The primary goal for defendants at the outset of a class proceeding is refusal of certification. However, it is important to note that denial of certification under the Class Proceedings Act does not put an end to the case. Under section 7 of the Act, “[w]here the court refuses to certify a proceeding as a class proceeding, the court may permit the proceeding to continue as one or more proceedings between different parties.” In addition, section 7 gives the court the power to:
- order the addition, deletion or substitution of parties;
- order the amendment of the pleadings or notice of application; or
- make any further order that it considers appropriate.
Refusal to Certify Does not Amount to Dismissal
Although success on the certification motion is an important step to defending a class action, refusal to certify does not amount to a dismissal of the action. In fact, courts in Ontario have held that the judge on a motion for certification is precluded from dismissing the action in its entirety. Cavanaugh v. Grenville Christian College heard an appeal to the decision of a motion judge refusing to certify the action as a class proceeding and dismissing the claim “immediately”. The court stated there was “nothing in the remedial powers available on a motion for certification under the CPA that empowers a judge to dismiss the action in its entirety,” and held that “[s]ection 7 does not authorize the motion judge to dismiss the action.”
In addition, Ragoonanan v. Imperial Tobacco Canada Limited held that the limitation period remains suspended following refusal to certify. The court held that a limitation period resumes running under section 28(d) of the Act only upon dismissal of a certified class action. In doing so, it noted the legislative intent behind section 7 that a denial of certification “should not automatically terminate the proceedings.” In responding to arguments that this interpretation would expose the defendant to a limitation period with no end in sight, the court held that it is incumbent on the defendant following certification to seek a discontinuance of the proceeding.
An Order Under Section 7 May not Sever the Proceeding into Individual Actions
Rather than severing a proposed class proceeding into a number of individual actions, defendants successful on a certification motion may nonetheless find themselves facing a complex procedure with a large number of plaintiffs. In Joanisse v. Barker, 2006 Carswellont 10233 the two plaintiffs moved under section 7 to add an additional 31 plaintiffs to the claim following denial of certification. The court found that combining the 33 claims “would not result in a sufficient increase in complexity over that involved in 33 separate actions to outweigh the benefits and convenience of combining all of the claims in the same proceeding.” As in Ragoonanan, the court cited the purpose of section 7 to “deal with the special circumstances created by the commencement of the action under the CPA.”
Implications for Class Action Defendants
Due to the possibility for continued litigation under section 7, defendants in class actions should be aware that refusal to certify does not bring an end to the proceeding. This is particularly true in proposed class proceedings such as certain franchise claims, where the class is made up of a smaller number of plaintiffs bringing claims of significant value. As a result, defendants successful at the certification stage should be prepared to take proactive steps such as seeking discontinuance in order to ensure the litigation is at an end.