1

LITIGATION UNDER THE SIMPLIFIED RULES IN ONTARIO

Historical Background to the Simplified Procedure in Ontario

In 1996, the Civil Rules Committee implemented a simplified procedure in Ontario in cases with a monetary value of $25,000.00 or less. The procedure was begun as a pilot project on a province-wide basis with the intention that the project would come to an end in December 31, 2000.

Prior to the implementation of the pilot project in 1996, the Report of the Ontario Courts Inquiry was published in 1987 (Toronto: Ministry of Attorney General, 1997). The report identified what it referred to as Alitigation-related barriers@ in cases where the amount of money at issue was relatively modest. The report, known as the AZuber Report@, stated at page 51 as follows:

AThe most common complaint about the justice system is that the cost of litigation is prohibitive.@

Mr. Justice Zuber went on to observe that Ait is generally conceded that only the very wealthy or the poor on legal aid can afford to go to court@.

The conclusion of Mr. Justice Zuber, based upon exhaustive statistical analysis, was that in cases of $25,000 or less, by the time the action had been disposed of, the litigants would be fortunate to recover 20-30% of the amount for which they had sued, primarily because the legal fees in processing the litigation were so substantial.

It has been my own experience that cases with a value of $25,000, or even $50,000, can be equally as complicated as those with a much larger dollar value, but the litigation process is such that all cases are treated identically, as far as procedure is concerned, and therefore, the legal costs differential between the two is often not significant (i.e. it can cost as much to litigate a $50,000 case as a $500,000 case).

This means that when a case of modest monetary value is commenced, the impact of the rule that costs follow the event distorts the litigation process to such an extent that few of these cases proceed to trial, because the costs exposure to the parties, and in particular to the plaintiff, make the litigation economically unfeasible.

In the Zuber Report, although the most common complaint about litigation in general was the prohibitive cost, the second most troubling complaint was that the cases were taking far too long to proceed to trial. The causes for this were attributed to the number of interlocutory motions that seem to attend any lawsuit, and the fact that examinations for discovery were far too time-consuming.

Page 7 of the Evaluation Report of October 2000 provided to you refers to Mr. Justice Zuber=s adoption of the Lord Chancellor=s Civil Justice Review, emanating from the Lord Chancellor=s department in England in 1987, which stated the problem as follows:

ADelay keeps litigants out of their entitlement, imposes hardships and forces economically weaker parties to accept terms of settlement which do not reflect the real merits of the case.@ (emphasis added)

It would be my observation as a practicing litigant that in dealing with cases involving lesser sums of money, settlements are driven by economic exhaustion and frustration with the protracted proceedings and the costs attendant thereto, rather than the actual merits of the issues at dispute between the parties.

For example, in mandatory mediations the emphasis of mediators is frequently directed to finding a business solution as opposed to a legal solution to the action. It may not matter what the legal merits of the two adverse positions are; rather the discussion concerns the costs of succeeding, the costs of actually realizing upon any successful judgment, and the costs of failure to win.

Perhaps the time-honoured practice of costs following the event, designed to discourage frivolous litigation, might benefit from its own evaluation. In my experience, in the context of dispute resolution in the adversarial process, the legal merit of an action is often secondary to financial concerns or to obtaining a result on the merits.

That having been said, the first recognition of the need for telescoping the procedure for cases involving lesser amounts of money was recognized by the Simplified Procedure Subcommittee, formed in 1993, which prepared a draft report in December of 1994 after reviewing the Zuber report, wherein it extracted two principles for consideration in recommending a simplified procedure.

  1. The first was that it is the procedure and not the lawyers that should be regulated.
  1. The second was that of proportionality. It was the Subcommittee=s view that there must exist a relationship between procedures available to pursue or defend a claim, and the magnitude of the claim.

A Civil Justice Review First Report, issued by the Ministry of the Attorney General in March 1995, recommended removing many interlocutory procedures and streamlining the litigation process, which in turn resulted in the Civil Rules Committee enacting the Pilot Project Simplified Procedure in March 1996.

The Evaluation Report, dated October of 2000, was commissioned to analyze and comment upon the experience of this province-wide pilot project, and in so doing, its objective was to determine whether the simplified procedure should be changed, and whether it should become a permanent feature of the Rules of Civil Procedure in Ontario.

The Evaluations Committee reported to the Civil Rules Committee whose mandate was to implement some or all of the recommendations of the Evaluation Committee.

The Evaluation Committee in its report undertook a statistical analysis and provided data regarding case types, the disposition rates, the numbers of motions for summary judgment and summary trial, the propensity to opt in or opt out of the simplified rules, and motions activity. Without reviewing that analysis, at page 14, they make the following observation from their review of the data collected.

AThe statistical analysis indicates that if the monetary jurisdiction of the Simplified Procedure were to increase from $25,000 to $50,000 there would be an approximate 50% increase in the number of cases operating under the Simplified Procedure, (i.e. approximately 37% - 38% of all civil cases would then be Simplified Procedure cases.)@

The Evaluation Committee determined that the Simplified Procedure Pilot Project had implemented significant costs savings, quicker resolution of actions and faster trial scheduling. However, the Committee also determined that the Rule, as currently constituted, was too complicated and confusing, thereby prompting the Committee to simplify the Simplified Procedure! It was concluded that access to the Simplified Procedure was being circumvented or under-utilized because counsel, whether young or old, who were having difficulty understanding how to take full advantage of the process.

