Monthly Archives: September 2014

Teaching the Unteachable – OPCA Litigants and Punitive Damages

By Eric Turkienicz, B.A. Hons., J.D.

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“The judge has left the court; has abandoned the court. I, as a sovereign, claim authority and dismiss the matter.” – Quote from an OPCA litigant, Hadju v. FRO, 2012 ONSC 1835

 

First, a confession. This writer confesses an especial interest in OPCA (Organized Pseudolegal Commercial Argument) cases. In short, I find them entertaining to read and sometimes even funny. Many of the quotes or legal documents involved read like legal farce – something the Marx Brothers would concoct as a satire of lawyers (see A Night at the Opera, Sam Wood, 1935: “Party of the first part…”). This is not to say that I minimize the importance of the issues to the parties to these Actions or belittle the serious mental and financial tolls OPCA proceedings can take on the litigants, lawyers, Court staff, and judiciary. It is very easy to sympathize with people who are at the unfortunate receiving end of some of the more misguided individuals in the OPCA realm. However, I find some of the approaches taken by these litigants humorous in the same way that many people find the uninformed predictions of the future made by society during the turn of the 19th century humorous. It is not lack of mental faculties that cause certain people to claim that inserting punctuation in your name changes the nature of the person, or to demand payment of obscene amounts of money in the form of precious metals, or to insist that the government has secret bank accounts keyed to our Social Insurance Numbers. Rather, these litigants have been fed misinformation by unscrupulous outside sources and proceed to Court waving the products of this misinformation as a sword against all who oppose them. Although I have acted as counsel in lawsuits with all manner of difficult litigants, I have not had the distinct displeasure of facing a true OPCA litigant. My wholehearted commendations go out to anyone who has.

 

But what is an OPCA Litigant?
There are many general hallmarks of this emerging trend of litigant:

  • They attempt to carry out “scams that abuse legal processes” – Meads v. Meads, 2012 ABQB 571
  • They invoke the false “theme that the litigant is not bound by the law or subject to the authority of the courts” – R v. Cassista, 2013 ONCJ 305
  • They are “known to direct violent and harassing activities against persons they see as enemies” – Perreal v. Knibb, 2014 ABQB 15

 

The specific strategies and techniques utilized by these individuals are endless and their members are amorphous. They call themselves Freemen on the Land, Detaxers, Sovereign Citizens, or any number of other monikers. Most courts have recognized that these litigants do not belong to one single geographic area, social class, profession, background, or other unifying characteristic. The one feature which they all share, however, is the general rejection of the Court’s jurisdiction over them and the utilization of strategies with the exclusive purpose of frustrating the legal rights of others. Strikingly, while the actual tactics used by OPCA litigants run the gamut and cannot be easily put into a list, they are nevertheless instantly recognizable. In some cases, they claim that the Court’s jurisdiction extends only to the seas, in others they affix their coloured thumbprint to every document. Most involve the use of impressive sounding legal jargon in documents which, when actually read, prove to be complete nonsense. The most alarming though, in this writer’s opinion, are those cases where the OPCA litigant, armed with their gibberish, attempt to foist unilateral legal obligations and debts onto others. To any trained observer, the foisted agreements are immediately recognizable as unenforceable. However, this does not stop the OPCA litigants from taking those foisted obligations and registering very real liens and other encumbrances against people. Those victims are then forced to proceed through the Courts against intentionally obstructive people to correct an action which ought to have never occurred.

 

By way of example, an Endorsement was recently released in the case of Myers v. Blackman, 2014 ONSC 5226. Myers is not a particularly noteworthy case. It is not of any specific legal importance nor have members of the public or even the legal community been following it with any real attention (as far as I can tell). In fact, the only reason it is positioned as the example for this article is that it is just the latest reported decision on this topic. In Myers, the Applicant law firm and lawyers were retained by a bank to recover an unpaid line of credit from the Respondents. During the course of the recovery process, including demand letters and a Small Claims Court Action, the Respondents delivered numerous letters to the law firm challenging their standing, demanding proof of contract between the firm and the Respondents, and unilaterally insisting that the law firm’s failure to engage with the Respondents’ demands made them liable for a number of damages. Several fee schedules and invoices soon followed from the Respondents insisting that the law firm was liable for many millions of dollars to them – all for writing a few letters and commencing a lawsuit to recover about $20,000.

