Civil Litigation - Admissions [R51]. Shwaluk v. HSBC Bank of Canada
In Shwaluk v. HSBC Bank of Canada (Ont CA, 2023) the Court of Appeal considered granting leave to amend a Claim, here in the context of withdrawal of an factual or a legal admission:
 An admission may relate to a fact or to a legal consequence − a position − alleged to flow from the fact. In determining whether a proposed amendment withdraws an admission in a pleading, the nature and extent of the admission is a key consideration. .... Ash v. Ontario (Chief Medical Officer)
 The motion judge dismissed the motion. She essentially gave two reasons for doing so.
 First, she held the proposed amendments seek “to withdraw the admission by [Ms. Shwaluk] that she did not submit an application for LTD benefits to Sun Life”. She noted that withdrawal of an admission is governed by r. 51.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and requires the moving party to demonstrate that the proposed amendment raises a triable issue, the admission was inadvertent or resulted from erroneous instructions, and the withdrawal will not result in non-compensable prejudice to the other party. The motion judge found that Ms. Shwaluk did not satisfy any of these criteria.
(1) Did the motion judge err in concluding the amendments sought to withdraw an admission?
 In my view, the motion judge failed to use the correct legal test and erroneously determined that Ms. Shwaluk sought to withdraw an admission. That erroneous determination resulted in the motion judge applying the incorrect test to the question of whether the amendments should be allowed. Appellate interference is therefore justified, as a judge errs in law when they apply the wrong legal test: Canada (Director of Investigation and Research) v. Southam Inc., 1997 CanLII 385 (SCC),  1 S.C.R. 748, at para. 35.
(a) The Amendments Did Not Withdraw an Admission
 The motion judge’s reasons for concluding that the amendments involved the withdrawal of an admission were brief. She simply stated that the “amendments proposed by [Ms. Shwaluk] are an attempt … to withdraw her admission; that she never filed an application for LTD [benefits]”. The only paragraph of the amendments she specifically referred to was (underlining indicates the amended portion):
[Ms. Shwaluk] did not submit an application/formal proof of loss claim form for LTD benefits to Sun Life, pending resolution of her STD benefits with her employer. However, [Sun Life] was put on notice by June 22, 2015 that [Ms. Shwaluk] was seeking short-term and long-term disability benefits. With respect, the motion judge erred in concluding that this amendment constituted a withdrawal of an admission.
 To determine whether an amendment withdraws an admission, two matters need to be considered: (i) the nature and extent of the admission in the original pleading; and (ii) the difference between the original pleading and the proposed amended pleading concerning what was admitted.
 In addressing these matters, it is important to recognize that admissions can pertain to alleged facts or to the legal conclusions or consequences (i.e., the party’s positions) alleged to follow from the alleged facts, or to both.
 Therefore, when considering the nature and extent of an admission, a court must consider whether the admission does one, or both, of the following: makes a “deliberate concession to a position taken by” the other party; or, accepts that “a set of facts posed by” the other party is correct: Yang v. The County of Simcoe, 2011 ONSC 6405, at para. 46 (emphasis added).
 That admissions may relate to facts or positions follows from the nature of the pleadings process. Pleadings are required to set out the material facts on which a party relies for their claim or defence. However, they may also contain conclusions of law if the material facts supporting them are pleaded: rr. 25.06(1) and (2). In other words, pleadings must allege facts, but they also, permissibly and routinely, allege the positions said to follow from those facts.
 For example, a plaintiff’s pleading may describe what the defendant did or failed to do, and it may also plead that such behaviour was negligent. The former are allegations of fact, the latter a position as it is a conclusion of mixed fact and law: Housen v. Nikolaisen, 2002 SCC 33,  2 S.C.R. 235, at paras. 26-29. Similarly, a pleading may allege that the defendant fired the plaintiff with a specific amount of notice − an allegation of fact − but may also allege that doing so was a wrongful dismissal, a position as it is a proposition of mixed fact and law: Dupuis v. Edmonton Cellular Sales Ltd., 2006 ABCA 283, 397 A.R. 376, at para. 6.
 Responsive pleadings (defences and replies) may address both the factual allegations and the conclusions or positions in the pleading being responded to, including by making admissions. Efficiency and fairness in the civil litigation process is advanced when this occurs. Although the Rules of Civil Procedure regarding statements of defence and reply pleadings refer to admissions of alleged facts found in the pleading to which they respond (see rr. 25.07(1) and 25.09(1)), nothing in the Rules prevents a party from also admitting, or denying, a legal conclusion or position that has been alleged. For instance, a defendant could admit that they behaved as the plaintiff contends and deny the position that the conduct constituted negligence or wrongful dismissal. Or they could, instead, admit that the conduct constituted negligence or wrongful dismissal, but then deny that the plaintiff suffered any damages. Doing so helps to frame the issues in the litigation.
