Canada: Preliminary Motions In Class Proceedings: Certification And Other Contenders

Article by Ian F. Leach¹

I. INTRODUCTION

This paper is intended to compliment that submitted by Ward Branch, and his colleagues at Branch MacMaster (Vancouver), for presentation and discussion at the Canadian Institute's 5th Annual National Forum on "Litigating Class Actions" (2004). It accordingly limits its discussion to developments insofar as they relate to Ontario, and litigation advanced under Ontario's Class Proceedings Act, 1992².

II. COMPETING PRIORITIES: CERTIFICATION FIRST?

Ten years into the life of the CPA, one would think people might at least agree on the general process to be followed in litigating a class proceeding in Ontario. One would be wrong.

As it turns out, plaintiffs and defendants still can not even agree on the first step to be taken in a class proceeding. Plaintiffs insist that certification be dealt with first; everything else can be dealt with later, in the fulness of time. Defendants argue that preliminary motions challenging the claim must be dealt with first, as there may then be nothing left to certify.

And so it goes. The same "chicken and egg" arguments and strategies, action after action, year after year³. Perhaps not surprisingly, this continues because both sides of the debate have merit, and may be stronger or weaker depending on the facts of each case.

The Plaintiff Perspective

For representative plaintiffs and their counsel, the road to a successful class proceeding usually runs entirely uphill. The way is fraught with the risk of unrecovered financial burdens, (in the form of wasted disbursements and docketed time), and the imposition of more, (in the form of adverse cost awards). The journey will never be worth it unless the ultimate rewards are substantial, and the defendant has the means to pay them. Yet the higher the stakes, the harder the defendant will fight. The wealthier the target, the bigger its war chest.

Realistically, few representative plaintiffs or law firms will assume those burdens for long without some early assurance that it may all be worth it. Without that assurance, there will no increased access to justice, and therefore no behaviour modification or judicial economy.⁴

Early hearing of a certification motion provides that assurance. Representative plaintiffs and their counsel learn, as soon as possible, whether they are fighting for millions of dollars on behalf of a collective, or advancing an individual action not worth pursuing even in the Small Claims Court. They also know whether they will be given the settlement leverage that goes hand in hand with certification⁵, thereby increasing the prospects of contained expense and early recovery.

Accordingly, from the plaintiff perspective, nothing should delay or postpone the certification hearing. Preliminary motions undermine the goals of the CPA, and play into the hands of defendants determined to wear down the resolve and resources of plaintiffs and their counsel.

A review of the structure and content of the CPA supports the view that the Legislature regarded certification as an immediate priority. Apart from a few opening definitions, certification is the first matter dealt with in the Act. Moreover, for plaintiff class proceedings at least, the Act clearly intended that resolution of the certification issue generally would occur within a few months of a proceeding's commencement, whatever the state of defence pleadings.⁶

Additional authority supports this view.

The Manual For Complex Litigation, Third⁷, emphasizes that early and timely case management of class proceedings is important, and that a timetable for certification should be set at the first case management conference:

Similar sentiments have been expressed by courts in Ontario.

In Moyes v. Fortune Financial Corporation⁸, Justice Nordheimer deferred hearing of the defendant's motion for summary judgment and held that certification ordinarily should be the immediate priority in class proceedings:

The same sentiment was repeated by Justice Nordheimer in Ward-Price v. Mariners Haven Inc.⁹.

From the plaintiff perspective on the "chicken or the egg" debate, if certification motions are "the chicken", they therefore must come first.

The Defence Perspective

Defendants to class proceedings invariably are alleged to owe vast sums as a result of manufacturing or distributing defective products, engaging in illegal activity, violating contractual obligations, or committing some other form of negligent or deliberate misconduct. They almost always are alleged to have done this at the expense of those who are inherently weak and vulnerable, insofar as the victims are said to have no effective remedy as individual claimants.