 

The real issue seems to have arisen when the Respondents then registered, without right, a Financing Statement under the PPSA against the law firm and Applicant lawyer. The Court, of course, immediately recognized the sheer absurdity of the Respondents’ conduct and discharged the Financing Statement. It also awarded costs on a substantial indemnity basis to the law firm of approximately $25,000 (after taxes) and a nominal $500 amount as per the provisions of the PPSA.

 

What is most interesting, however, is that it declined to award punitive damages against the Respondents. The Court recognized that Meads v. Meads – the 188-page ‘bible’ for OPCA litigation – recommended punitive damages in cases involving foisted agreements and the filing of false claims. However, applying the principles in Whiten v. Pilot Insurance Co., 2002 SCC 18, the Court in Myers did not believe that punitive damages would achieve their intended objective. The Court appeared to suggest that the costs award was sufficient deterrence (though it recognized that cost awards are inherently compensatory).

 

Though the Court’s decision is a reasoned one, this writer still views these sort of situations as deserving of punitive damages. Though costs awards can certainly have a deterring effect to normal litigants, there is something extra to be had by the imposition of an award explicitly geared towards communicating the dissatisfaction of the Court. OPCA parties enter the Courtroom believing that it has no jurisdiction over them. Interestingly, one of the Respondents in Myers claimed that he was not an OPCA litigant and had never heard the term. Of course he had never heard of it. “OPCA” is a term coined in the Courts and repeated in reported decisions. The very problem with most OPCA litigants is the fact that they pay no heed to the jurisprudence or the actual law; in their mind they are not “OPCA litigants” but just “litigants”. Believing, as so many of them do, that the judges, lawyers, and court staff are part of a far larger government conspiracy to suppress their inherent rights, a court order of damages and costs as compensation to the successful party means nothing to them.

 

The only tool the Courts have to separately rebuke the very tactics and conduct of the OPCA litigant is through punitive damages. As per Whiten, punitive damages are warranted when other awards do not adequately punish the misconduct. Apart from the finding that their claim/defence has no merit, the Court ought to convey a clear message of disapproval with the way the OPCA litigant has conducted him or herself and, hopefully, discourage that specific conduct in the future. To a future prospective OPCA litigant, this should communicate that the problem was not merely the claim but the way it was pursued.

 

Naturally, it is equally possible to argue that to someone who does not accept the authority of the Court, no award can punish the misconduct. It’s a circular problem. How do we punish the unpunishable? How do we teach the unteachable? If someone is committed to bogging down Court processes and using non sequiturs as legal argument, it is likely that nothing will persuade them that they have chosen the wrong tact. On the other hand, Courts cannot waver from established principles of law, even when they are all but guaranteed to fail in their intended purpose. Punitive damages, even moderate ones, can serve as a learning experience for OPCA litigants, present and future.

 

“A learning experience is one of those things that says, ‘You know that thing you just did? Don’t do that.” – Douglas Adams

 

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Eric Turkienicz is a lawyer practicing at the Toronto firm of Feldman Lawyers. He maintains a broad civil and commercial litigation practice. The opinions contained herein are his own and do not necessarily reflect the opinions of other members of Feldman Lawyers. Nothing in this article should be construed as legal advice and are for information purposes only. Any questions or comments on the article should be made directly to the author.

