Canada: Aggregate Damages In Class Proceedings: Ontario Court Takes A First Step

In what is reported to be the first class action decision in which an award of aggregate damages on a class-wide basis has been made, the Ontario Superior Court of Justice has ruled that if all or part of a defendant's monetary liability to class members can be fairly and reasonably determined without individual proof, aggregate damages awards should be made.¹

The decision, Ramdath v George Brown College, which actually considers the viability of an award of aggregate damages in practice, notes that aggregate assessments may be essential to the continuing viability of the class action as a procedural option for plaintiffs seeking access to justice. The court's review of the issues underlying aggregate assessments will be of interest to plaintiffs and defendants facing claims that rely on these provisions of the Class Proceedings Act.

The facts

This class action was brought by students of an Ontario college who enrolled in an international business program based on representations made by the college in its course calendar. After enrolling, the students found out that certain credentials would not be awarded through the program as promised. In the common issues trial, the college's misrepresentation was found to be an unfair practice under the Consumer Protection Act and also common law negligent misrepresentation. For the damages trial, the plaintiffs elected to proceed solely based on the Consumer Protection Act claim. The class was made up of domestic and international students who enrolled in the program during the class period, including those who withdrew or did not graduate.

Aggregate damages under the Class Proceedings Act

The court stated that the key to understanding the calculation of aggregate damages in class proceedings is to understand that they need not be perfectly accurate, but they must be reasonable. This represents the balance between accuracy and access to justice that was struck by the legislature in drafting the aggregate damages provision of the Class Proceedings Act. The court found aggregate damages may be awarded as long as the evidence proffered by class counsel is sufficiently reliable to permit a just determination of all or part of the defendant's monetary liability without proof by each individual class member.

The court listed three factors that should be considered in deciding whether to award aggregate damages:

• the reliability of the non-individualized evidence presented by the plaintiff;
• whether the use of this evidence will result in unfairness or injustice to the defendant; and
• whether the denial of an aggregate approach will result in a wrong without a remedy and therefore a denial of access to justice.

Calculating damages

The plaintiffs and the college agreed to a formula for assessing damages. The tort measure was agreed to be the appropriate measure of damages and the damages calculation sought to put each class member in the position he or she would have been in if the college had not made the misrepresentation.

The formula for the damages calculation was stated as: the direct costs of taking the diploma plus the indirect costs minus the residual value. Direct costs included tuition, books, additional expenses and air travel. Indirect costs were the income that was lost to each class member while taking the eight-month diploma and the income that would be lost over a lifetime of work because of the eight-month delay of entry into the workforce. To prevent over-compensation, the court subtracted the value of the diploma to each class member.

Rough calculations and "reasonable" sums

The court found that the direct costs and residual value of the diploma could be reasonably determined without individual proof, but that the indirect costs, including those resulting from foregone income and delayed entry to the workplace, would have to be determined by individual inquiry. The value of the degree to each class member could be determined in the aggregate.

The direct costs were calculated by adding up the tuition fees, other student fees, health insurance fees for international students, an average amount for textbooks and supplies and an average amount for air travel. The average amount for textbooks and supplies was fixed at $400 – about $100 less than what the representative plaintiff claimed. This amount was the court's best estimate after discounting for the fact that some students probably bought used books. For air travel, which was payable to all foreign students, the court used a weighted average of the round-trip economy airfares from the capital cities of the students' home countries as advertised on popular travel websites.

The court noted that while the college may have complained about the estimates used to tally direct costs, it did not adduce any evidence to refute the averages arrived at by the court, though it had ample opportunity to do so.

Though the plaintiffs' expert put forward methodologies for calculating the indirect costs of foregone income and delayed entry to the workforce on an aggregate basis, the court found these to be unreliable, unfair and flawed. Furthermore, the court identified serious problems with the underlying data and assumptions used in the expert's models. The court found that any monetary amounts under these heads of damage would require individualized evidence of pre-program income to fairly and reasonably determine the college's liability. The court indicated that if the plaintiffs wished to pursue individualized assessments under these heads of damage, it was "up to them."

Perhaps the most interesting aspect of the court's damages assessment was its estimate of the diploma's residual value, which had to be subtracted from the direct costs to each class member to prevent over-compensation. After analyzing the extensive evidence led on what the diploma was really worth, the court found the program had "a low but nonetheless measurable market value for some class members, most likely in the range of 15 to 20 percent." Declining to make a final determination on the diploma's exact value, the court invited further submissions from the parties.  

Aggregate damages: what's next?

It remains to be seen whether other courts will follow this approach, or whether plaintiffs in other class actions will be able to use this tool in the context of complicated damages assessments. While this decision makes clear that aggregate damages methodologies should not be applied if all or some part of the defendant's monetary liability cannot be fairly determined on an aggregate basis, the decision also represents a move towards conducting partial damages calculations where possible and then allowing individual assessments to follow if plaintiffs are inclined to pursue the remainder.

Footnote

1 Ramdath v George Brown College, 2014 ONSC 3066.

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