10475 NEWFOUNDLAND LIMITED FIRST APPELLANT AND: CROMBIE PROPERTY HOLDINGS II LIMITED SECOND APPELLANT AND: LILLIAN HOUSTON RESPONDENT, 2012 NLCA 34

Date: 20120613 Docket: 11/69 & 11/70 Citation: 10475 Newfoundland Limited v. Houston , 2012 NLCA 34 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN: 10475 NEWFOUNDLAND LIMITED FIRST APPELLANT AND: CROMBIE PROPERTY HOLDINGS II LIMITED SECOND APPELLANT AND: LILLIAN HOUSTON RESPONDENT Coram: Rowe, White and Harrington, JJ.A. Court Appealed From: Supreme Court of Newfoundland & Labrador, Trial Division (General) 201001T1014 Appeal Heard: November 14, 2011 Judgment Rendered: June 13, 2012 Reasons for Judgment by Harrington J.A. Concurred in by Rowe and White JJ.A.

Counsel for the Intended First Appellant: Leanne O’Leary Counsel for the Intended Second Appellant: Gerry Fleming Counsel for the Respondent: E. Mark Rogers Harrington, J.A.:

[1] The appellants apply for leave to appeal and, if granted, appeal from the decision of the applications judge permittingamendments to the statement of claim adding the appellants as defendants to an occupiers’ liability claim in negligence following theexpiration of the limitation period.

A further amendment was permitted, changing the status of the original defendant to “the propertymanager” from “owners/occupier”. [2] For the reasons that follow, I would grant leave to appeal but dismiss the appeal on the basis that the applications judge didnot err in allowing the appellants to be added as defendants, although he erred in certain respects in his reasons justifying theamendments. BACKGROUND [3] The applications judge added as defendants the purported owners of two abutting strip malls (Premises) in the east end of theCity of St. John’s.

There the respondent allegedly slipped and fell on an adjacent icy walkway and suffered injuries. The only defendantnamed in the original proceeding was Perennial Management Limited (Perennial). The original statement of claim, filed days before thelimitation of action period expired, alleged that Perennial was the owner or occupier of the strip malls. In her application to amend therespondent sought to change the status of Perennial to that of property manager as opposed to the owner or occupier of the twoproperties.

The respondent also obtained leave to add two defendants described as the owner and occupiers of the premises. Theappellants submit that their corporate identities and ownership interests could have been discovered prior to commencement of theproceeding and that they could thus have been named as defendants in the original statement of claim.

They claim that the order of theapplications judge permitting the respondent to amend is depriving them of a limitation defence. [4] The respondent’s application to amend relied on certain facts to explain the failure to name the appellant owners asdefendants when she commenced her original proceeding five days prior to the expiry of the limitation period. The applications judgerelied upon the following facts in his reasons: 1. The alleged slip and fall occurred at a point where two strip malls are virtually adjoined.

At the location in question, there weretwo abutting leased premises where it was difficult to determine the ownership and the status of the occupiers; 2. The properties were located at the same singular civic address in the east end of the City of St. John’s; 3. It was difficult to determine the status of the owners and occupiers of the two abutting premises since the leases are not registeredin the Registry of Deeds and, rather, it is no longer possible to obtain the names of the business taxpayers who are paying commercialassessments to the City of St.

John’s by conducting a search at the City’s taxation office; 4. Two alleged property owners failed to reply to a notification of a potential claim shortly after the incident had occurred. [5] The applications judge granted the respondent leave to amend the statement of claim by the addition of the two abuttingproperty owners, 10475 Newfoundland Limited (10475 Ltd.) and Crombie Property Holdings II Limited (Crombie). [6] The information set forth in the respondent’s application claimed that an internet search of Perennial disclosed that it was“responsible for 272 Torbay Road”.

Subsequent to service of the statement of claim, the respondent learned that Perennial was theproperty manager for 10475 Ltd. and that the two companies listed the same registered office at 272 Torbay Road. [7] In the original statement of claim, the respondent claimed negligent maintenance by the “owners and/or occupiers” of thewalkway where the slip and fall occurred. The amendment allowing the addition of parties did not alter the basic nature of the pleadedcause of action.

It was confined solely to the proper identification of the owners and property manager of the two abutting strip mallsand adjacent walkway. The process of their identification was alleged by the respondent to have been a difficult exercise for reasons setout by her counsel and accepted by the applications judge. [8] It was acknowledged by the parties before the applications judge that Perennial was actually the property manager of theabutting strip malls and was neither an owner nor an occupier of the properties.

The original statement of claim did identify the businesstenants of the two premises as a Pipers department store and a Quizno’s fast food outlet respectively. However, the correct owners oroccupiers of the properties had not been named as defendants prior to the commencement of the proceeding. DECISION OF THE APPLICATIONS JUDGE [9] The application to amend (application) relied upon rules 7.04 and 15.02 of the Rules of the Supreme Court, 1986. Rule7.04(2)(

b) was relied upon to add defendants and rule 15.02 was relied upon to amend the status of the original defendant to that ofproperty manager rather than “owner/occupier”. The applications judge noted that the statement of claim had been issued within fivedays, and was or had been served by registered mail within one day, of the expiration of the limitation period.

