Written By Cheryl Woodin and Sidney Brejak

Approximately four years have passed since the new amendments to Ontario’s Class Proceedings Act, 1992 came into force. One of the most significant amendments was the addition of subsection 5(1.1) to the preferable procedure criterion set out in section 5(1)(d).

Previously, certification required the plaintiff to provide some basis in fact that the class action is the preferable procedure for resolving the complaint, in that the class action must be: (1) fair, efficient and manageable; and (2) preferable to any other available method of resolution. The amendments added two additional requirements, stipulating that a class action will be deemed preferable for resolving common issues “only if, at a minimum”: (i) the class action is superior to all reasonably available alternative resolution procedures; and (ii) the common issues predominate over individual issues.

While many legal scholars have opined on the potential legal and practical impacts of the amendments,¹ and while the courts have offered obiter commentary that the amendments may only reflect the current jurisprudence², and alternatively that they reflect a material change in the law³, until recently, there was little judicial analysis.

This changed when Justice Perell, one of Canada’s most distinguished class action judges, rendered his decision in Banman v Ontario on October 31, 2023.

In Banman, the plaintiffs sought to certify a class action against the Ontario Government and the Attorney General on behalf of 429 patients treated in the forensic psychiatric unit of the St. Thomas Psychiatric Hospital between 1976 and 1992. Allegations included breach of fiduciary duty, negligence, vicarious liability, breach of non-delegable duty and breach of sections 7, 9, 12, 15, and 28 of the Canadian Charter of Rights and Freedoms. The defendants opposed certification, contending that the individual issues would predominate over the common issues, and that a joinder action would be superior to the proposed class proceeding.

Justice Perell dismissed the action against the Attorney General but certified the action against the Ontario Government, finding that the plaintiffs satisfied the certification criteria, except for certain Charter claims and several common issues regarding causation and damages.

A Stricter Certification Test

In assessing the effect of the amendments on the preferability analysis, Justice Perell looked to the language of the amendments and the legislative history and concluded that the purpose of the amendments “was to raise the threshold, heighten the barrier, or make more rigorous the challenge of satisfying the preferable procedure criterion.” Accordingly, the proposed class action “must” be superlative to any alternatives, and the common issues “must” also predominate, as a whole, over individual issues.

Justice Perell next considered the stringency of the amended preferability requirement. He concluded that the new analysis involves determining: (1) the manageability of the class action; (2) whether there are reasonable alternatives; (3) whether the common issues predominate over the individual issues; and (4) whether the proposed class action is superior to the alternatives.

This analysis is to be conducted by comparing the advantages and disadvantages of the alternatives to the proposed class action through the lens of judicial economy, behaviour modification, and access to justice—though access to justice should always be the primary lens through which preferability is assessed. A class action will not be preferable if, at the end of the day, claimants remain faced with the same economic and practical hurdles that they faced at the outset of the proposed class action.

Predominance

Justice Perell concluded that the purpose of determining whether the common issues predominate over the individual issues is to ensure that the common issues—taken together—advance the objective of judicial economy and sufficiently advance the claims of the class members to achieve access to justice. The commonly used “football game” metaphor—that a common issue must just move the yardstick—is no longer applicable under the new more rigorous preferability analysis.

In determining whether the common issues, taken together, predominated over the individual issues in Banman, Justice Perell considered the broad monetary range of the patients’ claims. He found that, as individuals, many of the patients had nominal claims which could not justify the costs of individual litigation. While a number of patients could have multi-million-dollar claims that would be worthy of pursuing individually, he held that the benefit to class members who had nominal claims was sufficient for the common issues to predominate, as the class action would be the only way to achieve access to justice for those patients.

Superiority

In assessing whether the proposed class action was superior to alternatives, Justice Perell concluded that the alternatives would be uneconomic, lengthy and expensive. He found the case of Barker v Barker (a proposed institutional abuse class action that was converted into a joinder action lasting 23 years and marred by delay, excessive cost and other difficulties) instructive and exemplified the significant financial expense and unmanageability of prosecuting individual institutional abuse or malfeasance actions. In the case before him, Justice Perell noted that individual actions would require vulnerable, marginalized and elderly patients to go through protracted discoveries, all for the prospect of recovering nominal damages.

Justice Perell also reminded the defendants that they would benefit from the economics of defending a single action, which would discharge the defendants from liability for all class members if the action were to settle.

Grozelle v Corby Spirit and Wine Limited, 2023 ONSC 7212

In the 2023 case of Grozelle v Corby Spirit and Wine Limited (Grozelle), Justice Akbarali cited Banman with approval in a contested certification motion, affirming the impact of the amendments as imposing a stricter, more rigorous certification test.

The plaintiffs in Grozelle alleged that the defendant was liable for damages caused to their properties which they claimed occurred as a result of a fungus stemming from emissions of whisky aging warehouses. The plaintiffs claimed negligence and negligent misrepresentation.

In contrast to Banman, Justice Akbarali determined that a class action was not the preferable procedure because the individual issues overwhelmed the common issues—both in quantity and in the scope of evidence required for plaintiffs to demonstrate damages, and potentially also the elements to make out a claim for negligent misrepresentation—and that individual issues trials would place the same burdens on class members as if they would have initially pursued individual actions.

Looking Forward

Banman and Grozelle provide early insights into the application of the new preferability analysis, offering guidance for class action practitioners in Ontario. We are on notice that:

• the preferability criterion is now a more onerous hurdle for plaintiffs;
• access to justice is the primary consideration when assessing preferability;
• to satisfy the predominance requirement, common issues—taken together—must predominate over the individual issues; and
• economic feasibility and efficiency are considerations in determining whether a class proceeding is superior to reasonable alternatives.

Though it may be too early to appreciate the full effect of the amendments on future class actions, Banman and Grozelle confirm that the preferability criterion is to be understood as a more onerous hurdle for plaintiffs as compared to what was required under the old statute. However, it remains to be seen how courts will continue to interpret and apply the new preferability analysis in other factual contexts and as other adequate alternatives are considered.

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