Ontario Court of Appeal Certifies “Presumptively Time-Barred” Subclass

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Aug 27, 2015

In a recent Ontario Court of Appeal decision, Strathy CJO certified a proposed class action including a subclass of “presumptively time-barred” class members. The decision is notable for its discussion of the interplay between the test for certification and limitation periods.

Background

The plaintiff charities began the proceedings in 2008 alleging that charitable lottery licensing and administration fees collected by the defendant municipalities amounted to direct taxes contrary to the Constitution Act, 1867.

The proposed class was originally and arbitrarily defined as anyone who had paid licensing fees on or after January 1, 1990. The proposed common issues included questions about discoverability and concealment and the impact of the Limitations Act, 2002 on class members’ claims. After an initial certification hearing and appeal to the Divisional Court, at a second certification hearing the certification judge accepted the proposed definition of the class and held that the impact of the limitation issue should be dealt with at a later stage and not at certification.

The Decision

Strathy CJO, for the Court, agreed the action should be certified as a class proceeding, but only if modified by creating a “presumptively time-barred” subclass of class members who paid fees within the 15-year ultimate limitation period under the Limitations Act, 2002, but not within the two year basic limitation period and not preserved by the transition rules in the statute. There were class-wide common issues of liability and damages, but this subclass of presumptively time-barred claims also raised issues of law and fact that were not shared with the timely claims.

In certifying a modified class and subclass, Strathy CJO made the following points:

  • Arbitrariness in the class definition defeats important purposes underlying class proceedings, including binding persons that ought to be bound by the proceedings, providing access to justice and achieving judicial economy.
  • It is strictly the responsibility of the plaintiffs to properly define a class, not the defendants; resorting to a “wait and see” approach, instead of ensuring the class is properly defined at certification, is inappropriate.
  • Subclasses can play a key role when there are common issues applicable to all the members of a class, while other issues are only applicable to some class members.
  • Where appropriate, considerations related to the manageability of class proceedings can be effectively handled through the use of subclasses.

Implications

The Court of Appeal’s decision demonstrates how, with the use of subclasses, a class which extends beyond the general two-year limitation found in the Limitations Act, 2002 may on occasion nevertheless be certified. However, the Court of Appeal’s decision makes clear that the responsibility of properly defining the class such that the definition is neither over-inclusive or under-inclusive will continue to remain with the claimants in a class action proceeding.

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