No statement of defencehad been filed and no discoveries had been conducted prior to the filing of the application. [10] The applications judge was aware that the respondent’s counsel believed shortly after the slip and fall incident that Crombiewas one of the property owners, since she had sent a written notice of potential legal action nine days after the incident.

However, nowritten or oral acknowledgement or response by Crombie was received. 10475 Ltd. was alleged to have received notice of the incidentby virtue of the fact that it and Perennial were related companies having the same office address at 272 Torbay Road.

Respondent’scounsel submitted to the applications judge that there was no prejudice to 10475 Ltd. and Crombie in being added as defendants sinceboth had received prior notice by direct or indirect means of the respondent’s intention to pursue legal action before the limitation periodhad expired. [11] In his reasons, the applications judge referred to the decision of Orsborn J. in Clearwater Fine Foods Inc. v.

Day & Ross Inc.,2003 NLSCTD 106 , 2003 NLTD 106, 106 Nfld. & P.E.I.R. 187 [affirmed 2004 NLCA 3], which held that a statement of claimshould not be amended to add a party after the application limitation period has expired unless the test of “necessity” derived from theprovisions of rule 7.04(2)(

b) has been met. With respect to the necessity test, the applications judge referred to paragraphs 16 and 23 of

the reasons of Orsborn J.: [16] … [I]t must be determined that, as a matter of law, there cannot be a final determination of the issues raised as between the plaintiff and the defendant unless the proposed party is added as a defendant and is subject to the final and binding effect of the court’s decision. … [23] But these issues, and in particular Clearwater’s responsibility, if any, for Argentia Freezers, can be fully considered and adjudicated in the existing action without Argentia Freezers being added as a defendant.

The addition of Argentia Freezers as a defendant may provide another party from whom Clearwater can recover if Clearwater’s claim can be made out, but this opportunity cannot be equated to the necessity of Argentia Freezers being added as a defendant in order to ensure the complete adjudication of the issues between Clearwater and Day & Ross as those issues are raised and framed by the existing proceeding. [ 12 ] The reasons for the dismissal of the appeal by the Court were given in a Memorandum of Disposition as follows: The applications judge refused leave after deciding that he could only exercise his discretion if it were shown that the second respondent “ought to have been joined as a party” or that the second respondent’s “participation in the proceeding is necessary to ensure that all matters in the proceeding may be effectually adjudicated upon”.

The applications judge concluded that the appellant had not established either threshold requirement and it was, therefore, “not necessary to hear further from the parties on the issue of the exercise of the court’s discretion”. The applications judge here correctly summarized the necessity test as being “whether or not the original statement of claim can be effectively and completely adjudicated without the addition of the two proposed defendants”. [ 13 ] He also referred to the decision of this Court in Vardy v.

Dufour et al., 2008 NLCA 22 , 275 Nfld. & P.E.I.R. 247 as an affirmation of the necessity test discussed by Orsborn J. in Clearwater for the addition of defendants following the expiration of relevant limitation periods. At paragraph 13 of his reasons the applications judge cited the following reasons by this Court in Vardy : [24] … Where the limitation period for adding a defendant has expired, the purpose of rule 7.04(2)(

b) is not to allow for the joining of a separate action to an existing one, even if the actions may be related. Rather, the rule is directed to the adjudication of the original proceeding. These principles apply equally to an application to remove a party under paragraph (a). [25] The test, then, is whether the existing action as commenced, as between the original plaintiffs and defendants, can be effectually and completely adjudicated without the addition of the proposed party.

It is the matters and issues in the proceeding as framed before adding the proposed party that must be considered . (Emphasis added.) [ 14 ] The applications judge then considered the failure of Perennial to file its defence within ten days after service of the statement of claim, which he described at paragraph 25 as “… creating [potentially] a procedural impediment to the normal flow of original litigation”. He was referring to an argument apparently raised by the respondent in her application.

At paragraph 17, he also noted that discoveries had not taken place which in his opinion: … could have exposed the evidentiary parameters of the claim and now makes it difficult to determine whether or not the action can be effectually and completely adjudicated without the addition of the intended second and third defendants. [ 15 ] The applications judge turned his attention to the necessity test for the addition of parties by parsing the wording in rule 7.04 (2)(b), which provides that the court may “order any person … whose participation in the proceeding is necessary to ensure that all matters in the proceeding may be effectually adjudicated upon, be added as a party …”.

At this point he made no reference to the first ground in rule 7.04(2)(

b) for adding a party who or which “ought to have been joined as a party”. [ 16 ] The applications judge then set out his reasons for allowing 10475 Ltd. and Crombie to be added as defendants at para. 12: This is one of those cases where a proper and fair adjudication could not be arrived at with the incomplete information set out before me. Counsel for the defendant and intended second defendant submits that the court can make a complete adjudication on the liability of Perennial Management without the addition of the second intended defendant.

He states that the Court can determine the location of the fall, the duty of care owed by the defendant and whether that duty was breached and caused the injury to the plaintiff. I do not completely agree with that position. It seems to me that for the defendant to come under the Court of Appeal’s

interpretation of rule 7.04(2)(

b) it ought to have complied with rule 10.02(1) and filed its required defence in time with the result that the parties would have understood the relationships between all the players and have had the matter move forward to a final and just adjudication. To do otherwise could result in a potentially unfair adjudication.

