JUDICIAL INSTITUTIONS & CIVIL PROCEDUREJulien Morissette

Fall 2006

“If anyone is going to jail, make sure it’s the client.” - H. Patrick Glenn

Introduction: History and Sources....................................................................3

I. The Legal Profession.......................................................................................5

A. Professional structures....................................................................................................5McDonic v. Hetherington, SCC 1997.........................................................................6Black v. Law Society of Alberta, SCC 1989................................................................8

B. Ethics and Liability..........................................................................................................81. Conflicts of interests, duty of loyalty and ethics.............................................................8

Martin v. Gray, SCC 1990..........................................................................................9Celanese Canada Inc. v. Canadian Bearings Ltd., SCC 2006.................................10R. v. Neil, SCC 2000.................................................................................................11Re Manville Canada Inc. and Ladner Downs, BCCA 1993.....................................12McKesson Information Solutions v. Duane Morris, USA 2006...............................12Witten, Volgel, Binder & Lyons v. Leung, AB QB 1983..........................................13Béliveau c. Comité disciplinaire: Syndic (Barreau du Québec) et al., mis en cause, QC SC 1991 & CA 1992..........................................................................................13

2. Civil and criminal liability............................................................................................14Demarco v. Unger, ON HCJ 1979............................................................................14

C. Legal representation......................................................................................................15D. Costs and fees.................................................................................................................16

1. Costs..............................................................................................................................17b. Judicial discretion in penalizing winners..................................................................18

Foucault Pontiac Buick inc. c. Clinique Auto Ste.-Adèle inc., QC PC 1985............18c. Judicial discretion in penalizing losers.....................................................................18d. Lawyer liability for costs..........................................................................................18e. The case of Quebec...................................................................................................19f. Costs rule and settlement negotiations......................................................................19

2. Fees...............................................................................................................................193. Financing.......................................................................................................................20

II. The judiciary.................................................................................................22

A. Appointment, Independence and Control...................................................................221. Nomination or appointment..........................................................................................232. Terms of office and control...........................................................................................23

a. Disciplinary proceedings...........................................................................................24b. Civil liability.............................................................................................................25

B. Recusation.......................................................................................................................26Reg. v. Bow Street Metropolitan Stipendiary Magistrate, Ex parte Pinochet Ugarte (No. 2), HL 1998.......................................................................................................26

C. Judicial powers...............................................................................................................26

III. The courts....................................................................................................28A. Subject matter jurisdiction (ratione materiæ).............................................................28

1. Courts of first instance..................................................................................................28a. Provincial courts of first instance..............................................................................28

Bélanger c. Ladouceur, QC CP 1975.......................................................................30Corporation des Maîtres mécaniciens en tuyauterie du Québec c. G. Famery Plomberie & Chauffage, QC CP 1975......................................................................30Caisse populaire de Notre Dame de Québec c. Cité de Québec, QC SC 1969........30Greenberg c. Denis, QC SC 1985.............................................................................30

b. The Federal Court.....................................................................................................31Quebec North Shore Paper Co. v. Canadian Pacific Ltd., SCC 1976.....................32

2. Courts of Appeal...........................................................................................................333. The Supreme Court of Canada......................................................................................37

Ernewein v. Minister of Employment and Immigration, SCC 1979.........................38B. Territorial jurisdiction (ratione personæ)....................................................................38

ECU-Line N.V. v. Z.I. Pompey Industrie, SCC 2003................................................39

IV. The Scope of Ligitation...............................................................................41

A. Interest to Sue – Standing.............................................................................................41Stewart c. Valois, QC SC 2006.................................................................................41Malhab c. Métromedia CMR Montréal inc. (André Arthur case), QCCA 2003......41Timmins v. Hughes, QC SC 1974.............................................................................42

B. Quality to sue and class actions.....................................................................................43Muller v. Ste. Marie, QC CP 1971............................................................................43Association des propriétaires des jardins Taché inc. v. Les entreprises Dasken, SCC 1971...........................................................................................................................43Thorson v. A.-G. Canada, SCC 1975; Canada (Min. of Justice) v. Borowski, SCC 1981; N.S. Board of Censors v. McNeill, SCC 1976................................................43

1. Financing.......................................................................................................................442. Certification..................................................................................................................453. Notice............................................................................................................................464. Settlement.....................................................................................................................46

Huber et al. v. Taylor et al., USCA 3rd Circuit 2006...............................................475. Trial & judgement.........................................................................................................476. Preclusion......................................................................................................................48

Nantais v. Telectronics Proprietary (Canada) Ltd., ON Gen. Div. 1995.................48HSBC Bank Canada c. Hocking, QC SC 2006.........................................................48

C. Res judicata – Lis pendens..............................................................................................491. Identity of persons.........................................................................................................492. Identity of cause of action.............................................................................................49

Rocois Construction Inc. v. Québec Ready Mix Inc., SCC 1990..............................49Boucher v. Stelco, SCC 2005....................................................................................50Town of Grandview v. Doering, SCC 1975..............................................................50

3. Identity of object...........................................................................................................51Angle v. Minister of National Revenue, SCC 1974...................................................51Bjarnarson v. Government of Manitoba, MB QB 1987...........................................52OPSEU v. Ontario, Toronto (City) v. CUPE, Local 79, SCC 2003.........................52Nasifoglu c. Complexe Ste-Ambroise inc., QCCA 2005...........................................53

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D. Joining causes of action...............................................................................................53Thames Steel Construction Inc. v. Portman, ON HCJ 1980.....................................53

V. Preliminary proceedings..............................................................................54

A. Initiation of proceedings................................................................................................541. Operation of prescription..............................................................................................552. Service / Signification (Qc) / Assignation (other CVL)...............................................56

Paupst v. Henry, ON HCJ 1983................................................................................57B. Preliminary contestation................................................................................................57C. Counterclaims.................................................................................................................59D. Default proceedings – summary judgment..................................................................60E. Exchange of pleadings....................................................................................................61

VI. Discovery......................................................................................................63

A. Availability and scope....................................................................................................63B. Privilege...........................................................................................................................64

VII. Amendment and revision of proceedings................................................65

A. Amendments...................................................................................................................65

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Introduction: History and Sources

Sept. 6th, 2006

Droit judiciaire explains the objectives better than Civil Procedure: entire apparatus of the State for litigated dispute resolution. The underlying thesis of the class is that procedure is controlled largely by concepts of professional role (lawyers may resist change or may be used according to the image they have of their role).

The Ontario Rules of Practice are a code of how lawyers and judges are to act. The underlying ideas behind this code are adversarial (“accusatorial” is used by Continental lawwyers) as opposed to investigative (“inquisitorial” is used by common lawyers) in the Continental tradition (note that ‘contradictoire’ in France means audi alteram partem) [Glenn prefers terms in bold].

Jolowicz uses another distinction: procedural justice (resolution of disputes through any conducive forum) and substantive justice (finding a solution with pre-existing rules), which according to Glenn speaks to the origins of COL and CVL.

History of COL suits:In England, solicitors or attorneys needed to issue a writ to institute a law suit. Still today in COL, the writ institutes a law suit and halts statutes of limitation. The first written writs always said “The King to the Sheriff, Greetings” and then went on what the Sheriff was to do (form of action). A jury was used for fact-finding (way the Normans had found to co-opt the population into the royal courts system). The judges didn’t have to do much: they heard ‘pleadings to issue’ as to whether the facts fit the writ (jurisdictional issue). If that step was passed, one proceeded to trial by jury, which usually knew the facts already and simply rendered a judgement. Judges never decided cases on the merits in COL until the 19th C., they got cases resolved in a locally acceptable fashion. There was no concept of substantive justice and judges had no active role with respect to the facts or the law, simply to ensure that there was an acceptable resolution. Lawyers did almost everything – truth was irrelevant.

History of CVL suits:Historically, in Continental Europe, one had to register an ‘acte introductif d’instance’ that informed the other side that it was being sued (no instruction to a government officer). Interruption of prescription occurs at service of the acte introductif d’instance on the defendant (known as the ‘lien d’instance’). Then there will be varying degrees of judicial investigation into the right of action (droit d’agir en justice). The civilian judge doesn’t care about jurisdiction, s/he initiates the investigation process: jura novit curia (the court knows the law), dabo mihi factum, dabo tibi jus (you give me the facts, I give you the law). Law was found in the pre-existing digests and since the court knew it, the court’s responsibility was to apply it on the proper facts. Roman rules and procedure aimed to eliminate local custom and unwritten rules. This idea of substantive justice is deeply rooted.

In systems where judges investigate and lawyers don’t do much, many more judges are required. In Germany, 45% of law graduates go immediately in the judiciary (30 judges per 100,000 people; 2 historically in England, 8 in France, 10 in Canada). In those countries, the judiciary is large and young (think of the judge in Outreaux). Usually, judges sit in groups of three to provide experience – which is very expensive. By convention, lawyers ask at most 3 questions after the judge!

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In the procedural justice model, there is a very small judiciary. The historical eleven high court judges were sources of law, not case managers. The structure was simple: a (royal) superior court of first instance that controlled all inferior courts, without any appellate structure (can’t appeal a jury’s decision).

In COL, it is still the case that an appeal exists only by law, whereas in CVL it exists as a matter of right. In CVL, appeal courts are required, to control the application of external rules.

The consequences of all this for the practice of law in Canada is that lawyers may shape the facts and the law, but with this comes responsibility and potential liability. There are temptations to push the envelope. In COL, the lawyer has much more responsibility than in CVL.

Quebec has moved since the Conquest from investigative to adversarial. Whereas COL is losing some of its characteristics (no more forms of action, appeals courts, etc.) and there is a debate on the increased role of judges (the US and the UK have gone the hybrid case management route, there is tremendous resistance in Ontario – it exists in some provinces, as gestion d’instance in Quebec).

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I. The Legal Profession

Sept. 11th, 2006

A. Professional structures

In both England and France, lawyers had a limited role in that they mostly did litigation. In England, barristers handle oral pleadings; in France, it was the avocats (prolocutor who only speaks). It was solicitors or avoués (attornatus) who could represent clients, bind them to the actions of the prolocutor and prepare written submissions and pleadings for litigation. France also has notaries (personal advice) and conseillers juridiques (business counsel). There are still barristers and solicitors in England, in France notaries and avocats remain.

The lawyer has a fiduciary duty towards the client, a duty of upmost loyalty in rendering services. This is why law is seen as a liberal profession, a self-governing profession (not a business, with more powers but also more liability!).

There are major tensions in the process, however. In Canada, there is a monopoly: one cannot give legal advice if one is not member of the Bar – and bars enforce this. In Quebec, notaries do family property law, wills and successions, real estate and solemnization of documents. If one is a lawyer, activities are somewhat confined. A lawyer cannot act as a notary, judge, syndic, police officer, bailiff, judicial stenographer, collection agent (see Quebec code of ethics). These are mechanical ethical barriers. ‘Busting the monopoly’ would also have deep quality and ethical implications. “The drama of our profession in North America is that the incompatibilities have mostly disappeared. Here, we are in deep waters relative to full and undivided loyalty towards a client.” In COL Canada, lawyers are ‘barristers and solicitors’; in NY State, lawyers are ‘attorneys’, without even a trace of the distinction.

There is a huge difference between North America and Europe. Even today, English barristers may only practice alone, partnerships are forbidden in order not to have a split loyalty (different for solicitors). In North America, the unification of the profession partly caused the end of the ban on partnerships. The concept of salaried employment was grafted upon the legal profession. This was impossible until very recently in France. In England, barristers may not engage in any form of commercial activity.

A reason for this was that in pioneer societies, it was unrealistic to have a very fine division of labour. A more important reason was probably the idea of an open profession. The lawyer no longer has a limited role in North America: even ch. VII of the CBA Code of Ethics (p. 7) only speaks in very general language, never talks of incompatibility. In the revised version (Code of Professional Conduct), there is more content: no blurring of roles (acting as a lawyer or not), no lawyer identification in carrying outside activities, no non-honourable activities or conflict of interest (incompatibility re-emerges).

Canada has a very wide profession just like in the US. But some differences in professional differences remain: peace, order and good government vs. freedom and pursuit of happiness. Bars in Canada are very dirigistes, but also well structured and funded. In that they are exceptional, even relative to those in the US or Western Europe.

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Canada United StatesStage - Articles No stage or articlesObligatory Bar Not necessarily Bar membership (often

admitted by Supreme Court of the State)Code of ethics (CBA: short, aspirational, virtue ethics, no definition of misconduct; provinces: similar if somewhat more precise)

Code of conduct (ABA: black-letter rules, situational ethics, since the late-80’s, each Faculty has a mandatory course)

Strong institutions (syndics or disciplinary officers*, spontaneous inspections)

Weak institutions (which may explain black-letter code, courts have disciplinary role but don’t exercise it much)

Limited advertising** Unlimited advertisingObligatory insurance*** No obligatory insurance (except Oregon and

mandatory disclosure in 1/3 of States)*To which complaints are made. There is first a filtering process, followed if need be by a disciplinary committee, a hearing and a judgement by the disciplinary committee or the convocation for serious penalties (ex. disbarment). It is then possible to apply for judicial review at the Superior Court, as if the Bar was a governmental agency. Precedents can be used as black-letter rules, large firms often have full-time people dealing with ethics and conflicts of interest. In the US, ethical claims often turn into tort claims against lawyers in the standard court system – which means a civil jury.**Lawyer advertising is much more restrained in Canada than in the US, possibly because there is a possibility of ex post control. In the US, there is unrestrained advertising; the USSC decided in the 1970’s that any restrictions were against the First Amendment, although New York courts are starting to crack down on some practices. In England, lawyers are not even in the Yellow Pages.***The most common claims are for lapsed limitation periods and botched real estate transactions.

Sept. 13th, 2006

The definition of the profession and structure of practice are inter-related. UK: the barrister just speaks to the file, the solicitor does the leg work. The barrister does the talking in a limited practice structure, without partnerships. For the barrister, it’s all about the brief and not the client. US: the lawyer has a nearly unlimited role, can do anything, barrister and solicitor. This is the reason for partnerships and specialization: criminal law, property, etc.

Lawyers in private practice may work in:1. Sole practice (more risk, often need to stretch competence);2. A partnership (venture to share profit but also risk-sharing – if one partner owes money, all are liable). Classically, all partners are liable for the others’ activities and for supervisory duty, basically for all debts and wrongs in partnership activity. The bad news is that partners are jointly and severally (for wrongs in Ontario, otherwise just joint) / solidairement or joint (in Quebec for one’s share) liable. McDonic v. Hetherington operates a distinction between inherent and apparent authority, but both lead to liability.

McDonic v. Hetherington, SCC 1997Facts: Robert Watt, a partner, acted as a mortgage broker to invest peoples’ money. He found the clients within the law partnership. The mortgages were underperforming, and some lost a lot of money. Investors and law firm sued Watt. The result at first instance was that Watt was liable but not partners, because he was not engaged in law practice. Held: Generally, judges are more sympathetic hearing at lower level courts, because its local, and they know you. At appeal, the judgement was reversed, as unlike in the UK, we let lawyers conduct other commercial activity, even non-law. E.g. this was like a law / mortgage company. The basis for this was that since Watt used the firm letter head and name, then

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other partners were also doing mortgages. Liability for partner extends to all debts and wrongs. Moral: You should know what other partners are doing!

The good news of insurance is that it exists, the bad news is that there may not be enough. Partnerships have no corporate entity, although there are some accommodations to facilitate law suits (ex. 2225 CCQ, 8 Ont. Rules of Civil Procedure). Lawyers cannot limit their liability by contract. Historically, English barristers were immune from civil liability like judges, but that immunity is now gone. Note that law suits today need only name the partnership, not each partner.

There is an obligation of loyalty towards clients but also towards other members of the partnership. It becomes more complicated when one determines that partnerships can also employ associates. Within large firms, this nexus becomes very complex, which explains the fact that some lawyers specialize in internal conflicts of interest.

Three main questions in the running of large partnerships:

- Associate leverage, i.e. the ratio between associates and partners, is public notably in the US. The more associates per partner, the more associates are expect to drive firm revenues. How are an associate’s duties to a client lined up with duties towards partners? Glenn recommends efficient work, which allows spreading more activity, charging less to clients. A proactive position is best, rather than doing duplicative work to meet quotas. Notably for this reasons, the general cost of litigation has gone up considerably.

- Major conflicts of interest in very large, geographically spread firms. Sometimes, mandate selection is necessary because the same firm has clients facing each other. This has lead a lot of ‘satellite litigation’ relating to lawyers’ professional role.

- Whistleblowing on unethical conduct is mandatory. There is a duty to whistleblow on corporate misbehaviour, up the ladder, which involves excruciating dilemmas, especially for associates. The USSC has said that employee obligations do not prevail over personal ethical obligations, damages for retaliatory dismissal are often granted.

As in-house counsel, lawyers are employees with only one client. It was actually an in-house counsel that went up to the USSC with retaliatory dismissal. It may place lawyers in a very delicate situation. Usually, in-house lawyers never act in litigation outside given the inability to be an officer of the court.

Professional corporations have been around for a while. They are basically a tax shelter which enhances firm revenue. But this does not affect lawyers’ liability directly or their work. They however provide limited liability between partners.

Today, limited liability partnerships (LLPs) are proliferating. Partners are sheltered from negligence of the others. They however cannot limit their own personal liability. There are currently about 60 LLPs / s.e.n.c.r.l. (as opposed to s.e.n.c. or general partnership) in Quebec. A 1995 ruling of the NYC Bar Ethics Committee said that LLPs are ethical. The major question now is the extent of liability for supervision and control, which probably still exists for partners supervising associates or even other partners – so far, there is no caselaw on this.

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More controversial still are the multidisciplinary firms or partnerships (MDF / MDP). Some major accounting firms launched their own law firms about five years ago (ex. Ernst Young Donoghue in Toronto). But Enron and other scandals completely burst that balloon and stopped that movement: loyalty was getting too dissolved and there were many thorny issues like privilege (idea rejected by ABA). Accountants have no privilege, how can there be a firewall between lawyers and accountants? Another fear is exacerbation of conflicts of interest: your lawyer won’t sue your accountants. “At a certain point, you cannot keep growing.” MDFs and MDPs exist nominally in Quebec and Ontario, but are bumbling along at best. Wait and see…

The UK government is now considering many reforms, some minor (creation of a solicitor advocate), some huge, like public flotation of law firm shares (hostility towards the legal profession!). It’s difficult to reconcile an independent bar (in Canada, argued that an implicit constitutional principle) and outside ownership.

Black v. Law Society of Alberta, SCC 1989Held: Provinces cannot legislatively prohibit inter-provincial law firms. McCarthy won on s. 6 of the Charter, since then firms have been using the same name everywhere. It was a major change when it was decided that partnerships needn’t have all partners’ names, current partners’ names, etc.

There have been major advances on personal mobility: may practice anywhere in Canada up to 180 days. The EU has gone much further: practice is possible anywhere without control, just using old title for 3 years. There is also major firm movement between jurisdictions. There is now a whole field of interjurisdictional / international ethics, with odd private international-law like issues as to application of ethical rules, payments to and compensation from compensation funds, etc.

Sept. 18th, 2006

B. Ethics and Liability

1. Conflicts of interests, duty of loyalty and ethics1. Conflicts of interests, duty of loyalty and ethics

Today, lawyers have a broad function and a practically unlimited role. Given the absence of incompatibilities of function, what is the institutional response? We have seen it is very strong in Canada: bars are very powerful. This is much less true in the US and even less outside OECD countries.

The next question is: What is the substantive response, i.e. how have rules of ethics and liability evolved given the modus operandi of the legal profession today? What is the effect of this on the litigation process?

In principle, the rules of liability are in the law of liability. The rules of ethics are more diffuse, for ex. in the CBA, Quebec, Ontario or Montreal bars’ documents. The CBA code (including the new version) is very aspirational: virtue ethics, which shun detailed rules. The Quebec code moves to some extent towards situational ethics, particular rules. The ABA code is now a huge document with very detailed situational rules.

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Fried’s article says that a lawyer should act as a friend would. There are two alternative views: lawyer as “Rambo” and lawyer as “saint”. Fried’s view is in favour of an idea of professional ethics. Many intellectual opponents in the US say that professional ethics should be abandoned, as many lawyers engage in aggressive lawyering (natural outcome of the adversarial system) and not as officers of the court: lawyer as “Rambo”. Others say that lawyers should use their personal ethic to govern their behaviour: lawyer as “Saint”. According to Glenn, Fried’s article represents the classic statement about what a lawyer is and how s/he should behave. Professional ethics goes beyond the pursuit of client wishes, but not as far as full ethical agency.

Rambos will choose any client as long as there is a chance of profit: paid for aggressive social behaviour! Saints will choose clients which have cases with which they agree, i.e. not tobacco companies or child abusers: the accused will have trouble getting representation. Also, current clients will control new clients: not English barristers that act for the Crown or defence interchangeably! For ex., no firm represents management and unions in labour law. Another ex. is the Plaintiff’s Bar in the US whose members only ever act for plaintiffs. Whereas “friend” lawyers with a professional ethic will have a restricted client choice given obligations, although it is not quite the barristers’ “cab rank” rule.

