Limitation periods remain suspended even after certification denied
Section 28 of Ontario’s Class Proceedings Act (CPA) suspends limitation periods for causes of action asserted in a class action. In RG v The Hospital for Sick Children, Justice Perell found that this provision continues to suspend a limitation period after a court refuses to certify a class action. Justice Perell held that defendants must bring a motion to discontinue the class action (which requires court approval) for the limitation period clock to start running again, admitting that this conclusion “may come as a surprise to the class action bar.”
Background: Flawed testing at Motherisk lab leads to litigation
This case related to flawed tests of hair samples at the Motherisk Drug Testing Laboratory. Test results (which claimed to detect drug and alcohol consumption) were used in family, child protection, and criminal proceedings. The tests were shown to be unreliable in a criminal appeal, resulting in an uproar. At least 28 separate actions followed, including a class action commenced by RG.
RG first asked the Ontario Superior Court to certify her class action. On November 1, 2017, Justice Perell dismissed her certification motion (discussed in a previous post). That decision was upheld on appeal.
After exhausting her appeal rights, RG moved for an order continuing her personal action (which advanced the same claims as her proposed class action) and joining her claim with approximately 200 other plaintiffs. The defendants opposed RG’s motion and, among other things, argued that many co-plaintiffs’ claims were statute-barred because the applicable limitation periods had started running when RG’s certification motion was dismissed. RG disagreed and argued that the applicable limitation periods remained suspended even after certification was denied.
Court decision: Limitation periods stayed suspended after certification denied
Justice Perell agreed with RG. He noted that s. 28(2) of the CPA sets out some circumstances where limitation periods start running again (including a class member opting out or being excluded, and the class action being decertified, dismissed without an adjudication on the merits, discontinued or settled). Refusing certification was not listed in s. 28(2) and therefore Justice Perell found that his refusal to certify RG’s class action did not restart the limitation periods.
In addition, Justice Perell found that this interpretation was fair to both plaintiffs and defendants. It was fair to plaintiffs because it allows a court to order that notice be given before a class action is dismissed and limitation periods resume. And it is fair to defendants because they have the option of taking steps that will restart limitation periods. In particular, Justice Perell held that a defendant who wants to end the operation of s. 28 of the CPA must bring a motion discontinuing the class action with leave of the court under s. 29, either after or at the same time as the certification motion is heard.
While Justice Perell found that the co-plaintiffs’ claims were not statute barred, he dismissed RG’s motion to join their claims because her pleadings did not include the facts necessary for determining if the test for joining actions was met.
Section 28 is meant to prevent class members from rushing to file potentially unnecessary individual claims if they are afraid of a limitation period running out while they wait to find out if they can be part a proposed class action. While Justice Perell’s holding was grounded in the wording of the provision, it does not appear to be consistent with this purpose. As noted by the Supreme Court of Canada in Canadian Imperial Bank of Commerce v Green, “[o]nce certification is denied and appeals exhausted, the right to seek justice through a class proceeding is no longer actively engaged” and so the purpose of s. 28 is exhausted.
Even Justice Perell acknowledged that things are different once certification is refused. While deciding RG’s joinder motion, he noted that her continued action would be an ordinary action and not an action under the CPA. It seems odd that an ordinary action can continue to trigger s. 28 of the CPA.
The continued suspension of limitation periods appears to be a legislative gap in the CPA. However, unless this gap is closed on appeal or by legislative amendment, defendants will continue to face the risk of dormant claims coming out of the woodwork if they don’t act promptly to discontinue a class action and restart the running of limitation periods after defeating a certification motion.