The potential for an award of aggregate damages — a class-wide estimate of the total damages suffered by class members — can be a strong motivating factor for class counsel to commence and prosecute a particular class action. Once the calculation of aggregate damages is certified as a common issue, class counsel is freed from the work and expense associated with litigating individual damages claims at separate individual trials following the resolution of the common issues trial. Quite simply, certifying the calculation of aggregate damages as a common issue speeds up the action and increases the risk of exposure to defendants.
Earlier this month, Justice Belobaba, a judge of the Ontario Superior Court, expressed disagreement with a prior decision of the Court of Appeal restricting the availability of aggregate damage calculations to cases where aggregate damages could be determined without any need for proof of damages from any individual class members.
Section 24 of the Ontario Class Proceedings Act gives the court the authority to determine class-wide damages in the aggregate if:
- The plaintiffs claim monetary relief;
- The resolution of the other common issues answers all questions as to the defendant’s liability except for the assessment of monetary relief; and
- The aggregate damages can “reasonably be determined without proof by individual class members.”
The Current State of the Law – Fulawka
In Fulawka v Bank of Nova Scotia, a class action concerning claims for unpaid overtime work, the Court of Appeal considered when and how a class-wide calculation of aggregate damages could be certified as a common issue.
In that case, the plaintiff proposed a procedure that involved taking out-of-court sworn testimony from a random sampling of individual class members that would allow for the calculation of their individual damage claims. Using statistical methods, the data obtained from these random samples would then be extrapolated to the class as a whole to determine the aggregate damages.
The Court held that this procedure of random sampling contravened the requirement that damages be determined “without proof by individual class members”. It explained that the use of a random sampling procedure could only have been authorized under the Class Proceedings Act if the relevant section of the statute had read “without proof by all of the individual class members” (rather than “without proof by individual class members”). The Court of Appeal held reading the Act in this manner was not possible, even having regard to the principle of statutory interpretation requiring the statute to be read liberally.
Nolevaux and Justice Belobaba’s Challenge
In the recent case of Nolevaux v King and John Festival Corporation, certain condominium owners and renters launched class actions against everyone involved in the construction of their respective condominiums alleging that the glass panels on their balconies were improperly installed. After several panels fell, the balconies were closed off for nearly two years until they could be repaired.
The plaintiffs claimed damages for, among other things, the loss of enjoyment of their balconies. The plaintiffs argued that an aggregate assessment of the loss of enjoyment would be possible with testimony from:
- Representative members of the class about the use and value of their balcony; and
- Professional real estate experts about the market value of a balcony in the sale or rental of a unit.
Together, the plaintiffs argued, this information could be used to fashion a formula to determine their aggregate damages.
Justice Belaboba found favour with this approach. He explained that this method of sampling would be identical to the method used in a similar mass tort or contract action and accordingly should not be barred in the class action before him.
Justice Belobaba pointed out that two standing Court of Appeal rulings appeared to be inconsistent. In Cloud v Canada (Attorney General), a class action concerning the mistreatment of aboriginal people at a government run residential school, the Court of Appeal held that aggregate damages could be determined on a class-wide basis “without proof of loss by each individual member”. According to Justice Belobaba, this holding may run counter to the requirement in Fulawka that damages be determined without proof by any individual member.
Notwithstanding his criticism of the Court of Appeal’s reasoning in Fulawka, Justice Belobaba nevertheless held that it was not open to him to accept the proposed sampling of representative members, as he was bound by the decision in Fulawka. He therefore declined to certify the common issue of the calculation of aggregate damages.
- Until the Court of Appeal reopens the issue, in order to be certified as a common issue, aggregate damages must be capable of being calculated without proof from any individual class members.
- This is an important restriction: if the calculation of damages requires input from individual class members, class counsel must wait until after the resolution of the common issues trial and the individual damages trials, before any damages are awarded.
- Justice Belobaba has called this conclusion into question. Defendants should monitor this development as the Court of Appeal considers future cases concerning the use and calculation of aggregate damages.