It matters not that the allegations may be without merit. Service of such a claim casts an instant shadow over such defendants. The publicity is adverse and immediate, and will take its toll regardless of ultimate vindication. The potential liability must be noted in financial statements for as long as the claim persists, with a detrimental impact on share values and investment. Effective defence of the claim will require substantial legal expense, and disclosure of information and documentation that otherwise would remain private and confidential. The pressure to settle even baseless class proceeding claims is enormous.

From the defence perspective, a proceeding without merit therefore must be attacked and dismissed as quickly as possible, using the various Rules of Civil Procedure expressly designed for that purpose. Those rules have intrinsic merit and a legitimate purpose, or they would not be on the books. They also have highly developed safeguards to prevent their abuse. If the CPA really was not intended to derogate from the substantive rights of parties¹⁰, there is no justification for effectively denying class proceeding defendants the rights and remedies available to any other defendant, particularly when their exposure is usually that much greater than the ordinary litigant.

In short, if an intended class proceeding can be ended or curtailed quickly, efficiently and properly, through preliminary motions brought pursuant to the normally available Rules of Civil Procedure, it benefits neither the parties nor the court system to drag things out through an expensive and fiercely contested certification motion. Preliminary motions can and should be determined before a motion for certification.

This competing view is also supported by the CPA.

In particular, section 35 of the Act makes it absolutely clear that the "rules of court apply to class proceedings". This effectively incorporates, into the procedural scheme of the CPA, such diverse matters as Rule 25.10 motions for particulars, (which generally must be brought before the filing of defence pleadings¹¹), Rule 21 motions to determine issues of law, jurisdiction, capacity or abuse of process, and/or to strike out pleadings, (all of which generally are to be brought without delay if at all¹²), and Rule 20 motions for summary judgment on the basis there is no genuine issue for trial, (which also are to be brought as quickly as possible if they are to serve their purpose of "rejecting, promptly and inexpensively, claims and defences that are bound to fail at trial"¹³).

There is also substantial judicial support, (both express, and implicit in procedures actually followed), for the view that preliminary motions can and often should be heard prior to motions for certification.

As Justice Cumming emphasized in Holmes v. London Life Insurance Co.¹⁴:

From the defence perspective on the "chicken or the egg" debate, if proper preliminary motions are "the egg", they therefore must come first.

Simultaneous Hearings as a Compromise? (The Salvage Interest Litigation)

The debate outlined above seems entirely premised as an "all or nothing" debate; i.e., that either certification or preliminary motions must take priority. Is it possible, however, to adopt some intermediate solution that accommodates the competing interests of plaintiffs and defendants?¹⁵

Justice Haines tried to adopt such an approach in the context of the ongoing "salvage interest litigation"; class proceeding litigation on a massive scale that followed in the wake of the Court of Appeal's decision in McNaughton Automotive Ltd. v. Co-operators General Insurance Co.¹⁶ The litigation centres on "total loss" situations where automobiles are damaged beyond economic repair by accidents caused by the fault of the insured. Insurers normally would process the resulting claims for property damage by paying the insured the actual cash (i.e., depreciated) value of the vehicle immediately before the accident, less the agreed deductible stipulated in the policy. After making that payment, insurers also would take the salvage interest in the damaged vehicle, relying on a statutory condition which vests title to the salvage in an insurer if, inter alia, the insurer pays the insurer the vehicle's "actual cash value".

Having regard to the literal wording of the statutory condition, and other provisions of the Insurance Act which seemed to give priority to the statutory conditions, the Court of Appeal found that the normal practice of insurers resulted in a breach of the relevant statutory condition. Put simply, the statutory condition seemed to require payment of the full "actual cash value" of the vehicle prior to the insurer taking the salvage; not merely payment of the "actual cash value less a deductible". As the proceeding had not yet been certified, the Court of Appeal remitted the action to Justice Haines, the first instance judge case responsible for case management of the matter.