In the conduct of litigation, Rambos engage in abusive lawyer tactics – the adversarial excuse (which dominate professional ethics say opponents) – in an uncivil and acrimonious manner. A known tactic is “wallpapering”: divulging roomfuls of information instead of selected documents. Famous cases are one from the Southern US where there was a brawl in a courtroom and one from Ontario where one lawyer poured his coffee over the other side’s documentation during discovery proceedings. The new CBA code has a new section on principles of civility (art. 17, 28, 30). “Acting in a passionate way as a client would is detracting from the work of resolving a situation.” - Glenn. Saints (with their selected clients) and Friends will probably act in a responsible manner. Friends, as true friends, suspend judgement on those they are represented but are not engaging in unprofessional conduct.

What is one to do if clients are engaging in obviously unethical conduct? The first step is to try to get the client to conform. If that doesn’t work, then withdraw. This is problematic: stalling, people saying that where there is smoke there is fire. There are ethical obligations in quitting, in a way that is not detrimental to the client. If a trial is already under way, the way to ask the court for permission to withdraw is to represent having lost confidence in or of the client. The USSC found that the adversarial excuse does not preclude lawyers from withdrawing (accused who was blatantly lying), but there are ways in doing so.

Conflicts of interest or undertakings / engagement (the designation is not value neutral) are now the object of litigation. Ethics are creeping into courts and are increasingly enforced by courts.

Recently, the SCC has been willing to hear cases about lawyer-client relations. Interestingly, Binnie J. wrote important decisions in Neil and Celanese. Every conflict of interest is complicated – the first challenge being to figure out what it actually is. It all started at the SCC with this case , the saga of Kristin Dangerfield…

Martin v. Gray, SCC 1990Facts: Gray is suing Martin in a huge succession law (something to do with executors’

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accounting) case which lasted 10-12 years (over one million in costs). Both were represented by lawyers. Martin’s lawyer is a senior counsel, but the real work (including a lot of the pleading) is done by a junior lawyer, Dangerfield, an employed associate. The senior lawyer is appointed to the bench and disappears. Dangerfield does two horizontal career moves and ends up with the Gray’s law firm. A motion for disqualification (of the firm – huge move!) is brought and later appealed to the Manitoba CA and later to the SCC. The exact event that made Martin discover Dangerfield’s move is unclear. There was no suggestion that there was client consent from Martin (often client consent covers conflicts of interest).Held: The SCC unanimously decides on disqualification. It considers two approaches to disqualifications: probability and possibility of disclosure of information. The SCC chose the possibility approach: mere possibility of mischief is enough. This is the US and not the English test, given that the profession in Canada is like that of the US. It was held that there was a conflict of interest – two loyalties were clashing – there was a possibility of exchange of actually acquired information (no firewall / cone of silence / Chinese wall on the plaintiff side). There was no consensus at the SCC about the details: 4 judges (Sopinka J.) say that working on related files allows to presume that information was acquired but that it is possible for the firm to rebut, i.e. protect itself with a firewall (flexible approach), 3 say that it is impossible for a firm to shield itself as it is a partnership, even with a firewall (rigid approach).

The effect of Martin v. Gray was that the CBA, provincial bars and firms very quickly worked on designing effective firewalls. P. 28 shows the very complete guidelines for effective firewalls. These have existed for over a decade today. This has meant more red tape and costs, but more obviously firewalls have not stopped the litigation about disqualification. Motion practice has exploded and with it “satellite litigation”. Firewalls have not solved the problem because there are vital interests at stake, any firewall established will be challenged.

Guidelines about firewalls are more or less implemented, depending on the firm. Some have highly elaborate conflicts checking systems (ex. Fasken has an efficient computerized system), others limit themselves to major clients.

From Martin v. Gray in 1990 to Neil in 2002, the notion of conflict of interest has been enlarged: Neil was about a 2-person law firm!

Sept. 20th, 2006

A lawyer who pleads orally for a client must not prejudice clients’ interests nor the courts’: professional role for the lawyers, including the judge. A pleader should never say “I truly believe” or any opinion… partly because it is immaterial, partly because personal convictions don’t necessarily line up with application of law to the facts (uncivil act with respect to judge and opposing counsel).

As far as conflicts of interest are concerned, there is a trilogy of SCC judgements: Martin v. Gray, Celanese and Neill. Celanese affirmed Martin v. Gray’s position and refined it somewhat.

Celanese Canada Inc. v. Canadian Bearings Ltd., SCC 2006Facts: Celanese was suing Canadian Bearings for industrial espionage. It obtained an Anton Piller order (allows seizure with no prior notice following an ex parte application, extraordinary order, if fear that proof will be destroyed before discovery; supervisory

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solicitor and police officers). The order was obtained, executed in a ‘mildly chaotic’ manner. Celanese’s counsel was Cassels Brock, Canadian Bearings’ was BLG. Cassels Brock got the order and executed it. There were some privileged BLG-Canadian Bearings communications. The auditing firm turned over the documents to Cassels Brock, which copied and circulated everything including privileged information. BLG learned this and instituted a motion for disqualification.Question: This was an exchange of information as in Martin v. Gray. Unlike in that case, there was no certainty as to the nature of the information. Who did the burden of proof to show possibility of mischief fall on?Held: It was unanimously held (reversing the OCA) that the burden fell on Celanese / Cassels Brock given that it was the receiving firm’s responsibility. Canadian Bearings / BLG had established exchange of information, the onus then shifted on Celanese / Cassels Brock which did not meet it. Cassels Brock was thus disqualified.

R. v. Neil, SCC 2000 Facts: Neil was a paralegal, who often worked at the limit of his competence and engaged in criminal forgeries and defrauding banks on mortgages. To cover himself, Neil dealt with Pops Venkatraman, a lawyer. Neil was charged on 92 indictments, Pops’ partner (Lazin) acted as his solicitor. Lambert, Neil’s secretary, was involved in the mortgage fraud and it was obvious that she would be co-accused. Lazin was involved in the Doblanko divorce action and it became known that Neil had forged papers in that file. Lazin handed that information over to the police officer already dealing with Neil.Neil’s case went to trial and he was convicted. He then argued that the proceedings should be stayed because of a conflict of interest (even a Charter implication). The SCC allowed the conviction to stand even though there was a conflict of interest, because it held that there was sufficient evidence without the ‘tainted’ ones.Held: This case is seen as very important for firm practice, particularly the statements (p. 51-3) about duty of loyalty to an existing client, even if they are dicta to some extent. There has been a significant rhetorical shift in Binnie J’s judgement from conflict of interest (neutral language) to duty of loyalty (not so neutral). Also, it is said that confidential information may or may not play a role in conflict of interest (goes beyond Martin v. Gray and Celanese, which were mostly about confidential information). The court pronounces a bright line rule: “The bright line is provided by the general rule that a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client — even if the two mandates are unrelated — unless both clients consent after receiving full disclosure (and preferably independent legal advice), and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other.”

The Neil bright line rule has been much analyzed by firms. In Neil, it was relatively clear that there was a de facto adversity between Lambert’s and Neil’s interests (shown by Lazin’s conduct, e.g. bringing Lambert to a meeting with Lazin to obtain information for a cut-throat defence, telling Doblanko to give information about the fraudulent nature of the document to the police). Neil may have been a relatively clear case, but it is very difficult to always detect de facto adversity before it turns into material adversity.

Since Neil, Stikeman Elliott withdrew from working in the Molson-Coors merger because it already represented Cynthia Baxter, a major Molson shareholder. This was a case of potential, rather than actual, de facto adversity. Duty of loyalty calls for difficult forecasting… this, of course, in an attempt to avoid tortious liability. Here, the firm cannot act for fear of dilution of loyalty, irrespective of any firewall.

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Can one sue X on behalf of A and A on behalf of Y at the same time? Just before Neil came out, the BC Bar had suggested a rule allowing acting against a “sophisticated client” in unrelated files. According to Glenn, Binnie’s bright line forbids this, even when there is no danger of exchange of information and geographic separation between the actions. This is a straight duty of loyalty question. The discussion in BC is now whether their proposal is compatible with Neil, which is very difficult to read down according to Glenn. Someone will one day test this. Admittedly, it is difficult to distinguish clients when it comes to fiduciary duty of loyalty. Glenn predicts that courts will not be particularly strict in applying Neil though: no such thing as automatic disqualification, even with a violation of the duty of loyalty. Transmission of confidential information is an example of violation of duty of loyalty. There may be others (Neil!).

Re Manville Canada Inc. and Ladner Downs, BCCA 1993Facts: When Manville came to Canada, it was represented by Osler in Ontario. An asbestos-related action (mostly subrogated) was brought in BC by Ladner Downs. Manville picked McCarthy as defence counsel. A McCarthy lawyer sees Osler Renault Ladner on a letterhead. ORL was a joint venture, or partnership of partnerships. McCarthy applied for disqualification, claiming that there could be exchange of information. Held: McEachern J. (former senior partner at Russell DuMoulin) held that the situation was acceptable given Martin v. Gray because the partnerships competed with each other in Canada and ORL was only for international business. The reasonable person would thus not conclude to a possibility of exchange of information.

Can Neil be reconciled with Ladner Downs? Could it be argued that Ladner Downs would be less loyal due (goes beyond exchange of information) to its alliance with Osler? According to Glenn, Neil would not lead to automatic disqualification in such a situation, because of different discernible identities of partnerships.

It has always been accepted in Canada that it is possible to act against a former client in an unrelated matter: mandates expire. This seems untouched by Neil. This is disallowed in some countries however (ex. Germany). Files must be examined carefully to determine if “matters are related”.

The question is also “who is the client?” This is a prevalent question for large corporations or government. This question has lead to the enactment of the LSUC rule saying that one must go up the structure in case of unethical or illegal behaviour.

Sept. 25th, 2006

McKesson Information Solutions v. Duane Morris, USA 2006Facts: McKesson Corp., through two of its subsidiaries (MMM and MA), hired Duane Morris (based in Philadelphia, but hired in their Harrisburg, PA office) to act for them against a bankrupt debtor. McKesson also has another subsidiary, McKesson Information Systems. A company based in Atlanta, GA, sues MI and hires DM. McKesson moved to disqualify on bad faith, breach of loyalty and behaviour close to extortion. The expression “breach of loyalty” is as used in Canada. Duane Morris defends itself saying that loyalty will not be watered down because it acts for corporately independent subsidiaries and also because McKesson officials in Harrisburg signed a waiver of conflict of interest for unrelated matters. Glenn doesn’t like the first argument (one corporate mind), the second is plausible but not an automatic ‘winner’ (even if the USSC has said that a consent would be

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operative).Held: Duane Morris was disqualified in the Georgian proceedings. The standard form of client consent was deemed insufficient.

The result of this case is to be followed… Cases like this one and Celanese show a certain hardening of ethics and a higher ethical standard enforced by courts.

Witten, Volgel, Binder & Lyons v. Leung, AB QB 1983 Facts: One law firm is suing another. In a first lawsuit, Witten acted for one side and Leung acted for the other. Witten had turned over documents to Leung on the condition that two documents be executed and returned. If that condition was breached, all documents were to be returned. The client ordered Leung to keep the documents, purportedly to be used in a law suit against a third party. Leung called the Law Society for advice, which advised Leung to initiate interpleader proceedings so that a court order resolve the conflict between their client and Witten. Witten then decided to sue Leung directly (unusual!) to get enforcement of the undertaking.Held: The court agreed, saying that Leung’s obligation was one of result.

- It does not have to be a contract, it is a purely unilateral promise which is enforceable (not even looking for a broad cause as in CVL).

- Client’s instructions do not matter.- The bar is not always right, but it is a good idea to seek advice (shows good faith).- A right of action arises out of undertakings, also suggested that summary

proceedings may be used (motions in or out of proceedings, much more expedient).Glenn doesn’t know of any other case where an undertaking was sued on.

This “undertaking” (called “trust conditions” in AB) is called “engagement” in Quebec. Much of legal practice is facilitated by reliance on undertakings. Beyond peer pressure or complaints to disciplinary committees, courts will intervene. There is a move by courts towards virtue ethics…

Béliveau c. Comité disciplinaire: Syndic (Barreau du Québec) et al., mis en cause, QC SC 1991 & CA 1992Facts: Béliveau borrowed money from clients (obvious potential problems). Nothing in the Barreau du Québec’s code of ethics expressly prohibited this. But the Barreau believed that this behaviour infringed a general provision (107A Barreau du Québec Act: honour and dignity of the profession). Béliveau’s lawyer challenged constitutionality based on vagueness. The committee nonetheless proceeded and convicted Béliveau. He challenged the finding, not at the Tribunal des professions, but in evocation / judicial review at the Superior Court. Held: Béliveau lost there and at the Court of Appeal. The CA fully adhered to virtue ethics and validated the proceedings, saying that the Charter guarantees did not apply and no proof of damage is necessary, only fault. Ethical standards generate a sui generis form of responsibility. Resembles criminal and civil proceedings: non-victim prosecution, but vague offence descriptions (if heavily jurisprudential) are allowed.

No internal mechanism like the Barreau’s (which solve 90% of issues, anonymous reporting in DDCP) exists in the US. State courts are competent to discipline lawyers directly. Basically, a high but vague standard of care applies. If needs be, it is applied by the courts.

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2. Civil and criminal liability2. Civil and criminal liability

All immunities have now disappeared. The avocats (vs. avoués which did the postulation) and barristers (vs. solicitors which did the postulation) had formerly no direct relationship with or liability towards the client. France abolished the avoués, clients now have a contractual relationship with clients. In England, barristers were unable to sue the client for fees and had no liability towards the client (only officer of the court, liability to the brief). But the House of Lords abolished this in Arthur J.S. Hall and Co. v. Simons (A.P.) 2005 3 All E.R. 673. So England is like Ontario, where it was found in Demarco v. Unger that given the fused profession, there never was immunity. The French avocats are still not very concerned because jura novit curia. Whereas barristers, solicitors or attorneys in COL run the case and are even to establish the cause of action – which leads to potentially huge liability.

There are three types of civil liability:

1. Malpractice. The grandfather of cases in this area Canada is…

Demarco v. Unger, ON HCJ 1979Facts: Unger sent someone else to argue a case for him and the case was lost. Demarco hired new lawyers and sued Unger (second lawsuit begun due to result of first lawsuit) in tort. There was a (fiduciary) duty of care, but there remained to prove fault, causation and damages. The new lawyers had to show the evidence that should’ve been presented and that this was a violation of the standard of care expected of the normal barrister / solicitor (fault). Next was to show that but for this lack of evidence, Demarco would have won (causation). A motion was brought to strike their pleading.Held: Motion denied. Liability in the first case has to be determined, it is a collateral attack on the first judgement – it’s a though nut to crack, but done more and more often. The original judgement stands and is not subject to appeal on those grounds, because the two cases are notionally independent: res judicata or chose jugée. This is acceptable because the parties are different: in the adversarial system, parties control claims and pleadings, and justice can be done given what was pleaded even if ultimately the judgement was incorrect. The first question was “did Demarco do something wrong?”, the second “did Unger do something wrong”. Res judicata doesn’t operate because (1) parties, (2) cause of action and (3) subject are different. There is thus no unsettling of the administration of justice. The bad news of lawyers is that the first case is not conclusive of the second.

Imagine the Crown prosecuting an accused who has a lawyer. The accused is convicted. The accused who was found guilty will then sue their first lawyer for civil damages. This is occurring frequently now in Canada and the US. This has never worked so far in Canada, but it has in the US.In Fisher v. Halyk (2003) 229 DLR 4th 67, the Saskatchewan CA said that there was a general notion of abuse of process and that those suits were “generally” in that category . The SCC denied leave to appeal. Such cases can be dismissed on a preliminary notion. The definition of abuse is variable, obviously. Some critics say that this was as though res judicata prevents the second suit – it remains controversial. Today, someone wrongfully convicted may file an application with the Minister of Justice including exonerating evidence. If this is found to be convincing, the conviction is overturned by a court (pardons work too, but don’t automatically include compensation) – then immediately sue your lawyer! Res judicata falls, there is no bar to a civil suit… the question is now standard of care. This has been the object of an OCA judgement in Folland v. Reardon (2005). Folland was wrongly convicted of rape

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and spent three years in jail. The OCA found that the standard of behaviour for the lawyer was that of reasonable competence, not egregious error.In Quebec, the avocat cannot be sued without first désavouer / disavow the lawyer’s action according to two QCA judges in Vaillant c. Okrainec (1985). Glenn advises us not to rely on this, because the underlying action was still ongoing in that case. Also, it is impossible to disavow an omission. So Quebec is more or less in the COL situation.

In Rice v. Canadian Lawyers Insurance Association (1996), Rice, says the court, was not engaged in professional activities in fraudulent mortgage brokering. But partner liability seems to be broader given McDonic v. Hetherington. In Johnston c. Fonds d’assurance du Barreau du Québec J.E. 2006-1269, a lawyer stole $500K from an estate. The estate sued his law firm, one of the former partners sued his insurer. The Quebec CA ruled that insurance did not cover to administration of property to another. The lesson is to create an LLP au plus sacrant! The next step is to sue the bar itself. The SCC said in Finney v. Barreau du Québec [2004] 2 S.C.R. 17 that the Quebec bar could be sued irrespective of a statutory immunity (and that the same rule applied to COL provinces), if the bar acted negligently.

Sept. 27th, 2006

1 - Ethical 2 - Civil 3 - CriminalStandard of care

Very high standard of care, no damage is required.

Behaviour of a normal lawyer, damage required.

Low standard of care, need to cause injury voluntarily.

Criminal liability usually involves the other types of liability. There are questions as to the utility of each determination for another. A breach of 1 is immaterial for 2 and 3, a breach of 2 is immaterial for 3. Yet there seems to be an irresistible urge to go from 1 to 2 (common in tort actions in the US where 1 doesn’t really exist as courts are to busy to do this and bars can’t). Ideally an accused would want proceedings to be 1, 2, 3. The problem is that all the evidence in 1 and 2 may be recycled at 3 (evidentiary funnel). So the correct order may be 3, 2, 1. Then the problem is that findings from 1 are admissible in 2 and 3, those from 2 in 3. “If you lose criminally, you have to bite the bullet.” There will be no res judicata (different parties, etc.) but strong evidence: evidence from 1 is admissible, heavy, but not conclusive. The only way out of this difficult catch-22 is to assess risks of each proceeding (funnel effect or presumptive effect).

2. Costs liability (“Torquemada costs rule”) by which lawyers may be made liable for costs incurred due to their negligence. More later…

3. Joinder in which lawyers can be sued before the conclusion of an action. More later…

C. Legal representation

What is the nature of the relationship between lawyer and client? It certainly is not employment nor hire / enterprise (obligation of result). It is a process of representation, or a contract of mandate ad litem (CVL) / contract of agency (COL) (i.e. retainer), the lawyer may bind the client vis-à-vis third parties. Lawyers have ethical agency, but also a legal power (for the mandatary / agent to affect the rights and obligations of a third party, the mandator / principle / client).

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There is an ethical presumption of agency or mandate that the courts and other parties rely on. This rule exists for efficiency reasons. This is important because some lawyers act without a mandate (esp. with class actions in the US). In all Canadian provinces except one, the existence of the mandate cannot be challenged. The risk for the lawyer doing this is disavowal proceedings by the plaintiff(s) – the finding will be admissible for disciplinary offence determination. In Ontario, 15.02 RCP says that one can ask the other lawyer whether s/he has a mandate or not. Lying to such a question is a double disciplinary offence.

Usually, lawyers use their power to bind the client in settlements, even absent client consent because this is inherent in the mandate (“apparent authority”). The system would break down if this could not occur. However, it leads to many unhappy clients and litigation. What can clients do? In Quebec, they can disavow their lawyer (from old French law), but this requires “motion to disavow” proceedings against the lawyer (with another lawyer and further costs) where it is claimed that there was no actual authority. There should be an obligation to give notice the ‘original’ other side. The problem is disavowal proceedings may reveal information to the ‘original’ other side (privileged information). In Brokenwood J.E. 2006-1382 the court said that disavowal implies loss of privilege! Also, there is no exclusion of the public. There is heavy price to disavowal proceedings. In COL, one has to find an exception to the lawyer’s authority. In Ontario, it was ruled in Scherrer that there is no exception, in BC it was ruled in Hawitt that there is one: reliance on insufficient information.

In any case, one can’t disavow an omission. Lawyers very often let limitation periods lapse. It would make no sense to wipe out limitation by simply disavowing a lawyer’s omission. The only remedy of the client is suing the lawyer in negligence for letting the limitation period lapse: Larose c. Fleury J.E. 2006-1678. Disavowal is set up as a requirement prior to a lawsuit in Vaillant c. Okrainec, but this is no bar to suing directly for an omission.

A client may unilaterally fire a lawyer. A lawyer may not unilaterally end the lawyer-client relationship. Until 2002, court approval was necessary. This is no longer the case in Quebec (249 CCP) if notice is given to the other side prior to setting down to trial, but remains in the other provinces. If court approval is required or the other party protests, justification before the court is necessary. This is delicate because until discharge a fiduciary obligation remains. These obligations extend to firm: firms may not ask you to step down arbitrarily. Lawyers stepping down will get paid and may retain the file until they are paid (solicitor’s lien / droit de rétention, 2185 CCQ).

D. Costs and fees

There is a different between costs and fees. Costs are shifted, fees are not.