Section 7.04(2)(

b) also permits the court on its own motion where it thinks just to do so order any person who ought to have been joined as a party . … (Emphasis added.) ISSUES [ 17 ] The issues on this appeal are: (

i) Should leave to appeal be granted with respect to an appeal from an interlocutory order adding parties as defendants following expiration of a limitation period? (ii) Did the applications judge err in granting leave to amend the statement of claim by the addition of defendants and following a

change of status of the original defendant after the expiration of the limitation of action period? LEAVE TO APPEAL [18] Leave to appeal is required since this appeal is from an interlocutory order by virtue of rule 57.02(1)(

a) of the Rules. As thereasons which follow will indicate, there appears to be some uncertainty as to the criteria for the addition of parties to proceedingsfollowing expiration of applicable limitation periods when applying

section 11 of the Limitations Act, SNL 1995, c. L-16.1 inconjunction with rules 7.04(2)(

b) and 15.02(1) of the Rules. [19] The focus of this particular appeal is whether certain parties, potentially liable at common law in an occupiers’ liability claim,but not named as defendants when the statement of claim was issued before the expiration of the limitation period, can be added asdefendants after its expiration.

It is recognized that most interlocutory orders will be the result of the exercise of discretion, and in suchinstances the hurdle to be overcome by the appellant is considerably higher when a review is sought of such a decision (see Langor v.Spurrell (1997), (NL CA), 157 Nfld. & P.E.I.R. 301 (NFCA) at paras. 32 and 33). [20] Rule 57.02(4) outlines grounds upon which leave to appeal an interlocutory order may be granted. They include circumstanceswhere: (

a) there is a conflicting decision by another judge or court upon a question involved in the proposed appeal and, in the opinion ofthe Court, it is desirable that leave to appeal should be granted; … (

e) the Court is of the view that the interests of justice require that leave be granted. [21] I am satisfied that there is some uncertainty as to the application of Rules 7.04(2)(

b) and 15.02(1) together with s. 11(1)(

d) ofthe Limitations Act dealing with the amendment of pleadings affecting the addition of parties as defendants following the expiration ofapplicable limitation periods which justifies further guidance from this Court. Additionally, the disposition of this appeal ultimatelyaffects the future viability of the respondent’s personal injury claim. Thus, the interests of justice require that leave be granted. RELEVANT LEGISLATION [22]

Section 11 of the Limitations Act permits the addition of parties following the expiration of the relevant limitation period: 11.

(1) Notwithstanding

section 17, where an action to which this or another Act applies has been commenced, the lapse of time limitedfor bringing an action is no bar to … (

d) the addition of a new party under the Rules of the Supreme Court, 1986 respecting a claim relating to or connected with the subject matter of the original action. …

(3) Where an application for an amendment to an action to which this or another Act applies is made after the expiration of thelimitation period for that action, the court may allow that amendment (

a) to change the pleading or originating process; or (

b) to substitute or change the plaintiff or defendant, provided that (

c) that amendment involves a non-prejudicial error and that it arises out of the facts set out in the original pleadings. (Emphasis added.) APPLICABLE RULES OF THE SUPREME COURT 15.02.

(1) The Court may grant an amendment under rule 15.01 at any time, in such manner, and on such terms as it thinks just.

(2) Notwithstanding the expiry of any relevant period of limitation, the Court may allow an amendment under rule 15.02(1) (

a) to correct the name of a party, notwithstanding it is alleged that the effect of the amendment will be to substitute a new party ifthe Court is satisfied that the mistake was genuine and not misleading or such as to cause any reasonable doubt as to the identity of theparty intending to bring or oppose the proceeding; ...

(3) The Court may allow an amendment under rule 15.02(2) notwithstanding the effect of the amendment will be to add or substitute anew cause of action, if the new cause of action arises out of the same or substantially the same facts as the original cause of action. …

7.04.

(1) No proceeding shall be defeated by reason of the misjoinder or nonjoinder of any party or person, and the Court maydetermine any question or issue in dispute in a proceeding so far as it affects the rights and interests of any party, saving the rights of anyperson who is not a party.

(2) At any stage of a proceeding the Court may, on such terms as it thinks just and either of its own motion or on application of any partyto the proceeding, … (

b) order any person, who ought to have been joined as a party or whose participation in the proceeding is necessary to ensure that allmatters in the proceeding may be effectually adjudicated upon, be added as a party, but no person shall be added as a plaintiff without the plaintiff's consent signified in writing or in such other manner as the Court mayorder. (Emphasis added.) ANALYSIS [23] The focus of this appeal is whether the applications judge erred in granting the respondent leave to add defendants to theproceeding and to amend the capacity or status of the original defendant and in his reasons for his decision.

At the outset it is clear thatthe respondent’s request was a simple matter arising from an honest and non-prejudicial error on her counsel’s part regarding the correctidentification of the owners of the two abutting retail premises adjacent to the icy walkway where her slip and fall occurred. [24] Although counsel for the parties based their submissions on decisions of this Court and the Trial Division particularly withrespect to rule 7.04(2)(b), the submissions before the applications judge should have commenced with consideration of section 11(1)(d)of the Limitations Act and then turned to rules 7.04(1) and (2) dealing with the addition of defendants to a proceeding commenced beforethe expiration of the relevant limitation period but sought to be added after its expiration. [25] The submissions of the parties and the reasons of the applications judge concentrated mainly on the necessity test for thejoinder of parties set out to rule 7.04(2)(b).

