Toronto, ON – In the case of Diarez v. David Murphy et al., 2025 ONSC 4486, the Ontario Divisional Court has dismissed an appeal by former employee Ernesto Diarez, upholding a Small Claims Court ruling that barred him from adding his former corporate employer, Clyde Industrial Equipment Limited (CIE), as a defendant after the expiry of the two-year limitation period.
Diarez worked for CIE from 2007 until his termination for cause in March 2017. In March 2019, just days before the two-year anniversary of his dismissal, he launched a Small Claims Court action against CIE’s owners, David and Aileen Murphy, alleging wrongful termination, unpaid overtime, breach of privacy, and harassment. At that stage, CIE itself was not named as a defendant.
Two months later, in June 2019, Diarez amended his claim to add CIE and seek damages directly from the company. The defendants brought a motion to dismiss the claim against CIE, arguing that the amendment came after the two-year limitation period under Ontario’s Limitations Act, 2002. Deputy Judge Di Gregorio agreed, finding the claim against CIE was out of time because the limitation period began on the date of termination, March 24, 2017.
On appeal, Diarez, representing himself, argued that the Deputy Judge had failed to consider various procedural rights, statutory provisions, and out-of-province cases. He also claimed the clock should have started later, citing information he said he learned in 2018, and asserted that the addition of CIE was a permissible “misnomer” correction rather than adding a new party.
Justice Sunil S. Mathai, writing for the Divisional Court, rejected each of these arguments. The court held that the relevant legal test under sections 5 and 21 of the Limitations Act barred adding CIE because Diarez knew, or ought to have known, of his claim against the company on the date of termination. Evidence before the Small Claims Court, including the termination letter, pay records, benefit documents, and a March 24, 2017 email from Diarez to the Ministry of Labour identifying CIE as his employer, confirmed that knowledge.
The court also ruled the situation was not one of “misnomer,” which applies when a party is misnamed but clearly intended to be sued from the outset. Here, Diarez had chosen to sue the Murphys personally and only later sought to add CIE as an additional defendant.
Justice Mathai further noted that Diarez led no evidence to rebut the statutory presumption that he discovered his claim on the day it arose. The decision also addressed a late-filed “Fresh as Amended Claim” adding an unpaid vacation pay allegation against CIE, finding it too was time-barred and improperly advanced after CIE had already been dismissed from the action.
In dismissing the appeal, the court emphasized that the Small Claims Court Rules permitting amendments before trial do not override the Limitations Act. The addition of a party after the limitation period has expired remains prohibited.
The appeal was dismissed without costs, as the respondents had not filed the required cost outline.
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