Header graphic for print

Canadian Class Actions Monitor

Class Actions against the Government – Key Lessons from the Ontario Superior Court’s decision of Johnson v Ontario, 2016 ONSC 5314

Posted in Class Actions
Brandon Mattalo

On August 23, 2016, Justice Grace released his decision, Johnson v. Ontario,[1] certifying a class of inmates in their action against the Ontario Government. The plaintiff class claims against the Ontario Government for systemic negligence, assault, battery, breaches of fiduciary duty and breaches of sections 7 and 12 of the Canadian Charter of Rights and Freedoms. Johnson is one of a long line of institutional abuse cases certified in Canada and has implications for class actions against governments alleging systemic wrongdoings.

The action arises out of facts reminisce of HBO’s latest series “The Night Of”, a crime drama that explores the institutional issues within the United States’ prison system. Instead of Rikers Island in New York, Johnson deals with the Elgin-Middlesex Detention Centre (“EMDC”) in London, Ontario. The representative plaintiff, Mr. Johnson, alleges that he was subject to threats, assaults, inadequate medical attention and overcrowding while housed at EMDC.

Justice Grace certified the issues of systemic negligence and breaches of ss. 7 and 12 of the Charter, since these issues met all of the requirements of section 5(1) of the Class Proceedings Act (“CPA”).[2]

The decision has two important lessons for class actions brought against government institutions.

Implementations of government policy decisions are justiciable

Generally, policy decisions by a government entity are not justiciable and cannot give rise to a tort liability.[3] However, this limit does not apply when the government has acted irrationally or in bad faith.

In Johnson, the Province argued that the Plaintiffs did not disclose a reasonable cause of action in negligence, since they were ultimately attacking a policy decision regarding the funding of prisons in Ontario. The Court disagreed, and instead found that the pleadings challenged the operational implementation of policies in Ontario, and not the policies themselves.[4]

There is a fine line between a bona fide policy decision, and the implementation of that policy decision. Justice Grace in Johnson referred to a decision of Justice Cory where the distinction was illustrated:

For example, at a high level there may be a policy decision concerning the inspection of lighthouses.  If the policy decision is made that there is such a pressing need to maintain air safety by the construction of additional airport facilities with the result that no funds can be made available for lighthouse inspection, then this would constitute a bona fide exercise of discretion that would be unassailable.  Should then a lighthouse beacon be extinguished as a result of the lack of inspection and a shipwreck ensue no liability can be placed upon the government agency…

On the other hand, if a decision is made to inspect lighthouse facilities the system of inspections must be reasonable and they must be made properly…Thus, once the policy decision to inspect has been made, the Court may review the scheme of inspection to ensure it is reasonable and has been reasonably carried out in light of all the circumstances, including the availability of funds, to determine whether the government agency has met the requisite standard of care.[5]

When bringing an action against the government, careful Plaintiff’s counsel can plead around this issue by ensuring that their claim relates to systemic issues involving the implementation of policy decisions.

Systemic wrongdoings can be common to the class even if individual circumstances of the class vary widely

The core issue the certification stage is whether the class can truly be said to have issues in common. The plaintiffs usually highlight the cohesiveness of the group, while the defendants show how many subdivisions and differences there are between the class members. Section 1(1) of the CPA makes clear that “common but not necessarily identical” issues of fact or law will be sufficient for there to be a certifiable common issue.

In Johnson, the Province argued that the inmates did not have issues in common since all of their experiences would have been different, especially since they were separated into different units within the EMDC, the range of complaints was wide and the time period of the defined class was over three years.

The Court held that while there are some cases where that argument succeeded that there was a “lengthy list of cases at their disposal which have concluded that issues of systemic wrongdoing are common even though the individual circumstances of the class members may have varied widely”.[6] Although the Court agreed that the “permutations and combinations of systemic negligence cases seem almost infinite”, the liability questions in this case were broad ones which raised issues that were common to the class.

This result is consistent with the long line of institutional abuse cases that have been certified in Canada.[7] Johnson follows this authority in confirming that allegations of systemic negligence, even if that negligence may have impacted class members differently, are often suitable for certification.

What does this all mean?

Johnson confirms two important issues in respect of class actions brought against government institutions:

  1. implementations of government policy issues may be justiciable so long as they are pleaded properly; and
  2. systemic wrongdoings can be considered common issues even if individual circumstances of the class vary widely.

[1] Johnson v Ontario, 2016 ONSC 5314 (CanLii) [Johnson].

[2] Class Proceedings Act, 1992, S.O. 1992, c. 6.

[3] R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at para. 72 (CanLII).

[4] Johnson, supra note 1 at paras. 33-35.

[5] Just v. British Columbia, 1989 CanLII 16 (SCC) at 1242-1243.

[6] Johnson, supra note 1 at para. 103.

[7] See e.x. Rumley v. British Columbia, 2001 SCC 69 (CanLII); See also Cloud v. Canada (Attorney General), 2004 CanLII 45444 (ON CA).

