Court File and Parties

CITATION: Streamline Foods Ltd. v. Jantz Canada Corporation, 2011 ONSC 1630

DIVISIONAL COURT FILE NO.: 581/10

DATE: 2011/03/15

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Streamline Foods Ltd., Appellant

AND:

Jantz Canada Corporation, Respondent

BEFORE: Herman J.

COUNSEL: James M. Wortzman, for the Appellant

Scott A. Rosen; Bryan Fromstein, for the Respondent

HEARD: March 8, 2011

ENDORSEMENT

[1] The appellant, Streamline Foods Ltd. (“SFL”), appeals the order of Master Muir, dated November 19, 2010, in which the Master dismissed the appellant’s motion to name Streamline Foods, Inc. (“SFI”) as a plaintiff.

[2] The parties agree that the primary issue is whether this is a case of misnomer. The appellant submits that the Master applied the wrong test. He should have granted the motion on the basis that the appellant made a bona fide mistake and the respondent had not been misled or prejudiced.

[3] The respondent, Jantz Canada Corporation, contends that this is not a situation of misnomer. Rather, the appellant seeks to add a party. In the respondent’s submission, the issue of prejudice only arises if there is a misnomer.

Background

[4] SFL, a Canadian corporation, commenced an action against the respondent, Jantz Canada Corporation, on September 29, 2008. SFL alleges that Jantz’s supply and installation of packaging and blending lines at SFL’s manufacturing facility was deficient. Jantz denies the allegations and has counterclaimed for payment.

[5] SFL is incorporated under the laws of Canada. It is a wholly owned subsidiary of SFI, a Delaware corporation. The two companies share common officers and directors and are commonly viewed as one and the same business.

[6] Examinations for discovery were held in May, June and July of 2010. SFL says that during the course of these examinations, it became apparent that some of the damages claimed in the action may have been incurred by SFI, not by SFL.

[7] SFL brought the motion to add SFI after the two-year limitation period had expired.

The Master’s decision

[8] The Master noted that most of the cases involving misnomers involve misnamed defendants. However, in his opinion, the same principles apply to misnamed plaintiffs: if the proposed party, while not specifically or correctly named, is otherwise identifiable from the pleading, it is a situation of misnomer; if the party is not identifiable from the pleading, it is not a situation of misnomer but is, instead, an attempt to add a new party.

[9] The Master concluded that this was not a case of misnomer but was an attempt to add a new plaintiff, SFI. SFI was not mentioned in the statement of claim nor, in his opinion, would a reasonable person on reading the statement of claim conclude that SFI was asserting a claim, had suffered damages or was involved in the events giving rise to the litigation.

[10] The Master noted as well that extensive amendments would be required in order to set out the factual basis for the claim being advanced by SFI such that there was a very different factual and legal foundation than was found in the original statement of claim.

[11] SFL and SFI concede that if the proposed amendment does not constitute a misnomer, SFI’s addition was statute-barred because of the limitation period.

Standard of review

[12] The standard of review of the final order of a Master is correctness on questions of law and palpable and overriding error on questions of fact (Jolicoeur c. Hawksbury (Ville), 2010 ONSC 4007 (Div. Ct.) at para. 26).

The test for the substitution/addition of parties

[13] Rule 26.01 of the Rules of Civil Procedure provides that the court shall grant leave to amend a pleading unless prejudice would result that cannot be compensated for by costs or an adjournment.

[14] Rule 5.04(2) provides that the court may add, delete, substitute or correct the name of a party, unless prejudice would result that cannot be compensated for by costs or an adjournment.

[15] Section 21 of the Limitations Act, 2002, S.O. 2002, c. 24 Schedule B addresses the addition of a party where a limitation period has expired:

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.

(2) Subsection (1) does not prevent the correction of a misnaming or misdescription of a party.

The cases

[16] I turn first to a consideration of the cases that preceded the Limitations Act, 2002.

[17] In Ladouceur v. Howarth, 1973 30 (SCC), [1974] S.C.R. 1111, the plaintiff sought an amendment to change the name of the plaintiff from the son to the father. Spence J. found that this was a case of misnaming a person and was a typical example of a misnomer. In concluding that the amendment should be granted, he cited at para. 12 the following principle; “The general principle underlying all the cases is that the court should amend, where the opposite party has not been misled, or substantially injured by the error”.

