Blakes Guide to Litigation and Dispute Resolution in Canada

1. Class Actions

Class actions are proceedings brought by a representative plaintiff on behalf of, or for the benefit of, a class of persons having claims with common issues. The purpose of a class action is to efficiently address cases of alleged mass wrong and to improve access to justice for those whose claims may not otherwise be pursued. Formal class action legislation is currently in force in all ten provinces. The Federal Court Rules also allow class actions for cases under the Federal Court’s jurisdiction. The Supreme Court of Canada has held that class actions can also be commenced in the absence of formal legislation.

1.1 Certification and Decertification

Class proceedings legislation anticipates that a class action will be commenced in the same manner as an ordinary lawsuit.

In most provinces, the plaintiff is required to bring a motion to allow the action to proceed as a class proceeding after the action is commenced. Until the court certifies the action, the representative plaintiff cannot proceed on behalf of the class. In Quebec, the plaintiff is required to bring an application for authorization to institute a class proceeding and to act as class representative before the action is commenced by way of an application to institute proceedings.

The certification motion occurs before a judge. In the common law provinces, the requirements for certification of a class proceeding are similar and generally include the following:

The pleading must disclose a cause of action.
There must be an identifiable class of two or more persons.
The claims of the class members must raise issues against the defendants that are common to all class members.
The class proceeding must be the preferable procedure for the fair and efficient resolution of the common issues.
There must be a representative plaintiff who can fairly and adequately represent the interests of the class, who has produced a plan to advance the proceeding on behalf of the class and who does not have a conflicting interest with other class members.

Quebec has somewhat similar criteria for authorization (certification). Historically, Quebec was thought to have the lowest threshold for class authorization because, unlike legislation in the common law provinces, the CCP does not include “preferability” as a requirement.

Notice of the certification order must be given to all potential class members and a time period is established to allow people to opt in or out of the proceeding. The method of providing notice to the class members is largely dependent on the size and nature of the class and can range from notice by mail or email to known class members to mass media and online publication.

A court may order the decertification of a class proceeding if new information arises or events occur, such that the conditions for certification are no longer satisfied. If a class proceeding is decertified, the action may continue as one or more proceedings between the named parties.

1.2 Class Membership Requirements

The Canadian provinces differ in their requirements for participation in a class proceeding. British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Nova Scotia have “opt out” regimes, regardless of residency, whereby all class members who do not wish to be members of the certified proceeding must take active steps to opt out, or they will remain members of the class and be bound by a judgment or settlement of common issues.

New Brunswick and Newfoundland and Labrador have separate regimes for resident and non-resident class members. In those provinces, resident class members are given an opportunity to opt out. However, class members residing outside the province must opt in to the class proceeding by taking an affirmative step, as set out in the certification order, if they wish to participate in and be bound by the class action.

The Supreme Court of Canada has not yet rendered a specific ruling on whether a provincial court can certify, constitutionally or otherwise, a “national class” with members in more than one province or territory, nor has it ruled on whether an order in a national class proceeding will be enforceable against non-residents. However, courts in several common law provinces routinely certify national classes, in some cases resulting to multiple, overlapping class actions commenced in different provinces.

While most provinces have no formal procedure for coordination of contested class actions commenced in different provinces regarding the same subject matter, some provinces have issued practice directions adopting a protocol for the coordination of settlement hearings in class actions. In British Columbia, when there are multiple actions proposed or commenced in different provinces regarding the same subject matter, legislation requires the court to determine which province the action should proceed in at the certification stage. In response, the court may allow certification in British Columbia, deny certification in British Columbia in favour of certification in another province or refuse certification for a portion of the proposed class who may be certified as class members in a proceeding in another province. In 2020, Ontario passed amendments to its class proceedings legislation that imposes a similar procedure as British Columbia described above.

Quebec courts have, for the most part, resisted the urge to certify national classes. Where national classes are certified, Quebec courts have generally required class members to be residents of Quebec or have a claim that has some connection to the province under the rules of private international law.

1.3 Conduct of Class Action Proceedings

Once the action is certified, it will proceed through the normal discovery process on the common issues. The defendant has a right to examine for discovery the representative plaintiff(s) in the action. With leave of the court, the defendant may also discover other class members.

Generally, the judge who makes the certification order will hear all of the motions in the class proceeding up to the trial of the common issues. Depending on the province, that same judge may also hear the common issues trial.

The resolution of the issues in a class proceeding may require more than one trial. The first trial will resolve the issues certified as common to the class and may include a ruling on the entitlement to and quantum of aggregate damages. Judgment on the common issues is binding on all class members who have not opted out of the proceeding. Further, all court-approved consent resolutions, such as settlement or dismissal, are binding on all class members.

Once the common issues have been determined, there may be a need for further assessment of individual claims. If there is an aggregate award in favour of the class, a method must be established, through consultation between the court and counsel, to distribute the award to the class members. If individual issues remain to be determined after the court has adjudicated the common issues, then a procedure must be established to assess those claims. The court has broad discretion to establish a method to assess individual claims. Methods for assessing claims range from relying on filed proofs of claim to ordering complete trials on individual issues. Any assessment method chosen by the court will include consideration of the facts of each case, the amount of damages and the nature and extent of the outstanding issues.

1.4 Appeals

In the common law provinces, there is a right of appeal from any order refusing to certify or decertify a proceeding. In some provinces, an order certifying a class proceeding may only be appealed with leave of the court. In Quebec, there is a right of appeal from an order refusing to authorize a class proceeding, but leave to appeal is required for an order authorizing a class proceeding, and it is reserved for exceptional cases.

There is a right of appeal in all provinces from a judgment on the common issues. In addition, appeals as of right are normally available from orders that determine individual issues.

If a representative plaintiff fails to bring an appeal from a certification hearing order or judgment on common issues within the requisite time limits, or if a plaintiff abandons an appeal, any other class member may pursue the appeal with leave of the court.

1.5 Awards, Costs, Funding and Counsel Fees

Canadian jurisdictions differ on the matter of costs. In Ontario and Alberta, for example, costs may be awarded against the losing party in a class proceeding in the same manner as in any other action. In British Columbia and Newfoundland and Labrador, however, costs are rarely awarded in a class proceeding, although courts do have discretion to award costs where the conduct of one of the parties is found to be vexatious, frivolous or abusive, or where improper or unnecessary steps have been taken.

The representative plaintiff is required to retain a lawyer to act on behalf of the entire class for the determination of the common issues. Contingency fees are permitted in all provinces. The agreement respecting counsel fees and disbursements must (1) be in writing, (2) state the terms under which the fees and disbursements are to be paid, (3) give an estimate of the expected fee, (4) state whether that fee is contingent on success, and (5) set out the method by which payment is to be made. In most provinces, the agreement respecting fees and disbursements between a lawyer and the representative plaintiff is not enforceable, unless it is approved by the court on the application of the lawyer. Amounts owing under an enforceable agreement are a first charge on any settlement funds or monetary award.

In some jurisdictions, the representative plaintiff may obtain funding for legal costs from publicly endowed funds.

In some jurisdictions, the representative plaintiff may obtain funding from a third party for legal costs.