ONTARIO – Where a plaintiff seeks to amend or substitute another entity for itself, the Court should not make the order unless the “new” plaintiff was an intended plaintiff when the action was commenced, and the defendant reasonably ought to have been aware of which entity was “pointing its litigating finger” in its direction.

Dealer’s Choice Preferred Collision Centre Inc. v. Kircher et. al.
2021 ONSC 8261,December 15, 2021
Ontario Divisional Court, D.L. Corbett J.

D.L. Corbett J. heard an appeal from Associate Justice Graham’s decision, 2020 ONSC 7557, dismissing a motion by the plaintiff, DCPCC Inc., to change its name on the basis that it was discovered after the action was commenced that DCPCC Inc. was not an incorporated entity and had no legal status: Graham A.J. para. 6.

The plaintiff sought to change its name from DCPCC Inc. to Downtown Auto Collision Centre Inc. o/a DCPCC Inc.

Rule 5.04(2) of the Rules of Civil Procedure allows for the substitution or the correction of the name of a party, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

Graham A.J. held that “the defendants, on receiving and reviewing the statement of claim, would have had no reason to think that the plaintiff pointing the “litigating finger” at them was other than the named plaintiff Dealer’s Choice Preferred Collision Centre Inc. The plaintiff’s entire action is based on the May 6, 2013, Agreement with the defendants and the negotiated exclusion of Downtown Auto Collision Centre Limited from the Agreement eliminated any possible reason for the defendants to consider that Downtown Auto was the intended plaintiff.” [emphasis added]: para. 3.

On that basis, Graham A.J. dismissed the plaintiff’s motion to substitute itself for another plaintiff. On appeal to the Divisional Court, Justice Corbett considered the governing legal principles.

In Sorokataya v. Keith, 2010 ONSC 4453 and Corp. of Township of North Shore v. Grant, 2018 ONSC 503, the Courts held that:

1. … where a plaintiff seeks to amend or substitute the name of a defendant on the basis that the defendant has been misnamed, the issue is whether the intended defendant was given notice of the claim and ought reasonably to have known that the plaintiff’s “litigating finger” was pointed at them (Sorokataya, 9); and
2. … where a plaintiff seeks to amend or substitute another entity for itself, the issue is whether the “new” plaintiff was an intended plaintiff when the action was commenced and the defendant reasonably ought to have been aware of which entity was pointing its litigating finger in its direction (North Shore v. Grant, 23).

Justice Corbett also noted that in Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 2001 CanLII 8620 (ON CA): paras. 48-49, the Court of Appeal applied the same principles. Rule 5.04(2) allows the Court to make an order where the plaintiff seeks to correct a misnomer in the sense that the proceedings were commenced in one name but in error, were commenced in another name.

As the Court of Appeal stated in the Mazzuca case at para. 49, “the power conferred under subrule 5.04(2) to amend a pleading to change parties is not confined to misnomers of the misdescription type. It extends to the power to substitute parties and, as well, to correct in proper cases the naming of a party by mistake.”

Returning to the present case, Justice Corbett noted that the appeal from Graham A.J. was on questions of fact and mixed questions of fact and law to which the standard of “palpable and overriding error” was applicable: para. 4.

The Divisional Court dismissed the appeal from the Associate Justice on the following basis:

1. Graham A.J. found that the defendant had expressly refused to contract with the proposed plaintiff. Therefore, it could not be said that the defendant knew that the proposed plaintiff was “pointing the litigation finger.” There was no palpable or overriding error in that finding: 7-8.
2. The named plaintiff had the burden to satisfy the Associate Justice that the error in the name of the plaintiff was a matter of misnomer. The Associate Justice was required to decide, on a final basis, whether Downtown Auto was the intended plaintiff all along, and that the defendants knew this or reasonably ought to have known this, which is what Graham A.J. did: 9.