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Bulletin

Bill 161 Is Now Law - Ontario Government Enacts Major Changes To Class Proceedings Act

Fasken
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Litigation & Dispute Resolution Bulletin

On July 8, 2020, the Ontario Government enacted major changes to the Class Proceedings Act, 1992 (the “CPA”) when the Lieutenant Governor gave Royal Assent to Bill 161—The Smarter and Stronger Justice Act, 2020. This represents the first major amendment to the CPA since it was enacted 28 years ago.

Generally, these amendments are intended to make Ontario’s class actions regime more efficient and to effect a more level balancing of rights between plaintiffs and defendants. These amendments stem from a comprehensive review of Ontario’s class actions regime by the Law Commission of Ontario (“LCO”), released in 2019. Fasken was directly involved in that process as part of a small group of leading Ontario class action defence lawyers who made submissions to LCO about proposed reforms on behalf of several corporate defence-oriented lawyer organizations.

The amendments will apply to proposed class action lawsuits that are commenced after Bill 161 has been proclaimed into force (the Government has not yet announced that date). Once proclaimed into force, Bill 161 is expected to have an immediate impact on class proceedings in Ontario. The key takeaways of Bill 161 are summarized below.

1. Bolstering the Certification Test: Superiority and Predominance Added Requirements to “Preferable Procedure”

Perhaps the most significant change to the CPA is the addition of requirements of “superiority” and “predominance” to the “preferable procedure” element of the certification test.

Under the current preferable procedure element of the certification test, courts must consider whether a class proceeding is better than other reasonably available procedures for achieving the three objectives of class actions­—judicial economy, behaviour modification and access to justice.[1] Ontario courts have historically accepted that a class proceeding can be the preferable procedure for achieving these objectives where the resolution of the common issues would materially advance the proceedings as a whole, even if these common issues do not predominate over individual issues (i.e., issues that are not common among all of the class members).[2]

Bill 161 revises this approach by bolstering the preferable procedure requirement through the introduction of a superiority test and a predominance requirement. With this amendment, in order to meet the preferable procedure element of the certification test, the plaintiff will have to establish that:

  • the proposed class action is superior to all reasonably available means of determining the entitlement of the class members to relief, including case management of individual claims or any remedial scheme or program outside of a proceeding; and
  • the questions of fact or law common to the class members predominate over any questions affecting only individual class members.

The superiority test and predominance requirement under Bill 161 are consistent with requirements found in the class actions certification test in the U.S. under rule 23(b)(3) of the United States Federal Rules of Civil Procedure. This suggests that the Ontario legislature may be seeking to more closely align Ontario’s certification standard with that of the United States. While it remains to be seen how these new requirements will be interpreted by Ontario courts, it is hoped that this amendment to the certification test will filter out some proposed class actions, which may meet the existing certification test because they may have one or a few common issues, but which really are not suited for treatment as class actions, practically or efficiently, due to the highly individualized nature of their claims.

2. Ability to Hear Dispositive Motions Prior to Certification

The amendments under Bill 161 will also facilitate the potential for early resolution of some proposed class proceedings by reversing the presumptive rule in Ontario that the certification motion is the first substantive motion to be heard in a class proceeding.[3]

Bill 161 will require that motions to dispose of the proceeding, or which narrow the issues or evidence on certification, be heard and decided prior to the certification motion, unless the court orders that the two motions be heard together. This amendment is expected to promote greater efficiency and judicial economy within Ontario’s class proceedings regime by encouraging the use of pre-certification motions to dispose more expeditiously of unmeritorious claims, or to narrow the issues before the hearing of the certification motion.

3. Management of Multijurisdictional Class Proceedings

Bill 161 introduces new provisions to enable judges to manage more effectively parallel and overlapping multijurisdictional class proceedings, i.e. class proceedings commenced in different provinces on behalf of the same proposed class, against the same or affiliated defendants, and concerning the same or similar claims. These include a requirement that Ontario judges consider whether to refuse certification on the basis that it would be preferable for all, or some, class members’ claims to be resolved in a multijurisdictional class proceeding commenced outside of Ontario. The court may stay an Ontario proceeding, based on this factor, prior to the certification hearing on a motion by either a party or class member.

These changes will harmonize Ontario’s class actions regime with those of some other Canadian jurisdictions, such as Alberta, British Columbia and Saskatchewan, in which similar provisions for the management of multijurisdictional proceedings are already in place.

4. Symmetrical Appeal Rights

The asymmetrical appeal rights under the CPA have long represented the most obvious example of an imbalance between plaintiffs and defendants—the CPA conferred upon plaintiffs an automatic right to appeal a dismissal of a certification order to the Divisional Court, whereas defendants, who wish to appeal an order certifying a class action, do not have an automatic right to appeal, but rather must apply to the appellate court for “leave” (i.e., permission) to seek to appeal the certification order. Bill 161 will level this playing field; Bill 161 confers upon both plaintiffs and defendants an automatic right to appeal a certification decision to the Court of Appeal without requiring either party to first apply for leave to do so.

5. Other Amendments

Other changes to the CPA include:

  • Introduction of a new mechanism for seeking to dismiss dormant class proceedings following the first anniversary of the day on which the proceeding was commenced.
  • Codifying a number of requirements with respect to third party litigation funding intended to: (a) improve transparency by requiring that redacted versions of funding agreements be disclosed to defendants; (b) provide protection for class members by requiring court approval for all funding agreements; and (c) provide protection for defendants by granting defendants a direct right of recovery from third party funders for adverse costs awards to the extent of the indemnity provided for under the funding agreement.
  • Tolling (i.e., suspending) limitation periods applicable to potential claims for contribution and indemnity by defendants from the date of the commencement of the action until the deadline for appealing the certification order has expired or the appeal has been finally disposed of.
  • Requiring plaintiffs to bear the cost of disseminating notice of certification of a class action to members, unless and until the plaintiff is successful on the merits of a common issues trial.
  • Prohibiting overlapping/duplicative proposed class actions from being commenced without leave of the court more than 60 days after the first Ontario action has been filed.
  • Allowing the court to order that all or part of an aggregate damages award be distributed on a cy-près basis, if it is not practical or possible to compensate class members directly.

Since Bill 161 will not apply to proposed class action lawsuits which were commenced prior to the date that Bill 161 is proclaimed into force, it will take some time before the effects of Bill 161 are known. As a leading defence firm in Canadian class actions litigation, Fasken will be directly involved as counsel in influencing this evolution of the law. We will continue monitoring these developments for future reports to our clients and other subscribers to our bulletins.



[1]       Fischer v. IG Investment Management Ltd., 2013 SCC 69 at para. 22.

[2]       Western Canadian Shopping Centres Inc. v. Dutton, [2001] 2 S.C.R. 534 at paras. 39-40; Cannon v. Funds for Canada Foundation, 2012 ONSC 399 at para. 280.

[3]       Attis v. Canada (Minister of Health), [2005] O.J. No. 1337 (S.C.J.) at para. 7; Cannon v. Funds for Canada, 2010 ONSC 146 at para. 7

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