ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-13-466-00SR

DATE: 20131002

BETWEEN:

ELLEN MARY ANDERSON

Plaintiff

– and –

GEORGE WILLOUGHBY GIBSON

Defendant

R.G. Ferguson, Q.C., for the Plaintiff

Defendant, self-represented

HEARD: September 17, 2013

REASONS FOR DECISION

MCCARTHY j.:

Introduction

[1] This motion provides a striking example of the tension that exists between the operation of statutorily prescribed limitations in the Limitations Act, 2002, S.O. 2002, c. 24, Schedule B (“the Act”) and the Rules of Civil Procedure which govern a litigant’s entitlement to amend pleadings and to add parties.

The Motion

[2] The Plaintiff moves for an order joining Small Claims Court action SC-0627-13 (the SCC action) with this Superior Court of Justice action 13-0466-SR (“the SCJ action”). The Plaintiff also seeks leave to amend the plaintiff’s claims as set out in the draft amended Statement of Claim attached as Tab D of the motion record (the proposed claim). The proposed claim would add Michael Willoughby Gibson (MWG) as a defendant and the firm of Anderson, Adams as Plaintiffs. MWG is the sole Defendant in the SCC action. This relief is sought under Rules 26.01 and 26.02. The relief sought also invokes the rules for Joinder of Claims and Parties [Rules 5.02 (1) and (2), 5.03(4) and 5.04(2)] although this is not set out in the Plaintiff’s notice of motion.

The Rules of Civil Procedure

[3] Rule 5.01 (1) reads as follows:

Joinder of claims

A plaintiff or applicant may in the same proceeding join any claims the plaintiff or applicant has against an opposite party.

Rule 5.02 reads as follows:

(1) Multiple plaintiffs or applicants

Two or more persons who are represented by the same lawyer of record may join as plaintiffs or applicants in the same proceeding where,

(a) they assert, whether jointly, severally or in the alternative, any claims to relief arising out of the same transaction or occurrence, or series of transactions or occurrences;

(b) a common question of law or fact may arise in the proceeding; or

(c) it appears that their joining in the same proceeding may promote the convenient administration of justice.

(2) Multiple defendants or respondents

Two or more persons may be joined as defendants or respondent where,

(a) there are asserted against them, whether jointly, severally or in the alternative, any claims to relief arising out of the same transaction or occurrence, or series of transactions or occurrences;

(b) a common question of law or fact may arise in the proceeding;

(c) there is doubt as to the person or persons from whom the plaintiff or applicant is entitled to relief;

(d) damage or loss has been caused to the same plaintiff or applicant by more than one person, whether or not there is any factual connection between the several claims apart from the involvement of the plaintiff or applicant, and there is doubt as to the person or persons from whom the plaintiff or applicant is entitled to relief or the respective amounts for which each may be liable; or

(e) it appears that their being joined in the same proceeding may promote the convenient administration of justice.

The court also retains a general power to add parties under Rules 5.03 (4) and 5.04(2):

5.03 (4) Power of Court to add parties – The court may order that any person who ought to have been joined as a party or whose presence as a party is necessary to enable the court to adjudicate effectively and completely on the issues in the proceeding shall be added as a party.

5.04 (2) Adding, Deleting or Substituting Parties Incorrectly Named – 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.

Rule 26.01 reads as follows:

General Power of the Court

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.

Rule 26.02 stipulates that consent of all parties or leave of the court is required where the amendment includes or necessitates the addition, deletion or substitution of a party to the action.

The Act

[4] The relevant sections of the Act for this motion are set out below:

Basic Limitation Period

s.4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

Discovery

s.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).

Presumption

s.5 (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 proven.

Statutory Variation of Time Limits

s.20 This Act does not affect the extension, suspension or other variation of a limitation period or other time limit by or under another Act.

Adding party

s.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.

The Defendant’s Position

[5] The present Defendant in the SCJ action is George Willoughby Gibson (GWG). GWG opposes the relief sought on two grounds. First, the SCJ action and the SCC action are entirely distinct and do not involve the same parties. The two claims share no material questions of fact and no questions of law. Second, the new facts alleged in the proposed claim could only support causes of action which are barred by the operation of the Act. The notice of motion for leave to amend was dated July 8, 2013, more than two years after the events described in the proposed claim, which events culminated in GWG’s withdrawal from the partnership on June 28, 2011.