The proceeding by McNaughton Automotive had been commenced against only one insurer, (the Co-operators). However, following release of the Court of Appeal's decision, multiple "copycat" proceedings were launched all over Ontario, (in addition to similar class proceedings started in other provinces such as British Columbia and Alberta). Pursuant to Rule 37.15, Justice Archie Campbell found that it made "no sense . . . for 30 or more individual class proceedings with identical or strongly similar issues to proceed haphazardly, in a totally unco-ordinated manner in nine separate trial centres in seven judicial regions", and ordered that all of the proceedings be redirected to Justice Haines for unified case management. Specifically, Justice Haines was to hear "all motions in any pending or future class action proceeding in respect of McNaughton insurance salvage issues".¹⁷

When battle was joined before Justice Haines, plaintiff counsel had completely different views as to how the litigation should proceed. Epitomizing the "chicken and egg" debate outlined above, plaintiff counsel insisted that the certification motions brought in each action had to be the first order of business, while defence counsel argued their right under section 35 and the Rules of Civil Procedure to first argue an extensive battery of preliminary motions that would summarily end all or some of the claims, and/or shape and determine the course of any subsequent certification rulings. These various defence motions included:

1. Rule 21 and Rule 20 motions requesting a revisitation of the ruling in McNaughton Automotive, and a finding that there was in fact no cause of action as alleged;
2. Rule 21 motions to determine issues of jurisdiction, striking out claims relating to insurance policies issued outside Ontario;
3. Rule 21 motions to determine the applicable limitation period, with corresponding Rule 20 motions for summary judgment dismissing those proceedings commenced by representative plaintiffs whose personal claims were out of time;
4. Rule 21 motions to determine the effect of an additional policy endorsement, and striking out claims to which that endorsement applied;
5. Rule 21 motions to determine the meaning of "actual cash value" in the context of the relevant statutory condition, (to establish that as an individual issue); and
6. Rule 20 motions requesting summary dismissal of particular claims on the basis that the named representative plaintiff had no individual claim for reasons other than operation of the limitation period; (e.g., because the person was not an insured, or was actually not charged a deductible when the insurer took the salvage).

Faced with literally hundreds of competing motions relating to certification and other preliminary issues, Justice Haines decided that it was not necessary to assign priority to one type of motion over the other:

Justice Haines commented further on this approach when rendering a further decision, (relating to disclosure and production issues), six months later:

One nevertheless might question whether the approach advocated by the defendants was not ultimately successful after all.

The defendants had argued that, as a matter of logic and necessity, the court should proceed with the hearing and determination of the various preliminary motions before proceeding with decisions concerning certification.

As far as the various Rule 21 motions were concerned, this is precisely what happened. Justice Haines released his decisions on all the Rule 21 motions on July 14, 2003²⁰, and then used those various rulings to shape and determine his subsequent certification rulings, released one month later on August 14, 2003²¹.

Moreover, while certification rulings ostensibly were made prior to those relating to various Rule 20 motions for summary dismissal brought by numerous defendants, (the hearing of which was delayed repeatedly by plaintiff objections to the extent of documentary disclosure provided by the defendants²²), closer examination suggests this too was an illusory victory for the plaintiffs in terms of certification being granted real priority over the preliminary motions brought by the defendants. In particular, the opening paragraph of the "certification" reasons delivered by Justice Haines in the salvage interest litigation underscored the fact that his ostensible certification rulings were not final but conditional or, perhaps more accurately, a work in progress that was not yet complete:

Justice Haines repeated this caution and qualification later in his reasons, when addressing the requirement for certification, set forth in s.5(1)(e), that certification of a class proceeding demands the presence of a representative plaintiff who will fairly and adequately represent the class:

In effect, Justice Haines ruled on the components of the certification test set forth in ss.5(1)(a) through 5(1)(d) of the CPA, but specifically stopped short of completing the analysis required by s.5(1)(e) until such time as the defendants' outstanding Rule 20 motions for summary judgment had been decided.

