Canada: Major Changes To Ontario's Class Proceedings Act

On July 8, 2020, Bill 161 received Royal Assent. The amendments to the Class Proceedings Act, 2002 (the "amended CPA") contained in Bill 161 will come into force and effect on a date to be determined by proclamation of the Lieutenant Governor.

Summary of the Key Changes

The amendments to the CPA introduced by Bill 161 will help to ensure that cases proceed more quickly, provide more opportunities for frivolous claims to be dismissed at an earlier stage, and provide the courts with a balanced framework within which to better assess whether claims are truly well-suited for certification as a class action. Bill 161 also introduces changes to appeal rights regarding certification decisions, which balance the rights of plaintiffs and defendants. The amendments also provide for claims to be dismissed if they are dormant for an extended period of time and for plaintiffs to bear the costs of notice of certification, recognizing that it is the plaintiffs who seek to pursue a class action and that certification is not a ruling on the merits of the claim. Also in connection with costs, Bill 161's litigation funding provisions allow defendants to recover costs directly from third party funders.   

The Specific Changes

• Transition: Class actions commenced before the amended CPA comes into force will be governed by the existing CPA. Any class action commenced after the amended CPA comes into force will be subject to the new CPA.
• Registration:  Plaintiffs will be required to register class proceedings in accordance with regulations. Historically, there has not been a centralized regulated database of class actions in Ontario. We expect that the registration regulations will result in the creation of such a database. 
• Overlapping class proceeding in Ontario (i.e. carriage): There will be no right to commence an overlapping class action more than 60 days after the first proceeding was commenced. Carriage motions between competing class actions in Ontario will be required to be filed within 60 days after the first proceeding was commenced. There will be no appeal from carriage decisions.
• Overlapping class proceedings in Canada: At certification, the court will be required to consider whether there is another class action pending in another province involving the same subject matter and, if so, to determine whether it would be preferable for some or all of the claims in the Ontario action to be resolved in another proceeding. Importantly, the amended CPA will also create the right for a party to bring a motion prior to certification for the court to make a determination about whether to stay an action (or grant other relief) where there is an overlapping class action in another province. This brings Ontario in line with Alberta, British Columbia and Saskatchewan.
• Permitting meritless cases to be shut down earlier:  The court will be required to hear motions that may dispose of all or part of the proceeding, or narrow the issues to be determined or evidence to be adduced, before the certification motion or simultaneously with the certification motion.
• Limitation periods for contribution and indemnity claims: Any limitation period applicable to a claim by a defendant for contribution and indemnity is suspended in favour of the defendant on the commencement of a claim for contribution and indemnity. The limitation period will only resume running against the defendant once the time for appeal of the certification decision has expired or the appeal of the certification decision is final.
• Certification test: The existing CPA requires that a class proceeding be the preferable procedure for the resolution of the common issues. The amended CPA will require that: (i) the proposed class proceeding be a superior means of determining the rights or entitlement of the class members, as compared with, inter alia, any quasi-judicial or administrative proceedings; and, (ii) that questions of fact or law common to the class members predominate over the individual issues. The introduction of a predominance requirement brings Ontario into line with the United States regime where certification is typically a higher hurdle for plaintiffs to overcome.
• Costs of notice to class members: The plaintiff must pay for the costs of providing notice of certification initially, unless they have consent from the defendant at an earlier time. The plaintiffs may seek to recover those costs from defendants if the plaintiffs are ultimately successful in the class proceeding.
• Appeals from certification: Defendants and plaintiffs will now both have a right to appeal from a certification order to the Court of Appeal. Previously, only the plaintiff had this appeal right.  The amended CPA will also prohibit plaintiffs from materially amending their notice of certification motion, pleadings, or notice of application on appeal. This amendment will avoid an increasingly common practice of plaintiffs changing their case materially in the course of an appeal.
• Third party funding:  A plaintiff who has entered into an agreement to receive third-party funding must receive court approval of the agreement. The court will only approve a third-party funding agreement if it is satisfied that: 1) the agreement is fair and reasonable; 2) the agreement will not diminish the rights of the representative plaintiff to instruct counsel and control the litigation; 3) the funder is able to satisfy adverse costs awards; and 4) meets any other prescribed requirements. Once approved, defendants will be able to recover any costs awarded against the plaintiff directly from the funder (to the extent of the indemnity provided under the funding agreement). Defendants will also be entitled to obtain security for costs from the funder (to the extent of the indemnity provided under the funding agreement) if the funder: 1) is ordinarily resident outside of Ontario; 2) the defendant has an order against the funder that remains unpaid in whole or in part; and 3) there is good reason to believe that the funder has insufficient assets in Ontario to pay the costs.
• Dismissing dormant actions: The court will be required to dismiss a proposed class action for delay if, within one year from issuing a claim, the plaintiff has not filed a final and complete motion record for certification, the parties have not agreed upon a timetable, the court has not ordered that the action not be dismissed or imposed a timetable, or any other steps required by the regulations have not taken place.
• Evidence to be filed on settlement: A party seeking approval of a settlement must disclose information about the settlement, including why the settlement is fair and reasonable, risks/possible recovery if litigation continues, the total number of class members, and expected recovery arising from the settlement. The court must consider this information in determining whether to approve the settlement.
• Report required after distribution of settlement funds: The administrator distributing settlement funds must file a report with the court no more than 60 days after the settlement funds are fully distributed setting out the particulars of the distribution. The amended CPA sets out the specific information the report must contain.

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