The Plaintiffs’ Position

[6] The moving party advanced three arguments why the amendments to the pleadings should be permitted. First, some of the underlying facts in support of the causes of action in the proposed claim postdate June 23, 2011 such that the commencement of the two year period of the Act cannot be said to have begun to run until the events as a whole unfolded. The events in question form part of the same series as those events preceding June 23, 2011. Second, the underlying facts in support of those causes of action in the proposed claim were the subject of solicitor and client privilege between the Plaintiff and MWG until they were divulged in the latter’s Defence to the SCC action on May 20, 2013. This constituted a waiver of privilege on the part of MWG; accordingly, May 20, 2013 became the first date upon which those facts could serve as allegations in a pleading brought by the Plaintiff. Third, the damages allegedly suffered by the Plaintiff were only discovered some time after the acts now complained of; that is to say, that the damages themselves, not just their quantification, were only reasonably discoverable in the time period after GWG’s withdrawal from the partnership.

The Proposed Claim

[7] The proposed claim would serve to add one hundred and eleven paragraphs to the original claim. It would add the law firm of Anderson, Adams as Plaintiffs for the sole purpose of claiming the outstanding amount of the solicitor and client account between it and MWG. The proposed claim against MWG would not be limited, however, to the simple claim set out in the SCC action. Instead, the proposed claim seeks damages by Ellen Anderson only, against MWG on account of him swearing false affidavits and participating in a conspiracy together with the co-defendant. In addition to claims against MWG, the proposed claim would add damages claims against the present Defendant (GWG) for: (a) breach of contract; (b) breach of the partnership agreement; (c) intentional interference with economic relations; (d) infringement on account of the right to equal treatment with respect to employment; (e) workplace harassment and violence constituting part of the unlawful tort of unlawful conduct conspiracy as engaged in by both parties; and (f) breaches of duties as a lawyer pursuant to the Rules of Professional Conduct. Against both Defendants, jointly and severally, the Plaintiff Ellen Anderson claims damages on account of the unlawful conduct conspiracy engaged in by both Defendants.

The Original Claim

[8] The original pleading is limited to claims for general damages for assault, special damages for loss of income and other out of pocket expenses, punitive and exemplary damages, interest and costs. The narrative of underlying facts is almost entirely devoted to an alleged altercation between the Plaintiff and the Defendant, the aftermath of the altercation and the resultant effect on the partnership and the Plaintiff’s well-being. All of the underlying facts were alleged to have taken place prior to June 28, 2011, with the exception of a passing reference to the Defendant’s remaining months at the partnership (June 28, 2011 to December 31, 2011). There is an allegation of a breach of the common law duty of good faith towards the Defendant and the Rules of Professional Conduct but no allegation of a breach of the partnership agreement itself. The claim for loss of income set out in paragraph 1(b) is not connected to any of the allegations of fact. There is a claim for punitive and exemplary damages.

The Interplay between the Rules and the Act

[9] Rule 26.01 is mandatory but not absolute: “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.” The expiration of a limitation period gives rise to a presumption of prejudice to a Defendant. Until recently, that presumption would be determinative unless the party seeking the amendment could show the existence of special circumstances that could rebut that presumption. (see: Frohlick v Pinkerton Canada Ltd., 2008 ONCA 3; 289 D.L.R. (4th) 639)

[10] The Court of Appeal’s decision in Joseph v Paramount Canada’s Wonderland, 2008 ONCA 469; 90 O.R. (3d) 401, has effectively closed the door on the common law doctrine of “special circumstances”, which was formerly employed by courts to negate the barring effect of statutorily prescribed limitation periods in various pieces of legislation. After concluding that the Act did not intend to preserve the common law doctrine of special circumstances, the Court went on to add that, “Rules 5.04 and 26.01 must now be applied giving effect to the new Act.” (see: para. 27)

