P.E.I. Adopts Ontario Class Action Model in New Legislation

In November 2021, the Prince Edward Island Legislature passed a bill to introduce the province’s first Class Proceedings Act (PEI CPA), making it the final province in Canada to introduce class proceedings legislation. Bill no. 36 received royal assent on November 17, 2021, and is expected to be proclaimed in force sometime in 2022.

Prior to the PEI CPA, P.E.I. was the only Canadian province without a legislative framework for the certification of class proceedings. Class certification was decided based on common-law principles established by the Supreme Court of Canada in Dutton v. Western Canadian Shopping Centers, 2001 SCC 46. In the province’s only certified class action decision, King & Dawson v Government of P.E.I., 2020 PECA 13, the P.E.I. Court of Appeal called for a “modern comprehensive legislative scheme” that can provide access to justice for individuals who might benefit from class proceedings.

P.E.I.’s new legislation represents an attempt to harmonize P.E.I.’s class actions regime with recent legislative reforms in provinces such as Ontario. Notably, the PEI CPA will include the  predominance and superiority requirements in the criteria for certification found in Ontario’s new Class Proceedings Act, recently amended in 2020 (Ontario CPA).

THE PEI CPA MIRRORS RECENT LEGISLATIVE REFORM IN ONTARIO

A number of key provisions in the PEI CPA will mirror those found in the Ontario CPA, including: the predominance and superiority criteria for certification, early resolution of dispositive motions, managing multi-jurisdictional class proceedings, settlement approvals, mandatory dismissal for delay, symmetrical appeal rights for certification and court approval and disclosure of third-party funding agreements.

Criteria for Certification and the Superiority and Predominance Requirements

In determining whether a class proceeding is the preferable procedure for the resolution of the common issues, the PEI CPA will notably adopt the superiority and predominance criteria from the Ontario CPA. Specifically, the P.E.I. regime will require that the class proceeding be “superior to all reasonably available means of determining the entitlement of the class members to relief or addressing the impugned conduct of the defendant” and that “the questions of fact or law common to the class members predominate over any questions affecting only individual class members.”

The predominance criterion will serve to dissuade certification of class proceedings in P.E.I. where the class members have significant individual issues that would be better litigated separately. This would avoid the expense and judicial burden of adjudicating those issues in a class proceeding that would not significantly advance the litigation.

The superiority criterion recognizes that where a fair process has already been established to resolve claims, courts will not certify a class action. To do so would allow an end run around these processes if a class proceeding is not a superior method of addressing the defendant’s conduct.

Early Resolution of Dispositive Motions

The PEI CPA will require that a motion be heard and disposed of prior to the certification motion, if that motion may dispose of the proceeding, in whole or in part, or narrow the issues to be determined or the evidence to be adduced in the proceeding, unless the court determines that the dispositive motion and the certification motion should be heard together. This provision aligns directly with the Ontario CPA and will allow parties and courts to address unmeritorious claims in an expeditious and cost-effective manner. 

Managing Multi-Jurisdictional Class Actions

The PEI CPA will provide that where a multi-jurisdictional class proceeding has been commenced in another Canadian jurisdiction involving the same or similar subject matter, the court must determine whether it would be preferable for some or all of the claims in the P.E.I. proceeding to be resolved in the other proceeding. This provision will bring the PEI CPA in line with provisions pertaining to the certification of multi-jurisdictional class actions already in place in Ontario, Alberta, Saskatchewan and British Columbia.

Settlement Approvals

As with the Ontario CPA, the PEI CPA will require that a class proceeding only be settled with the approval of the court. Further, the moving party in a motion for approval of a settlement must make “full and frank” disclosure of all material facts. The settlement administrator must also submit a report detailing the administration of the settlement within 60 days of settlement distribution.

Dismissal for Delay

Similar to the Ontario CPA, the PEI CPA will require the court, on motion, to dismiss a class proceeding for delay unless by one-year after the proceeding was commenced:

1. the representative plaintiff has filed a motion record in the certification motion;
2. the parties have agreed in writing to a timetable for the proceeding and have filed the timetable with the court;
3. the court has ordered that the proceeding not be dismissed and has established a timetable for the proceeding; or
4. any other steps prescribed by regulation have taken place.

The provisions on mandatory dismissal for delay will help ensure that judicial resources are not spent on dormant or unacceptably slow-moving proceedings.

Symmetrical Appeal Rights for Certification

Any party may seek leave to appeal a certification order (whether granting or refusing certification) to the PEI Court of Appeal. The symmetrical appeal rights of the defendant and the plaintiff aligns with the Ontario CPA. The Ontario CPA, however, does not require leave for an appeal to the Ontario Court of Appeal.

Third-Party Funding

The PEI CPA adopts the Ontario CPA’s codification of rules with respect to third-party funding of proposed class proceedings. Under the legislation, third-party funding agreements must be disclosed to the defendant, with information that could confer a “tactical advantage” redacted. Such agreements must then be approved by the court. Once approved, if costs are ordered to be paid by the representative plaintiff, the defendant has the right to recover costs directly from the third-party funder up to the indemnity provided under the agreement. The defendant would also be entitled to obtain from the funder security for costs to the extent of the indemnity provided under the agreement.

OTHER FEATURES OF THE PEI CPA

The PEI CPA will also allow for a non-member of a class to serve as the representative plaintiff, but only if it is necessary to avoid a “substantial injustice” to the class. P.E.I. adopted this provision from the model legislation developed by the Uniform Law Conference of Canada. This provision is intended to address the rare circumstance where a suitable or capable representative plaintiff from a member of the class is not available.

KEY TAKEAWAYS

Legislation to govern class proceedings in P.E.I. has been long overdue. The PEI CPA, once in force, will provide class action parties with a comprehensive legislative framework to guide litigants and the courts dealing with class proceedings, having regard for the objectives of class proceedings and fairness to all parties involved therein.

P.E.I.’s adoption of many of the same features as the newly amended Ontario CPA shows the province’s intent to have courts certify cases that are best suited for class proceedings—and to dismiss meritless cases or deny certification where there are significant individual issues or where there are reasonably available alternative procedures. P.E.I.’s decision to incorporate these provisions in its new class proceedings legislation signals that province’s support for the Ontario CPA and may spur other provinces into enacting similar changes.

For more information, please contact:

Jessica Lam                416-863-5847 
Alysha Li                     416-863-2506

or any other members of our Class Actions group.