July 08, 2016

Court Denies Plaintiff's Application to Add Another Plaintiff

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Western Regional Integrated Health Authority v Marine Contractors Inc., 2016 NLTD(G) 1.


The Health Authority sued a contractor and the City of Corner Brook with regards to damage to a hospital building and its contents, due to flooding from a sewer back-up. In their pleadings, the defendants admitted that the Authority owned the building.

Background

Information from discoveries indicated that the building was owned by the Province of NL, with the Authority being a tenant. Documents suggested prior knowledge, by the Authority, of this distinction. The defendants were allowed to withdraw their admission regarding ownership of the building. Subsequent investigations showed that title to the property was registered to the Government of Canada. As a result, the Province obtained a document purporting to transfer control of the property to the Province. Nevertheless, the absence of the Province as a party meant that the claim for damage to the building could fail. Because the limitation period had expired, the Province could not issue a separate action. As a result, the Authority applied to add the Province as an additional plaintiff.

Decision

Rule 15 allows for an amendment to a pleading that "adds, substitutes, or corrects the name of a party", notwithstanding the expiring of a limitation period, in order to rectify a mistake that was genuine, and not misleading or such as to cause reasonable doubt as to the identity of the party in question. Citing earlier decisions (Petten v. E.Y.E. Marine Consultants, [1994] N.J. No. 448 (TD) and Vardy v. Dufour, 2008 NLCA 22), the court confirmed that Rule 15 does not apply where a new party is sought to be added. Here, the Authority did not seek "a substitution or correction". The Authority itself would remain as a plaintiff. Furthermore, while the Authority was an agent of the Province, it was a separate legal entity with a separate cause of action. This was not an attempt to correct an error or mistake. What was sought was the substantive addition of a party. Beyond that, the Authority presented no explanation as to why the Province was not originally included as a plaintiff. As a result, the application to add the Province under Rule 15 was denied.

Section 11 of the Limitations Act provides that the expiry of a limitation period is no bar to the addition of a new party under the Rules of Court, regarding a claim relating to or connected with the subject matter of the original action. Under Rule 7, the Court may add any person, who "ought to" have been joined as a party or whose participation in the proceeding is "necessary" to ensure that all matters in the proceeding may be effectually adjudicated. The applicant "must satisfy either or both of the 'ought to' and 'necessary' branches of the Rule", but the court still retains a discretion regarding the motion.

The "ought to" branch involves the relationship between the existing party and the proposed party, and whether the existing party is fully constituted, in a legal sense, in the absence of the proposed party. According to the court, the Province was "fully constituted for the purposes of its existing proceeding". The Authority's claim could be effectually adjudicated, without the Province as a plaintiff. That the Authority's claim for damage to the building, as opposed to the contents, could fail, did not affect the court's conclusion. Nor was lack of actual prejudice to the defendants of any relevance.

As for whether the Province was a "necessary" party, the court confirmed the narrow interpretation of this branch of the Rule. This was articulated by the supreme court in Mandavia v. Central West Health Care Institutions Board, [2003] N.J. 17 (TD) and Clearwater Fine Foods Inc. v. Day & Ross Inc., 2003 NLSCTD 106, and approved by the Court of Appeal in Vardy v. Dufour. The applicant must establish that the proposed party is necessary for the adjudication of the existing proceeding as between the existing parties. It is insufficient that the addition of the proposed party would enhance the "prospects of successful recovery". The passage of the limitation period, a substantive defence, supported the strict requirements of Rule 7. According to the court, the Province was not a party that was necessary to enable the court to adjudicate the Authority's existing claim. Furthermore, the court had no discretion to add the Province where the requirements of Rule 7 had not been met. As a result, the Authority's application to add the Province was dismissed. The Authority has sought leave to appeal this interlocutory decision.

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