Ontario Superior Court of Justice

Court File No.: CV-21-30386
Date: 2025-03-31

Parties

Between:
Lou Lecce carrying on business as LGL Consulting, Plaintiff
– and –
Colautti Landry Partners PC, Raymond G. Colautti and Anita Landry, Defendants

Appearances:
Robert Matlack, for the Plaintiff
James Renaud, for the Defendants

Heard: December 2, 2024

Endorsement on Motion

Jacqueline A. Horvat

Introduction

1The plaintiff brings a motion under rr. 5.04 and 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for an order granting leave to amend the statement of claim. The only amendment proposed by the plaintiff is to correct the name of the plaintiff.

2The defendant, Colautti Landry Partners PC (“CLP”), opposes the motion on the basis that granting the order would cause prejudice to CLP, the proposed amended pleading discloses no reasonable cause of action, the claims made are untenable, without merit, are not sufficiently particularized and/or are frivolous, and that the plaintiff ought to have known and did know the correct name of the plaintiff in 2021.

3For the following reasons, the plaintiff’s motion is dismissed.

Background

4On September 20, 2021, the statement of claim, which seeks the payment of seven invoices, was issued. The claim describes the plaintiff as “Lou Lecce carrying on business as LGL Consulting” and as “a professional engineer.” The claim further states:

Between 2013 and 2020 the plaintiff was engaged by the defendants in his capacity as a professional engineer to assist the defendants with various litigation files. The plaintiff rendered his services on an hourly basis to the defendants and delivered various invoices.

5The statement of claim makes no reference to any corporate entity being retained by the defendants.

6In February 2022, in response to a demand for particulars, the plaintiff delivered its draft affidavit of documents, which contained each of the invoices that are the subject of the claim. They are as follows:

Claim Para.	Invoice No.	Invoice Date	Date Last Work Performed	Amount
6(a)	NV190213.1	May 1, 2021	December 26, 2016	$591,439.89
6(b)	LD050416	August 16, 2019	June 20, 2019	$68,252.09
6(c)	LD05416.05	September 25, 2019	June 20, 2019	$69,280.18
6(d)	RS190919-02	May 1, 2021 / August 9, 2020	May 19, 2020	$23,334.50
6(e)	BC151015.1	May 1, 2021	November 3, 2016	$15,349.24
6(f)	WF180316.1	May 1, 2021	December 31, 2016	$12,072.84
6(g)	FL060813.1	May 1, 2021	November 20, 2015	$12,072.24

7Each invoice was sent to CLP on letterhead bearing the words “LGL Consulting”.

8In August 2022, on consent, the claims against the individual defendants were discontinued.

9On February 2, 2023, CLP delivered its statement of defence. The statement of defence pleads that it “is being delivered in anticipation of and as a prerequisite to CLP bringing a motion for summary judgment and/or determination of issue(s) before trial”, including that the plaintiff has no standing to bring the claim and the claim, or parts of it, is statute barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. CLP has not brought a cross-motion for summary judgment.

10The statement of defence also pleads that at no time did CLP retain “Lou Lecce carrying on business as LGL Consulting” or Lou Lecce in his personal capacity. Instead, the statement of defence pleads that CLP: (i) always retained 1352194 Ontario Inc. (“135”), “a corporation controlled by Lou Lecce, but nonetheless a separate legal entity from Lou Lecce”; (ii) received invoices from 135; and (iii) the invoices bore the HST number for 135. The statement of defence also pleads several substantive defences to the claim.

11When the statement of defence was delivered, the plaintiff became aware that the plaintiff was misnamed in the statement of claim as “Lou Lecce carrying on business as LGL Consulting.”

12On February 17, 2023, the plaintiff brought this motion to amend the statement of claim.

13Counsel for the plaintiff advised the plaintiff -- and the court during his submissions -- that through his own inadvertence he incorrectly named the plaintiff in the statement of claim.

The Law

14Rule 5.04(2) provides that 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.” A proposed amendment under r. 5.04(2) must also meet the test under r. 26.01: Marsh v. Electronica AI Inc., 2024 ONSC 5869, at para. 16.

