Canada: LBP Holdings Ltd. v. Hycroft Gold Corp.: Leave Required To Appeal Certification Order Excluding Defendants

In LBP Holdings Ltd. v. Hycroft Gold Corp. et al., Justice Thorburn held that leave to appeal to the Divisional Court was required under s. 30 of the Class Proceedings Act, 1992 where the certification order excluded two defendants, but allowed the plaintiff to pursue claims against them individually. She accordingly quashed the appeal but granted the plaintiff an extension of time to bring a leave motion.

Background 

The plaintiff LBP Holdings Ltd. ("LBP") commenced a class action against the gold and silver mining company Hycroft Gold Corp.. Justice Perell certified a class proceeding but excluded two defendants (the "Underwriters") from the action because the claims against them did not meet the "preferable procedure" criterion of the test for certification. LBP purported to appeal the certification order to the Divisional Court without seeking leave, and the Underwriters moved to quash the appeal.

Leave required to appeal 

In deciding that leave to appeal was required, Justice Thorburn distinguished Cavanaugh v. Grenville Christian College, which we have written about previously for this Blog. Among the significant aspects of Cavanaugh, the Court of Appeal held that an appeal lay directly to it, without the need to obtain leave, where the certification judge went beyond dismissing the motion for certification and ordered that the action against a subset of defendants be "immediately dismissed". That amounted to a final order that could be appealed without leave to the Court of Appeal under s. 6(1)(b) of the Courts of Justice Act, irrespective of the Class Proceedings Act.

In contrast, in LBP Holdings, the certification order neither refused certification nor determined any claim on its merits. Rather, the order stated that the interests of justice were better served by claims against the Underwriters proceeding individually. Justice Thorburn therefore characterized the order as "in its essence" a procedural decision that created no automatic right of appeal. Justice Thorburn wrote:

40     Because there exists a class proceeding, the Class Proceedings Act applies.

41     Because there was no dismissal of the request to invoke a class proceeding process, there is no right to appeal to the Divisional Court pursuant to section 30(1) of the Act.

42     Where there is a class proceeding, and one party is not included in the class proceeding, the issue is whether the claim is dismissed on the merits or whether it can proceed in a different forum outside the scope of class proceedings.

43     Where the order appealed from denies the appellant the ability to pursue a claim on the merits, there is a right to appeal to the Court of Appeal, as was the case against the Diocese in Cavanaugh.

44     However where, as in this case, the Plaintiff is allowed to pursue its claim against the Underwriters but outside the forum of a class proceeding, the order is, in its essence, procedural, and not a determination of the merits of the claim. The certification motion judge did not deny the Plaintiff the ability to proceed but, rather, held that it is in the interests of justice to pursue those claims as individual actions. In such cases, there is no right of appeal, and leave must be sought.

45     Because this is a procedural decision as to how, not whether, those claims can be pursued by members of the class and possibly others, leave must be sought pursuant to section 30(2) of the Act.

Accordingly, the Underwriters' motion to quash was granted, with the instruction to LBP that the Divisional Court must grant leave to appeal the Order in accordance with section 30(2) of the Class Proceedings Act.

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