2188016 Ontario Inc. v. Kanakasabapathy, 2026 ONSC 2754

Court File and Parties

CITATION: 2188016 Ontario Inc. v Kanakasabapathy, 2026 ONSC 2754

COURT FILE NO.: CV-21-00672300

MOTION HEARD: 20260429

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 2188016 ONTARIO INC., c.o.b. as RAINBOW PRINTING AND GRAPHICS, Plaintiffs

AND:

KAMBAN KANAKASABAPATHY, ISABEL SANGEETHA and 1648250 ONTARIO INC., Defendants

AND BETWEEN:

KAMBAN KANAKASABAPATHY, Plaintiff by Counterclaim

AND:

2188016 ONTARIO INC., c.o.b. as RAINBOW PRINTING AND GRAPHICS and RUBICA HUSSAIN, Defendants to the Counterclaim

BEFORE: Associate Justice L. La Horey

COUNSEL: Karen J. Sanchez, counsel for the moving party Kamban Kanakasabapathy

Emily Evangelista and Thien Hoang, counsel for the proposed defendant Syed Hussain also known as Saeed Hussain

HEARD: April 29, 2026

REASONS FOR DECISION

1The moving party Kamban Kanakasabapathy (“Mr. Kanak”) brings this motion for an order granting him leave to further amend his amended statement of defence, crossclaim and counterclaim (“Proposed Pleading”) by adding Syed Hussain also known as Saeed Hussain (“Mr. Hussain”) as a defendant to the counterclaim.

2Mr. Hussain opposes the motion on the basis that the proposed claims against him are statute barred by the two-year limitation period.

3For the reasons that follow, the motion is granted.

BACKGROUND AND CHRONOLOGY

4In this action, issued on November 19, 2021, the plaintiff 2188016 Ontario Inc. c.o.b. Rainbow Printing and Graphics (“Rainbow” or the “plaintiff”) sues Mr. Kanak, Isabel Sangeetha (“Ms. Sangeetha”) and 1648250 Ontario Inc. which carries on business as Max Enterprises (“Max Enterprises”). The plaintiff seeks to recover monies advanced by it and confirmed by a promissory note in the amount of $250,000 dated April 15, 2020 (the “Promissory Note”). It also seeks an order that a charge registered on October 29, 2021 (the “Charge”), against title to Mr. Kanak’s home in Mississauga (the “Property”) pursuant to the Promissory Note is a valid charge. The plaintiff also claims an equitable charge and a certificate of pending litigation with respect to the Property.

5Mr. Kanak issued a statement of defence, crossclaim and counterclaim on January 25, 2022 (the “Original Pleading”). In it, he alleges that in or around 2016, he was enticed by the co-defendant Ms. Sangeetha and an associate of hers, the proposed defendant Mr. Hussain, to join them in multiple business ventures. He pleads that Ms. Sangeetha and Mr. Hussain convinced him to allow them to name him as a director of Max Enterprises, although he was not involved in its business. He alleges that they introduced him to Rubica Hussain (“Ms. Hussain”) who he says is related to Mr. Hussain and who is an owner or director of Rainbow. Mr. Kanak alleges that Mr. Hussain, Ms. Sangeetha and Ms. Hussain defrauded him and used his signature to secure multiple loans, ostensibly on behalf of Max Enterprises. Mr. Kanak denies executing the Promissory Note and pleads that his purported signature was fraudulently obtained. He pleads that following service of the statement of claim he became aware of the Charge which he says is illegally registered against his Property.

6In his Original Pleading, Mr. Kanak asserts a counterclaim against the plaintiff and Ms. Hussain seeking damages for fraud, fraudulent misrepresentation, breach of trust, unjust enrichment, conspiracy to commit fraud, and breach of statutory obligations in the amount of $500,000. He also seeks declaratory relief regarding the directorship of Max Enterprises and a mandatory injunction requiring the removal of the Charge from title to his Property. Although Mr. Hussain is referenced on multiple occasions in the Original Pleading, he was not named as a defendant to the counterclaim.