Since section 5 of the CPA requires satisfaction of all its constituent elements before a proceeding can truly be certified, and there is no authority whatsoever in the act for any waiver or departure from those requirements in their totality, the ruling by Justice Haines can not properly be regarded as having decided "certification" in the true sense for any action where Rule 20 motions for summary judgment were outstanding²⁵. This was made absolutely clear in a subsequent unreported oral decision, delivered by Justice Haines on October 22, 2003:

In the final analysis, and as a practical matter, all of the defendants' Rule 21 preliminary motions in the salvage interest litigation therefore effectively were given priority over the plaintiffs' motions for certification²⁷. The suggested compromise of the "chicken and egg" debate really extended only to the order of submissions, as far as those particular motions were concerned.

Moreover, the plaintiffs' effective delay of the defendants' Rule 20 motions via production disputes ultimately was self-defeating, as it only served to delay the "final" certification orders in the actions where such motions had been brought.

III. OTHER PRELIMINARY MOTIONS: THE PLAINTIFF POSSIBILITIES

As noted above, the plaintiff position in the "chicken or the egg" debate normally holds that motions for certification ordinarily must be "the first order of business", and the focus of the debate therefore shifts quickly to competing preliminary motions advanced by class proceeding defendants.

It is worth noting, however, that class proceeding plaintiffs also have access to the full gamut of motions available under the Rules of Civil Procedure, and have brought precertification motions of their own. These have included:

1. motions for directions²⁸;
2. motions to compel delivery of an affidavit of documents prior to argument of a Rule 20 summary judgment motion brought by a defendant²⁹;
3. motions to compel production of a further and better affidavit of documents, and further and better disclosure and production extending to all aspects of the uncertified claim, including those extending beyond certification³⁰;
4. motions to add or substitute representative plaintiffs³¹;
5. motions to restrain or sanction defendant communications with putative class members³²;
6. motions to change the venue for future motions³³;
7. motions to compel answers to questions refused on examinations, and to require the re-attendance of witnesses³⁴; and
8. plaintiff motions for summary judgment³⁵.

The vast majority of pre-certification motions nevertheless seem to be brought by class proceeding defendants, and those motions accordingly are the focus here.

IV. OTHER PRELIMINARY MOTIONS: THE DEFENCE POSSIBILITIES

The CPA subjects class proceedings to the Rules of Civil Procedure in their entirety, and the number and type of interlocutory motions competing with certification therefore are limited only by what may be contemplated and permitted by the rules. The decisions to date nevertheless suggest a number of preferred and/or promising weapons in the arsenal of class proceeding defendants.

Motions for Particulars: Rule 25.10

The purpose of pleadings "is to define the issues as precisely as possible for the benefit of both the parties and the court"; to "define the issues which have to be tried and as to which discovery must be given". The clarity of pleadings accordingly has been identified and emphasized as a priority long before the introduction of class proceedings.³⁶

Moreover, in the class proceeding context, subsection 5(1)(a) of the CPA makes disclosure of a cause of action on the face of the pleadings a prerequisite for certification.³⁷

As both a matter of general principle and the promotion in particular of the CPA's contemplated process, there accordingly is every reason to argue for clarity of a plaintiff's statement of claim at the outset of a class proceeding, prior to a motion for certification.

The cases in which class proceeding defendants have moved for particulars are nevertheless relatively few in number. From a tactical perspective, this may relate to other authority suggesting:

1. that inadequacies of a plaintiff's pleading are more profitably addressed, from a defence perspective, by Rule 21 motions to strike a claim³⁸; and
2. that the furnishing of particulars generally precludes subsequent motions to strike out pleadings³⁹.

For examples of motions for particulars brought prior to certification, see Blatt Holdings Ltd. v. Traders General Insurance Co.⁴⁰, and Obonsawin v. Canada⁴¹.

Motions Requesting Security for Costs: Rule 56

Given the extensive cost of litigation inherent in the defence of a class proceeding, there has been remarkably little resort to Rule 56. This permits a defendant or respondent to ask the court for an order compelling a representative plaintiff to post security for costs at any stage of a proceeding⁴². A defendant accordingly could require the posting of such security at the outset of a proceeding, before incurring the substantial expense usually associated with contesting a motion for certification.

