Newsletter > September 2012
In this issue:
1. Firm and Industry News
2. Arguing about Whether to Argue now or Argue at Trial: Can Summary Judgment Make Litigation More Accessible and Affordable?
3. Rail Carrier Allowed to Limit Liability Despite Failure to Produce Written Signed Agreement as Required by s. 137 Canada Transportation Act
4. Le vol à main armée : un cas de force majeure
5. The rise of legal alchemy: how con men are creating groups of unreasonable litigants, for profit
1. Firm and Industry News
- October 4th, New York – Association of Average Adjuster of the United States and Canada annual meeting and dinner
- October 5th, New York – Marine Insurance Claims Association Dinner
- November 27th, Toronto – Canadian Board of Marine Underwriters Annual Meeting and Dinner.
- November 28th, Toronto – Commons Institute Conference on Aviation Issues.
- November 29th, Toronto – Toronto Transportation Club Annual Dinner
- December 7th, Montreal – Grunt Club Annual Dinner
- January 17, 2013 Toronto – Fernandes Hearn Annual Maritime and Transportation Law Seminar
Gordon Hearn will be presenting a paper on “The Identity Theft of Cargo: Reducing Losses and the Allocation of Liability by the Courts” at the Canadian Board of Marine Underwriters Annual Conference in Toronto on November 27, 2012.
Rui Fernandes will be a presenting a paper on “Environmental Concerns in the Aftermath of an Accident” at the Commons Institute Conference on Aviation Issues on November 28th in Toronto.
2. Arguing about Whether to Argue now or Argue at Trial: Can Summary Judgment Make Litigation More Accessible and Affordable?
It could – if exercised wisely. In a recent decision a judge of the Ontario Superior Court cites concerns that many litigants and members of the Bar may not be “getting it” in terms of when motions for summary judgment are appropriate and setting a litigation strategy. (*1)
The summary judgment idea is simple enough. Litigation can be expensive. Not all lawsuits should have to proceed to a conventional formal trial, with all the trimmings of associated delays, witnesses, and ongoing expense. If one side’s position is clear enough, and if the law is ‘on their side’, why should the matter not be presented to a judge by way of an application for “summary judgment” today, instead of waiting for a trial by judge or a jury tomorrow?
The recent concern expressed from the Bench is that there may be a paradoxical or an unintended effect of the summary judgment mechanism making the system even more expensive. Perhaps the application for summary judgment is premature if the parties may not have yet proceeded to examinations for discovery. In the result, perhaps a full ‘record’ of facts has not yet ripened. Perhaps the application, when heard, is disposed of on the basis that the judge determines that in fact a trial is needed in the interest of justice. In the result, the ambition of one party seeking summary judgment has translated into extra costs and delays for the parties. The casual observer might cynically look upon the approach as “lawyers arguing about arguing”. Certainly from the standpoint of the party(s) paying for the process this is cause for serious concern. For its part, the Superior Court laments the drain on judicial resources and the concern that procedural strangleholds on lawsuits only serve to undermine the public’s confidence in the judicial system.
The Summary Judgment Process
Rule 20 of the Ontario Rules of Civil Procedure provides a mechanism for a party to apply to the court for “summary judgment”. The application is generally heard on the basis of a “paper record”, typically consisting of affidavits sworn by witnesses, transcripts of cross-examinations (if conducted) on those affidavits filed and transcripts taken from an opponent’s examination for discovery, if a party wishes to refer to it. Recently expanded judicial powers permit a judge hearing such an application to direct the taking of certain oral evidence from witnesses for the purposes of weighing competing evidence presented, evaluating the credibility of a deponent of an affidavit or to draw inferences from the evidence. On applications for summary judgment, the parties are to “put their best foot forward”: the party seeking judgment is to show the clarity by which that there is no genuine issue for trial [i.e. “we can deal with this now”] whereas the responding party has to provide a detailed case in support of why the matter should not now be disposed of [i.e. “we need witnesses and a detailed trial to have justice done”].
The court shall grant summary judgment if:
– the court is satisfied that there is no genuine issue for trial with respect to a claim or a defence; or
– the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.
Combined Air Mechanical Inc. v. Flesch
In the March, 2012 edition of this newsletter we provided a case comment on the decision of the 2011 decision of the Ontario Court of Appeal Combined Air Mechanical Services Inc. v. Flesch. (*2)
The Combined Air decision articulated guiding principles for applications for summary judgment. With the benefit of these pronouncements, counsel and litigants could embark on a reasoned litigation strategy: can a matter be disposed of on summary judgment, or should it proceed to trial? The experience since the Combined Air decision however shows how theory and practice do not always mix.
