Law Times

PAGE 10 FOCUS OctOber 3, 2011 • Law times Should defence precede certification? Superior Court ruling changes landscape for class actions BY JULIUS MELNITZER For Law Times H istorically, class action defendants have been able to delay delivery of a class action statement of defence until there's a decision on certification. But a ruling by Justice Paul Perell of the Superior Court of Justice in the recent case of Pennyfeather v. Timminco Ltd. may change all that. Perell's ruling followed on an order re- quiring the plaintiffs to deliver particulars before certification. Plaintiff's counsel Won Kim of Toronto's Kim Orr Barristers Professional Corp. had argued that particulars should be or- dered only where defendants require them to plead. Given the convention that defendants don't have to deliver a state- ment of defence at this stage, Kim reasoned, particulars shouldn't be ordered. Kim also argued that particu- lars were premature because leave under the Ontario Securities Act was necessary with respect to certain secondary-market claims and the defence couldn't be delivered until that issue was determined. As Perell saw it, that rea- soning was flawed. In his opinion, it was preferable that pleadings be closed be- fore the certification mo- tion. "All the causes of action that are pleaded have the potential to be tried, not just the ones that are certi- fied for the common issues trial," Perell wrote. "The non-certified causes of action are not struck out of the plaintiff's pleading. The defendant pleads to the original statement of claim and not some truncated ver- sion of it." Once pleadings were closed, a certification order was made, and a litigation plan was filed, the common issues trial would follow. But that wasn't necessarily the end of the matter as trials or proce- dures on individual issues such as damages might follow. "All of this is based on the original statement of claim, But it was also appropriate that the defendants deliver a statement of defence after the particulars had been de- livered and any other chal- lenges to the statement of claim were resolved. As for the fact that leave was required for the statu- tory claim, all parties could amend their pleadings if leave was granted. According to Kim, Pen- nyfeather significantly af- fects the procedural land- scape of class actions. "The case has changed the playbook," he says. "The decision lengthens 'The case has changed the playbook,' says Won Kim. which may or may not have to be augmented by pleadings and discoveries in the individ- ual issue trials, if there are any," Perell wrote. It was, therefore, not prema- ture for the plaintiffs to deliver particulars before certification. the pre-certification pro- cess and requires defen- dants to challenge causes of action in advance of certi- fication because they can't very well plead to a cause of action and then argue it isn't a proper basis for a law- suit." Alan D'Silva of Stikeman TRUST you're putting your reputation on the line. It's all about trust well placed. Elliott LLP, who represented the defendants, says getting the particulars was the key element for his clients. "What it meant is that we finally got some details of the vague but serious allegations against us. The court deemed it appropriate that we deliver a defence after receiving the par- ticulars." In fact, D'Silva maintains that if the plaintiffs had offered to settle the motion by deliver- ing particulars on condition that a defence be filed thereafter, he would have agreed to do so. "We were always indifferent to the timing for delivery of the defence," he says. The custom of delaying delivery of the statement of de- fence originates with the deci- sion of Justice Warren Winkler (now chief justice of Ontario) in the 1996 case of Mangan v. Inco Ltd. Winkler rejected Inco's ar- gument that defendants had an absolute right to delay delivery of the defence until after the certification motion but agreed that trial judges had a broad discretion to approve such a timeline. Although Winkler went on to say that the statement of de- fence wouldn't be required for determination of the certifica- tion motion, he observed — in Inco and subsequent decisions — that "it may be in a de- fendant's interest" to deliver a statement of defence before the certification motion. "Most counsel see early de- livery of the statement of de- fence as a good thing," D'Silva says. In fact, lawyers who support the reasoning in Pennyfeather note that delivery of the state- ment of defence before certi- fication means all parties will have an opportunity to resolve or attack dubious or unclear claims before embarking on a costly and lengthy process. In particular, they maintain that delivering all of the plead- ings may obviate the need to determine the substantive ad- equacy of pleadings on the cer- tification motion itself; limit or focus the argument about common issues; and shed light on whether a common issues trial was the preferable way to deal with the case. LT E.V. Litigation & Financial Services Inc. Elaine G.Vegotsky, CMA, CFE, CFI Assisting you in Litigation & Forensic Accounting, Financial Investigations Suit e 900 4 5 Sheppar d Avenu e East, Willowdale, Ontario M2N 5W9 LEONARD KUNKA | CRAIG BROWN | DARCY MERKUR Vlit_LT_Mar17_08.indd 1 Since 1936 Thomson, Rogers has built a strong, trusting, and collegial relationship with hundreds of lawyers across the province. As a law firm specializing in civil litigation, we have a record of accomplishment second to none. With a group of 30 litigators and a support staff of over 100 people, we have the resources to achieve the best possible result for your client. Moreover, we are exceptionally fair when it comes to referral fees. We welcome the chance to speak or meet with you about any potential referral. We look forward to creating a solid relationship with you that will benefit the clients we serve. YOUR ADVANTAGE, in and out of the courtroom. TF: 1.888.223.0448 T: 416.868.3100 W: www.thomsonrogers.com Untitled-1 1 www.lawtimesnews.com 3/13/08 11:55:47 AM Telephon e o r Fax (416 ) 930-1370 (905) 731-5812 evlitigation@rogers.com 11-09-23 12:10 PM

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