Fees or extra-judicial fees / frais extra-judiciaires: the lawyer’s bill or account existing on each side of the lawsuit.

Costs or judicial fees / frais judiciaries: paid by the loser and are fixed on a tariffs of costs subject to legislative or regulatory determination.

All Canada adheres to the “world rule” that the loser pays the costs, but the world does not include the US as the US has no cost shifting (no downside cost risk on initiating a lawsuit). Costs are almost always lower than fees. They are subject to review by a taxing officer. Justification of the rule is that winners should have the right to recover what it took to

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recover legitimate rights. This rule also deters lawsuits due to generalized risk aversion, the US deviated to eliminate the risk aversion problem (supposedly helping the underdog).

Beyond the general debate about costs, there is a debate about taxing. A few years ago, the Quebec Bar complained that costs have not been updated since the 1970’s. They have become derisory as they are linked to legal aid. This means that Quebec is today close to the US rule. Warning: this is not the case everywhere, for ex. BC has up to date costs schedules. The question is whether you shift costs, but also how much you shift. Note that lawyers keep shifted costs received from the other side (“distraction”) and have an ethical obligation to advise their clients of this and deduce costs from fees.

There is judicial discretion to shift costs, which means judges evaluate the conduct of litigation.

Oct. 2nd, 2006

1. Costs1. Costs

a. How does the cost system work?

Taxing officers (or greffiers or masters) with quasi-judicial powers handle questions of costs. Judges decide on who gets costs and then if a taxing officer or himself fixes costs, it is becoming common for the judge to do it. For this purpose, lawyers have to create a “bill of costs” including fees and disbursements.

Ex.: $1,000,000 action in which the plaintiff loses. No one pays the 1M to anyone. The plaintiff gets zero as judgment, he also pays fees to his lawyer (ex. 50K) and since he lost he pays costs (ex. 25K), which is paid to the winner. The winner also owes her lawyer 50K, but only pays 25K, the remaining 25K is paid by the loser. The 25K in costs is the plaintiffs’ debt. So, in the end, the plaintiff pays 75K and the defendant pays 25K. The 25K is simply a transfer between sides, and does not increase the total amount due. In the US, each side just pays its bill of 50K, i.e. its own costs. Most of the 25K will actually be compensation to lawyers.

Generally, the costs go towards the winning side’s bill (distraction). If the costs are not paid by the losing side (e.g. it goes bankrupt), then the lawyer collects the full bill from the client (no distraction). The client then can decide if s/he should collect the costs in bankruptcy.

Costs come at then end of trial, and include necessary things such as photocopies etc. They are awarded as a judicial order. Sometimes judges depart from the usual rule (“costs in the cause”), use discretion, if they deem that someone acted poorly or there is some other overriding imperative.

In Canada losers lose more and winners win more. So there is a higher requirement for strategic decisions in Canada, whereas litigation is smoother in the US. In the US judges can make a motion for costs, but it never really happens. Even if one is abusively sued, one does not obtain any costs. Quebec levels the impact, since costs are low, which is intentional according to Glenn.

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If costs are awarded by a taxing officer, one can most likely appeal to the court that sent the file to the taxing officer. Otherwise it’s a matter for the court of appeal. This is arguably why for big judgments judges do it themselves, to limit appeal possibilities.

b. Judicial discretion in penalizing winners

Foucault Pontiac Buick inc. c. Clinique Auto Ste.-Adèle inc., QC PC 1985An action against the President of a garage, the plaintiff won the suit and therefore should get costs, but since they operated a pre-judgment seizure against the garage and owners’ personal belongings which was seen as abusive, the winner got no costs.

An order that the winning plaintiff pay costs is possible but very rare. If the trial is run very poorly, it is likely that the order for costs will be against the lawyer directly. Costs are not the normal way to punish.

c. Judicial discretion in penalizing losers

This can happen even if losers already have to pay costs. Judges can increase the amount of costs that losers have to pay. The tariff of so-called party-party costs (now partial indemnity) is the normal case (5% in QC to 70% in Manitoba). It’s a partial indemnity for the fees. In Quebec there is no more.

In COL however there is also solicitor-client costs (substantial indemnity, upwards of 80%). If this happens, we know it was conducted very poorly. How is one to determine what amount it will be? It is not based on the actual lawyers, but based on the local average in the town for this type of work. This come from a process whereby the client taxes the lawyers fees, come from jurisprudence of unhappy clients. What is a reasonable fee is determined not by happiness of the client but from previous cases. Note that this is generally of no consequence to the actual costs question.

It is possible for a party to be compelled to pay the other sides’ fee of their lawyer. This is very rare and the ultimate condemnation. The only worst thing, is a solicitor liable for her own clients’ costs payable forthwith, i.e. immediately (ex. a totally abusive motion).

Think about this as compensation, a side effect is control. In France, lawyers don’t like having fees as part of the costs, because they don’t want supervision.

d. Lawyer liability for costs

In Foucault, the president of the company was getting sued. He won the suit and was thus entitled to get costs, but who pays those? Here, the lawyer may be liable. Two issues:

- Effect of client instructions. Lawyers may claim “my client told me to do this”. Glenn is doubtful that this would stand up. A lawyer should be ethical himself, not a Rambo or just a mechanical agent. In Sperduti a family member of the plaintiff, who was entitled to claim, was left out. There was an appeal of a previous ruling that this plaintiff was not allowed to claim which was successful, but costs were incurred because of Sperduti’s lawyer’s omission, so it was found that he should pay a full indemnity. And this was just for the motion itself, not the final judgment. This is a judgment, so it is possible to appeal (threshold in Quebec is $70K for the right to be

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automatic). Such an appeal is not a new cause of action, even though it’s the lawyer, and not the original party, that’s involved.

- Audi alteram partem. Before a lawyer is held liable, s/he needs to be able to speak to this. There should be no condemnation without a possibility to address the issue.

e. The case of Quebec

If one wins in Quebec and is entitled to costs, little is had because the tariff is badly out of date. Jurisprudentially, can anything happen? See Viel (QCA, 2002), in which a plaintiff said that the tariff was too low and that damages included not just the wrong but also the lawyers’ fee. The Court of Appeal disagreed.

To open the door to saying that costs can be awarded as damages, it must be pleaded that it is an abuse of right to sue or defend – this is almost a procedural right against abuses of procedure. It would not abuse in contract, tort, etc. This can be either for an entire case or for the specific motion. But this is rare.

f. Costs rule and settlement negotiations

There is new law in Quebec on this point (Morival case) and it is governed by 49.10(2) RCP in Ontario. Imagine a plaintiff that sues a defendant for $100K and the defendant makes an offer to settle for 50K. It is refused by the lawyer and the judgment ends up being only 40K. If a lawyer refused a settlement offer when the terms were better, then there is liability for costs. Morival says that liability for costs follows the rule applicable in the rest of Canada. In 49.10 RCP, however, speaks only of costs after the date of the offer. So it may be partial costs

This forces lawyers and parties to think more about whether to accept a settlement or not. Settlements are no longer inconsequential. In the UK, they are sealed offers, of which copies are provided to the court so that it knows what it was. Here, we just let it be proved later.

Oct. 4th, 2006

2. Fees2. Fees

The fact that fees are never shifted to the other party has become controversial given that lawyer’s fees have become exorbitant. The discussion is now how to make courts available to citizens.

There are two broad historical attitudes about fees:

- COL was hostile to litigation. Post-1066, there were few judges with a limited mandate (jurisdiction), everything was left to lawyers. The system was unable and unwilling to entertain many actions. This evolved into a rule against external funding given the small size of the system (there was a crime and tort of “maintenance” from which lawyers were exempted, there was also “champerty” which was a tort and a crime where there was maintenance with a contingent participation in the result). Lawyers could not work on a contingent fee, there could be no 3rd party financing of litigation, there could not even be assignment of claims or debts: “liability inheres in the bones” according to Lapham. Note that courts of equity were different. Given

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all of this, there was public taxation of fees preventing lawyers from charging too much.

- CVL was largely different. The court system was very open, required no writ, the judiciary was large and had a broad function, etc. so lawyers had little to do. External funding was permitted. Sale of litigious rights is acceptable (still at 1782-4 CCQ) and seen as a way to increase access to courts. There was no notion of maintenance or champerty. This led to no taxation of fees since they were relatively low. The limits in CVL were (1) prohibition of pacte in quota litis (lawyers and judges cannot participate in the acquisition of litigious rights, 1783 CCQ, including a contingent fee) and (2) no retrait litigieux (right of redemption in CVL English), i.e. the possibility to eliminate of liability by paying a créance assignee only what he paid for it (no profit to be made).

In COL, litigation became expensive which led to pressure to open up the system. In CVL, adoption of COL trials modified the system. Today the approach in Canada is increasingly similar. In COL Canada, there is still taxation of fees in front of taxing officers (motion may be made by lawyers and clients) to control them – not in Quebec or the US.

In Re Solicitors (1972), a $24K fee was reduced to $4K by taxation. According to an article, 20% of taxation cases reveal a reduction of 50% or more. Criteria used by taxing officers are broad and quite vague. One must look at taxing jurisprudence for ‘going rights’. In Alexander v. McKenzie (1984), the court decided to reduce the amount considerably due to excessive travel costs – the possibility of taxation does not prevent lawsuits on fee bills , courts will use roughly the same criteria. In Quebec in the US, fees can only be contested in courts. The Quebec Bar has set up an arbitration mechanism to hear account contestations given the high cost of litigation today (lawyers called randomly to do this like jurors, apparently works well). These rulings are subject to judicial review in the Superior Court, ex. Gagnon c. Conseil d’arbitrage du Barreau du Québec, J.E. 2006-341. In A. c. B. (1983), a lawsuit was possible after the client had not availed himself of the 45 day window to go to arbitration. There is an ethical obligation and it is a pre-requisite to recovery that the client must be informed of fees throughout the process. The US is now starting to emulate the Quebec model.

3. Financing3. Financing

Contingent fee / pacte in quota litis (1783 CCQ) is a pre-litigation agreement between lawyer and client (it never has been forbidden to have a “success fee” post-litigation). There is no cost the client in event of loss: no win, no costs, no fees. It will involve a portion of judgement recovery, usually expressed in % (in the US, often 30-40), but not always (conditional fee arrangement in the UK: multiplier of usual fees or lodestar, often 2). The idea is to over-compensate the lawyer for the risk.

There are many innovative formulations of such arrangements. In Quebec, a court struck down a lawyer-client agreement of a fixed fee + 20% of gains (lawsuit over a lottery ticket). This was nothing short of preying (lawyer assumed no risk, criticized as lucre).

There are now contingent fees in Ontario (after it was allowed by all other COL provinces through statutes), since McIntyre Estate v. Ontario (AG) (2002): contingent fees are not champerty per se but unreasonable contingent fees will be struck down. This will be

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controlled through taxation (built-in control unlike in the US). In Quebec, contingent fees have always been prohibited by the CCQ, CCLC and earlier French law. Lawyers and courts are systematically ignoring 1783 CCQ (except in family matters) – not jura novit curia. It is seen as acceptable because everyone does it in North American adversarial justice.

According to Glenn, there is little activity on the basis of contingent fees, unlike in the US. This is partly because awards by courts are low, most car accidents are not litigated, cost shifting means losers pay (lawyers have to pay everything as ‘no cost to the client’, even if a tax-deductible business expense), there is no insurance. All of this is a considerable deterrent for lawyers to ask for contingent fees (in Quebec, costs are lower, may be less of an issue).

Third party financing was a prevalent phenomenon about 5 years ago. Companies such as the Accident Group (UK) and Expertfunding.com (US) have disappeared. The idea was “no recourse funding”, i.e. that lawyers would swallow loses, costs, fees if they lost with no recourse against the client. This was contingent in winning enough cases (Accident Group went bankrupt!). Recently, the Ohio Supreme Court found that a form of 3 rd party financing was champerty and thus illegal. At Smith v. Canadian Tire Acceptance Ltd. (1995), 22 OR (3d) 433 the Ontario Supreme Court struck down an attempt to sell shares in a $1B action against Canadian Tire as champertous, and it awarded costs on a solicitor-client scale. In Quebec, for lack of champerty, the only option is abuse of right (no jurisprudence on this question, in principle more open). One argument by financers for allowing their activities is that insurers, unions and professional organizations are already doing this and this possibility should be open to the general public.

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II. The judiciary

A. Appointment, Independence and Control

Why are judges independent? Dworkin reflected on the achievement of results and was primarily concerned with substantive law, which doesn’t have much to do according to Glenn. Judges produce judgments, i.e. decisions that are binding and have res judicata status which can be executed. Judgements provide finality in the decision-making process, as they spell out obligations of named parties. This charaterized Aristotle’s concept of active justice, to specific facts, as opposed to general rules (passive justice).

Judges must also act judicially, that is to be impartial, idea that came from religious institutions such as Christianity, Judaism and Islam (John Nooman, professor at Berkeley: God does not take gifts to judge). This is the opposite of the principle of reciprocity: no bribes or payment from parties. The judge is thus different from arbitrators paid by the parties.

In the world, there is a continuum from the English judge (highly elitist, independent, wealthy, QCs and small group of about 100 – there are justices of the peace for small matters) and most of the rest of the world (about 180 countries) where the judiciary is large, corrupt and incompetent.

Canada is trying to maintain the same standards for judges as the UK, but with about 1,500 superior court judges, which is unique. There is no split profession so that anyone can be appointed to the bench after 10 years of bar membership. A study found 5,000 applications over 5 years, about 12% of which were successful. This group is much less selected than the English equivalent. Then on the continuum come the CVL (independence of judiciary but it is young, large and somewhat carriériste / autorité and not pouvoir judiciaire) and US (federal more independent: appointment for life; state judges are mostly elected with campaigns funded by lawyers and thus not independent) judges. Glenn says judges are to be trusted to decide according to law in about 15 countries, i.e. UK, Canada, European CVL, US federal courts.

Oct. 10th, 2006

Judiciary independence continuumLess independent More independentR.O.W. US - State <= BAD Continental - Civilian US - Federal Canada UK

GOOD => Commonwealth (some)At least 150 States At most 50 States

This is partly why arbitration is becoming so common: no guarantees with respect to the local judiciary. Choice of law clauses are very important in this context. Interestingly, all jurisdictions on the “good side” have inherited from Aristotelian / Greek philosophy, monotheistic religion and Roman law (litem suam facit: judges cannot make litigation their own, i.e. decide on their opinion rather than law) which gave rise to the idea of judge which was valued. The Act of Settlement (1701) also introduced the idea of se bene gesserit (judges tenured during good behaviour, institutionally independent), which was a historical accident: commons and judges vs. king and chancery. Elsewhere, these ideas have little traction and even cause problems (newly powerful but still corrupt judiciary).

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The factor of democratisation, typical of State judiciaries in the US and theoretically of the USSR (law comes from popular will), now agitating Canada as well, is spreading. But this is a very difficult endeavour if the judiciary is to remain independent. Many countries are now working on judicial reform, which is a large part of IMF institutional reform programs.

Impartiality and finality are the two main characteristics of judicial power, as opposed to the legislative and administrative powers. The separation of powers supposes that the judiciary is different from other powers. Courts render final and active decisions (vs. legislative) and have no policy to implement per se (vs. administrative).

1. Nomination or appointment1. Nomination or appointment

In Canada (federally), it’s the GG in Council, speaking through the Minister of Justice, which acts according to recommendations of a judicial appointments commission (judiciary, lawyers and lay persons). In provinces, the system is similar except it is the LG in Council. This whole system is called executive nomination. There are inherent biases: rewarding political friends (particularly Prairies and Maritimes), Ziegel argues judges will be overly favourable to the government (unusual argument according to Glenn). Judicial appointments commissions have been more or less successful in eliminating patronage.

The US is not as advanced as Canada, Senators control most of the process (esp. for circuits). The alternative is elections, also with recalls, etc. It is argued that this is law as expression of sovereignty by the people. This sounds great, but no one has ever been able to implement it with judges remaining independent (lawyers make campaign contributions, notion of reciprocity). Hence the notion of “diversity” whereas a non-State resident has an automatic right of transfer in federal courts (presumption of local bias in State courts). Glenn is arch-opposed to this model: individual litigants bare the brunt of airy-fairy political theory.

The present Canadian government claims to be committed to implement a “democratic approval” process, thus the hearings of Supreme Court nominees by parliamentary committees, which have no formal power of approval (McLachlin CJC pointed out in an article that the Constitution Act, 1867 would have to be amended as right now the GG in Council appoints. This is linked to the principle of responsible government [built in checks and balance], unlike “irresponsible” government with Senate approval in the US [formal checks and balances]). Glenn believes that democratization of the judiciary in full or in part is perverse in our system and undesirable in its objectives, but also notes he is now in the minority.

Note that the USSC deals only with constitutional and federal law (no State law, little criminal law). The SCC deals with all matters of law (80% of caseload is non-constitutional). This calls for a different institution, which is much less politicized in Canada: “The SCC should remain a court and not a vehicle for popular opinion” - Glenn. No judge is perfectly impartial, but there have been centuries of efforts to remove the judiciary from the political process.

2. Terms of office and control2. Terms of office and control

With a judiciary of about 1500 people, there is increasing litigation relative to judges’ functions. S. 99 of the Constitution Act, 1867 repeats the Act of Settlement: judges are

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tenured during good behaviour, only removable upon joint address of the Senate and House of Commons to the GG (never happened). S. 96 of the Constitution Act, 1867 specifies that judges are paid by the Federal Government and salaries are paid out of the Consolidated Revenue Fund (not subject to parliamentary debate and budgeting). Judges are incredibly shielded from the political process.

It is often said that “judges are bound by law”, which is senseless according to Glenn. In this context, it would be impossible for judges to differ. Despite what significant legal philosophers have said, the rule of law implies that judges are not bound by law: they have a purely assumed ethical obligation to act as judges and not as legislators, etc. As such, they are free to seek the appropriate law for a decision. It is often said that judges must decide a case because it is their task, yet no one can actually compel this directly. “You don’t know what the law is for a case until a judge has rendered a decision, so you can’t bind the judge to the law, that’s no more than a political myth. Canadian Codes of judicial ethics are consistent with this: “rendre la justice dans le cadre du droit”.” - Glenn. Even the binding force of precedent is not active justice. It only allows the reversing of judgements on appeal, it doesn’t actually force judges to decide anything. “The power of common law judges to distinguish is the best indication that judges are not bound by law.” - Joseph Raz. Obviously, this is partly constrained by the phenomenon of ‘moving up’ in the judiciary.

The closest thing to a judiciary code of ethics is Ethical Principles for Judges, which are aspirational as opposed to specific rules. Accountability / imputabilité is important for judges, unlike responsabilité (i.e. civil liability) which cannot exist. It is impossible to impose fixed rules on totally independent judges, at best guidelines are useful for judges seeking guidance.

In Williamson c. Mercier, J.E. 2004-1402 there was a challenge to a retired judge hearing a case. It was decided that such judges had to re-take the oath of office (fundamental importance), but did not have to be called back by the executive. In Re Ruffo, J.E. 2006-60, the QAC recommended destitution of Ruffo J. to the LG and, more importantly for us, said that ethical obligations of judges constitute a requirement of the judicial function and result from an engagement by the judge embodied by the oath of office.

Oct. 11th, 2006

a. Disciplinary proceedings

In England, there are no disciplinary methods of control of judges. In Canada, given the size of the judiciary, independence has been tempered to allow for some control. Standard methods of control are ethical, civil and criminal just like for lawyers (criminal relevant for civil which is relevant for ethical, but not the other way around). All of these are potentially applicable and have been tried. Given the growing judiciary, these mechanisms have been used increasingly.

Disciplinary proceedings are today formalized in Canada and all provinces. The procedure has actually become quite formal. A lawyer concerned about a judges’ conduct has two options: requesting recusation, disciplinary complaint (federally to the Canadian Judicial Council, must be in writing and name the judge). Some provincial judicial councils have minority lay membership, the federal one exclusively judges. Councils have chairs or other officials which act as filters to determine prima facie validity (relates to decision or conduct?).

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Most complaints are actually disguised appeals – according to Glenn, anything contained in a judgement should be immune from a disciplinary attack (ex. Ruffo J. ordering child picketing in the minister’s office, perhaps an innovative remedy). The attacked judge is allowed counsel in the whole process, paid by the government. Councils can also engage counsel for fact-finding. If chairs believe there are grounds for the complaint, s/he sends it to a panel, which may dismiss (like the chair) the complaint, reprimand or start an enquiry (which the chair may also initiate) which may lead to a joint address for removal (an enquiry happened only 5 times in 25-30 years, the first case was that of Berger J. which was found to having committed an “indiscretion” and resigned, which established possibility of a reprimand rather than only dismissal – same in all provinces, unlike in Continental Europe were it is possible to interfere in a judge’s career path).

There is an understanding that three reprimands means necessary resignation, but Ruffo J. was reprimanded 10-12 times before the Court of Appeal went further (exception that confirms the rule?). Some jurisdictions have distinguished private and public reprimands, but most are public (hard to ‘anonymize’ in annual reports). Arguably, this process is not very amenable to satisfying complainants, but at least there is a transparent process. Most complaints do not involve misconduct anyways. Glenn believes that the 1-800 complaints initiative in Ontario was a bad idea: the judiciary is an independent power, not a service enterprise. The vast majority of complaints relate to impartiality in the court room or conduct affecting it outside the courtroom. By en large, this has been a successful enterprise: judges discipline themselves in a transparent matter.

