Overview
In Dealer’s Choice Preferred Collision Centre Inc. v. Kircher, 2020 ONSC 7557 (“Kircher”), the Ontario Superior Court of Justice confirmed that where a plaintiff seeks to correct a misnomer by substituting an entity for itself, the question is whether the proposed “new” plaintiff was an intended plaintiff when the proceeding was commenced and the defendant knew or ought to have known of which entity was pointing its “litigating finger” in the defendant’s direction. Notably, Master Graham held that “[t]he fact that the named plaintiff […] has no legal status […] does not justify an order correcting a misnomer.”
Factual Background
On May 6, 2013, John Keen and Dealer’s Choice Preferred Collision Centre Inc. (“Dealer’s Choice”) entered into a contract with Dr. Peter Kircher, 918402 Ontario Inc. (“918 Ontario”), and Downtown Fine Cars Inc. (“DFC”) pursuant to which 918 Ontario agreed to refer all customers requiring body and collision services for damaged Porsche and Audi vehicles to Dealer’s Choice for a ten-year period (the “Agreement”).
The plaintiff, Dealer’s Choice, commenced an action against the defendants, Dr. Kircher, 918 Ontario, and DFC, on July 11, 2017 for breach of the Agreement. Dr. Kircher, 918 Ontario, and DFC defended the action and, in turn, counterclaimed against Dealer’s Choice and Mr. Keen alleging breach of the Agreement.
As it turns out, Dealer’s Choice (i.e., the party named in the Agreement and as the plaintiff in the lawsuit) is not an incorporated entity and has no other legal status. Dealer’s Choice, therefore, brought a motion to amend the title of proceedings to correct an alleged misnomer by substituting “Downtown Auto Collision Centre Inc. o/a Dealer’s Choice Preferred Collision Centre Inc.” (“Downtown Auto”) for the current plaintiff, Dealer’s Choice. The business name “Dealer’s Choice Preferred Collision Centre” was not registered by Downtown Auto for the period between March 6, 2012 and March 5, 2017.
Substituting a Plaintiff on the Basis of Misnomer
Under Rule 5.04(2) of the Rules of Civil Procedure, RRO 1990, Reg 194, the court may add, delete, or substitute a party to correct the name of a party incorrectly named, unless prejudice would result that could not be compensated for by costs or an adjournment.
Master Graham quoted from the decision in Corp. of Township of North Shore v. Grant, 2018 ONSC 503 for a summary of the circumstances in which a claim may be amended to substitute a plaintiff on the grounds of misnomer:
[21] [T]he jurisprudence is clear that an amendment will be permitted where there is a “coincidence” between a plaintiff’s intention to sue and the intended defendant’s knowledge of the plaintiff’s intention. In Lloyd v. Clark, 2008 ONCA 343, the plaintiff was denied leave by the motion judge to name the Regional Municipality of Durham as a defendant in place of the Town of Ajax and the Corporation of the Town of Whitby. In a brief endorsement allowing the appeal, the Court of Appeal held:
The case law amply supports the proposition that where there is a coincidence between the plaintiff’s intention to name a party and the intended party’s knowledge that it was the intended defendant, an amendment may be made despite the passage of the limitation period to correct the misdescription or misnomer.
[22] Although Lloyd was a case in which a plaintiff sought to substitute a defendant it has frequently been applied in cases in which a plaintiff seeks to substitute or add a plaintiff: see, for e.g., Streamline Foods v. Jantz Canada Corp., 2010 ONSC 6393 (Ont. S.C.J.), aff’d 2011 ONSC 1630 (Ont. Div. Ct.), 2012 ONCA 174 (Ont. C.A.); Tetreault v. Nussbaum, 2015 ONSC 6226 (Ont. S.C.J.); Asset Strategy Corp. v. Rodinia Lithium Inc., 2016 ONSC 5337 (Ont. S.C.J.).
[23] Thus, an amendment to add the name of one or more plaintiffs to a statement of claim should be permitted notwithstanding the expiry of a limitation period where the court is satisfied that the plaintiffs sought to be added to an action were intended plaintiffs prior to the expiration of the limitation periods, that the defendant knew that they were intended plaintiffs, and where no prejudice arises that cannot be compensated for in costs. [emphasis added]
The plaintiff’s action is based exclusively on breach of the Agreement. The evidence before the court demonstrated that the Agreement was reached after a period of negotiation between the parties. Crucially, by letter dated May 1, 2013, the defendants, through counsel, expressly rejected the inclusion of the proposed substituted plaintiff, Downtown Auto, as a party to the Agreement because that company had been stigmatized after its principal, Mr. Keen, was charged with multiple counts of fraud.
In the seminal decision in Davies v. Elsby Brothers, Ltd., [1960] 3 All ER 672, the English Court of Appeal stated that “one of the factors which must operate on the mind of the recipient of a document […] is whether there is or is not another entity to whom the description on the writ might refer.” According to Master Graham, “[i]t defies logic for the plaintiff to suggest that the defendants might reasonably have thought that they were really being sued on the Agreement by Downtown Auto Collision Centre Inc., an entity that their counsel had, on May 1, 2013, specifically said could not be a party to the Agreement and which was ultimately excluded from it.” There was no reason for the defendants to think that Downtown Auto was the actual plaintiff pointing the “litigating finger” at them for breach of the Agreement.
The court was not prepared to correct the alleged misnomer simply because the named plaintiff has no legal status:
[17] The fact that the named plaintiff Dealer’s Choice Preferred Collision Centre Inc. has no legal status also does not justify an order correcting a misnomer. Plaintiff’s counsel acknowledged during argument that the defendants had no reason to think that the named plaintiff Dealer’s Choice was not an incorporated legal entity. This makes sense; if Keen himself was unaware that Dealer’s Choice had no legal status when he entered into the May 6, 2013 Agreement, the defendants certainly could not have been expected to know.
As Master Graham recognized, “[t]he fact that all parties to the May 6, 2013 Agreement were mistaken as to the status of Dealer’s Choice would not have given the defendants any reason to think that they were really being sued by Downtown Auto.” The court dismissed the plaintiff’s motion.
Comment
The decision in Kircher is noteworthy as a good summary of the law of misnomer, particularly in those rare situations where a plaintiff seeks to amend or substitute another entity for itself. The fact that the named plaintiff has no legal status is not relevant to the court’s analysis where the proposed “new” plaintiff was not an intended plaintiff at the time that the proceeding was commenced and where the defendant had no reason to believe that some other entity was, in fact, pointing its “litigating finger” in its direction.
