Zapfe v. Barnes; The Town of Strathroy et al., Third Parties [Indexed as: Zapfe v. Barnes]

66 O.R. (3d) 397

[2003] O.J. No. 2856

2003 52159

Docket No. C38413

Court of Appeal for Ontario,

Feldman, Cronk and Armstrong JJ.A.

July 14, 2003

Limitations -- Municipalities -- Discoverability -- Defendant in motor vehicle action bringing third party proceedings against two municipalities -- Plaintiff bringing motion to add municipalities as defendants in main action well after three- month limitation period in Municipal Act -- Plaintiff's solicitor swearing affidavits explaining why it was not possible for plaintiff with reasonable diligence to discover facts to form basis of claim against municipalities until examination for discovery of municipalities in third party proceeding -- Motions judge erring in dismissing motion -- Determination of when plaintiff acquired or ought reasonably to have acquired knowledge of facts on which claim against municipalities was based constituting question of fact which should be left for determination by trial judge on full evidentiary record -- Discovery of tortfeasor involving more than ascertaining identity of one who may be liable and also involving determination of any acts or omissions which constitute liability -- Municipal Act, R.S.O. 1990, c. M.45, s. 284(1), (1.1), (2), (5) -- Rules of Civil Procedure, R.R.O. Reg. 194, rules 5.04(2), 26.01.

The plaintiff was involved in a motor vehicle accident in January 1999. She commenced a negligence action against the defendant in December 2000. At the time of the issuance of the statement of claim, the plaintiff and her solicitor had [page398] no knowledge of the possible involvement in, or responsibility for the accident of two municipalities. No mention was made in the defendant's statement of defence of the possible responsibility of third parties for the accident, or of the weather conditions at the time of the accident. In April 2001, the defendant commenced third party proceedings against one of the two municipalities, alleging that her view of the plaintiff's vehicle was obstructed by large piles of snow lining the perimeters of the parking lot and adjacent roadway as she was attempting to leave the parking lot. In July 2001, the defendant obtained an order permitting her to amend her third party claim to add the other municipality. In November 2001, the plaintiff brought a motion under Rules 5 and 26 of the Ontario Rules of Civil Procedure for an order amending her statement of claim to add the two municipalities as defendants in the main action. The motion was resisted by the municipalities on the basis that the applicable three-month limitation period under s. 284(2) of the Municipal Act, R.S.O. 1990, c. M.45 had expired. The plaintiff's solicitor swore affidavits in support of the motion explaining why it was not possible for the plaintiff to discover with reasonable diligence the facts to form the basis of a cause of action against the municipalities before the examination for discovery of the proposed defendants in the third party proceeding. That explanation was not challenged in any way by evidence from the municipalities. The motion was dismissed. The plaintiff appealed.

Held, the appeal should be allowed.

It was not clear that the motions judge considered the discoverability principle, which was raised by the plaintiff as an issue on the amendment motion. The determination of when the plaintiff acquired, or ought reasonably have acquired, knowledge of the facts on which her claim was based was a question of fact which should be left for determination by a trial judge on a full evidentiary record. The discovery of a tortfeasor involves more than ascertaining the identity of one who may be liable; rather, it also involves the determination of any acts or omissions which constitute liability. The plaintiff's solicitor provided an unchallenged explanation for why she was unable to determine the facts about the alleged snow build-up in the relevant location on the day of the accident. There was no evidence on what steps the plaintiff could have taken to attempt to substantiate the defendant's allegations prior to discovery and the production of documents. Since both municipalities denied the facts asserted by the defendant, without an affidavit from them or cross-examination of the plaintiff's solicitor as to what inquiries could properly have been made outside the litigation process to substantiate or disprove the facts alleged by the defendant, there was no basis on the record for rejection of the evidence from the plaintiff's solicitor. The question of whether the plaintiff's solicitor was reasonably diligent could not be answered with finality. Whether the solicitor's explanation as to why no inquiries could be made prior to discoveries to substantiate or disprove the defendant's claims would survive scrutiny on cross-examination, or whether evidence existed that information was available to the plaintiff upon proper inquiry prior to her amendment motion to ground a cause of action against the municipalities, could not be determined at this stage. The municipalities should have been added as parties in the main action, with leave to the municipalities to plead the limitation period.

APPEAL by a plaintiff from an order dismissing a motion to amend a statement of claim to add two municipalities as party defendants.

