Canada: Alternative Compensation Plan Reduces Class Size On Certification

On July 18, 2010, the Ontario Superior Court released reasons in Blair v. Toronto Community Housing Corporation, 2011 ONSC 4395. Justice Perell certified the action as a class proceeding. He did so over the arguments of the defendants who had implemented an alternative compensation plan that they submitted was preferable to a class proceeding. Justice Perell disagreed but his comments on alternative compensation plans are instructive for defendants facing class proceedings considering ways to reduce their potential liability.

The facts giving rise to Ms. Blair's action were headline news in Toronto in the Fall of 2010. On September 24, 2010, a six-alarm fire occurred in the apartment building at 200 Wellesley Street East in Toronto. Five million gallons of water were needed to extinguish the blaze. All of the residents, the vast majority of whom are low-income, were evacuated. Fortunately, there were no serious injuries. However, there was significant property damage.

Toronto Community Housing Corporation (TCHC), the nation's largest social housing provider owned the building. Greenwin Property Management Incorporated managed the building.

Shortly after the fire, TCHC announced a comprehensive compensation plan. Pursuant to the plan, residents could recover money for personal injuries, emotional upset, loss of comfort, spoiled food, contents damage, cleaning costs, moving expenses, out of pocket expenses and loss of income expenses. Residents would meet with the plan's administrator to determine the amount of compensation they were entitled to given their individual circumstances. Before payment, residents had to obtain independent legal advice (TCHC covered the cost of such advice), release their claims against TCHC, and assign their claims against Greenwin to TCHC. If residents did so, they received money within five business days. By the time of the certification hearing, over 50 percent of residents had accepted compensation from the plan and released their claims against TCHC.

Alongside the rollout of the compensation plan, Ms. Blair issued her claim seeking to certify a class proceeding on behalf of all residents of 200 Wellesley. Her claim seeks damages from TCHC and Greenwin of more than $25 million for negligence and breach of contract, among other things. Ms. Blair ultimately narrowed the proposed class to only those residents who had not signed releases pursuant to TCHC's compensation plan.

At certification, TCHC and Greenwin did not seriously dispute many of the elements of the certification analysis. But they opposed certification on the basis that a class action was not the preferable procedure for resolving the claims of residents. They argued that TCHC's compensation plan was the preferable procedure and that residents who thought the plan undercompensated them for their unique circumstances could proceed before the Landlord and Tenant Board, the Small Claims Court or the Superior Court of Justice, as appropriate. The defendants asserted that certifying this action as a class proceeding despite a comprehensive compensation plan would have a chilling effect and discourage defendants from taking steps to compensate class members voluntarily as quickly as possible.

Justice Perell held that, in certain circumstances, alternative compensation schemes implemented by defendants may be preferable to class proceedings. He cited several cases in which Canadian courts (including the Supreme Court of Canada in Hollick v. Toronto (City), [2001] 3 SCR 158) denied certification on the basis that a class action was not the preferable procedure given the existence of an alternate compensation scheme.

However, Justice Perell determined that in the circumstances of this case, TCHC's compensation plan was not the preferable procedure for those residents who had not released their claims against TCHC.

It is noteworthy that despite reaching this decision, Justice Perell commended many of the features of the compensation plan. Justice Perell found the following factors weighed in favour of preferring TCHC's compensation plan over a class proceeding:

  1. TCHC is, for practical purposes, a public authority and had less incentive to secure "cheap releases",
  2. The residents received legal advice following which there was a high take-up rate, which suggested that the amount offered under the plan was fair,
  3. The plan closely resembled administrative schemes in settled class actions,
  4. The plan closely resembled the administrative scheme proposed in Ms. Blair's litigation plan, and
  5. It is a social good when a defendant promptly takes steps to remediate injuries suffered.

Despite all of these factors which suggested TCHC's compensation plan was preferable to a class proceeding, two key facts in the particular circumstances of this case swayed Justice Perell to conclude that a class proceeding was the preferable procedure. First, Ms. Blair was not only the representative plaintiff but a critical witness for every class member with a claim against TCHC and Greenwin. Ms. Blair lived across the hall from where the fire began and testified that she informed Greenwin about the potential fire hazard and heard the fire marshall's office informing Greenwin likewise. Thus, her testimony would be critical to any individual proceeding residents wish to bring against TCHC (whether before the Landlord and Tenant Board or the courts). Having a common issues trial with Ms. Blair's testimony being given only once would save the judicial system enormous resources. Second, Justice Perell noted that residents are low-income and cannot fund litigation individually. A class action is, practically speaking, the only available action they have because class counsel and the representative plaintiff bear the up-front litigation costs and risks.

Finally, Justice Perell addressed the defendants' argument that certifying this action would eliminate incentives for defendants to voluntarily implement compensation plans and promptly remediate injuries suffered. Justice Perell acknowledged he was most troubled by this issue because he recognized that undervaluing voluntary compensation schemes could send the wrong message "that a defendant should not bother promptly offering compensation since there will be no avoiding a class action". But he concluded that reducing the class size, as TCHC has done in this case, should remain sufficient incentive for defendants to implement compensation plans in the future.

It is noteworthy, as well, that the plaintiff's decision to move to certify a class only of residents who had not participated in the TCHC compensation plan was critical. In other words, the certified class definition respecting the releases already obtained as well as those that continue to be obtained. That is, the compensation program will continue to be offered despite the certification order.

Businesses seeking advice when facing a situation which may give rise to a class action will want to consider the factors considered by Justice Perell and their impact on a compensation plan. It is clear that effective compensation plans can sometimes be preferable to class actions and in other cases can effectively reduce the size of the certified class. Both results are positive for defendants who wish to promptly remediate injuries suffered from mass harm, without admitting liability. However, it is clear that such plans need to offer reasonable compensation, delivered through fair processes and affected individuals should receive independent legal advice before releasing their claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Emrys C. Davis
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.