KerrLaw Logo JAMES D. L. KERR
CLIENT MEMO
TO:           Clients FROM:   James D.L. Kerr Lawyer
            17 – 151 Merton St.
            Toronto
, Ont., M4S 1A7
            Tel 416 485-4254
            Fax 416 485-8836
            
E-mail: jkerr@kerrlaw.ca
            www.kerrlaw.ca

            Certified Specialist Civil Litigation
DATE:     July 17, 2006
RE:         THE CONDUCT OF A LAWSUIT
            PRACTICAL CONSIDERATIONS INVOLVED IN
          LITIGATION





As well as the fact and law involved in your particular lawsuit, there are a number of general practical considerations that apply in most actions. These factors are set out below in rather general form. Please review this memorandum carefully so that you will be able to follow the course of the action as it proceeds.
 
1.          THE COURSE OF THE LITIGATION

A civil non-jury case will proceed through the following general steps:

(a) Pleadings:


The parties will exchange documents called "pleadings", setting out the facts upon which they rely and the claims and defences that they assert against each other. In a simple action, pleadings consist of a “Statement of Claim” (filed by the “Plaintiff”, being the party who started the lawsuit), “Statement of Defence” (filed by the “Defendant”, being the party who is the target of the lawsuit) and “Reply” (filed by the Plaintiff in response to any new allegations raised in the Statement of Defence); more complicated lawsuits can involve counterclaims, crossclaims and third party claims.


Each party must, in that party’s pleadings, either admit, deny, deny knowledge of, or state their version of, facts alleged in the pleadings of the other party. Failure to assert your version of the facts in your pleadings may result in your not being able to lead necessary evidence at trial.

(b) Mandatory Mediation:

Following the exchange of pleadings, in certain cases (including most “ordinary” actions commenced at Toronto) the parties are required by the Rules of Civil Procedure to attend mandatory court-supervised non-binding mediation.  In wrongful dismissal cases, mediation must take place within 150 days of the “close of pleadings” (meaning, the filing of the last claim, defence or reply due in the case or the expiration of the time for so doing). In cases other than wrongful dismissal cases, mediation must take place within 90 days after the case has been “set down” for trial. Usually, a case is set down for trial after the examinations for discovery (see below) a all follow-up proceedings have been completed.


The purpose of mediation is to canvass settlement at an early stage, before each side has incurred too much expense. The mediator can either be selected by the parties from a “roster” if the parties can agree on a mediator, or imposed by the court. The parties split the mediator’s fees (approximate cost to each side before their own lawyer’s fees - $400.00) and those fees are payable in advance. Because of the necessity to prepare documents and to spend time preparing for the mediation, this process adds another layer of cost to the litigation process.  Mediation can be avoided if the parties have already gone through another form of alternate dispute resolution involving the same issue (e.g., mediation under the Insurance Act in a motor vehicle case), and it can be delayed if pleadings are not yet completed, or a party has not yet been served with process, etc.

(c) Affidavit of Documents:

Following the exchange of pleadings, the parties will exchange copies of all documents relative to the action. The parties make Affidavits (sworn statements) of Documents deposing that they have produced all such documents. Certain "privileged" documents need not be produced, however they must still be listed as existing, since at some point it may be up to a Court to determine if in fact the document is privileged.
The Affidavit of Documents must be served within ten days of the close of pleadings, and if a party comes into possession of any further documents, a Supplementary Affidavit on Documents must forthwith. There are severe penalties for failure to comply: no document may be used at trial (except to cross-examine a witness) without special permission of the trial judge unless the existence of the document has been disclosed in an Affidavit of Documents. Any privileged report has to be disclosed and provided to the other party unless the party refusing to produce it undertakes not to call the person who made the report at trial, such decision to be made within ten days after the action is set down for hearing. The definition of "document" includes any method of storage of information which would include computer disks.

