COURT FILE NO.: 18-64207
DATE: 2021/11/03
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Joseph Truscott and 1215588 Ontario Ltd. Plaintiffs/Moving Parties
AND:
Co-operators General Insurance Company, Thomas Carroll and Yvonne Young and Associates Defendants/Responding Parties
BEFORE: The Honourable Justice R. J. Nightingale
COUNSEL: Adam Huff, Counsel for the Plaintiffs
Robert Dowhan, Counsel for the Defendants
HEARD: October 26, 2021
ENDORSEMENT
[1] The plaintiffs bring this motion for leave to amend their statement of claim to substitute “Joseph A. Truscott Chartered Accountant a Professional Corporation” (“Truscott PC”) for the plaintiff Joseph Truscott. Truscott PC is Joseph Truscott’s professional corporation through which he operates his accounting practice.
[2] The plaintiffs state that plaintiffs’ counsel inadvertently named Joseph Truscott personally and not Truscott PC as a plaintiff insured under the defendant Co-operators insurance policy in the statement of claim and now seek to correct the misnomer.
[3] The defendants oppose the motion on the basis that the motion is not to correct a misnomer but in reality, to delete a plaintiff and add a new plaintiff to the proceedings long after the expiration of the applicable limitation period.
Factual Background
[4] This action arises out of the plaintiffs’ claim for payment of insurance proceeds and damages for a fire loss that occurred on January 20, 2017 causing substantial damages to the building owned by the plaintiff 121558 Ontario Inc. (“121 Ontario”) and its contents.
[5] The plaintiff Joseph Truscott is a chartered accountant and has operated his accounting practice through his professional corporation Truscott PC out of that building since 2010.
[6] A policy of insurance was issued by the defendant Co-operators providing all risk/fire loss coverage for both the building and Mr. Truscott’s accounting practice. The declaration page to the Co-operators policy identifies 121 Ontario and Truscott PC, not Truscott personally, as the named insureds under the policy.
[7] A dispute arose with respect to the obligations of Co-operators for indemnification under the policy to the plaintiffs. The plaintiffs commenced this action on January 18, 2018. The statement of claim names as plaintiffs 121 Ontario as the owner of the subject property and Mr. Truscott personally.
[8] The uncontradicted evidence from the plaintiffs’ lawyers was that it was always their intention and the intention of Mr. Truscott that the statement of claim name as plaintiffs the named insureds under the Co-operators policy. The reason for the misnomer of the plaintiff Truscott rather than Truscott PC was an error made due to their inadvertence and was not intentional or a strategic decision on the part of plaintiffs’ counsel.
[9] The statement of claim pleads that Mr. Truscott practiced accounting at the subject building and is an insured under the Co-operators policy which provided insurance coverage to the plaintiffs’ building and business. The statement of claim sought a declaration that the plaintiffs are entitled to indemnity under the Co-operators policy and damages for damages to the building by 121 Ontario and loss of valuable papers and business interruption/income loss sustained by Truscott as a result of the fire.
[10] It appears that throughout the initial adjusting of the fire loss claims the parties referred to Joseph Truscott and Truscott PC interchangeably.
[11] Several proof of loss forms were submitted in the name of 121 Ontario and Mr. Truscott personally, not Truscott PC. The defendant Carroll on behalf of Co-operators on his examination for discovery did not dispute that Co-operators may have made initial indemnity payment cheques payable to Mr. Truscott personally and 121 Ontario and not Truscott PC.
[12] In early 2018, the parties participated in an arbitration pursuant to section 128 of the Insurance Act which included a claim for the loss of valuable papers of the accounting practice under the policy endorsement. Mr. Truscott, not Truscott PC, was the party to the appraisal agreement and the beneficiary of the umpire’s award.
[13] On May 2, 2018, Co-operators delivered a statement of defence which stated that its insureds were 121 Ontario and Joseph A. Truscott Professional Corporation and that there was no policy of insurance for Joseph Truscott in his personal capacity. The statement of defence made other references to 121 Ontario and Truscott PC collectively as being the insureds under the policy.