Analysis

[11] Looked at in its entirety, the proposed amended pleading is so manifestly different than the original pleading that it is not merely a variation on or a shading of its predecessor, but an entirely new pleading, cloaked under the same court file number assigned to it. I have no hesitation in concluding that the proposed claim discloses very discrete causes of action which are not to be found in the original claim. In my view, a new claim sought to be advanced in an amended pleading should be me made subject to the limitations in the Act in the same way as claim set forth in an originating process. This is in line with the intended purpose of ss. 20 and 21 of the Act. It is also consistent with the Court of Appeal’s ruling in Joseph that the Act is intended to be comprehensive, that amendment of pleadings and addition of parties rules must not conflict with the Act and that, specifically, Rules 5.04(2) and 26.01, must now be applied giving effect to the new Act. In my view, it follows that the question to be asked in each case is: if a fresh pleading were issued, containing the new allegations sought to be advanced in the proposed claim, can it fairly be said that the prima facie limitation period would apply to bar any of the disclosed causes of action? The answer, in the case at bar, is yes. The material underlying facts supporting the new causes of action in the proposed claim all predate June 23rd, 2011.

[12] This is not a case where the newly disclosed causes of action were plainly obvious on the facts originally pleaded or where the new cause of action is so closely linked to the one already disclosed in the originating process that it can be reasonably considered a derivative of it. Advancing a cause of action in negligent misrepresentation, where allegations have already been made to support a cause of action in fraudulent misrepresentation, would serve as an example of the latter. This would amount to proposed amendments which merely plead consequences flowing from the facts already pleaded as was the case in Gladstone v Canadian National Transportation (2009), 2009 38789 (ON SCDC), 82 C.P.C. (6th) 38 (ONSC). A careful review of the proposed claim reveals that it sets out many new facts and discloses very new causes of action. I find that there is an insufficient nexus between the acts complained of in the original pleading, (GWG’s wrongful harassment of Anderson, the breach of the duty of good faith within the partnership, workplace harassment and violence), and the breach of contract, breach of partnership agreement, intentional interference with economic relations, and the unlawful conduct conspiracy allegations in the proposed claim. Paragraphs 20 through 31 of the proposed claim delve into a wide range of partnership issues, ranging from capital accounts, interest on capital surpluses and partnership debts. These issues are entirely absent from the original claim. That is hardly surprising since they would be entirely out of place within a pleading that advances a claim based upon assault and harassment.

[13] Counsel for the Plaintiff suggested that the statement in paragraph 27 of the Joseph decision constituted obiter dicta. Moreover, that case can be distinguished as it involved an action being commenced after a limitation period had expired. In the case at bar, the Plaintiff seeks merely leave to amend a properly issued claim. The proposed amendment is procedural only.

[14] I disagree. In my view, a proposed amendment to a claim is substantive rather than procedural when it seeks to assert a new and distinct cause of action. It would be unfair to afford substantive rights to a plaintiff to advance a claim outside of a limitation period simply because that plaintiff is embroiled in ongoing litigation with a party against whom it seeks to advance the new cause of action.

[15] I also find that decision in Joseph stands for the proposition that any addition of parties to a proceeding must bear scrutiny under the Act. It follows that the general power of the court to add parties under Rule 5.03(4) is captured under the scope of the Court of Appeal’s decision. In my view, the discretion to order joinder of necessary parties rule is no different than the discretion to add parties under Rule 5.04(2), which is the specific rule cited in Joseph. The rationale of the Court of Appeal must still prevail: causes of action must not be advanced outside the presumptive limitation period in the comprehensive Act unless these can qualify for the exceptions set out therein.

Discoverability

[16] I am also unable to accept the plaintiff’s argument that the waiver of solicitor and client privilege by MWG should mark the commencement of the running of the limitation period against that individual. This may well have constituted the kind of special circumstances which a court would have countenanced in the pre-Joseph world. In the absence of appellate authority on the point, I find that the existence of solicitor and client privilege cannot serve to delay or suspend the inexorable march of a limitation period.