Suggestions in France following Outreaux: judges a minority on the Conseil de la magistrature; new fault of intentional violation of basic principles or criminal procedure (sanction: can’t sit alone in the future); new position of “disponibilité” (suspending for five years for “cas pathologiques”).

b. Civil liability

A judge may not be sued at any time in any court for civil liability. It is possible to get another judge to decide whether a suit against a judge should proceed. However, the invariable answer will be a motion for non-suit or to dismiss on grounds of absolute judicial immunity to civil liability (unlike prise à partie in New France in the Code Louis). What must then be determined is the application of absolute judicial immunity. In Re Mackin and Strange (1996), it was argued that slander was not part of acting judicially with finality and impartiality. So a case in civil liability must be framed in excess of jurisdiction (doesn’t get you very far) and mostly acting beyond judicial capacity. Acting beyond judicial capacity implies no immunity as it is an immunity of function, not a personal immunity. One may also allege abuse of power à la Roncarelli (authority even in COL although CVL language), malice and interest. There is one famous case in the US where this was successfully argued: a judge who had a vendor of bad tasting coffee arrested and sentenced him to one day in jail. One has to overcome the natural reluctance of judges to entertain such suits.

c. Criminal liability

There is no judicial immunity whatsoever against criminal accusations. If conduct has sunk that low, the case for immunity has disappeared. There have been several cases: traffic ticket fixing in Manitoba, sexual harassment by Evans J. in Ontario (acquitted), etc.

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B. Recusation

The mechanism of recusation, used before potentially prejudicial actions, is based on COL and codified at 234 CCP and following. It is the ethical remedy if one believes that a judge is unfit to preside over the case for some reason. In the US, federally appointed judges now have conflict of interest checking software. If judges do not comply, disciplinary proceedings for conflict of interest could follow. According to Glenn, standards of recusation are getting tighter. 234 CCP speaks of optional recusation, 235 of automatic disqualification (“inhabile”) given personal interest in the case. The division between the two are vague but appropriate for virtue ethics. The leading case on personal interest in COL is now…

Reg. v. Bow Street Metropolitan Stipendiary Magistrate, Ex parte Pinochet Ugarte (No. 2), HL 1998The case was that of the Crown versus Pinochet. Lord Hoffman sat on the trial. Amnesty International was granted intervener status, it had a charity presided by Lord Hoffman whose wife also worked in the organization. This was sufficient to disqualify Lord Hoffman, although there was no pecuniary interest whatsoever.

It is enough to be tied to parties that have expressed an interest in the case: very engulfing notion, which may include language in 234 CCP (“reason to favour one party over the other”).

According to Gold CJQ many years ago, if there are grounds for recusation, the best thing is to appeal the judgement. This is faster than interlocutory motions which themselves can be appealed. According to Glenn, this is bad law because it goes against the CCP and parties should not suffer from a compromised judge’s behaviour. However, judges in Quebec may now rule on such a motion themselves, as opposed to a party going to a different motions judges (consistent with COL practice and ethical obligations).

Motions for recusation have been made on many bases such as race, language, etc. There exists a doctrine of necessity in that all judges are francophones or anglophones, part of a racial group, etc. yet cases must be decided by someone. In R. v. S., [1997] 3 SCR 484 (violence in NS) it was found acceptable by the SCC for a judge to take judicial notice of the fact that that the police sometimes overreacts with respect to some racial groups.

In the UK, control of the profession has now been given to an independent body outside the profession. It just levied a fine of £250,000 for faulty consumer complaints’ procedures!

C. Judicial powers

Judges have powers beyond what the law specifies: general inherent powers in COL, codified at 20 and 46 CCP. Judges are to judge, not just apply particular rules of law. This defies analysis, there is a certain amount of judicial discretion, i.e. power to fulfil the judicial function.

The contempt power was historically open to outrageous abuses: a UK judge ordered that someone who had thrown a piece of turf towards him to have his hand cut off. There is today an idea of proportionality in the exercise of this power which goes with impartiality. There are still borderline cases, ex. imprisoning a spouse for failing to pay child or spousal support in Parent c. Perreault (1979) (debtor’s prison in case of wilful disobedience which is very much debated). It is possible for lawyers to be found in contempt of court, sometimes

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for double-booking or wearing improper attire (!). The only argument against such a contempt order is that it would be disproportionate and these orders are increasingly rare. The OCA found that a lawyer saying that “judges and police stick together like crazy glue” was not in contempt.

The parens patriæ (cloak of care) power has been much debated. The SCC found in Re Eve (1986) that sterilization of a disabled women could only be authorized for therapeutic reasons rather than convenience of relatives, but the House of Lords have found the opposite.

If there is a problem of non liquet, one must plead general inherent powers and that a court may in the circumstance act with judicial discretion. In Kolomeir c. L.J.Forget & Co. Ltd. (1972(, the QCA found that civil proceedings could be delayed until criminal proceedings were concluded, even though this was codified nowhere. There was an attempt to obtain an order in Commonwealth Plywood Compagnie Ltée. c. Conseil central des Laurentides (C.S.N.) (1978) where the Superior Court refused to do ‘police work’ in ordering that illegal strikers be unmasked.

These powers are examples of the autonomous power of the judiciary.

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III. The courts

There are two types of jurisdiction:- Ratione materiæ, subject matter jurisdiction which is of public order (fundamental

organization of the judicial system). It must be raised by the court on its own volition and may be raised at any time.

- Ratione personæ, territorial jurisdiction which is not of public order (parties may choose the forum or consent implicitly). Here any objection must be raised immediately. There is much litigation over this in NAFTA.

A. Subject matter jurisdiction (ratione materiæ)

US lawyers often ask in Canada “where’s the federal court house?”. The Canadian court system is in fact unitary because of the Superior Court institution, which descends from English royal high courts which have general and residual jurisdiction ratione materiæ. This is not equivalent to the French system which has public law courts (up to the Conseil d’État) and private law courts (up to the Cour de cassation). Initially in Canada, there is no distinction between federal and provincial law and there is very little of a federalized judiciary unlike in the US. The US has two parallels systems: federal (district => circuit => USSC) and State (stops at the State SC) which places a heavy burden on litigants. But how can the system be unitary with provincial, s. 101 and superior courts?

Oct. 16th, 2006

Choosing to be in the wrong forum can have disastrous consequences on claim given prescription – it’s an important matter.

1. Courts of first instance1. Courts of first instance

a. Provincial courts of first instance

The choice of forum here can have important consequences, notably on the possibility of appeal. There are difference between high level theory of jurisdiction (macro-level) and what actually happens in practice (micro-level). Three models have influenced the Canadian system.

The English court system was somewhat of a cloud: almost everything fell within the jurisdiction of royal courts, save for a few specific matters. This was inherent jurisdiction. Further, there was no court of appeal.

The Franco-German or continental model makes a distinction between private law (tribunal de grande instance, cour d’appel, Cour de cassation) and public law (tribunal administratif, tribunal administratif d’appel, Conseil d’État). This stemmed from the belief that it was against the separation of powers to have executive actions controlled by normal courts. There also always were courts of appeal: judges, unlike juries, could err. This involves a choice of forum. This model is very influential in Quebec.

The US model includes appeal courts but no distinction between private and public law: English model federalized. For ex., in California there is the Superior Court, Court of Appeal (2 levels), High Court (state law). Federally there is District Courts, Circuit Courts of Appeal,

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USSC (federal and constitutional law, ‘diversity’ in case of removal). The overall phenomenon of this simple idea is actually very complex (obligatory course in federal court jurisdiction in US law schools).

In 1867, Canada adopted a multiple unitary court structure. Each colony wanted to keep its own judiciary – these courts became Superior Courts with inherent jurisdiction based on the English model. The continental model was rejected. Also, the federal government got the power to appoint all Superior Court judges (s. 96, GIC). It also got the power to create federal courts (s. 101), including the SCC which is the final jurisdiction of appeal for everything from Superior Courts.

Few federations have a mixed judiciary: most federations have either a unitary or fully federal (i.e. only substate entities have courts) judicial systems. Only the US created a fully mix system. “The US should not be used as a model for any other country”. In the Anna Nicole Smith succession case, it took 5 years for the USSC to decide on jurisdiction alone.

The basic Canadian system is the Superior Court, Court of Appeal, SCC. But there is an idea that each legislature should be able to have its judiciary. There was an Exchequer Court in Canada since 1870 for claims against the Crown. In 1970, John Turner decided that Canada was to have a Federal Court and FCA with a specific jurisdiction. This had to meet the s. 101 requirement and there needed to be a legislative grant of authority. Note that there is substantial hostility towards those courts.

Provinces also have the opportunity to create provincial courts. As Madison said, a legislature without a judiciary is like a tree without branches. Quebec has pushed this the furthest for political reasons: the Cour du Québec has jurisdiction up to $70,000. Although it is politically incorrect to say this, provincial courts are inferior courts subject to the Superior Court’s supervisory jurisdiction.

So despite the unitary character of the court system, there are three semi-parallel court systems. Furthermore, there are administrative tribunal, both federal (CRTC, IRB, Competition Tribunal, etc., with review by FC or FCA) and provincial (huge number, ex. BREF in Montreal).

Think of a complaint about a lawyer to the Quebec Bar: Syndic => Disciplinary Committee => Tribunal des professions (division of Cour du Québec) =judicial review=> Superior Court => QCA => SCC. A few years ago, the Tribunal administratif du Québec was created with the inspiration of the Conseil d’État in an effort to create coherence in Quebec administrative law. Its decisions are nonetheless subject to the Superior Court’s inherent general jurisdiction, in judicial review.

A case may begin in five different places. In some cases, there are over 6 levels of decisions. Twice in the past 20 years, the Quebec Bar has proposed to create a Cour suprême du Québec, above the QCA and under the SCC, to uniformize jurisprudence. Both attempts failed, because this made the system even heavier according to Glenn. The system is considerably more complex than only one Superior Court… To some extent, there are firewalls between Superior Courts and federal / provincial courts, but these are not fully operative.

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This is a question of ordre public and a court must indicate a lack of jurisdiction proprio motu.

Bélanger c. Ladouceur, QC CP 1975 Facts: Ladouceur sued Bélanger over a car accident, he won but Bélanger didn’t pay the debt. Bélanger’s licence was taken away. The remedy for Bélanger was applying for a writ of mandamus against the Ministry of Transport. Back then, the Superior Court had a backlog beyond 18 months. Bélanger sued in Provincial Court, yet it is a statutory court without this jurisdiction, so it was Ladouceur being sued for a declaration that the debt had been paid. Held: The Provincial Court judged that the claim did not meet the criteria for its jurisdiction, as it was basically an administrative law remedy sought. Every plaintiff has the freedom to formulate claims, but these rules are of public order and must be enforced according to their true intent. Otherwise, judicial review would have likely been called on, which would have defeated the plaintiff’s purpose. In some sense, the jurisdictional rule is self-enforcing.

Corporation des maîtres mécaniciens en Tuyauterie du Québec c. G. Famery Plomberie & Chauffage, QC CP 1975 The plumber’s corporation levied a fine on a member and applied to have it enforced, as homologation in the Provincial Court. But it found that its jurisdiction was excluded as it is not a court of appeal, it has no possibility of reviewing the merits.

Caisse populaire de Notre Dame de Québec c. Cité de Québec, QC SC 1969Facts: The caisse was seeking a declaration for non-liability for municipal taxes in Superior Court. This was attractive to plaintiffs: possibility of appeal, possibility of obtaining a judgement applicable to the future. Held: This was prima facie correct, but there is a specialized tribunal which has specific jurisdiction for claims under a certain amount. The SC its own jurisdiction to grant an administrative remedy by way of declaration because the true nature of the case was a contestation of a tax bill. Jurisdiction was found to depend on the true nature of the claim, plaintiffs may not control it: “go beyond the veil of the statement of claim”.

34, 35 CCP grants jurisdiction to the Cour du Québec to the exclusion of the Superior Court.

The system is identical everywhere in Canada (only amounts vary). Imagine a plaintiff suing for $50,000 (Provincial Court), there is a counterclaim for $100,000 (Superior Court). In order to preserve coherence of the case, the case will be heard in the court which is most favourable to an eventual appeal, therefore Superior Court: 34.2 CCP. Imagine another case of three plaintiffs, each suing for $30,000 (Provincial Court), but which join claims. The amounts may not be aggregated ($90,000, Superior Court) for the purposes of establishing jurisdiction. Such an issue went up to the USSC in the context of a class-action. It decided (using an Aristotelian first principle) that justice is towards individual and simple aggregation goes against public order. Rationæ materie jurisdiction is a question of public order decided on the basis of individual claims.

Greenberg c. Denis, QC SC 1985Denis was suing in a “representative case” on behalf of a large number of plaintiffs, whose claims were all under the Superior Court threshold. So the SC denied its own jurisdiction: specific individuals have specific claims. Greenberg appealed the ruling (less possibilities of appeal in Provincial Court) and lost.

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What’s the remedy in case the court is the wrong one? Formerly, 2225 CCLC provided that a claim in an incompetent court did not interrupt prescription. Many claims died off in this way. Today, 2895 CCQ gives three months to refile a claim. Jurisprudence followed this (American Home Assurance Co. c. Ascenceurs Drolet Koné inc. (1996)) and also created a possibility of ‘transfer’ of a lawsuit. In COL provinces, only refiling is possible, there is no provision for transfer. However, the transfer system does not apply between the SC and federal courts and probably not between administrative tribunals and the PC or SC – once you’re out of closely functioning courts, it’s a problem. There is no overarching authority providing a remedy, operation of the CCQ is limited.

Frequently, lawyers file in several places, esp. to protect themselves from prescription. But actions may not proceed simultaneously in both places: lis pendens.

b. The Federal Court

There are federal administrative tribunals, the FC, FCA (up to the SCC). There may be imperative jurisdiction basically excluding Superior Court jurisdiction: some IP, federal administrative law, immigration. There may also be concurrent jurisdiction: concurrent jurisdiction, bills and notes (bills of exchange, commercial litigation), interprovincial undertakings, maritime law… The FC today is a highly specialized court, it has much less importance than federal courts in the US. The federal government has been reluctant to grant the FC with much authority vs. Superior Courts. There are no districts or territorial jurisdictions: the FC may sit anywhere (resident judges across the country, only administrative) and lawyers from any province may plead anywhere.

The limits of what the FC can do are found in the legislatively granted authority under s. 101. It is quite limited. For ex., the FC has no jurisdiction over criminal law, divorce or bankruptcy, even though it is federal law. There are also constitutional law questions: is the federal government acting for the “better administration of the laws of Canada”? In Canada, this is Quebec North Shore Paper Co. v. Canadian Pacific Ltd. (1976): Only claims on the basis of federal legislation can be brought in FC. Oct. 18th, 2006

If there a grant of authority elsewhere that is exclusive in nature, if one is precluded from suit in the Superior Court? A simple grant of authority means concurrent jurisdiction. The danger lies in exclusive grants of jurisdiction (to the FC, for ex.). In Quebec, the CCP says:

34. Except where a recourse is brought under Book IX, the Court of Québec has jurisdiction to the exclusion of the Superior Court in any suit:

(1) wherein the sum claimed or the value of the thing demanded is less than $70,000, except suits for alimentary pension and those reserved for the Federal Court of Canada;

(2) for specific performance, annulment, dissolution or rescission of a contract or for reduction of the obligations resulting from a contract, when the value of the plaintiff's interest in the object of the dispute is less than $70,000;

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(3) to annul a lease when the amount claimed for rent and damages is less than $70,000.

In the latest JE (2006-1844), Mounadi case: two parties had entered into a compromise following a labour law dispute: sum of money, reimbursement of EI, certificate of cessation of employment. The Commission des relations de travail sued in Superior Court for homologation. The employer objected to Superior Court jurisdiction and said that the interest was for less than $70K and should go to the Cour du Québec. The SC ruled that the sum of the claim was determinable as per the sum and EI, but since the certificate had an indeterminable value, the case was within SC jurisdiction.

Plaintiffs always ask for more than they think they will get, as courts cannot award extra petita (beyond the petition). There may also be jurisdictional advantages to doing so (only hard to do if a nominal debt or bill of exchange) – with usually no remedy for defendants beyond defence in the forum chosen by the plaintiff.

Previously, there were constantly s. 96 cases about jurisdiction of provincial bodies. Today, this is relatively quiescent. The status quo is that provinces can increase competence of their bodies, but not abolish judicial review. Between 1970 and 2000, there was much litigation on s. 101 and the extent of the FC’s jurisdiction.

Quebec North Shore Paper Co. v. Canadian Pacific Ltd., SCC 1976Facts: In Quebec North Shore, there was a contract to build an interprovincial railway between Quebec and Ontario. It said that it was governed by Quebec law. But since it was an interprovincial undertaking, plaintiffs sued in the uncongested FC. But the defendant objected that a law of Quebec was not a “law of Canada”.Held: The SCC agreed, otherwise the FC would completely eviscerate SC jurisdiction and would be a competing unitary judiciary, which cannot have been the intention behind s. 101. Two arguments were made: (1) there is a federal CL (residual body of law for federal statutes to take effect) and (2) provincial law fills the gaps within jurisdiction of the FC (here Quebec CVL would become federal CL). In Erie Railway v. Tompkins, the USSC said that there was no federal CL and that residual State law applied. According to Glenn, this is built in to the US constitution and even more in the Canadian one: unitary court of general jurisdiction to apply one CL. This is very controversial because of a large impact on State courts in the US and Superior courts in Canada. The SCC rejected both arguments given the nature of the Canadian court system: there is no general federal CL, nor is it ‘fed’ by provincial law. This means that the jurisdiction of the FC is not all of s. 91 but only enacted legislation.

So to get in the FC, you need at least one argument based on federal enacted legislation. This decision pleased most of the legal community, esp. judges of provincial SCs and CAs and provincial AGs (BC’s AG attempted to abolish the FC into the 1990’s!).

There has been a huge division in doctrinal writing. Quebec writers are against federal CL, most writers from other provinces are in favour. Underlying this debate is the question of appropriate sources for federal CL. Quebec North Shore closed down this discussion. The debate now is what remains in FC jurisdiction. Current litigation is around what “arises under federal law”: the SCC has said that it is sufficient that there be a “nexus” of federal law. For ex., the SCC found that suits for recovery by Canada Student Loans are in FC jurisdiction. Yet, the loan is a contract between the bank and the student, based on provincial CL. The government is only a guarantor which pays the bank after default and then sues the student on

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a provincial law contract but the guarantor status is granted by federal statute. Federal law must be operative at least in some measure.

The SCC has also been almost mean spirited as far as “ancillary or pendant jurisdiction”. In the US, extra parties can be added if the baseline parties are under FC jurisdiction. But here the SCC held that there is no ancillary or pendant jurisdiction. This is a perverse position: the plaintiff sues the (federal) Crown on a provincial law contract in FC, the Crown must counterclaim on the basis of provincial law in SC! The same goes for third party claims: claim against the Crown in FC, appel en garantie by the Crown in SC. This was so problematic that Parliament amended s. 17 of the Federal Court Act to make jurisdiction over claims against the Crown concurrent of the FC and SC. The federal government had to renounce century-old jurisdiction of the Exchequer Court / FC. Today, the FC is a specialized court. Note that provincial law may complement pleadings at the FC.

How serious was the SCC in saying that there was no federal CL? Not so much. There is federal CL as to Crown liability: this goes back to the Exchequer Court and is not very controversial. The major debate is whether there is a federal maritime CL. ITO--International Terminal Operators Ltd. v. Miida Electronics Inc. (1986) says that English maritime law was incorporated by reference: this is CL which feeds FC jurisdiction. Glenn thinks that this was done because maritime law transcends politics and admiralty law is federal in the US. Hostility came from the fact that the SCC said that maritime law was English maritime law: some have argued it is constitutionally invalid because it is unilingual (Braen from U. of O.), Glenn argues that it is in fact CVL as practiced in British courts of admiralty (the CCLC is probably the best statement of it in Canada). Since ITO, the SCC has over-ruled five or six ‘pure’ CL precedents as outdated (ex. contributory negligence bar). In Succession Ordor, [1998] 3 SCR 1273 it is said that CVL is persuasive authority in the context of English maritime law.

2. Courts of Appeal2. Courts of Appeal

This is a controversial question. At CL, there was no appeal. Even today, appeals do not exist as of right: appeals only exist by law (legislation). The only court of general inherent jurisdiction is the SC. Courts of appeal are statutory courts of limited jurisdiction. This happened in the late 19th C. There is a tension between the idea of inherent jurisdiction and statutory courts of appeal.

Jurisdictional limits for courts of appeal are statutory. One must presume that there is no appeal in CL, which is hostile to this notion. It is the reverse in CVL: droit commun d’appel since the 12th C. in France and in New France (it took legislation to remove this right for small claims), as errors cannot be tolerated in a system of pre-existing rules. In CL, courts working with a jury could not be wrong… In the US, appeals are granted more widely – this is a borrowed CVL trait. Almost all States have four court levels: first instance, appeal, higher appeal, supreme court. In France, a judgement of first instance is just a precondition to appeal. In Canada, there is much more filtering out of cases. There is tension between allowing individual justice and clogging of CAs (Continental Europe, US). Denial of some appeals is said to be justified by the need to treat appeals that are heard correctly.

