‘Excessive overpleading’ attracts cost consequences

As the risk of unsuccessful certification applications diminishes, Ontario courts are coming down hard on the practice of overpleading, saying it is unnecessary and wasteful, and leveraging cost consequences to emphasize the point.

‘Excessive overpleading’ attracts cost consequences
Craig Lockwood says that any hearing before Justice Paul Perell will likely be affected by the concept of overpleading.

As the risk of unsuccessful certification applications diminishes, Ontario courts are coming down hard on the practice of overpleading, saying it is unnecessary and wasteful, and leveraging cost consequences to emphasize the point.

However, the concept is not gaining traction elsewhere, leading to conflicting decisions.

“The whole animus of a class action is judicial expediency. Theoretically, we should just certify claims that have a viable chance and favour a streamlined approach,” says Craig Lockwood of Osler Hoskin & Harcourt LLP, who is on board with the Ontario push.

“To be honest, the plaintiff’s bar wants to do what they can. They traditionally employ a buckshot approach. Once the essence of the claim is established, they articulate as many causes of action as can be reasonably sustained through the course of the litigation, and create a dog’s breakfast. That makes cases more difficult and needlessly complex.”

Lockwood’s view supports what has become a campaign by Justice Paul Perell, most recently articulated in Berg v. Canadian Hockey League 2017 ONSC 2608.

That case alleges that junior hockey players were entitled to receive minimum wages for their services on the basis that they are employees of their clubs.

In the certification proceedings, Perell explained, “Perhaps because of the novelty of their claim and the extraordinary importance that hockey has to Canadians, Messrs. Berg and Pachis excessively over-pleaded both their case and also their certification motion . . . ”

He went on to say that the defendants excessively responded to the certification motion.

He found that while all of the causes of actions were properly disclosed in the pleadings, many of them were redundant and should not be certified because of the requirements of s. 5(1)(d), that the class proceeding be a preferable procedure for the fair and efficient resolution of the common issues.

“This is a mantra Perell has been hammering since the Magill v. Expedia 2014 ONSC 2073 case,” says Lockwood. He recalls similar statements in the Smith v. Sino-Forest 2012 ONSC 24 carriage fight.

“He awarded carriage to the firm that had the most streamlined claim,” he says.

Another case that provided a platform for the concept was the determination of costs in Bern-stein v. Peoples Trust Company, 2017 ONSC 2189, where Perell said, “In the class action context, over-pleading the class size, class period, and adding redundant causes of action and claims and not making concessions is a frequent phenomenon. And it is a problematic phenomenon because over-pleading and not making concessions virtually ensures that there will be a contested certification motion — and an expensive one — that simply aggravates the access to justice problems that class action procedure was designed to ameliorate.”

Ted Charney of Charney Lawyers in Toronto, who represents the plaintiff in the Ontario Hockey League case, points to the recent conflicting decision of Justice R.J. Hall of the Court of Queen’s Bench of Alberta in the Western Hockey League case.

“Justice Perell is the only one who has championed this so far. The only judge who has considered it so far, to see if it’s going to be accepted, is Justice Hall,” he says.  

In Walter v. Western Hockey League, 2017 ABQB 382, Hall said, “Justice Perell chose not to certify various causes of action for reasons of efficiency and judicial economy. I am not prepared to follow his lead.”

“If the pleadings disclose causes of action, then I consider that those causes of action should be permitted to proceed . . . I am not prepared to strike causes of action which have been properly pleaded,” said the ruling.

Charney says it is very rare to have parallel cases, let alone parallel class actions.

“This case is virtually identical to the one Justice Perell heard,” he says.

“It has the same facts, the same pleadings, the same causes of action and same common issues. It’s virtually the same record.”

Charney thinks Justice Hall takes the preferable approach. He has appealed the Ontario decision to exclude the causes of action, and the CHL and WHL have appealed Hall’s decision to let them in.

“There are serious implications to having two conflicting decisions. Both OHL and WHL are overseen by CHL — it is a defendant in both proceedings. It’s unfortunate. It is delaying the litigation significantly. We’ll be preoccupied with this for the next six months to a year,” he says.

Charney points to another conflicting decision, namely the carriage motion in Mancinelli v. Barrick Gold Corporation, 2016 ONCA 571, which has been confirmed by the Ontario Court of Appeal.

“It is the only appellate court to have dealt with a carriage motion,” he says.

“Justice Belobaba awarded carriage to the firm with the most comprehensive pleadings.”

Until the conflicting decisions are resolved, Lockwood says that any hearing before Perell will likely be affected by the concept of overpleading.

“He is the most prolific writer in the class actions realm in Ontario in any event,” he says.

“The reality is if you bring an action in Ontario there is a strong likelihood you will end up in front of Perell, so there is more force and effect when he says it.”

Despite this, Lockwood does not believe that plaintiff’s counsel is taking much note of the concept so far.

“I do have sympathy for them. They want to pitch it at the highest level, but there is still a tendency to throw everything in except the kitchen sink,” he says.

“Once one side pleads it, the defence has no choice but to meet it with any available defence.”

He considers that the class action should be streamlined at the certification stage.

“Let the judge pick and choose what he or she wants to proceed on,” he says.

He says the defence can also raise the issue.

“In the CHL case, the defence conceded it was a valid cause of action but said that it’s a singular issue,” he says.

“We know what it is. We don’t need 10 different ways of getting at it. We should not go through the headache of navigating all of them when one will do.”

Charney disagrees.

“I do not think it’s appropriate at the certification stage for the judge to call certain causes of action redundant or unnecessary. They must realize that the motion is being heard at a preliminary stage,” he says.

“We haven’t had discovery. We haven’t had exchange of documents. It’s necessary to have numerous causes of action until we have a complete record and the facts play out. At the pleadings stage, we do not have a crystal ball.”

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