(d) Examinations for Discovery:

Following the exchange of documentation, examinations for discovery are held. These are oral examinations under oath by a representative of each party. They are conducted before a judicial officer called an "Official Examiner", and a Court stenographer prepares a transcript of the oral examination. Normally, only the party being examined and the lawyers are present at each examination. The object of the examination is to obtain admissions to be used against the other side at trial, information about the opponent’s case, and in some instances their position as a matter of law.

Normally, the examinations for discovery drag on for a while, as both sides are required to provide extra information and documentation required by the other side to prepare for trial.  These are called "undertakings". When your lawyer requires that you provide the answers to the undertakings, it is important that you do so promptly since failure to do so will delay the matter going to trial.

(e) Pre-Trial Conference:

When the undertakings have been completed, the actions are set down for trial. There is usually a lengthy delay before the case is actually heard, depending upon which level of Court and at which location the matter is set down for trial.  After the matter has been set down for trail, and some time prior to the actual trial, the Court will schedule a Pre-Trial Conference before a Judge. Except with respect to matrimonial matters, only the lawyers attend the Pre-Trial Conference.  The purpose of a pre-trial conference is to:

(a) Admit facts not in dispute;

(b) Canvass the prospects of settlement;

(c) Simplify the issues;


(d) Shorten the trial time;


(e) Consider any other matters that may assist in the just disposition of the action.


The pre-trial conference Judge acts, effectively, as a conciliator and has limited actual power.  Furthermore, the pre-trial conference Judge cannot sit as the Judge in the trial of the action.


(f) Motions:

Pre-trial disputes (usually procedural wrangles or applications for restraining orders called “injunctions”) are resolved through Court “motions”; such proceedings are referred to as  "interlocutory proceedings" and are initiated by “bringing a motion”. Evidence on motions is by the filing of affidavits (rather than the oral testimony of witnesses in a courtroom). The credibility of the affidavit evidence is usually tested by cross-examinations that take place outside of court well in advance of the hearing of the motion. The transcripts of the cross-examinations and made available to the judge hearing the motion. Motions can be costly affairs, in some cases costing thousands of dollars. For that reason, lawyers usually try to resolve procedural dispute by agreement and consent before resorting to a motion. The losing party on a motion can be ordered to pay “costs” to the successful party and in some instances those costs are payable “forthwith”.

(g) Trial:

Eventually, you will be notified that your case is ready for trial. Under our present system, it is impossible to predict accurately the day upon which the case will be heard. You will be given as much warning as possible, but you must be prepared to attend Court with your witnesses on very short notice.

Family Law Matrimonial litigation is similar to general civil litigation at the trial stage, and requires at least equal preparation. It differs primarily at the initial stage, however.  Such issues as child custody, access, financial support and possession of family assets, which are often the subject of the litigation, require a great deal of material. These are also issues required to be dealt with on an interim basis, which is done by an interlocutory application. However, because it might take in excess of two years to get to trial; because the basis of a final Judgment will often be based largely on maintaining the status quo; and because the status quo is determined on the interlocutory application, the interlocutory application takes on added significance.
The usual procedure is for the initial interlocutory application to be adjourned a number of times: for filing of material in response; for cross-examinations on material filed for the motion; and for preparation of the transcripts of the cross-examinations.  The application is then heard by a judicial officer ("Master"), whose decision is subject to appeal to a Judge.

Thus there is a great deal of time, and therefore expense involved  "up front" in matrimonial litigation.
 Injunction Application: Litigation requesting a permanent and/or an interlocutory injunction (“interlocutory” means while the lawsuit is ongoing and before final judgment) also possesses special problems requiring extensive preparation at the initial stages. Full, complete and frank disclosure is required on an application for an interim injunction. An interim injunction may be granted on an ex parte (no notice to the other side) basis for a short period of time, but usually notice of the application to the other side is required. On the application for an interim injunction, failure to make full, complete and accurate disclosure will often be fatal to the application. In addition, “laches” (failure to proceed expeditiously) may also be fatal to the application.