Cases referred to Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 954 (ON CA), 38 O.R. (3d) 161, 156 D.L.R. (4th) 222, 17 C.P.C. (4th) 219 (C.A.), revg (1997), 1997 12145 (ON SC), 33 O.R. (3d) 615 (Gen. Div.); Bannon v. Thunder Bay (City), [2002] 1 S.C.R. 716, 210 D.L.R. (4th) 62, 284 N.R. 190, 27 M.P.L.R. (3d) 31, 2002 SCC 20, [2002] S.C.J. No. 18 (QL); Basarsky v. Quinlan, 1971 5 (SCC), [1972] S.C.R. 380, 24 D.L.R. (3d) 720, [1972] 1 W.W.R. 303; [page399] Bisoukis v. Brampton (City) (1999), 1999 3825 (ON CA), 46 O.R. (3d) 417, 180 D.L.R. (4th) 577, 7 M.P.L.R. (3d) 1, 1 M.V.R. (4th) 42 (C.A.), revg (1997), 42 M.P.L.R. (2d) 44 (Ont. Gen. Div.) [Leave to appeal to S.C.C. denied (2000), 261 N.R. 200n]; Burt v. LeLacheur (2000), 186 N.S.R. (2d) 109, 189 D.L.R. (4th) 193, 581 A.P.R. 109, 49 C.P.C. (4th) 53, 6 M.V.R. (4th) 1, 2 C.C.L.T. (3d) 206, 18 C.P.C. (5th) 1, 2000 NSCA 90 (C.A.), revg in part (1999), 1999 36379 (NS SC), 180 N.S.R. (2d) 88, 557 A.P.R. 88, 46 M.V.R. (3d) 230, 49 C.P.C. (4th) 69 (S.C.); Central Trust Co. v. Rafuse, 1988 46 (SCC), [1988] 1 S.C.R. 1206, varg 1986 29 (SCC), [1986] 2 S.C.R. 147, 75 N.S.R. (2d) 109, 31 D.L.R. (4th) 481, 69 N.R. 321, 86 A.P.R. 109, 34 B.L.R. 187, 37 C.C.L.T. 117, 42 R.P.R. 161 (sub nom. Central & Eastern Trust Co. v. Rafuse); Consumers Glass Co. v. Foundation Co. of Canada (1985), 1985 159 (ON CA), 51 O.R. (2d) 385, 9 O.A.C. 193, 20 D.L.R. (4th) 126, 30 B.L.R. 87, 33 C.C.L.T. 104, 1 C.P.C. (2d) 208 (C.A.); Deaville v. Boegeman (1984), 1984 1925 (ON CA), 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.); Kamloops (City) v. Nielsen, 1984 21 (SCC), [1984] 2 S.C.R. 2, 66 B.C.L.R. 273, 10 D.L.R. (4th) 641, 54 N.R. 1, [1984] 5 W.W.R. 1, 29 C.C.L.T. 97, 26 M.P.L.R. 81; M. (K.) v. M. (H.), 1992 31 (SCC), [1992] 3 S.C.R. 6, 96 D.L.R. (4th) 289, 142 N.R. 321, 14 C.C.L.T. (2d) 1; Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 2001 8620 (ON CA), 56 O.R. (3d) 768, 207 D.L.R. (4th) 492, [2001] O.J. No. 4567 (QL), 152 O.A.C. 201, 15 C.P.C. (5th) 235 (C.A.); Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 549, 151 D.L.R. (4th) 429, 217 N.R. 371, 30 M.V.R. (3d) 41, 12 C.P.C. (4th) 255 Statute referred to Municipal Act, R.S.O. 1990, c. M.45, s. 284(1), (1.1), (2), (5) [rep. S.O. 2001, c. 25, s. 484] Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 5.04(2), 26.01

Alan A. Farrer, for appellant. Brian McCall, for respondent, Town of Strathroy. Maura Helsdon, for the respondent, The Corporation of the County of Middlesex.