Federal system: FC and FCA (+SCC). Ontario: SC, Divisional Court (with SC judges sitting on it) and CA (+SCC). Quebec: SC, CA (+SCC).

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Most other provinces: QB and CA (+SCC).

Appeals are easiest to obtain from the FCA (see p. 176), then in Ontario, then in other provinces (low caseload), lastly in Quebec where appeals are most restricted, esp. on interlocutory judgements (historical paradox!) because of the small number of judges for a large province.

In Ontario, there is an appeal in certain matters from the SC to the DC: s. 19(1) Courts of Justice Act.

19. (1) An appeal lies to the Divisional Court from,

(a) a final order of a judge of the Superior Court of Justice,

(i) for a single payment of not more than $25,000, exclusive of costs, …

Imagine a plaintiff suing a defendant for $100K and gets $8K. Each wants to appeal: one over $8K, the other over $92K. There is still an appeal to the DC because the judgement was under $25K (exclusive of costs): the value for these purposes depends on the trial judge’s objective evaluation. Over $25K, you bypass the DC and go to the CA. From the DC, you can go to the CA with leave.

Oct. 23rd, 2006

From the FC, everything can be appealed to the FCA (underworked). From the Ontario SC, every final judgement can be appealed either to the DC (<$25K) which also does a lot of judicial review, then appeal to the OCA with leave) or the OCA. These two systems are quite open to review. Quebec has ironically the more typical COL position, hostility to appeals (QCA overworked). This stems from the CCP:

26. Unless otherwise provided, an appeal lies

(1) from any final judgment of the Superior Court or the Court of Québec, except in a case where the value of the object of the dispute in appeal is less than $50,000; (…)

There is an appeal from the SC or the CQ if the appeal is over $50K (doesn’t work if claimed $70K in CQ and got $30K, appeal over only $40K or $100K in SC and got $70K, appeal over only $30K). Otherwise, one needs leave (with individual assessment of appeal) which is very rarely granted. Also, leave is required to appeal an order in judicial review (done in Ontario, usually QCA is the 4th or 5th adjudication level):

26. par. 2 An appeal also lies, with leave of a judge of the Court of Appeal, …

(4) from any judgment rendered under article 846;

Other provinces are somewhere between Ontario and Quebec in terms of their openness to appeals. By their nature, appeals are on fact and law, even if CAs usually defer on facts to courts of first instance (and one can’t bring new facts without permission). Thomas v. Radvak (1997) outlines that any argument of law can be brought at any time, except that social facts

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have to be proved at trial for Charter cases. Joyal c. Construction Raymond Villeneuve inc. (1987) says clearly that one has to appeal from a decision (can’t appeal a non-decision, can reintroduce the claim if not prescribed, otherwise file for judicial review at the (if necessary another judge of the) SC).

If there is no appeal by law, historically, there was nothing one could do. However, there was a need for correction of lack of jurisdiction of the SC (other court or tribunal, public order!). Then one must request a judgement to quash the erroneous jurisdictional SC decision: this is the death knell of the power of the SC (which purportedly could not err on its jurisdiction), as the CA has common law powers not statutorily defined. This is what has happened in the US, where appeal is in the form of “error, appeal and review”. This is the idea of a common law right of appeal. This first emerged in Quebec, it is appearing in other provinces now as well (ex debitate justitias – out of the necessity of justice according to the SK QB). This is little used because otherwise all judicial review would drift up to CAs. “This is your last gasp when your goose is cooked.”

Tantum devolutum quantum appelatum, there is only devolution to the court of appeal within the bounds of the appeal. There are dangers to particularized justice; one is taken to abandon unappealed parts of a judgement to res judicata. Lesson: always counterclaim on everything when a favourable judgement to us is appealed by the other side.

Underlying the tantum, etc. principle, there is individual assessment of claims for the purpose of jurisdiction. The CA is very jealous in this regard. In Joyal, the plaintiff sued for $23.5K and got $2.5K. The plaintiff appealed quantum for $11K (then threshold of $10K), the defendant liability for $2.5K. The CA blatantly said that the plaintiff had an appeal but not the defendant. This was perverse: the defendant could be liable for $13.5K without a right of appeal! In Farmer c. New Hampshire Insurance Company (1987), the defendant got sued by 50 (!) insurance companies. In five cases, the award was $2K (below the threshold), so there was no appeal, even if the CA could overturn the first instance decision on liability. This case is now bad law in Quebec since 2002 because it was overturned by specific legislation, but not necessarily in other provinces:

26.0.1. Where leave to appeal has already been given by a judge or an appeal has already been brought by a party to the proceeding under one of the provisions of this section, any other party may bring an appeal as of right.

The former Quebec attitude prevails in all other provinces except Ontario. See Re Avon Canada Inc. and Minister of Finance of British Columbia (1986), per McLachlin JA.

Traditionally in COL, appeal does not prevent execution of the judgement (unlike CVL suspensive effect). If there was reversal at appeal, then there could be “reverse-execution”. In Quebec, this position has been reversed:

497. Saving the cases where provisional execution is ordered and where so provided by law, an appeal regularly brought suspends the execution of judgment.

In Ontario, there is automatic suspension for monetary judgements only (63.01 RCP).

There is considerable uncertainty when it comes to interlocutory appeals. Interlocutory judgements occur before full trial on the merits. If justice is to be done on all individual

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questions with appeals on interlocutory questions, one may never get to the merits… This has lead to the decision that there is no appeal from interlocutory judgements, however these can be raised at trial on the merits. This is the system in the US, with the exception of “death knell” orders which stop cases from proceeding (final order, really). Many jurisdictions are torn between ideals of individual justice and “pushing cases through the system”.

What kinds of issues are raised in interlocutory motions? Examples are conflict of interest (Martin v. Gray), champerty / financing, recusation, jurisdiction. The SCC has decided three interlocutory appeals on conflict of interest – otherwise it is practically impossible to get leave.

There are different attitudes on interlocutory appeals, which usually track attitudes about appeals generally.

Jurisdiction Appeal de plano Appeal with leave No appealQuebec Final or “death knell” order (if amount

is sufficient)29 / 511 CCP General rule

Ontario Final order (not just “death knell”) to the DC or CA (depending on amount)

Interlocutory order 19(1)(b) to the DC

None

Oct. 25th, 2006

The great struggle in Quebec is to show that an order falls within 29 or 511 CCP. In Ontario, the challenge is to obtain an appeal de plano.

The COL caselaw is struggling on the status of interlocutory judgements as per appeals , as courts of appeal don’t have an established role here. The OCA decided in 1877 (see f.n. 7 and 9 at p. 172 CB) that appeals were only to be heard on narrowly defined final orders (final judgement, death knell order). Slowly, the definition of final order got expanded, first to strangers to the parties, later to substantive issues (Denton v. Jones (1976)). This has lead to conceptual muddle: this “type of order” analysis doesn’t tell us much.

CVL jurisdictions have dropped the “type of order” analysis. Instead, they apply the old maxim of French law: “l’interlocutoire ne lie pas le juge”. The trial judge can change any interlocutory order prior to trial, so there is conceptually no “final order”. When is a judgement final for our purposes? This is only when the action is dismissed for lack of legal basis and there will thus be no trial. 29(2) CCP says “when it [the court] orders the doing of anything which cannot be remedied by the final judgment”. So one has to consider (1) the type of order and (2) the effect of the order (COL asks only the first question, not the functional question of possible correction).

In Fredericton (1970), there was a motion to add a defendant to the case which was denied. A decision on this motion was deemed final. According to Glenn, it is not helpful to say that it “deals with strangers to the case”. However, such a decision binds the trial judge to a large extent and shields the potential new defendant, so this order is final within the meaning of 29 CCP. However, if a defendant is added, it is not a “final” decision, as it can be corrected by a trial judge: dismissal of action, cost shifting. The idea is “chercher la finalité, look for the remedy”. In Denton v. Jones, it was decided that a trial judge cannot remedy retroactively a defective SOC. So, exclusionary orders get special treatment. One would want to insinuate

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CVL arguments in front of a COL court. Generally motions courts are very expeditive and undeliberative, so one wants a possibility of appeal!

29. An appeal also lies, in accordance with article 511, from an interlocutory judgment of the Superior Court or the Court of Québec but, as regards youth matters, only in a matter of adoption:(…)

2) when it orders the doing of anything which cannot be remedied by the final judgment; …

In Dubreuil c. Laliberté (1975), there was a motion under 65 CCP to get the suit declared irreceivable in law. This was correctible by the trial judge, who can later dismiss the action with costs. If the motion had been accepted, the action is gone and the trial judge can’t do anything. So in this case one may seek leave to appeal.

Every Canadian province has a constitutionally valid “security for costs rule”: a foreign plaintiff suing a local defendant in a Canadian court is subject to a motion for security (drives US lawyers crazy!). In Callen c. Lefrançois (1969), such a motion was ordered. Is this something that the trial judge can’t correct? S/he can order return of the money, but one needs to be able to pay. So it may be the case that the order is not possible to remedy, then one can apply for leave. What if the security motion is denied, what can the trial judge do? S/he can shift costs, but can’t go back in time to get security for costs before trial: a costs order cannot be turned into a security order. So an appeal may be warranted in this case, one can apply for leave.

In Hullabaloo A-Go-Go Amusement Inc. v. Teen Clubs International Inc., a motion requesting documents was brought. This was an effect of exclusion, uncorrectable by the trial judge. So leave to appeal could be granted. Had the motion been granted, no appeal would have possible. “If something is going in, it’s bad news for the possibility of appeal”.

3. The Supreme Court of Canada3. The Supreme Court of Canada

To what extent can one appeal to the SCC from the OCA, QCA or FCA? In all civil cases one must obtain leave. As in the HCA, USSC, or HL, it is a conventional COL court of appeal in which even facts may be argued. But it is very difficult to get in it: embodiment of the exceptional character of appeals. The SCC is not concerned about correcting individual injustice. This creates major questions on the grounds used by the SCC to grant leave, unwritten criteria are used.

This is radically different from CVL courts of cassation. To get into one of those, one must show that there is an error of law. Jurisdiction is limited to quashing errors of law or illegalities (unlike the SCC which can review facts, even if reluctant to do so) in individual cases – not quite shaping jurisprudence and policy as the SCC. However all cases are now formulated as questions of law, the French Cour de cassation deals with 20-30K cases a year (over 100 judges), most decisions are unreported. In past years, the SCC has been deciding 125-170 cases a year (currently near the lower bound, easier than the USSC and HL though). Nonetheless, the SCC remains a court of general surveillance, dealing with quite a bit of private law unlike the USSC. Proposals to create a SC of Ontario or Quebec (to deal uniformly with more cases) have failed twice in each province.

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What are the limits to the SCC’s ability to grant leave?

Ernewein v. Minister of Employment and Immigration, SCC 1979Facts: Ernewein lost at the Federal Administrative Tribunal and was going to be deported. To appeal at the FCA (which doesn’t like to deal with immigration cases), leave was required. The FCA summarily denied leave. The only option was to apply for leave to appeal at the SCC (Hail Mary pass in US college football). The SCC had to decide whether its jurisdiction extended to orders denying leave to appeal at the FCA. Held: The COL majority of judges (Laskin J.) held that given comity and mostly because justice in individual cases was not its objective or within Supreme Court Act, it was not within its jurisdiction to grant leave. Ernewein lost, but the question of national importance was decided by the SCC (i.e. jurisdiction). Pigeon J. dissented, saying that the SCC had a role of general surveillance of legality (CVL language).

Ernewein was overruled in by the unanimous SCC judgement in Macdonald v. City of Montreal (1986). The SCC abandoned its historical COL understanding of its jurisdiction, possibly because of the Charter. Today, it does not decide more cases, but it may decide cases brought on refusal to hear cases below: leapfrog appeal, the SCC will deal with it directly (not send it back to the CA which has already been told it was wrong). This is now clear law.

What if there is no possibility to appeal a decision of the provincial court, as in Quebec? Following Macdonald (and extradition jurisprudence at the FCA), the SCC will hear petitions beyond judicial review – it has jurisdiction to hear any appeal (doesn’t mean that it will use it).

Oct. 30th, 2006

B. Territorial jurisdiction (ratione personæ)

The rules here are not based on court structure but are principally a question of inter partes consent. This is simple when parties agree, but they often do not and there has been much litigation on the “threshold of litigation” (“seuil du litige”). This is pejoratively called “forum shopping”, more neutrally “choice of forum”. In many cases, this is actually “settlement shopping” given that plaintiffs look for the most favourable jurisdiction. In North America alone, there are close to 100 private law jurisdictions (14 in Canada, 48 in the Continental US, 33 in Mexico).

As a plaintiff, one has the option to sue in many places depending on local jurisdictional rules. Some are very welcoming: California (“California State Courts are competent to take any case in which it is constitutionally permissible to do so.”), PEI and NS (“Any case where the defendant can be successfully served in North America.”). Given that these rules were much imitated, the choice is often one of law: strict rules of liability, damages, availability of jurors, etc.

It is possible for parties to contractually agree not to have a lawsuit entertained in courts. For more on this, take the arbitration classes! Arbitration can be advantageous or not, depending on the specific rules applied, etc.

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How does one choose as a plaintiff’s lawyer? One first looks for law favourable to the claim. Trans-jurisdiction law firms have become increasingly sophisticated in doing this. Then a head of jurisdiction must be identified:

- Defendant’s domicile (actor sequitur forum rei, dates back to Roman Law), idea of “natural forum” since the defendant is presumed non-liable, but this also means ease of execution. This is the rule in Quebec: 3148(1) CCQ. In COL, the rule is the place of service of the defendant (which may be fortuitous: called “tag jurisdiction” in the US, Glenn chased a defendant through a Vancouver nightclub!). The COL rule which prevailed since the 19th C. has now uncertain status, some dicta from the SCC refers to it as an abusive ground of jurisdiction. It is seen as prejudicial to defendants. The idea of domicile of the parties also applies to corporations. The US rule then is where the corporation was incorporated, not where it has its principal place of business as held for a long time in Europe. The 3148(2) CCQ / Canadian COL rule is both wider and narrower: establishment in Quebec or doing business in Quebec and dispute related to those activities in Quebec. This is a specific jurisdiction rule (language very deliberately chosen), rather than a general one (US). This debate caused the failure of the (Hague) World Convention on Jurisdiction and Recognition of Judgment: the US wanted to keep the wide rule (came from internal imperatives such as the Delaware phenomenon, idea of von Mehren), other countries thought it was too broad.

- Consent of the parties through a choice of forum agreement, as enforced in…

ECU-Line N.V. v. Z.I. Pompey Industrie, SCC 2003Facts: Goods were shipped from Belgium to Seattle by ship and rail; the plaintiffs attempted to sue in FC, defendants objected that there was an agreement on “the courts of Antwerp and no other courts”, a clear prorogation [conferring] and derogation [refusing] clause.Held: The SCC upheld the bill of lading agreement.

In COL provinces it was always said that courts had jurisdiction to enforce or not enforce such clauses – this rule is today of declining importance (a “strong cause” but be shown according to the SCC in ECU-Line, id. in the US). In Quebec, it is put as an application of forum non conveniens – there is no jurisprudence on this. These agreements are all part of larger contracts, they are however treated as severable if invalidity of the contract or fundamental breach is argued.

- Codified heads of jurisdiction: Ontario rule 17, 3148 CCQ / 68 CCP. See Vile v. von Wendt (1979), Moran v. Pyle National (Canada) Ltd. (1975), Wabasso Limited c. The National Drying Machinery Co. (1981), Spar Aerospace v. American Mobile Satellite Corp. (2002) which are all ex. of corporate activity giving rise to jurisdictional battles.

- “Real and substantial connection” which is a very broad notion in Canadian COL. Nobody knows the specific limits, requirements of service of addition. Or is this a general ground?

- PEI and NS have very broad rules, but this is subject to constitutional control: property and civil rights “in the province” under 92(14) CA, 1867.

There is an expansion towards fora which are more favourable to plaintiffs, away from the natural forum idea.

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There is much contradiction in the area of website jurisdiction: hard for courts to claim that simple availability of the website leads to jurisdiction (everywhere in the World?). The OCA refused an international civil servants’ claim in libel relative to a Washington Post article: Bangoura v. Washington Post (2005).

According to Glenn, one should object as to jurisdiction first, as to execution only if this fails (has to do with recognition of foreign judgments). One warning: Any defence on the merits of a case brought in any case is considered consent to the jurisdiction. The best option is sometimes to walk away and bank on refusal by court of execution in the home jurisdiction if there is a judgment by default, irrespective of what the SCC has said in the past. The more tenuous the jurisdictional grounds, the most likely there will be no enforcement. Be careful though: this may restrict movement of assets in the future (especially given the “full faith and credit” of universal mutual recognition in the US).

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IV. The Scope of Ligitation

In his article, Chayes adopts the Aristotelian view of judges: look at the past, solve bipolar disputes in a final way. But all of this has changed: litigation includes multiple parties, future-directed and requires ongoing court involvement. This public law litigation model occurs mostly in (federal) district courts, not in State courts.

A. Interest to Sue – Standing

This idea of public law litigation model is not grounded in a specific court in CVL and COL Canada given our different model. Courts here require “interest to sue”, in Quebec “direct and material connection”, except in the case of (rare) public interest litigation. In private law, the need for involved parties to sue comes out of the necessary finality of judgement (imagine a third party suing instead of an injured plaintiff: if wins, still the question of whether will hand over the compensation).

Glenn was involved in a lawsuit about a Montreal hotel (owned by a real estate investment trust in Ontario which had been spun off to another entity) which was suing a contractor for a shifting foundation: Glenn succeeded in having the action thrown out for lack of interest (same law in Ontario applied). The new action had to be brought by the new owner, for which the “clock had not stopped running” – any new action was prescribed according to counsel on both sides, although Glenn isn’t so convinced.

In CVL this is known as the “nul ne plaide au nom d’autrui” rule (59 CCP), there is no clear statement of this rule in COL private law. This problem never came up in COL, because unlike CVL and its open “droit d’action” (right to sue), it had a closed system (needed to be given the writ by the Chancellor until the mid-19 th C.) in which court had to be willing to hear the case, which was not the general rule. The test was “does it make a difference whether you win or lose”. Today, everyone has a “right of action” in COL, the real question is one of substantive rights: confusion in the language. The test is still the same: what’s it to you? The question is how long it will take for clear rules to emerge in COL private law.

Stewart c. Valois, QC SC 2006Facts: A plaintiff’s lawyer sued a municipality for water backup due to a flood on behalf of father which owned the house and son which owned goods in it. The action was abandoned and settled with the insurance company. The father and son sued their first lawyer.Held: Father succeeds (désaveux was found not to be necessary and ethical rules were pleaded). But the son lost as not having given the mandate to the lawyer as having no interest. Note: This is a total misconception and misapplication of the test, as the son had a substantive right.

Malhab c. Métromedia CMR Montréal inc. (André Arthur case), QCCA 2003Facts: André Arthur made ‘collective’ defamatory statements. The general law is that there is no “defamation by osmosis” (decided in a 1915 case), so the population has to be small enough to be specifically identifiable. Is it the case here?Held: It does “make a difference” to Arabs and Haitians so there is interest to sue, although the action me be unfounded in law (165(4) CCP, courts reluctant to use it). The group is identifiable.

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Note: The apparently clear “making a difference rules” may actually help actions which are iffy in law. “The way to create new jurisprudence is to pick a plaintiff for which it makes a difference.” - Glenn. It is a crude rule.

Nov. 1st, 2006

Lawsuits are declining in number (increasing unrepresented litigants) but judges don’t have less work. They are hearing bigger and bigger cases that take more time. There is an ‘agglomeration’ phenomenon because of high legal fees. This works its way out at the micro-level: plaintiffs are helped to support a lawsuit. Nonetheless, one may not sue on behalf of another:

- CVL: “nul ne plaide au nom d’autrui; pas d’intérêt, pas d’action”. - COL: disallows class-actions and its ancestor, representative actions.

There are three possible situations:- Third party sues in its own name instead of injured plaintiff, for his benefit

(recent case in Quebec of a lawyer attempting this in SC for asbestos workers who lost wages due to a negligent CP accident, but no claim over $70K; CP lawyers got it to be transferred to Small Claims; the lawyer then tried to amend the claim to add the syndicat, which failed on the basis of 53 and 59 CCP). This is simply forbidden: nul ne plaide in CVL, no meddling intervener in COL.

- Third party provides injured plaintiff with financial and technical advice in the conduct of litigation. In COL, this is at least maintenance if not champerty, except if it is lawyers doing it (allowed). CVL is more open to third-party financing, but not fully.

- Subrogation or transfer of litigious rights from the injured plaintiff to the third party. Then the third party has acquired the litigious right and has to sue in her own name. Sounds simple enough, but insurers are reluctant to do this and often sue in the name of the insured (should be forbidden, compensated plaintiff no longer has an interest). This is particularly to prevent juries (when applicable) from knowing that it is an insurance company trying to recover (insurance companies hate being named).

There needs to be interest rules, individualized rules of contractual or tortious liability, even if highly individualized, are not sufficient to allow for individualized justice.

A plaintiff must maximize one’s interest.

