CITATION: TSCC No. 2411 v. 25 Merton Inc., 2026 ONSC 2967

COURT FILE NO.: CV-21-00655059-0000

MOTION HEARD: 2026-03-13

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: TORONTO STANDARD CONDOMINIUM CORPORATION NO. 2411 Plaintiff

AND:

25 MERTON INC., CRESFORD DEVELOPMENTS INC., GLOBAL PLUMBING & HEATING INC., and THE WHALEN COMPANY Defendants

BEFORE: ASSOCIATE JUDGE BROTT

COUNSEL: Counsel, for the Plaintiff – A. Servulia Counsel, for the Proposed Defendant Sensience – Richard B. Swan Counsel for the Defendant Global – R. Verta Counsel for the Defendant Cresford – N. Somayaji

HEARD: March 13, 2026

REASONS FOR DECISION

[1] The plaintiff Toronto Standard Condominium Corporation No. 2411 (“the plaintiff”) seeks an order granting it leave to amend the Statement of Claim to add Therm-O-Disc, Inc. o/a Sensience (“Sensience”) as a party defendant to this action.

[2] This is a subrogated claim for the recovery of the plaintiff’s damages arising from an incident that occurred on January 20, 2019 when a heating pipe within a heat pump ruptured in a unit causing water damage to the condominium building.

THE FACTS

[3] The plaintiff was the owner of the condominium building. The defendants 25 Merton Inc. (“Merton”) and Cresford Developments Inc. (“Cresford”) were the developers retained to construct the building. The defendant Global Plumbing and Heating Inc. (“Global”) was the mechanical engineer and was responsible inter alia for the installation of the HVAC system. The defendant The Whalen Company (“Whalen”) manufactured and supplied the heat pump.

[4] On January 22, 2019 Arcon Forensic Engineers (“Arcon”) were retained by the plaintiff’s insurer to investigate the loss. On or about May 15, 2019 the plaintiff and their insurers retained counsel to recover their damages. On or about June 6, 2019 counsel put Merton, Cresford, Global and Whalen (“the defendants”) on notice of their potential claims, and invited them to attend destructive testing to commence on or after July 1, 2019. Between mid-June 2019 and October 7, 2019 the defendants’ insurers confirmed their experts’ attendance at the destructive testing which occurred on or about December 11, 2019. On December 16, 2019 the plaintiff’s engineer, Nathan Hirst (“Mr. Hirst”) provided the following results:

“We independently tested the actuating valve and compressor in the unit. The valve opened and closed as expected , and the compressor appeared to be functioning as expected as well. The only outlier found was a damaged wire leading from a pressure sensor to the control, but it is not yet clear if the damage is meaningful or merely cosmetic.

After discussion with the engineers, we agreed that the best course of action is to conduct a complete performance test of the unit. This would include connecting the unit to a cabinet, patching or bypassing the freeze-up perforation, and potentially producing sub-zero conditions to test the unit’s temperature sensor. This would allow us to assess the unit as a whole, ideally finding the source of failure through observing its operation.”

[5] This action was commenced on January 18, 2021. Further testing on the heat pump was conducted on December 2, 2021. Mr. Hirst’s update stated:

“We confirmed that there is an apparent issue with the heat pump’s response to freezing conditions.

Our tests determined that the heat pump is capable of freezing when the unit experiences a low water flow condition. The copper tube that had originally ruptured and caused the flood was part of the open water loop in the unit, which transported water through the heat pump from the building. Our tests found that when this flow of water was reduced or stopped, internal temperatures dropped and ice formed inside the line. Typically, we expect that the freeze sensor in the heat pump would sense this change and deactivate the unit when temperatures fell below the cut-out point of 30 degrees F. The unit did not deactivate, and ice was able to form. This is consistent with the freeze-up damage observed in the original copper line.

Freezing conditions would likely have been averted had the freeze sensor deactivated the unit prior to ice forming in the lines. Alternatively, a flow sensor would have also been able to detect the low-flow condition before it caused freezing. The involved unit did not have a flow sensor installed – it is an optional feature.

The issues identified during testing appear to relate to performance of the heat pump and freeze sensor.”

[6] On or about February 22, 2023 Mr. Hirst conducted additional testing to determine the identity of the manufacturer of the freeze sensor (“the sensor”) and on the same date he reported that he was unable to identify the freeze stat manufacturer. Further efforts to identify the manufacturer were sent to Whalen’s counsel in April, June and August 2023. On or about August 30, 2023 Whalen’s counsel advised that the heat pump had no flow sensor and also confirmed that the manufacturer of the sensor was Sensience.

[7] On or about January 19, 2024 Sensience was put on notice that it would be added as a party defendant to this proceeding. In February 2024 plaintiff’s counsel sought the positions of all defendants and the proposed defendant on a motion to amend the Statement of Claim to add Sensience as a party defendant. When counsel for Sensience failed to respond, the plaintiff scheduled their motion for August 13, 2024. The motion was adjourned and by the time of hearing, it proceeded on consent of the defendants Whalen and Merton, unopposed by Cresford, and was opposed only by Sensience.