Class Action Filed in Relation to BC’s Foreign Buyer Tax

Posted in Class Actions
Alexandra Cocks

A proposed class action has been filed a mere six weeks after the BC government introduced amendments to the Property Transfer Tax Act to impose an additional 15% tax on the purchase of residential properties by foreign entities in the Greater Vancouver Regional District (the “Foreign Buyer Property Tax”).  This legislation, and the issue of foreign buyers in Vancouver, has received significant news coverage in the local and national media. This case is a prime example of a company/entity being at a high risk of being a class action target where it has received significant publicity/news coverage. Continue Reading

Silvercorp Metals: Ontario Court of Appeal confirms robust test for leave in securities class actions and affirms costs award

Posted in Appeals, Certification, Class Actions, Securities
Dana PeeblesMiranda LamPaul Davis

Silvercorp Metals: Ontario Court of Appeal confirms robust test for leave in securities class actions and affirms costs award[1]

The Ontario Court of Appeal recently released an important decision in a securities class action that (1) summarized the law with respect to the “robust” statutory screening mechanism which plaintiff investors must meet, (2) affirmed a significant costs award against the unsuccessful investor. On August 24, 2016, the Ontario Court of Appeal released its decision in Mask v. Silvercorp Metals Inc. (“Silvercorp”),[2] an appeal from a refusal to grant leave to proceed to a secondary market class action. In the wake of the Supreme Court’s recent[3] decisions[4] in secondary market cases, the unanimous decision dismissing the appeal confirms that the robust screening mechanism of a leave to proceed motion permits weighing of competing factual and expert evidence. It also confirms that a motion judge’s analysis of that evidence will be subject to appellate deference, and that unsuccessful plaintiffs on leave to proceed motions may, like unsuccessful defendants, face significant costs awards.

Continue Reading

When Will a Court Lift a Statutory Stay to Permit A Class Action to Proceed?

Posted in Class Actions
Kelli McAllister

Both the Bankruptcy and Insolvency Act (“BIA”)[1] and the Companies’ Creditors Arrangement Act[2] stay actions and remedies as against debtors. However, creditors may apply to lift the stay to pursue a proposed class action. The recent decision of the Alberta Court of Queen’s Bench in Da Silva v River Run Vistas Corporation (“Da Silva”)[3] considered the framework for when a court may lift such a statutory stay so that a proposed class action may proceed.

Background

In Da Silva, the plaintiff for a proposed class action brought an application to lift a BIA stay in respect of two bankrupt defendants who were the directors, officers, shareholders, and operating minds of corporations promoting and developing a real estate development project (the “Project”) in Alberta. The plaintiffs invested $14 million, secured by a first mortgage, in the Project based on representations made in 2007 and 2009. In 2009-2010, after an initial default, investors were told that their investments were still secured, based on an appraisal of the lands of between $11 million and $13 million. The plaintiffs alleged that the representations were made fraudulently based on false appraisals. By 2011, there was no progress on the development of the Project and by 2015, the lands were valued at $623,230. The investors lost substantially all of their investment in the Project.[4]

Continue Reading

Access to Justice in “Manageability” of Individual Issues: Appeal Dismissed in Fantl v Transamerica Life Canada

Posted in Case Comments, Certification, Class Actions
Breanna Needham

In the recent decision of Fantl v Transamerica Life Canada (“Fantl”)[1], the Ontario Court of Appeal unanimously dismissed the appeal of the Divisional Court’s decision and confirmed the certification of class claims in negligent misrepresentation, noting that it was time for class actions to “deliver on their promise of access to justice”[2] when it comes to individual issues.

Background

The matter involved a class action lawsuit against Transamerica Life Canada advancing a claim for negligent misrepresentation on behalf of investors in the defendant’s fund. The alleged misrepresentations arose from “best efforts” statements contained in information folders provided to class members pursuant to the Ontario Insurance Act. The claim concerned 53 different insurance contracts – five of which contained an express statement as to “best efforts” and 48 of which did not.

Certification Decision

The certification judge, while certifying the action for breach of contract based on the five contracts with express “best efforts” statements, declined to certify the negligent misrepresentation claim based on the information in the folders which accompanied the remaining contracts lacking express statements. He found that two, or at best three, of the five elements of negligent misrepresentation could be common issues. As a result, the issues of reliance and damages would have to be dealt with in extensive individual trials, clearly indicating that a class action proceeding was not the preferable procedure for the claims in negligent misrepresentation.

Continue Reading

Passivity can be Your Enemy: Update from Quebec’s New Rules of Procedure and their Potential Impact on Class Actions

Posted in Class Actions
Michel GagnéPierre-Jerome Bouchard

The new Québec Code of Civil Procedure (the “CCP”) has now been in force for eight months. Among the new tools available to ensure “proportionality” and “speediness” in proceedings, s. 234 of the CCP allows the judge to appoint one or more qualified experts to provide expert evidence deemed “necessary in order to decide the dispute”.  There has been much speculation in the Quebec legal community about the so-called “single expert” and the context and the type of files in which judges would agree to use their intrusive new power.  Most practitioners expected (or hoped) that it would be confined to smaller cases. In Regroupement des citoyens du quartier Saint-Georges inc. c. Alcoa Canada ltée, 2016 QCCS 2969, (“Alcoa”), Justice Carl Lachance of the Quebec Superior Court put an end to the speculation and granted Plaintiff’s motion to appoint an independent expert in the context of a class action. The judgment was not appealed.

