Publication
Class actions-proof of individual loss no longer required?
Recent decisions in the area of class actions appear to have lowered the bar for plaintiffs seeking to certify class actions in Ontario. Three recent decisions that rely on waiver of tort and on statutory provisions dealing with the aggregate assessment of damages appear to signal the courts' willingness to certify class actions without proof of individual loss.
First, the Supreme Court of Canada denied an application for leave to appeal in Serhan Estate v. Johnson & Johnson.1 As previously reported, the issue in Serhan was whether a pleading of waiver of tort disclosed a reasonable cause of action in the context of a product liability case. The motions judge, Mr. Justice Cullity, of the Ontario Superior Court of Justice, had certified the claim, which sought the equitable remedies of constructive trust and disgorgement of profits on the basis of the doctrine of waiver of tort. According to this doctrine, plaintiffs in a tort claim may waive compensatory damages for losses suffered and instead seek a disgorgement or accounting of the profit or gain made by the defendant as a result of the defendant's allegedly wrongful conduct. This allows liability to be determined and damages to be computed based solely on a review of the defendant's conduct. As a result, under waiver of tort, there is no need for individual class members to prove that they have suffered a loss, and liability can therefore be determined on a class-wide basis without reference to inherently individual issues such as causation and damages. The elimination of these individual issues and the Supreme Court's reluctance to consider the doctrine of waiver of tort on appeal suggests that similar claims will be filed more frequently and will be certified as class proceedings.
Secondly, in Heward v. Eli Lilly,2 Justice Cullity considered whether waiver of tort was available in any tort action or whether it could be pleaded only in respect of certain torts. The BC Supreme Court in Reid v. Ford Motor Co.3 (a product liability class action) had held that the doctrine of waiver of tort applied only to "anti-enrichment" torts such as conversion, detinue, deceit or unjust enrichment and that waiver of tort was not available in "anti-harm" torts such as negligence, defamation or battery. However, in Heward, a pharmaceutical product liability class action based primarily on negligence, Justice Cullity rejected this reasoning and held that, in principle, there was no restriction on the type of tort to which waiver of tort might apply. Accordingly, Justice Cullity certified the claims in negligence and waiver of tort as common issues in the class proceeding in Heward.
Lastly, in Markson v. MBNA Canada Bank,4 the Ontario Court of Appeal overturned another decision of Justice Cullity, who this time had denied certification of an action as a class proceeding. As in Serhan and Heward, the issue in Markson was whether the Court should certify a class action when the determination of whether any actual loss had been suffered would require an individual review of each class member's case. Rather than relying on the doctrine of waiver of tort, the Court of Appeal based its decision to certify the class action on s. 24 of the Class Proceedings Act ("CPA"), which allows for the aggregate assessment of damages to the class as a whole.
Before the Court of Appeal, the plaintiff in Markson argued that the question of whether any individual had suffered damages need not be answered as this case was an appropriate one for an aggregate assessment and apportionment of damages. The Court of Appeal agreed and held that the plaintiff need only demonstrate "potential liability" in order to engage the provisions of s. 24 of the CPA and went on to say that it would then be open to the trial court to use the provisions of s. 24 to determine both what the total damages were to the class (using statistical evidence and random sampling if necessary) and how such damages should be distributed. The Court of Appeal held that it would be possible to make such determinations without deciding whether any particular class member had suffered an actual loss and stated: "It may be that in the result some class members who did not actually suffer damage will receive a share of the award. However that is exactly what is contemplated by s. 24." In the end, the Court of Appeal added the issue of an aggregate assessment under s. 24 as a common issue and certified the action as a class proceeding.
The cumulative effect of the decisions in Serhan, Heward and Markson is to tip the scales in favour of the plaintiff on a motion to certify an action as a class proceeding. Historically, cases involving significant issues of individual loss and individual causation were infrequently certified as class proceedings. This was particularly the case where the minimal damages alleged to have been suffered by each class member did not justify the time and expense (to the parties and the courts) required to conduct the necessary individual determination of liability in each class member's case. To learn more, contact Alan Mark or D. Michael Brown.
