Courts ‘taking a harder line’ on vexatious lawsuits

The Ontario Court of Appeal’s recent adoption of guidelines for the interpretation of a relatively new rule against vexatious proceedings is a welcome addition to the ongoing battle against such actions, lawyers say.

Nevertheless, some lawyers suggest that even the clarity it provided on Rule 2.1.01 of the Rules of Civil Procedure won’t be enough ammunition to discourage vexatious litigation in the absence of financial sanctions on those who bring meritless cases.

In Scaduto v. The Law Society of Upper Canada, a unanimous court “fully endorsed” the approach lower courts had taken to the rule since it came into force on June 1, 2014. The rule provides a summary and expeditious procedure on written materials to deal with proceedings that are “frivolous or vexatious or otherwise an abuse of the process of the court.”

Scaduto arose after Giuliano Scaduto was unsuccessful in a claim before the Workplace Safety & Insurance Board. He pursued the matter all the way to the Supreme Court of Canada, which ended things by denying leave to appeal.

Scaduto then sued the law society and the Ontario attorney general for being remiss in their statutory duties by failing to investigate his complaints about certain lawyers, including the registrar of the Supreme Court who had refused his request for reconsideration of the failed leave application.

The law society and the attorney general moved for dismissal of the lawsuit against them as frivolous and vexatious. After reading Scaduto’s written submissions, Justice Fred Myers, who had decided a number of such cases since the rule’s inception, found Scaduto’s complaints were an attempt to relitigate his failed WSIB claim and dismissed the lawsuit.

Scaduto appealed, claiming Myers had erred by not reviewing the large volume of written evidence he had filed.

The appeal court, however, endorsed Myers’ approach.

“Under the [existing] line of authority [in the lower courts], the court has recognized that the rule should be interpreted and applied robustly so that a motion judge can effectively exercise his or her gatekeeping function to weed out litigation that is clearly frivolous, vexatious, or an abuse of process,” the court wrote in its endorsement last week.

“However, the use of the rule should be limited to the clearest of cases where the abusive nature of the proceeding is apparent on the face of the pleading and there is a basis in the pleadings to support the resort to the attenuated process.”

In the court’s view, Rule 2.1 was an effort to deal with frivolous or vexatious proceedings in a summary manner. “Resort to evidence defeats the purpose that the [Rule] 2.1 process will itself become a vehicle for a party who might be inclined to inflict the harms of frivolous proceedings on the opposing parties and the civil justice system,” the court stated, fixing total costs of the appeal against Scaduto at $3,500.

“The courts are definitely taking a harder line,” says Michael Myers of Papazian Heisey Myers in Toronto.
“Absent Rule 2.01, you could have serious and lengthy proceedings to deal with non-serious cases and arguments.”

Evidencing the harder line is a recent decision of the Federal Court, Bursey v. Canada. Using no uncertain language, prothonotary Kevin Aalto struck five actions that he described as “pseudo-legal drivel.”

The plaintiffs were “quintessential OPCA litigants,” he wrote, referring to a term — organized pseudo-legal commercial argument litigants — coined by the courts.

“OPCA litigants follow a now well-known path of illogic, presumption and pseudo-legal rants. [They] endeavour to build a cause of action based on snippets and fragments of international treaties, the Canadian Charter of Rights and Freedom, various Supreme Court of Canada cases and miscellaneous statutes, both federal and provincial. All of these are bound together in pseudo-legal verbiage.”

Myers, the lawyer, believes Bursey and similar cases are sending a clear message.

“The way the law is going in Canada, nobody is going to get anywhere with this kind of approach to litigation,” he says.

Still, he notes his concern that Aalto awarded only $500 in costs against the plaintiffs in each action.

“Walking to and from court from my office costs $500,” he says. “Until the courts make OPCA and other frivolous litigants pay through the nose, they’re going to keep trying no matter how the law develops.”

John Olah, a senior litigation partner at Beard Winter LLP in Toronto, has also seen a rise in the number of frivolous lawsuits. He attributes the rise to a number of factors.

“The larger problem is that there is an increasing inability for the public to access lawyers, so in some cases we are seeing parties representing themselves and who don’t understand the process. As well, in some cases, the young lawyers haven’t always done the best  job in their handling of these types of cases, often because there is a lack of adequate mentoring.”

Olah also notes the pervasive mentality that any case has a settlement value and the involvement of law firms that may not have the resources to properly review and assess files.

“As well, there’s a decline in work out there for the plaintiffs’ bar and some plaintiffs’ lawyers seem to be taking on more and more tenuous cases than they did in the past,” he says. “Having said that, it’s also important to point out that there are only a relatively small number of cases that have no merit.”

Nevertheless, Olah acknowledges that open courts and access to justice are essential for democracy and the rule of law to function effectively.

“But there’s a price for that, and the public ultimately pays the price,” he says.

In his view, the courts and legislatures need to adopt an approach that mirrors the one taken in Charter jurisprudence. “We have to balance the right to open access by creating processes that filter out meritless cases at an early juncture and eliminate them early and inexpensively,” he says. “In the end, perhaps the best we can do is recognize the problem and impose substantial indemnity costs to send out the message that litigants who resort to these tactics will pay a meaningful price.”

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