A brief review of the Combined Air guiding principles is in order:
- The purpose of the summary judgment rule is to eliminate unnecessary trials but not all trials;
- Generally speaking, there are three types of cases that are amenable to summary judgment. The first is where the parties agree to submit their dispute to resolution by way of summary judgment. The second is where the claims or defences can be shown to be without merit in the sense that they have no chance of success. The third type of case concerns situations where the trial process is not required in the “interest of justice” to perform a final adjudication on the merits of the case;
- The judge hearing the application is to weigh the evidence, and to the extent possible to evaluate the credibility of a deponent of an affidavit and to draw reasonable inferences from that evidence and determine whether there is a genuine issue for trial. In terms of determining if there is a genuine issue for trial, he or she must ask the following critical question: can the full appreciation of the evidence and issues necessary to dispose of the matter be achieved by way of summary judgment or can this full appreciation only be achieved by way of a trial?
Developments Since the Combined Air Decision: The “State of the Union” and George Weston Limited v. Domtar Inc.
Justice D.M. Brown of the Ontario Superior Court recently issued a thorough analysis on the “state of the union” of summary judgments in Ontario. The analysis is provided in the context of a sweeping 33 page decision rendered in the context of two cases brought before the court for summary judgment. One case is the noted George Weston case, the other concerns the case of 1318214 Ontario Limited et al. v. Sobeys Capital Incorporated. (*3) Justice Brown took the occasion in ruling on both applications for summary judgment to make observations on the post-Combined Air experience noting that there are still inefficiencies and that matters are far from being streamlined.
Justice Brown notes that certain counsel and litigants still have a way to go in terms of assessing the viability of motions for summary judgment and reducing or eliminating unnecessary costs and delays. Justice Brown issues the admonition that counsel and litigants need to develop a responsible and efficient litigation plan – and that “efficiency” does not necessarily applying for summary judgment as soon as possible. Rather, the notion of “efficiency” is in the broader of context of employing the wisdom of deciding if a case is ripe for summary judgment – and if so, when in the course of the lawsuit should the “harvest” take place.
Justice Brown proceeds to make further observations of importance to counsel and litigants being of general relevance beyond the narrow facts of the two cases before her:
- The intent that motions for summary judgment provide a means for resolving litigation expeditiously and with comparatively less cost than associated with the conventional trial can be undermined when there is a dispute as to whether an application is premature or inappropriate bearing in mind how far an action has progressed or the complexity of the case. “Arguing about whether to argue” can in and of itself be both unnecessary and expensive”. Citing language from the Combined Air decision, Justice Brown notes that:”the inappropriate use of [summary judgment applications] has the perverse affect of creating delays and wasted costs associated with preparing for, arguing and deciding a motion for summary judgment, only to see the matter having to proceed to trial”.
- Several counsel are now seeking to ‘stay’ or prevent an application for summary judgment being brought by an opponent are doing so by “taking a page” out of the Combined Air decision. In that decision the Court of Appeal stated that a party who asserts that an application for summary judgment is premature or inappropriate (as being sought prior to the completion of examinations for discovery) might “move to stay or dismiss the application on the basis that the most efficient means of developing a record capable of satisfying the full appreciation test is to proceed through the normal route of discovery”. This new mechanism of an application to “stay” a motion for summary judgment could however now lead to the curious effect of lawyers arguing about whether the case can now be argued or whether it should be later argued at trial! (*4) In short, picture the process now involving a motion to stay an application for summary judgment through which the parties would argue about whether there should be a trial…The Combined Air court noted that a party seeking to “stay” an application for summary judgment might bring a motion for directions pursuant to the following Rules of Civil Procedure:
1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
1.1 In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
1.05 When making an order under these rules the court may impose such terms and give such directions as are just.
- While agreeing that the above considerations should govern, Justice Brown however notes that it is not appropriate in all cases to bring a “stay” application when a litigant gets “wind” of the other side moving for summary judgment. For example, Toronto has a “Commercial List” of law suits, comprised of specific commercial type claims derived or based on various statutes. For Commercial List claims, if one party is concerned that a pending summary judgment application is premature or inappropriate, an appointment should be made to meet with a case conference judge rather than the bringing of a stand alone “motion to stay strike”- thus reducing the costs for at least one generation of court proceeding.
- For those cases for which a party chooses to move to “stay” an application for summary judgment (perhaps concerning a case not on the Commercial List as per point 3 above), Justice Brown suggests the following approach to be taken on a motion brought to stay an application for summary judgment:- The court should look at the contemplated motion for summary judgment and the reasonable chances of success in determining whether a stay is appropriate. The party seeking the stay should put their best foot forward as they would on a motion for summary judgment to say that there is a genuine issue requiring a trial or why the matter is too complicated for the motion judge to ascertain the full appreciation of the case;
– The court then ought to determine whether the matter is complicated, what are the issues; and the nature of the evidence and law to determine the issues and whether the case could be determined without the necessity of a full trial. The judge hearing the stay application should consider those factors listed in rules 1.04 and 1.05 above in examining whether the proposed summary judgment motion is a good or appropriate candidate for a summary disposition because the “right fit” exists between, on the one hand the nature of the issues raised on the motion and the quality of the record which the motion will generate, on the other hand, the summary judgment procedure.
