Analyzing the Superior Court's decision in Brazeau v. Canada (Attorney General), 2021 ONSC 8158
Ontario's Class Proceedings Act, 1992 (the "CPA") divides class actions into different stages, contingent on whether the litigation is focused on collective or individual issues. A progression from one stage to another will have implications for the relationships between litigants, their lawyers, the courts, and litigation funders.
The first stage in every class action is the pre-certification stage. At this stage, there is only a putative class action seeking certification. Where a class action is certified, it will advance into the common issues stage, where collective issues are adjudicated. Depending on the results of the common issues stage, the class action may progress into the third and final stage, where individual issues are decided.
To reach the final stage, a class action must not only not be resolved—that is, not settle—but clear a huge number of legal hurdles, typically over years. Consequently, breakthroughs into the third stage are rare.
The Class Action and the Class Proceedings Fund
Brazeau v. Canada (Attorney General), 2021 ONSC 8158 is the rare case that reached the final stage. The individual issues trials in that case follow summary judgment motions in two class actions brought on behalf of penitentiary inmates unlawfully placed in solitary confinement. While the class obtained an aggregate damage award, individual issues trials were ordered for class members to recover additional compensation.
The class actions were funded by the Class Proceedings Fund (the "CPF"), a litigation funding vehicle administered by the Law Foundation of Ontario (the "LFO"). The LFO is a special act corporation, and its powers are limited to those granted by that statute. These powers include providing "costs assistance to parties to class proceedings and to proceedings commenced under the [CPA]" When the CPF provides financial support for a class action, it will protect a litigant against an adverse cost award, and it will be entitled—among other things—to a "levy" of 10% of the "amount of the award or settlement funds, if any, to which one or more persons in a class" is entitled.
When individual issues trials were ordered in the Brazeau litigation, class counsel believed that the CPF's existing financial support would include litigation support for individual issues trials, and that the CPF could not extract a levy from awards arising out of those trials without funding them. The LFO disagreed and asserted that funding individual issues trials was outside of its statutory mandate. It brought a motion for directions to resolve its authority.
To decide the issue, the Superior Court was forced to "explore largely unexplored legal territory" concerning the third stage of a class action and decide—among other things—how the LFO's mandate interacted with the CPA.
Analytical Stages of a Class Action
The Court analyzed the role of the participants in each stage of a class procedure, framing each one in terms of litigation autonomy:
- during the pre-certification stage, a plaintiff will instruct a lawyer to bring a proposed class proceeding. The lawyer will have a potential lawyer-client relationship with class members, but the plaintiff has litigation autonomy.
- during the common issues stage, a lawyer will have a client relationship with class members, but this relationship is limited since class members cannot instruct class counsel and lack litigation autonomy. The plaintiff—now, a representative plaintiff—continues to have litigation autonomy.
- during the individual issues stage, a lawyer and client relationship between the representative plaintiff and class counsel may continue, but class members become free to retain new lawyers. These individual class members gain litigation autonomy.
Significantly: once a litigant gains litigation autonomy, they are potentially exposed to an adverse costs award.
The plain language of the CPF's enabling statute—which, among other things, distinguishes between "plaintiffs to class proceedings," and "proceedings commenced under the [CPA]"—supported the LFO's power to fund individual issues trials. The Court ruled that individual issues trials are "proceedings commenced under the [CPA]". Once a class member achieves litigation autonomy, they become a candidate for support from the CPF.
The Court also wrote that where there is exposure to an adverse cost award, access to justice concerns will be triggered. Access to justice is a policy rationale underlying both the CPA and the CPF, and the same access to justice concerns that exist for representative plaintiffs during the common issues stage can exist for class members in individual issues trials. This also supported a finding that the LFO could approve litigation support for individual issues trials in appropriate circumstances.
The LFO has the statutory authority to fund and provide adverse costs protection individual issues actions, but it is not obliged to do so. Its statutory levy extends to a recovery from a class member's individual issue trial regardless of whether it provides costs protection for that individual issue trial, since a sum payable to "one or more class members" includes any amounts awarded at an individual issues trial. In any event, the language of the CPF's enabling statute was clear that the LFO is entitled to a share of any kind of recovery made by the class members as a collective or as individuals.
The decision is an interesting addition to the law regarding individual issues trials, and aligns with common sense. Class members benefit from the CPF's financial support during the pre-certification and common issues stages and are notified on certification that the levy will reduce the award or settlement funds to which they may become entitled. In these circumstances, distinguishing between the different forms which an award might take would seem unreasonable.
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