On December 9, 2019, Ontario’s Attorney General announced wide-ranging reforms to key parts of the Class Proceedings Act (CPA) as part of a collection of civil justice reforms in Bill 161, the Smarter and Stronger Justice Act, 2019. Bill 161 is omnibus legislation that will amend or enact 20 pieces of legislation, including the CPA. The CPA amendments are the first major changes to the Act since it was enacted more than 25 years ago.
Most of the amendments to the CPA reflect the Law Commission of Ontario’s proposals following its comprehensive review of the Act released in July of this year (see Torys’ coverage of the LCO’s report here). However, some of the proposed amendments, such as changes to the certification test, were specifically considered and rejected by the LCO. It will take time for litigants to feel the full impact of the changes; the Bill has just been introduced for first reading and must work its way through the legislative process over the coming months. Most of the changes will apply only to cases commenced after the amendments are brought into force (with one notable exception relating to the dismissal of dormant proceedings).
Many of the amendments will be beneficial to defendants and potential defendants. Other amendments, although not directly applicable to defendants, have the effect of restricting the options available to plaintiff counsel and thus of streamlining and potentially expediting the class proceedings process.
What you need to know
- Bill 161 proposes changes to numerous aspects of class action practice and procedure in Ontario, including:
- providing a mechanism to dismiss dormant proceedings;
- revising the test for whether a class proceeding is the “preferable procedure”; and
- requiring the court to consider the existence of class actions in other provinces when deciding whether to certify a proceeding.
- The Bill also proposes procedural changes including to the timing of summary judgment motions, appeal routes, carriage motions, collection of data on class actions, costs of certification notices, and the approval of settlements and third-party funding arrangements.
- Aside from the dismissal for delay provisions, these amendments will apply only to proceedings filed after the legislation comes into force.
Dismissal for delay
The ability to bring a motion to dismiss a “dormant” class proceeding is a significant change, designed to expedite proceedings. Parties will have one year to complete at least one of the following steps, otherwise, a court will be required to dismiss the proceeding following a motion. Steps include:
- the representative plaintiff files “a final and complete” motion record for the certification motion;
- the parties agree to a timetable for service of the motion record or for other steps required to advance the proceeding, and file that timetable with the court;
- the court orders the proceeding not be dismissed, and establishes a timetable; or
- any other steps required by regulation have taken place.
The dismissal provisions will apply to current proceedings as well as new proceedings. For existing proceedings, the one-year period by which a motion record must be filed, or a timetable agreed to or imposed, will run from the date the amendments become law.
New test for “preferable procedure”
In a potentially major change, Bill 161 provides that a class proceeding is the preferable procedure “only if, at a minimum” it is superior to all reasonably available means of determining the entitlement of the class to relief, and common questions of law or fact predominate over individual issues. This amendment runs contrary to the recommendations of the LCO, and substantially alters the preferable procedure test as most recently interpreted by the Supreme Court of Canada in AIC Limited v. Fischer,1 which set out a five-factor test for preferability.
The superiority and predominance requirements in Bill 161 both appear in Rule 23(b)(3) of the United States Federal Rules of Civil Procedure, which may indicate that the government wishes to align class action law in Ontario more closely with that of the United States (where it can be harder for plaintiffs to obtain certification). Whether this will be the result remains to be seen; the class proceedings legislation in other provinces, such as British Columbia and Alberta, currently requires that courts consider the “predominance” of common issues over individual ones when considering preferable procedure.2
Mandatory consideration of multi-jurisdictional actions in other provinces
Multi-jurisdictional class proceedings—brought on behalf of residents of two or more provinces or territories involving the same or similar subject matter—have increased in prevalence in recent years. Unlike the multi-district litigation system that allows courts in the United States to manage multiple class actions related to the same subject matter, Canada’s constitutional structure affords fewer options for coordinating overlapping claims in different provinces when local class counsel do not cooperate in advancing those actions.
In 2005, the Uniform Law Conference of Canada recommended legislative changes to allow courts to deal with multiple “multi-jurisdictional” class actions. Legislatures in Alberta, British Columbia, and Saskatchewan have enacted the suggested provisions over the past decade. Though Bill 161 would implement similar provisions in the CPA, an important distinction from legislation in other provinces is that the amendments cover not only multi-jurisdictional class proceedings, but also other situations involving multiple parallel class actions, and allow for earlier resolution of which proceeding will be moving forward.