7The motion to add Mr. Hussain and Andrew Ballantyne (the lawyer registering the Charge) as defendants to the counterclaim was originally scheduled for October 22, 2024. An order was made on that day adding Andrew Ballantyne as a defendant to the counterclaim on consent. The motion to add Mr. Hussain was adjourned.

8In his Proposed Pleading, Mr. Kanak seeks to add Mr. Hussain as a defendant to the counterclaim to claim damages for fraud, fraudulent misrepresentation, breach of trust, unjust enrichment, conspiracy to commit fraud, and breach of statutory obligations. He also seeks declaratory relief with respect to the directorship of Max Enterprises and injunctive relief in respect of the Charge.

9Neither Mr. Kanak nor Mr. Hussain swore an affidavit for this motion. The moving party motion record includes affidavits from a paralegal. Mr. Hussain delivered a responding record that attaches Mr. Kanak’s affidavit sworn February 3, 2023 (the “Kanak Affidavit”), in this action, responding to an earlier motion seeking a certificate of pending litigation over the Property (which did not proceed) and pleadings in other actions involving some of the same parties. Both parties rely on the Kanak affidavit.

10In this action and others, Mr. Kanak alleges that Ms. Sangeetha and Mr. Hussain conspired to name Mr. Kanak as a puppet director to obtain corporate loans. He alleges that he did not understand that he would be personally liable on his guarantees of those loans.

11In 2018, Royal Bank of Canada (“RBC”) commenced an action against 2223549 Ontario Inc. o/a Tristar Group (“Tristar”) and Mr. Kanak in respect of a loan by RBC to Tristar guaranteed by Mr. Kanak. RBC brought a motion for summary judgment in October 2019. RBC obtained judgment against Tristar and Mr. Kanak in September 2020.

12In 2022, Mr. Kanak commenced an action in respect of the judgment against him obtained by RBC against Mr. Hussain, Ms. Sangeetha and Nicolas Canizares (a lawyer who represented Mr. Kanak). He alleges that Ms. Sangeetha and Mr. Hussain conspired to defraud him by using him as a tool to obtain a business loan for Tristar from RBC. He alleges that the proceeds of this loan were to benefit Ms. Sangeetha and Mr. Hussain. He pleads that he was misled by them into executing a personal guarantee of the Tristar loan. He alleges that he was unsophisticated, naïve and gullible and that he did not understand that by signing various documents he would be personally liable for the loan to Tristar. Mr. Kanak alleges that Mr. Canizares acted for him in the claim by RBC while in a conflict of interest. He alleges breach of contract, breach of fiduciary duty, and negligence against Mr. Canizares. Mr. Hussain has defended and asserted a crossclaim.

13The Bank of Montreal (“BMO”) commenced an action on August 31, 2020, against Max Enterprises and Mr. Kanak, seeking repayment of a loan to Max Enterprises guaranteed by Mr. Kanak. BMO obtained default judgment against Max Enterprises. Mr. Kanak defended the action. On August 11, 2022, he commenced a third party claim against Mr. Hussain, Ms. Sangeetha and Nicolas Canizares seeking contribution and indemnity. He alleges that Mr. Hussain and Ms. Sangeetha conspired against him to use him as a tool to obtain a loan from Bank of Montreal for their own use.

14This action was issued on November 19, 2021, and served on Mr. Kanak on December 13, 2021. The notice of motion for this motion was served on October 26, 2023.

LAW AND ANALYSIS

Applicable legislation and framework

15Mr. Kanak moves under subrule 5.04(2) and rule 26.01 of the Rules of Civil Procedure.¹

16Subrule 5.04(2) provides:

Adding, Deleting or Substituting Parties

(2) 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.

17Rule 26.01 of the Rules of Civil Procedure states:

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.

18However, subsection 21(1) of the Limitations Act, 2002² (the “Act”) prohibits the addition of a party to an existing proceeding if the limitation period in respect of a claim against that person has expired.

19The applicable limitation in this case is the general limitation period in section 4 of the Act which provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

20Section 5 of the Act sets out the scheme for determining when a claim is discovered. It provides:

Discovery

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

(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 proved.