The judgment of the court was delivered by

[1] FELDMAN and CRONK JJ.A.: -- The appellant, Doris Zapfe, appeals from an order of Hockin J. of the Superior Court of Justice dated December 14, 2001, dismissing her motion to amend her statement of claim to add two municipalities as party defendants in a negligence action arising out of a motor vehicle accident. The primary question on this appeal is whether the commencement of the three-month limitation period established by s. 284(2) of the Municipal Act, R.S.O. 1990, c. M.45 (the "Act"), as amended, which concerns actions against municipalities for the non-repair of highways, was postponed by the operation of the discoverability principle until after the date of the appellant's [page400] amendment motion. In that event, the appellant's proposed claims against the municipalities are not statute-barred. If the limitation period had expired, however, the issue is whether the requested pleadings amendment should have been permitted in the exercise of the court's discretion under rules 5.04(2) and 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[2] For the reasons that follow, we would allow the appeal with leave to the respondents to plead the expiry of the limitation period under s. 284(2) of the Act.

I. BACKGROUND

[3] On January 5, 1999, the appellant's motor vehicle collided with a vehicle driven by Aileen Mary Barnes while Barnes was exiting a parking lot in Strathroy, Ontario. The appellant commenced an action in negligence against Barnes on December 22, 2000, claiming damages for personal injuries allegedly sustained by her in the accident. At the time of the issuance of her statement of claim, the appellant and her solicitor had no knowledge of the possible involvement in or responsibility for the accident of The Town of Strathroy ("Strathroy") or The Corporation of the County of Middlesex ("Middlesex").

[4] Barnes delivered her statement of defence on March 29, 2001. She denied the appellant's claims and asserted that the appellant's own negligence was the cause of the accident. No mention was made in Barnes' statement of defence of the possible responsibility of third parties for the accident, or of the weather conditions at the time of the accident.

[5] Subsequently, on April 3, 2001, Barnes commenced third party proceedings against Strathroy (wrongly named, initially, as The Township of Strathroy-Caradoc) and The Royal Canadian Legion, Sir Arthur Currie Branch 116 (the "Legion"). Barnes alleged in her third party claim that her view of the appellant's vehicle was obstructed by large piles of snow lining the perimeters of the parking lot and the adjacent roadway as she was attempting to leave the parking lot. She claimed that the parking lot was owned by the Legion, the snow was on lands occupied by Strathroy and the Legion, and they failed to properly maintain the roadway. She sought contribution and indemnity from the third parties for any sums for which she might be found liable to the appellant at trial, or which might be advanced to the appellant by way of settlement.

[6] Barnes' third party claim was served on the appellant or her solicitor on or about April 3, 2001.

[7] On July 4, 2001, Barnes brought a motion seeking to amend her third party claim to add Middlesex as a third party. Barnes' [page401] supporting motion record contained a letter from her adjusters dated May 16, 2001, in which it was suggested that Middlesex was responsible for the roadway and that Strathroy was responsible for the adjacent sidewalks.

[8] On July 31, 2001, Barnes obtained an order permitting her to amend her third party claim to add Middlesex as a third party. Barnes alleged in her amended claim that Middlesex and/ or Strathroy were negligent for failing to maintain the roadway by ensuring that the snow banks lining the street were reduced to such a level as to permit clear vision of the roadway by motorists. She further alleged that Middlesex was responsible for maintenance of the roadway and that Strathroy was responsible for maintenance of the sidewalks. Barnes also repeated her earlier allegation that her view of the roadway was obstructed by large piles of snow at the time of the accident. As a result, she sought contribution and indemnity from Strathroy, the Legion and Middlesex.

[9] On September 26, 2001, Strathroy delivered a defence to the third party claim and to the appellant's statement of claim. Middlesex followed suit on October 15, 2001. In those pleadings, the municipalities denied any negligence or responsibility for the accident. They also denied any knowledge of the condition of the roadway and the sidewalks at the time of the accident, including any knowledge of a snow build-up.

[10] On or about November 5, 2001,1 the appellant brought a motion under Rules 5 and 26 of the Rules of Civil Procedure for an order amending her statement of claim to add the third parties as defendants in the main action. In her proposed amended pleading, she alleged that the two municipalities breached their duty to repair a highway by failing to remove the snow on the roadway and the sidewalks where the accident occurred. The appellant's motion was resisted by Strathroy and Middlesex on the basis that the applicable three-month limitation period under s. 284(2) of the Act2 had expired.

[11] The appellant's solicitor swore two affidavits in support of the appellant's amendment motion. In her affidavits, the solicitor, who is an experienced litigation counsel, explained why it [page402] was not possible for the appellant to discover, with reasonable diligence, the facts to form the basis of a cause of action against the municipalities before the examination for discovery of the proposed defendants in the third party proceeding. First, she stated that the appellant had no knowledge of the snow banks which Barnes alleged, in her third party claim, blocked her view and caused her to hit the appellant's car. Second, she said that she knows only the allegations made by Barnes, which are denied by the third parties in their pleadings. Further, because of the Rules of Civil Procedure, she asserted that she cannot obtain any information directly from the proposed parties except within the litigation process. Consequently, she has only Barnes' allegations, of which she learned only upon service of the third party claim, but no facts to substantiate those allegations.