– Where a judge faces a request to schedule a lengthy summary judgment motion before the parties have embarked upon or completed discoveries, the court should take into account various factors such as the nature and complexity of the issues raised in the action, the extent of the record that the parties are likely to develop if a summary judgment motion proceeds prior to the completion of discoveries and whether the records built through affidavits and cross examinations at any early stage would offer a less complete picture of the case that the responding party could present at trial, and so on.
– Where a request is made to schedule a lengthy summary judgment motion following the completion of the discovery process concerns about the appropriateness of such a motion will relate not so much to the quality of the record developed in light of the nature and complexity of the issues but to whether i) there is any “upside” to spending client money and judicial time conducting a motion-based review of the case’s merits when the parties can set the matter down for and proceed to trial and b) as to whether the summary judgment process in the circumstances would provide an appropriate means for effecting a fair and just resolution of the dispute.
– Only in the clearest of cases should the court impose a stay.
- Justice Brown cites confusion on the part of certain counsel between motions for summary judgment in Ontario with so-called “summary trials” available in British Colombia and Alberta. The latter permits parties, under certain circumstances, the opportunity to conduct a trial using only a written record. By contrast, Ontario’s summary judgment mechanism does not create an alternative mode of trial, but rather provides a mechanism by which an action may be disposed of on its merits without proceeding to trial. This important distinction seems to be lost amongst certain counsel who may think that the summary judgment mechanism may be used in and of itself to build a court ‘record’ of facts as distinct from the expectation there be an existing court record for the purpose.
- Justice Brown reminds counsel and litigants that there are benefits to the trial process itself. There is not necessarily any loss or failure in and of itself in not ‘squeezing’ a matter into summary judgment as opposed to proceeding to trial. Failed summary judgment applications are expensive, involve degrees of waste, and cause delay. By way of contrast, in planning for a trial, the parties will then be assured that there will for certain be a final disposition at the trial and expenses may be incurred perhaps more efficiently with the trial itself in mind (as opposed to expenses being incurred on a failed summary judgment application hearing either as a matter of waste or duplication, in light of the fact that the trial will take place perhaps well into the future).
- Justice Brown also reminds counsel and litigants that “civil trials are capable of adapting (and indeed must adapt) to new ways in the adjudication of cases”. Counsel are always invited to agree on facts and to consider alternative ways of proving facts at trial other than through having to call witnesses to make trials less expensive. Perhaps evidence can be admitted by way of affidavit. Perhaps the parties might agree on time limits in the examination on witnesses at trial. Parties might also agree on having their experts meeting before trial to come to an agreement on technical items. These are just a few examples cited by Justice Brown as to how trials can themselves be rendered less expensive.
If well thought out, the summary judgment mechanism can be incredibly effective as a means to get a ruling without undue delay on a solid claim or to root out a poor defence. The summary judgment process is however still evolving. In several places in her analysis Justice Brown talks for the need for a deliberate and efficient litigation plan. This must be a product of counsel’s professional judgment and a close working relationship with the client. Sometimes “efficiency” is not simply a function of getting things in front of a judge as fast as possible – and some cases are simply “meant for trial”.
*1 George Weston Limited v. Domtar Inc. 2012 ONSC 5001 (CanLII)
*2 Combined Air Mechanical Inc. v. Flesch (2011) OJ 5431 (Ont. C.A.)
*3 Court file 10-8668-00CL
*4 My cynical use of words, but this is the thrust of where Justice Brown takes us in her analysis.
3. Rail Carrier Allowed to Limit Liability Despite Failure to Produce Written Signed Agreement as Required by s. 137 Canada Transportation Act
In the recent British Columbia Superior Court decision of Mitsubishi Heavy Industries Ltd. v. Canadian National Railway Company *(1) the rail carrier was allowed to limit its liability under a confidential rail contract even though it could not produce a copy of the written signed agreement at trial.
Section 137 of the Canada Transportation Act provides that:
137. (1) A railway company shall not limit or restrict its liability to a shipper for the movement of traffic except by means of a written agreement signed by the shipper or by an association or other body representing shippers. [Emphasis added]
A train was carrying certain aircraft parts owned by the plaintiff Mitsubishi Heavy Industries Ltd. (“MHI”) derailed and, one of those parts was severely damaged resulting in damages of $1.6 million. CN took the position that its liability was limited to $50,000 pursuant to a certain contract between it and Casco Forwarding Limited (“Casco”), who arranged for the carriage of the aircraft parts with CN.
Casco had been employed by an freight forwarding agent of MHI, namely Fujitrans Corporation (“Fujitrans”).