[17] I am reinforced in this view by the limited scope of the “Discovery” section in s. 5 of the Act. Knowledge and constructive knowledge are the critical elements of discoverability. There is no evidentiary basis upon which the Court could conclude that the Plaintiffs lacked knowledge of the requisite facts necessary to advance its proposed claim in the two years after June 28, 2011. Indeed, the attachments to the SCC Defence were all documents in the possession, power and control of the Plaintiffs before June 28, 2011. Nor can the Plaintiffs qualify as incapable persons under section 7 of the Act.

[18] Finally, the Plaintiffs argue that the damages flowing from the actions of GWG and MWG could not have been discovered until well after June 28, 2011. Yet, the proposed pleading does not support this position. Paragraph 81 of the proposed claim alludes to medical attention and work place stresses being suffered by the Plaintiff Anderson between May 4, 2011 and June 28, 2011. Paragraph 97 alleges that staff members overheard altercations in June 2011. Paragraph 99 of the proposed claim identifies the Plaintiff Anderson’s feeling of being unsafe at her place of work in the same time period. Paragraph 127 alleges that the Plaintiff sought medical help in light of the medical problems arising from the stressful environment. It is clear, therefore, that any cause of action for mental distress is based almost entirely upon events that occurred prior to June 28, 2011. The allegations of what went on in the period between June 28, 2011 and December 31, 2011 are unremarkable and could not possibly be said to constitute anything more than the epilogue to the narrative about the relations between the parties. They do not add anything to the causes of action already disclosed by the facts which, as pleaded, all predate June 28, 2011.

Allegations in Support of Existing Causes of Action

[19] The allegations of spoliation of evidence found in paragraphs 112 and 113 deserve special attention because these are acts which are said to have taken place between May 2011 and February 24, 2012. Accordingly, these facts might support a cause of action which arose between July 8, 2011 and July 8, 2013. Confusingly, there is no claim specifically against either GWG or MWG for spoliation. The facts are merely pleaded under the sub-heading of “Termination of Partnership”. I can only conclude that they form part of a narrative designed to add colour to the cause of action already disclosed by the facts which pre-date June 28, 2011. In and of themselves, the allegations in paragraphs 112 and 113 do not constitute a discernible or supportable cause of action. However, this is not a motion to strike a pleading or portion thereof, on the grounds that a portion of a pleading is frivolous, vexatious or an abuse of the process of the court. Nor is this motion an exercise in determining whether portions of a pleading should be expunged on the basis that they fail to disclose or support a cause of action. Leave to add the proposed allegations in paragraphs 112 and 113 must be allowed at this early stage in the absence of prejudice to the Defendant. Those paragraphs do not disclose or support a cause of action that is a statute barred. The Defendant’s right to plead to those allegations and to move to have them struck is unaffected.

[20] The facts under the sub-heading “Gibson’s Wrongful Harassment of Anderson”, dominate the original claim, taking up more than half of the allegations. They would appear to be the facts relied on in support of the cause of action in assault. No specific damages are claimed for “wrongful harassment”. In the subparagraph 1(h) of the proposed claim, a claim for damages is added, “on account of workplace harassment and violence constituting part of the tort of unlawful conduct conspiracy as engaged by both defendants, in an amount to be determined at or before trial”. As well, the allegations in the proposed claim under “GWG’s Wrongful Harassment of Anderson” or “Ongoing Workplace Harassment by GWG” (paragraphs 62 through 68 and 75 through 100 respectively) repeat, replace or are in addition to the original allegations. I find that the allegations in these paragraphs of the proposed claim can survive limitation scrutiny, but only to the extent that they provide particulars, context and background to the cause of action in the original claim. That original cause of action is assault. The original cause of action did not extend to “workplace harassment and violence constituting part of the tort of unlawful conduct conspiracy as engaged by both defendants.” To the extent that such a cause of action even exists in law, it was supported by facts known to the Plaintiffs prior to July 8, 2013. Yet it was not advanced in the original claim; nor do I find that the cause of action is a derivative of assault or that the consequences alleged flow from the facts previously pleaded. Accordingly, those allegations in the proposed claim are allowed but only insofar as they support a cause of action and a damages claim for the tort of assault.