With respect, the granting of an application to add parties involving this particular cause ofaction involving occupiers’ liability should have been based upon section 11(1)(

d) of the Limitations Act and both grounds under rule7.04(2)(

b) which contemplates the addition of “any person, who ought to have been joined as a party” or was also justified by the secondground of “necessity” in rule 7.04(2)(b). [26] In its notice of appeal, counsel for 10475 Ltd. submitted that the decision of the applications judge “significantly alters thefactors to be considered in an application under Rule 7.04”. Counsel submits that decisions of this Court and the Trial Division hold thata “party should be added only if it is established that it is a necessary party for the effective and complete adjudication of the issues inthe original action”.

This was the test primarily relied upon by the applications judge which counsel for the appellants now argue that hefailed to properly apply. [27] Counsel for Crombie submitted in its factum supporting the grant of leave to appeal: 3. … (

b) The Court of Appeal in Clearwater and Vardy restricted the circumstances in which parties could be added to an action,following the expiry of the relevant limitation period, to those situations where the addition of the party is necessary for all matters in theproceeding to be effectually adjudicated upon as between the original plaintiff and original defendant. (

c) The effect of the decision of the Learned Applications Judge is to remove such restriction and permit the addition of a defendantfollowing the expiry of the relevant limitation period, where the proposed defendant is not necessary for all matters between the originalparties to be adjudicated upon. [28] Counsel for the appellants also contend that Perennial was the named owner/occupier on the face of the statement of claim andthat all aspects of the claim of occupiers’ liability could be adjudicated upon without the necessity for the addition of other parties.

Theysubmit they are being unjustly denied a limitation defence by permitting the respondent to add defendants and amend the statement ofclaim following the expiration of the limitation period. [29] The application to amend the status of Perennial from owner/occupier to property manager is a relatively insignificant aspect ofthis appeal in relation to the issue of adding parties. It represents the correction of an error discovered by the respondent following theissuance of the statement of claim.

The real concern for the respondent was the apparent failure to name the owners or occupiers of theabutting premises who, in the common law governing occupiers’ liability, would be the proper parties to be named as defendants in sucha proceeding. [30] The common law governing claims of occupiers’ liability recognizes that the duty of care owed to a visitor by an occupier“could also mean landowner if as owner he or she has responsibility for, and control over, the premises” (See Stacey v. AnglicanChurches of Canada (1999) (NL CA), 182 Nfld. & P.E.I.R. 1 (NFCA) at para. 30).

Here, the affidavit materialbefore the applications judge included information that a Pipers department store occupied the portion of strip mall owned by Crombieand that a fast food outlet occupied the abutting strip mall owned by 10475 Ltd. [31] It is significant on this appeal that the sole basis for opposing the granting of leave to add parties and to amend the Statement ofClaim is the loss of a limitation defence. There is no affidavit evidence or argument that suggests any actual prejudice caused by such

matters as undue delay. The appellants’ submissions on the law are based on the inability of the respondent to establish the necessity toadd defendants under the second ground in rule 7.04(2)(b). At this juncture it is useful to consider certain legislative and jurisprudentialconsiderations relating to our limitations statute and our Rules. [32] The English practice is that amendments will only be allowed to circumvent limitations defences in three circumstances. Theyare (

i) correcting the name of a party; (ii) altering the capacity in which a party sues; and (iii) allowing the addition or substitution of acause of action. These permitted exceptions can be found in our Rules of the Supreme Court, 1986 as rule 15.02(2)(a), rule 15.02(2)(b)and rule 15.02(3). However, our courts have not adopted the restrictive English practice. In Fowlows Wholesale Ltd. v.

CanadianNational Railway Co. (1986), 58 Nfld. & P.E.I.R. 13 (NFTD), Hickman C.J.T.D. said: The English courts have shown a reluctance to allow an amendment to pleadings which will have the effect of depriving a defendant of alegal defence by virtue of any statutory limitation period.

While such a rigid position has often caused English courts qualms ofconscience, they have frequently subverted the justice of the case, albeit with studied reluctance, to the very technical provisions of thestatute in question. [33] The difference in approach between the English and Canadian courts, when dealing with an issue of this kind, is summarizedby Bayda C.J.S. in Walbaum v. G & R Trucking Ltd. (1983), (SK CA), 144 D.L.R. (3d) 636 (SKCA) at page asfollows: The English jurisprudence exemplified by such cases as [Davies v.

Elsby Brothers, Ltd., [1960] 3 All E.R. 672] leaves little doubt aboutnot having taken the same turn as the Canadian jurisprudence, particularly with respect to the exception contained in the Weldon rule.…The English courts have adopted a conservative, strict constructionist approach, placing emphasis on the limitation periods. TheCanadian courts, on the other hand—particularly as demonstrated in the more recent cases—have sought to balance the two principles oflaw involved here and have perhaps adopted a more evenhanded approach.

In so doing, they have been more lenient in allowingamendments where no real prejudice resulted to the opposite party (apart from the right to rely on the statute of limitations), but at thesame time, have been careful not to unfairly attenuate the exacting force of the limitation periods. That approach, in my respectful view,is the right one. (Emphasis added.) [34] Similarly, Green J. affirmed this approach in Petten v. E.Y.E.

