Amendments to Claim Denied Where Leave Sought Too Close to Trial
In Falsetto v. Falsetto et al., 2021 ONSC 7964, the plaintiff sought leave to amend the statement of claim. The defendants opposed the plaintiff’s proposed amendments, arguing that the plaintiff was seeking to add new causes of action outside the limitation period, and that the motion would disrupt the litigation timetable and necessitate an adjournment of trial. In either case, given the advanced stage of the litigation, the defendants argued that the proposed amendments would create prejudice that could not be addressed by costs.
Background
In this action, the plaintiff alleged that his son had appropriated or misappropriated funds belonging to the plaintiff for the benefit of the son and the corporate defendants controlled by him.
The claim sought declaratory relief, and also sought an order that all rights, title and interest in certain listed properties would be held in trust for the plaintiff, an order for an accounting, a tracing order, a declaration of constructive trust, disgorgement of profits, damages, special damages and punitive damages.
The amendments proposed by the plaintiffs to the statement of claim included changes outlining details of properties owned by the son or the corporations, among other changes. The net result of the proposed amendments was to almost double the length of the original pleading.
Law on pleading amendments
The court reviewed the applicable principles on a motion for leave to amend a pleading. Leave to amend a pleading is governed by Rule 26.01. This rule provides that “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.” Although amendments can be sought at any stage of a proceeding, if costs and other terms are insufficient to address prejudice that would be caused by the proposed amendment, the amendment should be denied.
An amendment should also be denied if the plaintiff is seeking to add a new cause of action in the face of a limitation period that has expired. Prejudice may also be presumed if the amendment is sought late in the process, without an adequate explanation. In any event, an amendment will be denied if it is not a proper pleading, or is an abuse of process.
Analysis
The opposed amendments sought to add many more particulars of properties, assets, loans, and transfers of funds which the plaintiff asserts were improper. It was not admitted by the defendants that all of these additional transactions took place, and there was some evidence that some of them were cancelled transactions.
The court rejected the defendants’ submission that adding this additional detail would constitute the addition of new causes of action to the claim. The Court held that the claim had always sought an accounting of funds, a declaration of trust, and a tracing remedy. The additional details of transactions the plaintiff sought to add to the claim fell within the scope of the action originally pled.
However, the court agreed with the defendants that the new amendments were improper, and should be denied. This action was case managed, and there was a litigation timetable in place leading up to a trial that was to take place in two months from the date of this decision. Further, the plaintiff would turn 92 years old when the trial was scheduled to begin, and there had been an unreasonable delay in bringing this motion.
In that context, expanding the statement of claim to over 200 paragraphs and doubling the number of transactions in dispute would lead to additional productions and discovery, and would also require those added transactions to be explored at trial.
Delaying the litigation and lengthening the trial at this stage would be prejudicial to the defendants. However, denying the additional amendments would not be prejudicial to the plaintiff. The real issue in the case was whether the plaintiff’s son had misappropriated the plaintiff’s funds. Adding additional details of additional transactions to the claim was not necessary in order to address that underlying issue.
Finally, the Court reasoned that the proposed amendments to the pleading were an attempt to plead around a prior decision in the same case that had ruled on the permissible scope of production and discovery, and as such, they constituted an abuse of process.
In concluding that the opposed amendments would not be included, Justice MacLeod stated that adding numerous unproven transactions to the pleading and to the trial would risk making the trial more costly and time consuming.
Commentary
This case demonstrates that even if proposed amendments to a claim are not barred by the expiry of a limitation period, they may still be denied by the court if their addition would jeopardize the litigation timetable by setting the action back to an earlier stage.
In this case, Justice MacLeod denied the plaintiff leave to amend the claim in a manner that would lengthen the factual record and complexity of the case and the trial, and likely necessitate further productions and examinations for discovery as well, in a case that was two months away from trial.