C.R. The OFGC is a public authority and its failure to properly supervise Robert Benton would be a breach of its public duty under s. 15(3) of the CFSA. This becomes apparent when the five-step approach to determining the application of s. 7(1) of the PAPA recommended by Binnie J. in Des Champs, supra, at pp. 313-14 S.C.R. is applied to the facts of this case.

(i) Is the OFGC a public authority within the class of entities for whom the limitation protection was intended?

9Children's aid societies, which are established under the CFSA, are entities for whom the protection of the PAPA was intended. See C. (Y.) v. Children's Aid Society of Metropolitan Toronto, [1998] O.J. No. 839 (Quicklaw), 37 R.F.L. (4th) 381 (Gen. Div.) and Skewes v. Children's Aid Society of Judicial District of Hamilton-Wentworth (1982), 38 O.R. (2d) 578, 138 D.L.R. (3d) 124 (H.C.J.). Agents carrying out public duties on a society's behalf are similarly entitled to the protection of the PAPA. See Moffatt v. Dufferin County Board of Education, [1973] 1 O.R. 351, 31 D.L.R. (3d) 143 (C.A.). OFGC was licensed under the CFSA and its corresponding regulations to operate Foundations Residence. It entered into an agreement with the Halton CAS to operate the residence on behalf of the Society. Thus, OFGC was the Halton CAS's agent. OFGC is, therefore, a public authority within the class of entities for whom the limitation protection was intended.

(ii) What was the OFGC doing and under what duty or power was it doing it?

10OFGC was operating a children's treatment home for the Halton CAS. It was licensed to do so under s. 193 of the CFSA, which provides:

193(1) No person shall,

(a) establish, operate or maintain a children's residence; or

(b) provide, directly or indirectly, residential care for three or more children not of common parentage in places that are not children's residences,

except under the authority of a licence issued by a Director under this Part.

11It had agreed to operate this home under the terms of a written agreement with the Halton CAS. [page742]

(iii) Is the power or duty relied on as part of the appellants' cause of action properly classified as containing "a public aspect or connotation" or is it more readily classifiable as "private executive or private administrative . . . or subordinate in nature"?

12Some of the powers and duties exercised by public authorities are public; others are private. Only the exercise of public powers and duties attracts the protection of the limitation period.

13Virtually all public authorities operate under a statutory regime, and, consequently, most of their powers and duties are listed in a statute. However, that fact alone does not mean that the power or duty in question should be classified as public. A public duty is one that meets two other requirements. First, it is a "duty owed to all the public alike", not a duty owed to a particular person because of, for example, a private contract. See Bradford Corp. v. Myers, [1916] 1 A.C. 242, 85 L.J.K.B. 146 at p. 247 A.C. (H.L.). Second, the duty must not be subordinate to, or too remote from, the public authority's public role. See Berardinelli, supra, at p. 283 S.C.R.

14In this case, the appellants claim that OFGC had a duty -- which it breached -- to supervise Robert Benton, to control him, and to take steps to find him after he left the Residence. These duties are found in s. 15(3) of the CFSA, which lists the functions of children's aid societies and of entities such as OFGC, which operate children's residences for a society. The three functions or duties of OFGC that relate to the appellants' claim are set out in s. 15(3)(b), (d) and (e):

15(3) Functions of society -- The functions of a children's aid society are to,

(b) protect, where necessary, children who are under the age of sixteen years or are in the society's care or under its supervision;

(d) provide care for children assigned or committed to its care under this Act;

(e) supervise children assigned to its supervision under this Act.

15These duties have a public, not a private, aspect. Once the Halton CAS determined that Robert Benton was in need of protection and placed him at Foundations Residence, the OFGC owed a duty to protect, care for and supervise him. These duties were owed not just to one particular person -- not even just to Robert Benton's family -- but to all members of the public. These [page743] duties were not subordinate to OFGC's public role. They lay at the very core of that role. They are similar to a public school board's duty to operate a safe school, which Binnie J. recognized as a public duty in Des Champs. Therefore, the duties relied on by the appellants in their claim must be classified "as entailing a public aspect".

(iv) Is the activity of OFGC that is the subject matter of the complaint "inherently of a public nature" or is it more of "an internal or operational nature having a predominantly private aspect"?

16Any public authority undoubtedly engages in a wide range of actions or activities. Many of these activities may fairly be said to come within a public authority's public mandate. But as Estey J. pointed out in Berardinelli, supra, not even all of the activities within the authority's public mandate are entitled to the protection of the limitation period. Some of the authority's public managerial activities are so mundane or routine -- in Berardinelli, snow removal by a public housing authority -- that they do not justify the protection of the PAPA. These routine activities may be classified as predominantly internal or operational.

17This fourth step, therefore, focuses on whether the activity of the public authority complained of by a plaintiff is primarily public, or primarily internal or operational. This distinction avoids creating double standards for the routine activities of a public authority. In other words, permitting a public authority to claim the protection of the PAPA for an activity as routine as snow removal unfairly disadvantages a plaintiff injured on the icy steps of a housing authority complex compared to a plaintiff injured on the icy steps of a privately owned apartment building. In the first case, the plaintiff has six months to sue; in the second case, the plaintiff has six years.

