I am Terribly Vexed – Vexatious Litigants in Penney v. Newfoundland and Labrador, 2020 NLSC 46

Joe Thorne and Kara Harrington

Vexatious litigants are a category of persons who misuse the court process through repeated improper, abusive, and/or meritless proceedings. Vexatious litigants may take many forms, but ultimately they are a drain on the resources of courts and defendants.

Unlike other provinces such as Ontario, Newfoundland and Labrador does not have legislation for managing vexatious litigants. Nor has Newfoundland and Labrador established any procedure for a litigant who has been ordered to obtain leave of court prior to initiating proceedings to obtain such leave.

On March 9, 2020, Justice Handrigan of the Supreme Court of Newfoundland and Labrador heard an application for leave to initiate a claim. The plaintiff bringing the application, Shawn Penney, had previously been ordered by the Court to obtain leave prior to initiating any new claim.

Mr. Penney, like many vexatious litigants in Canada and the United States, was described by the defendants as an “Organized Pseudolegal Commercial Argument Litigant”, or OPCA. OPCAs are, in general, a category of litigants that refuse to acknowledge established law. Rather, OPCAs rely on what has been described as “pseudolaw” – a form of argument that on its face appears to have some basis in law, but in reality is disconnected from existing law.

OPCAs have been described as:

…largely contained in communities that are in conflict with or hostile to government and corporate authority. These groups typically hold profoundly conspiratorial beliefs concerning the nature and illegitimacy of “conventional” authorities, and are clearly attracted to the idea of another “true” hidden law that can be accessed to escape from or retaliate against those who are perceived as enemies or wrongdoers.¹

In his March 13, 2020 decision on the application, Justice Handrigan reiterated the Court’s inherent jurisdiction to manage its own process, including the inherent authority to require a litigant to obtain leave to start new proceedings and to set the process for obtaining such leave.

Background

In February 2019, Justice Faour of the Supreme Court of Newfoundland and Labrador ordered that Mr. Penney was not permitted to commence or continue any further proceedings in the Supreme Court without first obtaining leave of a Justice of the Court. By the time of Justice Faour’s order, Mr. Penney had commenced 6 proceedings using OPCA language seeking various forms of relief against the government, all of which had been dismissed.

In April 2019, Mr. Penney disobeyed Justice Faour’s order by filing a new Statement of Claim without obtaining leave. Mr. Penney’s claim was against the Governments of Newfoundland and Labrador and Canada for “negligence and vicarious liability” and asked for, among other things, $50,000,000.00 in general damages, $10,000,000.00 in punitive damages, and:

a declaration that the defendants are in breach of its/their international obligations and duties and that, the defendants lack of supervision permitted discrimination, bullying and harassment and thus abrogate, abridge or infringed upon Human Rights of plaintiff during its (crown) interaction with plaintiff in his (plaintiff) civil, political, economical, social and cultural institutional rights and freedoms custom to rule of law.²

Based on Mr. Penney’s failure to seek the required leave of Court, the Court, on its own motion, stayed the proceedings without prejudice to Mr. Penney’s ability to seek leave in the future.

In May 2019, Mr. Penney filed an ex parte application seeking leave of the Court to proceed. In August 2019, upon the Court’s instruction, Mr. Penney served the application for leave to proceed on both defendants.

The Decision

Guided by Ontario’s legislation and case law from that province, Justice Handrigan denied Mr. Penney’s application.

Justice Handrigan reached this conclusion by analyzing Mr. Penney’s application through the lens of Section 140 of the Ontario Courts of Justice Act.³ That section addresses vexatious proceedings and sets out the factors Ontario courts consider to determine whether to grant leave in such proceedings. Those factors include, that “leave shall be granted only if the court is satisfied that the proceeding sought to be instituted or continued is not an abuse of process and there are reasonable grounds for proceeding.”⁴

The test for whether to grant leave pursuant to s. 140 was explained by Justice Favreau in Olumide v. Thompson Reuters, 2019 ONSC 997:

The test is not merely whether the applicant has conceptually an arguable case. The applicant must proffer evidence and not mere allegations to support the proposition that there is an evidentiary basis for the relief claimed in the proposed proceeding.⁵

Justice Handrigan noted that Newfoundland and Labrador does not have similar legislation, but that the Court has inherent jurisdiction to dispose of matters that come before it (unless the Court is specifically forbidden from considering such a matter). This inherent jurisdiction includes the jurisdiction to require vexatious litigants to obtain leave of court to start or continue proceedings, and to hear those applications for leave.