Ciment St-Laurent class action-the Supreme Court of Canada grants leave to appeal
In related news, the Supreme Court of Canada recently granted Ciment St-Laurent Inc. leave to appeal the previously reported decision of the Quebec Court of Appeal. Among the questions to be raised before the Supreme Court is the propriety of the Court of Appeal's use of an average to calculate the quantum of damages in a class action. The evidence before the lower courts established that the inconvenience to residents in the neighbourhood caused by dust from Ciment St-Laurent's cement works varied greatly in nature and degree. The Court of Appeal held that it would be appropriate to assess damages on the basis of an average, recognizing nonetheless that this would result in overcompensation of some class members and undercompensation of others. Ciment St-Laurent will argue that this approach constitutes an inadmissible departure from the substantive rules governing civil liability, which do not permit a loss to be transformed into a windfall. François Fontaine is counsel for Ciment St-Laurent.
Judicial review-tactical evidentiary decisions before administrative tribunals
The Supreme Court of Canada's decision in Council of Canadians with Disabilities v. Via Rail Canada Inc.5 adds a significant chapter to the jurisprudence on the issue of reasonable accommodation in Canadian human rights law. At issue was the legality of a decision by the Canadian Transportation Agency ordering VIA to make its newly acquired Renaissance rail cars wheelchair-accessible. Of significant general interest are the differing viewpoints expressed in the majority and dissenting opinions regarding the nature and extent of the evidence that must be presented before an administrative tribunal.
The Court was sharply divided, five to four, with the majority allowing the appeal from the Federal Court of Appeal and reinstating the order of the CTA. A critical component in the analysis was VIA's evidence before the Federal Court of Appeal on judicial review. VIA submitted an expert report from a Bombardier Inc. train expert, who explained that it would cost $48 million to implement the CTA order and that it could not be justified from an engineering standpoint.
The majority of the Supreme Court of Canada disapproved of VIA's decision not to adduce more evidence before the CTA and seem to have disregarded the expert report filed before the Federal Court of Appeal as an element of their disapproval of VIA's conduct before the CTA. In contrast, the dissent accepted VIA's argument that it was more feasible to obtain the third-party cost estimate after the final decision of the CTA because it pertained to a specific order of the CTA rather than to an unlimited series of alternatives. Moreover, the dissent criticized the majority's implicit view that the expert report should not have been admitted as evidence before the Federal Court of Appeal and pointed out that the admission of this evidence was not an issue before the Supreme Court, that the report was the subject of cross-examination, and that over 2000 pages of evidence were filed in the Federal Court of Appeal.
One of the lessons that can be drawn from this case is that parties before administrative tribunals need to put their best foot forward from the start and not expect the "real" debate to take place only on judicial review. However, given the slim majority, this decision may not be the final chapter on this issue. To learn more, contact Randy Sutton or Azim Hussain.
The Supreme Court re-examines the doctrine of interjurisdictional immunity
The Supreme Court of Canada recently released reasons for judgment in two long-awaited cases: Western Canadian Bank v. Alberta6 and British Columbia (Attorney General) v. Lafarge Canada Inc.7 In both cases the Court rejected arguments that, under the doctrine of interjurisdictional immunity, provincial laws were constitutionally inapplicable to matters falling within federal jurisdiction. The majority of the Court indicated that the doctrine should not be used as a primary tool for refereeing federal-provincial jurisdictional conflicts and should follow pith and substance and paramountcy as the third step in a division of powers analysis. As a result, in Western Canadian Bank, provincial regulations regarding the marketing of insurance were held to apply to the chartered banks' insurance promotion activities. On the other hand, in Lafarge Canada, municipal zoning and development by-laws were held to be inoperable in respect of the construction of an integrated ship offloading/concrete batching facility located within the port of Vancouver. To learn more, please see our recent Information Bulletin on this case or contact Christine A. Carron, Pierre-Christian Labeau or Andres C. Garin.
Injunctions-substantial indemnity costs award upheld by the Ontario Divisional Court
The Ontario Divisional Court has upheld a significant costs award following the dismissal of a motion for an interlocutory injunction in Jazz Air LP v. The Toronto Port Authority.8 In making the costs award of $160,000, the motions judge considered the fact that the one-day motion was presented on a tight timeline and included unproven allegations of conspiracy and improper conduct. The motions judge was also influenced by Jazz Air LP's failure to produce its own dockets to test the reasonableness of the costs sought. The Divisional Court held that it was reasonable for the motions judge to conclude that the defendants would do everything they could to prepare for and present a case with the best possible prospects of success given the tight timetable and the importance of the issues. Although the costs awarded were characterized as "enormous", the Court concluded that the motions judge did not err in principle and upheld the award.