The first issue was who was the “shipper” for the purposes of section 137 of the Canada Transportation Act. The British Columbia Superior Court judge had no problem finding that the “shipper” was Casco – the party that had entered into a contract with CN. In this respect the Court followed the decisions and reasoning in three prior important decisions on the s. 137 issue of who is a shipper. *(2)
The second, and more interesting issue, evolved from the failure of CN to locate and produce a signed written agreement.
The Court commented on the unfairness of allowing CN to rely on the limitation because it could not produce a signed agreement, stating:*(3)
In my view, it would be a completely unfair and arbitrary result to hold in this case that a simple failure to produce the written document with signatures should deny the benefit of the limitation clause which CN negotiated in good faith with its contractual partner, Casco. This is nothing more than a “form over substance” result which does not do justice between the parties.
Having arrived at this result the Court then proceeded justify it with an analysis of the intent and purpose of the legislation. It also then reviewed in painstaking detail the evidence showing that MHI was aware of the limitation and was a sophisticated commercial party. And finally it concluded in fact that there was a “signed” written agreement. It did so by finding that an assignment of the confidential contract (CTA-13349) by Casco had its signature on the assignment (not on the original agreement) and that as such the requirement of s. 137 were met. *(4)
The assignment of CTA-13349 by Casco plays an important role in meeting the requirements under s. 137(1) of the Act. In the present case, Mr. Weymark signed the assignment of CTA-13349 to P&O Ports Canada Inc. By doing so, he accepted and agreed with the terms in the assignment. The assignment clearly indicated that CTA-13349 had been made between Casco and MHI as the “Customer” and CN and was considered by Casco to be an extant agreement between it and CN. While it is somewhat unclear on the evidence, a copy of CTA-13349 was attached to the assignment. This was the document that clearly set out the basis upon which Casco and CN arranged for the rail services and upon which those rail services were provided.
 Mr. Weymark’s signature on the assignment is an indication or “sign” of both Casco’s agreement and acknowledgement that the contract, CTA-13349, existed between Casco and CN and also Casco’s agreement and acknowledgement of the underlying contractual terms of CTA-13349, which included the limitation of liability clause.
 Section 137(1) of the Act requires a “written agreement signed by the shipper”. Mr. Weymark’s clear signature on the assignment provides a written, signed document by which Casco agrees with or acknowledges the underlying terms of CTA-13349. In this way, it can be said that Mr. Weymark’s signature on the assignment represented the “signing” of CTA-13349 by Casco as the shipper.
It was obvious that the judge was not comfortable with the concept that the shipper was bound by a limitation clause in a confidential contract to which it was not a party or privy to. The judge took solace in the evidence which clearly showed that MHI had actual knowledge of the limitation clause. The judge also took comfort that even in the face of that knowledge, MHI continued to ship its aircraft parts under CTA-13349, knowing that such a limitation would apply. “Consent was therefore given by MHI as to the terms by which the CN shipments would occur.” Finally, the judge took refuge in the fact that section 137 had been satisfied, albeit in a circuitous manner.
*1 2012 BCSC 1415
*2 See Canadian National Railway Company v. Sumitomo Marine & Fire Insurance Company Ltd., 2007 QCCA 985 (CanLII), 2007 QCCA 985, leave to appeal to SCC refused, 32282 (February 28, 2008); Boutique Jacob Inc. v. Pantainer Ltd., 2006 FC 217 (CanLII), 2006 FC 217, 288 F.T.R. 78, rev’d 2008 FCA 85 (CanLII), 2008 FCA 85, 375 N.R. 160; and more recently Cami Automotive, Inc. v. Westwood Shipping Lines Inc., 2009 FC 664 (CanLII), 2009 FC 664, 351 F.T.R. 236, aff’d 2012 FCA 16 (CanLII), 2012 FCA 16, 428 N.R. 382.
*3 Paragraph 153
*4 Paragraphs 141 to 143
4. Le vol à main armée : un cas de force majeure
In a recent decision, the Quebec Superior Court had the opportunity to review the possibility to rely on the Act of God defence in response to a cargo claim against a carrier resulting from an armed robbery. The Court held that yes, in some specific circumstances, an armed robbery is irresistible and unforeseeable and therefore amounts to an act of God as defined by the article 1470 of the Quebec Civil Code.
Le vol de cargaison est un fléau face auquel tous les acteurs impliqués dans le transport de marchandise doivent faire face sur une base quotidienne. Récemment, dans Ace-Ina Insurance c. Clarke Transport Inc. *(1), l’Honorable Jean-Jude Chabot de la Cour Supérieur du Québec a eu l’opportunité d’étudier la possibilité d’assimiler un vol à main armée perpétré par des malfaiteurs à un cas de force majeure.
