Quebec Government Launches a Public Consultation on the Reform of Class Action Proceedings

On June 1, 2021, Quebec's Minister of Justice and Attorney General, Simon Jolin-Barrette, announced the launch of a public consultation on the prospects of class action reform in Quebec. This consultation follows a report (available in French only) (Report) published in September 2019 by the Université de Montréal's Class Action Laboratory, whose work was funded by Quebec's Ministry of Justice. The Report calls for, among other things, a review of the prior authorization stage of class actions and recommends active and proactive case management measures to reduce applicable costs and delays.

PROPOSED AVENUES FOR REFORM

Following the findings of the Report, a consultation paper available (in French only) on Justice Québec's website proposes eight avenues for reform that can be grouped into four categories.

1. Eliminating the Prior Authorization Stage of a Class Action and Integrating it into the Main Proceedings

In a class action in Quebec, a plaintiff seeks to represent a large group of people without having a mandate from them. The class action is therefore subject to a prior authorization process to ensure that the court is satisfied that (i) the plaintiff has an arguable cause of action; (ii) the class members' actions raise one or more identical, similar or related issues; (iii) it is not reasonably possible for the plaintiff to obtain a mandate from the class members; and (iv) the plaintiff can adequately represent them. This process is also an essential screening mechanism to prevent companies doing business in Quebec from being subjected to abusive or baseless class actions.

One of the avenues of reform under consideration is to eliminate the prior authorization stage of a class action by integrating it to the main proceedings. While the proposal in this regard is less radical than the Report's proposal to eliminate this stage altogether, it remains nonetheless one of the most significant recommendations of concern for companies doing business in Quebec. Under this model, a class action would begin with filing an originating application without prior authorization. Proceedings would then be stayed to allow the defendant to respond and raise preliminary exceptions to dismiss. A judgment would be rendered on both the authorization of the class action and the exceptions to dismiss, and the parties would then commence proceedings on the merits.

Another important aspect of the proposed reform is that the analysis of the suitability of the representative would be subject to an inquisitorial process. The judge hearing the application would meet with the proposed representative without the defendant present to determine whether the representative is in a position to properly represent the class members for whom the representative has not been appointed.

2. Changes in Authorization Criteria

Another avenue of reform being considered is the elimination of the colour of right test, which requires the court to ensure that the plaintiff raises an arguable cause of action before authorizing a class action. This is the test most frequently invoked by the Superior Court to refuse the authorization of a class action. Under the proposed reform, a defendant could instead, following commencement of the action, establish one or more preliminary exceptions to dismiss if the defendant believes the action is without merit. The criteria for authorizing a class action would therefore be limited to whether (i) the class members' claims raise one or more identical, similar or related issues; (ii) it would be difficult or impractical for the plaintiff to obtain a mandate from the class members; and (iii) the plaintiff is in a position to properly represent them.

One avenue being considered would be to add a proportionality or preferability test for authorizing a class action, or to codify a principle of proportionality applicable to all stages of a class action. The addition of such a test is advisable to the extent that, beyond the mechanical application of the authorization criteria described above, it would allow the court to prevent the long, complex and costly mechanism of a class action from being triggered when it proves to be disproportionate or inappropriate in the circumstances. This would include situations where a company has already put in place a compensation process that the court believes is adequate, for example, through simplified claims refunds, product recalls or free repairs, depending on the circumstances. A similar standard already exists in other Canadian provinces and it is advisable that the legal environment in which businesses operate across the country be as predictable and consistent as possible.

3. Proactive Case Management

To reduce the costs and delays associated with a class action, Quebec's Minister of Justice is considering various measures to encourage parties and courts to actively manage cases:

• Adopting tight deadlines to ensure that the hearing of the application for authorization is held within one year of filing

• Reducing the number of intervenors for trial readiness; encouraging judges to exercise their discretionary powers proactively

• Maintaining restrictions on the evidence that a defendant may submit at the authorization stage

These measures are already widely applied in practice and care must be taken not to further restrict the rights of defendants, who already struggle to assert their rights at the authorization stage.

4. Assessment and Approval of the Plaintiff's Legal Fees

When a class action is concluded, following a final judgment or a settlement, an amount typically representing 33 per cent or more of the total amounts payable to class members will be deducted to pay the plaintiff's legal fees, subject to the court's approval. The payment of such fees is sometimes severely criticized by class members who see their recoveries reduced significantly when, depending on the circumstances, they feel that the case does not justify it. One of the avenues of reform being considered is to establish a more systematic approach for assessing the reasonableness of the fees paid to the plaintiff's lawyers and to redefine the criteria for their approval so that they take into account not only the risks assumed, but also the hours actually worked, and the results achieved. Consideration is also being given to the appointment of an independent "friend of the court" to provide an opinion on a settlement agreement submitted for the court's approval and on the fees claimed by the plaintiff's lawyers.

Interested persons are invited to provide comments or suggestions on the proposed avenues for reform through submissions, by July 31, 2021, at sma.smaj@justice.gouv.qc.ca.

For further information, please contact:

Robert Torralbo                       514-982-4014
Claude Marseille, Ad. E.         514-982-5089
Francis Rouleau                      514-982-4016
Simon Seida                             514-982-4103
Ariane Bisaillon                       514-982-4137

or any other member of our Class Actions group.