C.A. Applies “Litigating Finger” Test to Add Defendants After Expiry of Limitation Period

In June, the Court of Appeal laid to rest a dispute that had persisted for more than four years: do courts still have the power to allow defendants to be added to actions after the expiry of the limitation period, on the basis of “special circumstances”? In a pair of rulings–Joseph v. Wonderland and Meady v. Greyhound–the Court held that for claims arising after January 1, 2004 (when the Limitations Act, 2002 came into force), the “special circumstances” power no longer exists (at least for causes of action whose limitation period is now found in the new Act: see below…)  Our discussion of those two cases can be found here.

On November 14, the Court of Appeal considered the Limitations Act, 2002 again in Spirito Estate v. Trillium Health Centre. However, the ruling made by Justices Rosenberg, Gillese and Blair was that, on the facts of this case, they did not have to interpret the Limitations Act, 2002.

The case was an appeal from a decision of Justice Katherine van Rensburg. She had granted a motion, brought by the plaintiffs in a medical malpractice action, to add two physicians as defendants after the expiry of the two-year limitation period under s. 38(3) of the Trustee Act.

(This limitation period, which applies to actions on behalf of a deceased person, has been preserved by section 19 of the Limitations Act, 2002. It runs from the date of death of the deceased. The Court of Appeal has previously held, and reaffirmed in Spirito, that the discoverability principle does not apply to actions governed by s. 38(3).)

In this case, the original statement of claim had named as defendants “Doctors AB, DC, EF, GH”. On the motion before van Rensburg J., the plaintiffs sought to substitute two named physicians for Drs. AB and DC, claiming that they had only been able to identify these doctors as a result of evidence obtained through the discovery process.

Key to the decision of Justice van Rensburg (and to that of the Court of Appeal) was that the original statement of claim had made very specific allegations that, as it turned out, were directly referable to the doctors whom the plaintiffs sought to add. She determined that naming these doctors as “AB” and “DC” in the original pleading had been a misnomer. In other words, the doctors had been sued within the Trustee Act limitation period but had been misnamed.

In coming to this conclusion, van Rensburg J. applied what is known as the “litigating finger” test for misnomer: “would a person having knowledge of the facts be aware of the true identity of a misnamed party by reading the Statement of Claim? If so, the defendant will be substituted unless there is prejudice that cannot be compensated for in costs or by an adjournment.”

The Court of Appeal agreed with van Rensburg J.  It elected not to decide whether the transition provisions found in s. 24 of the Limitations Act, 2002 applied to a case in which the claim is brought after January 1, 2004 but the limitation period is one preserved by s. 19 of the Act (as was the case here). It left that issue to another day. However, it proceeded to consider this case under both possible scenarios: if the Limitations Act, 2002 applied and if it didn’t.

If the Act did not apply, this case did not have to be decided on the basis of limitation periods, transition provisions or “special circumstances”. The members of the panel agreed with van Rensburg J., that this was merely a case of misnomer. The action had been commenced within the Trustee Act limitation period, but the two doctors had been misnamed as “AB” and “CD”. Applying the “litigating finger” test, the statement of claim had pleaded facts that sufficiently identified the two doctors. As the Court observed, what the plaintiffs were really doing was not adding parties but correctly naming existing defendants. No allegation of prejudice had been raised by the defendant doctors, so the Court held that there was no reason to interefere with Justice van Rensburg’s decision.

If the Limitations Act, 2002 did apply, the situation was no different. The defence argued the defence that s. 21(2) of the Act imposed a narrower test than the old law of “misnomer”. (Subsection 21(2) says that subsection 21(1) (which prevents the addition of defendants after the expiry of the applicable limitation period) “does not prevent the correction of a misnaming or misdescription of a party”.)

The Court could see no basis for a distinction between “misnomer” and “misnaming”; hence, the same result should follow whether s. 21 applied or not.

(Actually, on the Court’s reasoning, if the case fell under the Limitations Act, 2002, s. 21 ought not to apply at all. That section deals with the addition of a defendant after the expiry of the applicable limitation period. But the Court of Appeal found that where a defendant has been sued but has been misnamed, the action is timely if the litigating finger test is met. Thus, to take this case for example, Drs. AB and CD were sued within two years of death, so the limitation period against them had not expired. The plaintiffs had only to correct the misnomer. Therefore, s. 21 should have had no application.)

Finally, as David Cheifetz pointed out to us, the ruling leaves open another interesting question. As noted above, the Court did not decide whether the Act applies to suits brought after January 1, 2004 but for which the applicable limitation period is one preserved by s. 19. In addition to the Trustee Act, these include the one year limitation period found in statutory condition 14 of the Insurance Act and a number of others. The decision in Spirito leaves open the possibility that the law of “special circumstances” is alive and well with respect to those limitation periods. We will have to wait and see.

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