[14] Despite that pleading, the plaintiffs took no immediate steps to substitute Truscott PC as the plaintiff in place of Truscott personally. Co-operators takes the position that the time for the plaintiff Truscott PC to commence its claim for loss of profits under the Co-operators policy expired on January 19, 2019.
[15] In June 2019, counsel for the defendants advised plaintiffs’ counsel of their position that Truscott PC was a corporate entity separate and apart from Joseph Truscott which was not a misnomer but an intentional act to claim a personal benefit of a policy of insurance held by a corporation. They took the position that all losses attributable to Truscott PC were now statute barred including under the policy’s contractual limitation period.
[16] Plaintiffs’ counsel responded on July 12, 2019 stating it was clear to Co-operators who the claimants were and considered their position to be another obstructive, costly and delay tactic.
[17] Counsel for the defendants then conducted the examination for discovery of Mr. Truscott on August 2, 2019, which included his providing answers to questions with respect to the business losses sustained by Truscott PC.
[18] On September 30, 2019, Co-operators served a motion for summary judgment to dismiss the claims advanced by Truscott personally which has not yet been heard.
[19] The plaintiffs then brought this motion on January 13, 2020, which unfortunately has not been heard until last week.
Analysis
[20] Rule 5.04(2) of the Rules of Civil Procedure provides that at any stage of a proceeding the court may 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.
[21] Section 21(1) of the Limitations Act, 2002 prohibits the adding of a party to existing litigation if the limitation period relating to that party has expired.
[22] However, section 21(2) states that section 21(1) does not prevent the correction of a misnaming or misdescription of a party which in effect allows for the correction of a misnomer even if the limitation period otherwise expired.
[23] The issue is whether this is a case of a misnomer of the plaintiff Truscott.
[24] The leading decision is that of Mazzuca v. Silverplate Pharmacy Limited, 2001 8620. The facts are quite similar to the facts of this case.
[25] In Mazzuca, the plaintiff brought a claim in her own name for damages relating to a fire but the damages were sustained not by her personally but by her corporation. The court affirmed the motions judge’s decision which allowed the amendment to substitute the corporation as plaintiff for her personally as the error was a misnomer.
[26] Similar to this case, that action was mistakenly brought in the name of the personal plaintiff. There was no conscious decision to name her personally rather than the name of her company as counsel always intended and was instructed to bring the action to recover damages sustained to the business.
[27] Most significantly, the defendant always understood that it was the owner of the business who was suing it for damages and on that basis, correcting the misnomer had no impact on the defendant. There was no new cause of action being asserted and no new facts were being alleged.
[28] The Ontario Court of Appeal in Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469 confirmed that where the new Limitations Act, 2002 applied, the effect of section 21(1) was to abolish the doctrine of special circumstances. Section 21 of the Act precludes the addition of parties to an existing action after the expiry of the limitation period.
[29] The Ontario Court of Appeal recently in Lee v. Richcraft Homes Ltd. 2019 ONCA 7 at para. 20 refers to Mazzuca still being the law of Ontario in particular (with the abolition of the doctrine of special circumstances) because of the concurring reasons of Laskin, J.A. in that case.
[30] Laskin, J.A. in Mazzuca confirmed that the court when considering a motion under Rule 5.04(2) should grant the amendment where the opposite party has not been misled or substantially injured by the error or in other words, has not suffered prejudice that cannot be compensated for by costs or an adjournment.
[31] Laskin, J.A. confirmed that the judge hearing the motion to add or substitute a party under Rule 5.04(2) has a discretion to refuse the amendment even where no non-compensable prejudice would result from allowing it. Laskin, J.A. referred to the Supreme Court of Canada decision of Ladouceur v. Howarth 1973 30 (SCC), [1973] S.C.J. 120 (S.C.C.) where the court allowed an appeal to add the son as a plaintiff after the limitation period had expired who was injured in a car accident in place of his father who was not injured. The son's lawyer mistakenly started the action in the father's name. Spence, J. confirmed the general principle underlying all of the cases that the court should allow the amendment where the opposite party has not been misled or substantially injured by the error. There was no need to show special circumstances.
[32] Laskin, J.A. also confirmed at para. 86 that Rule 5.04 (2) is not limited to correcting misnomers but also to correct in proper cases, the naming of the wrong plaintiff by mistake. Cronk, J.A. also similarly confirmed that at paragraph 46 - 49 in her decision.