THE LAW

[8] Rule 26.01 provides that on a 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. The rule is mandatory unless the responding party’s prejudice flows from the proposed amendments themselves, and/or the proposed pleadings are scandalous, frivolous, vexatious or an abuse of the court’s process or if the pleading discloses no cause of action.

[9] Rule 5.04(2) provides that the court may add, delete or substitute a party at any stage of a proceeding, on such terms as are just unless prejudice would result that could not be compensated for by costs or an adjournment. This provision is discretionary and permits the court to deny the addition of a party in certain circumstances including where a limitation period has expired. But if discoverability is a live issue, and it is not clear that prejudice would result that cannot be compensated for by costs or an adjournment, then the court may exercise its discretion to add the party.

[10] The Limitations Act 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.

[11] The court is to determine, based on the evidence, whether the plaintiff has provided a reasonable explanation as to why it could not have discovered the claim through the exercise of reasonable diligence. As stated by Master Dash in Wakelin v Gourley, [2005] O.J. No. 2746:

The court must examine the evidentiary record before it determines if there is an issue of fact or credibility on the discoverability allegation, which is a constituent element of the claim. If the court determines that there is such an issue, the defendant should be added with leave to plead a limitations defence. If the issue is due diligence rather than actual knowledge, this is much more likely to involve issues of credibility requiring a trial or summary judgment motion, provided of course that a plaintiff gives a reasonable explanation on proper evidence as to why such information was not obtainable with due diligence.

[12] As long as the plaintiff puts into evidence the steps it took to ascertain the identity of the proposed party and provides a reasonable explanation as to why the information was not obtainable with due diligence such as to raise a triable issue, then that will end the inquiry.

[13] Caselaw is clear that the application of the discoverability principle is generally to be discouraged on interlocutory motions. The appropriate and most expeditious procedure is to permit the amendments and leave it to the proposed defendant to plead a limitation defence thereby leaving the final determination to be made by the trial judge. Rule 1.04 is the guiding principle of the Rules. It provides that the Rules of Civil Procedure shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

[14] The plaintiff submits that it has provided a reasonable explanation. It immediately retained an adjuster to investigate the loss. It notes that at the first destructive testing which was attended by engineers retained by all of the defendants, it was agreed by all that it was possibly a damaged wire which caused the loss, and all engineers agreed that a further investigation was in order. There was little discussion that a faulty sensor was the main cause of the loss.

[15] The plaintiff provided further evidence that it was at the second testing in December 2021 that the engineer suggested the problem could be the sensor. At that time, none of the parties were aware that Sensience was the manufacturer of the sensor. Ultimately, after requesting from April to August 2023 information on the sensor and its manufacturer from Whalen, the plaintiff was advised by Whalen of Sensience’s involvement. Significantly, Whalen never pleaded that the sensor was designed, manufactured or supplied by Sensience nor did Whalen add Sensience as a third party. Accordingly, it was reasonable until then for the plaintiff to assume that Whalen was responsible for not only the heat pump, but its component parts.

[16] The proposed defendant submits that immediately following the first inspection on December 11, 2019, the plaintiff’s expert noted that all the heat pump’s components appeared to be functioning, except for possibly the heat pump’s sensor, and the wire. The defendant asserts that the plaintiff failed at that time to make appropriate inquiries of Whalen about whether it or another company had manufactured the sensor.

[17] The proposed defendant further submits that on December 1, 2021, when the experts for the plaintiff and all of the defendants’ experts conducted a second inspection and testing, and when following that, the plaintiff’s expert opined that in his opinion the sensor had failed, the plaintiff failed to exercise due diligence regarding the identity of the manufacturer of the sensor, waiting until February 2023.

[18] In summary, the proposed defendant asserts first that the plaintiff failed to take steps to identify Sensience between December 2019 and the date of the second inspection in December 2021 and further, even after the December 2021 testing, it took the plaintiff until February 2023 before identifying Sensience.

[19] The proposed defendant accordingly asserts that the plaintiff’s delay of more than four years is indicative of the plaintiff’s failure to exercise reasonable diligence. They also submit that the plaintiff has failed to provide any evidence or explanation for why it could not have discovered its claim against Sensience earlier.

[20] In my view, the plaintiff has provided ample evidence that it took steps to ascertain the identity of Sensience. It has provided a very reasonable explanation as to why such information was not obtainable until April 2023. Accordingly, this ends the inquiry.

[21] Even if, as the proposed defendant asserts, there is some doubt of whether the plaintiff’s actions amount to due diligence, then that triable issue must be resolved on a full evidentiary record at trial or on a summary judgment motion.

[22] Leave to amend the Statement of Claim to add Sensience as a party defendant is hereby granted. The plaintiff’s request in oral argument, to deny the proposed defendant the right to plead the limitation period, is without merit and is dismissed. The defendants are at liberty to amend their Statements of Defence and the proposed defendant may plead the application of the limitation period.

[23] The plaintiff requested costs of this motion at the conclusion of the hearing. While the plaintiff was successful on this motion, and costs should follow the event, the plaintiff failed to comply with Rule 57.01(6) in that the plaintiff failed to provide a costs outline to the opposing party. Further, the draft Order uploaded to CaseCentre indicated that there was to be no order as to costs. There shall accordingly be no costs on this motion.

________________________ ASSOCIATE JUSTICE BROTT

Date: May 20, 2026