[18] In the case of Witco Chemical Co. v. Oakville (Town), 1974 7 (SCC), [1975] 1 S.C.R. 273, the appellants moved to amend the style of cause and show Argus Chemical Canada Limited, formerly known as Witco Chemical Company, Canada, Limited, as the plaintiff instead of Witco Chemical Company, Canada Limited. The solicitor for the appellants had been unaware that Witco had merged with Argus when he issued the writ. The Supreme Court allowed the appeal and the amendment to the style of cause. In so doing, Spence J. again noted the general principle that an amendment should be allowed where the other party has not been misled or injured.

[19] In Mazucca v. Silvercreek Pharmacy Ltd. (2001), 2001 8620 (ON CA), 152 O.A.C. 201 (C.A.), the plaintiff brought a motion to substitute the corporation as the plaintiff in place of her own name. The motion judge granted the motion on the basis that the action was mistakenly brought in the name of Ms. Mazucca; the defendant always understood that it was the owner of the business who was suing for damages and defended on that basis; correcting the misnomer had no impact on the defendant; and there was no new cause of action being asserted and no new facts alleged.

[20] The Court of Appeal agreed with the motion judge’s conclusion. Cronk J.A. stated that amendments to pleadings should be permitted where there is no evidence that the party affected by the amendment has been misled or will suffer non-compensable prejudice, other than that which arises from the inability to rely on the limitation defence.

[21] The Limitations Act, 2002 came into effect on January 1, 2004. The Court of Appeal considered its impact in Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469 (C.A.). The case did not involve misnomer. Rather, the plaintiff’s counsel had failed to issue a statement of claim within the limitation period. The case did, however, involve s. 21 of the Act and the doctrine of special circumstances. The motion judge applied the common law doctrine of special circumstances and exercised his discretion to extend the limitation period.

[22] The Court of Appeal allowed the appeal. Feldman J.A. writing for the court, indicated that the doctrine of special circumstances does not apply to the addition of parties. She stated as follows at para. 16:

No specific provision in the new Act refers to the doctrine of special circumstances, or specifically allows a court to extend or suspend the running of the limitation period based on special circumstances. To the contrary, s. 21 of the Act precludes the addition of parties to an existing action after the expiry of a limitation period. The late addition of parties to an existing action was one of the main situations where the doctrine of special circumstances was traditionally applied at common law and under Rule 5.04(2).

[23] In the case of Spirito Estate v. Trillium Health Centre, (2008) 2008 ONCA 762, 246 O.A.C. 150 (C.A.), the plaintiffs’ original claim was brought against Doctors AB, CD, EF, GH. The plaintiff sought to substitute two named doctors for Doctors AB and CD. In considering the situation under s. 21 of the Limitation Act, Rosenberg J.A. stated at para. 15:

The opening words of s. 21(1) are: “if a limitation period in respect of a claim against a person has expired”. The effect of this court’s decision in Kitcher [1997 1931 (ON CA), 44 O.R. (3d) 589 (Ont. C.A.)] is that in a case of misnomer, the limitation period has not expired. Further, s. 21(1) only precludes adding a person as a party, but in the case of misnomer, the person is not being added as a party. To repeat a portion of the reasons in Kitcher: “The appellants’ motion sought to name the defendant correctly not to add him as a party.” Finally, s. 21(2) makes it clear that the prohibition against adding a party after expiration of a limitation period in subsection (1) does not prevent the correction of a misnaming of a party.

[24] Rosenberg went on at paras. 16 and 17 to note that the Legislature intended to preserve the established law concerning misnomer; and to cite Saunders J. in Dukoff v. Toronto General Hospital (1986), 1986 2648 (ON SC), 54 O.R. (2d) 58 (Ont. H.C.) who explained that, “A misnomer is a misnaming”.

[25] In Lloyd v. Clark, 2008 ONCA 343 (C.A.), the Court of Appeal allowed an appeal from the motion judge’s refusal to correct the name of the defendant. In that case, the plaintiff had commenced an action against the Towns of Ajax and Whitby and wanted to substitute the Regional Municipality of Durham in their stead. The Court agreed that on a fair reading of the statement of claim, it was clear that the plaintiff intended to name the municipality that had responsibility for the maintenance of the road on which the accident occurred. Furthermore, there was evidence that Durham knew it was the intended defendant.

[26] The Court articulated the following general principle at para. 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.