The Evaluation Committee, in its conclusions, made a number of recommendations which are found at pages 28 - 31 of its report and have been reproduced in the materials, the most obvious and fundamental of which is increasing the jurisdiction under the Simplified Rules to $50,000. While retaining most of the provisions of those rules, changes were implemented to make the Rule more accessible to parties and more understandable to lawyers tempted to utilize its provisions.

Changes effective January 1, 2002 to Rule 76 of the Simplified Procedure

Given that the Simplified Rules Subcommittee of the Civil Rules Committee completed a favourable Evaluation Report on the operation of Rule 76, the Rule amendment deleted the Asunset clause@ (Rule 76.11) from Rule 76 and made the rule a permanent feature of the Rules of Civil Procedure, effective January 1, 2002. The new Rule 76 has adopted various of the recommendations set out in the Evaluation Report resulting in the rule being rewritten and reorganized.

The following are the major changes to Rule 76, effective January 1, 2002, which I will touch upon briefly in this paper.

1)Pursuant to Rule 76.01(1)(c), Rule 76 has been redrafted to be a rule, separate and apart from case management, such that Rule 77 excludes the simplified procedures from the case management regime.

2)Pursuant to Rule 76.02, which makes the simplified procedure available, the monetary limits for a claim that should be commenced under the simplified rules procedure has been raised to $50,000.

3)Although Rule 76.04 precludes the right of examinations for discovery, and is substantially the same as the prior rule, the words Aan examination for discovery by written questions and answers under Rule 35" has been added to clarify conflicting case law with respect to the scope of examinations for discovery under this particular rule.

4)Rule 76.03 was rewritten to add details found under Rule 30 in respect of the Affidavit of Documents.

5)Under the new Rule 76, the procedures for summary judgment and summary trial are independent of one another. It is asserted that this approach has simplified both motions for summary judgment and summary trials.

6)Regarding summary judgments there are only a few changes, one of which is the present Rule 76.07(2), which provides that the place of the hearing for the summary judgment is prima facie, the county where the action was commenced, rather than where the respondent=s solicitor resides.

7)In addition, pursuant to Rule 76.07(1), an important new provision provides that a judge on a summary judgment motion where it is refused or only granted in part shall determine the mode of trial that is appropriate for the matter to continue. This is in contrast to the situation where at the pre-trial conference prior to any motion, generally speaking, the parties determine the mode of trial as being summary or ordinary, as the case may be.

The Absence of Discovery

It would appear that the most troublesome aspect of the Rule is the elimination of discoveries and the following analyzes how this played out during the duration of the pilot project. The recent amendment regarding discovery was required because of conflicting case law in the area. Whereas Master Beaudoin, in the case of Stapley v. Intermap Technologies Ltd., [1999] O.J. No.1411, determined that discoveries did not include written questions and answers, Master Polika, in the more recent case of Osan Financial Corp. v. Bhatti, [2000] O.J. No.4104, took a different position.

In the Stapley v. Intermap Technologies case, supra, the plaintiffs commenced their action for wrongful dismissal under the simplified rules. The defendant objected to the utilization of the simplified rules due to the amount and the plaintiffs reduced the claim to the $25,000 limit and requested that the action be transferred back to the simplified procedure. The defendants objected on the basis that an amendment to transfer the action back to the simplified rules could not occur. The fundamental concern of the defendant in this particular case was that inasmuch as the case involved matters of credibility, the defendant wanted the opportunity to have oral examinations of the plaintiff prior to proceeding to trial (i.e. discovery).

At paragraph 13 of the decision of Master Beaudoin, he states as follows:

AIf the defendant still wants to have discovery, to the extent that it considers it necessary, the court notes that the prohibition under Rule 76.05 is limited to oral examinations for discovery. That rule provides:

An examination for discovery under Rule 31.03 or 31.10, a cross-examination of a deponent on an Affidavit under Rule 39.02 and an examination of a witness on a motion under rule 30.03 are not permitted in an action under the simplified procedure. That rule does not prohibit an examination under Rule 35, examinations for discovery by written question. It may very well be that the framers of the rule intended to exclude all forms of discovery under Rule 76, however Rule 76.05 is very specific as to the forms of discovery that are not discovery under Rule 76 pursuant to Rule 76.01(3) which states Athe rules that apply to an action apply to an action under the simplified procedure except where the rules provide otherwise.@

Therefore, he permitted in the particular case, discovery by written questions and answers.