Timmins v. Hughes, QC SC 1974This is a succession case where the plaintiff was disentitled by four successive wills. His only option to inherit on intestacy rules was to strike down all four wills. Wills 4 and 3 had A&B as executors, 1 and 2 C&D. Timmins only sued A&B to strike down will 4. They could have done it for 3 at little extra cost. The court said that he had to maximize his interest, his potential gain through the suit against particular defendant. There is extensive French jurisprudence to this effect.

The injured party can also contractually give a mandate to a third party. This is a mandate ad litem. Lawyers are given those all the time.

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B. Quality to sue and class actions

Muller v. Ste. Marie, QC CP 1971Muller was administrator of a taxi company. The owner had him sue whenever there was damage to a taxi. The idea here is ‘contractual maintenance’ or ‘contractual authorization’. But the court held that nul ne plaide was a rule of public order which could not be escaped by contract. The action was thus dismissed.

Association des propriétaires des jardins Taché inc. v. Les entreprises Dasken, SCC 1971Facts: A building was built in Hull in violation of by-laws. Local dwellers sued and it was argued that they had no interest, so they created an association to sue. Held: The SCC held that the association could not sue, but that the building was to be teared down because one name dweller had interest. Note: Creating a legal person does not work because it has to sue in its interest.

Legislation creates some exceptions: curators, tutors, guardians. In CVL, these people have “la qualité d’agir en justice”, representational authority granted by law. Lawyers are, of course, the most obvious ex. Another ex. is some environmental laws which say that anyone benefiting from the environment have the “qualité” to act (not much action here so far, notably because of costs).

The above ex. classical private law cases, i.e. claims for money. But the interest and standing rules are today inconsistent with the circumstances of litigation (which are extremely difficult to change). Rules of interest and standing “have to give”. This is the idea behind class actions.

Much more has happened in public law cases. It is obvious that this area of law affects many people as may practically any claim. Today, Canada has something close to the old Roman actio popularis. The idea is to verify objective legality. According to Glenn, even with class actions, there is a large difference between private law actions and public law ones: almost anyone can challenge the government.

Thorson v. A.-G. Canada, SCC 1975; Canada (Min. of Justice) v. Borowski, SCC 1981; N.S. Board of Censors v. McNeill, SCC 1976Thorson: About directory legislation implementing the official languages act (no damage at law here): if he couldn’t sue, no one could.Borowski: Extended this idea to exculpatory legislation (no criminal liability for abortion, no damage!) which was deemed challengeable.McNeill: Regulatory legislation was deemed to have a broad effect for the purposes of challengeability (enough that he couldn’t see The Last Tango in Paris because of the Censors’ Board).

In Canada, this is all taking place in the same courts, unlike in other jurisdictions… The US is much more restrictive in terms of requiring a nexus between what is attacked and the plaintiff. This, according to Glenn, may be a counterbalance to the US cost rule.

“All of the action is now in class actions.” - Glenn. Fortune is very critical of class actions. In Canada, class actions were first created in 1978 in Quebec, but weren’t used much for at least a decade. They have since taken off: ascendancy of class actions. They exist in the UK as “group actions”, are being created in France. Ironically, they are now being curtailed in their

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country of origin (1995: limitations on shareholder class actions; 2002: Class Action Fairness Act which forces large class actions to be brought in federal court; USCA circuits have been brutal in quashing class certifications, which trial judges are willing to get off the dockets). “In class actions, everything is up for grabs” as very few are actually subject to a final judgement.

Class actions are legislatively created to provide for grouped law suits but with safeguards to prevent actions. Class actions “moments”:

- Financing.- Certification (major safeguard).- Notice (for purposes of opting out).- Settlement (usually happens, at any time before judgement).- Trial & judgement (on common issues).- Recovery (general determination becomes specific awards).- Preclusion (res judicata on all members of the class; questions on finality of this for

unhappy plaintiffs [unravelling effect], questions of territorial jurisdiction).

Every class action involves a class representative (and member) acting on behalf of members of the class. In the private law field, they are claims for damages. For the class to exist qua class, there must be common questions to the class. Res judicata applies to all members of the class.

1. Financing1. Financing

In the US, class actions are financed through contingent fees (compensation of risk for undertaking action with no guaranteed compensation). This has existed since 1963. It is supported by the no-cost-shifting rule, since lawyers can see the whole risk.

In Canada, at least BC, AB, ON and QC have allowed class actions. There are radical differences in permitted methods of financing. In AB, there is no specific provision, contingent fees can be used as for other actions. Cost shifting stands, which results in few class actions. BC maintained contingent fees, doesn’t allow cost shifting to plaintiffs (only to defendants if they lose: one-way cost rule). There, thought has been given to the deterrent effect of the Canadian cost rule. Ontario, which copied Quebec, created a new contingent fee structure only for class actions (actually a lodestar, multiplier of fees rather than percentage, 1992, generalized for all actions in 2002). Cost shifting rules stand, but there is a small private class action fund (pays disbursements, including expert fees, but not lawyers’ fees, except in some cases costs of winning defendants). Plaintiffs are much more vulnerable than in BC. Quebec is known as the “paradise”: contingent fees, very low cost shifting, relatively large class action fund (administrative agency funded with public funds [about $1M/year, possibility to go to the TAQ and judicial review] which compensates for disbursements, lawyers’ fees and costs, grants about 80% of applications). It’s possible to run a class action with no risk in Quebec.

In Ontario, a class action certification aiming at tobacco companies was rejected as to imprecise. The companies moved for over $1M for costs. Winkler J. denied them on the basis that this was a novel question. It is said that this has assisted class action financing in Ontario, since at least one judgement stands for escape of cost shifting.

Nov. 6th, 2006

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2. Certification2. Certification

It is highly exceptional, an exception to the basic rule that one may sue as of right. It also goes against the basic rule of non-aggregation (watch out in the US: the USSC held in the 1970’s that to sue federally, each claimant must fall within federal jurisdiction already). Here, one may aggregate any number of claims (no matter how small) regarding any subject matter, which are then brought to Superior Court.

♪Your worse enemy in civil litigation is prescription.♫ In Ontario, one must not worry about prescription: one starts the class action, then one seeks authorization for it by way of motion. In Quebec, the procedure is reversed: one can only start the action if the motion is approved. But 2908 CCQ says specifically that the motion for certification stops prescription.

Plaintiffs who lose on certification have a de plano right of appeal (1010 CCP, 30(1)(2) RCP). Defendants who lose have no right of appeal in Quebec (1010(2) CCP, held that this was constitutional by the QCA), and one only with leave to the Divisional Court in Ontario.

Art. 1003 (ss. 5-6) RCP and equivalent rules in other provinces provide conditions of certification:

- Commonality. Must justify a single decree which has the effect of res judicata to all members of the class. This is the intellectual opposite of distinguishing: despite the differences, “common features” relative to the defendant are sufficient to treat plaintiffs as a class. Sub-s. 6 says that particularities in the damage suffered is not to be considered in certification’s commonality. In Quebec, the language is “identical, similar or related”. Defendant lawyers’ job is to distinguish, with evidence relevant to class characteristics (affidavits usually, at least sworn by the class representative) or otherwise hypothetical contestation. In Hollick v. City of Toronto (2001), McLachlin CJ emphasized the usefulness of affidavit evidence. In Quebec, there was traditionally no limit to preliminary contestation to certification, proceedings sometime last years. The result of this was art. 1002 CCP (adopted in 2002, 24 years after the initial rules), which says that no affidavits are to be used in certification (a constitutional challenge failed). Quebec (a leader in class action legislation) is the only province to have done this. Nonetheless, a motion for certification may be contested orally (with testimonial evidence if necessary, with court control as per relevance and admissibility), but there is a limit to “filibustering”.

- Merits. In the US, this has never been a requirement, but it is one everywhere in Canada as a way to limit possible class actions. The case must appear to be well founded or the facts alleged “seem to justify” (1003 CCP language) or the plaintiff must establish a “cause of action” (RCP, apparently less demanding than in Quebec, but difference probably read out in Nantais v. Telectronics Proprietary (Canada) Ltd. (1995) so that creation of new law is possible: if a cause of action may have a reasonable probability of being established).

- Suitability. This comes from the US. One must show that class action is the preferred mean of resolution of the question (by opposition to the representative action, joinder if class members are not too numerous, etc., which plaintiff lawyers usually prefer if technically feasible). In Hollick, the SCC said that plaintiffs scattered over 16 sq. mi.

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which suffered environmental damage over 7 years could not form a class because of the lack of suitability given very different damages (QCA held the opposite in another environmental case: Paquin c. Compagnie de chemin de fer Canadien Pacifique (2005)). Suitability is an issue related to commonality.

- Representativity. The class representative must adequately represent members of the class. In most cases, plaintiff lawyers choose the representative, with varying degrees of success (ex. Quebec case where the representative in a consumer class action against oil companies had never bought any oil, see also the Milberg Weiss case in the US in which Milberg Weiss LLP was developing “stables” of “serial plaintiffs” receiving kickbacks in case of success and starting a class action a week; they are now federally indicted on the felony of lying in affidavits, saying they hadn’t paid representatives – see article on money.cnn.com). The problem is whether class action procedures get tainted by the activity of lawyers…

Over time, class actions change substantive law because they bring determinations on previously unlitigated issues (ex. fear as a cause of action in Nantais).

3. Notice3. Notice

Notice to the class has to be provided because of the res judicata effect of the judgement on the class action. This includes a possibility to opt out (1006 CCP), people usually only avail themselves of this in case of particularly large damage. The main challenge is giving notice to very large classes (tens, possibly hundreds of thousands of dollars). Electronic notice may help in this regard, but e-mail records still have to be created, produced, exchanged, etc. Great care is needed here, funding often comes from class action funds or sometimes courts order that defendants foot the bill: this was found unconstitutional in the US, but allowed in Quebec in Thibault, JE 2006-1027 (plaintiffs’ lawyers must control this tightly: content of notice, breadth of diffusion).

4. Settlement4. Settlement

It’s usually after notice that serious discussion into settlement will occur, although it may occur any time before judgement. Today, defendants fearing class actions initiate settlement themselves even before certification (settlement class action: certification also homologates the settlement, certification is uncontested, the action itself has no existence as it ends as it begins). This is a process of reverse auction (this has even been done by court orders) by which defendants contact potential plaintiff firms and pick the one willing to settle for less (have at least a representative in shelf actions, otherwise they need to find one, but champerty and barratry [ambulance chasing] are forbidden). This brings thorny questions as to the lawyers’ and judges’ role in class actions. In the US, there is a lot of competition (and satellite litigation) as to who gets to be lead counsel. Defendants like settlement class actions as they cap liability.

One may argue that this is collusory behaviour, not in the best interest of justice. The easiest way to contest such behaviour is to appeal the settlement class action judgement. In Georgine, a huge US asbestos settlement class action was quashed on appeal (both settlement and certification). The ground for appeal is often unequal treatment of parts of the class. Appeal judges have called this “injustice”. A member of the class may appeal, if not by the named parties. But this puts a considerable burden on members of the class.

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There are at least four categories considered in settlement, parts of the class get different treatment:

- Inventory (plaintiffs known to the firm) actually injured.- Inventory not yet injured.- Non inventory actually injured.- Non inventory not yet injured.

One problem is that the 4th category often recovers nothing and is precluded from ever suing (Glenn found a 1998 breast implant case in Quebec, USSC forbade this differentiation on the basis of contact with the plaintiffs’ firm and time of injury in Georgine). Now, settlements have to treat plaintiffs equally.

Nov. 8th, 2006

A person prejudiced by a settlement (either after certification or settlement class action)…

Huber et al. v. Taylor et al., USCA 3rd Circuit 2006Facts: The USCA had to deal with a law suit against lawyers who had settled an asbestos ‘mass action’ to the prejudice of some plaintiffs. Thousands of plaintiffs were joined (12 of them got $4M each on average, there were 2-4,000 remaining). Local counsel for plaintiffs had upstream counsel arrangements with a Texas lawyer called Taylor, specialized in high damage jury awards (Mississippi is notorious). Taylor wanted to increase his inventory, he learned that Pritchard and other lawyers had gotten $48M for 12 plaintiffs in Mississippi. For Pritchard worked a settlement specialist called Cox (4% for him; 2% for local counsel; rest of 30% split between Pritchard and Taylor). The USCA acknowledged that damage awards in the South are usually lower for northerners. Cox eventually settled with the 200 defendants. Once settlement had been agreed to and distribution had started, northerners realized that they were getting less money because of local counsel fees. A class-action was filed against all the lawyers involved. The suit was based on breach of fiduciary duty. Held: The district court denied certification for: too many individual questions (commonality), more efficient ways to litigate this (suitability), plaintiffs not typical (representativity). The USCA has now reinstated the class because the Pennsylvania certification judge had not applied the law of Texas, as warranted by contract (choice of law). This is a significant development: lawyers can be financially liable.

5. Trial & judgement5. Trial & judgement

If the defendant (or his insurer) is not willing to settle… Trial will occur on “common issues” for which the class was certified (normally: duty, breach, representatives’ damages / fault, causation, r. damages). This leaves out the question of damages for each plaintiff: no individual assessment of damages. In both CVL and COL, quantification of damages is not only about adding up claims, damages are related to other elements of liability. So class actions required a change in the law.

This is institutionalized as a “split trial” (normally impossible) for all non-representative members of the class. This implies a change of private law. There may also still be a choice of law issue for sub-classes, with potentially different results. In very large class actions, settlements or judgements set up institutionalized trust funds for individual recovery (which may exist for 10 years or more). This removes damage awards from courts to private adjudicators. For difference between individual and collective recovery, see 1031 (collective:

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certain damages) and 1037 (individual: mechanism for spreading) CCP, although the line is not always clear. There is always the possibility of “unravelling”, i.e. that some plaintiffs may not qualify as part of the class (defendants don’t like this: lack of closure).

6. Preclusion6. Preclusion

The real test of preclusion (in addition to appeal or suing the lawyer) is when a class members sues directly (can lead to unravelling). Res judicata doesn’t work automatically, the defendant must raise it as an exception. Then, the court must decide whether the defendant is precluded from suit.

In the Agent Orange case, there was a 1984 settlement of a class action and a trust fund which operated for 10 years. Two plaintiffs diagnosed with cancer in 1996 and 1998 sued in front of the same judge and lost: res judicata even if no diagnosed illness. On appeal, the USCA 2nd

Circuit decided that the two plaintiffs could not be adequately represented (didn’t know the prejudice) in the settlement and were thus not bound by it. So there is no guarantee that a class action brings finality, there can always be unravelling.

Can an Ontario judgement prevent you from suing in Quebec? This is a difficult question of jurisdiction. A claim to unravel may have more success in a different jurisdiction. To what extent can class action judgements or settlement reach across borders?

How large is the class purportedly governed by the settlement or judgement? Lawyers can limit the class to the filing jurisdiction. But both in the US and Canada activity extends across boundaries, which has lead to class expansion beyond filing jurisdiction, sometimes internationally. “The further the judgement goes, the weaker it gets.”

Many actions for pan-Canadian classes were once started in Ontario, because it was for a long time the only COL province with its statute (now more a phenomenon of coordination).

Nantais v. Telectronics Proprietary (Canada) Ltd., ON Gen. Div. 1995This was a class-action relative to faulty pacemakers. It appears that the defendant had some activity in Ontario, so there was jurisdiction over him. But were plaintiffs outside of Ontario precluded everywhere in Canada after judgement or not? The Ontario judge decided that this was for other courts to decide. There was thus no problem in having a national class.

This is the idea of “general jurisdiction” in the US: suit for damage in and out of jurisdiction on any defendant on which there is jurisdiction. The case that took this furthest was an Ontario suit for a national class against a French defendant which had activity in Ontario: in some cases, neither plaintiff nor defendant was in Ontario!

What does one have to do to get preclusory effect recognized in another jurisdiction? At least, there needs to be notice to every purported member of the (now sometimes continental) class. Otherwise, courts are little inclined in recognizing preclusion.

HSBC Bank Canada c. Hocking, QC SC 2006A class counsel in Ontario got a judgement against HSBC (Canadian operations based in BC). There was then an attempt on behalf of HSBC to get the judgement recognized against a Quebec plaintiff. The Superior Court that there was insufficient notice, recognition was denied. There was a similar judgement over a McDonald’s contest Illinois judgement, which

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was not recognized in Ontario (McDonald’s, (2004) 128 ACWS (3d) 58).

Ineffective notice is the main cause of unravelling…

C. Res judicata – Lis pendens

Because of high mobility within North America, res judicata cases are currently pouring out of courts. Within each province, there are already 5 entities with ratione materiæ jurisdiction. In each of those, res judicata may be an issue (“exception in res judicata” in CVL, “motion to dismiss on the basis of res judicata”). If it succeeds, a res judicata motion is fatal and is thus appealable. There is an increasing number of higher court judgements on this. The multiplication of fora has lead to serial litigation and “re-trying” and much debate.

Res judicata (COL) / préclusion (CVL) uses notions from Roman law, but the concept is in flux. One exception to this is lawsuits against lawyers for losing a case which should have been won: this is allowed because a different defendant is sued.

Requirements of res judicata:- Identity of parties. Suing someone different for the same facts is considered a

different case (esp. in an adversarial system).- Identity of cause of action. No one knows what this means exactly.- Identity of the object.

This is codified in 2848 CCQ, CVL being identical to COL in this case.

Nov. 10th, 2006

1. Identity of persons1. Identity of persons

This is simple: persons are identifiable formally (name, etc.) but also substantively, i.e. they have the same interest (“real persons in interest” in COL). One ex. is one person suing for support for himself and suing ès qualité for support for a child. This is formally the same person, but the answer of “what’s it to you” is not the same, therefore there is no identity of person. In Deschamps v. Durand (1966), a plaintiff injured in a car accident (damage to the car) but compensated by his insurance company nevertheless recovered for his company as a “paravent”. Then, the plaintiff sued a second time for bodily injury: it was held that there was no res judicata, no identity of person as the actions were brought in the interest of different parties.

2. Identity of cause of action2. Identity of cause of action

Rocois Construction Inc. v. Québec Ready Mix Inc., SCC 1990Facts: Rocois is suing QRM in with two separate causes of action. One is for general damages (1053 CCLC), the other is based on the Combines Investigation Act. Both are brought in Federal Court. QRM motioned that the FC did not have jurisdiction ratione materiæ. Knowing that this could take years (in fact, it did!), lawyers for Rocois filed an identical suit in Superior Court. Lawyers for QRM applied for a preliminary exception lis pendens in SC: can’t sue twice for the same thing.Question: The SCC decided that lis pendens functions on the same three identities as res judicata, albeit with slightly more care (pleadings, not judgement). In the first action, the SCC held that the claim on the CIA was allowed in FC but not the one on 1053, which was

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probably to proceed in SC. The question arose of whether this was the same cause of action. Held: Gonthier J. devised a test for the identity of cause of action, based on the identity of legal characterization, drawing in mostly French doctrine. The main idea (beyond courts that are equally competent) is that the underlying legal principle has to be the same. Under the CIA, the claim was for wrongful conduct leading to damages, same for 1053 CCLC: same cause of action (Glenn agrees), res judicata. But Gonthier J. also said that the underlying principle would be different in “the majority of cases” (Glenn disagrees).Note: Most facts can lead to very different legal characterizations, which suggests (Gonthier J.) that one may go to court several times. Yet, on a principled basis, in COL Canada’s and Quebec’s adversarial system, it is plaintiffs and their lawyers who are to bring up facts, their claims and underlying law (disposition maxim in Germany), judges only dispose of what’s presented (it is up to parties to get it right). Gonthier J. was consistent with pure Continental CVL (a ton of authority there), where judges have an investigative process (if judges don’t fulfill jura novit curia, one can go back to court, not lawyer’s or party’s fault).

According to Glenn, the SCC wrongly overturned over 200 years of tradition in Quebec and, a fortiori, in COL Canada. The SCC later changed its mind later, deciding that re-characterization did not allow you to return to court with a “different” cause of action:

Boucher v. Stelco, SCC 2005Facts: After a decision of an Ontario administrative tribunal (Superintendent of Financial Services), there was a question of whether this lead to res judicata in Quebec SC. Stelco closed down plants, let many people go. The pension plan was wound up, Quebec workers got no pre-retirement benefits whereas those from Ontario did (different applicable law). The Quebec workers filed a suit in SC claiming under their contract of employment.Held: The SCC held that it was impossible to requalify the action as contractual to escape the res judicata effect of the Ontario decision. This was the case even if different law applied to the contract of employment and to the pension scheme. Note: According to Glenn, this case is a formal rebuttal of Rocois and is correct.

The conclusion is that the definition of the cause of action is as wide as the parties could and should have made it, not as wide as they actually did make it. In the adversarial process, you get only one kick at the can. If an issue wasn’t raised, it’s res judicata anyways. This is a typical COL result: merger of all grounds of complaint in the first judgement, bar of all the others: “merger and bar” (ton of cases, called “épuisement” in Quebec). This can lead to professional liability for lawyers.

One problem is that the fear of leaving something out (unlike the surgeon) leads to “shotgun pleading” (US expression) which widen rather than narrow issues – driven by res judicata. The consequences on court efficiency are highly deleterious.

