In the context of this class action, the Quebec Superior Court recently granted a request to split the action, thereby splitting the trial into two stages: a first stage during which damages will be assessed and a second stage addressing liability.
In this case, the plaintiffs essentially claim that the defendants engaged in anticompetitive activities to sell gas in Quebec. The Court had to rule on a motion by the defendants, who, prior to the presentation of evidence on liability, wanted the Court to determine the appropriate method for the calculation of damages as well as their quantum. The Court began its analysis by reiterating the principles that should guide the judge seized of such a motion. It noted that although the general rule is that a trial is heard as a whole, the splitting of an action is not an extraordinary measure. Splitting an action is appropriate if it accelerates the judicial process, while reducing costs. More specifically, the Court must determine whether certain predefined criteria favour splitting the action or not. Its analysis may be summarized as responding to the following questions:
- Are the issues to be determined during the first stage simple or complex?
- Are the issues to be determined during the first stage distinct from those that will be dealt with during the second stage, or are they closely linked?
- Is the judgment to be rendered at the end of the first stage susceptible of putting an end to the litigation, of limiting the scope of the issues to be determined during the second stage or likely to increase the chances of reaching a settlement of the file?
- What resources have the parties already dedicated to one or the other issues or all of them taken together as a whole?
- What advantages will splitting the action provide the parties in comparison to the risks or inconveniences that it may cause?
The Court must thus ensure that splitting the action respects the rule of proportionality and promotes access to justice.
In regard to the complexity of the issues, the Court noted that the parties had obtained a total of eight expert reports on the issue of damages and that, further to the Court’s request, the experts had met and prepared a joint report. Although it was agreed in the joint report that the same damage calculation methodology would be used, some fundamental issues in regard to the assessment of damages remained to be determined. Thus, considering the reports obtained and the complexity of the issues, the Court ruled that this criterion favoured splitting the action.
In regard to the second question, the Court was of the view that, like in most cases, the issues regarding liability could be treated separately from those regarding damages and that, in this case, nothing indicated that these issues were closely linked. The Court indicated that the expert reports already contained the information required and the methodology to be used to assess the damages.
With respect to the third question, the Court noted that the defendants were unanimously of the view that a judgment quantifying the damages would encourage them to settle the litigation or at least limit the questions to be debated during the second stage of the trial. On the other hand, the Court noted that the plaintiffs would only be inclined to settle if their expert’s theory was retained by the Court. Considering that splitting the action serves primarily the proper administration of justice before aiming to put an end to litigation, the Court concluded that, in this case, splitting the action could, all the same, have a decisive influence on the continuation of the dispute.
In regard to the resources already dedicated by the parties to the litigation, the Court referred to the eight expert reports and the joint report already prepared and indicated that it would be useful to conduct a thorough analysis of the elements already available considering all the work remaining to be done by the parties in regard to the evidence on liability.
Finally, considering that splitting the action is merely a procedural measure and would not cause the parties to lose any rights, the Court granted the motion.
In closing, it should be noted that under the new Code of Civil Procedure, an action may be split of the judge’s own motion, whereas previously, splitting the action had to be requested by one of the parties. It will be interesting to see if judges will avail themselves of this new power in order to encourage recourse to private dispute resolution methods and encourage the proportionate and economical application of procedure, which, moreover, are among the principle objectives of the new code.