Canada: The Supreme Court Of Canada In Favour Of National Classes When Establishing The Criteria For Recognizing Foreign Judgments

On Friday, April 3, 2009, The Supreme Court of Canada rendered an important decision in the matter of Canada Post Corp. v. Lépine, which establishes the criteria for recognizing a foreign judgment (Ontario Superior Court of Justice) in Québec approving a settlement in connection with a national class action judgment.

In September 2000, Canada Post Corp. (the "Corporation") began selling a software with a free lifetime internet access service in Canada. A year later, the Corporation put an end to its internet access service.

In 2001, the government of Alberta filed a complaint against the Corporation pursuant to the Fair Trading Act, R.S.A. 2000, c. F-2.

On February 6, 2002, Mr. Michel Lépine filed a motion for authorization to institute a class action before the Superior Court of Québec on behalf of every natural person residing in Québec who had purchased the internet service of the Corporation.

On March 28, 2002, Mr. Paul McArthur also instituted a class action against the Corporation in Ontario before the Superior Court of Justice on behalf of every person, excluding Québec residents, who had purchased the internet service of the Corporation.

On May 7, 2002, Mr. John Chen also instituted a class action in British Columbia before the Supreme Court on behalf of all the residents in that province who had purchased the internet service of the Corporation.

The action instituted in Alberta was settled in 2002 on the basis that consumers could obtain a refund of the purchase price of the CD-ROM. A settlement was also reached in the Ontario and British Columbia proceedings. In Québec, Mr. Lépine refused to endorse the settlement.

The settlement provided for two classes of members: residents of British Columbia, and residents in all other Canadian provinces, excluding British Columbia.

On November 19, 2003, the Ontario certification request was modified to include Québec residents.

On December 22, 2003, the Ontario Superior Court of Justice certified the modified class action, confirmed the settlement, excluding British Columbia residents, but including Québec residents and consequently ordered the publication of judgment notices to class members.

The following day, the Superior Court of Québec rendered a judgment authorizing a class action against the Corporation for Quebec residents only.

Faced with these two contradictory judgments, the Corporation made an application before the Québec Superior Court to recognize and enforce the decision rendered by the Ontario Superior Court of Justice in Québec. This motion was denied on July 20, 2005 on the basis that the Ontario decision was rendered in contravention of fundamental principles of civil procedure (Article. 3155(3) C.C.Q.). The court opined that the notice of certification of the Ontario judgment was unclear and could be perceived as excluding Québec members from the quasi-national group.

This decision was confirmed by a Québec Court of Appeal judgment rendered on August 10, 2007, on the basis that (1) the Ontario Superior Court of Justice should have declined jurisdiction with respect to the Québec residents by applying the doctrine of forum non conveniens; (2) the Ontario decision contravened fundamental principles of civil procedure, as was decided by the Quebec Superior Court; and (3) there would be lis pendens between the two class actions and the proceedings instituted in Québec, which was commenced first.

The Supreme Court confirmed the denial of the request to recognize the Ontario judgment in Québec, albeit for different reasons.

The Supreme Court began by stating that the doctrine of forum non conveniens does not apply in matters of recognition and enforcement of foreign judgments in Québec. This doctrine, stipulated under Article 3155 C.C.Q, allows a Québec Court to decline jurisdiction in cases where authorities of another state are deemed more suitable to hear the matter. However, in matters pertaining to the recognition of foreign judgments, Article 3155 C.C.Q. establishes a paramount rule that every decision rendered by a foreign authority must be recognized, except in the circumstances set forth in that Article. Hence, the purview of the Québec Courts is limited to verifying whether the foreign decision meets these requirements, without entering into any examination of the merits of the decision (Article 3158 C.C.Q.). As such, the Supreme Court concluded that the Québec Court must simply ensure that the foreign Court was competent to render that decision, as dictated by Article 3164 C.C.Q.

The Supreme Court acknowledged, however, that the notices published in Québec newspapers following the Ontario judgment were inadequate and may have created confusion in the minds of Québec residents, thereby vitiating essential requirements of civil procedure as set forth in Article 3155 (3) C.C.Q.

Moreover, on the basis of Article 3155 (4) C.C.Q., the Supreme Court reiterated the principle that a foreign judgment cannot be recognized in Québec when confronted with lis pendens. In the instant matter, the Supreme Court noted that the class action request in the Québec Court preceded the request for certification of the class action before the Ontario Superior Court of Justice, even though the Ontario class action was certified before the Québec recourse.

Finally, the Supreme Court emphasized the need for legislative intervention so that particular attention is paid to national class actions, and specific mechanisms are put in place in order to solve jurisdictional conflicts.

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.