Canadian Class Action Defence Blog

Weeding out unmeritorious class actions early: section 4.1 of the amended Class Proceedings Act, 1992 comes to the rescue

Oct 14, 2021 4 MIN READ
Craig Lockwood

Partner, Disputes, Toronto

Bushra Nassab

Associate, Disputes, Toronto

Scales of Justice in the Courtroom

A recent decision of the Ontario Superior Court of Justice, Dufault v. Toronto Dominion Bank (Dufault), is the first decision interpreting section 4.1 of the amended Class Proceedings Act, 1992 (CPA) relating to the sequencing of pre-certification motions. The decision provides helpful guidance for defendants with respect to the use of the new section 4.1 as a mechanism to dispense with unmeritorious class actions at a preliminary stage. 

Section 4.1 in a nutshell

Section 4.1 of the CPA, which came into force on October 1, 2020, states the following:

Early resolution of issues

4.1 If, before the hearing of the motion for certification, a motion is made under the rules of court that may dispose of the proceeding in whole or in part, or narrow the issues to be determined or the evidence to be adduced in the proceeding, that motion shall be heard and disposed of before the motion for certification, unless the court orders that the two motions be heard together.

As the Court observed at the outset of its analysis, the legislative intent behind the provision is clear: if a proposed pre-certification motion (such as a summary judgment motion or motion to strike) can dispose of the proceeding in whole or in part, or can narrow the issues or the evidence, then the motion must be heard before certification, unless the court orders that the two motions be heard together.

Section 4.1 provides defendants with a presumptive right that may be rebutted

Although section 4.1 ultimately gives the judge “the last word,” the Court noted that the provision shifts the presumption about “who has to show what” insofar as the defendant now has a presumptive right to have certain motions heard and decided before the plaintiff’s motion for certification. This presumption can be rebutted by the plaintiff if it can persuade the court that there are nonetheless good reasons for the two motions to be heard together.

Applying section 4.1 is a balancing act

Section 4.1 requires judges to balance the first 58 words of the provision (which sets out the legislative preference) against the last 11 words (which preserves some measure of judicial discretion). The Court indicated that the wording of the provision amounted to a “strong legislative signal” that early motions by the defendant should be allowed to narrow or dispose of a case before certification. 

When a defendant’s pre-certification summary judgment motion may be denied

While the Court stated that it would consider applying section 4.1 in a way that narrows or disposes of a case before certification, it also noted certain instances which would give rise to “good reasons” for denying a defendant’s request for a pre-certification summary judgment motion under section 4.1:

  • the defendant’s motion does not raise any genuinely arguable issues that can narrow or dispose of all or part of the litigation and appears to be a delay tactic; or
  • the defendant’s motion raises genuinely arguable issues that can narrow or dispose of all or part of the litigation, but the existing or proposed dates for the certification motion and the summary judgment motion are sufficiently close that it makes sense to hear the two motions together.

Implications of Dufault and section 4.1 for class action defendants

Dufault represents an encouraging development for class action defendants who seek to have unmeritorious claims dismissed at an earlier stage of the proceedings. In effect, section 4.1 provides defendants with a mechanism for weeding out class actions that should not be allowed to proceed, and helps reduce the significant financial and reputational risks that businesses face in defending class actions.

It is no secret that it is expensive and time-consuming for businesses to defend class actions that have no merit. With section 4.1 now in the picture, defendants have a critical tool for disposing of claims early or, at the very least, narrowing the issues in a way that limits the scope of the evidence adduced at certification. This development generates procedural efficiency, reduces defendants’ exposure in any given case and helps parties defend class actions in a reasonable amount of time and at a reasonable cost.

That said, defendants should remain cautious in their optimism about the application of section 4.1 insofar as the Court in Dufault acknowledges that the judge retains the “last word” on whether such preliminary motions should be allowed to proceed, and expressly identifies certain instances where this exercise of judicial discretion will result in the court declining to hear proposed preliminary motions in advance of certification.