[12] The appellant's solicitor was not cross-examined on her affidavits; nor did the municipalities file any affidavit materials in response to her affidavits. Accordingly, the evidence of the appellant's solicitor is uncontradicted on the record before this court.

[13] No examinations for discovery have been held to date in the main action or in the third party proceeding.

II. THE DECISION OF THE MOTIONS JUDGE

[14] The appellant's motion was argued before Hockin J. of the Superior Court of Justice on December 14, 2001. For reasons dated June 3, 2002, the motions judge dismissed the motion in relation to Strathroy and Middlesex and granted the requested amendment concerning the Legion. The Legion did not appear on the motion and does not appear to have contested it.

[15] In dismissing the appellant's motion concerning the two municipalities, the motions judge observed that the effect of the requested amendment, if granted, would be to add Strathroy and Middlesex as party defendants after the expiry of the applicable limitation period. In that regard, ss. 284(1), (1.1), (2) and (5) of the Act provided at the relevant time:

284(1) The council of the corporation that has jurisdiction over a highway or bridge shall keep it in a state of repair that is reasonable in light of all the circumstances, including the character and location of the highway or bridge.

(1.1) In case of default, the corporation, subject to the Negligence Act, is liable for all damages any person sustains because of the default.

(2) No action shall be brought against a corporation for the recovery of damages occasioned by such default, whether the want of a reasonable state of repair was the result of nonfeasance or misfeasance, after the expiration of three months from the time when the damages were sustained. [page403]

(5) No action shall be brought for the recovery of the damages mentioned in subsection (1) unless notice in writing of the claim and of the injury complained of has been served upon or sent by registered mail to the head or the clerk of the corporation, in the case of a county or township within ten days, and in the case of an urban municipality within seven days, after the happening of the injury, nor unless, where the claim is against two or more corporations jointly liable for the repair of the highway or bridge, the prescribed notice was given to each of them within the prescribed time. S.O. 1996, c. 32, s. 54.

III. ISSUES

[16] There are two issues on this appeal: (i) has the commencement of the limitation period under s. 284(2) of the Act been postponed by the operation of the discoverability principle; and (ii) if the limitation period had expired by the date of the appellant's amendment motion, should the appellant's requested pleadings amendment nonetheless have been permitted in the exercise of the court's discretion?

IV. ANALYSIS

(1) The Application of the Discoverability Principle

[17] It is common ground that the three-month limitation period under s. 284(2) of the Act applies to the claims sought to be advanced by the appellant against Strathroy and Middlesex. The limitation period expired naturally on April 5, 1999, three months after the date of the accident, unless the discoverability principle operates to postpone the commencement of the limitation period to, at least, until after the appellant's motion to amend her statement of claim was brought at the beginning of November 2001.

[18] The discoverability principle was described by Justice Le Dain in Central Trust Co. v. Rafuse, 1986 29 (SCC), [1986] 2 S.C.R. 147, 31 D.L.R. (4th) 481, at p. 224 S.C.R. in the following terms:

[A] cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence.

See also Kamloops (City) v. Nielsen, 1984 21 (SCC), [1984] 2 S.C.R. 2, 10 D.L.R. (4th) 641.

[19] The discoverability principle is an interpretive tool of general application which guides the interpretation of limitations statutes. Consideration of whether it applies in a given case is concerned with balancing fairness for both the plaintiff and the proposed defendant. On the one hand, the plaintiff, through no lack of diligence, is unaware of her cause of action prior to the [page404] natural expiry date of the limitation period. In those circumstances, the principle is designed to avoid the injustice of precluding an action or claim before the plaintiff is in a position to commence proceedings. On the other hand, the proposed defendant is entitled to reasonably rely upon limitations statutes in the ordering of its affairs. Application of the discoverability principle postpones the running of a limitation period and therefore precludes the proposed defendant from relying on the protection of the natural expiration of a limitation period: Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 549, 151 D.L.R. (4th) 429. See also Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 954 (ON CA), 38 O.R. (3d) 161, 156 D.L.R. (4th) 222 (C.A.), and Consumers Glass Co. v. Foundation Co. of Canada (1985), 1985 159 (ON CA), 51 O.R. (2d) 385, 20 D.L.R. (4th) 126 (C.A.).

