In a decision released July 18, 2011, Justice Perell of the Ontario Superior Court of Justice certified a class action asserted by tenants of a Toronto apartment building against Toronto Community Housing Corporation (“TCHC”) and Greenwin Property Management Incorporated (“Greenwin”). The suit alleged breach of contract and negligence on the grounds that the defendants permitted a tenant at 200 Wellesley Street East in Toronto, a building owned by TCHC and managed by Greenwin, to create a fire hazard by hoarding large quantities of paper in his apartment.

Background

The plaintiff of the proposed class action, Jo-Anne Blair (“Blair”), was a former tenant of 200 Wellesley. She alleged that she warned the defendants about the fire hazard in 2009, but that her warnings were ignored. In September 2010, a six alarm fire fuelled by the paper broke out, resulting in extensive property damage to the building and contents of the units from the combination of smoke, fire and five million gallons of water used to quell the blaze. The apartment building was evacuated, with some tenants waiting hours for rescue and suffering physical injury. Some units were inhabitable for several months after the fire.

Shortly thereafter, the defendant TCHC, without admitting fault, offered a compensation plan to tenants pursuant to which financial compensation was provided for personal injuries, emotional upset, contents damage and other out of pocket and loss of income expenses in exchange for a release against TCHC. After receiving mandatory independent legal advice, approximately half of the tenants accepted the compensation plan and released their claims against TCHC.

In November 2010, Blair commenced a proposed class action suit alleging that TCHC breached its contract with the tenants and that TCHC and Greenwin were negligent. She additionally alleged that TCHC was vicariously liable for the negligence of Greenwin and claimed general, special, aggravated and punitive damages on behalf of tenants who did not accept the compensation plan.

In connection with the certification motion, the defendants contended that a class proceeding would not be the preferable procedure for resolution of the claims, given the existence of the TCHC compensation plan and availability of proceedings in other forums, and additionally argued that that Blair was not an appropriate representative plaintiff because she was angry at the defendants and therefore unable to properly represent the class members' interests.

The Court’s Ruling

Justice Perell noted that the defendants had not seriously disputed three of the five criteria for certification.  However, his Honour held that on the issue of an identifiable class, the definition should not, as TCHC submitted, be amended to exclude residents of the building who were not authorized to be residents under the terms of the tenant's lease, in light of the fact that no such persons were currently known and, in any event, such persons may have claims in negligence if not contract. Justice Perell also briefly addressed the parties’ submissions with respect to common issues and noted that Blair’s proposed question with respect to punitive damages must be narrowed to focus on the question whether the defendant's conduct would warrant and award of punitive damages. To reflect his concerns regarding clarity and a connection to the circumstances of the fire, Justice Perell set out seven common issues on the facts of the case that in its view satisfied the common issues criterion for certification.

Justice Perell then turned to the disputed issues of preferable procedure and the representative plaintiff. In his view, the question of whether the suit was a preferable procedure was the most important and problematic element of the matter, raising public policy issues about the compensation plan in particular. Justice Perell stated that the notion of “preferability” addresses whether a class proceeding would be an appropriate method of advancing a claim and better than other available methods, evaluated by reference to the purposes of access to justice, behaviour modification, judicial economy and the importance of the common issues to the claims as a whole. His Honour observed that but for the TCHC compensation plan combined with the availability of proceedings before the Landlord and Tenant Board, Small Claims Court and Superior Court there was little doubt that the preferable procedure for the action would be a class action.

Upon further consideration of the compensation plan, Justice Perell concluded that its availability did not alter the fact that a class action would be the preferable procedure. Contrary to the plaintiff’s contention, in his view a compensation plan or settlement offer could, in fact, be a proper procedure, especially where court and tribunal proceedings were available as a backstop. However, the question remained as to whether such procedures would be preferable, especially in light of several factors that recommended the compensation plan: for example, that it was being offered by TCHC, a public authority not motivated by protecting profits; the high take up rate of the compensation plan, which suggested to the Court that the offers of compensation were fair; the plan’s close resemblance to administrative schemes generally imposed after class actions are settled; the administrative scheme set out in the class litigation plan being similar to the compensation plan; and finally the recognition that it is a “social good” when a defendant promptly takes steps to remediate injuries suffered by a mass harm. The fifth factor was of significant importance to Justice Perell, in light of the concern that allowing a class proceeding despite a defendant’s offer of compensation could potentially deter future remedial efforts after mass torts because it would not prevent the institution of a class proceeding in any event. Ultimately, it was concluded that this concern was not determinative. Rather, Justice Perell pointed to the facts at bar: the compensation plan had had the effect of reducing the class size if not avoiding a class action altogether, and that fact combined with the “ethical value of accepting responsibility” should, in his view, offer sufficient motivation for a defendant to continue to make prompt settlement offers with or without accepting fault.

Finally, Justice Perell concluded that Blair was a suitable representative plaintiff despite her admitted anger against the defendants and her unfamiliarity with the TCHC compensation plan, rejecting the defendants' arguments that her anger would prevent her from adequately representing the class members’ interests. To the contrary, he noted that Blair had retained competent counsel, there was no indication that she had given instructions otherwise than in the best interests of the class members, and her anger had not in his view been manifested in any inappropriate conduct to date.