The amendments apply where a class proceeding (including a multi-jurisdictional class proceeding) involving the same or similar subject matter has been commenced outside Ontario. In that case, the court will be required to consider whether it would be preferable for some (or all) of the claims of the class members in the Ontario proceeding to be resolved in the other jurisdiction. The legislation provides certain objectives and factors for the court to consider in making that determination.
Notably, Bill 161 provides that a party or class member may bring a motion prior to certification to determine whether an extra-provincial proceeding should be preferred to an Ontario one. This appears contrary to the approach in some other provinces, where courts of appeal have indicated that the preferable time to make this determination is at the hearing of the certification motion.3
Other procedural changes
Motions before certification
Bill 161 provides for greater use of preliminary motions prior to certification whether they be summary judgment, or any other motion that “may dispose of the proceeding in whole or in part,” or may narrow the issues to be determined or the evidence required in the proceeding.
Appeal routes and related amendments
Currently, defendants must obtain leave to appeal a certification decision to the Divisional Court, whereas plaintiffs have an automatic right of appeal if certification is denied. This difference is to be abolished. Bill 161 provides that all parties will have a right of appeal from a certification decision directly to the Court of Appeal. Additionally, plaintiffs appealing a refusal to certify a proceeding will be restricted in their ability to amend their notice of motion, pleadings, or notice of application, unless there are “exceptional or unforeseen circumstances.”
Other amendments to the CPA will help to both coordinate cases across jurisdictions and evaluate the effectiveness of class proceedings. Plaintiffs will be required to register class proceedings in accordance with regulations to be published in the future and give notice of the proceeding to representative plaintiffs in similar cases in other jurisdictions. Those charged with administering settlements and distributing awards made to class members will be required to file reports with the court containing information about the case, including the amount of any award, the number of class members, how many class members opted out, distributions made to class members, administrative costs and counsel fees and disbursements.
Once amended, the CPA will give courts specific powers on carriage motions, which occur when two or more representative plaintiffs commence claims related to the same subject matter. Carriage motions will have to be made no later than 60 days after the first proceeding was commenced and be heard as soon as possible afterward. The carriage decision will be final and not subject to appeal. The amendments identify a number of factors for the court to consider on such motions, eliminate appeals from carriage motions and provide that class counsel may not seek to recover the costs of the carriage motion either from the class or defendants. The amendments will bar the commencement of similar proposed class proceedings in Ontario more than 60 days after the first proposed class proceeding has been commenced.
The amendments provide specific direction to courts in approving settlements. The party seeking approval will be required to make full disclosure of all material facts, and file an affidavit providing information on, among other things, the method used for valuing the settlement, the plan for allocating and distributing settlement funds, whether there have been any objections, the anticipated number of class members who are expected to make a claim under the settlement, and evidence as to how the settlement is fair, reasonable and in the best interests of the class.
Costs of certification notices
Presently there is uncertainty as to which party is responsible for the cost of certification notice programs. Bill 161 clarifies this issue and provides that plaintiffs shall initially bear these costs, which they may in turn seek to recover from the defendants only at the end of the proceeding and “in the event of success in the class proceeding.”
Third party funding arrangements
Bill 161 allows for third party funding agreements in class proceedings. Those agreements will now explicitly be subject to court approval and will not be enforceable unless approved. A motion for approval, on notice to defendants, must be made as soon as practicable after the agreement is entered into, and a copy of the agreement must be provided to the defendants (though certain information may be redacted).
1 2013 SCC 69.
2 See British Columbia’s Class Proceedings Act, R.S.B.C. 1996, c. 50, s. 4(2)(a), and Alberta’s Class Proceedings Act, S.A. 2003, c. C-16.5, s. 5(2)(a).
3 See, e.g. Fantov v. Canada Bread Company, Limited, 2019 BCCA 447.
To discuss these issues, please contact the author(s).
This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.
For permission to republish this or any other publication, contact Janelle Weed.
© 2020 by Torys LLP.
All rights reserved.