Town of Grandview v. Doering, SCC 1975Facts: The town of Grandview, MB, built a dyke as part of flood control measures. Doering, a farmer, sued for damages to his crops in 1968 and 1969. [He lost in 1973, the municipality was found not liable.] In 1972, Doering started another suit claiming that the case was not only about surface water, but also from water that rose from the aquifer because of water impounding.Held: In a divided judgement (two civilians dissenting), the SCC majority decided that merger and bar was an obstacle to a second suit. Since by diligent consultation of a soil expert, the claim could have been made the first time, the second action was precluded.

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Note that if with reasonable diligence the claim could not have been raised (grounds unknown and unknowable at the time of the first action), res judicata does not apply and another cause of action is deemed to exist.

The possibility to sue again is contested in France and continental CVL as terribly inefficient. A French judge has said to Glenn that the Cour de cassation has forbidden this, but Glenn hasn’t found the case so far.

Res judicata precludes a further action even if time has gone by (prospective effect). Pretty much everywhere, judgements include some things that have not happened yet (ex. passage of time). But in Grandview, there was four more years of crop damage (never mind the aquifer) as the municipality did not open the dam until 1973. So, without discussion, the SCC allowed operation of judgements to future events (and claims based on facts that arose after judgements). To have a new cause of action, one needs to show that damage wasn’t in the contemplation of the court.

3. Identity of object3. Identity of object

This is another broad and difficult notion. Its most obvious application is that a party must make all the claims related to the facts, can’t “save some for later” . In COL, this is called issue estoppel, in Quebec partial res judicata or preclusion.

Imagine a plaintiff and a defendant who had two different contracts. Both were breached, the plaintiff sues on both causes of action. The judgement on cause of action 1 had to decide, say, whether there was valid signing authority. In the judgement on cause of action 2, the exact same issue comes up between the same parties. The question is whether this issue must be relitigated. Historically in COL, the judgement on that issue was directly transferred, this is a solid rule.

Angle v. Minister of National Revenue, SCC 1974Facts: Angle got a pool house constructed by Trans-World Construction, which she apparently wasn’t really paying for. She then got into tax difficulties as to the treatment of that building, the MNR was claiming extra taxes. This was a very complex suit, in the end it was decided that this benefit or gift was taxable.Later, the MNR was suing Kansas Trading Co. under a writ of extent (i.e. immediate transfer of money owed by Trans-World Ltd. to Kansas Trading). It found that Angle actually owed money to Trans-World for the pool house, which had been judged to be an unpaid benefit!Question: This went up to the SCC on issue estoppel. The whole court accepts the notion of issue estoppel. Held: Laskin J. (minority) held that there was issue estoppel in this case, using a rather broad concept consistent with “merger and bar”: conclusive as per the existence of no debt. However, Dickson J. held for the majority held that since Trans-World was not a party to the proceeding and the Exchequer Court had no jurisdiction to make this finding anyways, also that there was no notional incompatibility between a benefit and an obligation to pay for it: there was no issue estoppel. There was no identity of object, based on a narrow concept of “merger and bar”. Basically, parties can be prejudiced by what was decided, but not by what could have been decided.Note: The extent to which this case is good law is questionable, as underlying the judgement is judges’ attitude relative to Angle’s attempted tax avoidance.

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The debate in the COL world is not the existence of issue estoppel (called “collateral estoppel” in the US), which is settled, the question is on the existence of non-mutual issue estoppel.

Bjarnarson v. Government of Manitoba, MB QB 1987Facts: Bjarnarson 1 successfully sued the municipality for flood damage to his property. His brother, Bjarnarson 2, sued following the judgement. The municipality claimed not to be liable, 2 argued issue estoppel on the liability issue (only damages left).Held: The Manitoba CQB accepted “positive non-mutual issue estoppel” – first time in Canadian legal history according to Glenn. In way, this is a class-action without the name, built up by expansion of res judicata.

In OPSEU v. Ontario (2003), Arbour J. said for the SCC there was no issue estoppel because the parties were different. So perhaps Bjarnarson is only an isolated case.

There is also “negative non-mutual issue estoppel”: if tobacco companies are not liable to one person, they would not be liable to another. According to Glenn, this more normally is disallowed: no exculpation without judgement.

For now, there is probably no non-mutual issue estoppel in Canada with a preclusive effect. There may be an issue of abuse of process in some cases.

Nov. 13th, 2006

OPSEU v. Ontario, Toronto (City) v. CUPE, Local 79, SCC 2003Facts: These are twin case dealing with the same questions of non-mutual issue estoppel (NMIE) and abuse of process. In both cases, the same problem arose: workers found criminally guilty of harassment in their workplace, what effect is that to have in civil proceedings?Question: We have seen previously that given different standards of proof and liability, crashing through to criminal liability implies crashing through the civil standard. The employers fired the employees claiming that the conviction was incompatible with employment. The question is the conclusive effect of criminal liability in civil proceedings. Held: If there is such a thing in Canada as NMIE, the criminal judgement would be conclusive, even if the suit was between different parties. In both the OPSEU and Toronto decisions, the SCC rejected NMIE. Mutuality is a requirement of issue estoppel in Canada. So, criminal liability is relevant but not conclusive in civil proceedings. But the SCC also says that those found guilty are not to contest their conviction in civil proceedings (offensive NMIE), as it is an abuse of process. So the window is narrow…

The SCC has now said in two cases that NMIE does not exist (following the HL, not the USSC – Glenn agrees), there is a requirement of mutuality. But this does not mean that the window is very open, given a strong notion of abuse of process.

Has this been accepted in Quebec? According to Glenn, it seemed for a long time that Quebec had no concept of res judicata or preclusion. But, buried deep in the jurisprudence, this notion is actually present. In Boucher, Lebel J. said for the SCC there is a link made between Quebec res judicata and COL issue estoppel. Also, there is…

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Nasifoglu c. Complexe Ste-Ambroise inc., QCCA 2005Facts: A tenant sues his landlord for damage due to a sprinkler. Later, the same tenant sues the same landlord. The question turns on whether this is a residential or commercial lease (residential leases cannot have exoneration clauses). It was decided in one case that it was a commercial lease. Held: The QCA said that there was not the same cause of action or object of suit. So the requirements of res judicata in the large COL sense do not apply. This is what leads textbook writers to say that there is no Quebec issue estoppel as the CCQ three identities are met. But the QCA (Morissette JA) said that this was incorrect: for the purposes of partial res judicata, the cause of action becomes the issue – same issue, therefore the three identities are satisfied. So the SC was bound by the Régie du logement decision (Hilton JA dissenting). For the defendant to rely on this was not abuse of process as the Régie’s decision was conclusive.

Watch out, as Quebec evidence and civil procedure doctrine is almost unanimous in the other direction. What is turning currently is jurisprudence. Since Nasifoglu was decided, some research has suggested that there may be a functional equivalent in Continental CVL: positive effect or prejudicial effect (as in pré- or déjà jugé) of cases for use in other cases.

D. Joining causes of actionD. Joining causes of action

When a case is not a class action and plaintiffs and defendants are all named, how many people or causes of action may be involved? Today is that there is no limit: mass actions instead of class actions: 5 RCP and 66-7 CCP. There may be suits between two parties over several causes of action. It is also possible to join defendants if the cause of action is the same or to join plaintiffs (product liability before class actions, now re-emerging). The ultimate mass action is multiple causes of action between multiple plaintiffs and defendants: these cases are often called “complex litigation”. This is consistent with fewer, bigger cases: Les placements Esplanade Ltée c. Légaré (1976) and Clough v. Greyhound Leasing (1979).

Thames Steel Construction Inc. v. Portman, ON HCJ 1980A party’s lawyer was negotiating a deal with another party. Deals often go bad, previously there would be litigation between the parties. But in this case it was held that it was possible to sue one’s lawyer before other recourses were lost or épuisés. It is possible to join the other party and one’s (former) lawyer in the same action. This is bad news for transactional lawyers (doesn’t apply to litigators). Even if the action against the main defendant succeeds, (former) lawyers can be sued for fees (“extra-judicial fees” in Quebec).

This case has been followed in Quebec as reducing lawyers’ immunity from suit: see Bourque, JE 92-721 (decided by the QCA).

In Communauté urbaine de Montréal c. Reggio Foods Inc. (1976), it was decided that an action in mandamus against the city could not be joined to claim for damages. This is because administrative law procedure and civil procedure are different. This is a specifically Quebec problem, except in Ontario: SC for civil claims, DC for judicial review. Even the reliability of this case in Quebec is today doubtful given pressure to join cases.

In New Asia Investment Corp. In. c. 2756-7916 Québec inc. (1994), it was decided that one can’t sue in dealing if one must sue in contract. But some people have interpreted this as a limit on joinder rather than a rule of substantive law. There are thus very few limits on joinder, the echo of private / public law differences is now fading.

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V. Preliminary proceedings

A. Initiation of proceedings

Two objectives of initiating a lawsuit:- Creation of what CVL calls a lien d’instance (just “lawsuit” in COL, too abstract) and

thus of procedural obligations (otherwise: default judgement). - Interrupts prescriptions as sometimes negotiations drag on close to prescription.

This is what occurs when a lawsuit is begun correctly.

As soon as a lawsuit is initiated, sections I-IV of this part become relevant given possible preliminary contestation. Once these contestations are exhausted, it is time for pleadings (still important in Canada), after which follow discovery (s. VI) and amendment (s. VII).

Whole books have been written attempting to define a right of action. In a way, this is a “right of rights”, which exists so that the other rights may be vindicated. Anyone can sue anyone: this is a right of action, no permission is required. The law of Canada is radically different from the history of COL until 1825 (needed a writ from the Chancellor to initiate a suit, no right of action). In CVL, the right of action has existed since about 350 AD (end of formulary procedure). Just like all others, this right can be abused and subject to injunctions (vexatious or quarrelant [Quebec] litigants).

We are dealing here with 110-146 CCP (read with 2 CCP) and 14-16 RCP (read with 1.04, 2.01-2 RCP). These articles tell us that procedure is to be the servant to substantive law. They include a statement of intent: cases should no longer be decided and cases lost or won on purely procedural technicalities. However, this doesn’t mean that lawyers are not bound to follow procedure (client may be absolved, but this may lead to contestation, satellite litigation with costs for which lawyers may be personally liable). These are les derniers retranchements but they should not be relied on by lawyers (rules designed to protect clients).

One must first decide: with which procedure will one initiate a lawsuit? The main distinction is between action and motion / requête. Today, there is more and more action on the motion side relative to the action side.

Action Motion / RequêteNo fixed date of return before a judge. Fixed date of return.No full pleadings, no discovery (affidavit evidence and sometimes examination on it).

Full pleadings and discovery (“never ends”).

Open-ended and potentially very long. Expeditious.

In Ontario, 14.02 RCP says that in principle, all proceedings ought to be actions. There are however important exceptions: 14.05(3)(h) (“unlikely that there will be any material facts in dispute”). In Re Danson v. A.G. Ontario (1990), Danson attempted to contest the constitutionality of the enacted Torquemada costs rule using a motion. It was held that “litigation facts” had to be established and full proceedings were required (see also Thomas v. Radvak, can’t contest constitutionality only on appeal).

In traditional COL, the order was this: (Issuing the) Writ (summons to appear, very skeletal on content) – Appearance (personal appearance in old COL) – Statement of claim (content of the claim).

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Since the 1970-80’s, there had been some acceleration by combining writ and statement. The final move in this direction is that the originating process is the declaration / statement of claim (writ has disappeared in Ontario: 14.03 RCP). This seeped in from the US (70’s) and UK (90’s). Quebec has even gone further: all claims in justice are initiated through a requête (enormous procedural change! 110 CCP) with a fixed date of return. This is an ex. of judges’ case management in procedural law (idea is to involve a judge ASAP).

The action in justice is one which is exercised as of right. But it is open to preliminary contestation (to have the action struck). The only way to reconcile this is that the particular demand, i.e. the exercise or formulation of the right of action is challengeable.

In an originating document, there must be the following information:1. Court: choice of jurisdiction ratione materiæ.2. Name of the parties: persons who may be bound by res judicata after the eventual

judgement (111.1 CCP, 14.06(1) RCP); this needs to be done carefully, esp. for corporations and questions as interest and quality to use.

3. Cause of action (otherwise there will be an immediate motion to dismiss as not founded in law [old COL demurrer: lose even if all claims are true]) and object (i.e. remedy sought: ask for everything you want and hope for, no court grants judgement extra petita. Always ask for costs at the end!): 111 CCP, 14.03(2) RCP.

The case which illustrates all of this is Club Motoneige Bellevue inc. c. Chabot (1981). With hours left before prescription, a lawyer filed a “Demande 20 000$”. The QCA said that this did not convey even a minimal amount of information to defendants about the claim.

Nov. 15th, 2006

1. Operation of prescription1. Operation of prescription

It may begin…- With the facts constituting the cause of action (ex. accident).- At a point after the cause of action arises (knowledge of the events can’t be impuned

to the plaintiff, ex. sexual abuse of children – prescription starts running at majority according to the SCC).

This is acutely important for lawyers! Note that prescription exists for lawyer negligence as well. In this case, the SCC has held that prescription starts running when the client knew or should have known the action giving rise to the cause of action. Instituting the law suit always stops the clock. The period before prescription kicks in can be used to gather facts, negotiate (always try to settle), etc. This should be active time.

If a lawsuit has to be initiated, a document has to be prepared and filed. Once upon a time, a writ was required. This is now gone. Now, it is an “originating process”, “declaration”, “statement of claim”. In Quebec, it’s filing / deposer, in Ontario, it’s issuing. This should be sufficient to interrupt prescription, although service / signification of the defendant may also be necessary. This is a difference remaining between COL and CVL (problem in the EU currently, need to determine where the action first started for determining lis pendens, the same problem may appear between Quebec and Ontario). In Quebec CVL, as implicit in the expression of “lien d’instance”, what is most needed is not formal stamping by a clerk, but

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creating a relationship which involves procedural obligations: no lawsuit begins if there is no audi alteram partem, see 2892 CCQ.

2892. The filing of a judicial demand before the expiry of the prescriptive period constitutes a civil interruption, provided the demand is served on the person to be prevented from prescribing not later than 60 days following the expiry of the prescriptive period. …

One thus has extra time if one sues early. Note that there can be forms of effective service which are not actual service, with court approval (defendant making herself scarce).

COL has never seen a lawsuit as a relationship. For a long time, a lawsuit was began by a writ of summons issued by the office of the Chancellor: “The King to the Sherriff, Greetings…”. The defendant was eventually physically brought before the court by the Sherriff acting under the writ and its cause of action. So service had no importance, what mattered was “issuing the writ” (thus today “issuing” instead of “filing” in Ontario RCP, even if lawyers handle this now). Interruption occurs on issuance of the writ. In Ontario, 14.08 says that a ‘writ’ is valid for 6 months, in BC it’s one year, before it’s served on the defendant. There can also be extensions of this period at the court’s discretion (one case in Ontario where there was renewal for 9 years without anything happening). This is an inefficient process given the nature of practice today, there is pressure for the system to change.

2. Service / Signification (Qc) / Assignation (other CVL)2. Service / Signification (Qc) / Assignation (other CVL)

In Quebec, service is the monopoly of bailiffs / huissiers. In other provinces, anyone can do it. There are three types of jurisdiction for service: COL where anyone can do it (Glenn in a Vancouver nightclub), Quebec where bailiffs have a monopoly, Continental Europe where it is a governmental function. Sometimes there are clashes between these rules.

In the process of filing, one presents the original plus 3 copies. You keep one. One is left with the court. Another one is for the person being served. The original will then have a sworn affirmation of service (declaration, OP or SC). That original is returned to the registry office, which shows that service occurred. This is somewhat more complicated with multiple defendants.

The best form of service is personal service (125 CCP, 16.01 RCP), followed by domiciliary service (123 CCP, 16.03(5) RCP), person in authority for a corporation (130 CCP, 16.02(1), see Saratoga Construction Ltd. c. Grenache (1979)), mail (only codified in Ontario: 16.03(4)) – these are all available without authorization. Note that the longer defendants resist service, the more costs this incurs and the more costs they may be liable for. If the normal means of service don’t work, one needs to make a motion for authorization of substituted service by mail (in Quebec, 140 CCP) or newspaper (in Quebec, 139 CCP) or by any other authorized way (in Ontario, 16.04 RCP).

It is slightly more complicated to serve in foreign jurisdictions. One way is to use local agents, but it is expensive. Another way is registered mail, but it is highly unreliable in most places. Another option is using bilateral treaties (it took 8 months for Glenn to be served to appear as a witness in Germany) or the Hague Convention on Service of Documents Abroad, using central authorities in each country. In Continental Europe, this can lead to challenge of the service as it is effected by governmental authorities (can’t serve for punitive damages in

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Germany according to the highest court there). Depending on the size of the lawsuit, more or less official channels are used. The general idea is to serve in a way that will stand up to defendant’s challenge.

Paupst v. Henry, ON HCJ 1983Facts: There was a fire allegedly cause by two defendants. They were insured, with policies saying that the companies had an obligation to defend. The lawyer was thus nominated by the insurance companies. Statements by both defendants were recorded. At the time of trial, it was realised that service had actually occurred on defendant 2, but the defendant’s lawyer had appeared for both. Even though defendant 1 had since disappeared, she became a party and her statement was admissible as an admission. The insurance company moved to have defendant 1 removed for lack of personal service. Held: The interest of justice requires personal service, the insurance company only had secondary liability. So it was allowed to withdraw its appearance on behalf of defendant 1 (backdoor elimination of lawyer-client relationship by the lawyer / company). This is a good ex. of audi alteram partem.

Once a lien d’instance is created and prescription, procedure plays out…

B. Preliminary contestation

Things used to be simple in the time of “ordinary adversarial” system: issue (to use COL language), service, preliminary contestations, completion pleading (when writ was basic, completed SOC and SOD), discovery, trial. This was all party-managed. By the mid-1990’s, this lead to a huge backlog of cases.

Adversarial procedure has been completely eliminated in Quebec, the UK, most of the US, but COL Canada is behind. There is simplified procedure (was tried in Quebec, but abandoned in 2002, doesn’t exist in the UK) for small cases, with a varying threshold, under $50,000 in Ontario – this idea came from the US. There is no discovery (76.04 RCP). A settlement conference must take place within 60 days, everything must be finished by 90 days (76.08-9 RCP). There is a summary judgement (76.07 RCP) which can be based exclusively on affidavit evidence.

Quebec and the UK don’t have simplified procedure in part because they have case management. There is early intervention of a judge. This is very different from motions “when you come around to it” in Practice Court, each of which in front of a different judge. Now, the process is managed by one judge which decides what is to be done: rocket docket. In Quebec, a case must be set down for trial at most 180 days after service. Parties have the burden “to get it done”, more work has to be done upfront. This is a drift by COL towards CVL procedure, but the end result has yet to be ascertained. But CVL has judicial interrogation and judicial management (fairly recent, since the 1960’s: called juge de la mise en état in France, which decides whether the case is to be put on the long, medium or short “circuit”; copied by the US). This is not what case management has done in the adversarial system: case management has been superimposed over party-lead interrogation. So it is more a grafting onto the adversarial system (kind of a hybrid) than a move away from it… so much for binary thinking. So the objective is to use private resources for a public goal, moving cases forward – this is somewhat of a limit to party autonomy however.

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The UK has full case management, there is no longer any adversarial procedure as originally known (Lord Woolf, CJ of England & Wales, campaigned for a complete reform). Same in the US (borrowed from France) and Quebec (since 2002): all cases are case-managed. In COL Canada, it’s a patchwork: pilot projects, depending on regions (Ottawa and Windsor but not Toronto), types of cases, etc. COL Canada has had the most effective resistance to reform. Note that neither in Quebec nor in Ontario are the reforms doing what they were supposed to do. According to Glenn, it’s very difficult to steer an independent judiciary and bar.

A word on the old Quebec procedure (1966-2002)… The attempt was to speed up adversarial procedure by imposing a complex system of time delays for everything (formerly in 161-2 CCP, now repealed), from filing, to disjoinder, jurisdictional objection, full pleadings. This experience failed for a very simple reason: everyone agreed that it can’t apply “in my backyard”, it was seen as professional courtesy to agree to extensions for lawyers, judges had no choice to accept absence of motions seeking to enforce delays.

The new 4.2 CCP introduces the principle of “proportionality”, so gestion d’instance or case management is to use time depending on complexity of cases. This sounds obvious, but has often not been the case historically.

4.2. In any proceeding, the parties must ensure that the proceedings they choose are proportionate, in terms of the costs and time required, to the nature and ultimate purpose of the action or application and to the complexity of the dispute; the same applies to proceedings authorized or ordered by the judge.

In Ontario, 77 RCP applies in case management areas. Plaintiffs must choose the fast track or slow track (state it: 77.06(5-6) RCP). After filing of the SOC, there is 6 months to serve. 77.08 RCP says that lacking any action the case “shall be dismissed” after 6 months: not the old liberty. This incites to quick service. After service, there are 20 days to file a defence (18.01 RCP). As soon as the defence is filed, the case is referred to a case management judge (rocket docket: 77.09(1) RCP). Depending on the track, one then gets 150 or 240 days for a settlement conference to take place before a judge (77.14(1-2) RCP); this period includes discovery and all preliminary contestation (heavily front loaded). At that conference, a trial date is set (77.14(7) RCP). A criticism in the UK is that it makes justice speedier, but also more expensive. Sanctions for non-compliance are at the appreciation of the judge and can go up to dismissal (77.08 and 77.10(7)).

