OCA addresses evidentiary burden of proving that plaintiff did not act with due diligence in order to rely on a limitations defence

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In Mancinelli v. Royal Bank of Canada,2018 ONCA 544​, the plaintiffs brought a motion under rule 5.04(2) and rule 26.01 to add the defendants to the action. The defendants opposed the motion on the basis that the claim against them was barred by the Limitations Act, 2002. The motion judge dismissed the motion on the basis that the plaintiff adduced insufficient evidence to establish that they behaved as reasonable persons in the same or similar circumstances to identify the proposed defendants as conspirators and the evidence rather establishes that their identity could have been established with reasonable diligence before the expiry of the limitation period. The Court of Appeal overturned the decision and allowed the appeal on the following two bases: (1) that the motion judge placed too high an evidentiary threshold and (2) there was a lack of evidentiary foundation.

The Court held that the evidentiary threshold that must be met by a plaintiff on such a motion is low. The plaintiff’s explanation should be given a “generous reading.” Whether the plaintiff and its counsel acted with reasonable diligence must be considered in context.

In this case, the proposed defendants had led no evidence of further reasonable steps that the plaintiffs could have taken to ascertain their identities. Notwithstanding, the motion judge suggested that the plaintiffs should have taken further steps to investigate whether the defendants were co-conspirators. The Court of Appeal found that he had placed too high of an evidentiary burden. For example, it was not apparent how a plaintiff alleging a conspiracy that the defendants took active steps to conceal and that was conducted through secret “chats” could have possibly obtained the necessary information.

The Court also stated that the plaintiff’s failure to take reasonable steps to investigate a claim is not a stand-alone or independent ground to find a claim out of time. Instead, the reasonable steps a plaintiff ought to take is a relevant consideration in deciding when a claim is discoverable under s. 5(1)(b). More importantly, the Court held that where the issue on a motion to add a defendant is due diligence, the motion judge will not be in a position to dismiss the plaintiff’s motion in the absence of evidence that the plaintiff could have obtained the requisite information with due diligence, and by when the plaintiff could have obtained such information, such that there is no issue of credibility or fact warranting a trial or summary judgment motion. The respondents conceded that there was no evidentiary foundation for the motion judge’s finding that the respondents’ identities as co-conspirators could have been established with reasonable diligence.  As a result, the appeal was allowed and the parties were added.

The Court also stated that the issue of whether the appellants could have discovered the identities of the respondents with due diligence and, if so, when the appellants could have done so, are issues that require consideration on a summary judgment motion or at trial.