[27] In Ormerod v. Strathroy Middlesex General Hospital (2008), 74 C.P.C. (6th) 298 (Ont. Sup. Ct.), aff’d 2009 ONCA 697, 255 O.A.C. 174 (C.A.), the plaintiffs moved to substitute the name of a doctor who had treated the deceased for the name of another doctor who had been mistakenly named. In granting the motion, the motion judge applied what is sometimes referred to as the “litigating finger” test: if a reasonable person looking at the document as a whole knows that he or she was the intended defendant, then it is a situation of misnomer.

[28] The Court of Appeal dismissed an appeal from the decision. Juriansz J.A. noted at para 31 that the concept of misnomer had been broadened so as to apply to a wider range of situations. He further noted at para. 32 that the factors the motion judge applied, that is, whether the defendant was misled or was unduly prejudiced should generally be determinative.

[29] The plaintiff in Veerella v. Khan 2009 CarswellOnt 8624 (Master); aff’d [2009] O.J. No. 4111 (Div. Ct.) moved to substitute the corporate entity in the place of the named plaintiff, who was the principal of the corporate entity. Master Sprout concluded that the motion was not, in fact, a motion to substitute, but was a motion to delete the personal plaintiff and add the corporate plaintiff. As a result she denied the motion. In doing so, she declined to follow the decision in Mazzuca, in which the Court of Appeal had considered special circumstances as relevant to the exercise of the court’s discretion to add, delete or substitute a new party. In view of the subsequent Court of Appeal decision in Joseph v. Paramount Canada’s Wonderland, interpreting s. 21 of the Limitations Act, new parties cannot be added after the expiry of a limitation period and special circumstances can no longer operate to extend the period.

[30] On appeal to the Divisional Court, Jennings J. upheld the Master’s decision, indicating that her finding that the motion did not involve a misnomer was a finding of fact and was therefore entitled to deference.

[31] Raymond v. 345404 Ontario Corp., 2009 CarswellOnt 8833 (Ont. Sup. Ct.); aff’d 2010 ONCA 214 (C.A.) involved a motion brought by a plaintiff to substitute the incorrectly named registered owner of a property with the correct registered owner. McMillan J. relied on the principle in Lloyd v. Clark and found that there was “a coincidence between the Plaintiff’s intention to name a party and the intended party’s knowledge that it was the intended Defendant”. The Court of Appeal dismissed an appeal from the decision, noting that the motion judge had found that the respondent’s claim had come to the attention of the appellant within the limitation period and the appellant would have recognized that it was the target of the litigation.

[32] In the case of Greater Toronto Airports Authority Assn. Inc. v. Foster Wheeler Ltd., 2010 ONSC 5891, the plaintiff moved to change the name of the plaintiff from Greater Toronto Airports Authority Assn. Inc. to Greater Toronto Airports Authority (GTAA). Master Sproat noted that the plaintiff did not make a conscious decision to name the plaintiff instead of the GTAA and the defendant understood it was the owner of the airport who was suing for damages. She concluded, therefore, that this was a situation of misnomer. Given the absence of prejudice, she granted the motion.

Analysis and Conclusion

[33] In general, leave is granted to a party to amend pleadings unless there is non-compensable prejudice to the opposing party. However, where the limitation period has expired, a party’s name may only be changed if there has been a misnomer. A new party cannot be added.

[34] The principles articulated in the cases prior to the passage of the Limitations Act, 2002 should be treated with caution. It is no longer possible to add parties after the expiry of a limitation period even in the face of special circumstances (Joseph v. Paramount Canada’s Wonderland).

[35] In my opinion, the Master applied the correct test. The primary issue is whether this is a situation of misnomer or is, instead, the addition of a new party. If it is the latter, it does not matter that the error was bona fide or the defendant will not suffer prejudice.

[36] The Master’s finding that the plaintiff was seeking to add a party, not seeking to correct a misnomer, is a finding of fact and is entitled to deference. It is also, in my opinion, correct. The plaintiff is seeking to add SFI not because the original plaintiff, SFL, was incorrectly named, but because SFI was not included as a plaintiff when the claim was initiated. Section 21 of the Limitations Act prohibits the addition of new parties after the expiry of a limitation period.

[37] The appeal is therefore dismissed.

[38] The parties presented costs outlines and made submissions on costs. In my opinion, a costs award of $5,000 is reasonable in the circumstances. The appellant is therefore to pay costs to the respondent in the amount of $5,000, inclusive of disbursements and HST, payable within 30 days.

Herman J.

Date: March 15, 2011