The Appeal Of Bread: The Court Of Appeal For Ontario Weighs In On The Effects Of Class Action Certification

In David v. Loblaw Companies Limited, 2025 ONCA 830, Justice Zarnett wrote for a unanimous panel of the Court of Appeal for Ontario dismissing an attempt to relitigate the bread price-fixing class action proceeding.

Slicing to the heart of the matter, Justice Zarnett wrote, "One does not go behind the order and consider how close to asserting a cause of action the unsuccessful plaintiff came."

Background

This case is an appeal from a dismissed motion to amend a Certification Order on the following facts.

Marcy David, Brenda Brooks and Andrew Balodis were the representative plaintiffs who, in 2021, sought certification of the proposed bread price-fixing class action in Canada. There were 13 defendants, one of which was Maple Leaf Food Inc., the parent company of Canada Bread Company, before its sale to another defendant.

The Court certified the class action against some, but not all, defendants. In refusing to certify the class action against Maple Leaf, the certification judge noted that the pleadings disclosed no facts that implicated Maple Leaf in the conspiracy. The plaintiffs had ignored Maple Leaf's separate legal personality, lumping it in with its subsidiary, Canada Bread. The certification judge found that there was no cause of action against Maple Leaf, unlike another parent company, George Weston Limited, which was alleged to be a direct participant in the price-fixing conspiracy. The plaintiffs did not appeal the ruling denying certification against Maple Leaf.

Two years later, the plaintiffs moved to amend their pleading and the certification order to add Maple Leaf. The motion was dismissed. Although the Rules of Civil Procedure and the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the "CPA") permit amendments, neither allow for final decisions which are not appealed to be revisited. Further, the test for re-opening a trial, as set out in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. 2001 SCC 59 was not met on the facts.

The Decision

On appeal, the plaintiffs argued:

1. The amended pleadings should not have been struck against Maple Leaf because the claims against Maple Leaf were never dismissed, the pleadings had not closed, and the Certification Order did not foreclose pleading amendments;
2. The Certification Order should be amended because the only bar to certification, a lack of a particularized cause of action, has now been resolved. The Court has broad discretion to exercise its power under the CPA, which the motion judge applied too narrowly; and
3. The motion judge erred in applying the Sagaz test as the point of the new evidence was to show there was merit to the proposed claim in the amended pleading, not to prove by admissible evidence that Maple Leaf had participated in the alleged conspiracy.

The Court of Appeal dismissed the first ground of appeal by addressing the preclusive effect of the certification order. The Court reasoned that when a certification judge determines that there is no cause of action such that the claim cannot go forward, that order is final. This was affirmed by Obodo 2022 ONCA 814, the leading decision on the effects of a refusal to certify a claim. It is not material how close the unsuccessful plaintiff came to asserting a cause of action.

Citing Drywall Acoustic 2020 ONCA 375, the Court stated that, "an order is final for the purpose of appeal when it "determine[s] the real matter in dispute between the parties – the very subject matter of the litigation – or any substantive right to relief of a plaintiff or substantive right of a defendant." By moving to amend their pleadings and the certification order, the appellants tried to obtain substantive relief from Maple Leaf based on the same facts, the same parties, harming the same plaintiffs, all under the same conspiracy. The doctrine of res judicata prevents such attempts at re-litigation.

Further, the right to amend under rule 26.02 of the Rules of Civil Procedure contemplates a situation where the defendant is obliged to deliver a defence or be noted in default. Where a statement of claim does not disclose a cause of action, as here, the plaintiffs cannot pursue that defendant in any forum. The fact that the certification order did not formally dismiss the action against Maple Leaf does not change this.

In dismissing the second ground of appeal, the Court rejected the broad interpretation of the CPA argued by the appellants. The CPA is a comprehensive procedural statute which regulates the conduct of class proceedings in Ontario. It cannot create or modify substantive rights as was attempted by relitigating the issue in the face of Maple Leaf's right to rely on res judicata.

The Court dismissed the last ground of appeal, finding that the motion judge reasonably applied res judicata to deny the amendments. This discretion exists for circumstances where barring the re-litigation would create unfairness; however, for orders made in court proceedings, the discretion is very limited. The judge was entitled to scrutinize the evidence and found that it fell short of any new or arguably meritorious claims.

Takeaways

Much like bread, re-litigated claims can get stale. The doctrine of res judicata serves an important function in upholding the principle of finality, except in exceptional circumstances. This decision underscores the importance of properly pleading a cause of action at the outset, specifically in a class action, as procedural statutes, like the CPA, cannot be used to circumvent substantive legal rights

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