Merchant to appeal costs against him

Saskatchewan class action lawyer Tony Merchant says he’ll be appealing a B.C. Supreme Court ruling that leaves him on the hook for costs and a dismissed class action over the propriety of phone companies’ system-access fees for cellular service.

In Drover v. BCE Inc., Justice Gordon Weatherill took issue with the fact Merchant’s firm, the Merchant Law Group LLP, attempted in 2004 to serve the writ of summons and statement of claim by fax. In the meantime, the firm continued to move ahead with a similar class action over system-access fees in Saskatchewan while letting the B.C. matter remain idle until Nov. 9, 2012. The Saskatchewan courts allowed the matter to go ahead on the basis of unjust enrichment only and any B.C. resident can join that case in an opt-in basis. None of the allegations have been proven in court.

The latest B.C. ruling dealt with the plaintiffs’ bid for a declaration that the defendants had been validly served with the writ of summons and statement of claim back in 2004. Alternatively, they sought permission to be able to now serve the statement of claim.

According to Weatherill’s Jan. 14 ruling, plaintiffs’ counsel maintained that service by fax was fine even as at least one of the defendants challenged the firm on that point. As a result, he rejected the application for a declaration of valid service.

“Neither the former nor the current Rules permit service by way of facsimile,” he wrote.

Weatherill went on to deny the plaintiffs’ application for an order permitting them to serve the statement of claim.

“The plaintiffs have provided no evidence to explain the delay or any evidence indicating that the plaintiffs indeed intend to prosecute this action,” he wrote. “It is reasonable to infer that plaintiffs’ counsel abandoned the British Columbia action many years ago.”

In the end, Weatherill found the case to be one of “exceptional circumstances” allowing him to order costs — in this case against Merchant himself — in a class action.

“In my view, this is an exceptional case. The conduct of counsel for the plaintiffs has caused costs to be wasted through delay and neglect. Plaintiffs’ counsel neglected this action for over eight years. When he got around to dealing with it by bringing this application, he failed to set out the proper relief. Furthermore, the application was not supported by any evidence explaining either the delay or the failure to comply with the rules regarding the need for an endorsement and proper service. Moreover, the application was brought against defendants against whom there was no basis for the order(s) sought. To say that this was and has from the outset been a shoddy piece of counsel work would be an understatement.”

For his part, Merchant tells Legal Feeds he’s appealing both the ruling preventing the B.C. class action from going forward and the costs award against him.

“If lawyers are worried about costs being awarded against them, they won’t be as candid with their clients, they may put their own interests ahead of their clients’ interests,” he says, adding that requiring lawyers to defend their conduct in such scenarios “jeopardizes solicitor-client privilege.”

Merchant also notes he wasn’t the lawyer who pressed forward with the arguments about service by fax.

“What’s wrong in the thinking is there’s nothing to indicate that I had anything to do with the delays,” he says, adding it was another lawyer who had argued the court would accept service by fax as far back as 2004. “Obviously, we weren’t correct. I wasn’t doing that in 2004 and that was nine years ago.”

Apart from the costs issue, Merchant is concerned with Weatherill’s finding that it would be an abuse of process to allow the parties to relitigate the same issues in British Columbia after the Saskatchewan matter goes ahead.

“It’s just not right societally,” he says, noting Weatherill’s approach would put a damper on class actions in opt-in jurisdictions since prospective plaintiffs would have to both know about and choose to participate in a matter elsewhere in order to have a chance at redressing an alleged wrong since the court may not allow the case to go ahead in their home province.

As a result, Merchant says he’ll be pressing ahead with the class action both in British Columbia and across Canada. It’s an issue, he adds, that affects millions of people given the widespread use of system-access fees by cellphone companies.

“There are a lot of important principles in play in this class action,” he says.

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