15Rule 26.01 provides that “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.” In 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42, at para. 25, the Court of Appeal for Ontario summarized the principles applicable to leave to amend motions as follows:

• The rule requires the court to grant leave to amend unless the responding party would suffer non-compensable prejudice; the amended pleadings are scandalous, frivolous, vexatious or an abuse of the court's process; or the pleading discloses no reasonable cause of action;
• The amendment may be permitted at any stage of the action;
• There must be a causal connection between the non-compensable prejudice and the amendment. In other words, the prejudice must flow from the amendments and not from some other source;
• The non-compensable prejudice may be actual prejudice, i.e., evidence that the responding party has lost an opportunity in the litigation that cannot be compensated as a consequence of the amendment. Where such prejudice is alleged, specific details must be provided;
• Non-compensable prejudice does not include prejudice resulting from the potential success of the plea or the fact that the amended plea may increase the length or complexity of the trial;
• At some point, the delay in seeking an amendment will be so lengthy, and the justification so inadequate, that prejudice to the responding party will be presumed;
• The onus to prove actual prejudice lies with the responding party; and
• The onus to rebut presumed prejudice lies with the moving party.

[Emphasis in original, citations omitted.]

16If the proposed amendments are untenable, meaning they are not prima facie meritorious, or not sufficiently particularized, then leave may be denied: Marks v. Ottawa (City), 2011 ONCA 248, at para. 19; Marsh, at paras. 11-12.

17When a limitation period has expired, generally the amendment will not be permitted and the moving party will be required to “show the existence of special circumstances that, in the context of the existing claim, rebut the presumption that the responding party will suffer prejudice from the loss of a limitation defence”: Marsh, at paras 13-14, citing Frohlick v. Pinkerton Canada Ltd., 2008 ONCA 3, at paras. 17, 18 and 22. The amendments should be considered as if they were issued as a new and separate claim. If that claim would fail for being statute barred, then the amendments must fail: Marsh, at para. 15; Frohlick, at para. 24.

18On special circumstances, the court in Frohlick, at paras. 25-29, stated as follows:

There is no exhaustive list of what constitutes special circumstances in the context of rule 26.01. They are often procedural or informational mistakes made by a party that have not misled the opposite party or induced the opposite party to defend the claim differently than it would have if the amendment had been made before the limitation period expired.

From the foregoing discussion, it is apparent that I view the concept of “special circumstances” as overlapping with the moving party's burden to rebut the presumption of prejudice. Facts that indicate an absence of prejudice may also constitute special circumstances justifying leave to amend under the authority of rule 26.01.

Previous decisions of this court have undertaken the prejudice analysis under rules 26.01 and 5.04(2) in a two-step process: see e.g. Mazzuca v. Silvercreek Pharmacy Ltd. and Mota v. Hamilton-Wentworth (Regional Municipality) Police Services Board. The first step considered the prejudice to the responding party other than [what] might arise as a result of the loss of a limitation defence. The second considered whether special circumstances existed so as to justify relieving against the harshness of the expired limitation period. The integrated approach I have adopted is in substance consistent with these earlier decisions. It compresses the two stages into one by considering the prejudice suffered from the loss of a limitation defence and the existence of "special circumstances" as being encompassed in the "prejudice" analysis referred to in rules 26.01 and 5.04(2). This, in my view, logically emerges from the wording of rules 26.01 and 5.04(2) as they direct courts to consider the sole question of prejudice.

In summary, therefore, the loss of a limitation defence gives rise to a presumption of prejudice. The moving party must show the existence of special circumstances that, in the context of the existing claim, rebut the presumption that the responding party will suffer prejudice from the loss of a limitation defence.

It is only after the court has determined that there is no prejudice that cannot be compensated for by costs or an adjournment that the mandatory nature of rule 26.01 comes into play. The rule then provides that the motion judge “shall” grant the amendment sought. This can be contrasted with the permissive wording of rule 5.04(2), which grants the motion judge a residual discretion to deny the relief sought, even in the absence of the kind of prejudice contemplated by the rules. In exercising this residual discretion under rule 5.04 the court may once again consider special circumstances.

