Ontario Government Proposes Significant Amendments to Ontario Class Proceedings Act

On December 9, 2019, the Attorney General of Ontario introduced Bill 161, the Smarter and Stronger Justice Act, 2019 (Bill 161) which, among other things, proposes a number of changes to the Ontario Class Proceedings Act, 1992 (CPA). Bill 161 follows a recent comprehensive review of the CPA by the Law Commission of Ontario (LCO). The proposed amendments adopt many of the incremental changes recommended by the LCO and, in some instances, have taken a bolder approach to reform. For more details on the LCO report please see our July 2019 Blakes Bulletin: Law Commission of Ontario Recommends Broad Reforms for Class Actions.

The key proposed reforms are summarized below. While the amendments do not go as far as many business stakeholders recommended to the LCO, most will provide much needed incremental reform, eliminate some unfairness in the existing legislation and provide mechanisms to reduce parties’ costs and the burden on judicial resources.

NEW CERTIFICATION CRITERIA: PREDOMINANCE AND SUPERIORITY

Predominance

The current test for certification under the CPA requires, among other things, that a class proceeding be the “preferable procedure” for the resolution of the common issues. If Bill 161 is enacted, a class proceeding would be considered preferable only if “the questions of fact or law common to the class members predominate over any questions affecting only individual class members.”

This change goes a step further than the class action statutes of some western Canadian provinces that also direct courts to consider predominance, but do not make the predominance of common issues a mandatory requirement for certification. The enhanced predominance requirement will allow courts to deny certification in cases where there are significant individual issues better litigated without the added expense and judicial burdens of a class proceeding.

Superiority

The second new preferable procedure criterion in Bill 161 would require plaintiffs to establish that a class proceeding is “superior to all reasonably available means of determining the entitlement of the class members to relief or addressing the impugned conduct of the defendant.” Courts will be directed to specifically consider whether a class proceeding is superior to a variety of alternative procedures such as regulatory or other remedial schemes.

The superiority amendment can be expected to supplant case law that interprets the preferable procedure criterion narrowly. This will allow the courts to deny certification where a fair process has already been implemented to resolve claims, through recall or service programs, or through alternative dispute resolution.

EARLY RESOLUTION OF DISPOSITIVE MOTIONS

If enacted, Bill 161 would require that any motion to dispose of the proceeding in whole or in part—including a summary judgment motion—or that will narrow the issues to be determined or evidence to be adduced must be heard and disposed of prior to the certification motion, unless the court orders that the two motions be heard together.

This amendment should underscore that judges can and generally should hear dispositive motions prior to certification. This will allow the parties and courts to address meritless claims more expeditiously and cost-effectively, which should in turn reduce the expense and judicial burden of the class certification motion.

SYMMETRICAL APPEAL RIGHTS

Currently, plaintiffs may appeal a denial of certification to the Divisional Court as of right, whereas defendants require leave to appeal a certification order. The proposed amendments would provide the same appeal rights to defendants and plaintiffs, and the right to appeal a certification decision directly to the Ontario Court of Appeal, eliminating the additional expense and judicial burden of intermediate appeals to the Divisional Court.

Further, unless there are “exceptional or unforeseen circumstances,” the plaintiff would not be permitted to make material amendments to the notice of motion for certification on appeal. Discouraging such amendments should encourage more focused certification motions from the outset, and reduce the potential for costs and judicial time to have been thrown away if the case is reformulated on appeal.

MANAGING MULTI-JURISDICTIONAL CLASS ACTIONS

Bill 161 would implement provisions pertaining to the certification of multi-jurisdictional class actions similar to those already in place in Alberta, Saskatchewan and British Columbia.

These proposed amendments provide expressly that a court can refuse to certify a proceeding that it determines should proceed in another province. If a similar proceeding—including a multi-jurisdictional proceeding—exists in another Canadian jurisdiction, the certification judge will be required to determine whether it would be preferable for the claim to be resolved in the other jurisdiction. The court may also consider this issue on a motion brought by a party in advance of the certification hearing and may, as a result, stay the proceeding.

These changes would likely help to relieve the administrative burdens and costs associated with overlapping and duplicative proceedings, a benefit to all class action litigants.

DISMISSAL FOR DELAY

Bill 161 would allow a defendant to move to dismiss a proposed class proceeding for delay if the plaintiff does not file a “full and complete” certification record within one year of the proceeding being commenced, unless the parties have agreed to or the court has set a timetable for the proceeding, or other steps prescribed by regulation have been taken.

This amendment provides a mechanism to address dormant or unacceptably slow-moving proceedings, which create financial and other burdens. By providing that a timetable may satisfy the deadline requirements, the amendment strikes a balance between ensuring that cases progress and allowing the parties to agree on an appropriate pace.

EXPANDED DISCLOSURE IN SETTLEMENT APPROVALS

The proposed amendments provide specific direction to the court regarding the evidentiary requirements for settlement approval, including “full and frank” disclosure of all material facts. Within 60 days of settlement distribution, the settlement administrator will be required to submit a comprehensive report detailing the administration of the settlement. The court will also be empowered to hold back a portion of plaintiff’s counsel fees until it is “satisfied” with the distribution of the settlement funds.

OTHER INCREMENTAL CHANGES

Bill 161 also contains a number of reforms that will provide clarity and certainty for all class action litigants, including:

1. Codifying rules with respect to third party funding of proposed class proceedings, including that funding agreements must be disclosed to the defendant—with information that could confer a “tactical advantage” redacted—and must be approved by the court.
2. Providing that plaintiffs will bear the costs of providing notice of certification, although they will be reimbursed if the action is successful.
3. Codifying the law with respect to carriage motions adding a requirement that they be brought within 60 days of the first claim being commenced, and having them heard by a judge that will not hear the certification motion.
4. Clarifying that the limitation period suspension that runs in favour of a class member will be lifted—and the limitation period will resume—if the proceeding is not certified, is dismissed or if the class member is otherwise excluded from the proceeding.
5. Providing that a limitation period applicable to a defendant’s potential claim for contribution and indemnity in the proceeding will be suspended from the commencement of the proceeding until the time to appeal a certification decision has expired or the appeal of a certification decision is finally disposed of.

The amendments proposed in Bill 161 are the first significant reforms to the CPA since it was enacted over 25 years ago. For many class action litigants, these changes are long overdue. We expect that the government will be interested in hearing the views of stakeholders on the draft bill as it moves through committee deliberations. We will continue to provide updates as the legislative process unfolds.

For further information, please contact:

Nicole Henderson       416-863-2399

Grace Smith                416-863-3879

or any other member of our Class Actions group.