21The Act codifies the common law discoverability rule. Under this rule, "a cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence".³

22In Grant Thornton LLP v New Brunswick,⁴ the Supreme Court considered the degree of knowledge required to discover a claim and trigger a limitation period and held that “a claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant's part can be drawn”.⁵ It further stated that the “plausible inference of liability requirement ensures that the degree of knowledge needed to discover a claim is more than mere suspicion or speculation.”⁶ It held that “a plaintiff does not need to know the exact extent or type of harm it has suffered, or the precise cause of its injury, in order for a limitation period to run.”⁷

23In Mancinelli v Royal Bank of Canada,⁸ the Court of Appeal explained the role of the motion judge and the evidentiary threshold on an opposed motion to add a party when it is alleged that the limitation period has expired. The court said:

23 When a person opposes a plaintiff's motion to add it as a defendant on the basis of the apparent expiry of a limitation period, the motion judge is entitled to assess the record to determine whether, as a question of fact, there is a reasonable explanation on proper evidence as to why the plaintiff could not have discovered its claim through the exercise of reasonable diligence. If the plaintiff does not raise any credibility issue or issue of fact about when its claim was discovered that would merit consideration on a summary judgment motion or a trial and there is no reasonable explanation on the evidence as to why the plaintiff could not have discovered the claim by exercising reasonable diligence, the motion judge may deny the plaintiff's motion: Arcari v. Dawson, 2016 ONCA 715, 134 O.R. (3d) 36, at para. 10.

24 However, the evidentiary threshold that must be met by a plaintiff on such a motion is low: Pepper v. Zellers Inc. (2006), 2006 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), at para. 14; Burtch v. Barnes Estate (2006), 2006 12955 (ON CA), 80 O.R. (3d) 365, at paras. 26-27. The plaintiff's explanation should be given a "generous reading": Wakelin v. Gourley (2005), 2005 23123 (ON SC), 76 O.R. (3d) 272, at para.15, aff'd 2006 CarswellOnt 286 (Div. Ct.). Whether the plaintiff and its counsel acted with reasonable diligence must be considered in context: Fanshawe College of Applied Arts and Technology v. Sony Optiarc Inc., 2014 ONSC 2856, at para. 45 (the "Fanshawe Pleadings Motion".)

24Put another way, a motion to amend a claim to add a defendant will usually be granted unless is it “plain and obvious” that the limitation period has expired.⁹

25Subclause 5(1)(a)(iv) of the Act added a new factor to the common law discoverability analysis - the appropriateness of bringing a proceeding. This was discussed by the Court of Appeal in Dass v Kay in the context of a summary judgment motion as follows:¹⁰

25 This court's jurisprudence interpreting s. 5(1)(a)(iv) was recently distilled into three principles by Hourigan J.A. in Sosnowski v. MacEwan Petroleum Inc., 2019 ONCA 1005, 441 D.L.R. (4th) 393, at paras. 16-19.

26 First, the determination of whether a proceeding is an appropriate means to seek to remedy an injury, loss, or damage depends on the factual and statutory context of each case: Sosnowski, at para. 16.

27 Second, this court has recognized two non-exclusive factors that can operate to delay the date on which a claimant would know that a proceeding would be an appropriate means to remedy a loss: (i) when the plaintiff relied on the defendant's superior knowledge and expertise, particularly where the defendant has taken steps to ameliorate the plaintiff's loss; and (ii) "where an alternative dispute resolution process offers an adequate remedy, and it has not been completed": Sosnowski, at para. 17.

28 Third, "appropriate" means that it is legally appropriate to bring a proceeding, rather than practically advantageous. This third principle excludes from consideration many practical and tactical reasons a claimant might have for not commencing a proceeding at an earlier time when it was legally appropriate to do so, such as the belief that the claim might be difficult to prove. Put differently, "[a]ppropriate does not include an evaluation of whether a civil proceeding will succeed": Sosnowski, at paras. 18-19.