Marine Consultants (1994), (NL SC), 120Nfld. & P.E.I.R. 313 (NFTD): I do not subscribe to the view that because a party-amendment is expressly permitted outside a relevant limitation period [Rule 15.02(2)]and a similar provision is not expressed with respect to amendments generally, such a power does not exist in respect of other types ofamendments. Rule 15.02(1) must be given a broad and liberal

interpretation to ensure that the real matter in controversy between theparties is properly before the court. [35] In Petten, Green J. at paragraph 57 identified relevant factors for consideration within rule 7.04(2)(

b) such as (

i) avoidance ofmultiplicity of actions, (ii) the addition of an issue that might complicate or lengthen the trial of the existing action, (iii) the point in theprogress of the existing proceeding when the issue of adding parties arises, (iv) whether joinder would embarrass or delay the trial, or (v)whether it would be otherwise inconvenient or prejudicial to the other parties. [36] This purposive approach to dealing with the addition of parties after the expiration of relevant limitation periods wasentrenched by the express wording of

section 11 of the Limitations Act, and particularly in section 11(1)(

d) which provides that withrespect to a commenced proceeding, the expiration of the relevant limitation period is not a bar to the addition of a new party under theRules with respect to a claim relating to or connected with the subject matter of the original action. [37] In Marsh v. Imperial Oil, 2001 NFCA 32, 120 Nfld. & P.E.I.R. 346 Wells C.J.N.L. discussed the policy underlying

section 11of the Limitations Act at paragraph 34: [34]

Section 11 of the Limitations Act simply establishes a clear limitations policy with respect to commencing peripheral but relatedprocedures and allowing amendments to pleadings in an existing action, where limitations periods in relation to proceedings arising outof the factual matters involved in the action, have expired by the time the peripheral procedure or amendment is sought.

It is a simplepolicy: Such peripheral procedures are to be allowed unless, in the exercise of judicial discretion, relief would be refused on groundsother than the lapse of time, and such amendments may be allowed provided “that amendment involves a non-prejudicial error arisingfrom the facts set out in the original proceedings” (emphasis added by Wells C.J.N.L.). [38] In lockstep with section 11(1)(

d) of the Limitations Act are the opening words of rule 7.04(1) which read: No proceeding shall be defeated by reason of the misjoinder or non-joinder of any party or person …. (Emphasis added.) This provision is then followed by rule 7.04(2)(b), which empowers the court to add a party: (

i) who ought to have been joined; or (ii) whose participation is necessary to ensure all matter in the proceeding may be effectively adjudicated upon. [39] Underlying the application of rule 7.04(2)(

b) is the proposition that no proceeding shall be defeated by a misjoinder or non-joinder where the intention of a party to take proceedings was manifested by the commencement of a proceeding within the prescribedlimitation period. It is extended by s. 11 of the Limitations Act for situations outside a limitation period provided it arises out of facts“connected with the subject-matter of the original action”. That is the situation here. Further, the court is granted this authority to

enable it to “determine any question or issue in dispute … as it affects the rights and interests of any party”. [40] With regard to the addition of plaintiffs after a limitation period had expired, Green J. in Petten dealt with the addition of twocompanies which were potential recipients of damages if liability was found against one or more of the defendants. He wrote atparagraph 104: The facts upon which any right to recovery on the part of ESB or Enterprises would depend are the same as those upon which theplaintiffs rely.

On the face of it, there is good reason to have the corporate manifestations of the plaintiffs joined as parties so as toensure that if liability is found at the end of the day, recovery will not be frustrated simply because the party in whom the actual right tocompensation resided was not before the court. [41] There is a consistency in the reasons expressed in Marsh with those expressed by Green J. in Petten which allow forconsideration of factors such as prejudice, fairness and avoidance of duplicitous proceedings in the exercise of discretion to allow theaddition of parties as well as amendments after the expiry of the limitation period to permit the issues arising under the original statementof claim to be adjudicated upon.

The issue of prejudice was at play in Diamond Estate v. Robbins, 2006 NLCA 1, 253 Nfld. & P.E.I.R.16 (“Diamond Estate”). The defendant in a motor vehicle negligence case attempted to file a counterclaim after the expiry of thelimitations period under the Survival of Actions Act, RSNL 1990, c. S-32 (the “SAA”).

In the course of deciding whether subsection 11(1)of the Limitations Act applied to actions under the SAA, Mercer J.A. reviewed its purpose and effect: [58] The concluding words of s-s. 11(1) establish a significant requirement for the type of counterclaim permitted by that subsection.It must be one "respecting a claim relating to or connected with the subject matter of the original action." The right to commenceunrelated counterclaims will continue to be subject to the limitation periods applicable thereto. … [60] Its internal context obviously includes the other subsections of s. 11.

Subsection (2) in particular refers directly to s-s. (1) andprovides that the latter does not bar the exercise of judicial discretion to refuse relief on grounds unrelated to the expiry of a limitationperiod.

That is the logical corollary to s-s. (1). … … [75] Though the Rules and those of other Canadian jurisdictions now differ in certain respects from the earlier English rules on whichthey are based it is difficult to improve upon the clear direction provided by the early English practice cases: It is a well established principle that the object of Courts is to decide the rights of the parties, and not to punish them for mistakes theymake in the conduct of their cases by deciding otherwise than in accordance with their rights. … I know of no kind of error or mistakewhich, if not fraudulent or intended to overreach the Court ought not to correct, if it can be done without injustice to the other party.

Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment asa matter of favour or of grace. … It seems to me that as soon as it appears that the way in which a party has framed his case will not leadto a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected, if it can be done withoutinjustice, as anything else in the case is a matter of right. … Cropper v. Smith (1884), 26 Ch. D. 700 at 710-711 (C.A.), per Bowen, L.J.

However negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should beallowed if it can be made without injustice to the other party. There is no injustice if the other side can be compensated by costs. Clarapede v. Commercial Union Association (1883), 32 W.R. 262 at 269 (C.A.), per Brett M.R. [76] Those principles were followed in this jurisdiction in Snow v. Kashyap, (1995), (NL CA), 125 Nfld. & P.E.I.R.182 (NLCA); Holloway v. Marystown (Town) (No. 1), (1984), 58 Nfld. & P.E.I.R. 208 (Nfld. Dist. Ct.); and Petten v. E.Y.E.

MarineConsultants at paras. 85-90. Instances of this approach in other Canadian jurisdictions can be seen, for example, in Baumhour v.Williams (1977), (NS CA), 22 N.S.R. (2d) 564 (C.A.); Stoodley v. Ferguson, 2001 ABQB 436 and Canada v. Mandel(1996), 194 N.R. 50. (Emphasis added.) At paragraph 77, Mercer J.A. focused on the issue of prejudice which the applications judge in that proceeding had held to be absent.

The appellant argued that the length of delay in adding a cross-claim or counterclaim after expiration of the limitation period and fiveyears after commencement of the proceeding should create a presumption of prejudice, thus eliminating any requirement to prove actualprejudice. In rejecting this submission, Mercer J.A. wrote at paragraph 80: … procedural relief ought to be granted unless the opposing party can demonstrate actual prejudice.

Placing the burden of proof uponthe opposing party is reasonable as it is in accord with the general principle that, where the facts necessary to establish a proposition arepeculiarly within the knowledge of one of the parties, that party should bear the burden of proof. Accordingly, where remedialprocedural relief is sought, it ought not to be presumed from lengthy delay alone that the opposing party has suffered prejudice.

Unlessthe totality of facts warrant an inference of prejudice it should be incumbent upon the opposing party to offer proof of actual prejudice. [42] It seems clear that the express language of these statutory provisions reflects the views expressed in the Newfoundland LawReform Commission Working Paper on Limitation of Action (St. John’s: Newfoundland Law Reform Commission 1985). It is useful toreview the principles discussed by the Commission on the matter of the post-limitation amendment of pleadings. The Commission’sworking paper cited Professor G.O. Watson in 53 Can. Bar.

Rev. 237 listing the threefold purpose of limitation statutes as being (i)provision of finality to the commencement of proceedings; (ii) protection of potential defendants from undue delay or passage of timeand (iii) promoting effective functioning of the legal system.

[ 43 ] The Commission’s paper specifically quoted the following passage of Professor Watson’s commentary at p. 222: While pleadings perform a number of functions, clearly their most important purpose is to give the adversary fair notice of the case alleged against him so that he will be able to prepare his own …. But in modern procedure the device of pleadings does not stand in isolation. An integral and very important aspect of the rules relating to pleadings, and the constitution and conduct of a law suit generally, are the rules relating to amendment. … Their purpose is primarily twofold.

Firstly, to permit the correction of non-prejudicial errors that occur in the constituting or conduct of proceedings. Secondly, to permit an action to be reshaped as it develops so that ultimately it will be decided on the merits on the basis of the real issues between the parties. [ 44 ] With respect to the addition or substitution of parties the Commission made the following recommendation at pages 242-243: 2.

In any action, the Court should be given a discretion to allow for the amendment of any pleading or other proceedings, or an application for change of party, upon such terms as to costs or otherwise as the Court deems just, as long as the amendment or change involves a non-prejudicial error and arose out of the facts set forth in the original pleadings, notwithstanding that between the time of the issue of the writ and the application for amendment or change of party, a fresh cause of action disclosed by the amendment or the cause of action against the new party would have been barred by a limitation period. [ 45 ] The applications judge at paragraph 22 of his reasons raised the issue of prejudice as being a relevant consideration but he did not do so in the appropriate context.

He focussed on the fact that the original defendant Perennial had failed to file its defence within ten days from the date of service of the statement of claim. However, the defence was not required to be filed before the expiry date of the limitation period. Instead he could have simply relied upon (

i) the absence of undue delay in applying for the addition of parties and the amendment (ii) the fact that given the nature of the particular cause of action, the appellants were necessary and proper defendants and (iii) the omission of the appellants as defendants was a non-prejudicial error. [ 46 ] Ultimately, he also directed his mind to a portion of rule 7.04(2)(

b) which allows “the Court … on its own motion … to order any person who ought to have been joined as a party … be added as a party”. He found this to be a proper ground to add the defendants and he was correct in that conclusion. [ 47 ] While this first portion of Rule 7.04(2)(

b) has been narrowly construed to apply in rare cases such as those involving joint contractors, following the reasoning of Lord Devlin in the Amon v.