This decision is significant not only because of the size of the award, but also because it signals how Ontario judges may interpret the new criteria for fixing costs awards included in recent amendments to the Ontario Rules of Civil Procedure. Ogilvy Renault represented Porter Airlines, one of the parties that successfully defended against the motion for an interlocutory injunction. To learn more, contact Robert L. Armstrong or Orestes Pasparakis.
Real estate development-when payment is available for services provided prior to the signature of a contract
In Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc.,9 a shopping plaza developer performed work and provided services in anticipation of signing a joint venture agreement to develop an outlet mall. The joint venture agreement was never finalized. Because an enforceable contract was never concluded, the trial judge dismissed the developer's claim for breach of contract. The trial judge also denied the developer's claim for payment of fair market value for services rendered by way of a restitutionary claim based on quantum meruit, holding that an explicit mutual agreement to compensate for services is a prerequisite to recovery.
On appeal, the Ontario Court of Appeal held that there is no need to prove the existence of a valid contract to succeed in an action for restitutionary relief based on quantum meruit. It was sufficient that the services in question were provided in reliance on some underlying measure of agreement at the request of or with the encouragement or acquiescence of the beneficiary of those services in circumstances that rendered it unjust for the beneficiary to retain the benefit conferred by the provision of those services. Such circumstances support a claim for compensation at fair market value. As a result, parties advancing independent quantum meruit claims have clearer guidance in advancing such claims and it is not necessary to demonstrate an explicit mutual agreement to compensate for services rendered. To learn more, contact William McNamara or Dan Leduc.
Injunctions-when equitable defences are not available
The Ontario Court of Appeal has confirmed that equitable defences, including estoppel, laches and delay, are not available to prevent the issuance of a permanent injunction restraining the infringement of legislation. In Canada Post Corporation v. G3 Worldwide (Canada) Incorporated (c.o.b. Spring),10 Canada Post sought a permanent injunction against Spring to prevent it from operating a mail delivery service and to enforce the exclusive statutory privilege for providing mail services granted to Canada Post by s. 14(1) of the Canada Post Corporation Act. Spring had been providing outbound international mail services for Canadian customers and Canada Post had known this since at least 1992. Among the defences Spring raised against the injunction were estoppel, laches and delay. Spring also claimed that Canada Post could not seek an injunction because the Canada Post Corporation Act did not provide for a civil remedy.
The Ontario Court of Appeal found that Canada Post could seek an injunction despite the absence of civil remedy provisions in the Canada Post Corporation Act, although the Court was careful to state that this decision does not mean that every statutory right can be enforced through civil proceedings. The Court also held that equitable defences, including estoppel, laches and delay, cannot be applied against the Crown or its agent to prevent the operation of a statutory scheme which imposes an express duty. To learn more, contact Dera J. Nevin.
Termination of commercial contracts-no need for "grace periods"
The Quebec Court of Appeal has held that when a contract provides that a party can terminate the agreement with cause upon providing to the other party a written notice of termination to take effect within a reasonable time, the party giving such notice need not provide the other party with a "grace period". At issue in Toshiba Business Equipment, Division of Toshiba of Canada Ltd. v. Admaco Business Machines Ltd.11 was whether Toshiba had properly terminated its agreement with Admaco by providing a notice of termination. Admaco argued that the termination was illegal and wrongful, as it was not afforded an opportunity to remedy its breach.
The Court of Appeal rejected Admaco's arguments, holding that the notion of a grace period is relevant to employment law, but is quite foreign to commercial matters. In the Court's view, unlike a grace period, the reasonable period required by the case law for the termination of commercial arrangements does not serve to provide the other party with an opportunity to cure any default. Rather, its purpose is to allow the other party to take note of the termination and to reorient its commercial activities. To learn more, contact Éric Dunberry or Sophie Barry.
News from Ogilvy Renault
Ogilvy Renault is proud to announce that Brian Mulroney, P.C., C.C., LL.D., a senior partner of the firm, is the recipient of the Médaille du Barreau du Québec for 2007. The Médaille du Barreau du Québec is the highest honour bestowed by the Quebec Bar. The Medal is awarded once a year in recognition of an individual who has made a significant contribution to Quebec society in the legal field. Since the award was created in 1982, recipients have included L. Yves Fortier, Chairman of Ogilvy Renault, Louise Arbour, United Nations High Commissioner for Human Rights, and Gil Rémillard, former Minister of Justice of Quebec.