Quebec functions on a similar system throughout (110 and 151.1-157.23 CCP), the process is: Declaration in form of a motion – 60 days – service – 10 days (119 CCP) – appearance (only need to state that there is going to be contestation) – 30 days – return before the judge (151.4 CCP). At this point, the judge can decide the case on oral testimony. If it is too complex, the court can decide what to do (151.5 and 159 CCP) including gestion d’instance and inscription for trial (within 180 days after service, 110.1 CCP). Within those 180 days, all discovery and preliminary contestation must take place. Parties can avoid the intervention of the case management judge if they enter in a binding agreement on how to proceed within the 180 days (so-called “contrat judiciaire”); this happens often. Sanctions for non-compliance are set out at (151.3 and 151. 7 CCP). Note: Pre-2002 cases are now mostly completed.

Nov. 27th, 2006

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Case management is a mid-point between the adversarial and the investigative: interrogation is managed by counsel, management itself rests with the judge. This means that there is no longer adversarial procedure, but that doesn’t mean that investigative procedure has been adopted: parties still have a lot of liberty. In the initiation & service – return – setting down dynamic, at the return stage judges intervene and parties agree to get a lot done (contrat judiciaire: 180/150-240 days to trial). This exists everywhere in the UK, Quebec and the US (patchwork in COL Canada). At the FC, there is also case management (381 ff. Federal Court Act), but with long delays (180 days between service and return).

Concepts of role have been controlling civil procedure according to Glenn. There is a limit as to changes in actors’ behaviour coming from civil procedure. Everywhere there is adversarial procedure, litigation has been declining dramatically. In the UK, 114,000 cases were filed in the High Court in 1998, only 14,000 in 2004 (12%). In Ontario, there has been perhaps a 10% decline, but 80% of cases are insurance company-driven automobile accident cases. In Quebec, 54,000 cases were filed in 1977, 27,726 in 1998, 11,404 in 2003 (post-CCP reform), 11,808 in 2004 (20% of 1977). Why this is happening in adversarial jurisdictions is the subject of speculation: mediation, ADR, elimination of car accidents, rising lawyers’ fees, civil procedure inconsistent with roles (Glenn)…

Ontario reforms have been stopped for 3 years in Toronto given lack of judges (78 RCP), go on in Ottawa and Windsor. It’s hard to get a small COL judiciary to be rule-making. In Quebec, a report has just come out: “Rapport d’évaluation de la loi portant réforme du Code de procédure civile”. 15-20% of Quebec cases lead to motions requesting a delay in practice court. The problem is that 90% of these motions are for cases going to trial and these motions are rarely contested and almost always granted. The report nonetheless recommends maintaining the 180 days delay and highlights the need for a “cultural change”.

“There will always be litigation, but the question is systemic management and rights of weaker parties.” - Glenn.

C. Counterclaims

Usually, when a claim is made, a defence is filed. If more aggressive, the defendant becomes cross-plaintiff and sues in turn the plaintiff (172 CCP: same or related source; 27.02 RCP: any claim). It’s always possible to engage in a counter-action, but most defendants prefer to use a counter-claim, which is faster, cheaper, doesn’t require plaintiff’s service, grouping of appeals, less security requirements for foreign plaintiffs, etc.

COL has been most restrictive, historically counterclaims were forbidden, a writ i.e. permission of the Chancellor was needed, but this was a counter-action. Counter-claims were allowed largely in the 19th C. CVL counterclaims have existed for longer, but are restricted to the “same or related source” or “connexité” (decision on specific claims applying existing law, not of all relations between parties) for an efficiency rationale.

For Quebec, see Gamache c. Caumartin (1985): an initial suit in contract cannot include a counterclaim in delict, even if the facts are the same. This is the classic CVL / continental result (different sources of law), reminiscent of debates on cause of action and res judicata (both notions narrow in CVL). A year later (1986), in Foessl c. Banque Royale du Canada, a contract claim (guarantee) is answered by a delictual (abuse of right) claim and the QCA ruled

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that these matters had a “same and related source”. According to Glenn, Foessl should be relied on given widening of res judicata, cause of action…

In Ontario, 27.08(2) prevents counterclaims when it is inefficient to do so because of procedural difficulties (ex. libel heard by a jury). In Mogil v. Mogil (1985), a claim for dividends was answered by a counter-claim in set off for other debts. The court even said that “the parties must seek all relief in the same proceeding” (p. 368 CB) – this is the only Canadian statement of a settled US principle (also a broad view of res judicata in the UK). If you don’t get it in the first time, you can’t go back again… the notion of merger and bar is being applied to counter-claims. Glenn thinks that this is currently not good law anywhere in Canada (much more caseload pressure in the US).

If one wants the full possibility to argue that a lawsuit is an abuse of process, the most retaliatory suit is a counter-action (even if possible to argue in a counterclaim). In the US, it is very common in medical malpractice cases. “In a defence, you can only defend.” First, P.A sues D.B. Second, P.B sues D.A. the cause of action being the first action (abuse of process, defamation, etc.). The COL has been very restrictive, saying that such a counteraction could not take place before a conducive judgment in the first action. Such a rule does not exist in CVL: Baudouin JA in Gille v. Les Placements Diar inc. (1992). Everywhere, if such actions are brought contemporaneously, they may be joined (way to push cases through, but complicated proceedings!). There are more counter-actions in the US because of cost rules, less incentive in Canada.

It is possible to move for a declaration that the plaintiff is a vexatious litigant / belliqueux or querelleur (psychological condition!). One ex. of this Re Lang Michener and Fabian (1987) where a serial plaintiff (sued everyone!) was declared a vexatious litigant: can’t begin litigation again without an authorization of the court. In Quebec, self-represented members of Fathers4Justice (such as Andy Srougi) are suing and filing complaints everywhere. The Bar is now trying to get Srougi declared to be querelleur.

One way of counter-attacking is to move for summary judgment. It continues to be used much, esp. in the context of case management… D. Default proceedings – summary judgment

There are three types of summary judgment:

- Default: 19 RCP, 192-8 CCP. Signed by a judge in Quebec, a Master in Ontario if it’s a properly documented claim for a sum of money. If it’s not a claim for a liquidated sum of money, there needs to be a judge involved, but evidence (usually affidavit) is uncontested (most cases in Court of Quebec, Small Claims). See Les éditions françaises inc. c. Martel (1966).

- Unfounded in law: 21.01(1)(a-b) RCP, 165(4) CCP. This challenge to the pleadings is demurrer in COL, an exception in CVL. Basically, the argument is that the plaintiff must still lose if all of the plaintiff’s claims are correct. The most famous case which was a judgement on demurrer was Donoghue v. Stevenson: assuming that there was a snail in the bottle, is there a valid cause of action (HL said yes). Here, there is no dismissal if there remains some possibility of an action succeeding at law: exceptional decision, which requires that not only does no cause of action exist, but no new one

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should be created either (not accepted in Milgaard v. Mackie (1994): claim against absolute immunity of prosecuting officers had to be decided after factual examination). No evidence of any kind is allowed in such a proceeding, it’s a pure argument of law.

- Summary judgment. This is sometimes called “piercing the pleadings”. It’s a summary examination of facts with affidavit evidence. See Vaughan v. Warner Communications Inc. (1986): affidavit evidence was sufficient. Whether this is done or not depends on the court’s appreciation, notably the amount of contradiction between the parties and complexity of the case. It is being alleged in England that this is not used enough. In BCCI v. Bank of England, liquidators of bankrupt BCCI sued the Bank of England for lack of supervision and £1B in damages. There was summary dismissal, upheld in appeal but not at the HL (3-2). After 256 days of trial, 12 years, and legal costs of £110M, the case was withdrawn!! In the US and recently in Quebec (little costs awarded), there has been a phenomenon of SLAPP (strategic lawsuit against public participation) to force people to shut up. This is largely because of the lack of cost shifting. Summary judgement (with costs in Canada) can be an answer to this.

All these judgments involve res judicata. Yet all these cases are decided without a full examination of the fact. This was historically impossible in COL (mesne: drag and torture defendants to appear through a full process), today defendants must appear notionally.

Nov. 29th, 2006

E. Exchange of pleadings

Pleadings today are mostly exchanged by parties in writing. They identify the essential issues and can be complicated to draft in large files. Historically, there have been large discrepancies between pleadings in CVL and COL. This difference has largely been overcome but the clanking chains of history still remain…

Common lawyers plead to the issue, i.e. that it fell in the form of action that was chosen (stated on the writ initiating the lawsuit). They pleaded only questions of law, “that in which the action sounds”. In CVL, the most important maxim was jura novit curia. The court already knows the law, the trial is meant to ascertain facts to which law will be applied: da mihi factum dabo tibi jus (give me the facts, I’ll give you the law). So pleadings were to the facts (also called “code pleading”, esp. in the US).

Since the abolition of causes of action in COL jurisdiction (mid-19th C.), parties issue writs and have a right to sue. So there is no need to tell the court in what the action sounds. The judge is now to apply substantive law to the merits of the case. But common lawyers still think that there is a stake in ascertaining in what the action sounds: the requirement was eliminated, but not the practice. In Allan v. New Mount Sinai Hospital (1981), Linden J. decided that the action failed in negligence but succeeded in battery. The OCA overturned this on the basis that the law of battery was not pleaded at trial. According to Glenn, this is wrong (2005 judgement of BCCA backing this: argument of law not necessary in the pleadings). 25.06(2) RCP says that you “may” plead law. Glenn says that strategically, law should only be pleaded at the very end, once all the facts are in.

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In Xérox Canada Inc. c. Boily (1996), the judge raised consumer protection law proprio motu. This ought to be quashed because the court may not raise law without submitting it to counsel’s argument, according to the French Conseil d’État (also the rule in COL). So in Quebec, there is a possibility and right to argue law (argument, but not mandatory pleading in the initial stages of the lawsuit).

In 12.1 ALI/UNIDROIT (p. 404), there is a requirement to state facts, describe evidence and “refer to the legal grounds that support the claim”. The new French codification now requires counsel to plead law! The question is whether one is bound by initial pleadings of law. This is what the OCA apparently said in Allan (but still unsettled law). This is meant as a device to accelerate cases. In any case, Ontario and French rules say “plead law now, but without prejudice”. The idea that law must be plead initially should be laid to rest, says Glenn.

Thus pleadings today are mostly about facts. How does one do that? Before the trial in which evidence is adduced, there is a process of discovery (investigation of the case by the lawyers) which often involves very large amounts of information. Before that, one starts with a statement of claim / requête, which usually says very little. A second level of pleading says a little more, a third says yet more, enough for the defendant to file a statement of defence. Sérabec ltée c. Place Desjardins inc. (1977) and Copland v. Commodore Business Machines Ltd. (1985) show that what the answer of the other party can be at each step. In Copland, it was said that pleadings have to be sufficiently specific, otherwise there is striking out of the allegations (allegations were struck with leave to amend it). 76 CCP and 25.06(1) RCP say that “the (material) facts (which are intended to be invoked)” have to be plead. Note that even if allegations are sufficient not to be struck out, they may be insufficient for the party to answer. This will generate a “motion for particulars” (which can be contested): 168(7) CCP, 25.10 RCP.

In Canada, pleading is about definition of issue. In the US, fact / code pleading has been eliminated in all but 3 or 4 States and federally. It has been replaced by “notice pleading”, which does not allow definition of issues. This stems from the pleading process becoming useless (shotgun pleading because of res judicata and merger and bar: put everything in SoC, even if immaterial, some 2-300 pages). Notice pleading uses summary statements of what the complaint is about and what is sought (ex. A is suing B for $1M in negligence due to the accident which occurred on date / place). Then everything is sorted out in discovery (defendant can discover / depose the plaintiff), which becomes a huge process (“discovery never ends”). Trial, in comparison is much more modest. Some fear that Canada is going the same route. Interestingly, the ALI/UNIDROIT principles fully reject US-inspired notice pleading (first s. p. 404). In Canadian (but not US) law, pleadings limit discovery and discovery limits evidence: no “fishing”. The end of this process is res judicata.

One only needs to plead material facts, not law, secondary facts or evidence. This requires a great deal of judgement (thus the barristers’ role in England to “settle the pleadings”, an art lost in the US: Canada is somewhere in between).

The defence has an obligation to respond. What you do in a defence: admit (85 CCP, 25.07(1) RCP: silence = admission in Ontario), deny (25.07(2) RCP), disclaim (when ignore the basis of a statement), affirm (providing an alternative to a statement). Note that general denial is not allowed. This eliminates some questions and focuses the inquiry. If this is well done, there is a complete definition of the issues between the parties. Discovery is limited to what the lawsuit “is about”. It’s important to plead well because this has repercussions later.

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VI. Discovery

A. Availability and scope

A lawsuit is progressive disclosure of relevant information. Initially, each party draws from its own information. Everything changes when one reaches the stage of discovery. Discovery involves investigation beyond the party to the litigation. In equity (and continental CVL), judges did this. In COL, lawyers did this. This allows lawyers to go into the other side’s information base and interrogate first the opposite party. This is a manner of getting all of the facts of the case and preparing correctly for trial. Discovered material can be converted into evidence, including to contradict testimony (“Were you lying then or are you lying now?”).

You can discover parties and witnesses (called depositions in the US), documents (incl. electronic), property and persons (ex. medical examination). Parties and witnesses are long and expensive to discover. Document discovery is not a problem unless there is wallpapering. Note that the UK does not have discovery of parties and witnesses.

Historically, in COL, there were law pleadings and jury trials. So there was no need for investigation of facts (jury already knew them). CVL had a process of fact pleading, then judicial inquiry (includes interrogation of witnesses), then a final hearing and argument followed by a judgment. Since the 19th C., COL has borrowed from equity, controlled by the canonists which had imported CVL procedure (Chancellor investigated). There the judicial investigation became known as discovery. The US, Canada and some other COL jurisdiction, an equity / CVL process is used: fact pleading and privatised investigation (by the lawyers instead of the judges). So, in Canada, the process now is: fact pleading (step eliminated in the US), discovery, trial. There is a problem of major duplication between discovery and trial. Importantly, what happens in discovery is not evidence (unlike in CVL).

ALI/UNIDROIT (p. 416) tries to tackle these differences, knowing that both systems are initially polar opposites, esp. as per the role of the judge. There is still discovery, but a case management judge decides on the scope of discovery. Also, a counsel or judge interrogate (depending on the jurisdiction’s rules). Everything you get out of that is evidence (as in CVL). Glenn thinks this compromise is brilliant. Parties can clearly agree to such procedure in arbitration proceedings, but can they do it by contrat judiciaire? Probably, since most civil procedure rules are not of public order.

Dec. 4th, 2006

How much time and expense can be devoted by parties to discovery? Judges are driven to efficiency and proportionality. But, to parties, it is an open-ended (and potentially abusive) search for truth. For this reason, more and more limits are being placed on discovery.

Discovery starts with the other party. Each party is under an obligation to inform (31.06(1) RCP, understood in Quebec) of that which is of “knowledge, information or belief”. This includes all physical and electronic documents (including versions, etc.). Each lawyer must engage on document review to decide what might be privileged and what information is in the records and should be forwarded. “If you don’t manage your own discovery, you end up having to make everything available to the other side.” Sanctions for not informing the other side: can’t use that information yourself (31.1(4) RCP), the claim may be dismissed (34.15(1) RCP, 75.1, 2, 20, 46 CCP). Lying in discovery may lead to a charge of

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perjury (conflicting jurisprudence on whether lying in discovery is perjury). This obligation includes the obligation to convey information discovered later.

Normally, a discovered party must testify as to material facts which are the object of allegations in the pleadings. Remember that pleadings limit discovery, which limits the judgement. Everywhere in North America except in Quebec, it is possible in discovery to obtain not just facts, but also actual evidence (ex.: asking a party who unknown witnesses are). This is clear law in the US (“discovery is a dress rehearsal for the trial”). Canadian COL originally only focused only on facts, but this changed with Soke Farm Equipment v. New Holland of Canada (1990) (and other equivalent cases). In the US, this is a matter of right, in Canada one must obtain leave for this. This is a check on unending discovery as occurs in the US. In Air Canada v. Meridien Credit Corp. of Canada (1985), a third party was discovered for being adverse in interest. This makes sense. More controversial is discovery of third party witnesses, such as in Weiszman v. 491 Lawrence Avenue West Ltd. (1985 slip and fall case). Glenn says two recent cases in Quebec said that necessity of discovery to prepare for the trial is insufficient (need specific allegations), they are much less generous than Weiszman. So Quebec is in principle the most restrictive jurisdiction for granting leave.

Pleadings limit discovery. For ex., if someone is alleging negligent manufacturing of a wheel, one cannot discover the designer but only the manufacturer. In Canada, one must state facts which base the cause of action (“notice pleadings”, not necessary in the US). If necessary, it is possible to amend defective (usually too narrow) pleadings. This can be the object of contested motions (esp. if prescription has kicked in).

In Ontario, in any case under $50K, discovery is not allowed (76 RCP), in Quebec it has been excluded for cases under $25K (396.1 CCP).

B. Privilege

After leave and pleadings, the third major limit on discovery is privilege. In CVL, there is also a notion of wide professional secret (set out in Code of Professions); in COL only lawyers benefited historically. Solicitor-client privilege protects communications between client and lawyer. In COL, everything else is open (with leave in Canada, without leave in the US): parties can investigate. In principle, one can find out communications between a lawyer and third parties (ex. experts) which become vulnerable to discovery. In the 1940’s, a second privilege was created as an answer to this: known as litigation privilege / work product privilege. It extends privilege to the work product the lawyer created in preparation for litigation. It does not exist in continental CVL. “The more work a lawyer does, the less information is available for fact-finding; there is a tension here.” There are now limitations on this privilege, with the objective of accurate fact-finding: lawyers can’t bury information. See the Waugh v. British Railway Board (1979) case in which an official British Rail report prepared after an accident was requested on discovery. The HL decided that litigation has to be the “dominant purpose” for litigation privilege to apply (in Waugh, it was also almost the only usable evidence). Canadian cases have emboitté le pas: La Prévoyance cie d'assurance c. Constructions du fleuve ltée (1982), Highland Fisheries v. Lynk Electric (1989). Remember that it is only the document which is privileged, experts or third parties (but not lawyers) may be interrogated on underlying facts or other “stuff” (privilege attaches to the product, not to the information). In the US, it is now a qualified privilege (unclear in Canada): no litigation privilege if can’t get the information any other way. Also, reports which will be adduced in evidence must now be disclosed slightly in advance.

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VII. Amendment and revision of proceedings

A. Amendments

It is crucial, because one only knows the whole case after discovery. The old COL rule was that pleadings could be amended freely before pleadings closed or before a reply was provided. Now, amendment may be done at any time, within broad limits (26.01 RCP, 199 CCP). CVL had fact pleadings which could be amended at any time. COL has converged towards CVL on this point. In any case, an amendment may be contested by the other party. There broad limits are: no completely new cause of action, if not in the interest of justice, non-compensable prejudice to the other party. What adds piquant is the role of prescription.

What may be invoked to refuse an amendment. The first two reasons are not sufficient to prevent an amendment, the last two may be:

- Time needed to envisage (simple solution: give more time).- Additional costs (not an issue in Canada unlike in the US: cost shifting).- Information has disappeared (ex. destroyed records, dead witnesses).- Running of the limitation period (would remove a defence). One must distinguish

several types of amendments when the limitation period has run: o New cause of action. Ex.: manufacturing fault instead of design fault. This is

always allowed, because a second suit will not be allowed. One may include explicitly what is included implicitly because of cause of action estoppel (res judicata): a judgement extends not only to facts pleaded but to what should have been pleaded, so it’s a matter of justice to be able to amend. In case of refusal, one should appeal (and one has the right to do so: final).

o New plaintiff(s). In Munger c. Corp. municipale de St-David-de-Falardeau (1981), a suit was launched in name of the mill owner (negligent flood) instead of in the name of the corporation. Counsel sought an amendment. This departs from res judicata: a different party needs a different judgement. In this case, it was accepted because the defendant had notice of what it was being sued for (so no prejudice, able to prepare adequately: identical action). Some cases are more dubious: unrelated plaintiff with a particular claim. In Sperdutti, a lawyer was held liable for Torquemada costs for forgetting family members. He eventually obtained leave on appeal to amend the pleadings, but was held liable for solicitor-client costs.

o Different (more) law. This is always allowed, law never has to be pleaded anyways. In Denton v. Jones (No. 2) (1976), it was decided by the OCA (1976) that there was no new cause of action when new law was pleaded, so there could be amendment.

o New defendant(s). This is always allowed granted there is notice (idea of equity, if a Munger-like situation, say the car that hit you belonged to a corporation and not the driver you sued). If there is no notice (what occurred in Krusel v. Firth (1991): pool injury, owner of pool sued, wanted to add manufacturer), it is normally denied if prescription has run. But then, as pointed out by the BCCA in Krusel, the question is when the limitation period has begun to run (this may be more or less contested: in Krusel, sent back to trial to ascertain whether the lawyers had diligently researched who could be sued initially, if not: no amendment allowed, potential professional liability).

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