The apparent reluctance of defendants to bring such motions may reflect a number of considerations, such as:

1. the general difficulties inherent in bringing a matter within the situations described by Rule 56, (although the Rule expressly makes reference to proceedings brought by a "nominal plaintiff" having insufficient assets in Ontario to pay a defendant's costs);
2. prudent plaintiff counsel putting forward representative plaintiffs with little in the way of exigible assets, coupled with recognition of the general reluctance of courts to require security for costs from impecunious plaintiffs⁴³;
3. a perception that such security may not be required or possible in cases wherein a representative plaintiff is receiving assistance from the Class Proceedings Fund⁴⁴; and/or
4. a general belief that courts rarely visit substantial adverse cost awards against unsuccessful representative plaintiffs in any event, having regard to the considerations set out in section 31 of the CPA and general "access to justice" concerns⁴⁵.

However, recent decisions have demonstrated a greater focus on the ability of representative plaintiffs to fund a class proceeding; i.e., as part of the certification analysis under s.5(1)(e)(i) of the CPA to determine whether a proposed representative plaintiff has the ability to "fairly and adequately represent the interests of the class"⁴⁶.

Recent decisions also have exhibited a willingness to award substantial costs against unsuccessful representative plaintiffs⁴⁷. These factors combined may encourage more motions by defendants and respondents seeking security for their costs.

To date, however, the only instance of a class proceeding defendant bringing such a motion seems to be Sutherland v. Canadian Red Cross Society⁴⁸, where the defendant moved successfully, prior to certification, for an order requiring the representative plaintiffs, resident in Texas, to post security for costs. The amount of security ordered nevertheless fell far short of that requested by the defendant, as the court was reluctant to make an order that would have discouraged the plaintiffs from continuing with their action.

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Footnotes

1 Ian F. Leach is a partner with Lerners LLP. Since 1993, his practice has involved class proceeding litigation from both the plaintiff and defence perspectives, including breast and TMJ implant claims, claims relating to late payment penalties charged by utilities, and claims against insurers relating to salvage appropriation and the use of after market parts. This paper was prepared with helpful and much appreciated research assistance provided by Kathleen Harper and Shawn MacDonald.

2 S.O. 1992, c.6, hereinafter referred to as the "CPA".

3 In this paper, certification generally will be described as "the chicken" and other preliminary motions as "the egg". In some quarters, however, even this may be regarded as highly controversial...

4 From the outset, these have been identified as the three goals of the CPA. See Bendall v. McGhan Medical Corp. (1993), 14 O.R. (3d) 734 (Gen.Div.), leave to appeal refused (unreported, November 26, 1993), court File 14219/93.

5 Many courts have recognized the settlement pressures created by the nature of a class proceeding, and the "greater leverage for a settlement after certification because of the realities a corporate defendant (or respondent) must face in the marketplace"; Holmes v. London Life Insurance Co. (2000), 50 O.R. (3d) 388, at p.392.

6 Subsection 2(3) of the CPA says that, absent leave of the court, motions for certification of a plaintiff class proceeding "shall be made" within ninety days of the last defence pleading being delivered, or the date on which the time for delivery of such pleadings expired according to the Rules of Civil Procedure. This should be contrasted with section 3 of the CPA, which establishes no timeline whatsoever for motions to certify a defendant class proceeding.

7 In its Report on Class Actions, which shaped the CPA in large measure, the Ontario Law Reform Commission repeatedly referred to the second edition of the Manual and stated, at p.451, that "Judges and counsel involved in class actions in this jurisdiction may wish to consult the Manual on occasion, as it represents the distilled experience of members of the American federal judiciary with class actions".

8 (2001), 13 C.P.C. (5th) 147 (S.C.J.).

9 [2002] O.J. No. 4260 (S.C.J.)

10 There are many judicial statements to this effect. See, for example, Ontario New Home Warranty Program v. Chevron Chemical Co. (1999), 46 O.R. (3d) 130 (S.C.J.), per Justice Winkler at p.143: "This court has noted on multiple occasions that there is no jurisdiction conferred by the Class Proceedings Act to supplement or derogate from the substantive rights of parties. It is a procedural statute and, as such, neither its inherent objects nor its explicit provisions can be given effect in manner which affects the substantive rights of either plaintiffs or defendants."

