Superior Court of Justice

Court File No. CV-09-4721

Endorsement

Plaintiff: HMQO (MNR)

Counsel: Eunice Machado

Defendants: Temagami Barge Limited et al

Counsel: Marc A.J. Huneault

Heard;

September 26, 2012

[ 1 ] From my Order dated March 18, 2010, and for the reasons indicated, the application was converted to an action. The Plaintiff commenced an action on or about May 17, 2010. On or about June 22, 2010, the Defendants delivered a Statement of Defence. The Defendants now bring this motion seeking leave to amend their Statement of Defence to add a Counterclaim, submitting that it is necessary in order for this Court to adjudicate effectively and completely on the issues in this proceeding. The Plaintiff opposes the addition of the Counterclaim for reasons outlined in their Factum, as elaborated upon at the hearing of this motion. Examinations for discovery have not taken place.

[ 2 ] The Counterclaim alleges negligent misrepresentations, abuse of authority and breach of procedural fairness by the Plaintiff and claims aggravated, punitive and exemplary damages. The Plaintiff opposes the Counterclaim for, inter alia , the following reasons:

a) the facts alleged disclose no reasonable cause of action and the claims have no chance of success;

b) the claims are barred by the Limitations Act;

c) the claims are frivolous, vexatious and an abuse of process; and

d) some of the claims are brought on behalf of a now-deceased individual.

[ 3 ] The issue to be decided on the motion is whether the Defendants should be permitted in these specific circumstances to add this Counterclaim, despite the Plaintiff’s submissions of the expiry of multiple limitations periods and other issues with the proposed pleading.

[ 4 ] Rule 26.01 provides:

“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.”

[ 5 ] It is submitted that the Plaintiff will suffer the following prejudice if the Counterclaim is permitted:

a) limitations periods have expired;

b) the counterclaim is a ‘collateral attack’ on other proceedings; and

c) the Defendants are seeking to launch an action on behalf of a now-deceased Defendant.

[ 6 ] On such a motion for leave to amend, the amendment should be allowed on just terms unless the opposite party will suffer an injustice that could not be compensated for by costs or an adjournment. Also, the proposed amendment should be prima facie meritorious, should be a pleading permissible in the first instance, and must contain sufficient particulars.

[ 7 ] I have carefully examined the relationship the proposed claim has to the existing and on-going claim and the way that this action has progressed to date both before and after my Order of March 18, 2010. This Court must consider the true nature of all of the claims and the knowledge of the parties.

[ 8 ] In my review of the Statement of Defence and the Amended Statement of Defence and Counterclaim, I have been wary of the distinction between pleading a new cause of action and pleading new and alternate remedies based on the same facts. Counsel have referred to Frohlick v Pinkerton Canada Limited , 2008 ONCA 3 . That decision of the Court of Appeal for Ontario illustrates the difference between an amendment that pleads a new cause of action and one that simply pleads a different remedy. In that case, contrary to what exists in this particular case, there was no dispute that the applicable limitation period had expired. Further, the amendments being sought in that case were fundamentally different. As such, the Court of Appeal in Frohlick found that Rule 26.01 did not contemplate the addition of unrelated statute barred claims by way of amendment to an existing pleading.

[ 9 ] Here, the original Statement of Defence contained broad allegations against the Plaintiff. From my review of the specifics of this matter, the original pleading contains all the facts necessary to support most of the amendments. These amendments relate to proper remedies sought upon facts already pleaded. There are no new and unrelated causes of action which are being asserted based on new facts. The claims flow directly from the facts pleaded in the Statement of Defence.

[ 10 ] The Defendants are seeking relief for negligent misrepresentations, abuse of authority and breach of procedural fairness. While there are facts which are pleaded in the proposed Counterclaim which may not be specifically referred to in the Statement of Defence, the forms of relief sought are based on substantially the same facts. The amendments sought to the Statement of Defence arise from the core factual nexus. As the facts and circumstances of the case unfolded, and continue to unfold, the Defendants discovered that it had accrued a cause of action for negligent misrepresentation, breach of natural fairness and abuse of authority as against the Plaintiff.

[ 11 ] The discoverability principle guides the interpretation of limitations statutes. Consideration of whether it applies in a given case is concerned with balancing fairness for both parties. In this case, the balancing of fairness is in favour of the Defendants. There are no policy reasons not to apply the discoverability principle. The Court finds that, in order to decide whether there is a triable issue respecting discoverability, it is necessary to resolve contested issues of fact, and therefore the Court shall grant the amendment with leave to argue the limitation defence at trial.

[ 12 ] I agree that the doctrine of ‘collateral attack’ provides a defence, and does not deprive this Court of jurisdiction in these circumstances.

[ 13 ] As such, there is no evidence in this case of non-compensable prejudice of the type envisaged by Rule 26.01 that would preclude the amendments. The Plaintiff is aware of all of the facts and circumstances surrounding these proceedings.

[ 14 ] The pleading, original and proposed, contains facts which support allegations of negligent misrepresentation, abuse of authority, and breach of procedural fairness by the Plaintiff.

[ 15 ] Therefore, with the exception of their claims for aggravated, punitive and exemplary damages, I grant leave for the Defendants to amend their pleading by adding the Counterclaim with leave for the Plaintiff to plead any limitation period.

[ 16 ] I also grant leave to permit the pleadings to be amended to reflect the appointment of Patricia Lowery Delarosbel as Estate Trustee for the Estate of Raymond Joseph Delarosbel.

[ 17 ] If these parties cannot agree on the issue of costs for this motion, this Court will entertain written submissions. Any party claiming costs shall serve and file written submissions and a Bill of Costs no later than 20 days from the date of this Order. Any responding submissions shall be served and filed within 20 days thereafter.

December 10, 2012 The Honourable Mr. Justice David Nadeau