18The appellants contend that the Halton CAS's alleged failure to supervise Robert Benton is no different from a housing authority's failure to clean the ice and snow in Berardinelli. I do not agree. The appellants' submission, however, is supported by the decision of Kurisko J. in L. (D.) v. Children's Aid Society of the District of Thunder Bay, [1987] O.J. No. 1461 (Quicklaw) (Dist. Ct.). In that case, a young boy who had been taken into custody by the Thunder Bay Children's Aid Society and placed in a group home, stabbed and killed a resident of the group home, and stabbed and seriously wounded an employee of the Society. The boy's parents and siblings sued the Children's Aid Society for damages for negligent supervision, but did not start the action until more than a [page744] year after the stabbing. The Children's Aid Society moved to dismiss the claim on the ground that it was barred by the six-month limitation period in the PAPA.

19Kurisko J. held that the claim was not statute-barred because the day-to-day care and supervision of a child in a group home was "internal or operational in nature having a predominantly private aspect". He wrote:

In Berardinelli the Supreme Court of Canada held that removal of snow from public access portions of a public housing complex is not a phase of activity which has "a direct public purpose" or which has "a public aspect". The court described this activity as predominantly in character a "subordinate" or "incidental" act. "It is something done every winter by almost every householder in Canada." If the foregoing can be said of snow removal from public access portions of a public housing complex I have no difficulty concluding that day to day care and supervision of a child residing in a group home operated by the Society is not a phase of activity which has "a direct public purpose" or which has "a public aspect". Such care and supervision is internal or operational in nature having a predominantly private aspect. Caring for a child is a duty performed on a daily basis by every conscientious parent or guardian. It is a duty owing primarily to the child as opposed to the public.

20The Thunder Bay case was decided before Des Champs. Kurisko J., therefore, did not have the benefit of Binnie J.'s analysis. In my view, Kurisko J.'s reasoning is inconsistent with that analysis. A children's aid society's day-to-day supervision of a child in need of protection cannot fairly be equated to a housing authority's removal of snow and ice from a sidewalk. Snow removal was an obviously routine or subordinate activity in Berardinelli, but I see nothing routine or subordinate about the activity of supervising a child entrusted to a group home's care. This is a very public activity. Indeed, it is central to the group home's public mandate. Therefore, the activity of OFGC that forms the subject matter of the appellants' complaint -- failing to supervise Robert Benton properly and failing to take steps to find him -- are, in the words of Estey J., "inherently of a public nature": see Berardinelli, supra, at p. 284 S.C.R.

(v) From the appellants' perspective, does their claim "correlate" to OFGC's exercise of a public power or duty, or does it relate to the breach of a public duty, or does it complain about an activity of a public character?

21This is the critical step in the inquiry. If the answer to question (v) is yes, then the limitation period applies.

22This fifth question requires the court to consider the nature of the plaintiff's claim and assess whether it correlates to the public authority's public duty. In other words, once the public [page745] authority owes a duty to "all the public alike", then any claim against the public authority that is correlative to that duty attracts the protection of the Act. Conversely, any claim against the public authority that is rooted in contract or in another kind of private relationship will not gain the benefit of the limitation period.

23In this case, the appellants' claim against OFGC correlates exactly with OFGC's public duties. The appellants allege that OFGC failed to properly supervise and control Robert Benton, and failed to take reasonable steps to find him after he was discovered missing. These allegations correspond to OFGC's public mandate in s. 15(3) of the CFSA to protect, care for, and supervise children assigned to its supervision. I would, therefore, answer yes to this fifth question and hold that OFGC can rely on the limitation period in s. 7(1) of the Act.

Second Issue: Did the Motions Judge Commit a Reviewable Error in Exercising his Discretion to Dismiss the Appellants' Motion?

24The application of the limitation period does not automatically foreclose the appellants' motion to add OFGC as a defendant. Under subrule 5.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court retains discretion "at any stage of a proceeding" to add a party to an action "on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment". A court can invoke this rule in a case such as this, by adding a defendant to an existing action even though the limitation period applicable to that defendant has expired. See, for example, Deaville v. Boegeman (1984), 48 O.R. (2d) 725, 14 D.L.R. (4th) 81 (C.A.) and Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 56 O.R. (3d) 768, 207 D.L.R. (4th) 492 (C.A.).

25In this case, however, the motions judge exercised his discretion by refusing to add OFGC after the expiry of the six- month limitation period in the PAPA. He held that the expiry of the limitation period created a presumption of prejudice which the appellants had failed to rebut. He also held that there were no special circumstances justifying the proposed addition of OFGC.

26The appellants submit that the motions judge erred because he based his dismissal of the motion on presumed, not actual prejudice. Because OFGC led no evidence that it would actually be prejudiced by the proposed amendment, the motions judge should have added OFGC as a defendant in the action.

27There are three obstacles to accepting the appellants' submission: (1) the order of the motions judge is entitled to deference; (2) the appellants made no attempt to locate OFGC for over [page746] three years after the accident; and (3) the appellants have not shown OFGC would not be prejudiced by the amendment.

