The Ontario Court of Appeal recently released its decision in Markson v. MBNA Canada Bank. This is a class action based on the allegation that certain credit card fees and interest charges amounted to a criminal rate of interest. In this decision, the Court overturned two lower court decisions and certified the action as a class proceeding notwithstanding the fact that the question of whether any particular cardholder had been charged a criminal rate of interest could only be determined on an individual basis. This is an important decision in that it appears to represent a shift in the Ontario Court’s interpretation and application of the provisions in ss. 23 and 24 of the Class Proceedings Act that provide for a possible aggregate assessment of damages to the class as a whole.


Under the Class Proceedings Act (“CPA”), an action cannot proceed to trial as a class action until it has been certified as such by the court. While the test for certification in the CPA contains several components, the key component is whether a class action is the preferable procedure: i.e., does it make sense to deal with all or some of the class members’ claims in a single proceeding. This analysis often focuses on whether it is necessary to look at each class member’s particular circumstances in order to determine if the defendant is liable to any specific class member. As in any civil action, the defendant will only be liable if the plaintiff can prove that he has suffered a loss. While courts have often certified actions in which the amount of each class member’s loss is an individual issue, when a detailed examination of each class member’s circumstances is required to determine if the class member has suffered any loss at all, the court has traditionally refused to certify the action as a class proceeding.


In Markson, the plaintiff brought a class action against MBNA on behalf of credit card holders based on the allegation that certain transaction fees and interest charges on cash advances resulted in a criminal rate of interest. The difficulty for the plaintiff, however, was that the alleged criminal rate of interest would only arise if the individual cardholder engaged in a fairly specific and unusual combination of borrowing and repayment practices. Indeed, it appears that the proposed representative plaintiff himself engaged in these unusual borrowing and repayment practices for the sole purpose of being charged a criminal rate of interest as a basis for the litigation. The evidence was that the vast majority of cardholders would never have been charged a criminal rate of interest and thus would not have suffered any loss. Further, for the handful of cardholders who had suffered a loss, the maximum damages that could have been suffered on any particular cash advance was $7.50.

Based on this evidence, the motion judge refused to certify the action. The motion judge held that the class action would be unmanageable because the Bank would have to review roughly 8 million transactions in order to determine if any class member had actually suffered a loss. In short, the class action would be dominated by individual issues instead of common issues. Further, the cost of determining liability would far outstrip any potential recovery. The decision of the motion judge was subsequently upheld by the Divisional Court.

The plaintiff tried a new argument at the Court of Appeal in order to address concerns that the class action would be consumed by individual issues. He argued that the Bank did not need to perform any individual examinations because ss. 23 and 24 of the CPA allowed for the aggregate assessment and apportionment of damages. Relying on these sections, the plaintiff argued that if the class action was certified, it could simply establish at trial what the total damages were for the class and then (using statistical evidence and random sampling, if necessary) determine how the damages should be distributed to the class members. MBNA argued that these sections, pursuant to their express terms, could only be used once liability had been established. Before the court could calculate damages, the plaintiff had to prove that individual class members had suffered a loss, which required a review of individual transactions. Essentially, the Bank argued that the plaintiff could not use ss. 23 and 24 to avoid the requirement of having to establish liability. The Court of Appeal disagreed.

In certifying the class action, the Court of Appeal held that a plaintiff only has to prove “potential liability” to rely on ss. 23 and 24. This means that in the present case, the plaintiff only had to show at trial that the bank’s practices had the potential to cause a criminal rate of interest to be charged to some class members. The Court of Appeal went on to hold that once such potential liability was established, the court could employ “statistical sampling” (as provided for in s. 23) to determine the aggregate amount of the Bank’s global liability to the class. Further, the Court of Appeal held that under s. 24 the court could then allocate or distribute such aggregate damages to class members on an “average or proportional basis” if it would be “impractical or inefficient” to allocate damages based on actual individual loss. Because all of this could be achieved without having to review cardholders’ individual transaction histories, none of the problems identified by the lower courts would arise.

The clear implication of the Court of Appeal’s analysis is that class members who were never charged a criminal rate of interest could nevertheless be entitled to a share of an award. The Court of Appeal did not shy away from this result, holding that it is “exactly the result contemplated by s. 24”.


Although ss. 23 and 24 of the CPA had received little judicial scrutiny prior to Markson, the judges who had commented on the sections were universally of the view that they could be applied only after liability had been established. Most had interpreted the case law in this context to require proof of actual liability, which would include proof that those class members who were to share in any proposed aggregate judgment or award had suffered an actual loss. The Court of Appeal’s determination that the plaintiff need only demonstrate potential liability before having recourse to ss. 23 and 24 arguably represents a significant expansion of the scope of these provisions. It would appear that cases that would normally require proof of individual loss to establish liability can nevertheless be certified as class actions, with the assessment and allocation of damages as common issues framed in accordance with ss. 23 and 24.

The most significant aspect of the Markson decision is that it appears to conflict with one of the key tenets of class action jurisprudence, namely, that the CPA is only procedural in nature, and does not derogate from the substantive rights of the parties. Here, the Court of Appeal appears willing to dispense with the defendant’s substantive right to require the plaintiff to prove an actual loss where proving such loss would be impractical or inefficient.

The Court of Appeal’s ruling is not the final word on this issue. Markson is an appeal of a certification motion, not a trial. As such, the Court of Appeal has merely certified certain common issues for trial on the basis that they could be resolved in common employing the provisions of ss. 23 and 24. Whether such an aggregate assessment is, in fact, appropriate in the circumstances of the case will ultimately be decided by the trial judge based on a review of the evidence. However, it should be noted that only a small fraction of class actions make it to trial: the vast majority are resolved at or before the motion for certification. It may be many years before Markson or any similarly certified class action makes it to trial and the Court of Appeal’s interpretation of ss. 23 and 24 is put to the test. Until that time, the Court of Appeal’s ruling in Markson will have its greatest impact on motions for certification, particularly cases in which proof of individual loss is a factor. One can now expect to see ss. 23 and 24 of the CPA featured prominently in the arsenal of plaintiffs’ counsel seeking to get their cases certified as class proceedings.