11 An order directing a plaintiff to provide particulars generally is premised on the defendant's need to have such particulars in order to frame its responding pleadings. See, for example, Stylecraft Dress Co. v. Gotlin, [1946] O.W.N. 114 (H.C.), or Physicians' Services Inc. v. Cass, [1971] 2 O.R. 626 (C.A.).

12 Delay in bringing a Rule 21 motion is a sufficient ground to dismiss the motion, and not merely a matter affecting costs. See Fleet Street Financial Corp. v. Levinson (2003), 31 C.P.C. (5th) 145 (S.C.J.).

13 Mears v. Bobolia (1986), 13 C.P.C. (2d) 164 (Ont.H.C.). See also Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225 (Gen.Div.), 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 21 O.R. (3d) 547 (C.A.), and Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 28 O.R. (3d) 423 (Gen.Div.).

14 (2000), 50 O.R. (3d) 299 (S.C.J.), at p.391.

15 To extend the metaphor, if certification is the "chicken" and preliminary motions are the "eggs", (or vice versa), is it possible to have a "chicken omelette"?

16 (2001), 54 O.R. (3d) 704 (C.A.), application for leave to appeal dismissed, [2001] S.C.C.A. No. 451.

17 Segnitz v. Royal & SunAlliance, [2002] O.J. No. 2137 (S.C.J.).

18 McNaughton Automotive Ltd. v. Co-operators General Insurance Co., [2002] O.J. No. 2026 (S.C.J.), at paragraphs 8 and 9. For further comment on the impact of judicial concern over potential litigation "by instalment", see below.

19 Segnitz v. Royal & SunAlliance Insurance Co. of Canada, [2003] O.J. No. 78 (S.C.J.), at paragraph 13.

20 (2003), 66 O.R. (3d) 112 (S.C.J.)

21 66 O.R. (3d) 466 (S.C.J.)

22 See, for example, Segnitz v. Royal & SunAlliance Insurance Co. of Canada (2003), 44 C.C.L.I. (3d) 248 (S.C.J.), additional reasons at (January 20, 2003), Doc. 37188/01, 2003 CarswellOnt 139 (S.C.J.), additional reasons at (March 22, 2004), Doc.37188/01, 37165, 20688/A1, 39161, 38733, 2004 CarswellOnt 1287 (S.C.J.).

23 Supra, at paragraph 1.

24 Supra, at paragraph 38.

25 The dangers of doing so are highlighted by what later transpired. Immediately after release of Justice Haines' decision on August 14, 2003, plaintiff counsel issued press releases indicating that the various class proceedings had been certified, and there were corresponding reports to that effect in the public media, (via radio and newspaper), as well as legal publications such as Ontario Lawyers' Weekly. Members of the public, and members of the various proposed classes in particular, therefore understandably may have formed the impression that class proceedings against particular insurers had been certified. In fact, when the outstanding Rule 20 motions eventually were heard and determined, many of the "certified" actions, (including Segnitz v. Royal & SunAlliance, the style of which was used to report the decision), were dismissed in their entirety because the named representative plaintiffs had no individual cause of action. See, for example, Segnitz v. Royal & SunAlliance, [2004] O.J. No. 3673 (S.C.J.) As noted in further detail below, there has not yet been any formal notice of certification to class members in relation to those proceedings which escaped dismissal. Justice Haines ruled that publication of such notices, prior to resolution of various outstanding appeals which might result in further dismissals, resurrections, and/or reshaping of the class definitions, would only serve to needlessly confuse the public.

26 London Court File No. Y30273/99, dated 2003-10-31 (sic).

27 This priority has been accentuated on appeal, for the reasons described below.

28 Segnitz v. Royal & SunAlliance, [2002] O.J. No. 2026 (S.C.J.);

29 Shaw v. Zurich Canada, unreported decision of Justice Haines released July 30, 2002, London Court File No. 01-CV-213320CP.

