The Supreme Court of Canada released its judgment today in Canada Post Corporation v. Lépine1 – a decision eagerly anticipated by Canada’s class actions bar. At issue in Lépine was whether the Quebec courts should recognize an Ontario Superior Court of Justice decision certifying a multi-jurisdictional class action against Canada Post Corporation and simultaneously approving a settlement of that action. The Supreme Court of Canada held that the Quebec Superior Court and the Quebec Court of Appeal properly refused to recognize the Ontario judgment.
The dispute underlying the class proceedings arose from the cancellation of a lifetime Internet access package sold by Canada Post. Proceedings on behalf of those having purchased the package were instituted in three provinces: (1) in Quebec on behalf of Quebec residents; (2) in Ontario on behalf of all persons in Canada except Quebec residents; and (3) in British Columbia on behalf of residents of that province.
Canada Post and the applicants in Ontario and B.C. were able to arrive at mutually agreeable terms for settling the proposed class proceedings. However, the Quebec applicant refused the offer made by Canada Post. The Quebec motion for authorization proceeded and was heard by the Superior Court in November 2003.
In the meantime, the parties to the Ontario and B.C. proceedings entered into a settlement agreement that extended to residents of all the provinces, including Quebec. In November 2003, the Ontario application for certification was accordingly amended to include Quebec residents in the class. On December 22, 2003, the Ontario Superior Court of Justice granted certification and approved the settlement. In parallel, on December 23, 2003, the Quebec Superior Court granted authorization to institute a class action on behalf of a group limited to residents of Quebec.
Canada Post unsuccessfully applied to the Quebec Superior Court to have the Ontario judgment recognized and declared enforceable in Quebec.
THE SUPREME COURT OF CANADA
In unanimous reasons written by Justice LeBel, the Court held that the criteria for judgment recognition under article 3155 of the Civil Code of Québec were not met. In particular, recognition was properly refused on the basis of a violation of the fundamental principles of procedure (art. 3155(3)) and an application of the doctrine of lis pendens (art. 3155(4)).
National Classes, Notice and the Fundamental Principles of Procedure
The Supreme Court’s judgment recognizes that adequate notice is essential in order to safeguard individual rights and respect the principles of comity. The Court gives some guidance as to the requirements of adequate notice:
- The notice procedure must be designed so as to make it likely that the information will reach the intended recipients;
- The wording of the notice must take into account the context in which it will be published and the situation of the recipients;
- In some cases, it may be necessary to frame a notice very precisely or provide additional information as to how the class proceedings affect members’ rights.
The Court held that the Ontario notice provided to Quebec members was inadequate. The wording and timing of the notice was apt to confuse Quebec members leading to a contravention of the fundamental principles of procedure. Unfortunately, the Court provides little practical guidance as to the proper scope of notice dissemination in a multi-jurisdictional class proceeding.
The Doctrine of Lis Pendens
The Court also held that recognition was properly refused on the basis of lis pendens. The Quebec motion for authorization was filed on February 6, 2002, some time before the Ontario and B.C. proceedings were launched. Accordingly, the Court was of the view that a dispute between the same parties, based on the same facts and having the same object was already pending before the Quebec courts and recognition of the Ontario judgment was therefore precluded.
This represents a significant development. Under existing Quebec case law, a class proceeding does not exist until authorization is granted. As a result, it was thought that there could be no perfect lis pendens between a motion for authorization and a certified class action or between two motions for authorization. The Court’s novel application of the lis pendens doctrine suggests that Quebec may witness a race to file in cases where a national class is possible.
In several cases, Canadian courts have certified multi-jurisdictional classes on an opt-in or opt-out basis depending on the applicable provincial legislation. However, as illustrated by Lépine and other cases,2 judgment recognition in such cases has been less forthcoming. Harmonizing the requirements for certification and recognition is important to ensure both order and fairness.
More importantly, the Supreme Court’s judgment does not resolve a number of issues that arise in “national” class actions. It does not clarify the test for jurisdiction in multi-jurisdictional class actions despite the difference in approach between the Quebec courts and those of Ontario and B.C.3 Nor does the Court decide whether multi-jurisdictional class actions respect the territorial limits on provincial legislative competence.4 While the Court indicates that it is alert to the difficulties of competing class proceedings, it reminds us that these are matters for provincial legislation not judicial determination.