Again, because of the time it takes to get to trial, and because the interlocutory injunction will determine the status quo until that time, success or failure in the litigation often depends upon success or failure in the application for the interlocutory injunction. Accordingly, the interlocutory application again takes on added significance. As in the case of an interim custody application, there is a great deal of time and therefore expense involved "up front" in injunction litigation.
 
2.         SETTLEMENT

The foregoing outline assumes that the case will actually proceed to trial. In fact, most cases are settled before trial. Trials are expensive, slow and inefficient, and most litigants eventually opt for settlement. At a trial, a Judge imposes a settlement that is not necessarily in accordance with the parties' understandings of their legal rights. By settling the matter themselves, the parties actually reach their own accommodation.

Settlement negotiations usually occur at the following stages in the litigation:

(a) Following a demand letter;


(b) Following institution of action;


(c) Following examinations for discovery; or


(d) As the case is being prepared for trial.


It is important to set a specific goal in your lawsuit at the earliest possible date. This goal must be reasonable, and you should consult your lawyer to consider what he/she feels constitutes a reasonable goal. If you can attain your goal by early settlement, you would be well advised to consider that solution. It is better to settle a case at an early stage, before both sides have run up time and expense, and before they have "dug in their heels" and reached an inflexible position. The problem when settling at an early stage is to amass enough information to make a rational decision.


At the commencement of litigation, it is rarely possible for your lawyer to advise you sensibly on a settlement goal. If your lawyer believes that settlement negotiations should take place, he/she will ask you for instructions. You should keep the possibility of settlement in mind at all times.

It is very rare that settlement discussions are conducted on a  "ballpark" basis. More often, both sides go on a "high-low" basis, and eventually negotiate to some middle figure.

The Rules of Civil Procedure encourage settlement by imposing severe cost penalties for refusing a reasonable offer, and specifically vest in a Judge authority to refuse costs to an unreasonable litigant and/or award costs to the opponent. The timing of the costs penalty(s) encourages the early submission of a written offer.

By raising the question of settlement with you at this early stage, your lawyer is not wishing to imply that he/she will not take this case to trial or that he/she is pessimistic about your chances.  Rather, under the canon of ethics, a lawyer has an obligation to discuss settlement with his client. Your lawyer would be derelict in his duty to you if he/she did not raise these points with you.
 
3.         MATERIALS NEEDED TO CONDUCT THE LITIGATION

Whether the case proceeds to trial or is settled, it is essential to be well prepared. There is no substitute for thorough preparation. Unfortunately, preparation takes time and therefore money. However, the more of the preparatory work that can be done by the client, the less the legal bill.

Litigation therefore involves a good deal of hard work for the client as well as for the lawyer. A lawyer can only present a good case or settle the case intelligently if he/she is provided with enough ammunition. Some assistance may come from investigation and expert witnesses, but most must come from the client. The client is the person most familiar with the issues involved, and will be expected to deal with the following, among other matters:

(a) If you have not already done so, prepare a summary of the facts and the evidence within your knowledge while these matters are fresh in your memory. Prepare a list of witnesses with addresses, phone numbers and place of business if possible. The lawyer will wish to obtain statements from these witnesses at the earliest possible date. Witnesses often move or change jobs between the commencement of the action and the actual trial, and the farther off the trial is, the more difficult it is for witnesses to recall the facts of the case. After a statement has been obtained from each witness, you should make it your business to keep track of the witness, so that if the witness moves we are advised of this well in advance of trial.

(b) In personal injury cases, the victim and all family members should keep a diary of their actions, observations with respect to pain and suffering, limitations of movement, medication, etc. Keep receipts for all payments made, not necessarily just medication (e.g., flowers).


(c) If expert evidence plays a part in this case, your  lawyer will ask you to make inquiries and give him/her  your suggestions with regard to the leading experts in  the field. An expert witness must be impartial, he/she must have no connection with you in any way, and if possible he/she should have some Courtroom experience. 