[33] The defendants submit that the decision of Streamline Foods Limited v. TransCanada Corporation 2012 ONCA 174 supports their position that this is not a case of misnomer and that the plaintiff’s motion should not be granted.
[34] I disagree.
[35] Streamline Foods applied the following reasoning in Lloyd v. Clark, 2008 ONCA where the plaintiff sought to substitute a defendant to one where the plaintiff sought to substitute or add a plaintiff. Misnomer of plaintiffs and misnomer of defendants are governed by the same principles.
“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.”
[36] The Court in Streamline Foods refused the proposed amendment to add the parent corporation of the plaintiff but that decision is distinguishable on the facts. In that case, the plaintiff was attempting to add its parent corporation as a plaintiff, not substitute it for itself, so that the proposed parent corporation could claim some damages not being claimed by the original plaintiff. The plaintiff was not seeking to correct the name of a party but was seeking to add a party plaintiff so as to pursue that party’s separate claim for damages which would also require additional material facts to be plead to support the parent corporation’s claims.
[37] The Ontario Court of Appeal in Spirito Estate v. Trillium Health Centre, 2008 ONCA 762 confirmed that the court may correct a misnomer irrespective of whether the Limitations Act applies. That is because no issue of expiry of the limitation period arises when the misnomer is found which includes both misnaming and misdescription of a party.
[38] In Greater Toronto Airports Authority Association Inc. v. Foster Wheeler Limited, 2010 ONSC 5891 the court applied the principle of misnomer to allow the plaintiff’s amendment when the wrong corporate entity was named as plaintiff.
[39] Similarly, the court in in Christopher Callow v. Tammy Salinger et al., 2017 ONSC 5992 followed Mazzuca and applied the principles of misnomer to correct the name of the plaintiff who was named personally and replace it with his company when it was his company that was the party to the contract.
[40] I also accept the reasoning of O’Bonsawin, J. in Callow that this case involves one of misnomer similar to that of Mazzuca as compared to the decision of Veerella v. Khan, [[2009] O.J. No.6347 SC aff’d [ 2009] O.J. No. 4111( Div. Ct.)
[41] The decision of Picov and Picov Farms Limited v. Generac Power Systems Inc. et al. 2020 ONSC 852 also allowed the plaintiffs to amend their statement of claim claiming damages because of a fire to remove them as plaintiffs and substitute in their place a different legal entity as the new plaintiff when it was discovered that it owned the property in question.
[42] I agree with the following reasoning of Justice Dawe in Picov:
“…my principal difficulty with Veerella is that Mr. Sproat appears to have treated the Ontario Court of Appeal decision in Mazzuca as having become entirely overtaken by the subsequent changes to the Limitations Act that eliminated the common law doctrine of special circumstances. While I agree that Cronk J.A.’s decision in Mazzuca about using rule 5.04(2) to add plaintiffs whose claims would otherwise be statute barred has indeed be superseded by the new legislation, I do not think that the statutory commitments go so far as to overturn her holdings concerning the expanded scope of the doctrine of misnomer. As discussed above, a number of subsequent decisions of this Court have treated this latter aspect of Mazzuca as still good law and as still binding and I agree with this interpretation.”
[43] R. Smith, J in Maxrelco Inc.v. Jim Pattison Industries Limited, 2016 ONSC 3182 also followed Mazzuca in granting the plaintiff’s motion to correct the misnomer of its name to the correct name of the corporate plaintiff where plaintiff’s counsel’s evidence was that she intended to sue and believed she had sued in the name of the owner of the property of the plaintiff.
[44] I find that in this case, plaintiff’s counsel naming Joseph Truscott rather than Truscott PC was a misnomer or misdescription of the proper plaintiff.
[45] The issue then is whether or not I should exercise my discretion to permit a correction or refuse the motion.
[46] The important question in this case is whether or not the defendant Co-operators has been misled or unduly prejudiced in any way. It is clear that they have not as they were aware at the outset of the fire and since that date that Truscott PC was the named insured and proper plaintiff to make the claim. The statement of claim is clear that the claim for damages under the commercial/business insurance policy is that of the chartered accountancy business which is Truscott PC rather than Truscott personally. The defendants have not been misled and in fact have conceded in their examination for discovery that they have suffered no prejudice.
