Tuesday, April 24, 2007

CONSUMER ALERT! DEMAND LETTERS THREATENING LEGAL ACTION IN ONTARIO!

Over the past six months or so, several of us at the LawLINE have heard from people who have received letters from Ontario lawyers threatening to sue them in the small claims court of Ontario.

Typically, the caller has an outstanding account of a few thousand dollars with a cell phone company or bank. Sometimes the caller has a service dispute with the company, sometimes not. The company then refers the file to an Ontario lawyer to write a “demand letter” that states that unless the caller pays the claimed amount within ten days, he or she may be sued in Ontario Small Claims Court. Just for good measure, the letter attaches an unfiled copy “Plaintiff Claim” for filing in that Court.

Our callers are naturally quite distressed when they call us about these letters. How can they defend themselves in an Ontarian law suit when they live in B.C.? Obviously, that would be wildly impractical! Do they have no practical choice but to try to pay up? That would be very galling, especially when they have a legitimate dispute with the company! Even if they don’t have a service dispute, shouldn’t they have a realistic opportunity to negotiate payments terms?

We tell our callers that, despite appearances, it is very unlikely that they will have to defend themselves in Ontario.

In order for a court in Ontario to have jurisdiction to give judgment on a matter, the case must have some connection to Ontario. In the cases we are seeing the callers are from B.C., the companies are operating in B.C., and the services are provided in B.C. Therefore, in the absence of any contractual term to the contrary, only the courts of B.C. have jurisdiction, in our opinion. So we tell the clients, after checking the terms of their contract, not to worry because it’s very unlikely that the “Plaintiff’s Claim” will be filed because the Ontario lawyers must know that the Ontario courts don’t really have jurisdiction.

We do also tell them to contact us promptly if they receive a filed Plaintiff’s Claim, as they will need to defend the action. (Never, never just ignore court papers not matter how unfounded you think the claim is! That could result in a default order.) But so far, no one has phoned us to say that they have actually been sued in Ontario.

These cases raise an interesting point of ethics. Is it ethical for these lawyers to threaten to file a law suit in a court they know (or ought to know) almost certainly has no jurisdiction to hear the case? Are lawyers allowed to do this?

A formal complaint regarding this tactic has been made to The Law Society of Ontario. We will let you know it goes as soon as we find out.

Stay tuned! The Law Society has promised to get back to us by mid-June.

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