Conversely, in the Osan Financial Corporation v. Bhattie case, supra, Master Polika states at paragraph 20, after setting out Rule 76.05, as follows:

ARule 31.02(1) clearly sets out that examinations for discovery may take the form of oral examinations or examinations by written question. Rule 35 then sets out how examinations by written questions are to be conducted. Rules 31.03 and 31.10 set out who may be examined for discovery, that is whether by oral questions or by written question. The prohibition in Rule 76.05 is one that states that in an action under the simplified procedure you cannot examine for discovery the persons listed in Rules 31.03 and 31.10. There is no mention in Rules 31.03 or 31.10 of the method of examination for discovery. On that basis I conclude that examination in an action under the simplified procedure of anyone listed in Rules 31.03 and 31.10 is not permitted regardless of the method of examination. It does not appear that Master Beaudoin was directed to this argument nor to Rule 31.02(1).@

The matter was analyzed in significantly more detail by Madame Justice Lax in the Mills v. MacFarlane, case [2000] O.J. No. 2824, where she takes Master Beaudoin to task in the Stapley case, supra.

In Madame Justice Lax= analysis, she takes a broader approach to the function of the rule itself, rather than the technical approach adopted by Master Polika, by referring to the purpose of Rule 76, and what it was derived to achieve.

In addition to noting that one of the controversial proposals that found its way into the rule was the elimination of discovery, she quotes from Mr. Justice Farley in the Baker v Chrysler Canada Ltd. case (1998), 38 O.R. (3d) 729 (O.C.G.D.) as follows:

AThe defendants submitted that it would only be just that they have the benefit of discovery. However, I would observe that Rule 76 provides that no matter how complicated the case and how essential the aspect of credibility, the case is to be tried according to the simplified procedures since the cut-off was not on the basis of complexity or credibility or other reason. Rather the cutoff was a specific dollar figure ($25,000 per plaintiff).@ (emphasis added)

At paragraph 28 of Madam Justice Lax= decision in Mills v. McFarlane, supra, she refers to a simplified procedure as restated by McDermott J. in Gibbons v. York, Fire and Casualty Company, [1997] O.J. No. 4125 (O.C.G.D.) as follows:

AThere is no doubt that the simplified procedure removes from the arsenal of the litigants some of the traditional armament of battle. However, that is exactly what it was meant to do in the interests of expediting and reducing the cost of trials where the amount in issue is less than $25,000. In my opinion, the policy underlying the simplified procedure rules is sound and ought not to be rendered impotent by creating so many exceptions to its application that these rules have no force or effect.@

Lastly, Madame Justice Lax referred, at paragraph 29 of her decision to the Court of Appeal case of Lillie v Bison (1999), 46 O.R. (3d) 94 at p.95, as follows:

ASimplified procedures contained in Rule 76.01 are intended to provide a readily understandable and cost-effective method of resolving disputes where the monetary claim is $25,000 or less. The court should encourage a liberal interpretation of Rule 76 to carry out the policy behind the Rule which is to reduce the cost of litigating claims of modest sums by reducing the amount of procedure available in such cases.@

As can be seen therefore, the Rule is adamant on eliminating examinations for discovery under the Simplified Rules as a matter of policy. In fact, the Evaluation Committee=s report noted that there was divided opinion on the existence of discovery and that a large portion of the profession stated to them that some form of discovery should be reimplemented, particularly if the monetary jurisdiction were increased to $50,000. At pages 19-20 of the Report, it appears that the Committee, notwithstanding the anecdotal information received and the focus groups= comments that some form of discovery should be retained if the monetary amount is increased, the Committee was reluctant to reopen the discovery issue because of the increase in costs of motions that inevitably flow from refusals and undertakings, as well as the concern that the availability of judges and masters required to deal with this increased volume of activity would be unnecessarily strained.

How Does One Succeed as an Advocate without Discoveries

The question of how to succeed as an advocate without oral examinations for discovery is answered initially by stating that counsel have no choice about the matter and are obliged to do their utmost to facilitate and obtain disclosure of information and documentation because they will be unable to wait until discoveries to provide or request information, particularly of a documentary nature.

It is my belief that in the absence of examinations for discovery, counsel must be more diligent in the following three areas:

  1. in providing more complete Affidavits of Documents pursuant to the requirements of Rule 76;
  1. in drafting affidavit material used on either a motion for summary judgment or summary trial, such affidavit material should be comprehensive, and not leave out any pertinent fact or detail required to succeed on the motion or at trial, and in order not to have an adverse inference drawn by leaving out pertinent information or details;
  1. in utilizing to a far greater extent than is currently the case, the Request to Admit format.

These are dealt with at length below.

a) The Affidavit of Documents

The Affidavit of Documents should disclose the full extent of the parties knowledge, information and belief regarding all documents relating to any matter in issue in the action that are or have been in the parties= possession, control or power, together with a list of names and addresses of persons who might reasonably be expected to have knowledge of the matters and issues in the action. Failure to disclose such persons means that person cannot be called as a witness at the hearing or trial of the matter.

The import of this upon advocates trying matters without discovery means that every effort should be made to ensure that all of the pertinent documentation is set out in the Affidavit of Documents, together with witness names and addresses and that letters can be exchanged between counsel regarding the completeness of the Affidavit of Documents.

b) The Role of Affidavits under Rule 76 in Support of Summary Trial or Summary Judgment