(b) The Motion Judge’s Error Led Her to Apply the Wrong Test for Whether to Grant Leave to Amend
 Amendments to pleadings are generally governed by r. 26.01: “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”. Under this rule, the court must permit an amendment, regardless of the stage of the action at which it is sought, unless the party opposing the amendment can demonstrate actual prejudice that is non-compensable, or unless the delay in seeking it was so long, and the justification so inadequate, that prejudice is presumed: 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42, 135 O.R. (3d) 681, at para. 25.
 This is a different test than the one applicable for when the proposed amendment would withdraw an admission made in the original pleading. Rule 51.05 provides that: “an admission in a pleading may be withdrawn on consent or with leave of the court”. Absent consent, the party seeking an amendment to withdraw an admission must satisfy a three-part test to be granted leave. They must show that: (a) the proposed amendment raises a triable issue; (b) the admission sought to be withdrawn was inadvertent or the result of wrong instructions; and (c) the withdrawal will not result in non-compensable prejudice: Szelazek Investments Ltd. v. Orzech (1996), 44 C.P.C. (3d) 102 (Ont. C.A.).
 The test for withdrawal of an admission varies in two significant ways from the test applicable to other types of amendments. First, where no withdrawal of an admission is involved, the moving party is not required to show that the prior version of the pleading is the result of inadvertence or incorrect instructions. Second, the onus regarding prejudice is different. Where an admission is withdrawn “the onus is on the moving party to show that the opposite party will not be prejudiced, rather than the reverse as is the case under rule 26.01”: Kostruba and Sons v. Pervez, 2011 ONSC 4894, 38 C.P.C. (7th) 100, at para. 42.
 The motion judge applied the test for withdrawal of an admission and did so erroneously since no withdrawal was being made. The use of the incorrect test made a difference. I do not read the motion judge’s findings that Ms. Shwaluk had failed to satisfy the three-part test for withdrawal of an admission to be the equivalent of finding that Ms. Shwaluk should be denied leave to amend under r. 26.01. As I will explain, when the correct test is applied, leave to amend should be granted.
 The first consideration is the legal tenability of the amendment. An amendment will not be permitted if it is legally untenable, a point determined on the basis of the pleading taken as true, rather than by weighing evidence: Andersen Consulting Ltd. v. Canada (Attorney General) (2001), 2001 CanLII 8587 (ON CA), 13 C.P.C. (5th) 251 (Ont. C.A.), at paras. 34-35. Although the motion judge said the amendments did not raise a triable issue, her treatment of this point focussed on whether there was a reasonable explanation for Ms. Shwaluk’s supposed withdrawal of an admission, and was melded together with a consideration of whether the admission in the reply was inadvertent. She did not consider whether on the facts alleged in the amendments, taken as true, relief from forfeiture had a reasonable chance of success.
 Failing to file a proof of loss with an insurer within a policy-prescribed time limit is a type of imperfect compliance which might be amenable to relief from forfeiture: Falk Bros. Industries Ltd. v. Elance Steel Fabricating Co., 1989 CanLII 38 (SCC),  2 S.C.R. 778, at pp. 784-85; Kozel v. Personal Insurance Co., 2014 ONCA 130, 119 O.R. (3d) 55, at paras. 40-43. Although Sun Life argues that relief from forfeiture pursuant to s. 129 of the Insurance Act is not applicable to this type of policy, it is unnecessary that I determine whether that section, or any other section of the Insurance Act providing for relief from forfeiture, may apply. I see no reason why s. 98 of the CJA would not be applicable, as it has been held to be “available as an avenue of relief for contracts governed by the Insurance Act”: Kozel, at para. 58.
 In my view, the amended pleading raises a request for relief from forfeiture that is legally tenable. For example, in Smith v. Sun Life Assurance Company of Canada, 2021 ONSC 7109, the court granted relief from forfeiture after first determining that an insured’s failure to file a formal application for LTD benefits constituted imperfect compliance. The case involved circumstances where the insurer had previously dealt with and adjudicated the plaintiff’s request for STD benefits based on the same alleged disability and had some notice of an intention to claim LTD benefits: at paras. 25-28.
 The second consideration is prejudice. The motion judge made a finding that Ms. Shwaluk failed to show that Sun Life would not suffer non-compensable prejudice from the amendments. But given the different onus, this finding cannot be directly transposed into a finding that Sun Life proved it would suffer non-compensable prejudice, which is the test under r. 26.01. Other than noting the stage of the action, the only finding about prejudice the motion judge made was that “Sun Life has conducted its litigation strategy on the basis of the admission” and permitting the withdrawal of the admission would therefore prejudice it. However, since there is no withdrawal of an admission, this ground of prejudice cannot stand.