30 Segnitz v. Royal & SunAlliance Insurance Co. of Canada (2003), 44 C.C.L.I. (3d) 248 (S.C.J.), additional reasons at (January 20, 2003), Doc. 37188/01, 2003 CarswellOnt 139 (S.C.J.), additional reasons at (March 22, 2004), Doc.37188/01, 37165, 20688/A1, 39161, 38733, 2004 CarswellOnt 1287 (S.C.J.).

31 Egglestone v. Barker (2001), 9 C.P.C. (5th) 304 (S.C.J.), Logan v. Canada (Minister of Health), [2002] O.J. No. 522 (S.C.J.), affirmed [2004] O.J. No. 2769 (C.A.), Johnston v. State Farm (2003), 38 C.P.C. (5th) 181 (Ont.S.C.J.), Giuliano v. Allstate Insurance, [2003] O.J. No. 3266 (S.C.J.), Young v. Janssen-Ortho Inc., [2002] O.J. No. 993 (S.C.J.), appeal quashed (2003), 32 C.P.C. (5th) 47 (C.A.), Veley v. CGU Ins., [2004] O.J. No. 143 (S.C.J.), Farquhar v. Liberty Mutual (2004), 43 C.P.C. (5th) 361 (S.C.J.).

32 Lewis v. Shell Canada Limited (2000), 48 O.R. (3d) 612 (S.C.J.), Vitelli v. Villa Giardino Homes Ltd. (2001), 54 O.R. (3d) 334 (S.C.J.), and 1176560 Ontario Ltd. v. Great Atlantic & Pacific Co. of Canada Ltd. (2002), 62 O.R. (3d) 535 (S.C.J.), leave to appeal granted (2003), 64 O.R. (3d) 42 (Div.Ct.). Compare Pearson v. Inco Ltd. (2001), 57 O.R. (3d) 278 (S.C.J.), additional reasons at [2002] O.J. No.73 (S.C.J.).

33 McLaren v. Stratford (City) (2003), 33 C.P.C. (5th) 253 (S.C.J.).

34 Caputo v. Imperial Tobacco Ltd., [2002] O.J. No. 3767 (Master).

35 Garland v. Consumers Gas Co., [2004] 1 S.C.R. 629.

36 See Asfordby Storage and Haulage Ltd. v. Bauer (1985), 1 W.D.C.P. 505 (Ont.H.C.), and Int. Nickel Co. v. Travellers Indemnity Co., [1962] O.W.N. 109 (C.A.).

37 Subsection 5(1)(a) of the CPA states that the court shall certify a class proceeding on a motion under section 2, 3 or 4 if, inter alia, "the pleadings or the notice of application discloses a cause of action".

38 Rule 25.06(1) requires a minimum level of material fact disclosure and if this level is not reached, some courts have held that the proper remedy is a motion to strike out the pleading rather than a motion for particulars. See, for example, Copland v. Commodore Business Machines Ltd. (1985), 52 O.R. (2d) 586 (Master).

39 Henrickson v. Henrickson, [1962] O.W.N. 75 (Master).

40 (2001), 27 C.C.L.I. (3d) 308 (Ont.S.C.J.). Similar motions for particulars were brought by the insurers defending class proceedings alleging improper use of "after market parts" in repairs made to damaged automobiles. The motions succeeded only in part, with some plaintiffs being ordered to provide particulars as to the alleged inferiority of the parts used. Other demanded particulars were held to relate to matters within the knowledge of the insurers, or matters of evidence that the plaintiffs were not required to plead.

41 [2001] O.J. No. 369 (S.C.J.). The defendant in this class proceeding, relating to an alleged denial of tax exemption rights, brought a motion for particulars. The motion was successful only in part, with the plaintiff being required to specify the amount of damages being claimed. Additional particulars were not ordered because of the defendant's failure to lead any evidence of inability to plead its case without them.