28Because the order of the motions judge refusing the amendment under subrule 5.04(2) is discretionary, it is entitled to deference from a reviewing court. It should be set aside only if it reflects an error in principle or is otherwise unreasonable. As I will discuss, I am not persuaded that the motions judge committed a reviewable error in the exercise of his discretion.

29An important consideration supporting the motions judge's order was the appellants' inaction for over three years after the accident. The accident occurred in September 1998. The appellants (or their counsel) were told in February 1999 that Robert Benton had been placed at FGI Foundations in Burlington. However, they took no steps to find OFGC until February 2002. FGI is the trade name for OFGC, which is the legal entity. Ordinary corporate and telephone directory searches would have disclosed OFGC's existence and its operation of Foundations Residence in Burlington. The appellants offered no explanation for why they waited so long to conduct these searches.

30The following brief chronology shows what occurred and when it occurred:

• May 5, 1998: Halton CAS places Robert Benton at Foundations Residence in Burlington.
• August 27, 1998: Robert Benton leaves Foundations Residence without permission.
• September 5, 1998: the car accident occurs.
• December 4, 1998: the Mota family issues a statement of claim, but does not name either OFGC or FGI as a defendant.
• February 2, 1999: the lawyers for the estate of Robert Benton inform the lawyers for Mr. and Mrs. Mota that Robert Benton had been a Crown ward placed with FGI Foundations in Burlington at the time of the accident.
• August 19, 1999: the Mota family moves to add FGI Foundations and the Children's Aid Society of Hamilton- Wentworth as defendants. They try unsuccessfully to serve FGI Foundations at the Hamilton-Wentworth Society's offices in Hamilton. OFGC do not operate any facilities there and, accordingly, received no notice of the motion.
• February 7, 2002: lawyers for Mr. and Mrs. Mota conduct corporate searches. [page747]
• February 19, 2002: OFGC becomes aware of the lawsuit when it is served with the motion record to add it as a defendant to the action.
• May 13, 2002: lawyers for Mr. and Mrs. Mota do telephone directory searches.
• May 14, 2002: the Mota family brings its motion to add OFGC as a defendant.

31This chronology shows how this case differs from those in which an amendment to add a party after the expiry of the limitation period has been allowed. Two differences stand out. First, the proposed defendant OFGC had no knowledge of the claim until over three years after the accident. If it was not misled, it was certainly taken by surprise. This case, therefore, differs from a case such as Mazzuca, where, from the outset, the defendant knew the substance of the claim being asserted and the amendment simply substituted the correct corporate name of the plaintiff. Second, the appellants have given no real explanation for why they took no action to add OFGC for over three years after the accident. In cases such as Mazzuca, the party who sought the court's indulgence -- there, the plaintiff -- gave a reasonable explanation for not moving earlier. Thus, even apart from the question of prejudice, I find it hard to see any compelling reason to reverse the motions judge.

32That being said, prejudice is an important factor in a motion under subrule 5.04(2). Oddly, therefore, the record is silent on the question of prejudice. OFGC has filed no evidence that it would be prejudiced by the proposed amendment, and the appellants have filed no evidence that OFGC would not be prejudiced if it were added as a defendant. Absent evidence on either side, the question of prejudice must be determined by the failure of the appellants to rebut the presumption of prejudice.

33In Deaville v. Boegeman, supra, at p. 730 O.R., MacKinnon A.C.J.O. explained the presumption of prejudice and the onus on the party seeking to rebut it.

Some courts have suggested that in applications of the nature of the one in the instant case, limitation periods can be ignored. Limitation periods, however, were not enacted to be ignored. It has also been suggested that the mere bringing of such an application as in the instant case immediately shifts the burden of establishing prejudice to the defendant. I do not agree. In my view, the expiry of the limitation period creates a presumption, however slight in some cases, of prejudice to the defendant. It may be that the mere recitation of the facts and history of the case makes it clear there is no prejudice to the defendant and it can be inferred that he knew, within the limitation period, of the case and the nature of the claims now being made [page748] against him. Alternatively the defendant may file material which establishes prejudice. If matters are left in balance, the usual rules apply and the applicant upon whom the burden lies has not discharged that burden. The facts of the case and the claims and the history of the dealings with the defendant are within the knowledge of the plaintiff and there is no unfairness in placing upon the plaintiff the burden of establishing those facts.

34In this case, the mere passage of time has created a presumption that OFGC would be prejudiced by the amendment. Although that prejudice cannot be measured, it must be taken to exist unless the appellants can show otherwise. Conversely, on the unusual record in this case, OFGC was not required to put forward evidence of actual prejudice. It was entitled to rely on the presumption of prejudice because the appellants led no evidence to suggest otherwise. The appellants, therefore, cannot meet the requirements of subrule 5.04(2). They have not shown that adding OFGC after the expiry of the limitation period would not result in prejudice that could not be compensated for by costs.

35For these reasons I see no error in the motions judge's order dismissing the motion to add OFGC as a defendant. I would dismiss the appeal with costs on a partial indemnity basis fixed at $5,000, inclusive of disbursements and Goods and Services Tax.