Converting an individual action to a class proceeding

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Apr 20, 2017

In a recent decision from the British Columbia Supreme Court, the Court considered an issue of first impression in that province; i.e., whether an individual action could be “converted” to a class proceeding by amending the notice of civil claim to invoke the provisions of the Class Proceedings Act (RSBC 1996, c 50) (the “CPA”). The Court determined an individual action could be converted to a class proceeding; however, on the facts of this particular case, Justice Skolrood declined to exercise the Court’s discretion to convert the action to a class proceeding.

Background

The plaintiffs (collectively, “Great Canadian”) are related companies that provide operational services to various casinos in BC under agreements with the defendant, British Columbia Lottery Corporation (“BCLC”). Pursuant to the terms of the agreement between BCLC, Great Canadian and other service providers, BCLC withheld a portion of commissions payable to the service providers to fund common marketing initiatives in the province. The dispute between Great Canadian and BCLC related to the termination of this marketing arrangement and whether BCLC could continue to withhold a portion of commissions payable to Great Canadian and other service providers.

Can an individual action be converted to a class action?

The only issue before the Court on the application was whether the individual action could and should be converted to a class proceeding. The CPA is silent on this issue. The Court concluded that both the CPA and the BC Supreme Court Civil Rules (the “Rules”) allowed for the conversion of an individual action to a class proceeding by way of an amendment to the notice of civil claim. In coming to its conclusion, the Court considered the following:

  • Judicial Precedent: While the issue was novel in BC, the Ontario Superior Court of Justice previously considered the issue in Bellefeuille v Canadian Pacific Railway Ltd. (2010 ONSC 5499, aff’d [2011] OJ No 1937 (Div. Ct). In that case, Justice Hennessy noted:

“There is no explicit prohibition against converting a single action to a class proceeding by way of an amendment. Nor is there a policy reason for such a prohibition. Taking into account that the Rules are to be interpreted in harmony with the purposes of the class proceedings, I am not convinced that there is any bar to amending an individual action so that it may become a proceeding under the CPA.”

  • Policy Objectives of the CPA: The Court also looked to the broader policy objectives of class proceedings, noting the need to interpret class proceedings legislation generously and in a manner that promotes flexibility and efficiency. The Court pointed to Chief Justice McLachlin’s statements in Western Canadian Shopping Centres Inc v Dutton (2001 SCC 46), where she noted that the overriding purpose of class proceedings is to promote: (i) judicial economy; (ii) access to justice and (iii) behaviour modification. The Court also noted the procedural flexibility that is built into the CPA, including section 12 which provides:

The court may at any time make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination and, for that purpose, may impose on one or more of the parties the terms it considers appropriate.

  • Harmony between the Rules and the CPA: The Court also emphasized that the CPA provides for the application of the Rules to class proceedings, provided that there is no conflict between the two. The Court stated that “While the Rules continue to apply to class proceedings, both before and after certification, their interpretation and application will be informed by the objectives of the CPA to ensure that the two operate in harmony.” The Rules permit the amendment of pleadings and the addition of parties, absent prejudice to the other party.

Factors considered by the Court

The Court held that the appropriate test to be applied in converting an individual action to a class proceeding required consideration of the following factors:

  • the history of the proceedings;
  • the length and reason for the delay in seeking to convert the action;
  • the expiry of any limitation periods;
  • the presence or absence of other prejudice to either party;
  • the likelihood or otherwise of a proper class eventually being defined;
  • the conduct of the parties; and
  • whether the conversion would advance the overriding objectives of a class proceeding, namely, judicial economy, access to justice and behaviour modification.

In applying these factors to the facts of this case, the Court determined that this was not an appropriate case to be converted to a class action:

  • Delay: First, the delay on the part of Great Canadian in bringing this application forward was not adequately explained; the existence of common issues among the service providers was always apparent give that Great Canadian was aware that BCLC was in discussions with the other service providers regarding the termination agreements.
  • Did not advance the policy objectives of the CPA: Second, and most importantly, the Court “failed to see how converting Great Canadian’s action to a class proceeding would advance the objectives of the CPA.” The proposed class consisted of sophisticated parties, none of which had commenced individual actions at the time of the application. As such, the Court noted that “[a] class proceeding [in this case] would be inconsistent with the principles of judicial economy and efficiency by complicating what is currently a relatively straight forward contractual dispute.” Similarly, the Court noted that there was no issue about access to justice; each of the potential class members was capable of pursuing their action on their own. Finally, the Court noted that there was no issue of behaviour modification at stake; this was a contractual dispute, the outcome of which would compel no change in behaviour towards class members, who without recourse to the CPA, would have no means of pursuing their rights.

While this case was not an appropriate one to be converted to a class proceeding, an individual action with an already lengthy procedural history may be converted into a class proceeding, where doing so is consistent with the policy objectives of the class proceedings legislation.