1. Les faits
Dans cette affaire, la demanderesse Nexans Canada Inc. (ci-après « Nexans ») avait retenu les services de la défenderesse Clarke Transport Inc. (ci-après « Clarke Transport ») pour le transport d’une cargaison de rouleaux de cuivre de Montréal jusqu’à destination de Saskatchewan. Clarke Transport a par la suite décidé de sous-traiter la première partie du transport entre son terminal et l’usine de Nexans en retenant les services d’un autre transporteur, soit Lazer Transport Inc. (ci-après « Lazer Transport »).
En cour de route, alors que la cargaison était en la possession de Lazer Transport et de sa conductrice, celle-ci est victime d’un détournement à main armée commis par des malfaiteurs qui s’emparent de la cargaison et abandonnent la conductrice dans un stationnement, les mains ligotées.
Dans sa Requête introductive d’instance, la demanderesse Nexans plaida que la défenderesse Clarke Transport avait une obligation de résultat en ce qui a trait à la livraison de la cargaison pour laquelle ses services avaient été retenus tout en précisant que la défenderesse s’était vue remettre un document portant sur énonçant les précautions à prendre pour éviter les détournements et vols de cargaison.
En défense, la défenderesse Clark Transport plaida que le vol s’était produit soudainement par voie de détournement, qu’il avait été imprévisible et irrésistible et que le tout était assimilable à un cas de force majeure, la dégageant de toute responsabilité pour la perte subie par la demanderesse Nexans.
2. La question en litige
Afin de pouvoir trancher ce litige entre la demanderesse Nexans et la défenderesse Clark Transport, l’Honorable juge Chabot de la Cour supérieure a dû répondre à la question suivante :
Est-ce qu’un vol à main armée peut constituer dans certains certaines circonstances un cas de force majeure?
3. La décision
La réponse de l’Honorable juge Chabot à la question susmentionnée fut positive. Dans les circonstances en l’espèce, le vol de la cargaison appartenant à la demanderesse Nexans constituait à son avis un cas de force majeure et par conséquent, la défenderesse Clark Transport fut dégagée de toute responsabilité.
Au soutient de sa décision, l’éminent juge a tenu à rappeler les deux concepts juridiques en opposition dans cette affaire, soit tout d’abord l’obligation de résultat pour un transporteur de délivrer le bien à destination tel que stipulé à l’article 2049 du Code civil du Québec et la notion de force majeure édictée à l’article 1470 du Code civil du Québec :
2049. Le transporteur est tenu de transport le bien à destination.
Il est tenu de réparer le préjudice résultant du transport, à moins qu’il ne prouve que la perte d’une force majeure, du vice propre du bien ou d’une freinte normale.
1470. Toute personne peut se dégager de sa responsabilité pour le préjudice causé à autrui si elle prouve que le préjudice résulte d’une force majeure, à moins qu’elle ne se soit engagée à le réparer.
La force majeure est un événement imprévisible et irrésistible, y est assimilée la cause étrangère qui présente ces mêmes caractères.
L’Honorable juge Chabot a tenu à rappeler les critères d’analyses du concept de force majeure:
« Ainsi pour prouver le cause de force majeure, le débiteur de l’obligation doit prouver que l’événement qui a causé la perte était imprévisible, qu’il ne pouvait y résister et que cet événement a rendu impossible l’exécution de l’obligation (voir Jean-Louis Beaudoin et Pierre-Gabriel Jobin, Les Obligations, 6e édition, 2005, paragraphe 915). Ces mêmes auteurs définissent la notion d’imprévisibilité comme un événement qui n’était pas normalement prévisible pour une personne placée dans les mêmes circonstances :
« 916 – Imprévisibilité – La loi requiert d’abord l’imprévisibilité de l’événement (article 1470 du Code civil). La jurisprudence, reprenant les données de la doctrine classique, demande au débiteur de démontrer non seulement qu’il n’a pas effectivement prévu l’événement, mais encore que celui-ci n’était pas normalement prévisible. Établir le caractère imprévisible de l’événement consiste à comparer la conduite du débiteur au moment de la formation du contrat à celle d’un modèle abstrait du débiteur avisé. Les tribunaux ne poussent cependant pas cette comparaison à la limite; toute chose est, en effet, théoriquement prévisible, même les événements les plus inattendus. Pousser cette exigence jusqu’au bout aurait pour effet de vider le concept même de force majeure de son contenu. La jurisprudence fait donc appel, encore une fois, à la notion classique, relative, de la personne raisonnablement prudente et diligente et se pose la question suivante : l’événement était-il normalement prévisible pour une telle personne placée dans les mêmes circonstances? (…) »
Le critère d’irrésistibilité se caractérise par le fait que toute opposition du débiteur serait inutile ou futile ou périlleuse :
