All the Proper Parties

February 21, 2021

By Brian Babcock

Suing the proper parties is important. If you sue the wrong party, you might not get a judgment. If you name them wrong, collecting on your judgment might be difficult, even impossible.

This might seem obvious, yet we continually see reports of cases where Plaintiffs seek permission to add parties to a law suit, or at least, to change the name of existing Defendants.

In Ontario, the Rules of Civil Procedure provide a framework for this. Rule 5.04(2) says that, at any stage of a proceeding, the court may 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 cannot be compensated for by costs or by an adjournment.

Substituting or correcting a name is usually simple in cases we call “misnomer”. That is where you sue the right person, but get the name wrong. So, you intend to sue ABC Thunder Bay Buggywhip Limited, but accidentally name them as ABC Thunder Bay Buggywhips Inc. You serve the claim on their head office. They are aware of the claim, so have no valid reason to object to the correction.

Similarly, if you believe that you were dealing with an individual named Jack Smith, and learn later that his legal name is John Smith. It sometimes gets trickier if the error is more substantial, or the claim is not served on the correct party.

This may lead to an argument whether it was a misnomer, or whether you sued the wrong party. It might then lead to the time limit issue that applies if you sue the wrong party and want to add a new party, rather than correct a misnomer.

As discussed in prior articles, in Ontario, as in most jurisdictions, there are time limits, or limitations, that say when you may launch a law suit. In Ontario, the general rule is two years from when the claim arises or is discovered.

Section 21(1) of the Limitations Act, 2002 provides that a party may not be added to a proceeding if a limitation period in respect to that party has expired.

If you wish to add a party before the limitation expires, it is generally not a problem, because your other option is to start a separate action against them, and judges usually dislike multiple related proceedings – better to invite everyone to the same party.

The first lesson here is to work with your lawyer to identify all possible defendants and add them in the proceeding from the start. This often means adding some peripheral players who might not prove to be responsible, but better to add them than not in most situations. It may also require some factual investigation, or research about corporate structures.

So the second lesson here is that this is a reason not to sit on your rights until the limitation is about to expire. Even if you are undecided about suing, you want to begin the process of identifying potential parties early.

Still, there will always be cases where there is a person who might be responsible that you were unaware of at the time you start the claim. Sometimes you learn about them after the presumptive two year limit expires. For example, you sue for the damage to your trees. You believe that it was caused by your neighbour, but the neighbour’s defence is that they told the contractor where the property boundary was, and if the contractor cut over the line, it is not the neighbour’s fault. You only find out the contractor’s name after the two years have passed.

However, your actual knowledge of the contractor’s name is only half the story. You must also show that you could not have found out the name through reasonable inquiries. For example, if the defence was filed within the limitation, did you or your lawyer try to find out the contractor’s name then, or did you sit back until examinations for discovery.

Perhaps you asked and were told that the neighbour hired two different contractors at different times. You might need to go to examinations to learn which contractor was working the day your trees were damaged.

In either situation, you will be in an argument on a contested motion to add the contractor, and the result will depend upon how the judge hearing that motion views all of the facts.

So the third lesson is that once you become aware that there is a missing defendant, start your investigation immediately.

The fourth lesson is that every time there is a contested motion, it might turn out against you, so taking all available steps to avoid having to bring the motion actually reduces your litigation risk and saves costs in the long run.

Because the most important lesson of all is that all litigation is risky business, and working with your lawyer to manage that risk is time and money well spent.