In Ash v. Ontario (Chief Medical Officer) (Ont CA, 2022) the Court of Appeal clarifies that the R51 'Request to Admit' provisions apply to trial proceedings, not to judicial review proceedings:
 Rule 51.02(1) provides that “[a] party may at any time, by serving a request to admit (Form 51A), request any other party to admit, for the purposes of the proceeding only, the truth of a fact or the authenticity of a document”. Rule 51 goes on to provide that the party receiving the request must respond within 20 days, by admitting the facts or the authenticity of the documents, denying them, or refusing to admit them and providing reasons for doing so. A deemed admission arises from a failure to respond, and there can be cost consequences arising from a denial or refusal to admit if “the fact or document is subsequently proved at the hearing”: r. 51.04.. Hilson v. Evans
 Mr. Ash relies on the phrase “at any time” to argue that the request to admit process can be used even where a proceeding has reached the appellate stage. That interpretation must be rejected. In Orlan Karigan & Associate Ltd. v. Hoffman (2000), 2000 CanLII 22725 (ON SC), 52 O.R. (3d) 235 (S.C.), Juriansz J., as he then was, concluded that a request to admit is valid only if served more than 20 days before a trial. He held that a request to admit could not be validly served any later than that (such that the 20-day time for responding would continue into the trial itself) since a request to admit is a pre-trial process, not one that can be used during the trial. It follows from this reasoning that a request to admit cannot be initiated at an even later stage – the appellate stage.
 This interpretation comports with the language of the rule as a whole in light of its context, which makes it clear that r. 51.02 applies only before a hearing at which facts or documents that are not admitted are to be proven, that is, it only applies in the stages of the proceeding in which the factual record is still being settled. It does not apply to stages of a proceeding, such as a motion for leave to appeal, which are to be decided based on a factual record which has already been set.
 Rule 51 describes a process whereby proof of facts or documents may be streamlined. Its placement in the rules sheds light on when it can be resorted to, as r. 51 appears immediately before rr. 52 and 53, which are headed “Trial Procedure” and “Evidence at Trial”. Moreover, the costs consequences provided for in r. 51.04, which are an integral part of the request to admit scheme, expressly contemplate the request to admit process being undertaken before a hearing at which facts or documents may be proven. All of this strongly suggests that the process is intended for use prior to the fact determining hearing – a trial, or an application or motion for summary judgment that will determine the facts without a trial. To be sure, the process can be engaged “at any time” before that kind of a hearing – in the sense of being available in the early stages of the proceeding and not just post-discovery. But the process is one that is only available before that kind of a hearing, not after.
 This interpretation is also consistent with the purpose of r. 51, which is “to enable the parties to prepare for an efficient trial focused on what is disputed”: Orlan, at para. 21. Nothing suggests that its purpose is to allow a party to expand, supplement, or alter the factual record after the trial, or other initial dispositive hearing, has taken place.
 In this case, Mr. Ash’s application for judicial review was the forum within which to develop the factual record he contended would support the relief he requested. In the order from which he seeks leave to appeal, his application was quashed for lack of standing and an absence of facts necessary to support the claimed relief. That was the initial dispositive hearing. Any resort to the request to admit process had to take place before it, not after it.
In Hilson v. Evans (Div Ct, 2022) the Divisional Court considered how to handle the situation where a party issued a Request to Admit, it was not answered by the opposing party and so admissions were deemed - but then the issuing party contradicted the admissions:
 It is a rare occurrence for a party in a civil action to give evidence that contradicts a deemed admission flowing from her own unanswered Request to Admit, and there is little authority that addresses the effect of the contradictory evidence on the deemed admission. But this very thing occurred in Jama v. Basedeo, 2020 ONSC 2922. In that case, the applicant served a Request to Admit under r, 22(2) of the Family Law Rules O. Reg. 114/99 (“FLRs”), and the respondent did not file a Response. As a result, the trial judge ruled that certain statements set out in the Request to Admit were deemed to be admitted by the respondent, and that the respondent could not lead evidence contradicting the facts set out in the statements. However, at the trial, some of the facts that were deemed to be admitted were contradicted by evidence adduced by the applicant. As a result, the trial judge decided, at para. 21, that wherever the applicant’s own evidence, either in her testimony or otherwise adduced by her, contradicted facts in her Request to Admit, he did not deem those facts to be admitted by the respondent. In those instances, he made factual determinations based on the totality of the relevant evidence.
 I consider the approach taken in Jama to be sound, and consistent with the Rules. Rule 51.05 permits an admission made in response to a request to admit, a deemed admission under r. 51.03 or an admission in a pleading to be withdrawn with leave of the court. In effect, that is what the trial judge did in Jama (although operating under the FLRs, which have a similar provision at r. 22(5)), and that is what the trial judge did here.