Friday, November 07, 2008

Law in the Trenches: Ontario’s Rule 76

A 'Legally Speaking' update from Alvin Starkman M.A., LL.B.

After writing about antiques and multi-million dollar claims in two of the three last installments of Legally Speaking, it’s time to return to the type of lawsuit which most likely applies to our readers’ circumstances … claims involving much more modest sums of money, and how we can proceed without breaking the bank on legal fees, and get them settled within our lifetime.

Back in the 1990’s government legislators began contemplating how to provide access to justice for litigants whose potential lawsuits exceeding small claims court monetary jurisdictions, yet were claims not involving enough money to warrant paying lawyers exorbitant fees and fighting in court for years on end. Hence, provinces developed what became known as the “simplified procedure” whose goal was to promote cost effective litigation and the expeditious resolution of disputes without compromising procedural fairness.

Earlier this year the first reported case in the country which centres upon a claim involving antiques, and was fought pursuant to the rule governing the simplified procedure mechanism, was published in the legal reports. Liu v. Donya Enterprises involved a claim for damage to merchandise in an antique store resulting from water leakage caused by the landlord’s negligence and failure to maintain “quiet enjoyment” for its tenant. The case proceeded using Ontario’s Rule 76, the province’s code for the simplified procedure.

The workings of the procedure vary somewhat from province to province, but the objectives and essential characteristics are the same, countrywide. Since it’s an Ontario case, we’ll outline this province’s procedures. Then we’ll deal with the facts and the outcome of the particular case, and finally conclude with a look to the future.

In Ontario, most claims that involve a plaintiff seeking $50,000 or less must be commenced under the simplified procedure. If the defendant does not object, lawsuits with more than this amount at stake can proceed using the rule. The mechanism does not permit pre-trial out-of-court oral examinations of the parties (known as examinations for discovery) or other witnesses, provides for disclosure of potential trial witnesses very early on in a case, and streamlines other procedures, making advancing a lawsuit easier, much quicker and cost effective. A judge has the power to control a great deal of the process, the result being that it’s more difficult for unsavory litigants and their lawyers to drag out matters and force the other side to incur unnecessary expense.

Our spotlighted case is not at all unique, nor ground-breaking from a legal standpoint. That’s why it’s important. It shows us how we can proceed, obtain fast justice, and in fact win, with a set of facts perhaps familiar to many of us. Only two decades ago such a case would have been extremely expensive to litigate, and taken years to reach a conclusion. I’ve litigated cases using the procedure, and had a judge’s final ruling within a year and a half or so after commencing the court action. So it does work.

Heidi Liu’s antique store, Lotus Lamp Company, had a lease with Donya Enterprises from December 2000 to January 2005. In May, 2004, the landlord contracted to have renovations done to the apartments above the store. In the course of some plumbing work, water leaked down into Ms. Liu’s store, damaging some of her merchandise.

Water damage is perhaps one of the most common scenarios causing problems between landlords and tenants. In this instance the landlord admitted before the trial that it was in fact negligent, and that it breached its implied warranty to provide quiet enjoyment of the premises. Aside from a couple of issues which are irrelevant for our purposes, the battle became one of Ms. Liu proving her monetary losses. She had to convince the judge in the face of cross-examination by the lawyer representing the landlord, and defense witnesses, that specific antiques were damaged as a result of the leakage, and their cost of repair or replacement.

The antiques purportedly ruined consisted of nine carpets and 10 handmade silk paintings (all Tibetan), two cabinets one of which was a red wedding piece, a coral artifact, and a wooden lion dog carving.

The evidence consisted of witnesses who testified on behalf of each side, and exhibits which included some of the actual pieces, photographs of the items claimed to have been damaged, and receipts evidencing their purchase price. The defendant’s position was that not all of the damage was caused by the leakage, the invoices for the purchase of the antiques were suspect, and in any event the damaged pieces could have been repaired.

The judge accepted virtually all of the evidence presented by the lawyer representing Ms. Liu and her company because it was the best evidence available. No expert reports were tendered about how the damage was caused, whether repair as opposed to replacement was a viable option for some of the items, or regarding their cost. In the absence of expert evidence, and without convincing testimony casting doubt on Ms. Liu’s reasonable version of the facts, the judge was compelled to accept the plaintiff’s allegations. Madam Justice Allen repeatedly noted that expert evidence contradicting the claims was lacking. She therefore accepted what the plaintiff’s witnesses said, and the exhibits illustrated.

The case suggests that for a relatively small claim you can keep costs down by submitting convincing oral testimony and exhibits which help you to prove your case, and as long as the other side doesn’t go to the expense of retaining experts, you’ll win without your own experts. The courts are aware that experts are expensive, but will often be critical if you try to refute a reasonable version of the facts without their use to bolster your contention. If there had been credible evidence to refute Ms. Liu’s position, she might have lost, and been ordered to pay the cost of the defendants’ expert reports and testimony.

The use of the simplified procedure worked well, with Ms. Liu prevailing. Her judgment was for $29,459, plus interest, plus legal costs of $15,000 fixed by the judge. Presumably the costs award covered most if not all of her lawyer’s actual fees.

In the foreseeable future the monetary jurisdiction of Rule 76 will probably be increased to $100,000, making justice more accessible to those with higher claims. However, some of the safeguards which until now have kept costs and delays from escalating may be whittled away by the legislators. It’s already happened in some provinces.

- Alvin Starkman, M.A., LL.B, Oaxaca

Alvin Starkman received his Masters in Social Anthropology in 1978. After teaching for a few years he attended Osgoode Hall Law School, thereafter embarking upon a successful career as a litigator until 2004. Alvin, a good-standing member of the Law Society of Upper Canada, now resides with his wife Arlene in Oaxaca, Mexico, where he writes, leads small group tours to the villages, markets, ruins and other sights, is a consultant to documentary film production companies, and operates Casa Machaya Oaxaca Bed & Breakfast. The views expressed are those of the guest blogger, and do not necessarily reflect the views of Wise Law Blog and its authors.


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