Canada: Take Two: Aggregate Damages Award Upheld At Ontario Court Of Appeal

In our previous blog post in 2014, we had reported the Ontario Superior Court in Ramdath v George Brown College had granted the first award of aggregate damages following a common issues trial in 2014. In a recent decision, the Ontario Court of Appeal upheld that award and affirmed the ability of courts in Ontario to award aggregate damages at the common issues phase of a class proceeding. The Court of Appeal's ruling is a strong message that in an appropriate case, the court will exercise its statutory powers to conduct an aggregate assessment of damages and to order collective relief, well before individual claims have been determined.

Facts of the Case

The appellants commenced a class action against George Brown College ("GBC") for negligent misrepresentation, breach of contract and unfair practice under Ontario's Consumer Protection Act ("CPA"), based on the misleading statement in GBC's course calendar for its International Business Management Program that program graduates would have "the opportunity to complete three industry designations/certifications" in addition to the GBC certificate. Upon arrival at GBC, the appellants discovered that they were required to complete additional courses and/or work experience as well as exams at their own expense in order to meet the requirements for the industry designations.

The action was certified and at the common issues trial, the court found that the course calendar statement was a negligent misrepresentation and a breach of the unfair practices provision in the CPA. The court awarded aggregate damages at the damages trial for the statutory cause of action and removed the third cohort of students from the certified class. The appellants appealed the change to the class composition and GBC cross-appealed the trial judge's decision to award aggregate damages. The Court of Appeal allowed the appeal by affirming the aggregate damages award to the first two cohorts and reinstating the third cohort into the class, and dismissed the cross-appeal.

Guidance on Aggregate Damages

The question of significance that this case brings to light is whether aggregate damages can be awarded in a class action as the remedy for an unfair practice under s. 18(2) of the CPA. As Justice Feldman reminds us in the Court of Appeal's recent decision, pursuant to the CPA enacted just over a decade ago, consumers are entitled to rescind contracts and claim damages without demonstrating that they relied on the misrepresentation or were induced by it.

A notable characteristic of this case was that the quantification of damages was not originally certified as a common issue, in contrast to the Court of Appeal's consideration in Fulawka v Bank of Nova Scotia (leave to appeal refused [2012] SCCA No 326), which examined how a class-wide calculation of aggregate damages could be certified as a common issue. Notwithstanding this fact, Justice Feldman held that the trial judge, Justice Belobaba, was correct to invoke the aggregate damages provision (s. 24(1)) in the Class Proceedings Act after finding liability because it was not necessary to prove reliance.

Justice Feldman agreed with Justice Belobaba's criteria on the assessment of aggregate damages, which we enumerated in our previous blog post, and she provided useful comments about causation that a consumer is required to establish under s. 18(2) of the CPA: that the necessary causal link is between the damages and the agreement, not between the actual unfair practice and the damages.

The Trial Judge's Errors in Law

Although not impacting the ultimate outcome, the Court of Appeal found two errors on the part of the trial judge:

  1. attempting to use individual evidence of damage as the foundation for an award of aggregate damages: Justice Belobaba extrapolated the motivations of the three representative plaintiffs to all members of the class. As Justice Feldman noted, "[a] court cannot extrapolate from the motivation of one person to a conclusion respecting others" [91]. The evidence of motivation draws on the reliance element, which is not necessary to prove in this context and which Justice Feldman stated must be based on the experience of each individual class member. Interesting to note, however, Justice Feldman dismissed GBC's claim that Justice Belobaba erred by relying on the evidence of individual plaintiffs to estimate average costs, and confirmed that Justice Belobaba's "[...] reasoning and conclusion were reasonable" [100]. Justice Belobaba used the evidence of the parties' witnesses as well as market data and costs of the representative plaintiffs in applying the parties' agreed use of the tort measure of damage and the parties' agreed formula (direct costs plus foregone income and the cost of delayed entry into the workforce minus residual value) and in ultimately determining the aggregate damages award.
  2. suggesting that causation for the purpose of a damages award under s. 18(2) was established because of reliance: Justice Feldman stated that "[...] the right to the damages remedy for an unfair practice under the Consumer Protection Act arises from entry into the agreement. Damage and compensation for it are based on the plaintiffs' change in position, not on any reliance on the unfair practice." [92]

Take-Aways for Class Action Defendants

  • In determining the weight to give to the witness evidence, Justice Belobaba criticized the GBC's evidence as less than helpful, as GBC had evidence available to it that it chose not to present to the court. In turn, Justice Feldman approved Justice Belobaba's evidentiary decisions which she determined were entitled to deference. Future class action defendants should be mindful of the trial judge's approach to GBC's evidence and the resulting consequences of such a decision.
  • Justice Feldman approved Justice Belobaba's approach to awarding aggregate damages where the criteria under s. 24(1) of the Class Proceedings Act are met in order to make the class action an effective instrument to provide access to justice. This approach has implications for defendants' litigation strategies as courts become more open to favouring aggregate damages in the interests of justice over individual claims for damages.
  • Removing the need for inducement or reliance potentially increases the future use of the CPA by plaintiffs as a basis for class actions. Justice Feldman acknowledged that not requiring inducement or reliance in the analysis is "[...] consistent with and facilitates the use of the Consumer Protection Act as a basis for class actions" [89].

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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