In Alcoa, a group of roughly 700 residents sought compensation in connection with an alleged contamination caused by polycylic aromatic hydrocarbons (“PAHs”) emitted from Alcoa’s aluminum plant adjacent to the houses in Baie-Comeau, Québec.  The class action was authorized (the Quebec term for “certified”) on May 23, 2007.  Between 2007 and 2009, the Court ruled on motions to strike allegations, motions for particulars and objections. However, no judgment was rendered by the Court between October 2010 and April 2016, and according to the docket, nothing was filed between November 2011 and November 2014. Continue Reading

Procedure Trumps Substance: Alberta Court of Appeal Grants Certification in Warner v Smith & Nephew Inc

Posted in Certification, Class Actions
Kelli McAllisterRenee Reichelt

In Warner v Smith & Nephew Inc (“Warner”)[1] the majority of the Alberta Court of Appeal held that meeting the procedural requirements for certification trumped concerns regarding the substance of the action.[2] The Court disagreed on whether and to what extent evidence may be considered on a certification motion. The reasons for this are clear (although where the line ought to be drawn is not): the Supreme Court of Canada has directed courts to provide a meaningful screening device on certification by conducting more than a superficial analysis but not an assessment of merits or weighing of the evidence.[3] Continue Reading

BC Court Refuses to Strike Jury Notice in Common Issues Trial

Posted in Class Actions, Product Liability, Uncategorized
Alexandra Cocks

On July 28, 2016, in Bartram v. GlaxoSmithKline Inc., 2016 BCSC 1409, the BC Supreme Court dismissed the defendants’ application for an order striking out a jury notice and requiring that an upcoming trial of the common issues be heard by a judge alone.

The case involves allegations that newborn infants suffered cardiovascular birth defects as a result of their mothers’ use of the anti-depressant drug Paxil during pregnancy. The Defendant, GlasxoSmithKline Inc., marketed the drug in Canada.

A trial of the common issues is set for October 3, 2016 to last 40 days. There are 10 common issues to be determined at the trial.

Commenting generally on jury trials in class actions, the judge made two observations: first, that nothing in the BC Class Proceedings Act precludes a trial by jury in a common issues trial, although the nature of a class action may introduce additional considerations; and second, that common issues are appropriate for trial by jury does not preclude a contrary finding in relation to subsequent trials of individual claims. Continue Reading

More uncertainty in managing multi-jurisdictional class actions: leave to appeal granted in Ammazzini v Anglo American PLC

Posted in Appeals, Certification, Class Actions
Lyndsey Delamont

In the recent decision of Ammazzini v Anglo American PLC (“Ammazzini”), 2016 SKCA 73, the Saskatchewan Court of Appeal granted leave to appeal an order made in chambers conditionally staying a proposed multi-jurisdictional class action (the Ammazzini Action) against the respondents, Anglo American PLC, De Beers Canada Inc. and others, pending a certification decision in a similar class action commenced in Ontario by Kirk Brant (the Brant Action).

This matter involved four separate class action proceedings, at various stages and involving plaintiffs (or prospective plaintiffs) in jurisdictions across Canada. The actions involved allegations that the defendants overcharged for gem grade diamonds by restricting the world supply of diamonds to inflate the price. Further background on this case can be found at http://www.canadianclassactionsmonitor.com/2016/06/can-representative-plaintiffs-from-other-jurisdictions-adduce-evidence-in-a-certification-application/#more-1450. Continue Reading

Sandhu v. HSBC Finance Mortgages Inc.: Disqualifying representative plaintiffs for the use of pre-certification “extortionate” settlement tactics in fee disclosure case

Posted in Certification, Class Actions, Insurance
Alexandra CocksLeah Whitworth

Recently in Sandhu v. HSBC Finance Mortgages Inc., 2016 BCCA 301, the British Columbia Court of Appeal (the “BCCA”) decertified a class action where the plaintiffs sought damages or restitution from HSBC Finance Mortgages Inc. and the Household Trust Company in relation to title insurance fees.[1] In allowing the appeal, the BCCA disqualified two of the representative plaintiffs finding that they had engaged in “extortionate” settlement tactics before certification in a manner that did not reflect the values inherent in the Class Proceedings Act.

The plaintiffs alleged that when borrowers enter into a mortgage commitment with the HSBC defendant, they authorize a variety of fees relating to title insurance, variously described as a “Premium”, the “Policy Insurance Cost” and “Additional Charges”. The plaintiffs claimed that some of these fees are actually for undisclosed legal fees and legal costs of the defendants and that therefore the defendants were liable for numerous common law causes of action including negligence and breach of contract and for statutory breaches of the Competition Act, the Business Practices and Consumer Protection Act, and the Mortgage Brokers Act.

HSBC appealed certification on the grounds that two of the four representative plaintiffs were unsuitable, various causes of action were inadequately pleaded, and the commonality of the issues was not duly considered by the chambers judge.[2] Continue Reading