(d) Documents: If your lawyer does not already have them, he/she must have all of the original documents in your possession, whether or not those documents are privileged from production to the other side; when you do not have original documents, then you must produce any copies in your possession. This will include tape recordings, video recordings, writings, photographs, and any other physical evidence of any shape or kind in your possession. You will have to make an affidavit swearing that you have produced copies of all the relevant documents in your possession. If they are not disclosed in your Affidavit of Documents, or in a Supplementary Affidavit of Documents, and produced on a discovery, documents may be excluded at trial.

(e) Other matters: In the course of the litigation, your lawyer will discuss with you other matters such as demonstrative aids (charts, models, etc.), physical exhibits and other items which may be peculiar to the  presentation of your lawsuit.
 
4.         COSTS

The primary practical concern in most litigation is the financial impact of the lawsuit. The cost of litigation continues to skyrocket. In Ontario, the cost of litigation involves two factors. First, each party must pay his own lawyer's fees and disbursements. Second, if the case proceeds to trial, the loser must usually pay "partial indemnity costs" ("costs") to the winner.  Such costs are based on a tariff established by the Court. They are not intended to and do not entirely cover the winner's legal fees, but they usually cover two-thirds to 75% of that amount.  Accordingly, even the successful litigant bears a significant portion of his or her own legal expenses.
Non-compliance with the Rules of Civil Procedure will also effect costs.  If a document is not disclosed in an Affidavit of Documents, or if an expert's report is not produced, and the evidence is needed at trial, you may have to apply for an adjournment. Such an adjournment would probably be on terms requiring the payment of the other party's costs.

Your legal fees will relate to the complexity of the case, the importance of the matter, the time and the degree of skill that the case will require, and the results achieved. Modern litigation requires that considerably more care be taken in the early stages than was formerly the case and the primary factor in your legal fees is the time involved in the prosecution or defence of your case. In addition to the "hard" costs, you must also consider the soft costs, namely, the time that you or your associates will have to spend on the litigation, in general, and at trial, in particular.
 
5.         INSURANCE AND COLLECTION

If a defendant has insurance covering the plaintiff's claim, he/she should of course report at once to his or her insurer. Failure to do so may result in the insurer denying the claim. In addition, the insurance company frequently has the right to appoint counsel and the obligation to pay the counsel's legal fees.
Your lawyer will know nothing of the financial circumstances of your opponent or whether he/she has insurance (except in motor vehicle cases). A Judgment either for damages or costs against an insolvent party without insurance is of no value; if the opponent is insolvent, and you obtain an order for costs which cannot be satisfied, you will have to bear the full brunt of your legal fees. It is suggested that you make whatever discreet inquiries are possible concerning the financial health of your opponent. If legal services are required in collection, you will be billed separately for such services.
 
6.         INCOME TAX CONSIDERATIONS

At some early stage, you should consider the taxation implications of the litigation. Some amounts acquired by a plaintiff may be taxable, and some amounts paid by a defendant may be deductible for income tax purposes. Similarly, the costs of a lawsuit may or may not be deductible, depending upon the circumstances of the case.  I am not a tax expert and do not render advice with respect to taxation matters.  In all instances I recommend at the outset that my clients obtain competent tax advice from their chartered accountant or other tax advisor; clients decline to do so at their own risk.

7.         CONCLUSION


The foregoing is of necessity quite general. If more detailed  problems arise in your particular case, your lawyer will discuss them with you at the appropriate time. Please  let your lawyer know if you have any questions concerning the  foregoing.


ADDITIONAL INFORMATION CAN BE FOUND AT THE MINISTRY OF THE ATTORNEY GENERAL'S WEB SITE AT http://www.attorneygeneral.jus.gov.on.ca/english/courts/civilsuing.asp.

 



DISCLAIMER: The foregoing is not intended to be a comprehensive guide to the applicable law. General Client Memoranda and mailings from James D.L. Kerr ● Lawyer are intended to inform clients and acquaintances with respect to current issues that may be of interest to them. Memos are current to the date shown on the Memo. The law is constantly changing, however, and for that reason a Memo may not be completely accurate after it's stated date. Where circumstances warrant, the advice of a lawyer or other qualified professional should be obtained.


2006 James D.L. Kerr