Plaintiffs in a proposed $200-million class-action lawsuit against Dye & Durham Ltd.
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will get stuck paying some of the software company’s legal bills after an Ontario Superior Court Justice called their request for a delay a “gap-filling exercise” that “looks to me like a redo of nearly the entire case.”
At issue in the action is a pair of price hikes announced by D&D in early 2021 and 2022, and whether its broken price freeze promise to clients constituted a contractual obligation. D&D has itself called the pledge “puffery” in court documents. Justice Edward Morgan must determine if there are real damages at play, and whether the plaintiffs suffered losses before certifying the suit as a class action.
Justice Morgan expressed skepticism about the case, filed in early 2022, in a motion adjournment filed late Friday. He wrote “there is no real evidence” the lead plaintiffs, two Ontario real estate law practices, suffered any loss of business and said if anyone suffered a financial hit it “seemed to be the class members’ clients rather than the class members themselves,” as price hikes are typically passed on by law firms to customers. “This focus suggested that there may be a question of whether the actual class members have a sufficient stake in the litigation at all.”
He granted a request by the plaintiffs’ legal team, led by Ted Charney, to adjourn the class-action certification hearing until October. The plaintiffs had asked for time to bring new expert evidence on the real estate legal market and of business losses experienced by D&D’s clients.
But Justice Morgan wrote that would result in “a fundamental reconceptualization of the claim,” meaning D&D has “gone to all of the trouble of defending a case that is no longer the real case they will have to meet.” He asked D&D to submit a bill for “costs thrown away.” He will rule on submissions by both sides, then determine what the plaintiffs must pay.
D&D spokesman Wojtek Dabrowski said the company has spent “well over $300,00 already” on the case “and we hope to recover a substantial portion of that. This lawsuit is without merit and we plan to continue to defend ourselves.”
D&D has specialized in snapping up legal software providers in Canada, then hiking fees with little warning. In January 2021, one month after buying DoProcess LP, Canada’s largest provider of real estate practice management software, D&D increased the fee for using its conveyancing software. Customers were told they would be charged $129 per file for using the market-leading software to process real estate transactions, up from $25. DoProcess also told customers by e-mail “in recognition of your loyalty, current customers will receive a minimum three-year price guarantee on purchase, sale and mortgage files, ensuring no further price increases in the foreseeable future.”
But one year later D&D raised the fee again to $249, after buying Telus Corp.’s financial solutions business and wrapping one of its newly acquired software offerings into its conveyancing platform free. Charney Lawyers, acting for D&D clients Burford Law of Napanee, Ont., and Toronto sole practitioner Tais Davis, filed a notice of action within days.
In their statement of claim, the plaintiffs accused D&D and DoProcess of breach of contract, breach of “the duty of honesty, good faith and fair dealing,” and violating sections of the competition act, saying “the defendants reneged on their promise.”
But in a responding factum filed with the court by D&D’s law firm Groia & Co., the company argued the class action was “unsuitable for certification.” Among its arguments: The price freeze was “a gratuitous promise,” not a contract, and “did not give rise to unilateral legal obligations” for the defendants.” It was also “true at the time” it was communicated by D&D.
The factum also quoted pleadings and testimony by the plaintiffs that did their case no favours. D&D said both lead plaintiffs had agreed to its terms and conditions which stated fees “are subject to change from time to time at our discretion;” both admitted during cross-examinations they had accepted them without reading the fine print. Ms. Davis also stated during cross-examination she “assumed honestly” the price freeze pledge “was just marketing.” Ms. Davis said during cross-examination she intended to keep some of the monies recovered in a class action for herself, instead of giving them to clients.
D&D lawyer Joe Groia said in an interview the class action would deliver “a windfall” to “a bunch of lawyers in a circumstance where they’ve suffered virtually no loss.”
Ms. Davis, Mr. Charney and Jillian Burford-Grinnell of Burford Law declined to comment.