SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: CV-14-497643
MOTION HEARD: October 14, 2015

Re:

THOUFIQUL ISLAM
Plaintiff

v.

STOYAN TADIN, LILY TADIN, DIMITRI TADIN, MIE TADIN,
DIO TADIN, CHRISTINA TADIN, and GT GROUP INCORPORATED
Defendants

BEFORE: Master Lou Ann M. Pope

APPEARANCES:
Brendan Donovan, Wagner Sidlofsky LLP, for moving plaintiff
Fax: 416-364-6579

Michael Meredith, for responding defendants
Fax: no fax number provided
Email: mmeredith@rogers.com

REASONS FOR ENDORSEMENT

[1] The plaintiff seeks to amend the statement of claim to correct the date the plaintiff discovered the claim.

[2] What is unique about the relief sought is that the effect of the proposed amendment would be to bring the date of discovery of the claim within the two-year limitation period whereas the date of discovery as pled in the statement of claim is beyond the expiry of the limitation period.

[3] The first issue to be determined on this motion is whether the same principle applies to the facts in this motion as to motions to amend a pleading to add a claim that is passed the limitation period. The second issue is whether a presumption of prejudice exists in the circumstances of this motion as a result of the operation of s. 5(2) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. (“Limitations Act”)

[4] The statement of claim was issued on February 3, 2014. In the statement of claim under subheading E. entitled “Fraud by the Defendants,” paragraph 14 sets out the fact that on or about June, 2011 the plaintiff discovered that the defendants had submitted bogus invoices for renovations to the property for which they were reimbursed from the profits.

[5] This claim relates to an agreement between the plaintiff and the defendant, Stoyan Tadin (“Stoyan”), to purchase certain property, and after renovations, sell it, hopefully for a profit. That is, in fact, what occurred in this action. However, after the property was sold, the Royal Bank of Canada sued the plaintiff alleging misuse of a line of credit to purchase the property subject to this lawsuit. As a result, the sale proceeds were paid into court and after involvement of the court-appointed Receiver, there was agreement regarding the share of the proceeds of sale of each party after verification by the receiver of expenses incurred to renovate the property.

[6] The statement of defence, served on March 28, 2014, pled that the plaintiff’s claims were statute barred given the statement that the plaintiff discovered the bogus invoices on or about June 2011 and the commencement of the action was not until February 3, 2014.

[7] Immediately after being served with the statement of defence, the plaintiff advised defence counsel that the statement of claim contained a factual error that related to the date upon which the alleged fraud by the defendants was discovered. Upon receipt of the proposed amended statement of claim, the defendants refused to consent to the amendment.

[8] If the plaintiff is granted leave to make the proposed amendment, the plaintiff is not opposed to the defendants being permitted to amend the statement of defence to plead the discoverability principle, as they have already pled a limitation period defence.

Law

[9] The test to amend pleadings under rule 26.01 places the onus on the responding party, the defendants herein, to show non-compensable prejudice. If the responding party cannot do so, the amendment “shall” be allowed.

[10] The plaintiff submits that the defendants have not adduced any evidence that they will suffer non-compensable prejudice if the amendment were granted given that this action is at the pleadings stage where affidavits of documents have not yet been produced and examinations for discovery have not taken place.

[11] The defendants submit that if the amendment is granted, they will be deprived of a substantive limitation period defence.

[12] A great deal of material was filed and time spent on the defendants’ submissions at the hearing of this motion.

[13] The defendants’ two-fold submissions are as set out in paragraph 3 of this decision. Firstly, they argue that a presumption of prejudice exists because the proposed amendment involves the discoverability date of the claim which, as pled, is beyond the applicable limitation period. They rely on the principle as enunciated by the Ontario Court of Appeal in Frohlick v. Pinkerton Canada Ltd., 2008 ONCA 3, 2008 CarswellOnt 66, at para. 17, that:

. . . the proper interpretation of rule 26.01 is that the expiry of a limitation period gives rise to a presumption of prejudice. This presumption of prejudice will be determinative unless the party seeking the amendment can show the existence of special circumstances that rebut the presumption.

[14] Secondly, the defendants submit that another presumption of prejudice must be applied to the facts herein by virtue of section 5(2) of the Limitations Act. Section 5(1) of the Act sets out the time when a claim is discovered and section 5(2) provides that:

A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the date the act or omission on which the claim is based took place, unless the contrary is proved. (emphasis)

[15] With respect, I disagree with the defendants’ submissions for the reasons that follow.