Noting Justice Favreau’s finding that the history of a vexatious litigant is relevant to determining whether to grant leave, Justice Handrigan explained that Mr. Penney had a history of similar actions, including many related proceedings Mr. Penney had commenced over the past two and a half years.

Regarding the proceeding at issue, Justice Handrigan explained that the claim, “lacks logic, it is rambling and incoherent and it does not state any cause of action known to law.”⁶

Applying the test from Olumide, Justice Handrigan found that it was conceptually impossible to determine if Mr. Penney had an arguable case. Further, he noted that even a cursory reading of Mr. Penney’s statement of claim revealed that it was scandalous, frivolous, and vexatious.

Accordingly, Justice Handrigan denied Mr. Penney’s application for leave. Justice Handrigan also ordered Mr. Penney to pay $1,000.00 in costs to each defendant, and provided a seven-part set of procedural steps that Mr. Penney is required to follow in order to start or continue any proceeding in the Court in the future:

1. Any application to commence or continue a proceeding shall be in writing.
2. Any application to commence or continue a proceeding shall be accompanied by an affidavit:
   1. attaching a copy of the pleading, motion or process that Shawn Cordale Penney proposes to issue, file or continue;
   2. deposing fully and completely to the facts and circumstances surrounding the proposed claim or proceeding, so as to demonstrate that the proceeding is not an abuse of process, and that there are reasonable grounds for it;
   3. indicating whether Mr. Penney has ever sued any or all of the defendants or respondents previously in any jurisdiction or court, and, if so, providing full particulars;
   4. undertaking that, if leave is granted, the authorized pleading, application or process, the Order granting leave to proceed, and the affidavit in support of the Order will promptly be served on the defendants or respondents; and
   5. undertaking to diligently prosecute the proceeding.
3. The designated judge may, but shall not be obliged to:
   1. give notice of the proposed claim or proceeding and the opportunity to make submissions on the proposed claim or proceeding, if they so choose, to:
      1. the potential parties;
      2. other relevant persons identified by the Court; and
      3. the Attorney-General of Newfoundland and Labrador and/or the Attorney-General of Canada.
   2. respond to and dispose of the leave application in writing; and
   3. hold the application in open Court where it shall be recorded.
4. Leave to commence or continue proceedings may be given on conditions, including the posting of security for costs.
5. An application for leave that is dismissed may not be made again directly, or indirectly.
6. The staff of the Supreme Court of Newfoundland and Labrador at the Registries in all court centres throughout the Province, and for greater certainty, at the Registries in St. John’s, Grand Bank, Gander, Grand Falls-Windsor, Corner Brook and Happy Valley-Goose Bay, shall be advised of these conditions and shall discard any documents or other materials from Mr. Penney, unless they comply with the directions set out above.
7. Any fee waivers granted to Mr. Penney formerly are hereby revoked. Any future fee waiver requests will be considered with any motion for leave that Mr. Penney brings to commence or continue a proceeding.

Impact

Justice Handrigan’s decision confirms the Court’s inherent authority in the absence of clear statutory authority to deal with vexatious litigants. This decision strikes a balance between access to justice and misuse of judicial resources.

The decision confirms that the Court may institute appropriate barriers to such proceedings so that they do not unfairly take up the Court’s, or the defendant’s, time and resources. Justice Handrigan’s seven-part procedure will likely provide guidance on the steps required in future cases.

¹ Organized Pseudolegal Commercial Arguments as Magic and Ceremony, D. Netolitzky, Alberta Law Review (2018), vol 55, no 4, at p 1048.
² Penney v. Newfoundland and Labrador, 2020 NLSC 46 at para 16.
³ RSO 1990, c C-43.
⁴ Penney v. Newfoundland and Labrador, 2020 NLSC 46 at para 5.
⁵ Penney v. Newfoundland and Labrador, 2020 NLSC 46 at para 7.
⁶ Penney v. Newfoundland and Labrador, 2020 NLSC 46 at para 24.

This update is intended for general information only. If you have questions about the above, please contact a member of our Litigation & Alternative Dispute Resolution group.

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