 This is Wei Longchao and welcome to Legal Fundamentals Module 1, Part D. In this part, we will look at the courts and civil lawsuits. Let's look at the life of a civil lawsuit from beginning to end. A civil lawsuit involves one private person or business suing another private person or business. That's in contrast to a criminal lawsuit where the government, which in Canada we call the Crown, accuses a person of having committed a criminal offense. So with a civil lawsuit, we always start with some kind of dispute between two or more parties. And that dispute can involve what we call a tort, which is some kind of wrongful act that has caused injury or loss to another person. We'll talk more about torts in another module. Or it could involve a breach of contract, and we'll talk about contracts in another module as well. So arising from that dispute could be an actual lawsuit. So the first stage of a lawsuit is called pleadings. So before actually initiating a lawsuit, we have to determine whether or not the applicable limitation period has expired. Limitation period is a deadline by which a lawsuit has to be initiated. It cannot be initiated once that limitation period has expired. The limitation period in Ontario is generally two years. But it's very important to check out what is the specific limitation period that applies to any particular situations. Because there are exceptions to that two-year rule where the limitation period could be shorter or it could be longer than two years. So as long as we are within the limitation period, the plaintiff, which is the party who is initiating, who is doing the suing, would serve and file a document called a statement of claim. A statement of claim would contain the plaintiff's version of the facts and also state what the plaintiff wants out of the lawsuit. Usually the plaintiff wants the other party, the defendant, to pay money to the plaintiff. After the statement of claim has been served and filed, the defendant, which is the other party, the person that the plaintiff is suing, would look at the statement of claim and decide whether or not to fight the lawsuit. If they do want to fight the lawsuit, they would prepare a document called a statement of defense, which would set out the defendant's version of the case. If the defendant does not file any statement of defense, the plaintiff basically wins by default and can obtain what's called a default judgment from the court. Other pleadings that could arise at this stage could be a counterclaim. That's where the defendant is claiming an amount from the plaintiff. They would put that into a document called a counterclaim. Another pleading could be what's called a reply. Once the plaintiff has received a statement of defense from the defendant, if the plaintiff wants to reply to the version of the facts that the defendant has set out in the statement of defense, then the plaintiff can put its response into a reply. The next stage involves a number of different pretrial activities. The purposes of these pretrial activities is to narrow down the issues so that by the time we reach trial, we know exactly what is in dispute. But a larger, more important purpose of these pretrial activities is to encourage the settlement of this lawsuit to avoid having to go forward with a very expensive trial, expensive in the sense that it would incur very substantial legal fees. So these pretrial activities include, firstly, an examination for discovery. What that involves is that each party and their lawyers are allowed to ask questions of the other party to find out the details of their case, including what evidence they have. And this also involves each party having to disclose all documents that they have in their possession that is relevant to the case. So by going through this discovery process, we are able to determine what are the strengths and weaknesses of each party's case and therefore encourage a settlement between the two parties. Another pretrial activity could be mediation. Mediation is where the two parties sit down with a neutral person, which we call a mediator. The mediator tries to find common ground between the two parties in order to try to put together a settlement of the case. Mediation is a mandatory step for civil cases that are initiated in Toronto, Ottawa, and Windsor. And the final step before actually going to a trial is something called a pretrial conference. A pretrial conference involves the two parties and their lawyers meeting with a judge. So it's not the judge that will hear a trial, but it's a real judge of that court. The judge will be appraised of what was the evidence that was obtained through discovery. And the judge will provide his or her opinion about the strengths and weaknesses of each party's case and could also on that basis push the parties towards coming to a settlement in order to avoid trial. Now, if after all that pretrial activity, there is still no settlement of the case. And by the way, more than 95% of cases are settled before reaching trial. Now, if we are unable to settle the case and we have to go to trial, a trial can involve, and in civil cases, it's usually a judge alone. The judge hears the case and makes the decision. With more serious criminal cases, there's usually a choice between either a judge alone or a judge with a jury. The matter of guilt or innocence is decided by the jury. Now, in any trial, there is evidence that is presented to the court. Evidence is usually presented by way of witnesses. So it could be what we call ordinary witnesses. So these are people who have firsthand knowledge of what happened in the case. And it can also involve expert witnesses who don't have firsthand knowledge, but expert witnesses such as doctors, engineers, forensic experts, they've looked at the evidence in this case and they are testifying about their professional opinion arising from that evidence. When witnesses are called, the lawyer that calls that witness asks questions of that witness. That's called an examination in chief. When that lawyer is done asking questions, the lawyer for the other side for the opposing party also has a chance to ask questions of that witness. That's called cross examination. In presenting evidence at trial, there are complex rules of evidence that apply to determine whether any particular piece of evidence is admissible or inadmissible. The most famous rule of evidence is the hearsay rule. The hearsay rule essentially says that a witness cannot testify about something that they heard someone else say. The witness can only testify about what they saw, what they experienced as opposed to just repeating what someone else has said to them. That's the hearsay rule. In deciding a case, the court will apply a standard of proof. In a civil case, the plaintiff has to prove its case, its version of the facts, on a balance of probabilities. So what that means is that based on the evidence presented, the plaintiff's version is more than 50% likely to be the true version versus the defendant's version. With a criminal case, the standard of proof is much higher than just something more than 50%. The crown has to prove guilt beyond a reasonable doubt. After we have a decision at trial, the next stage is an appeal. So this is where the losing party at trial will appeal that decision or at least try to appeal that decision to a higher court. So basically saying, the losing party is saying to the appeal court that there was an error made in the trial decision, specifically an error of how that court applied