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The Ontario Superior Court building is seen in Toronto on Wednesday, Jan. 29, 2020.Colin Perkel/The Canadian Press

An Ontario justice has thrown out a proposed $200-million class action lawsuit against legal software provider Dye & Durham Ltd. DND-T over price hikes and broken promises by the Toronto software company.

Ontario Superior Court Justice Edward Morgan last month dismissed the action brought by real estate law firms and D&D clients Burford Law Professional Corp. and Tais Davis.

D&D spokesman Wojtek Dabrowski said in an e-mail: “We are pleased with this outcome and glad to put this meritless lawsuit behind us.”

At issue was a pair of price hikes announced by D&D in early 2021 and 2022, and whether a broken price-freeze promise to clients constituted a contractual obligation. D&D itself called the pledge “puffery” in court documents. Justice Morgan in March wrote in a court filing there was no evidence the plaintiffs suffered any loss of business and that if anyone suffered a financial hit, it was their clients, as price hikes are typically passed on to customers.

Justice Morgan wrote at the time a request by the plaintiffs to bring in new expert evidence 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 wrote that their request for a delay was a “gap filling exercise” that “looks to me like a redo of nearly the entire case.”

He ruled the plaintiffs would have to cover some of D&D’s costs, but in last month’s ruling he awarded no costs.

D&D has specialized in buying legal software providers in Canada, then hiking fees. 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 transaction processing software to $129 per file up from $25. DoProcess e-mailed customers to say they would 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. Charney Lawyers, acting for the two plaintiffs, filed the action days later. They 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.”

The company responded the proposed action was “unsuitable for certification” as 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.

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” and said she intended to keep some of the monies recovered in a class action for herself, not give them to clients.

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