The following case law and legislative updates were recently discussed as part of our annual class-actions seminar. The recorded seminar, Class Actions in 2021: Trends and Developments, may be accessed here.
WAVING GOODBYE TO WAIVER OF TORT
While no Canadian court has affirmatively recognized waiver of tort as a cause of action, courts in several class-action certification cases have refused to strike claims in waiver of tort, finding that such claims could pass the low bar for satisfying the “disclose a cause of action” element in the test for certification.
In Atlantic Lottery Corporation v. Babstock, the Supreme Court of Canada finally resolved this long-standing controversy around waiver of tort. It held that waiver of tort is not a cause of action and that the term should be abandoned. Blakes Bulletin: SCC Waves Goodbye to Waiver of Tort provides further details on this significant decision.
BARRIERS TO CERTIFICATION
There were a number of important lower court decisions in 2020 in which courts refused certification where the proposed plaintiff could not demonstrate any loss or harm to the proposed class.
In Paquette v. Samsung, the Quebec Superior Court dismissed the plaintiff’s application for authorization where the defendant’s compensation program adequately compensated the class members. In Sharp v. Royal Mutual Funds, the British Columbia court similarly refused to certify claims for “symbolic” and “nominal damages” and confirmed that nominal damages cannot be used as a workaround to certify a case where damages are individual in nature. A similar result was also reached in Ontario in Maginnis v. FCA Canada. In an early 2021 decision, Setoguchi v. Uber, the Alberta court likewise refused to certify the proposed class action regarding a privacy breach as there was no evidence of loss or harm.
This past year also confirmed that there can be cases that are “too big to certify.” In Kett v. Mitsubishi, Justice Branch of the Supreme Court of British Columbia declined to certify a proposed class action where the complexity of the individual issues risked undermining the commonality of the proposed issues and turning the proceeding into a “monster of complexity and cost.”
IMPORTANT AMENDMENTS TO ONTARIO CLASS PROCEEDINGS ACT, 1992
Amendments to Ontario’s Class Proceedings Act, 1992 enacted by Bill 161 came into force on October 1, 2020. See Blakes Bulletin: Ontario Government Proposes Significant Amendments to Ontario Class Proceedings Act for more on these amendments.
Among other changes, these recent amendments strengthen the preferable procedure criterion of the certification test in Ontario by introducing “superiority” and “predominance” requirements. A class action will now meet the preferable procedure criterion only if (1) it is superior to alternative procedures, including regulatory proceedings or other remedial schemes, and (2) questions of law or fact common to the class members predominate over questions affecting only individual class members.
The predominance requirement may make it more difficult to certify class actions in areas that tend to raise significant individual issues, such as product liability, personal injury, privacy and consumer protection cases. The superiority requirement also empowers courts to deny certification where a fair process has already been implemented to resolve claims — for example, where there is a recall or service program, or another compensation regime established by the defendant.
These recent amendments should allow judicial resources to be focused on claims that are best suited to class proceedings in meritorious cases.
PURE ECONOMIC LOSS DEVELOPMENTS
Pure economic loss (that is, loss that is financial in nature) may be recoverable in tort in certain circumstances. Recent decisions have confirmed, however, that there is no general right to recovery in tort for economic loss absent physical injury, property damage or circumstances where a defective good presents a risk of “real and substantial danger” that must be repaired.
In 1688782 Ontario Inc. v. Maple Leaf Foods Inc., the Supreme Court of Canada upheld a summary judgment motion dismissing a certified class action where the claim was in the nature of pure economic loss. The plaintiffs sought damages for lost profits after a listeria outbreak made certain ready-to-eat meats manufactured by the defendant unavailable for six to eight weeks. The plaintiffs argued that liability should be imposed under the parameters established in Winnipeg Condominium Corporation No. 36 v. Bird Construction Co., which permitted recovery where the appellant bore the burden of avoiding real and substantial danger caused by the respondent’s defective product. The majority in this case found that since the ready‑to‑eat meats could be feasibly discarded to avert any risk of harm at little to no expense, there was no basis for imposing liability.
The Supreme Court’s decision in Maple Leaf Foods suggests that, in certain circumstances, pure economic loss may provide a useful tool in challenging the underlying legal basis of a class action.