Canada: Happier Motoring For Class Action Defendants? “Harmegnies v. Toyota” And The Toughening Approach To Class Action Certification

Can a class action petitioner make a case for certification through vague allegations and hearsay? Will just any common or related issue suffice to justify class proceedings? These questions were answered with a decisive "no" in Harmegnies v. Toyota Canada Inc.

The respondent, Toyota Canada, had initiated a new program, "Access Toyota," for the sale of its cars in the Montréal metropolitan area. Under this program, consumers would obtain the average dealer's price for each model of vehicle and, using a mathematical formula, Toyota would establish a uniform price for all participating dealers.

Unfortunately, the sales ploy effectively eliminated the possibility for the consumer to negotiate and discriminate among dealers by seeking the most competitive price. Toyota, recognizing that its program may have violated sections 52 and 61 of the Competition Act, agreed to donate $2.3 million in lieu of damages to a charitable organization.

Nonetheless, appellant representatives persisted in claiming damages on behalf of a class of consumers who had purchased or leased a Toyota vehicle while the Access Toyota program was in place.

Superior Court Judgment

Justice Hélène Poulin of the Superior Court rejected the motion for two reasons: (i) no obvious and serious evidence of harm was adduced in support of the motion for certification, and (ii) the requirement of paragraph 1003(a) of the Québec Code of Civil Procedure, which demands the presence of identical, similar or related questions of law or fact, was not satisfied since too many irreconcilable differences existed among the potential claims of the various class members.

Court Of Appeal Judgment

Justice Baudouin of the Québec Court of Appeal, before providing reasons for dismissing the appeal, reiterated a few basic principles with respect to class action procedures:

  • The differences between class action certification in Québec and the other provinces are such that relying on external authorities can sometimes be dangerous. In Québec, once the four conditions listed in Article 1003 C.C.P. are met, judges have no discretion to deny certification.

  • In the context of class actions, appellate court judges must exercise the same level of deference to superior court judges on issues of fact as they would in any other case.

  • Class action provisions must be given a large and liberal interpretation.

  • Class actions must not be considered exceptional remedies; rather, they are ordinary remedies aimed at furthering principles of social justice.

  • In the context of a motion for certification, the petitioner's burden is merely one of simple demonstration and not one of proof on the balance of probabilities. The petitioner must nonetheless establish a serious colour of right by demonstrating that factual allegations directly support the conclusions sought.

  • Finally, in order to meet the requirement set out in paragraph 1003 (a) C.C.P., it is sufficient to demonstrate that a certain number of issues are common to the class as a whole.

In its decision, the Court of Appeal found that, with respect to the three elements of extra-contractual liability (fault, damage and causation), the element of fault was clearly established.

However, the court went on to conclude that the evidence submitted was insufficient to allege a prejudice, even according to the much lower standard of a mere appearance of right. The appellant never actually compared the prices of Montréal dealers under the Access Toyota program with those of other dealers in the Province of Québec, and no evidence indicated that this particular program had effectively increased the prices of Toyota automobiles in Montréal. The trial judge was therefore justified in concluding that the claim rested solely on vague impressions and hearsay with regard to damages.

Even if sufficient evidence existed as to damages, the trial judge did not err in law by concluding that there were no sufficiently identical or related questions of law to support the certification of the proposed class. The value of each vehicle is personal to each class member and the extent of the damages (if there are any) will vary from one member to another — thereby giving rise to several small trials within one large class action.

McCarthy Tétrault Notes:

Although the Court of Appeal reiterated some of the principles that have encouraged the proliferation of class proceedings, its holding in Harmegnies indicates that a more rigorous approach to certification is now being adopted, at least in the Province of Québec. As in other recent cases, the Court of Appeal emphasizes that it is not enough for petitioners to formulate ambiguous contentions or to allege conclusions rather than ascertainable facts. On the contrary, the proposed class action must, at first blush, appear factually, logically and legally sound. Likewise, common issues — regardless of their nature or scope — will simply not guarantee a free pass when it comes to certification. The Court of Appeal suggests that these issues must be sufficiently significant and compelling to justify the complexity, difficulty and cost associated with class-wide procedures.

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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