917 – Irrésistibilité – Le caractère irrésistible de l’événement doit être tel qu’il rende toute opposition de la part du débiteur inutile ou futile. Celui-ci a, en effet, le devoir de tout mettre en œuvre pour fournir l’exécution, même si un changement de circonstances a accru pour lui la difficulté de paiement. L’événement qui rend l’exécution simplement plus difficile, plus périlleuse ou plus coûteuse pour le débiteur ne tombe pas dans la catégorie des cas fortuits; en d’autres termes, l’événement invoqué comme force majeure doit être tel qu’il empêche l’exécution de l’obligation d’une manière absolue et permanente. Un certain rapprochement peut être fait ici avec la théorie de l’imprévision. Par ailleurs, le débiteur n’est pas déchargé si l’exécution partielle d’une obligation divisible est encore possible ou si les effets de l’événement ne sont que temporaires (à moins, dans ce dernier cas, que le moment pour exécuter l’obligation ne soit essentiel). L’impossibilité d’exécution ne saurait être personnelle au débiteur, mais doit revêtir un caractère général; en d’autres termes, l’événement doit être qu’il rende l’exécution impossible pour tous. »
Quant au critère d’extériorité, il présente un certain flottement dans la jurisprudence et se définit comme un événement à l’extérieur du champ de compétence du débiteur de l’obligation. »
Dans son analyse, l’Honorable juge Chabot a retenu que les caractères d’imprévisibilité et d’irrésistibilité doivent obligatoirement se rattacher à l’événement et aux obligations incombant au transporteur, qu’en l’espèce, la conductrice n’aurait pas pu empêcher le détournement armé de la manière dont il s’est produit et que dans les circonstances, il n’y avait absolument rien dans le comportement et la procédure adoptée par la conductrice qui aurait pu constituer un manquement aux règles de sécurité et qu’elle s’était comportée comme une personne raisonnablement instruite dans les mêmes circonstances. Le juge a aussi retenu le fait que des milliers d’envois qu’effectue annuellement la demanderesse Nexans, une infime partie seulement est perdue pour cause de détournement armé faisant en sorte que bien que possible, le risque de détournement armé appartient plus au domaine de la possibilité qu’à celui de la probabilité. Ainsi, l’Honorable juge a décidé que vu les circonstances, le vol de la cargaison était imprévisible et irrésistible et que par conséquent il constituait un cas de force majeure.
* Il est important de noter que cette décision a été récemment portée en appel par les demanderesses.
*(1) Ace-Ina Insurance c. Clark Transport Inc., 2012 QCCS 3227 (CanLII).
5. The rise of legal alchemy: how con men are creating groups of unreasonable litigants, for profit
I had discovered, early in my researches, that their doctrine was no mere chemical fantasy, but a philosophy they applied to the world, to the elements, and to man himself.
W.B. Yeats – 19th Century Irish Poet & Playwright
Alchemy was a medieval philosophy whose practitioners believed that a sort of pseudo-chemistry was the secret to unlocking vast power and wealth. The most famous of their claims was that their special knowledge could turn lead into gold.
In recent years, an emerging alchemy has brewed in North America. Its practitioners promise exemption from taxation, an existence free from the authority of the state, and effortless overnight wealth. The only things needed to unlock these amazing gifts, so they say, are the secret words and techniques that these gurus possess (and are willing to share, for a price).
Rather than promising power through an understanding of magical chemistry, these gurus promise that the path to power is through an “understanding” of the legal process. They promise methods that unlock secret government bank accounts and charm judges into bending at will.
There are a number of these groups in Canada and the United States and they are becoming the bane of judges and reasonable (and cost conscious) litigants alike.
In a recent judgment by a judge of the Alberta Court of Queen’s bench, Justice Rooke took pains to document and discredit the methods of these legal alchemists. Having seen a growing trend of this brand of difficult litigant clogging the courts and wasting time and money, Justice Rooke was motivated to set a clear and authoritative response that would serve as a warning to these practitioners and as a handy reference guide to those dealing with them.
Justice Rooke’s judgment in Meads v. Meads, 2012 ABQB 571 (CanLII) is nearly 200 pages long and is encyclopedic in its treatment of this growing problem. To assist Justice Rooke in the public service element of bringing awareness to this problem and in providing solutions to it, the object of this article is to condense his detailed judgment.
To roughly track the structure of Justice Rooke’s reasons, I divide this article into three sections (1) Who are legal alchemists and what are their methods? (2) How can you tell if you’re dealing with a legal alchemist?, and (3) How should you respond?
Who are the legal alchemists?