26An order adding a party under subrule 5.04(2) is discretionary: the court “may” make the order provided that there is no prejudice that could not be compensated by costs or an adjournment.¹¹

27The parties’ rights are determined as of the date of service of the notice of motion.¹² The parties are in agreement that the rights of the moving party crystallized as of October 26, 2023, when the notice of motion was deemed served by email.¹³

28Mr. Kanak’s position is that the two-year limitation period began to run on December 13, 2021, when he was served with the statement of claim. Alternatively, the limitation period was triggered by the registration of the Charge on October 29, 2021. In either case, the motion was commenced within two years. Mr. Kanak does not ask me to make a finding that his claim against Mr. Hussain is not statute barred and proposes an order that is without prejudice to a limitation defence. He submits that the limitation issue should be determined on a summary judgment motion or at trial.

29Mr. Hussain’s position is that the evidence demonstrates that Mr. Kanak discovered the material facts underlying the proposed claims against him no later than August 24, 2021, when the plaintiff’s lawyer sent an email to Mr. Kanak’s lawyer threatening legal action. Because this motion was commenced more than two years later, the motion must fail.

30Ms. Evangelista submits that emails that Mr. Kanak sent to the lawyer Nicolas Canizares in November 2019 (attached to the Kanak Affidavit) demonstrate that Mr. Kanak knew that Mr. Hussain and Ms. Sangeetha were the parties responsible for the alleged fraudulent scheme he describes in his affidavit. Specifically, Mr. Kanak believed that Mr. Hussain and Ms. Sangeetha controlled Max Enterprises, used Mr. Kanak’s signature to obtain loans, used the loan proceeds for their own benefit and misled Mr. Kanak about his personal liability. As a result of this alleged wrongdoing, Mr. Kanak says he was financially and emotionally harmed. In his factum, Mr. Hussain submits that: “The only relevant missing element is the specific loss alleged in this action.”

31Although the funds had allegedly been advanced by the plaintiff by the date of these emails, the Promissory Note is dated well after, April 15, 2020.

32Mr. Hussain argues that Mr. Kanak became aware of the specific loss (arising from the plaintiff’s claim in this case) as a result of an email from Mr. Canizares to Mr. Kanak’s current lawyer, Ms. Sanchez, on August 24, 2021. The email reads:

I represent the corporation 2188016 Ontario Inc. This corporation, pursuant to agreement, advanced the sums set out in the attachment to Bay South and Max Enterprises. There appears to be an overlap of receipt of funds by Mr. Kanakasabapathy and Ms. Sangeetha. The corporation has instructed me to issue civil process. Are you retained on this matter for Mr. Kanakasabapathy.

33Ms. Sanchez replied the same day advising that she had not been retained for this matter and that Mr. Canizares may be in a serious conflict of interest as a result of having acted for Max Enterprises and Mr. Kanak until the prior week. Mr. Canizares’ August 24, 2021 email does not mention the Promissory Note nor the prospect of a charge against Mr. Kanak’s residence. (The Charge had not yet been registered.) It appears that there was no attachment to the email.

34Mr. Hussain submits that by August 24, 2021, Mr. Kanak knew that some damage had occurred, if not the extent and type of damage, and knew the identity of the alleged wrongdoer. He contends that Mr. Kanak did not have to know about the specific existence of the Promissory Note or the registration of the fraudulent Charge for the claim to be discoverable. Ms. Evangelista argued that these are “details” of how the injury was caused. It is not obvious to me that these are mere details that do not impact the running of the limitation period.

35Mr. Hussain further says that the fact that Mr. Kanak filed no evidence to explain why the claims were not discoverable on August 24, 2021, or at any time prior to the service of the statement of claim is fatal. He also says that at the very least, this email triggered a requirement on the part of Mr. Kanak to make further enquires. Because there is no evidence from Mr. Kanak about any such efforts, he has constructive knowledge of the material facts and the motion should be denied.