[20] The need for the balancing of those competing fairness concerns was confirmed by the Supreme Court of Canada in M. (K.) v. M. (H.), 1992 31 (SCC), [1992] 3 S.C.R. 6, 96 D.L.R. (4th) 289. In that case, La Forest J., writing for a majority of the court, described the policy reasons for statutory limitations of suits from the perspective of a potential defendant. They include: (i) recognition of the fact that there comes a time when a proposed defendant may reasonably expect that it will not be held to account for past obligations (at para. 22); (ii) the desirable objective of foreclosing claims based on stale evidence, that is, once a limitation period has expired, the potential defendant should be relieved from the need to preserve evidence relevant to the claim (at para. 23); and (iii) the important public benefit to be achieved by requiring plaintiffs to act diligently and not to "sleep on their rights", thus fostering the timely commencement of suits and closure of claims (at para. 24). At the same time, however, as observed by La Forest J., at para. 27, "[F]airness to the plaintiff must also animate a principled approach to determining the accrual of a cause of action."

[21] In Peixeiro, Major J. emphasized the requirement for fairness to plaintiffs, but also underscored their due diligence obligations (at para. 39):

In balancing the defendant's legitimate interest in respecting limitations periods and the interest of the plaintiffs, the fundamental unfairness of requiring a plaintiff to bring a cause of action before he could reasonably have discovered that he had a cause of action is a compelling consideration. The diligence rationale would not be undermined by the application of the discoverability principle as it still requires reasonable diligence by the plaintiff.

[22] It is not contested that the discoverability principle applies to s. 284(2) of the Act. The principle has been judicially recognized to apply to the limitation of actions against municipalities, including limitations established by the Act: Peixeiro, supra; [page405] Bannon v. Thunder Bay (City), 2002 SCC 20, [2002] 1 S.C.R. 716, 210 D.L.R. (4th) 62; and Bisoukis v. Brampton (City) (1999), 1999 3825 (ON CA), 46 O.R. (3d) 417, 180 D.L.R. (4th) 577 (C.A.), leave to appeal to S.C.C. refused [2000] S.C.C.A. No. 52.

[23] Rather, the appellant asserts here that the effect of the application of the discoverability principle is to postpone, to the date of the examinations for discovery, the commencement of the limitation period under s. 284(2) of the Act. In contrast, the respondents submit that application of the discoverability principle is irrelevant in this case because the appellant was aware of a potential cause of action as against Strathroy by April 1, 2001 (as a result of Barnes' original third party claim), and as against Middlesex by July 31, 2001 (when Barnes' third party claim was amended to include a claim against Middlesex).

(2) The Postponement of the Limitation Period

[24] As appears from the decisions of the Supreme Court of Canada in Central Trust Co. and Peixeiro, the discoverability principle rests by definition on the requirement of due diligence by the plaintiff. Judicial respect for that requirement is inherent to proper regard for the diligence policy rationale which underlies limitations statutes. That requirement dictates the test to be applied in determining the start of a limitation period under the discoverability principle: when can it be said that the plaintiff knew, or by reasonable diligence could have discovered, the material facts on which to base a cause of action against the proposed defendant?

[25] The appellant advances two main arguments in support of her submission that the limitation period under s. 284(2) of the Act has not yet expired.

[26] First, the appellant relies on the decision of this court in Aguonie, supra, in support of her assertion that the determination of when a plaintiff acquired, or ought reasonably to have acquired, knowledge of the facts on which her claim is based is a question of fact which should be left for determination by a trial judge on a full evidentiary record.

[27] Second, the appellant submits that discovery of a tortfeasor involves more than ascertaining the identity of one who may be liable; rather, it also involves the determination of any acts or omissions which constitute liability.

[28] In response, the respondents argue that the appellant's amendment motion was brought outside the three-month limitation period, on any view of the facts. They claim that regardless of which date is considered to be the date upon which the limitation period commenced to run, it has expired. More particularly, more than three months have expired from any of: (i) the date of [page406] the accident, which occurred on January 5, 1999; (ii) the appellant's receipt of Barnes' original third party claim on April 3, 2001; (iii) the appellant's receipt of Barnes' motion materials to add Middlesex as a third party on July 4, 2001; or (iv) the delivery to the appellant of Barnes' amended third party claim on July 31, 2001. Accordingly, even assuming that the appellant satisfied her due diligence requirement, the respondents submit that the prescription period has now expired and had expired by the time of the appellant's amendment motion.

