Amending civil pleadings

There is a very broad right to amend a civil pleading. Such right shall not be defeated unless the amendment itself causes non-compensable prejudice.

The point is illustrated in today's decision in  Iroquois Falls Power Corp. v. Jacobs Canada Inc., 2009 ONCA 517 which provides:

[15]          Rule 26.01 of the Rules of Civil Procedure governs amendments to pleadings.  It uses mandatory language:

On motion 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.

[16]          Rule 26.01, therefore, dictates that the court must grant an amendment to a pleading unless the party opposing the amendment shows that:

              If the amendment was granted, the party opposing the amendment would suffer non-compensable prejudice, that is, prejudice that could not be compensated for in costs or by an adjournment; and

·                    The prejudice would result from the amendment.

[17]          My quarrel with the motion judge's decision is that he addressed the first element, non-compensable prejudice, but not the second element, whether that prejudice would result from the amendment.

[18]          The motion judge identified three items of non-compensable prejudice:

·                    Two material witnesses for the defendants had died;

·                    Iroquois Falls changed the turbines at the plant, which made it impossible to determine whether high nitrate oxide levels caused the cracks in the casing of the steam generators; and

·                    Many relevant documents had been destroyed.

[19]          I accept that these three items of prejudice are the sorts of prejudice that may not be compensable by costs or an adjournment.  And, in this case, I defer to the motion judge's findings that these items amounted to non-compensable prejudice.

[20]          However, to defeat a motion to amend, the party resisting the amendment must show that the non-compensable prejudice it relies on "would result" from the amendment. It must establish a link between the non-compensable prejudice and the amendment.  It must show that the prejudice arises from the amendment.   

[21]          This necessary link is missing in this case.  That is because the non-compensable items of prejudice found by the motion judge already existed at or immediately after the time that the original statement of claim was issued.  These items of prejudice, therefore, would not result from the amendment. 

·                    Two material witnesses for the defendants had died, but one died in 1998 and the other in 2003;

·                    Iroquois Falls had changed the turbines, but it did so in the spring of 2003;

·                    Relevant documents belonging to the defendants were destroyed, but their destruction occurred during Hurricane Katrina in August 2005.

[22]          The original statement of claim was issued in June 2005, well within a six-year limitation period.  The first two items of prejudice existed well before Iroquois Falls started its action.  The third item of prejudice – the destroyed documents – occurred a month before the defendants delivered their statement of defence and thus likely before they began assembling their documents for the lawsuit.  These items of prejudice did not arise from the amendment.  They existed whether or not Iroquois Falls sought to amend its statement of claim.
...
[29]          ... .  The defendants did not change their position in reliance on the absence of a claim for breach of contractual warranty.  They knew from the outset that whether Iroquois Falls sued for negligent design or breach of warranty, the key question in the litigation was the same: what caused the cracking?  The prejudice the defendants relied on was pre-existing prejudice.  It was not prejudice that would result from Iroquois Falls' proposed amendment to its statement of claim.  I therefore disagree with the motion judge that the defendants incurred the sort of prejudice justifying a refusal to grant the amendment. 
James Morton
1100-5255 Yonge Street
Toronto, Ontario
M2N 6P4

416 225 2777