A New Cause of Action or Clarifying an Existing Action? Amendments to Pleadings and Limitation Periods
Written on March 2, 2016 – 12:51 pm | by Angelique Moss
When will a court permit amendments to a statement of claim after the expiration of a limitation period? In a recent decision by Justice Lederman, Barcham v. Barcham, the plaintiff and moving party, Lazar Barcham (“Lazar”), sought leave to amend his statement of claim, and an adjournment of the trial of Lazar’s action that was scheduled to start only a few weeks later in February 2016.
In his original statement of claim that was issued in 2012, Lazar sought a declaration that the defendants held in trust for Lazar a one-third interest in a Mississauga, Ontario property (“Mississauga Property”). Lazar alleged that the circumstances in which his interest arose were as follows: over the years, he made financial contributions to another property, which was owned by George Barcham, Lazar’s brother (“George’s Property”). Lazar claimed that after George’s death in 2009, George’s Property was sold by George’s wife and estate trustee, Almas Barcham (“Almas”), and the funds from the sale of George’s Property were used to purchase the Mississauga Property. Lazar claimed in his action that Almas accordingly became a trustee holding Lazar’s one-third interest in the Mississauga Property.
Lazar sought to amend his statement of claim on the basis that he recently discovered George’s true last will and testament, which was not the 1995 Will but rather a holograph will made in 2000. The holograph will, he alleged, left George’s entire estate to Lazar. Lazar said that George gave him a copy of the holograph will many years before, but Lazar did not look at it and simply stored it in his house. After George died, Lazar could not find the holograph will. When he started his claim in 2012 for an interest in the Mississauga Property, he did not mention the holograph will in his claim, nor did he object to the validity of the 1995 Will or to Almas’ certificate of appointment and her subsequent distribution of George’s estate to herself, including the Mississauga Property where she lived.
Lazar explained in his motion materials that he located the holograph will approximately two years after he started his claim, but he provided no explanation to the court as to how he finally discovered it.
His Honour found that in order to succeed in a motion to amend pleadings after the expiry of the limitation period, the following evidence and analysis will be applied:
- The plaintiff must demonstrate that there is a triable issue of discoverability.
- Discoverability will be a triable issue if a plaintiff demonstrates that he exercised due diligence: i.e. the plaintiff must give a reasonable explanation on proper evidence as to why the material evidence was not obtainable with due diligence.
- If the plaintiff is unable to demonstrate the existence of a triable issue of fact or credibility relating to discoverability, the motion to amend pleadings after the expiry of a limitation period should be refused.
- Any issues of fact or credibility successfully raised by the plaintiff require evaluation on a full evidentiary record at trial, or on a motion for summary judgment. If such a trial or motion is required, then leave to amend should be granted, and the defendants should also be granted leave to plead a limitations defence.
- Even if the plaintiff fails to demonstrate that he acted with due diligence in discovering the evidence that is the subject of the amendment, the court retains a residual discretion to grant a motion to amend, provided that there is an absence of non-compensable prejudice to the opposing party.
Applying the aforementioned principles to the facts at hand, his Honour found that the amendments sought by Lazar raised a completely new cause of action based on new facts. The record did not disclose a triable issue as to whether Lazar acted with due diligence. At a minimum, his Honour found that due diligence would have required Lazar to notify the court and George’s estate trustee, Almas, that the 1995 Will may not have been George’s last will and testament. Instead, Lazar did nothing.
Although his Honour noted that the court has residual discretion to permit an amendment to pleadings, even if the plaintiff fails to establish an issue as to discoverability, his Honour found actual and potential prejudice would be suffered by the defendants if the amendments were granted. An adjournment to permit the amendments would result in further delay and increased costs, and would also expose the defendants to the risk that the previously distributed assets of the estate be required to be transferred to Lazar – including Almas’ home (the Mississauga Property).
His Honour concluded that “the possibility of the action being disposed of in such a way upends the principles of judicial certainty and finality that Ontario’s statute of limitations is designed to preserve.” Costs of $3,000.00 as previously agreed upon by the parties, were ordered payable by Lazar.
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