[47] I do not accept the submission of defendants’counsel that the defendants will suffer prejudice if the motion is granted as the defendants may not be able to make a claim for costs against Mr. Truscott personally. They would not have been able to claim costs against Truscott personally in the first place if Truscott PC was named from the outset nor is there any suggestion that the plaintiffs Truscott PC and 121 Ontario cannot satisfy any potential award for costs.
[48] The fact that plaintiffs’ counsel did not immediately bring this motion after receipt of the statement of defence in May 2018 and not until January 2020 after the defendants brought their motion for summary judgment in September 2019 is a factor I have considered in the exercise of my discretion. However, it is not a determining one.
[49] As Laskin, J.A. confirmed in Mazzuca, the distinction whether the mistake in naming the wrong plaintiff was unintentional or a deliberate and informed decision is not helpful and should not dictate the result. The focus should be on the prejudice caused by the mistake regardless of its characterization.
[50] In Ormerod. v. Strathroy Middlesex General Hospital et al (2009) 2009 ONCA 697, 97 O.R. 321, the statement of defence delivered in June 2003 pled that the defendant Dr. Ferner did not treat the plaintiff who was treated by another emergency room physician.
[51] In December 2004 on the examinations for discovery, the defendant Dr. Ferner confirmed that it was Dr. Graham who treated the plaintiff.
[52] In July 2008, three and a half years later, Dr. Ferner brought a motion for summary judgment to dismiss the action against him.
[53] Two days later, the plaintiff then brought their motion to amend the statement of claim to substitute for the name of the defendant Dr. Ferner misnamed as a party with the correct naming of the defendant Dr. Graham.
[54] The motion judge’s decision allowing the plaintiff to amend the statement of claim based on Dr. Ferner being a misnomer for Dr. Graham was upheld by the Court of Appeal. The court confirmed that the motion judge’s remedy was a correction of the misnaming or misdescription of the doctor rather than a substitution of Dr. Graham as a defendant for Dr. Ferner. The correction of the misnomer does not involve the substitution of one defendant for another.
[55] The court at paragraph 31 confirmed that as the concept of misnomer has been broadened to apply to a wider range of situations, the standard used to permit its correction should take into account the extent of its departure from mere irregularity in all the circumstances of the case. The court found that whether the defendant was misled or unduly prejudiced were undoubtedly factors deserving of the greatest weight and as a general principle, should be determinative but this is not an inflexible rule.
[56] Similarly in this case, there is no prejudice to the defendants because of plaintiffs’ counsel not bringing this motion on their receipt of the statement of defence and before the alleged limitation period in January 2019 or until after being served with the defendants’ motion for summary judgment. The amendment to the name of the proper plaintiff Truscott PC will result in no alteration of the nature of the claims against defendants and there are no new facts, causes of action or claims for relief alleged against the defendants who have always been aware of the name of the proper plaintiff being Truscott PC since the date of the fire.
[57] These factors are more significant than the threshold of prejudice factors under rule 5.04(2) that cannot be compensated by costs or an adjournment.
Conclusion
[58] For these reasons, an order is granted that Joseph A. Truscott Chartered Accountant a Professional Corporation be added as the plaintiff in this action in the place and stead of Joseph Truscott and that the title of proceedings in the statement of claim be amended as noted in Schedule A of the plaintiffs’ fresh as amended motion record.
[59] If the parties are unable to agree on the issue of costs, the plaintiffs can make brief submissions of no more than three pages in length together with a bill of costs within 10 days from the date of this decision.
[60] The defendants will have a similar right to respond within seven days thereafter.
[61] If submissions are not received within those timelines, the parties will be deemed to have resolved the issue of costs of the motion.
The Honourable Justice R. J. Nightingale
Date: November 3, 2021
DATE: 2021/11/03
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Joseph Truscott and 1215588 Ontario Ltd.
Plaintiffs
- and -
Co-operators General Insurance Company, Thomas Carroll and Yvonne Young and Associates
Defendants
ENDORSEMENT
Nightingale, J.
Released: November 3, 2021