Law Times

Law Times • sepTember 8, 2015 Page 9 www.lawtimesnews.com Judges showing more skepticism of amended claims BY YAMRI TADDESE Law Times hen it comes to tweaking state- ments of claim in class actions, one lawyer says the litigation pendu- lum is moving away from what he calls the "plead and amend mentality." Recent cases show judges have been more hesitant to allow plain- tiffs to amend their statements of claim, says Lerners LLP partner Angus McKinnon. "I think that they're attempting to balance the right of the parties to prevent procedural unfairness against the defendants and I think in part they're trying to ensure the litigation process moves forward in a more linear fashion," he says. It appears judges are trying to avoid a common scenario where "an action is commenced and the defendants point out difficulties with the claim, [then] plaintiffs amend and it becomes a com- pletely different claim and this can go around in circles for a number of years," says McKinnon. In a decision earlier this year, Justice Edward Belobaba refused to allow the plaintiffs to amend their statement of claim in 1250264 Ontario Inc. v. Pet Valu Canada. Pet Valu's franchisees had accused the franchisor of not sharing re- bates and discounts it was re- ceiving on supplies. Pet Valu then moved for a summary judgment motion seeking to strike the claim because it had indeed shared its rebates with its franchisees. When the plaintiffs then changed their focus to argue that Pet Valu had misrepre- sented its purchasing power, Belobaba suggested they seek to amend their statement of claim. Nevertheless, the judge refused to grant leave when they did seek to amend the claim. "The defendant's motion for summary judgment should have been concluded in full without this court suggesting and encour- aging this motion to amend the pleadings and add a new common issue. Absent my judicial interven- tion, the summary judgment mo- tion would have concluded and the defendant would likely have prevailed on most of the common issues," wrote Belobaba. "I am therefore satisfied that there is actual prejudice to Pet Valu in respect of the proposed amendments and new common issue. Pet Valu was in a position to obtain complete summary judgment on the existing com- mon issues as well as a probable cost award against the represen- tative plaintiff. This would have ended the litigation," he added, suggesting "the last minute ad- dition of a pleadings motion that adds a new common issue at the end of the summary judg- ment hearing tilts the class pro- ceeding in the plaintiff 's favour." The judge declined leave to amend the statement of claim de- spite finding Pet Valu had in fact misrepresented its purchasing power. But ultimately, Belobaba found in the plaintiff 's favour on other deferred common issues. Shortly after Belobaba's decision, Justice Paul Perell declined a motion to deliver a fourth amended statement of claim in Drywall Acoustic Lath- ing and Insulation, Local 675 Pension Fund v. SNC-Lavalin Group Inc. "I disagree with the plaintiffs that these proposed amend- ments are merely an elaboration or particularization of what they have already pleaded against SNC-Lavalin and the Outside Directors," wrote Perell. "In my opinion, the im- pugned amendments are not a mere matter of degree; these proposed amendments repre- sent discrete misrepresentation claims — or as a matter of proce- dural fairness — these proposed amendments go too far to be allowed without being tested by a fresh leave application." He added: "The f law of the Plaintiffs' argument is that if a plaintiff pleads a sweeping mis- representation as the basis of its statutory cause of action — which is what the Plaintiffs have done in the case at bar — then virtually every other remotely related alle- gation can be said to be a subset of that misrepresentation and, there- fore, encompassed by the original granting of leave." Ultimately, Perell found it was too late to seek fresh leave under the Securities Act and it would, therefore, be procedur- ally unfair to allow it. McKinnon says the amendment approach causes unnecessary delays and ex- penses on the defendants' part. "There are certainly actions that, between the time they were commenced and the time they went to trial, they changed dra- matically in the subject matter of the action and the cause of action being advanced," he says. When this process continues in a loop, it takes a normal piece of civil litigation and turns it into "an inquiry into the industry or a particular product where the initial claim gets advanced and the defendant responds, [then] the plaintiff reassesses the facts and comes back with a new and perhaps novel theory of the claim," he says. There are many circumstances in which it's unclear to the de- fendants precisely which claim they're ultimately going to face, according to McKinnon. While judges are right to try to curb that, it's hard to say whether their ac- tions will halt constant amend- ments in class actions, he adds. "I don't know if I'd go as far as calling it a stance [by judges], but as far as there are pendulums in litigation, I think there are in- dications that the pendulum is swinging away from the plead and amend mentality," he says. Some lawyers, however, dis- agree with the notion that amend- ments occur too often. Anecdotal evidence isn't sufficient to make that conclusion, says Siskinds LLP class action lawyer Daniel Bach. He notes that as far as he's aware, no study has shown the frequency of amendments in class actions. Bach also says amendments don't necessarily translate into ineffi- ciencies as they may in fact help streamline the process by "bring- ing the issues into more focus." LT FOCUS An essential reference for professionals who work with children, Children's Law Handbook, Third Edition provides quick access to expert guidance on the most relevant, important and up-to-date legal points, issues and consequences you need to know to make confident, sound decisions. New in this edition • Review of child protection legislation across Canada dealing with the issue of domestic violence • Updated and revised discussion of children giving evidence in court: Children's Aid Society of Toronto v. C. (J.) (2013, Ont.C.J.); Children's Aid Society of Haldimand and Norfolk v. P. (K.) 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