[29] On the record in this case, we agree with the appellant's position, for several reasons.

[30] First, it is not clear to us that the motions judge considered the discoverability principle, which was raised by the appellant as an issue on the amendment motion. The motions judge's analysis proceeded from the premise that the limitation period had expired. He went on to address the issues of prejudice and special circumstances in the context of the rules governing pleadings amendments. In doing so he stated:

The discovery process was never to be used as a tool to investigate possible causes of action. The plaintiff's obligation is to investigate and, if so advised, to commence proceedings, within time, against those who may have caused or contributed to the injury claimed by the plaintiff as a result of the accident.

[31] While that statement properly recognized the appellant's due diligence obligation, it does not indicate that the motions judge related that obligation to the discoverability principle; nor do the reasons of the motions judge suggest that he assessed the evidentiary record before him in the context of the discoverability principle.

[32] Second, in Aguonie, the discoverability principle was held to apply to the identity of the tortfeasor and, in addition, to the acts or omissions of a potential tortfeasor identifying him or her as such. Justice Borins (ad hoc), writing on behalf of the court in Aguonie, stated, at p. 170 O.R.:

While it is true that many of the cases in which [the discoverability principle] has been applied concern a plaintiff's discovery of the extent of an injury, or the delayed effect or result of a defendant's negligence, this case concerns the discovery of a tortfeasor. The discovery of a tortfeasor involves more than the identity of one who may be liable. It involves the discovery of his or her acts, or omissions, which constitute liability.

(Emphasis added)

[33] Later in his reasons, Borins J. (ad hoc) said (at p. 172 O.R.):

The starting point for the application of the discoverability rule . . . is the time when the appellants' cause of action arose. This will define the starting [page407] date of the limitation period. It is a question of fact when the cause of action arose and when the limitation period commenced. The application of the discoverability rule is premised on the finding of these facts: when the appellants learned they had a cause of action against the respondents; or, when, through the exercise of reasonable diligence, they ought to have learned they had a cause of action against the respondents. These facts constitute genuine issues for trial . . .

(Emphasis added)

[34] In this case, the appellant's solicitor provided an explanation for why she was unable to determine the facts about the alleged snow build-up in the relevant location on the day of the accident. That explanation was not challenged in any way by evidence from the respondents. In addition, there is no evidence before this court on what steps the appellant could have taken to attempt to substantiate Barnes' allegations prior to discovery and the production of documents in the litigation. Since both municipalities deny the facts asserted by Barnes, without an affidavit from them or cross-examination of the appellant's solicitor as to what inquiries could properly have been made outside the litigation process to substantiate or disprove the facts alleged by Barnes, there is no basis on the record for rejection of the evidence from the appellant's solicitor.

[35] In most cases one would expect to find, as part of a solicitor's affidavit, a list of the attempts made by the solicitor to obtain information to substantiate the assertion that the party was reasonably diligent. In this case, however, the solicitor has explained why she could take no such steps. No information to the contrary was provided by the respondents.

[36] On the record before us, therefore, the question of whether the appellant's solicitor was reasonably diligent cannot be answered with finality. The appellant herself claims that she had no knowledge of the snow banks. Therefore, everything within her knowledge is mere allegations by Barnes, denied by the third parties. Thus, a claim by the appellant against the municipalities at this stage rests only on bare allegations.

[37] Whether the appellant's solicitor's explanation as to why no inquiries could be made prior to discoveries to substantiate or disprove Barnes' claims will survive scrutiny on cross-examination, or whether evidence exists that information was available to the appellant upon proper inquiry prior to her amendment motion to ground a cause of action against the respondents, cannot be determined at this stage. As observed by the Nova Scotia Court of Appeal in Burt v. LeLacheur (2000), 2000 NSCA 90, 189 D.L.R. (4th) 193, 49 C.P.C. (4th) 53 (N.S.C.A.), at p. 207 D.L.R., the precise amount of knowledge necessary to trigger the running of time [page408] under a limitation period must be determined upon application of the legislation creating the limitation period, using the discoverability principle, to the facts as found. In this case, the crucial fact-finding exercise has not yet occurred and the appellant's asserted version of the facts concerning the discoverability of a cause of action against the municipalities was uncontradicted on the motion before the motions judge. Accordingly, the testing of the appellant's assertion that the limitation period has not yet commenced to run must await either a summary judgment motion or a trial.

