Section 21 of Limitations Act, 2002 Doesn’t Permit Addition of Defendants After Prescription

In an important new decision, Mr. Justice George P. Smith has become the first judge (so far as we know) to consider in detail the effect of s. 21(1) of the Limitations Act, 2002. He has found that s. 21(1) now prevents the addition of parties after the expiry of a limitation period. Although his decision also addresses the former law (Rules 5.02 and 26.01 of the Rules of Civil Procedure and the jurisprudence dealing with “special circumstances”), his reasons make it clear that he was responding to an argument made in the alternative.

In Meady v. Greyhound Canada Transportation Corp., the plaintiffs had been injured in a December, 2000 bus crash. They alleged that one Davis had caused the accident by seizing the steering wheel of the bus. Before the two-year limitation period had expired, one of the defendants had added as a third party a physician who, it was alleged, had been negligent in treating Davis. In particular, it was alleged that the physician had been negligent in prescribing Dexedrine to Davis. The doctor defended both the third party action and the main action. In late 2006, the plaintiffs moved for leave to amend their claim, to add the doctor as a defendant in the main action. Counsel for the physician opposed the motion on the basis that the claim was prescribed and that s. 21(1) of the Limitations Act, 2002 prevented the plaintiffs from adding a new party after the limitation period had passed. In the alternative, counsel for the doctor argued that if the old law of “special circumstances” still applied, no special circumstances existed here to warrant the addition of a party after the expiry of the limitation period. The decision is under appeal.

Section 21(1) of the Limitations Act, 2002

Section 21(1) of the Act reads as follows: “If a limitation period in respect of a claim against a person has expired, the claim shall not be pursued by adding the person as a party to any existing proceeding.” Justice Smith reviewed some of the consulting reports that led to the passage of the present legislation. In particular, he referred to a 1989 submission by the Canadian Bar Association—Ontario, commenting on the addition of parties after the expiry of a limitation period. The paper criticized the former practice as “one of the greatest areas of uncertainty in the present law”. One of the issues in the case was the fact that the doctor was already a party in the suit, having been sued as a third party. However, Smith J. held that this circumstance made no difference to the application of s. 21(1):

Had the legislature intended to exclude from the operation of s. 21(1) of the Act those situations where the proposed defendant is already a third party it would have said so.

The fact that one party (the Crown) has commenced a proceeding (the third party claim) prior to the expiration of the former limitation period and before the “effective date” (January 1, 2004) does not mean that the Act does not apply to a different party (the Plaintiffs) attempting to advance a similar claim against the same person after January 1, 2004 and after the former limitation period has expired.

His Honour then said, “I find that the Plaintiffs are statute-barred and cannot add Dr. James as defendant at this late date.” Finally, on this point, he rejected the plaintiffs’ argument, that applying s. 21(1) to this case would amount to giving retrospective effect to the legislation. He said, “I am not persuaded by this argument. The Act came into force on January 1, 2004. The Plaintiffs’ motion to add Dr. James was commenced in October 2006. There can be no retrospective application of the legislation in these circumstances.”

We have one small quibble with Justice Smith’s reasons. At paragraph 24, he said, “My reading of s. 21(1) of the Act is that the legislature intended to prevent claims of this nature which attempt to add a party to an existing proceeding (the main action) where the limitation period has expired before January 1, 2004.” [Emphasis added] In our view, this must have been a slip by Justice Smith. Section 21(1) prevents the addition of a party to an existing proceeding where the limitation period has expired, no matter when that event occurred. If the above-quoted passage were accurate, s. 21(1) would, for example, have no application to any cause of action accruing after the Limitations Act, 2002 came into force. It seems quite unlikely that this is what was intended by the legislature.

Although Smith J. concluded his analysis of s. 21(1) by saying, “the question remains whether the Rules of Civil Procedure and common law allow the Plaintiffs to add Dr. James after the expiration of a limitation period”, we have confirmed with counsel for the moving party, that the submissions dealing with the former law of “special circumstances” were made in the alternative to the s. 21(1) argument. Despite the fact that His Honour’s use of the phrase, “the question remains” might suggest otherwise, paragraph 3 of his reasons makes it clear that he considered the law of “special circumstances” only in the alternative to his finding that the addition of the doctor as a party was barred by s. 21(1). In his consideration of “special circumstances”, Justice Smith found that if the law laid down by such cases as Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 56 O.R. (3d) 768 (C.A.) still governed, the plaintiffs would have failed to make out “special circumstances” here. He reached this finding largely on the basis that the plaintiffs had made a deliberate decision not to sue the doctor within the limitation period.
Justice Smith’s ruling is quite significant. So far as we know, his is the first Ontario decision to have considered s. 21(1) in any detail. (In Pepper v. Zellers Inc. 2005 WL 5085667 (Ont. S.C.J.), 2005 CarswellOnt 9919, Justice Gordon Killeen expressed a similar view of the effect of that section, but did so almost in passing. He said that s. 21(1) “clearly precludes” a party being added “at this late date”. The decision was reversed on other grounds by the Court of Appeal, with no mention of s. 21(1).

We will post any information about the progress of the appeal of Justice Smith’s decision as soon as we receive it.

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