[21] The original claim contains allegations of breach of duty of good faith within a partnership. As well, subsumed under the workplace harassment sub-heading, the original claim contains allegations of breach of professional obligations under the Law Society’s Rules of Professional Conduct. The proposed claim simply expands those allegations, adds particulars to them and provides the context of the dispute involving the Plaintiff Anderson, GWG and MWG. These allegations (under “Part E, Rules of Professional Conduct”) do not disclose a new cause of action. They are merely supplementary to the original pleaded facts. The Defendant argues that there is no cause of action in law for a breach of the Rules of Professional Conduct. Again, this is not a motion to strike a pleading. The Defendant was unable to satisfy me that it would suffer non-compensable prejudice should leave be granted to permit these amendments.

Conclusion on the Motion for Leave to Amend the Pleading

[22] In light of the Court of Appeal’s reasoning in Joseph and having regard to the provisions of the Act, I have arrived at the conclusion that the proposed claim discloses new and discrete causes of action which are statute barred. The disclosed causes of action in breach of contract, breach of partnership agreement, intentional interference with economic relations, unlawful conduct conspiracy and infringement of rights to equal treatment with respect to employment without discrimination because of sex and family status, are statute barred. The new proposed claims against MWG are statute barred. The expiration of the limitation period in respect to these proposed claims gives rise to a presumption of prejudice to the Defendants. Neither costs nor an adjournment can possibly alleviate or cure the prejudice in this case. The doctrine of special circumstances can no longer be invoked. The Plaintiffs cannot avail themselves of the discoverability rule now enshrined in s. 5 of the Act.

[23] I am not persuaded that the legal consequences set out in the new causes of action flow from the facts set out in the original claim; nor do I accept that these causes of action in the proposed claim are mere derivatives, variations or categories of the causes of action in the original claim. Accordingly, leave is denied to amend the pleading as set out in the following paragraphs: 1(d), 1(f), 1(g), 1(h), 2(a) through (d), 3(a) and 4(a) through (d). It would not be the most expedient use of court resources for me to go through the entirety of the proposed claim to rule on what paragraphs can survive the import of these reasons. The Plaintiff is granted leave to propose an alternative version of an amended pleading to this court for consideration. That proposed amended pleading must not attempt to advance the causes of action identified above as being statute barred or to allege facts that can only serve to disclose or support those causes of action. The Plaintiffs shall seek that leave within ninety days of the date of this order.

The Motion to Join

[24] The motion to join must now be viewed in light of my findings that the new proposed causes of action against MWG are stature barred. I decline to exercise my discretion to join the SCC action with the SCJ action. The two actions do not share the same parties. The nature of the relief sought is entirely different. There are no common questions of law or fact that would arise in the respective proceedings. I am not persuaded that the claims to relief arise out of the same transaction or occurrences. The bases of the claims are entirely distinct. The SCC action is a claim for payment of a solicitor and client account. The SCJ claim is for damages for assault and accompanying special damages. It is not alleged that MWG was a party to the assault. Nor was GWG the provider or the recipient of the legal services which form the basis for the SCC action. I am not persuaded that such an order would promote the convenient administration of justice; nor am I persuaded that adding MWG to the SCJ action is necessary for the court to adjudicate effectively and completely on the issues in the present proceeding. Accordingly, leave to join the SCC action to the SCJ is denied. Leave to add the firm of Anderson, Adams as a Plaintiff is denied.

Disposition

[25] For the reasons set out above, the motion for leave to amend the pleading in the proposed manner is dismissed. Leave is granted to the Plaintiff to seek leave of the court on a further proposed amended claim within sixty days of today’s date. That motion must be made on notice to the present Defendant. I will remain seized of this matter for the purposes of any proposed amendments. If the parties are unable to agree on the issue of costs, it is ordered that there be costs submissions in writing, according to the following schedule: the Defendant GWG and the proposed Defendant MWG shall serve and file costs submissions, limited to three pages, by October 25, 2013. The Plaintiffs shall serve and file costs submissions, limited to two pages, by November 8, 2013. The Defendants shall have until November 15, 2013 to serve and file reply submissions, if any, limited to one page.

Justice J.R. McCarthy

Released: October 02, 2013