[38] In our view, therefore, given the evidentiary record before the motions judge, this is a case where the municipalities should have been added as parties in the main action, with leave to the respondents to plead the limitation period.

(3) Other Issues

[39] Two additional matters bear mention in this case.

[40] First, the three-month limitation period under s. 284(2) of the Act is a prescription of very short duration. The length of that limitation period signifies the high value attached by the legislature at the time of this accident to the control, and timely closure, of potential negligence actions against a municipality for the non-repair of highways or bridges. The duration of the limitation period suggests that judicial caution should be exercised in relieving against the limitation period.

[41] That interpretation is reinforced by s. 284(5) of the Act, which provides in part that no action shall be brought for the recovery of damages in connection with the non-repair by a municipal corporation of a highway or bridge unless written notice of the claim and of the injury complained of has been provided to the municipality within ten days (in the case of a county or township) or within seven days (in the case of an urban municipality) after the injury.

[42] Thus, s. 284 of the Act, as in force at the time of this accident, imposes two discrete limitations on the ability to sue a municipality in negligence for damages occasioned by the non-repair of a highway or bridge: (i) the three-month limitation period established by s. 284(2) for commencement of an action; and (ii) the provision for prior written notice of the claim and the alleged injury required under s. 284(5). Those statutory provisions, in combination, serve to underscore the requirement for diligence and timely action by a prospective plaintiff concerning such a claim. The respondents on this appeal, however, did not allege a breach by the appellant of s. 284(5); nor did the appellant [page409] claim compliance with it. In those circumstances, it is inappropriate to further comment on the significance of s. 284(5), if any, in this case.

[43] Second, before this court, the appellant argues that the reasoning underlying rule 5.04(2) of the Rules of Civil Procedure is not applicable to the determination of her right to amend her statement of claim to add the respondents as party defendants. We disagree.

[44] A pleadings amendment to add a party to an existing action is governed by the Rules of Civil Procedure. In some cases, the relevant rules must be applied in the context of an amendment sought after the expiry of a limitation period. In other situations, the issue of the expiry of a limitation period does not arise. In no event, however, can the reasoning which supports the rules for pleadings amendments simply be ignored; nor are the rules displaced by the discoverability principle.

[45] In this case, the motions judge declined to grant the requested amendment following consideration of rules 26.01 and 5.04(2) of the Rules of Civil Procedure. Those rules read as follows:

5.04(2) At 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.

26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[46] The motions judge considered rules 26.01 and 5.04(2) in the context of this court's recent decision in Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 2001 8620 (ON CA), 56 O.R. (3d) 768, 207 D.L.R. (4th) 492 (C.A.). It is settled law that the courts retain a discretion to permit a pleadings amendment to change the parties to a proceeding, notwithstanding the expiry of a limitation period, if special circumstances justifying the amendment and the absence of non-compensable prejudice to the party opposing the amendment are demonstrated: Basarsky v. Quinlan (1971), 1971 5 (SCC), [1972] S.C.R. 380, 24 D.L.R. (3d) 720; and Deaville v. Boegeman (1984), 1984 1925 (ON CA), 48 O.R. (2d) 725, 14 D.L.R. (4th) 81 (C.A.). Mazzuca confirmed that those principles apply to rules 5.04(2) and 26.01 under the current Rules of Civil Procedure.

[47] In this case, the motions judge proceeded on the basis that the applicable limitation period had expired. He did not expressly address the discoverability principle. Application of that principle, [page410] depending on the facts concerning the exercise of due diligence by the appellant, may result in the postponement of the commencement of the limitation period under s. 284(2) of the Act. Further, on the record before the motions judge, the appellant's solicitor's uncontradicted explanation concerning the inability to determine, prior to discoveries and productions, if material facts exist in support of a cause of action against the respondents was relevant to the exercise of the court's discretion under rules 5.04(2) and 26.01. It is not clear from the motions judge's reasons that her explanation was considered by him in the context of the discoverability principle.

V. DISPOSITION

[48] For the reasons given, we would allow the appeal. The appellant is entitled to her costs of the appeal on a partial indemnity basis, fixed in the sum of $3,750, inclusive of disbursements and Goods and Services Tax.

Appeal allowed.