36In his affidavit, Mr. Kanak says, “What I believe is that this action, and the present motion [the motion for a certificate of pending litigation], is part of a concerted fraud against me” by Mr. Hussain, Ms. Sangeetha and Ms. Hussain. He alleges that their collective aim has been to defraud him of his Property. According to him, the issuance of this claim is part of the fraud and a material fact necessary to trigger the running of the limitation period. I cannot determine this on the record before me.

37The fact that Mr. Kanak did not tender an affidavit specifically addressing the discoverability issue is not fatal to this motion. There is evidence on this motion that supports Mr. Kanak’s position that this motion was brought within two years of the discovery of the claims against Mr. Hussain. His affidavit was not necessary to put into evidence the date that the statement of claim was served on him and the date that the Charge was registered. These facts are not contentious.

38There is a reasonable argument for a summary judgment or trial, that without knowledge of the registration of the Charge and/or without knowing that the plaintiff had commenced a claim against him in respect of the Promissory Note and Charge, the claim against Mr. Hussain pleaded in the Proposed Pleading was not discoverable.

39Further, in order for a claim to be discovered, a person has to know whether a proceeding would be an appropriate remedy (s. 5(1)(a)(iv)). I am not convinced that Ms. Evangelista’s argument that Mr. Kanak was in a position to seek declaratory relief by August 24, 2021, is sufficient to deny the motion.

40It is not “plain and obvious” at this stage that the limitation period has expired.

41Mr. Hussain does not ask me to exercise my residual discretion to deny the amendment under subrule 5.04(2). There is no allegation of prejudice.

42In my view, in light of the discoverability issue raised in this motion, the motion ought to be granted with the responding party being given leave to plead a limitation defence.

43Because of the conclusion I have reached, I do not need to address the moving party’s alternative arguments that the declaratory relief and injunctive relief should be allowed to stand even if the claim against Mr. Hussain is otherwise statute barred.

DISPOSITION AND COSTS

44Therefore, an order will go granting the moving party leave to further amend his statement of defence, crossclaim and counterclaim to add Syed Hussain also known as Saeed Hussain as a defendant to the counterclaim. Mr. Hussain shall be at liberty to plead the expiry of the limitation period as a defence.

45I encourage the parties to agree on costs. If they cannot, Mr. Kanak may submit cost submissions of up to 3 pages (exclusive of attachments) by May 29, 2026. Mr. Hussain may deliver responding cost submissions of up to 3 pages by June 12, 2026. Mr. Kanak may deliver a 1 page reply by June 26, 2026. Cost submissions are required to be double spaced in 12 pt font.

L. La Horey, A.J.

Footnotes

1. 1R.R.O. 1990, Reg. 194
2. 2S.O. 2022, c. 24, Sched. B
3. 3Scott v Golden Oaks Enterprises Inc., 2024 SCC 32 at para 44 quoting Grant Thorton LLP v New Brunswick, 2021 SCC 31 at para 29
4. 4Grant Thornton at para 42
5. 5Grant Thornton at para 42
6. 6Grant Thornton at para 45
7. 7Grant Thornton at para 46
8. 8Mancinelli v. Royal Bank of Canada, 2018 ONCA 544 at paras 23, 24
9. 9Zeppieri (Litigation Guardian of) v Shahid, 2021 ONSC 2858 at para 28
10. 10Dass v Kay, 2021 ONCA, 565 at para 25 - 28, leave to appeal to SCC refused, [2021] S.C.C.A. 379
11. 11Pepper v Zellers Inc., 2006 42355 (ON CA) at para 8
12. 12Philippine v. Portugal, 2010 ONSC 956 (Div. Ct.) at para 34; Sweda Farms Ltd. v Ontario Egg Producers, 2011 ONSC 6146 at para 22; Computer Enhancement Corp. v. J.C. Options, 2013 ONSC 4548 at para 20.
13. 13In this case, the notice of motion was sent by regular mail and email on October 25, 2023. Rule 16.04(b)(iv) provides that service by email is effective the following day if made between 4 p.m. and midnight. The affidavit of service of the notice of motion does not specify the time that email was sent and therefore I assume that it was served the next day on October 26, 2023.