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Law and Business
LAW 122
Leigh Lampert

Chapter 2: Litigation and Alternative Dispute Resolution Litigation- dispute resolution in court; risks of it: expensive, time consuming, unpredictable, frequently fatal to business relationships. Litigation is rare because people settle first. The Litigation Process: Who Can Sue and Be Sued? All adults regardless of their citizenship, corporations (even if they are incorporated outside of Ontario; the law treats corporations as legal persons for some purposes), trade unions and some special cases: children or adults suffering from a mental incapacity (represented by a parent, or litigation guardian) have access to courts in Ontario, and can be sued. Unincorporated organizations, such as clubs, amateur teams, and community groups, are generally not recognized in law as “persons”, so these organizations cannot sue or be sued as an organization. But they can be sued as individual members of the club. If members of a club wish to pursue legal action against another party, they must bring their legal action as individuals. They cannot sue in the name of the club or organization. Trade unions are an exception to this rule. Legislation has now made it possible to sue the government under some circumstances. Plaintiff is the person who initiates the law suit. Defendant is the person being sued, and a law suit as a whole is frequently called the action. The Litigation Process: Class Actions What are the benefits of class actions? A class action allows a single person or a small group of people to bring a legal claim on behalf of a larger group of people. The class is the group of people on whose behalf the legal claim is brought; a class can range in size from very small (even just two people) to very large (thousands of people). In Ontario, the Class Proceedings Act governs class actions. In order to bring a class action, a representative plaintiff must take steps to have the class certified. (Certification basically means that the Court has decided to allow the claims of the individual members of a proposed class to be joined together). The Class Proceeding Act states that a judge will certify a class if the following requirements are met: -There is a “cause of action”. The representative plaintiff does not have to prove his case during the certification phase, but he must show that there is some basis in law and in fact for the claim being made. -Members of the proposed class must have common issues. Sometimes, class members have quite different types of issues, but their claims still have a lot in common with each other. In such cases, the class might be certified with sub-classes that divide the class members into different sub-groups, based on the different types of issues resulting from the same event. Each sub-class must have its own representative plaintiff. -There must be a representative plaintiff (who is involved in the case/directly affected). Representative plaintiffs have a number of responsibilities: a responsibility to have a workable plan for fairly representing the all members of the class. -The representative plaintiff must demonstrate that he or she has a workable plan to notify all potential members of the proposed class. In Ontario, class actions are “opt-out”, which means that people are deemed to be included in a class action unless they specifically opt-out of participating. It is only fair to require the representative plaintiff to give notice to everyone who could be a member of the proposed class so that people can opt out of the class if they want to sue the defendant on their own. -A class action must be the preferable procedure for addressing the various claims. For example, if the members of the proposed claim do not have enough in common or if joining the claims together would result in an overly complex proceeding, the judge may find that a class action is not appropriate. -As with all legal class proceedings, someone has to pay for the costs of the action, including the lawyers’ fees. Section 31(2) of the Class Proceedings Act makes clear that the Representative Plaintiff alone is liable for costs related to the action; other members of the class are not liable for the general costs of litigation. Nevertheless, section 17(7) of the Act allows a Representative Plaintiff to ask the court for an order that permits him or her to ask other members to contribute to the cost of lawyers’ fees and disbursements. The Representative Plaintiff is not entitled to any special form of compensation such as payment for the time and effort expended on bringing the class action. -The Class Proceedings Act also permits a lawyer to charge contingency fees in class actions. Contingency fees are fees that are only payable if the case is successful. The Litigation Process: Legal Representation There are three broad options for obtaining legal representation in the litigation process: you can represent yourself; you can hire a paralegal; or you can hire a lawyer. In Ontario, both lawyers and paralegals are regulated by the Law Society of Upper Canada. This means that you must obtain certain credentials and meet certain requirements in order to be licensed to practise as either a lawyer or a paralegal. The licensing process is part of ensuring that lawyers and paralegals are competent and remain competent. Clients can sue their lawyers and paralegals for carelessness (negligence) and for intentional wrongdoing. Lawyers and paralegals in Ontario are required to hold professional liability insurance. This insurance provides compensation to clients who have suffered losses as a result of a lawyer’s or a paralegal’s carelessness. The Law Society also maintains an Assurance Fund to compensate people who have suffered losses as a result of a lawyer’s or a paralegal’s dishonest conduct. Representation by Paralegals Advantages: usually very knowledgeable in specialized areas, generally less expensive and more accessible Disadvantages: traditionally no formal training requirements, they are not regulated by a governing body, Since 2007, Law society of Upper Canada has licensed paralegals in Ontario; they now must train at an approve school, complete examinations, abide by a code of conduct and carry liability