Appeal court puts new limits on case management

This month, the Ontario Court of Appeal circumscribed the discretion of class action case management judges to conditionally certify a class action in the absence of a statement of claim that discloses a cause of action. The appeal decision places new limits on the case management judge to amend aspects of an otherwise viable claim, introducing the potential for even more delay and cost for the motion for certification of a class proceeding.

Brown v. Canada (Attorney General) arose out of the practice in Ontario between 1965 and 1984 in which welfare authorities, in accordance with court orders, removed Aboriginal children from their families and communities and placed them with non-Aboriginal families. At the time, the governing legislation did not require the Crown or the courts to take into account the Aboriginal status of the children. The plaintiffs alleged some 16,000 Aboriginal children were removed from their families and lost their language culture, and any benefits they might have had as status Indians under the Indian Act.

On a motion for certification and summary judgment, Justice Paul Perell held that, as pleaded, the plaintiffs’ case was uncertifiable. In considering whether the statement of claim had met the criteria required for certification under s. 5(1) of the Class Proceeding Act, the case management judge found the plaintiffs had not pleaded a certifiable cause of action. However, with amendments to their statement of claim, revisions to the proposed class definition and proposed common issues — all of which the judge provided — and subject to the preparation and approval of an adequate litigation plan, Perell granted the motion to certify and denied the motion for summary judgment.

On appeal, however, the Court of Appeal criticized Perell’s approach on the basis he “predetermined” that a cause of action would emerge as long as the fresh pleading was prepared in accordance with his reasons. The court held it was impossible for the defendant to meaningfully respond to an application for certification without knowing the cause of action.

In these circumstances, held the Court of Appeal, it was not open to Perell to conditionally certify the class proceeding. The proper course was to either dismiss the motion for certification, to adjourn the motion for certification to give the plaintiffs an opportunity to amend their statement of claim, or to grant the defendant’s motion for summary judgment and dismiss the action.

The appeal court also directed the new certification motion be heard by another judge, on the basis the case management judge had determined that viable causes of action existed as he framed them. Rather than being heard by a judge who had “predetermined” that the amended causes of action were viable, which would result in the case management judge sitting in review of his own decision, the principle of natural justice required the motion for certification based on the amended statement of claim be brought before a new judge.

In overturning Perell’s decision, the appeal court placed a new limit on the discretion of the class action case management judge. Appropriate case management involves the wide discretion to advance the proceedings and to avoid the potentially prohibitive costs and excessive delays associated with certifying a class proceeding. The motion for certification was heard in May 2010. Leave to appeal was heard in January 2011. Appeal to the Divisional Court was heard in October 2011. Finally, appeal to the Court of Appeal was heard Oct. 25, 2012 and a decision was released Jan. 17, 2013.

After four appearances and more than two and a half years after the motion for certification, the parties were instructed to return before a fresh judge not familiar with any of the issues in this action for a re-hearing of the motion for certification.

In the circumstances, Perell was merely exercising this discretion to modify the proposed class proceeding to accord with the Class Proceedings Act. Class actions are notorious for their evolution as case management judges utilize their discretion to adapt a claim to overcome the hurdles of this complex procedure. The cost and delay of interlocutory appeals can be avoided by addressing the representative plaintiffs’ compliance with the s. 5(1) factors after the certification motion.

Adjournment under s. 5(4) or striking the pleadings with leave to amend was unnecessary in the circumstances, and would have resulted in further cost and delay to the proceedings with no discernible benefit to anyone.

Appropriate case management in class proceedings should take into account the substance of a proposed representative plaintiff’s claim in order to determine whether or not the claim is certifiable. The judge is given wide discretion to look at the pleadings to determine whether the constituent elements of a certifiable cause of action are present, and to amend the definition of the class or the common issues. Conditional certification is an important mechanism to ensure lower costs and expeditious resolution of certification motions.

In the circumstances, Perell properly exercised his discretion in granting the conditional certification.

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