In the first decision in the class action context since the
Supreme Court of Canada expanded the scope of summary judgment in
Hryniak v. Mauldin, 2014 SCC 7, Perell J. of the Superior Court of
Justice has dismissed a newly certified class action against travel
booking website Expedia Inc. This decision underscores the fact
that certification has no bearing on the merits of a class action,
and further, that summary judgment may be an appropriate response
to the certification of a weak claim.
New Test for Summary Judgment
In Hryniak, the Supreme Court held that the judge
hearing a motion for summary judgment must review the evidence to
determine whether there is a genuine issue for trial. There is no
genuine issue for trial if the judge is able to come to a fair and
just determination on the merits of the case. With the available
record, the judge must be able to:
1) Make the necessary findings of fact;
2) Apply the law to the facts; and
3) Conclude that summary judgment would be the
proportionate, more expeditious and less expensive means to achieve
a just result.
An Expedia customer named Tim Magill sought to commence a class
proceeding on the basis that Expedia breached the terms of its
contract with customers who booked hotel reservations using its
website. Mr. Magill alleged that Expedia breached the reservation
contract by improperly characterizing two bundled charges – a
tax recovery charge and a service fee – that were added to
the cost of hotel reservations. Mr. Magill alleged that Expedia
failed to disclose the manner in which the tax recovery charge was
calculated; that Expedia should have separated the tax recovery
charge and a service fee; and that Expedia was not allowed to
profit from the service fee.
Perell J. certified a class action against Expedia Inc., but not
against its Canadian subsidiary: 2013 ONSC 683. Expedia then sought
On the motion for summary judgment, Perell J. had before him a
record of the disclosure made by Expedia in respect of the impugned
charges. The record revealed that both the tax recovery charge and
the service fee are estimates, and that Expedia may overestimate or
underestimate its actual tax and service costs. The disclosure also
revealed that the impugned fees are bundled to comply with
Expedia's confidentiality agreements with its suppliers and to
keep its trade secrets from being reverse-engineered.
Neither party argued that this case was inappropriate for a
summary judgment. Perell J., being cognizant of the Supreme
Court's decision in Hryniak, noted that the
evidentiary record before him was "more than adequate" to
decide whether there were genuine issues for trial. The facts were
not in dispute, and the issues of law and mixed fact and law did
not require a trial.
Expedia argued that it had not breached its reservation
contract. Additionally, Expedia contended that the profit element
of the service fee was disclosed to customers. The motion turned on
the interpretation of express terms in the reservation contract.
Applying the principles of contractual interpretation, Perell J.
concluded that Expedia did not breach the reservation contract. In
His Honour's view, the reservation contract did not promise to
disclose the details of the impugned charges. Additionally, the
record explained Expedia's reasons for non-disclosure.
In granting the summary judgment, however, Perell J. noted his
tentative view that any costs awarded should be modest, as the
class action might have been avoided if Expedia had more thoroughly
explained the tax recovery charge and service fee in its
This decision serves as an example of the third path between
trial and settlement for certified class actions. Following
the Supreme Court of Canada's judgment in
Pro‑Sys Consultants Ltd. v. Microsoft
Corporation, 2013 SCC 57, which liberalized the
certification regime, it is expected that more defendants will find
themselves standing at this crossroads. Magill
confirms that Hrnyiak has rendered summary judgment a
viable alternative in appropriate circumstances. In service
of this alternative, Magill also emphasizes the
courts' increased willingness to dispose of class actions by
deciding issues of contractual interpretation on a motion
record. In this sense, Magill extends the line of
jurisprudence begun by Arora v. Whirlpool Canada LP, 2012 ONSC 4642,
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