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On November 14, 2007 the Ontario Court of Appeal released its decision in Cassano v. The Toronto-Dominion Bank,[1] certifying a class action alleging that Toronto-Dominion Bank ("TD") breached its contract with credit card holders by failing to disclose fees on foreign currency transactions and by collecting those fees without authorization. In overturning the decision by the motions judge not to certify the action (which was upheld by the Divisional Court), the Court of Appeal determined that an individual assessment of what each individual cardholder would have done had they known of the allegedly undisclosed fees was not required and that in any event an aggregate assessment of damages under the Class Proceedings Act would be appropriate. The Court of Appeal also affirmed that various provisions of the Class Proceedings Act provide powerful procedural mechanisms which permit trial courts to take a variety of approaches to assess individual claims and distribute any damages awards.

In a related development, on November 15, 2007, the Supreme Court of Canada decided not to grant leave to appeal in Markson v. MBNA Canada Bank[2] (see our September 2007 bulletin on the Ontario Court of Appeal decision), in which it was found that the plaintiff need only demonstrate potential liability before having recourse to the provisions of the Class Proceedings Act relating to aggregate assessment, and in Parsons v. Coast Capital Savings Credit Union,[3] a decision in which the British Columbia Court of Appeal found that the relevance of individual circumstances only required the refinement of certain common issues, not revocation of certification. These three decisions, all in favour of certification, illustrate a continuing trend towards certification and the courts' reluctance to refuse to certify despite the presence of individual issues or the difficulty in assessing each class member's claim.

THE FACTS

The representative plaintiff, Dr. Paul Cassano, used his credit card to pay for hotel charges in the United States, which when converted from United States currency totalled C$766.62. The hotel accidentally billed Dr. Cassano's credit card twice. His card was credited for this erroneous charge, but instead of the full amount, his statement showed that he was only credited C$745.44. The discrepancy resulted from TD charging a conversion fee and an issuer fee on foreign currency transactions.

A class action was commenced by Dr. Cassano, alleging that TD had breached its contract with certain cardholders by charging undisclosed and unauthorized fees. The plaintiff's claim centred on the allegation that the conversion fee and the issuer fee charged on foreign currency transactions were undisclosed and unauthorized under the terms of the plaintiff's cardholder agreement. At the relevant time, it was alleged that the conversion fee and issuer fee were not included in the consumer and commercial cardholder agreements and that it was not until later that the respective cardholder agreements were amended to expressly disclose the conversion fee and the issuer fee as part of the cost of foreign currency transactions.

The motions judge dismissed Dr. Cassano's application for certification on the basis that the only common issue, i.e., whether there was breach of contract, would not advance the claims of the class members significantly due to the fact that compensatory damages would need to be determined on a individual basis. In particular, the motions judge held that a determination of the extent of each cardholder's loss would require proof on an individual basis as to how each class member would have used his or her credit card had the cardholder known of the fees that applied to foreign currency transactions. The motions judge's decision was upheld by the Divisional Court.

OVERVIEW OF DECISION

The Court of Appeal found that the motions judge had erred in concluding that damages for the alleged breach of contract required an individual assessment. Under the Ontario Class Proceedings Act, a judge, in granting certification, must be satisfied that the claims of the class members raise common issues. The judge must also be satisfied that a class proceeding is the preferable procedure for the resolution of common issues. The Court of Appeal agreed with the motions judge that the resolution of whether TD breached its contract with cardholders by charging the conversion and issuer fees was an acceptable common issue. However, it disagreed with the conclusion that the damages in this case required an individualized assessment and found that the damages could be assessed in the aggregate.

The Court of Appeal found that the terms of the cardholder agreement did not provide alternative modes of performance so as to require consideration of how each cardholder would have acted had they known of the fees. While the terms of the cardholder agreement provided TD with an option to disclose fees and amend the agreement, it did not provide TD with the option to present cardholders with a hypothetical choice of asking what they would have done in the event that disclosure of certain fees had been made retroactively in accordance with the cardholder agreement. Thus, the determination of damages did not require an assessment of how each individual cardholder would have behaved.

In addition, the Court of Appeal found that the requirements for an aggregate assessment of damages, as outlined in section 24 of the Class Proceedings Act, could be used in the case before it, and the extent of TD's liability could be determined by reviewing TD's records relating to the amount of income it collected from foreign currency transactions as a result of the undisclosed fees. In coming to this conclusion, the Court of Appeal rejected TD's argument that the cost of determining the quantum by checking individual records, approximately $48,500,000, was too high, stating that such expenses would only be required if TD were found liable and that "[i]t would hardly be sound policy to permit a defendant to retain a gain made from a breach of contract because the defendant estimates its costs of calculating the amount of the gain to be substantial". The Court of Appeal also found that provisions of the Class Proceedings Act might permit the trial judge to fashion a remedial order that would avoid the potential costs and inefficiencies associated with determining the quantum of damages on an individual basis, or authorize the court to require class members to submit individual claims in order to give effect to an aggregate award of damages.

The Court of Appeal found that a class action was the preferable procedure to deal with class members' claims against TD and indeed it was the only viable procedure for bringing such claims. Finding that the Class Proceedings Act is a "powerful procedural mechanism that permits the court to take a variety of approaches in resolving claims of the class members", the Court of Appeal held that although "the prospect of an aggregate assessment of damages is a factor in favour of certification, it is not a prerequisite." A class action was held to be the preferable procedure regardless of whether the assessment and distribution of damages, if necessary, was to be conducted on an aggregate or an individual basis, given the various provisions of the Class Proceedings Act which are available to the trial judge to determine any individual issues and distribute amounts awarded.

Randy C. Sutton

[1]. 2007 ONCA 781

[2]. 2007 ONCA 334

[3]. 2007 BCCA 247

The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault LLP or any member of the firm on the points of law discussed.

© Ogilvy Renault LLP 2007 - All Rights Reserved

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