New Brunswick appeal court allows mortgage broker to replace wrong plaintiff in fee lawsuit

The New Brunswick Court of Appeal has allowed a mortgage brokerage to replace a related company as the plaintiff in a financing-fee lawsuit, even though the limitation period had expired. In Front Gate Financial Group (2010) Ltd. v. TFE Industries Inc. et al., 2026 NBCA 88, released July 30, 2026, the court held that the motion judge had failed to consider a statutory provision expressly permitting some claims and parties to be added after a deadline.

The unanimous decision does not determine whether the defendants owe the disputed fees. It permits Front Gate Mortgages (2010) Ltd. to take the place of Front Gate Financial Group (2010) Ltd. and returns the motion for summary judgment to the Court of King’s Bench for a decision on its merits.

Two companies and a disputed brokerage fee

The action concerns an agreement dated January 6, 2017, under which the plaintiff says the defendants agreed to pay a four per cent fee for financing arranged for TFE Industries Inc. TFE received $2.6 million in loans with the assistance of Kent Brewer, a director and officer of both Front Gate companies.

The defendants acknowledged that Linda Foss signed the document, but disputed the contractual obligation being asserted. They said Brewer had described it as a document allowing him to contact potential lenders. They also pleaded that TFE had paid $52,000 in brokerage fees and had not agreed to pay the additional amount claimed.

The difficulty for the plaintiff was its identity. Financial Group had commenced the proceeding, but the financing agreement referred to Mortgages and its registered business name. It made no reference to Financial Group. Brewer explained that Mortgages provided the brokerage services as a Mortgage Alliance franchisee.

In August 2024, Financial Group sought permission to substitute Mortgages and asked for summary judgment. The motion judge refused the substitution, largely because the limitation period had expired and he found no special circumstances justifying the change. He then denied summary judgment on the basis that Financial Group was not a party to the agreement and had no entitlement to sue under it.

A statutory exception had to be considered

Writing for the appeal court, Justice French held that the judge’s failure to consider section 21(c) of the province’s Limitation of Actions Act was an error of law. Although the parties had not expressly relied on the provision before the motion judge, the court decisions cited to him had identified it. The appeal court obtained further submissions from the parties on its application.

Section 21 permits an added claim after expiry of a limitation period when it relates to the conduct, transaction or events described in the original pleadings and meets the applicable statutory conditions. For a change of plaintiff, the defendants must have obtained sufficient knowledge before the deadline or within six months afterward to avoid prejudice in defending the claim. The change must also be necessary or desirable for the effective determination or enforcement of the original claims.

The court found those requirements satisfied. The proposed substitution concerned the same financing agreement, transactions and events already pleaded. The defendants’ dealings had been with Brewer, who represented both companies, and the agreement identified Mortgages despite inconsistencies in how its name was written.

Justice French rejected the suggestion that section 21(c) necessarily required a formal letter or amended pleading notifying the defendants of the new plaintiff within the specified period. The question was whether they had enough knowledge to defend the claim without being prejudiced by the change.

Defence difficulties did not result from the substitution

The defendants pointed to the incapacity of Judson Foss, who had participated in the financing, and the death of the lawyer involved in the transaction. The court accepted that those difficulties were real, but found they did not arise from replacing Financial Group with Mortgages. The contested facts and issues remained substantially the same.

The court granted leave to amend the statement of claim, sent the summary judgment motion back and awarded $2,500 in costs.

The decision confirms that expiry of a limitation period does not end the analysis when section 21 may apply. It leaves an important broader question unresolved: whether that section completely displaces the older common-law doctrine permitting amendments in special circumstances. The court did not need to decide that issue because the statutory requirements were met here.