Raphael Tuck & Sons Ltd. , [1956] 1 Q.B. 357, [1956] 1 All E.R. 273 , I see no reason why, by analogy, this ratio could not also apply to an occupiers’ liability case where owners and occupiers at common law can be held to be jointly and generally liable for a breach of duty of care respecting dangerous premises. [ 48 ] The applications judge was on the right footing in considering the matter of prejudice and obviously felt that in all of the circumstances here the appellants ought to have been joined given the nature of this occupiers’ liability claim where the genuine problems of identification of the owners of the abutting properties were encountered by the respondent.

The need for the respondent as a visitor to the abutting strip malls to have the owners of the abutting properties joined in order for those responsible for the ownership, care and maintenance of these properties to be before the court was obvious from the description of the cause of action in the original statement of claim.

There can be no doubt that the status of the appellants as alleged owners of the abutting properties would lead one to conclude that they ought to have been added from the outset. [ 49 ] The scheme of the Limitations Act mandates a purposive approach to an exercise of discretion which includes considerations of necessity and prejudice including undue delay. An underlying principle remains as to whether the addition of parties like any other substantive amendment can be found to be related to or arising from the original cause of action as pleaded.

However, when parties seek to add parties after limitation periods have expired, discoveries have taken place, proceedings are in a trial-ready state and the essential aspects of the original cause of action are in place, the existence of proper grounds for an amendment to add parties becomes elusive. The ultimate decision by an applications judge will nevertheless be based on an exercise of discretion. [ 50 ] Counsel for the appellants relied upon the decisions in Clearwater and Vardy to support their position on this appeal.

However, these cases dealt solely with the issue of whether the applying parties had established that it was necessary to add defendants to ongoing proceedings, which would have involved consideration of new causes of action not arising out of the same originally pleaded fact scenario. [ 51 ] In Clearwater , the cause of action related to a contract of carriage of Clearwater’s shrimp in refrigerated trailers of the defendant Day & Ross Limited. Day and Ross Limited joined Argentia Freezers as a third party seeking indemnity with respect to allegedly improper loading of its trailers.

At a late stage of the proceeding, Clearwater sought to claim contractual indemnity against its agent Argentia Freezers. Argentia Freezers had initially stored the shrimp in its warehouse freezers and later loaded the cargo into the Day & Ross trailers. The indemnity claim by Clearwater against Argentia Freezers was found to be peripheral issue to the core issues in the litigation as it had been pleaded. Clearwater was unable to meet the “necessity” test.

It did not arise out of the originally pleaded fact scenario. [ 52 ] This Court affirmed the Clearwater decision with the following memorandum of disposition: The applications judge refused leave after deciding that he could only exercise his discretion if it were shown that the second respondent “ought to have been joined as a party” or that the second respondent’s “participation in the proceeding is necessary to ensure that all matters in the proceeding may be effectually adjudicated upon”.

The applications judge concluded that the appellant had not established either threshold requirement and it was, therefore, “not necessary to hear further from the parties on the issue of the exercise of the court’s discretion”. [ 53 ] The result in Clearwater is not surprising. The plaintiff had truly slept on its right to seek indemnity against its own agent and could not expect discretionary relief in its favour. The application by Clearwater to add Argentia Freezers as a defendant was made in 2003, six years after the proceeding was commenced.

The proposed amendments were not to add a new party to the action since

Argentia Freezers was already joined as a third party. Instead, the application sought to add an additional capacity of defendant to Argentia Freezers, already a third party. However, a new cause of action was being pursued by Clearwater against its own agent against which it had not claimed as a co-defendant from the outset. [ 54 ] In Vardy , the plaintiff sought to join a specialist physician and a medical facility in St. John’s to an existing proceeding that was already progressing towards trial. The physicians and the Clarenville medical facility had been sued within the relevant limitation of action period.

The patient plaintiff claimed that he had suffered injury resulting from medical negligence at Clarenville but later sought to make a further claim for alleged negligence by physicians in St. John’s while attempting to remedy his medical difficulties which arose at the Clarenville facility. The proceeding involving the St. John’s physicians and hospital was commenced beyond the expiration of the limitation period. [ 55 ] An applications judge had allowed an ex parte application to add the St. John’s physician and hospital as defendants.

This Court allowed an appeal and removed the new defendants on the grounds that the “necessity” test had not been met. Once again, the addition of defendants involved a new cause of action based on new factual allegations not related to the liability of the existing defendants in relation to the original treatment at the Clarenville health facility, which was the subject of the original cause of action. [ 56 ] These cases are distinguishable from the case on appeal.

The intended effect of the application in this case was to have the statement of claim amended to describe the capacity of the sole defendant Perennial as “property manager of all or part of the Premises” rather than being described as “owner and/or occupier of all or part of the Premises”. The additional defendants would replace Perennial in the capacity as “owners” of the abutting properties. What was actually taking place was what Green J. termed in Petten to be a “capacital correction” affecting Perennial occurring under rule 15.02(1)(

b) and a “substantive addition” of parties under rule 7.02(2)(b). [ 57 ] Here, the limitation period had only recently expired when the respondent discovered the need to add parties and make a minor amendment to the statement of claim. [ 58 ] This appeal involves a simple issue as to whether the applications judge erred by permitting two additional defendants to be added to an owner/occupiers’ liability claim after the expiry of the limitation period. The pleaded cause of action remained substantially unchanged.