42 Rule 56.01(1) provides as follows: 56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that:

1. the plaintiff or applicant is ordinarily resident outside Ontario;
2. the plaintiff or applicant has another proceeding for the same relief pending in Ontario or elsewhere;
3. the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;
4. the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent;
5. there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or
6. a statute entitles the defendant or respondent to security for costs.

[Emphasis added.]

43 Generally, where a plaintiff is impecunious but the claim being advanced is not "plainly devoid of merit", the courts will permit the claim to proceed without ordering the plaintiff to post security for costs. See, for example, John Wink Ltd. v. Sico Inc. (1987), 57 O.R. (2d) 705 (H.C.), Holt v. Craven (1989), 35 C.P.C. (2d) 190 (Ont.Master), Solcan Electric Corp. v. Viewstar Canada Inc. (1994), 25 C.P.C. (3d) 181 (Gen.Div.).

44 Pursuant to s.59.4(3) of the Law Society Act, R.S.O. 1990, c.L.8, amended by the Law Society Amendment Act (Class Proceedings Funding), 1992, S.O. 1992, c.7, a defendant who has the right to apply for payment from the Class Proceedings Fund in respect of a costs award against a plaintiff may not recover any part of the award from the plaintiff. One might ask, however, whether defendants have a right to question the value of this ostensible guarantee of payment. In a number of cases, counsel for unsuccessful representative plaintiffs and/or the Law Foundation have submitted that adverse cost awards should not be made because doing so would create a grave risk of substantially depleting or exhausting the Class Proceedings Fund, already possibly in serious jeopardy. See Garland v. Consumers Gas Co. (1995), 22 O.R. (3d) 767 (Gen.Div.), Edwards v. Law Society of Upper Canada, [1998] O.J. No. 6192 (Gen.Div.), affirmed (2000), 48 O.R. (3d) 329 (C.A.), and Fehringer v. Sun Media Corp., [2002] O.J. No. 5514 (S.C.J.). All these cases rejected such submissions as improper and irrelevant for a court to consider in awarding costs, and as matters more appropriately dealt with by the Law Foundation. Moreover, more recent annual reports of the Law Foundation, (such as The Law Foundation of Ontario, 2002 Annual Report, at 6-8, 15 and 26, and The Law Foundation of Ontario, 2003 Annual Report, at 2), suggest that the Class Proceedings Fund is now in a much less precarious position. However, if a defendant to a class proceeding is entitled to look only to the Fund for payment of a cost award in its favour, (because the representative plaintiff is being assisted by the Fund), and there is evidence that the Fund may not have the resources to satisfy the award, a motion requesting security for costs would seem to have merit.

45 Section 31(1) of the CPA provides that, in exercising its discretion with respect to costs under s.131(1) of the Courts of Justice Act, the court may consider whether the class proceeding was a test case, raised a novel point of law or involved a matter of public interest.

46 See, for example, Western Canadian Shopping Centres Inc. v. Dutton, [2001] 2 S.C.R. 534, Fehringer v. Sun Media Corp., supra, Pearson v. Inco Ltd. (2002), 33 C.P.C. (5th) 264 (Ont.S.C.J.), and Moyes v. Fortune Financial Corp. (2002), 61 O.R. (3d) 770 (S.C.J.), affirmed (2004), 67 O.R. (3d) 795 (Div.Ct.).

47 See, for example, Gariepy v. Shell Oil, [2002] O.J. No. 3495, Pearson v. Inco Ltd., [2002] O.J. No. 3532 (S.C.J.), affirmed [2004] O.J. No. 3074 (Div.Ct.), awarding relatively high costs on the dismissal of certification motions and corresponding appeals. Contrast, however, other recent decisions such as Price v. Panasonic Canada Inc., [2002] O.J. No. 5437 (S.C.J.), Shaw v. BCE Inc., [2003] O.J. No. 2695 (S.C.J.), Joanisse v. Barker, [2003] O.J. No. 4081 (S.C.J.), awarding modest or no costs in such situations.

48 [1994] O.J. No. 204 (Gen.Div.)

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