[16] The plaintiff is not seeking to add a claim nor is he seeking to add a claim beyond the limitation period; therefore, the principle in Frohlick is not applicable to this motion. In fact, the issue of the limitation period did not arise as a result of the proposed amendment on this motion. That issue arose when the statement of claim was served given the fact pled that the plaintiff discovered the bogus invoices in June 2011. Thereafter the defendants responded by pleading a limitation period defence. Ultimately, that issue will be determined at trial or on a summary judgment motion when all the evidence is before the court and subjected to cross-examination.

[17] Further, and for the same reasons set out in the preceding paragraph, section 5(2) of the Limitations Act is not engaged on this motion. Again, section 5 of the Act will be applicable at trial or on a summary judgment motion.

[18] Admittedly, the facts giving rise to this motion are unusual. None of the cases cited by the parties involve facts similar to those herein where the plaintiff originally pled a discoverability date which was beyond the limitation period, but thereafter sought to amend the claim to change the discoverability date which would bring it within the limitation period. However, the facts herein must be considered in the context of all the facts as set out above. It is significant that plaintiff’s counsel immediately upon being served with the statement of defence sought consent of the defendants to amend the claim to change the discoverability date based on a drafting error. The affidavit of Joanna Lindenberg, an associate with the lawyers for the plaintiff swore under oath on September 8, 2014, at paragraph 4, that “. . . the date of June, 2011 in the statement of claim was entered erroneously.” And at paragraph 6 she states, “Upon review of the statement of defence, it came to the plaintiff’s attention that the June, 2011 date, . . . had been incorrectly entered.” Again in paragraph 7, she states that in a letter from plaintiff’s counsel to defence counsel, counsel advised that the statement of claim contained a “factual error.” That evidence is uncontroverted as cross-examinations were not held. Having said that, the defendants do not appear to dispute Ms. Lindenberg’s evidence.

[19] In conclusion regarding the defendants’ submissions, I am not persuaded that the same principles that apply to a motion to amend to add a claim beyond the limitation period ought to apply to the facts herein.

Prejudice

[20] In my view, the defendants will suffer no non-compensable prejudice if the amendment is granted and they are permitted to amend their statement of defence to plead the discoverability issue. They will not be deprived of the substantive limitation period defence that they pleaded in their statement of defence. Discoverability would continue to be an issue for trial.

[21] It is the defendants’ evidence that they will be prejudiced if the amendment is allowed as they have “deleted almost all of the e-mail communications we had with Islam and others surrounding these events.” (paragraph 54 of the Affidavit of Stoyan Tadin sworn December 31, 2014)

[22] The defendants have the onus to show actual prejudice that arose since they were given notice of the proposed amendment on or about April 8, 2014. The defendants’ evidence is a bald statement that they have not preserved emails and other evidence. In fact, Mr. Tadin explains in paragraphs 52 and 53 of his affidavit that after the sale proceeds were distributed in 2012, he and his family believed the stressful matter was behind them and in an effort to do so, he and his son, Dimitri, deleted the e-mail communications. Based on this evidence, it is reasonable and logical to conclude that Mr. Tadin and Dimitri deleted the e-mail communications well before this action was commenced on February 3, 2014. Therefore, I find that the defendants have not satisfied their onus to show actual prejudice that arose since they were given notice of the proposed amendment on or about April 8, 2014.

[23] The defendants also claim that their memories of the events have faded with time and their personal and business credit ratings have been totally ruined. I find that neither of these points demonstrates actual prejudice that arose since the defendants were given notice of the proposed amendment on or about April 8, 2014. Frankly, if their memories have faded, it did not arise from the proposed amendment. Further, the statement regarding ruined credit ratings is a bald statement unsupported by any documentary proof and, secondly, the alleged ruined credit ratings would have existed prior to this action being commenced.

[24] In conclusion, the plaintiff’s motion is granted with leave to the defendants to amend the statement of defence to plead the discoverability defence.

[25] The plaintiff seeks substantial indemnity costs on the grounds that the defendants tried to take advantage of a lawyer’s slip when drafting the statement of claim. In my view, this motion was unnecessary given the mandatory wording of rule 26.01 and the fact that there was no case law to support the defendants’ position. It was the defendants who first raised the issue of discoverability in their responding material filed on January 2, 2015. Given the allegations contained therein, the plaintiff was compelled to respond and did so on January 12, 2015 when he served the supplementary motion record of the plaintiff. It is my view that this is an appropriate situation to award costs to the plaintiff on a substantial indemnity basis.

[26] Costs are therefore fixed in the amount of $8,000 all inclusive payable within 30 days.

(original signed)______

October 16, 2015
Master Lou Ann M. Pope