The Plaintiffs appealed a Master’s partial refusal to allow an amendment to their pleadings. The proposed amendments added claims of negligent or fraudulent misrepresentation related to the auditing of financial statements for nightclubs purchased by the Plaintiffs.

Lee J. considered Rule 3.65, which allows pleadings to be amended, and Rule 13.7, which requires that pleadings must set out particulars of fraud and misrepresentation. Referring to authority, Justice Lee set out the law with respect to amending pleadings:

a. An amendment should be allowed if it can be made without prejudice or injustice to the opposing party, it raises a triable issue, it is not embarrassing, it is pled with particularity, and there is some evidence to support any new facts of substance alleged.

b. An amendment will be refused if:

i. it will create prejudice that can’t be compensated by costs or other measures;

ii. it is hopeless, bound to fail on the merits, there is no genuine issue for trial, it would not survive a summary judgment application;

iii. it does not disclose a cause of action;

iv. it would have been struck out in the original pleading as vexatious, embarrassing, an abuse or process or otherwise improper; or

v. a limitation period has passed.

c. Amendments must be pled with particularity. Evidence is required in support of substantive amendments.

d. There is a general rule against amending to allege fraud. Significant evidence is required to show that “exceptional circumstances” or “good grounds” exist, and evidence of intent is required.

Lee J. held that the amendments would prejudice the Respondents, and that the amendments were hopeless. Lee J. held that the Plaintiffs did not provide adequate particulars of the alleged negligent and fraudulent misrepresentation as the particulars of key facts were missing and the only evidence of the misrepresentation was in an Affidavit without any other supporting evidence. The Affidavit did not meet the standard of “significant evidence” required to allow an amendment to allege fraud. Finally, Lee J. found that the amendments were limitations barred, claims did not have any chance of success, did not raise an issue that genuinely required a Trial, and would not survive Summary Judgment. The Appeal was dismissed.