Canada: The Second Opinion: Ontario Court Of Appeal Rejects "Conditional" Certification Of Class Actions

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP.

The Ontario Court of Appeal has released a new ruling which holds that motion judges do not have jurisdiction to “conditionally” certify class actions that fail to disclose a cause of action under s. 5(1)(a) of the Ontario Class Proceedings Act (“CPA“).

The decision in Brown v. Canada (A.G.), 2013 ONCA 18 concerns a proposed class action against the federal government, which alleges that it wrongfully delegated its duties in respect of Aboriginal persons by entering into an agreement (the “1965 Agreement”) that enabled the province of Ontario to place thousands of Aboriginal children in non-aboriginal foster care or adoptive homes.  The plaintiffs alleged that these children were deprived of their Aboriginal identity, and alleged liability based on honour of the Crown, “identity genocide”, breach of Aboriginal rights, breach of fiduciary duty and negligence.

At the certification motion, the motion judge found the pleadings failed to disclose a cause of action as required under s. 5(1)(a) of the CPA.  However, despite holding that the fiduciary duty and negligence claims did not support a cause of action based on the federal Crown’s entry into the 1965 Agreement – which was the claim pleaded by the plaintiffs – the motion judge went on to find that these claims could potentially support a cause of action based on the Crown’s failure to prevent the Aboriginal children from losing their Aboriginal identity.  Accordingly, upon finding that the proposed class action satisfied the remaining criteria under s. 5(1) of the CPA, the motion judge granted certification on the condition that the plaintiffs deliver an amended statement of claim.

The motion judge’s decision was set aside by the Ontario Divisional Court.  In a brief endorsement, it found that he predetermined that a cause of action would be disclosed if the pleadings were amended in accordance with his reasons, and erred by not adjourning the certification motion to await an amended statement of claim which could be challenged anew by the Crown.  Remarkably, the Court also ordered that the adjourned certification motion be heard by a different motion judge once an amended pleading was delivered, despite the fact that s. 34 of the CPA requires that “[t]he same judge shall hear all motions before the trial of the common issues” unless that judge “becomes unavailable for  any reason”.

In Brown, the Ontario Court of Appeal affirmed the Divisional Court’s order.  However, rather than doing so through an endorsement, the Court chose to deliver comprehensive reasons that emphasize the centrality of the s. 5(1)(a) requirement to the certification analysis.  According to Rosenberg J.A.:

…[I]dentification of a cause of action is fundamental.  It is impossible for the defendant to meaningfully respond to an application for certification without knowing the cause of action. The definition of the class and the identification of the common issues depend upon the nature of the cause of action. … It is not possible to know whether an action can be appropriately prosecuted as a class action without identifying the fundamental issue of whether or not there is a cause of action. It is no answer that the defendant can bring a motion to decertify the action under s. 10 if the action should never have been certified in the first place.

…[C]ertifying a class action in the absence of a statement of claim that discloses viable causes of action is not case management. Even the power to amend other aspects of the claim, such as the proposed common issues, should be exercised with caution and restraint: McCracken v. Canadian National Railway Co., 2012 ONCA 445, 111 O.R. (3d) 745, at para. 144. … The defendant cannot respond to the evidence-based criteria in the abstract without knowing the cause of action. [emphasis added] (paras. 44-45)

These comments reflect a growing trend towards a more rigorous review of certification motions by Ontario appellate courts.  The notion that it is appropriate to certify a class action that fails to satisfy one or more of the statutory criteria, on the basis that it may simply be “decertified” should problems arise down the road, no longer represents the prevailing approach, as is evident from other recent certification dismissals such as McCracken v. Canadian National Railway Company, 2012 ONCA 445 and Williams v. Canon Canada Inc., 2012 ONSC 3692 (Div. Ct.).  In the wake of lengthy common issues trials such as Andersen v. St. Jude Medical, Inc., 2012 ONSC 3660, Ontario courts have become sensitive to the impact that poorly conceived class actions can have upon defendants and the judicial system.  The result is a renewed emphasis upon the plaintiff’s statutory burden at certification.

Brown is also notable for the Court of Appeal’s decision to prevent the motion judge from presiding over the adjourned certification motion.  Rosenberg J.A. found the motion judge’s predetermination that an amended statement of claim would satisfy s. 5(1)(a) created a reasonable apprehension of bias, which rendered him “unavailable” to hear the motion pursuant to s. 34(2) of the CPA:

While it was not always the case, I think it can now safely be said that judges cannot sit in appeal of their own decisions: see e.g., Law Society of Upper Canada v. French, [1975] 2 S.C.R. 767, at pp. 782-83, per Spence J., at p. 775, per Dickson C.J.C., dissenting.  In my view, a reasonable interpretation of the reasons of the case management judge is that he had determined that viable causes of action existed as he framed them. … [T]he causes of action as framed by the case management judge are so radically different from the way they were pleaded in the statement of claim that I do not think it can be safely said that the respondent had an adequate opportunity to respond. To now give the respondent that opportunity before the same judge would, as the Divisional Court found, result in the case management judge sitting in review of his own decision. (para. 53)

In light of Brown, motion judges should be wary of taking an overly interventionist approach on certification.

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