What I have dubbed “legal alchemists”, Justice Rooke calls Organized Pseudolegal Commercial Argument litigants or “OPCA litigants” for short (from paragraph 1 of his judgment):
This Court has developed a new awareness and understanding of a category of vexatious litigant. As we shall see, while there is often a lack of homogeneity, and some individuals or groups have no name or special identity, they (by their own admission or by descriptions given by others) often fall into the following descriptions: Detaxers; Freemen or Freemen-on-the-Land; Sovereign Men or Sovereign Citizens; Church of the Ecumenical Redemption International (CERI); Moorish Law; and other labels – there is no closed list. In the absence of a better moniker, I have collectively labelled them as Organized Pseudolegal Commercial Argument litigants [“OPCA litigants”], to functionally define them collectively for what they literally are. These persons employ a collection of techniques and arguments promoted and sold by ‘gurus’ (as hereafter defined) to disrupt court operations and to attempt to frustrate the legal rights of governments, corporations, and individuals.
The key to identifying OPCA litigants is to recognize that they do not always identify as such. They may simply appear to be “impossible” people. Since their methods and “philosophies” are not uniform, it may be difficult to determine if you are dealing with an OPCA litigant, or not. However, Justice Rooke explains that there are some unifying themes (from paragraph 4):
OPCA litigants do not express any stereotypic beliefs other than a general rejection of court and state authority; nor do they fall into any common social or professional association. Arguments and claims of this nature emerge in all kinds of legal proceedings and all levels of Courts and tribunals. This group is unified by:
1. a characteristic set of strategies (somewhat different by group) that they employ,
2. specific but irrelevant formalities and language which they appear to believe are (or portray as) significant, and
3. the commercial sources from which their ideas and materials originate.
The most important thing, however, to understand about OPCA litigants is that the central tenant of all their theories is that they are free from any obligations to anyone.
This category of litigant shares one other critical characteristic: they will only honour state, regulatory, contract, family, fiduciary, equitable, and criminal obligations if they feel like it. And typically, they don’t.
Justice Rooke groups the concepts used by legal alchemists into a limited number of categories, which are often interwoven by a litigant in the same document or argument:
A) They are not subject to court authority,
B) All obligations (even those mandated by law) require agreement (and they don’t agree),
C) They have two selves, one natural self, free from state interference, and a second one that is a social fiction created by the government, with which they refuse to associate,
D) They have the power to force others to be legally obligated to them by the use of pseudo-legalistic documents, and
E) They have the ability to access virtually unlimited government funds through the use of more pseudo-legalistic documents.
I detail each further below.
Claim #1: They are immune from court authority
Justice Rooke writes at paragraph 267 that,
[a] very common OPCA scheme category is that the OPCA litigant is in some manner outside the jurisdiction of the court or state, or is somehow rendered immune from legal obligations. This category has three general forms:
1. the jurisdiction of the court is restricted to certain specific domains, and the OPCA litigant falls outside those categories;
2. the jurisdiction of the court is eliminated due to some defect; and
3. the OPCA litigant is in some manner immunized from the court’s actions
Challenges to jurisdiction include claims that the court is a military or admiralty court (or conversely, that the matter can only be heard by a military or admiralty court, see paragraph 269), that religion trumps the courts, or that some defect in a judge’s oath or other court formalities renders the court without authority (paragraphs 276 and 282). Other litigants claim immunity that flows from some special status or actions taken. As Justice Rooke calls it, the OPCA will attempt to don a “magic hat” that purports to take the wearer outside of the jurisdiction of the court (for instance, by claiming that they are only subject to “Moorish Law” see paragraph 302).
Claim #2: They are immune from all laws
If OPCA litigants cannot manoeuver their way out of the jurisdiction of the court, they try to argue that essentially the law does not apply to them because they never agreed that it could (from paragraphs 379-380):
A second common OPCA litigation category is grounded in a belief that all legally enforceable rights require that a person agree to be subject to those obligations. This strategy takes two closely related forms:
1. every binding legal obligation emerges from a contract, and
2. consent is required before an obligation can be enforced.
Persons who advance this concept extend it to interactions between state actors, including Canada and the provinces, and individual persons. This is a kind of ‘magic hat’; the OPCA litigant says he or she has not agreed to be governed or subject to court authority, and the OPCA litigant is therefore allegedly immune.”
Claim #3: They are really two people and only one is subject to law and (unsurprisingly) they wish only to be the person not subject to law
If the OPCA cannot sidestep the court’s jurisdiction, and the state’s authority to pass laws then, the OPCA litigant has a third line of defence: they are really two people, only one of whom is subject to the court and the law – the other is natural, free and unconstrained (from paragraphs 417 and 421):
A strange but common OPCA concept is that an individual can somehow exist in two separate but related states. This confusing concept is expressed in many different ways. The ‘physical person’ is one aspect of the duality, the other is a non-corporeal aspect that has many names, such as a “strawman”…
There are different explanations for the non-corporeal similarity. Some OPCA gurus promote the idea that this aspect is created by the state, burdened with legal obligations, then ‘shackled’ to the physical person. Other OPCA gurus present the non-corporeal aspect as a part of a person that can be split away, and then burdened with obligations and debts.