In addition, seven members of the firm have been named "Advocatus Emeritus" by the Quebec Bar. This new distinction, created by the Bar to promote the image of the legal profession by honouring its most exemplary members, was conferred on a total of 33 individuals this year. Three members of our Litigation Group, Christine Carron, Pierre Cimon and François Fontaine, received the award at the 2007 Quebec Bar Convention on May 31, along with Gilles Touchette of our Employment and Labour Law Group and Joan Clark, Counsel and a member of our Intellectual Property Group. The title of "Advocatus Emeritus" was also conferred on this year's recipient of the Médaille du Barreau du Québec, Brian Mulroney, and on L. Yves Fortier, who received the Medal in 1992.
Jean Savard, of our Montréal office, was awarded the Jules Deschênes Award by the Canadian Bar Association, underscoring his exceptional ongoing contribution to and support for the Quebec Branch of the Canadian Bar Association.
Lynne O'Brien of our Toronto office returned to the firm as a litigation associate at the beginning of 2007. Lynne was called to the Ontario Bar in 1994 and was initially in private practice as a litigator. She then moved in-house with BMO Nesbitt-Burns and is returning to private practice after a four-year career interruption to devote herself to her family. Please do not hesitate to contact Lynne.
Marc Kestenberg joined our Toronto office as an associate in May 2007. Marc was formerly a litigation associate at another firm and has particular experience in a broad range of commercial litigation matters including all manner of contractual disputes, the defence of directors and officers against claims of negligence and statute-based claims, shareholder and partner disputes, the enforcement of foreign judgments and estate litigation. Please do not hesitate to contact Marc.
Ogilvy Renault Engagements
Members of Ogilvy Renault's Litigation Group have been involved in the following engagements:
In June 2007, Steve J. Tenai, of our Toronto office, spoke at the Intensive Litigation Course on Maximizing Results in Examinations for Discovery. To learn more, contact Steve.
In May 2007, Kelly Friedman, of our Toronto office, chaired a panel at the E-Discovery A to Z Workshop. Kelly's panel topic was "First Steps on the Path to Production". To learn more, contact Kelly.
In April 2007, Martha A. Healey, of our Ottawa office, addressed a number of clients of the firm at a privacy conference hosted by Ogilvy Renault. The conference was called: "Privacy Breach? Developing a Corporate, Communications and Human Resources Response Plan better than 'What now?'" To learn more, contact Martha.
In April 2007, Sylvie Rodrigue, of our Montreal and Toronto offices, spoke at a Class Actions Symposium at Osgoode Hall Law School in Toronto. Sylvie provided an overview of recent developments in class action litigation in Quebec as part of a cross-country check-up. To learn more, contact Sylvie.
In April 2007, Robert Armstrong, of our Toronto office, spoke on Directors' Liability at the Law Society of Upper Canada's Special Lectures on Employment Law. To learn more, contact Robert.
In March 2007, Karen Whibley and Anna Traer, law clerks in our Toronto office, participated in an Advanced Roundtable in Civil Litigation for Law Clerks, sponsored by the Law Society of Upper Canada. The program was chaired by Karen Whibley and she spoke on three topics - Preparing for Trial, the Electronic Trial, and Document Retention Policies and Strategy. Anna Traer acted as Facilitator on the topic of the Electronic Trial. To learn more, contact Karen or Anna.
sp;1. 2006 OJ No.2421 (Div. Ct.)
2. 2007 CanLII 2651 (ON S.C.) (leave to appeal granted in part 2007 CanLII 26607 (Ont. S.C.))
3. 2006 BCSC 712
4. 2007 ONCA 334
5. 2007 SCC 15
6. 2007 SCC 22
7. 2007 SCC 23
8. 2007 CanLII 6457 (ON S.C.D.C.)
9. 2007 ONCA 324 (CanLII)
10. 2007 ONCA 348 (CanLII)
11. 2007 QCCA 125
For further information, please contact one of the following lawyers:
Montréal
Richard L. Desgagnés (514) 847-4431
rdesgagnes@ogilvyrenault.com
Toronto
Randy C. Sutton (416) 216-4046
rsutton@ogilvyrenault.com
About Ogilvy Renault
Ogilvy Renault is a full-service business law firm with close to 450 lawyers, patent and trade-mark agents practising in the areas of business, litigation, intellectual property, and employment and labour. Ogilvy Renault has offices in Montréal, Ottawa, Québec, Toronto, and London (UK), and serves some of the largest and most successful corporations in Canada, and in more than 120 countries worldwide. Ogilvy Renault is the 2006 International Law Office Client Choice Award winner among all Canadian law firms.
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