19In situations where a factual dispute exists with respect to the limitation period, and the court is not in a position to resolve it, the amendment will normally be allowed and the defendant will be given leave to plead the limitation period as a defence: Frohlick, at para. 32, citing Zapfe v. Barnes.

Analysis

20The plaintiff argues that there is no prejudice resulting to CLP with the proposed amendment and that the invoices correctly name the plaintiff as LGL Consulting.

21CLP does not argue that it did not know who was bringing the claim against it or what the claim was in relation to because of the incorrect naming of the plaintiff. CLP’s primary argument is that it will suffer prejudice as a result of the loss of a limitation period. CLP also made arguments regarding its substantive defences to the claim to support an argument that the amended pleading discloses no reasonable cause of action. CLP has not brought its own motion seeking summary judgment or any other relief.

22Each of the May 1, 2021 invoices, being those identified at paragraphs 6(a), (d), (e), (f) and (g) of the claim, bear HST number 74266 4477 RC0001, which relates to 2747206 Ontario Inc., operating as MNC Windsor (“MNC Windsor”), and not to 135. MNC Windsor is a company controlled by Mr. Lecce.

23The invoices identified at paragraphs 6(b) and 6(c) each bear HST number 86645 3079 RT0001, which relates to 135.

24The statement of defence pleads that CLP: (i) always retained 135; (ii) received invoices from 135; and (iii) the invoices bore the HST number for 135.

25The plaintiff did not file a reply and did not file any evidence or argue on this motion that CLP retained MNC Windsor, Lou Lecce in his personal capacity, or LGL Consulting, and not 135. Neither party filed a retainer agreement or an engagement letter or any other documentary evidence explaining the retainer relationship. The only evidence before me is Mr. Colautti’s unchallenged affidavit evidence, which states:

• CLP never had a relationship with “Lou Lecce, carrying on business as LGL Consulting”, but at all times retained and dealt with 135;
• CLP was told by Mr. Lecce that his business was operated through 135;
• CLP made payments to 135 and all billings and payments were made with 135’s HST number;
• all contractual arrangements were with 135; and
• the business name LGL Consulting was inactive or expired since 2014.

26In my view, only those invoices identified in paragraph 6 of the statement of claim that were issued by 135 may be the subject of any amendment on this motion for leave to amend. There is no evidence before me that CLP had any business relationship with MNC Windsor that would entitle MNC Windsor to issue an invoice to CLP.

27The claim was commenced on September 20, 2021, and this motion was served on February 17, 2023. The invoice at paragraph 6(b) is dated August 16, 2019. The invoice at paragraph 6(c) is dated September 25, 2019. Under cross-examination, Mr. Lecce admitted that the invoices identified at paragraphs 6(b) and (c), being the only two invoices sent by 135, are duplicate invoices.

28In my view, based on the record before me, the limitation period in relation to the invoices identified at both paragraphs 6(b) and (c) has expired given that they are duplicate invoices. It is clear from the case law that the loss of a limitation defence gives rise to a presumption of prejudice. The moving party must then show the existence of special circumstances that rebut the presumption that the responding party will suffer prejudice from the loss of a limitation defence: Marsh, at paras. 13-14; Frohlick, at paras. 17, 18 and 22.

29There is no evidence before me, and no arguments made by the plaintiff, to rebut the presumption or to raise any special circumstances. CLP says that the presumption of prejudice is determinative and the plaintiff’s motion for leave to amend must fail. I agree.

30For all these reasons, the plaintiff’s motion for leave to amend is dismissed.

Costs

31I have reviewed and considered the costs outlines of both parties. This matter was scheduled for a two-hour hearing. Considerably less time was spent on oral arguments. In my view, an award of costs in the amount of $7,500 on a partial indemnity basis, inclusive of HST and disbursements, payable by the plaintiff to CLP, is fair and reasonable in the circumstances of this motion.

Jacqueline A. Horvat