Claim #4: They believe that they have legal authority over others
The fourth line of defence appears to be that ‘if others can declare laws that unilaterally bind me, then I can do the same‘ (from paragraphs 447, 449).
OPCA litigants frequently attempt to unilaterally foist obligations on other litigants, peace officers, state actors, or the court and court personnel… Common examples of these foisted agreements purport to appoint someone a fiduciary, establish a contractual relationship or declare an OPCA person no longer has an obligation, such as to pay income tax. Some purport to unilaterally settle lawsuits or legal claims, without court direction. Others provide a system of predetermined fines.
Claim #5: They have magic words that provide unlimited wealth
As if promising freedom from the state and unlimited, unilateral power over others is not enough, OPCA litigants also believe that they can unlock unlimited wealth by use of a few legalistic sounding words and phrases (from paragraphs 532-536):
As I understand it, A4V’s guru promoters claim that each person is associated with a secret government bank account, which contains millions of dollars. The exact sum varies from guru to guru… [they] claim that the government maintain these bank accounts to monetize the state after it abandoned the gold standard. Put another way, the theory, as I understand it, is that people are property of the state that it uses to secure its currency… [they] claim that, with a correct combination of government documents, a person can access their secret bank account and its funds.
None of these arguments has any legal merit, but the gurus who sell these schemes continue to profit from the gullible that believe in them.
How can you identify them “in the wild”?
According to the judgment, legal alchemists utilize a number of distinctive motifs in their written material and their in-court conduct.
(1) They use unusual punctuation when writing their name or the names of others, usually colons and dashes (for example “James John Jones” would be written as “::james-john: of the jones family::”, see paragraph 206);
(2) Document formalities and markings such as thumbprints, postage stamps, and the use of differently coloured inks are also common (paragraph 215);
(3) OPCA litigants use distinctive phrases and language such as ‘flesh and blood man’ or ‘free will full liability person’ (paragraph 221),
(4) They use atypical mailing addresses; many refuse to use postal codes (they believe use of the postal codes acknowledges state power and therefore binds them to its laws, see paragraphs 232).
(5) OPCA legal arguments often refer to “obsolete, foreign, or typically otherwise irrelevant legislation,” such as the Magna Carta or the 1931 Statute of Westminster, and rely on obsolete versions of Black’s Law Dictionary (paragraphs 11 and 12).
In court, legal alchemists often follow strict scripts in the mistaken belief that certain arcane words and phrases have the power to halt or reverse the course of a proceeding. These ‘scripts’ often include demands to see the oath of the judge or that the judge prove his or her appointment. Some OPCA litigants will even demand that the judge take a new oath of office in front of them before continuing.
Often, the OPCA litigants will give documents to judges or opposing counsel that purport to bind these people into contracts with the OPCA litigant (including owing substantial sums of money) (paragraphs 245-246).
Different groups of OPCA litigants use different combinations of these techniques. The techniques they employ depend on from which guru they bought their kit.
How should you respond?
Justice Rooke advises any judge who faces an OPCA litigant to use all their tools to constrain the party early in the proceeding. The court should consider striking claims or dismissing an action (paragraphs 586-587). In fact, Justice Rooke advocates looking at these schemes as a form of extortion that may be exemplary with punitive damages (paragraph 593)”
It appears to me that asserting an OPCA scheme, particularly one that has been identified and dismissed as ineffective, can attract punitive damages, where specifically sought by the party opposing the OPCA litigant. The manner in which ‘fee schedules’ and other foisted unilateral agreements are used seem to make that strategy a particularly appropriate target. These documents have no basis in law, reverse the burden of evidence, and typically involve grotesque and unwarranted ‘fines’. To quote Justice Brown, in MBNA Canada Bank v. Luciani, 2011 ONSC 6347 at para. 3, these are “[a] good old-fashioned shake-down!” Extortion deserves a punitive response.
Justice Rooke also calls for elevated costs (paragraph 594-597), security for costs (paragraphs 601-602), findings of contempt, restricting the litigants’ ability to initiate or continue an action (paragraphs 612-613). Justice Rooke also suggests having only one judge on an OPCA litigant’s matter throughout so that the litigant is closely monitored and controlled (paragraph 610):
it makes sense that a single judge should usually supervise a court proceeding in which OPCA activities have emerged, and that action is an ongoing process. This may be achieved by having a judge seize themselves of the matter, or a more formal process such as assigning a case management judge – in our Court, the former converts into the latter.
The bottom line is that when faced with a legal alchemist who threatens to drag out a legal process and make it very expensive, the suggested strategy is to bring the matter immediately before a judge and to request his or her assistance in controlling the legal alchemist. These are people who have been duped by con men into believing that they are above the law and they cannot be reasoned with. The only solution is to demonstrate early and often that, despite what their guru has told them, they are subject to the laws of Canada and all the penalties that come with trying to flaunt it.
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