The primary goal for defendants at the outset of a class
proceeding is refusal of certification. However, it is important to
note that denial of certification under the Class Proceedings Act
does not put an end to the case. Under section 7 of the Act,
"[w]here the court refuses to certify a proceeding as a class
proceeding, the court may permit the proceeding to continue as one
or more proceedings between different parties." In addition,
section 7 gives the court the power to:
order the addition, deletion or substitution of parties;
order the amendment of the pleadings or notice of application;
make any further order that it considers appropriate.
Refusal to Certify Does not Amount to Dismissal
Although success on the certification motion is an important
step to defending a class action, refusal to certify does not
amount to a dismissal of the action. In fact, courts in Ontario
have held that the judge on a motion for certification is precluded
from dismissing the action in its entirety. Cavanaugh v. Grenville Christian
College heard an appeal to the decision of a motion judge
refusing to certify the action as a class proceeding and dismissing
the claim "immediately". The court stated there was
"nothing in the remedial powers available on a motion for
certification under the CPA that empowers a judge to dismiss the
action in its entirety," and held that "[s]ection 7 does
not authorize the motion judge to dismiss the action."
In addition, Ragoonanan v. Imperial Tobacco Canada
Limited held that the limitation period remains suspended
following refusal to certify. The court held that a limitation
period resumes running under section 28(d) of the Act only upon
dismissal of a certified class action. In doing so, it noted the
legislative intent behind section 7 that a denial of certification
"should not automatically terminate the proceedings." In
responding to arguments that this interpretation would expose the
defendant to a limitation period with no end in sight, the court
held that it is incumbent on the defendant following certification
to seek a discontinuance of the proceeding.
An Order Under Section 7 May not Sever the Proceeding into
Rather than severing a proposed class proceeding into a number
of individual actions, defendants successful on a certification
motion may nonetheless find themselves facing a complex procedure
with a large number of plaintiffs. In Joanisse v. Barker,
2006 Carswellont 10233 the two plaintiffs moved under section
7 to add an additional 31 plaintiffs to the claim following denial
of certification. The court found that combining the 33 claims
"would not result in a sufficient increase in complexity over
that involved in 33 separate actions to outweigh the benefits and
convenience of combining all of the claims in the same
proceeding." As in Ragoonanan, the court cited the
purpose of section 7 to "deal with the special circumstances
created by the commencement of the action under the CPA."
Implications for Class Action Defendants
Due to the possibility for continued litigation under section 7,
defendants in class actions should be aware that refusal to certify
does not bring an end to the proceeding. This is particularly true
in proposed class proceedings such as certain franchise claims,
where the class is made up of a smaller number of plaintiffs
bringing claims of significant value. As a result, defendants
successful at the certification stage should be prepared to take
proactive steps such as seeking discontinuance in order to ensure
the litigation is at an end.
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.
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