insurance. Restrictions: confined to certain types of work, cannot work on a contingency fee basis. The Litigation Process: An Overview of the Life of a Legal Action The basic steps in a legal action are set out below. Cause of Action occurs. Action must be commenced within applicable limitation period Pleadings The parties exchange various filings that outline the issues that they will raise at trial and the facts upon which they will rely. Statement of claim is used by plaintiff to start a claim, and outlines dispute and states desired remedies. Statement of defence is used by defendant to deny facts/liabilities. Counterclaim is used if defendant wants to claim against plaintiff in same proceedings. Statement of defence to counterclaim is denial of facts or liability to counterclaim. Reply is used by plaintiff to dispute contents of statement of defence. Demand of particulars is used by either party to demand additional information. Pre-trial Activity Parties have the opportunity to "discover" each other's case through the exchange of documents and pre-trial examination of witnesses, which occurs under oath (examinations for discovery). Discovery gives the parties an opportunity to evaluate the relative strength of the other party's case and to gauge how much the claim is really worth. Parties have a pre-trial conference in which they meet with a judge. The judge may give the parties a frank assessment of which side is likely to win if the case goes to trial. This gives the potential losing party more incentive to settle. In some cases, there is court-mandated mediation (currently in Ontario only). Determination of Claim The parties either settle or the case goes to trial. The vast majority of cases settle before trial. If the case goes to trial, the plaintiff must prove its case on a balance of probabilities. In other words, every important part of the plaintiff's claim must be shown to be more likely true than not. At trial, the defendant is found either liable or not liable. If the defendant is held liable, the plaintiff will be awarded a remedy. The most common remedy is compensatory damages. Remedies include: compensatory, punitive, nominal damages, specific performance, injunction and rescission (all in depth below) Burden of proof: criminal court (guilty/not guilty): beyond a reasonable doubt and in civil court (liable or not liable->remedies): balance of probabilities. Enforcing the Judgment If the plaintiff wins an award of damages, the defendant becomes a judgment debtor. The plaintiff now has the difficult task of getting its money from the defendant. Appeals In some cases, a party may appeal all or part of a judgment. This means that the party the appellant asks a higher court to review the case and to decide if the judge made the correct legal decision. Limitation Periods: Limitation periods are the period of time within which an action must be started. Legal claims must be made within a certain period of time or the court will not allow the claim to proceed. These time periods are governed by statute, and can range from six days (e.g., if you want to sue a city in tort) to 21 years (e.g., if you want to assert certain property rights). In Ontario, in cases involving torts or breach of contract, the most common limitation period is two years from the date on which the plaintiff should have become aware that he or she had a claim against the defendant. If the plaintiff misses the limitation period, she still has a claim…but she cannot enforce that claim through the courts unless there are very special circumstances. A special exception applies to debts, if a debtor acknowledges a debt after the limitation period expires, the creditor may bring an action to recover the outstanding monies even though the limitation period has passed. Pleadings: There are strict limits on the time that each party has to respond to the other’s pleadings. The failure to file your pleadings in response to the other party’s pleadings could have disastrous results. For example, if a defendant does not file a Statement of Defence on time, the plaintiff can move for a default judgment in favour of the plaintiff. The failure to file the Statement of Defence on time is interpreted as meaning that the defendant accepts all of the plaintiff’s allegations in the Statement of Claim, including the allegation that the defendant is liable! If you are served with a statement of claim or other form of pleading, you should immediately contact your lawyer. Do not wait. There are serious consequences to missing filing deadlines. The Litigation Process: Remedies and Enforcing Judgment Remedy Description Example Compensatory damages Pay the plaintiff money to Provide an injured plaintiff with compensate for the plaintiff’s the amount he lost as a result loss of not being able to work and the amount spent on medical bills Punitive damages Pay the plaintiff money as a Punish an insurance company means of punishing the that made up allegations of defendant for acting very arson in order to avoid paying badly a benefit under the policy Nominal damages Pay the plaintiff a very small Recognize the right of a store amount of money to recognize that sued for trespass even symbolically that the though the unwanted defendant acted wrongfully customer did not do any harm even though the plaintiff did not suffer any loss Specific performance Order the defendant to fulfill a Force a defendant who contractual promise promised to sell a piece of ***equitable remedy land to the plaintiff to go through with the sale Injunction Require the defendant to act Force the defendant to stop in a certain way (e.g., to do cutting through the plaintiff’s something or to stop doing backyard or force a something) construction company to ***equitable remedy remove its equipment from a neighbour’s property Rescission Terminate a contract Eliminate a contract that was ***equitable remedy created by a con artist who tricked an elderly couple into signing Once a defendant has been found liable and ordered to pay damages, the defendant becomes a judgment debtor (because the defendant owes the plaintiff a debt pursuant to a judgment). If a judgment debtor does not pay, the plaintiff has a few options. The plaintiff can g
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