The Year of Deference

The impact of Sattva Capital Corp. v. Creston Moly Corp on the interpretation of contracts

It’s looking like 2014 is shaping up to be the year of deference, at least from the perspective of the Supreme Court of Canada. Just over six months following the landmark decision of Hryniak v. Mauldin, the SCC has released another ruling which both recasts the traditional perspective on contract interpretation and further claws back appellate Courts’ ability to set aside the rulings of trial judges.

Lawyers and other fans of Canada’s highest court will certainly be aware of the January 2014 Hryniak decision which re-evaluated the role of Summary Judgment in the life cycle of a lawsuit and said that, among other things, the decision of a Superior Court Judge in a Summary Judgment Motion should be treated with deference. No longer could the Court of Appeal easily question the factual findings of lower Court Judges. Now armed with new analytic powers, Judges were encouraged to view Summary Judgment as an efficient method of resolving legal disputes which did not need the expensive and time-consuming trial process.

Though that analysis may be a bit simplistic, similar themes appear again now in the BC case of Sattva Capital Corp. v. Creston Moly Corp. In that case, the parties entered into a contract in which Sattva was to receive a finder’s fee for the successful purchase of a mining company in the form of shares of the purchasing company. The parties disputed over the valuation of the shares and ultimately went to arbitration to settle the matter. The arbitrator found in favour of Sattva and based the decision on an interpretation of the term “Market Price” in the contract.

Creston appealed the arbitrator’s decision, arguing that the arbitrator’s failure to properly consider and apply a particular provision of the contract was an error reviewable on a standard of correctness. The BC Court of Appeal agreed.

The Supreme Court, however, did not agree. In seven paragraphs of the Court’s decision, Justice Rothstein outlined the history of the Court’s approach to the interpretation of contracts. Historically, Justice Rothstein wrote, Courts of Canada and the UK treated contract interpretation as questions of law and therefore reviewable on appeal on the higher “correctness” standard. Though some shift away from that strict approach has occurred in Canada, many Courts still viewed contracts as strictly legal affairs. However, the interpretation of a contract must now be seen inherently as a question of mixed fact and law – subject to the lower reasonableness standard. True errors of law in contract interpretation will be few and far between and will be typically limited to questions peripheral to the explicit language of the contract itself. Recognizing that the context surrounding the formation of a contract is fundamentally important to understanding the intentions of the parties, the Court explicitly rejected the historical approach and affirmed that the arbitrator’s decision met the requisite standard of reasonableness.

The impact of this decision, however, goes beyond the immediate effect on the parties. Beyond confirming the appropriate standard of review for contract interpretation, it sent two very clear messages to the lower courts:

  1. Judges engaged in the interpretation of contracts between parties are essentially finders of fact. As such, their decisions are to be treated with deference upon appeal.
  2. The circumstances surrounding the formation of a contract is relevant to the interpretation of it but should not overwhelm or supersede the words of the contract themselves.

Of course, trying to predict the effect of this decision on future cases or litigation strategy would be a fool’s errand. Litigants will still continue to bring baseless appeals and Courts will still distinguish some future cases from this rubric. Ultimately, though, Sattva will likely limit the number of attempts by appellants to re-litigate a contract when the first go-around has not gone their way. It will also provide some guidance to the Courts in recognizing that the explicit language of a contract is not independent of the conduct or context surrounding its formation, nor do the surrounding circumstances override what has been agree to. Rather, both factors should complement each other in assisting the Court to reach a proper interpretation of the contract.

Peeling the judicial onion back further, it seems that the Supreme Court has been sending a larger message to the Courts and the profession. Summary Judgment and contract interpretation are not obscure legal areas which scarcely come before the Courts. In fact, they represent some of the more common fields which Judges find themselves. Both Hryniak and Sattva represent a tonal shift in Canadian legal practice in which trial judges ought to be given more latitude upon review of their decisions. Indeed, the SCC appears to be discouraging parties from even pursuing such appeals, except in the clearest of cases. Naturally, two decisions are hardly indicative of a streak, but time will tell if the SCC continues down this welcome path of deference.