Many product liability claims are brought as putative or proposed class actions. The recent Ontario decision in Pennyfeather v. Timminco Ltd., a securities case, is of importance for all types of class action litigation, as it calls into question the long-standing practice that defendants need not deliver statements of defence until an action has been certified as a class proceeding.
In Ontario and the other common law jurisdictions of Canada, in order to be approved as a class proceeding, a judge must certify that the matter is appropriate for treatment as a class proceeding in accordance with criteria set out in relevant legislation, and must decide which issues are sufficiently common to all class members that they should be determined at a common issues trial.
Prior to the motion for certification, claims are often “moving targets” with many key aspects of proceedings, including material facts and causes of action, being subject to change as plaintiffs fine-tune their case. Given the fluid nature of class proceedings prior to certification, ordinary practice in Ontario and some other common law provinces is for defendants to defer pleading a defence until after the certification hearing.
In the Pennyfeather decision, Justice Perell took issue with this standard practice. In his reasoning on a procedural motion brought by a defendant for particulars of a plaintiff’s claim (essentially a motion asking for details of the plaintiffs’ allegations), Justice Perell stated, “[I]t is time to revisit the convention that defendants do not deliver a statement of defence before the certification motion. My experience as a case management judge in class proceedings reveals to me that as a general rule, it would be preferable that pleadings be closed before the action moves to a certification motion.”
His Honour cited three main reasons for this view: (1) the legislature intended pleadings to be closed prior to certification; (2) all the issues pleaded in a statement of claim require a response in a statement of defence, and as such, whatever issues are certified for the common issues trial are irrelevant to the content of the defence; and (3) having pleadings closed prior to the certification hearing will often narrow the issues to be argued at certification.
Although this case has yet to be discussed in any subsequent rulings, if it is followed consistently it will represent a major change in the ordinary practice for class action defendants, and one whose implications are unclear. Due to the size and scope of many class proceedings, the nature of the action can change remarkably over time. Requiring defendants to plead a full defence at an early stage of the litigation may well handicap defendants by forcing them to make strategic decisions before the plaintiffs’ claims are clearly stated. On the other hand, it could also signal that Ontario courts may now be more amenable to entertaining pre-certification motions by defendants, including motions to strike or even motions for summary judgment, when those motions may eliminate or narrow the scope of a certification hearing.