On April 11, 2014, the Alberta Court of Queen’s Bench released its decision refusing to certify a class action because the proposed representative plaintiffs lacked even a basic understanding of their roles and responsibilities.  In Sullivan v Golden Intercapital Investments Corporation, the plaintiffs were customers of GIC, a company offering refinancing to individuals facing foreclosure.  The plaintiffs alleged various unfair business practises and breaches of fiduciary duties by GIC, its sole director, and numerous lawyers who had advised GIC customers.

Suitability of representative plaintiffs

As in all provinces except Prince Edward Island, the Alberta Class Proceedings Act (“CPA”) requires that representative plaintiffs be able to “adequately and fairly”  conduct the litigation on behalf of the class.  Here, the plaintiffs were found to lack the most basic appreciation of their role in the litigation.  Specifically, the plaintiffs did not meaningfully understand their potential liability for legal costs, or their responsibilities as representative plaintiffs, including the requirement to create a litigation plan.

The Court emphasized that the inability of a plaintiff to pay costs is not an absolute bar to suitability, but states the awareness of costs is a factor to be considered and should be explored between representative plaintiffs and their counsel.

Implications

This decision demonstrates that in class proceedings, representative plaintiffs must be capable of properly instructing their counsel, and vigorously act on behalf of the entire class. While this issue is occasionally raised, certification is rarely denied due to the lack of a plaintiff’s understanding of the proceedings, as it was here. In similar circumstances, a Court could grant a certification order conditional on the representative plaintiffs informing themselves of their responsibilities or other appropriate conditions.

We look forward to seeing whether this decision is followed in future certification applications.