Canadian Class Action Defence Blog

The Ontario Divisional Court’s preferred approach to the preferable procedure analysis

Oct 7, 2022 5 MIN READ
Authors
Craig Lockwood

Partner, Disputes, Toronto

Andrea Korajlija

Associate, Disputes, Toronto

Sunset in City

In Curtis v. Medcan Health Management Inc., 2022 ONSC 5176 (Curtis), the Divisional Court overturned the Ontario Superior Court’s dismissal of the plaintiffs’ certification motion and certified the appellants’ class action. The Divisional Court interfered with the certification judge’s decision on the grounds that he erred in assessing the “preferable procedure” criterion under s. 5(1)(d) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the CPA).

The Divisional Court’s decision clarifies the analytical framework for the preferable procedure analysis under the CPA. Moreover, the decision reminds litigants that appellate courts can interfere with lower court findings with respect to the certification criteria, including the preferable procedure analysis. In this latter regard, the decision represents a rare instance in which an appellate court has interfered with a certification judge’s evaluation of “preferability” — an exercise that has generally warranted substantial deference.

The facts and judicial history

Curtis concerned a group of former employees who brought a class proceeding against their former employer and its directors. The plaintiffs alleged the defendants failed to pay vacation and public holiday pay as required under the Employment Standards Act, 2000, S.O. 2000, c. 41 (the ESA) as far back as 2003. Prior to litigation, the defendant employer Medcan Health Management, Inc. (Medcan) acknowledged an issue with how these payments were calculated and tried to remedy the issue through additional payments. Medcan did not make any payments for the period before 2018, relying on the presumptive two-year limitation period and full and final releases signed by former employees.

Having found that four of the five certification requirements of the CPA were met, the certification judge considered whether a class action would be a preferable procedure, as required by s. 5(1)(d) of the CPA. Ultimately, he found that a class action would not be a preferable procedure because:

  • there would be very few class members who were not already adequately compensated by the defendant’s voluntary remedial payments;
  • a common issues trial would advance each plaintiff’s claims very little as there was no possibility of aggregately assessing the class members’ claims, as individual issues surrounding limitations periods and the enforceability of releases would require individual issues trials; and
  • a common issues trial would delay access to justice for class members since they would have to wait for the determination of the common issues before adjudicating their own individual issues.[1]

The certification judge concluded that individual court proceedings would be preferable to a class proceeding.

On appeal, the Divisional Court found this analysis constituted an error in principle because it did not explicitly avert to the five questions set out by the Supreme Court in AIC Limited v. Fischer, 2013 SCC 69 (Fischer) (as outlined in an article from 2013).

Assessing the economic and psychological barriers to access to justice

In addition to not explicitly addressing the five Fischer questions, the Divisional Court found the certification judge erred by not identifying the barriers to access to justice faced by class members, such as difficulty in retaining counsel due to the low amount of recovery, or fear of reprisal from their employer. The Divisional Court held class proceeding would have the potential to address those barriers, as compared to individual proceedings.

Considering the behaviour modification  

The Divisional Court also found the certification judge erred by not addressing the extent to which a class proceeding would or would not serve the goal of behaviour modification.

The Divisional Court emphasized that the analysis must consider behaviour modification at large, rather than just with respect to the defendants. The Court found that, in the employment context, a class proceeding would serve the goal of behaviour modification because:

  • it would signal to employers that they are expected to comply with their statutory obligations regarding employee compensation;
  • individual claims would never result in the employer being held entirely accountable for the full costs of their conduct; and
  • the possibility of a class proceeding would incentivize the employer to comply.

An absence of statutory remedies may impact the analysis

When deciding whether a class proceeding was “preferable”, the Divisional Court and certification judge in Curtis were faced with a binary choice between a class proceeding and individual court proceedings. Both Courts held that administrative remedies under the ESA should not be considered as an alternative procedure because the timeframe for bringing these proceedings under the ESA had expired.

Had these remedies — or other statutory remedies or enforcement mechanisms — been available, the access to justice and behaviour modification considerations discussed above may have been equally well served by those procedures, leading to a different outcome.

Observing a pickier standard of review?

This case is a rare example of an appellate court interfering with a certification judge’s preferable procedure analysis. Typically, a certification judge’s determination of whether a class proceeding is the preferable procedure is subject to special deference.[2]

In Curtis, the Divisional Court recognized the high standard of review and found that the certification judge correctly set out the applicable legal principles.[3] Nonetheless, the Divisional Court still overturned the certification judge’s decision on the basis that he did not explicitly address each of the five Fischer questions proposed by the Supreme Court in 2013.[4] This aspect of Curtis is notable for two reasons:

  1. Appeal courts have not always insisted that lower courts explicitly address each of the five Fischer questions in their reasons.[5]
  2. The Divisional Court’s intervention may represent a departure from the “special deference” it often applied. Provided that a lower court has correctly identified the correct legal principles, reviewing courts typically do not interfere absent a finding of palpable and overriding error.[6]

The decision stands as a reminder that the preferable procedure analysis is a fundamental aspect of the certification test. A failure to properly apply the requisite analysis may merit appellate intervention.

 


[1] Curtis v. Medcan Health Management Inc., 2021 ONSC 4584 at paras. 97-104.

[2] Pearson v. Inco Ltd., 2006 CanLII 913, 261 D.L.R. (4th) 629, (Ont. C.A.) at para. 43.

[3] See the discussion of standard of review at paras. 23 and 24, and the discussion of the certification judge’s identification of the proper principles at paras. 33 and 34.

[5] For example, in Maginnis v. FCA Canada Inc., 2021 ONSC 3897 (Div. Ct.) and Kirsh v. Bristol-Myers Squibb, 2021 ONSC 6190 (Div. Ct.) there was no express review of the five questions. Similarly, neither the majority or dissent of the Supreme Court addressed these five questions recently in Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19.

[6] See e.g. Housen v. Nikolaisen, 2002 SCC 33 at paras. 36-37; R. v. Delchev, 2015 ONCA 381 at para. 23.