In what circumstances can statistical evidence be used to support a finding of aggregate damages in a class action? That was the question before the Honourable Justice Belobaba in Ramdath v George Brown College, 2014 ONSC 3066, a recent Ontario Superior Court decision that dealt with the damages phase of a class action trial.
Putting the class in class action
As a result of alleged misrepresentations made by George Brown College (“GBC”) about the benefits of its International Business Management Program, a class action involving more than 100 former students was commenced in 2010. The class argued, and the Court ultimately accepted, that in two separate course calendars, GBC had falsely stated that graduates of the program would obtain three industry designations. In fact graduates received only a graduate certificate from the college.
A common issues trial was held in 2012.1 The trial focused on the students’ dual claims of breach of the Consumer Protection Act (the “Act”) and negligent misrepresentation.At the conclusion of the common issues trial, Justice Belobaba reasoned that there was a sufficient causal connection between the misrepresentation and the students’ enrollment in the College, and therefore that section 18(2) of the Act was in principle available to all of the class members to provide a remedy. However, a significant point of contention remained: should damages be calculated on an aggregate or individual basis?
The damages phase of the trial commenced in early 2014. At the outset of the damages phase, the students advised they would be proceeding solely on the basis of the consumer protection claim, and would be claiming damages under 18(2) of the Act.2
In his reasons stemming from the damages phase of the trial3, Justice Belobaba opined that recent academic and judicial discussions about aggregate damages have become unnecessarily complicated. The principle in s. 24(1)(c) of the Class Proceedings Act is clear: a court may award aggregate damages where all or part of a defendant’s monetary liability can be fairly and reasonably determined without proof by individual class members. Moreover, judges ought to do so in such instances, in light of the principle of access to justice.
Having determined that aggregate damages were desirable in principle, the central issue in the decision was whether the agreed-to formula for damages could reasonably be determined without proof from individual class members. The formula was described as direct costs plus indirect costs, minus residual value, where:
- Direct costs were reasonably foreseeable out-of pocket expenses, such as tuition and books;
- Indirect costs were both:
- Foregone income (income lost while taking the eight-month program);
- Delayed entry (income lost over a lifetime of work because of the eight-month delay into the workforce); and,
- Residual value was the value of the GBC certificate without the three promised designations
Justice Belobaba reasoned that both direct costs and residual value could be determined without proof from individual class members. The former was ostensibly straightforward, since most students had incurred the same fixed costs, which were easily determinable. The calculation of residual value was more difficult. Ultimately, relying on the testimony of a witness experienced in industry hiring, Jusitce Belobaba arrived at a figure in this regard based on the estimated market value of the GBC certificate. However, His Honour was not prepared to go further than this, finding that indirect damages could not reasonably be determined for the class in the absence of individual proof, as the underlying methodology involved too many uncertainties.
Significantly, Justice Belobaba set out the following factors courts should consider in making a determination whether to forego individual proof of damages in favour of aggregate damages:
- The reliability of the non-individualized evidence that is being presented by the plaintiff;
- Whether the use of this evidence will result in any unfairness or injustice to the defendant (for example, by overstating the defendant’s liability); and,
- Whether the denial of an aggregate approach will result in a wrong eluding an effective remedy and thus a denial of access to justice.
This is one of the first class actions in Canada in which the availability of aggregate damages has been considered in detail. Plaintiffs may well be encouraged by such a strong endorsement of aggregate damages as a tool in working towards making class proceedings more expedient and efficient. However, as Justice Belobaba’s decision also highlights, the desire for expedience and efficiency should not come at the cost of unfairness to defendants, and the awarding of aggregate damages in circumstances in which proposed statistical models may be rife with suppositions and uncertainties. Aggregate damages, while perhaps a useful tool in select scenarios lending themselves to statistical analysis, will not always be an appropriate or available remedy under the Class Proceedings Act.