A party which was incorrectly alleged in the original statement of claim to be “the owner and/or occupier of the Premises” was named as a sole defendant. The obvious intention of the respondent was to sue all parties associated with ownership of two abutting properties. The cause of action, as reframed, continues to arise out of the originally pleaded fact scenario and in s. 11(1) (

d) of the Limitations Act is “related to or connected with the subject matter of the original action”. Accordingly, the expiration of the limitation period is irrelevant. [ 59 ] In her application to amend, the respondent not only explained the problems of identification of the proper parties but also submitted that the intended appellants had actual notice of the prospects of litigation against them prior to the expiration of the limitation period. The respondent submitted on the appeal that there was no prejudice to the additional defendants.

The facts show that the respondent was well intentioned from the occurrence of the incident to pursue her claim expeditiously but fell victim to a “non- prejudicial error” in identifying the proper defendants. [ 60 ] This information came to light shortly after the service of the statement of claim, when the respondents were advised by counsel for Perennial that it was the property manager for both strip mall properties but was neither an owner nor an occupier.

The respondent in her submission to the applications judge outlined the difficulties that were encountered in confirming the correct parties responsible for the ownership and occupation of the adjoining walkway. [ 61 ] The applications judge’s decision to allow the addition of the appellants as defendants should have been based upon (

i) the nature of amendment to add defendants who ought to have been joined in the proceeding based on the nature of the cause of action; (ii) the necessity to have the property owners as parties to the litigation accepting that the plaintiff had justification for failing to identify them before the limitation period expired; (iii) the lack of prejudice to the additional defendants who had received prior timely notice of the claim in relation to the date of occurrence, which allowed them to investigate and defend their position on a timely basis; and (iv) the prejudice to be suffered by the respondent if the property owners were not before the court in order to be accountable for any proven negligence on their part. [ 62 ] With respect, the applications judge incorrectly focused on the failure of the defendant to file its defence under rule 10.02(1)(

b) as support for granting leave.

Since the respondent had chosen to wait until the last days of the limitation period before commencing and serving the statement of claim, an opportunity was lost to determine whether all proper parties had been named by commencing and serving the claim much earlier which would have resulted in the filing of a statement of defence well ahead of the limitation period expiration thus clarifying the matters of property ownership and occupation. [ 63 ] Nevertheless, the applications judge was entitled to take into account the difficulties which the plaintiff faced in correctly identifying the proper owners and property manager of the two abutting strip malls. [ 64 ] The appellants asserted a rather specious argument to the applications judge that the claim as pleaded against Perennial, a property management company, stands on its own because it outlined a fully developed cause of action against an “owner/occupier” reflected by “the location of the fall, the duty of care owed by the defendant and whether the duty of care was breached and caused the injury to the plaintiff”.

They say that the claim could be tried with regard only to whether the claimant had a valid claim at law against Perennial without the participation of the actual owners of the two properties. [ 65 ] However, I am satisfied that the defendants “ought to have been added” after the limitation period has expired given that (

i) the facts show that the plaintiff clearly intended to name all of the proper parties to the pleaded occupier’s liability cause of action and (ii) the amendment was not so late in the litigation that it created actual prejudice to the original defendant. This factor was mentioned by the applications judge in one sentence of his reasons as being applicable. He did not elaborate on the application of the rule to the facts surrounding this application. Nevertheless, he was correct to consider that this ground under rule 7.04(2)(

b) as being applicable to the facts.

[ 66 ] Additionally, I am also satisfied that the addition of the two defendants by the applications judge meets a purposive

interpretation of the words “necessary to ensure that matters in the proceeding may be effectually adjudicated upon …” found in rule 7.04(2)(

b) of the Rules which is discussed in these reasons. [ 67 ] The fact that this application and this subsequent appeal were based on rather tenuous grounds raises concern that there is misunderstanding of how Rule 7.04(2)(

b) is intended to operate in the conjunction of s. 11(1) (

d) of the Limitations Act . The underlying principle is a simple one. The expiration of a limitation of actions period does not preclude the future participation of an unnamed party. Parties may be added whether they are plaintiffs or defendants, third parties or counter-claimants outside the relevant limitation period as long as their participation relates to or is connected with the subject matter of the original proceeding. Their participation must be necessary so that the matters arising in the original proceeding as pleaded, can be fully adjudicated upon.

Parties ought to be added when the nature of the cause of action, makes it clear that they ought to have been joined at the commencement of the proceeding. Consideration of factors such as necessity for the participation of previously unnamed parties along with the presence or absence of actual prejudice are relevant to the decision of an applications judge when dealing with similar requests for amendments.

SUMMARY AND DISPOSITION [ 68 ] The applications judge was correct in allowing the addition of defendants together with the amendment to change the capacity of the original defendant. Both grounds under rule 7.04(2)(

b) were applicable. The appellants failed to establish actual prejudice arising from the amendments. [ 69 ] For the reasons set forth, leave to appeal is granted. However, the appeal is dismissed, albeit for reasons somewhat different from those of the applications judge. The respondent shall be entitled to costs based on Column 3 of the Scale of Costs, Appendix to Rule 55 of the Rules of the Supreme Court, 1986 . __________________________ M. F. Harrington J.A. I Concur: M. H. Rowe J.A. I Concur: ________________________ C. W. White J.A.