the law or interpreted the law, an error of law in other words. An appeal court will overturn errors of law but will not appeal errors of fact. In terms of what the different appeal courts, a trial decision of the Ontario Superior Court, which is the highest trial court for civil cases, those decisions are appealed to the Ontario Court of Appeal. The Ontario Court of Appeal is the highest court in Ontario and decisions of the Ontario Court of Appeal are appealed to the Supreme Court of Canada, which is the highest court in Canada. Now once appeals are exhausted or even if an appeal doesn't happen, the last step is called enforcement. So if the defendant has lost and the court has ordered the defendant to pay money to the plaintiff, that defendant is now called a judgment debtor. And if that judgment debtor does not voluntary pay the amount that's been ordered, the plaintiff has to take steps to enforce that judgment. So that could involve the plaintiff garnishing the judgment debtor's income, which means if the judgment debtor has a job from which he or she is receiving salary, every time there's a paycheck, the employer will be required to deduct a certain portion of that paycheck and pay it over to the court and the court will give it to the plaintiff. Another way a judgment can be enforced is to have the court seize and sell the judgment debtor's assets in order to pay down the debt that's owing from the lawsuit. One overall point to keep in mind is that most cases never make it to trial. As I mentioned earlier, 95% or more of cases are settled before ever making the trial stage. And a thing to keep in mind is that litigation is uncertain in the sense that you can never be 100% sure whether you will win or lose. Second is that the process of a civil lawsuit from beginning to end is lengthy. It's not like on TV where a case is initiated at the beginning of a one hour show and it gets to trial before the show is over. A lawsuit can go over a period of years, two, three, four, five or more years sometimes. And because it's lengthy, it's costly. Lawyers are expensive. So legal fees, the longer a case is dragged up, legal fees add up. Let's talk about class actions and let's look at a real case. So this case involves a gas utility in Ontario called Consumers Gas. So what was happening was that consumers gas was charging late payment penalties to its customers. And it was discovered that those penalties were charged at a rate that were illegal or criminal under the criminal code of Canada. So let's say this particular customer was charged an illegal late penalty of $25. So that customer has a right to sue Consumers Gas to recoup that $25. But the problem is that that amount, that $25 amount for that one customer is so small, it's not worth the hassle to initiate a lawsuit. And it's just too costly for the customer to start a lawsuit and hire a lawyer to carry on that lawsuit. So in most instances, the affected customer will just say to hell with it, it's not worth it and do nothing about that illegal $25 payment. Now with the ability to start a class action, we can instead of focusing on just one customer, we can look at all of the affected customers. So in this case, there were 500,000 affected customers. So those customers so that that whole group of customers were charged illegal late penalties of $150 million in total. So those customers as a group through a class action can sue Consumers Gas for the whole $150 million. By being able to use a class action to recover the late payment penalties, the customers have a practical and useful way of recovering the penalties that they have paid. Now, a thing to keep in mind too is that the lawyers are presenting the customers. So those are the plaintiffs lawyers, they're willing to assist the customers in pursuing this lawsuit. Now, and they're very happy about that because once there's a judgment or a settlement of the case, plaintiffs lawyers in class actions are usually paid what's called a contingency fee. So contingency fee is a fee that is calculated as a percentage of the actual amount that's been recovered in the lawsuit. So that that rate is usually 25 to 40%. And with a contingency fee arrangement, if no money is recovered, the plaintiff lawyers receive nothing. So they only receive something if there is an amount that's been recovered by way of a judgment or settlement. So if we if we think about about this case, let's assume I don't know what the rate was that was applied in this case in terms of the contingency fee. If we assume that plaintiffs lawyers are paid, let's say the lowest 20, 25%. So that would amount to about $38 million that are paid to two lawyers out of the total of $150 million. To be able to proceed as a class action, the court has to certify a case as a class action. There are a number of criteria that have to be met before a court will provide that certification. The first criteria is that there has to be common issues among all class members. With the consumers gas case, all of the affected customers had the same issue regarding the illegal late payment penalties. And there has to be a representative plaintiff. So this is the one person who represents one plaintiff who represents the whole group, the whole class. And that representative plaintiff has to demonstrate a workable plan for fairly representing all class members' interests. And the third criteria is that there has to be a plan to notify all potential members of the class. If there is a mailing list that can be used to contact all of the affected members, what another method of notification is putting ads in newspapers or posting something online. And the last criteria is that it has to be shown that pursuing the case via a class action is preferable. Is the preferable procedure over traditional litigation where one affect party sues the company, so having a whole bunch of different lawsuits. So the usual argument there is that it's much more efficient to have one class action instead of thousands of different and separate lawsuits against the company. Let's look at the different courts that deal with civil lawsuits in Ontario. In terms of trial courts, so these are the courts where the lawsuits are initiated and these are the courts that hear the trial of the case. So with claims that are over $25,000, the court that would deal with that trial is the Ontario Superior Court. If the claim is $25,000 or less, there's a court called the Small Claims Court. Small Claims Court is designed to be easier to use for non-lawyers and less expensive to use than with the Ontario Superior Court. In terms of the appeal of trial court decisions in civil lawsuits, there is the Ontario Court of Appeal which hears appeals from the Superior Court and also a court called the Divisional Court. The Ontario Divisional Court hears appeals of Small Claims Court decisions. The final appeal is to the Supreme Court of Canada. The significance of having what we have called higher and lower courts is a legal doctrine called the Doctrine of Precedent. So under that doctrine, lower courts must follow the legal principles in decisions of higher courts. So what arises from that principle is that all courts in Canada must follow the decisions of the Supreme Court of Canada which is the highest court in Canada. If we look at just Ontario, the lower courts in Ontario would be the Superior Court, Divisional Court, and Small Claims Court. All of those lower courts have to follow the decisions of the Ontario Court of Appeal which is the highest court in Ontario.