Canada: When Common Issues Ain't So Common: Decertification Of Class Actions

"I've found that common sense ain't so common" - Mark Twain

Twain's words are probably true today and there doesn't seem to be much we can do about it. However, Justice R. Smith recently held, to borrow Twain's adage, "I've found that common issues ain't so common" and decided there was something he could do about it: decertify. While Smith J. didn't actually quote Twain in Plaunt v. Renfrew Power Generation Inc., 2017 ONSC 1868, he did conclude that new evidence, obtained post-certification, demonstrated that the claims for trespass were dominated by individual issues and a class action was no longer the preferable procedure for resolving those claims. Plaunt offers some insight into a rarely litigated provision of the Class Proceedings Act ("CPA").1

Facts

Plaunt was an environmental trespass class action commenced on behalf of 400 cottage owners with property abutting Round Lake in Ontario. The class claimed that Renfrew Power Generation Inc. ("RPG") was trespassing on class members' land by storing water on their property as the defendants' activities had eroded their shorelines and raised water levels. The class was certified on the basis of a fixed dividing line between public and private lands created in 1917 – the 107.5 Contour Line. The plaintiff argued any encroachment of water past that line constituted trespass.2

The certification judge understood that the Contour Line affected all of the class members' property and was a reference point for each class members' property line. Determining whether the Contour Line created a boundary between public and private lands or was only a flooding easement would have affected all class members and moved their action forward in a substantial manner. The parties presented little or no evidence of deeds of land or surveys showing the boundary of class members' lands at the certification motion. Both parties then retained surveyors to obtain evidence and prepare expert reports on the legal descriptions and boundaries of the class members' property.3

RPG's expert found that not all of the class members' lands were affected by the Contour Line for several reasons: some lands around the lake were subsequently acquired without reference to the Contour Line; for certain properties, flooding rights were determined not with reference to the Contour line, but a 66 foot road allowance; and many categories of class members' property boundaries were not defined by reference to the Contour Line.

Decertification Motion

On the basis of this new evidence, RPG brought a motion to decertify the class action arguing that the conditions for certification were no longer met as the new evidence showed that there were no common issues and, therefore, a class proceeding was no longer the preferable procedure. Under section 10(1) of the CPA, the court has the authority to reopen and reconsider whether the requirements for certification are still satisfied in light of new evidence, subsequent facts, or developments - this includes new expert evidence4 and new appellate authority.5

The plaintiffs' resisted the motion, making three arguments:

  1. It is not required that each class member be identically situated vis-ŕ-vis the defendant, or that the common issue predominate;
  2. RPG ought to be estopped from presenting new evidence because it could have, but failed, to present survey evidence at the original certification motion; and
  3. The motion to decertify amounts to an impermissible, late-filed appeal of the merits of the certification decision.

Justice Smith rejected each of the plaintiffs' arguments.

While the resolution of a common issue must be necessary to every class members' claim, it is not required that each class member be identically situated vis-ŕ-vis the defendant, or that the common issues predominate over the non-common issues. Although the plaintiffs' argument relied on the Supreme Court of Canada decision Vivendi Canada Inc. v. Dell'Aniello,6 the Supreme Court held in the same case "that the class members' claims must share a substantial common ingredient". Justice Smith found that this was no longer the case for these class members.7

RPG was not estopped from bringing the decertification motion, nor was the decertification motion a "disguised late appeal" of the certification decision. Justice Smith held "the common issue as certified arose out of the plaintiffs' submissions at the certification motion and it was not reasonable for the Defendant to have produced evidence directly related to this common issue before the original certification motion."8 On the basis of this authority, a party will not be estopped from producing new evidence, including expert evidence, on a decertification motion, provided that party could not have been expected to produce such evidence at the certification motion.

This raises the interesting question of what is reasonable to expect a party to produce as evidence at a certification motion. The way the certification motion in Plaunt was argued and decided – with the certified common issue forming as a result of the argument before the judge, rather than being proposed in the motion materials – explains why it was not reasonable for RPG to have produced evidence linked to that common issue at the hearing. It is a curious counterfactual to consider whether this decertification motion would have been decided differently had the common issue as certified been before the court in the certification materials: such a situation would require a different analysis.

Justice Smith also referred to Pearson v. Inco Ltd., where Justice Cullity held a motion for decertification is not an appeal from the certification order and that the moving party has the burden of showing that the earlier decision would not have been made in light of new evidence, including evidence of facts that have subsequently occurred.9 In Pearson, Justice Cullity also suggested that the provisions and objectives of the CPA call for a flexible approach to new evidence – "together with costs sanctions where evidence could previously have been discovered by an exercise of due diligence."10 This line of reasoning seems to indicate that in the class actions context generally, courts might be inclined to take a more relaxed view of the Palmer11 criteria on a motion to adduce fresh evidence, but such a proposition has not been determined by the courts. More likely, this flexible approach to new evidence ought to be understood in light of the unique language of section 10(1).

Ultimately, where new evidence shows that class members' claims do not share a necessary and substantial common ingredient, decertification may be appropriate. In Plaunt, Justice Smith agreed with RPG that the "common issue as certified for the class as presently defined does not meet the criteria of s. 5(1) of the CPA because the common issue is not a necessary or a substantial ingredient of each class members' claim, as many class members' property is not related to the 1917 Contour Line."12

Conclusion

Although the Court of Appeal for Ontario has not ruled on the application of section 10(1) directly, Plaunt seems to be consistent with the obiter comments of the Court of Appeal in a number of cases regarding the availability of decertification or amendment should circumstances change.13 Until there is appellate guidance on the proper test for decertification and the evidentiary burdens involved in the Plaunt decision suggests that when new evidence (or new law) demonstrates that the "common issues ain't so common" it might be time to consider preparing a motion (or a response) to a decertification motion.

Footnotes

1. Class Proceedings Act, 1992, S.O. 1992, c. 6 ("CPA").

2. Plaunt v. Renfrew Power Generation Inc., 2011 ONSC 4087.

3. Plaunt v. Renfrew Power Generation Inc., 2017 ONSC 1868, at paras. 1-6 ["Decertification Reasons"].

4. Taylor v Canada (Health), 2010 ONSC 4799, at para. 7.

5. Decertification Reasons, at para. 9; citing Pearson v. Inco Ltd., 2009 CarswellOnt 1000, 2009 CanLII 9371 (ON SC), see paras. 22-26.

6. Vivendi Canada Inc. v. Dell-Aniello, 2014 SCC 1, [2014] 1 S.C.R. 3, at para 41, citing Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534, at para. 39.

7. Decertification Reasons, at para. 18.

8. Decertification Reasons, at para. 19.

9. Pearson v. Inco Ltd., 2009 CarswellOnt 1000, 2009 CanLII 9371 (ON SC), see paras. 22-26.

10. Pearson v. Inco Ltd., 2009 CarswellOnt 1000, 2009 CanLII 9371 (ON SC), at para. 26.

11. Palmer v The Queen, [1980] 1 S.C.R. 759 at p. 775.

12. Decertification Reasons, at para. 22.

13. See, for example, Cloud v. Canada (Attorney General) (2004) 73 O.R. (3d) 401 (C.A.), at para. 90; Pearson v. Inco Ltd., et al (2006), 78 O.R. (3d) 641 (C.A.), at para. 70; Markson v. MBNA Canada Bank, 2007 ONCA 334, at para. 58; Good v. Toronto (Police Services Board), 2016 ONCA 250, at para. 65; Keatley Surveying Ltd. v. Teranet Inc., 2014 ONSC 1677 (Div. Ct.), at para. 113.

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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