Yesterday Ontario's Attorney General proposed significant changes to the Class Proceedings Act, 1992 (the "CPA"). The CPA had been the subject of a recent review by the Law Commission of Ontario, which issued a report in July recommending modest changes. Few of the changes recommended by the Law Commission found their way into the proposed legislation, which instead advances a slate of reforms propounded by defence interests.
For the time being, the rules of the game are unchanged. If some or all of the proposed changes to the CPA are adopted, they will affect class actions commenced after the amendments enter into force, likely in the first half of 2020 (s. 39).
The following are the ten most significant proposed changes:
- A stricter certification test:
The Attorney General has proposed a US-style predominance
requirement (s. 5(1.1)(b)). The proposed amendment
tracks the language in some Western Canadian class action statutes,
but it makes predominance mandatory, rather than a matter for
consideration. Certification will only be granted if
"the questions of fact or law common to the class members
predominate over any questions affecting only individual class
members". It appears that the goal is to bar
class actions that are difficult to adjudicate because they raise
significant individual issues. Products liability and
institutional abuse claims may be more difficult to certify on this
tighter test for certification.
- Limiting multi-jurisdiction
cases: Ontario Courts will be required to decide
whether Ontario is really the preferable forum in
which to resolve the claims of some or all members of the proposed
class, if there are competing cases in other provinces. The
CPA would adopt the Uniform Law Conference of Canada's test for
assuming carriage of multi-jurisdictional class proceedings (s.
5(6)). Further, an Ontario Court would (in contrast to
Western provinces), be permitted to determine jurisdiction
prior to the motion for certification (s. 5(8)),
which will avoid a needless expenditure of resources where Ontario
is not the appropriate forum. In order to facilitate this
process, it will be mandatory for Ontario Plaintiffs to register
class actions (s. 2(1.1)), and to serve an Ontario notice of
certification on counsel advancing parallel proceedings in other
provinces (s. 2(3)).
- Early dismissal motions
encouraged: Motions by Defendants to
narrow or dispose of the proceeding will presumptively be
determined prior to the motion for certification (s.
4.1). This amendment would overturn the jurisprudence that
delayed dispositive motions until they could be heard in tandem
with certification motions (to avoid multiple rounds of
appeal). The new emphasis on early motions will allow
defendants to challenge proceedings on their merits before
plaintiffs obtain the leverage of a certified action.
- An enhanced right of appeal for
Defendants: Defendants and plaintiffs will have
the same direct right of appeal from a certification decision to
the Court of Appeal for Ontario (s. 30(1)).
Moreover, the plaintiff will be barred from making material
amendments to the proposed class action on appeal (s.
30(2)). These changes address widespread dissatisfaction with
the asymmetrical appeal rights in the CPA (a direct right of appeal
for an unsuccessful plaintiff, while an unsuccessful defendant must
seek leave to appeal), as well as the delay that results from an
intermediate appeal to the Divisional Court. Additionally,
defendants will no longer face the frustration of an evolving claim
on appeal, which undermined the value of the decision at first
instance, especially when defendants were successful.
- Enhanced consideration of
alternative procedures: Courts will now be directed to
consider whether a variety of alternative
proceedings, including administrative and regulatory
proceedings, might better determine the entitlement of
class members to relief, or address the defendant's
conduct (s. 5(1.1)(a)). The proposed amendment
overturns the jurisprudence that had rendered it difficult for
defendants to argue that another proceeding had already addressed
or could adequately address the substance of class members'
claims, and was therefore preferable to a class action.
- Streamlined carriage motions:
Competing class counsel will now have carriage decided
faster and in a more predictable manner. Carriage
should be decided within 60 days of the commencement of the first
action, and on a set of defined criteria (s. 13.1). Moreover,
no appeals will be allowed (s. 13.1(5)). The new carriage
motion regime will likely be welcomed by class counsel, as well as
by defendants who wish to know who will actually be in charge of
the Ontario litigation.
- More rapid dismissal for
delay: If a plaintiff does not file a
certification record or a timetable to proceed within one year of
commencing the action, it will be dismissed for delay (s.
29.1(1)). The plaintiff would then be responsible for giving
notice to the class (s. 29.1(2)). This change reflects a
recommendation by the Law Commission to respond more effectively to
plaintiffs who do not seek certification expeditiously.
- Clarity on the resumption of
limitation periods: If a certification motion is
dismissed, the limitation period will begin to run for all proposed
class members (s. 28(1)(a)), and the limitation
period on a defendant's claims for contribution and indemnity
from third parties will be suspended upon
commencement of a putative class proceeding (s.
28(3)). There had been a lack of clarity on these important points
under the current legislation.
- More balanced allocation and
recovery of costs: The Class will only recover
the costs of giving notice of certification, if their claims
actually succeed, whether on the merits or in a settlement
(s. 22(1.1)). Further, if a plaintiff receives support from a
third party funder, it will be mandatory to disclose the fee
sharing arrangement in the notice of certification (s. 16(5)(e));
third party funding agreements will be subject to prescribed
criteria for court approval, on notice to the defendant (s.
33.1(6)); the defendant will have a direct right of action
against the funder for costs (s. 33.1(8)); and the
defendant can seek security for costs from a third party funder not
ordinarily resident in Ontario (s. 33.1(12)). These changes
will enhance transparency so that class members can make an
informed decision as to whether to opt out of the class proceeding,
courts can protect the class in its dealings with third party
funders, and defendants can collect on cost awards.
- Fuller disclosure for settlement approval: On settlement approval, class counsel will be required to make "full and frank disclosure" of prescribed factors intended to assist the court in assessing the fairness of the proposed settlement (s. 27.1(7)). This codifies the recent trend in the jurisprudence toward requiring greater empirical support for proposed settlements. After settlement, the administrator must file a comprehensive report on the performance of the settlement (s. 27(16)), and the court may hold back class counsel's fees until it is "satisfied with the distribution of the monetary award or settlement funds" (s. 32(6)).
The proposed reforms go well beyond the recommendations of the Law Commission, and they should be welcomed by defendants. Class counsel will likely oppose many of these changes, and it will be interesting to see whether the Attorney General bends to pressure. Ultimately, this will be a test of the Government's stated commitment to send a clear message that Ontario is "open for business".
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