Bill 161's Predominance Test to Alter the Landscape on Class Proceedings in Ontario

On December 9, 2019, Attorney General Doug Downey tabled Bill 161, the Smarter and Stronger Justice Act, 2019 (Bill 161), in the Legislative Assembly of Ontario. Bill 161 introduces a comprehensive overhaul to regulations on Ontario’s justice system.

As a part of the suggested reforms, Bill 161 proposes a list of modifications and new additions to Ontario’s Class Proceedings Act, 1992 (CPA), which has not been substantially updated in over 25 years. While the numerous CPA amendments purport to increase procedural efficiency and streamline class actions in Ontario, by far the most significant is the introduction of a “predominance” requirement to the test for certification of a class action in Ontario.

The language of the new section 5(1.1)(b) introduces a considerably higher bar to the preferable procedure requirement along several lines. Under 5(1.1), a class action will only satisfy the preferable procedure requirement at certification if, at a minimum:

• proceeding as a class action is considered the superior means to all reasonably available options of determining the entitlement of the class members to relief, or addressing the disputed conduct of the defendant; and
• the questions of fact or law common to the class members predominate over questions affecting only individual class members, mimicking the language of the predominance section of the United States’ Federal Rule 23(b)(3).

Although a predominance requirement has long been an element of the U.S. class actions process, it has never formed a part of the Canadian regime. In Bendall v McGhan Medical Corp?the first case to be certified on a contested basis in Canada—Justice Montgomery specifically recognized that the predominance issue is not a factor to be considered under the Ontario certification test. Historically, the lack of a predominance requirement is likely what has made Ontario (consistent with other provinces) a friendly jurisdiction for class actions that typically involve many individual issues, such as product liability and personal injury cases. In the United States, such cases rarely achieve certification.

The judicial interpretation of these proposed amendments will play an important role in determining their impact not only within Ontario, but also in the broader context of the national coordination of class actions.

Other proposed amendments under Bill 161 directly implement the findings of the Law Commission of Ontario’s investigative report on class actions released in July 2019. These include:

Procedural amendments designed to achieve faster resolution of cases

• The proposed changes seek to do this by permitting preliminary motions that resolve the proceeding, narrow the issues to be determined, or reduce the evidence to be adduced before a motion for certification is heard.
• The amendments also introduce a new rule addressing mandatory dismissal for delay. A proceeding commenced under section 2 of the CPA must be dismissed unless, within one year, the representative plaintiff files a final and complete motion record for certification, the parties agree in writing to a timetable for its service, or the court establishes a timetable for its service.
• In appealing an order refusing to certify a class proceeding, a plaintiff cannot amend the notice of certification motion, pleadings, or notice of application, except with leave of the court in “exceptional or unforeseen circumstances”. In other words, the “reformulation” of class proceedings on appeal is no longer a matter of routine.
• Finally, the amendments add to the circumstances under section 28(1) in which limitation periods will continue to run against class members. The section will now include that the period resumes when a court refuses to certify the class proceeding.

Increased transparency in settlements, class counsel fees, and third-party litigation funding

• The proposed changes specify new evidentiary requirements for seeking court approval of settlement agreements. The changes would authorize a court to appoint a person or entity to administer the distribution of settlement funds and to require them to file a report detailing essential information on the settlement.
• Courts must first determine whether fee agreements between lawyers and representative plaintiffs are fair and reasonable before they can be approved. Under this proposed change, a court may also withhold a portion of the fees until it can determine if the class was fairly compensated.
• Finally, the amendments propose a new section 33.1, which codifies requirements for court approval for third-party funding agreements.

Reducing the multiplicity of class proceedings

• Under a new section 13.1, where two or more proceedings involving similar subject matter and class members are brought in Ontario, the court may order that one or more be stayed. On a carriage motion, the court will determine which proceeding best advances the claims of the class members in an efficient and cost-effective manner.
• The proposed changes also aim to address multi-jurisdictional class proceedings and carriage motions.
• If a class proceeding is commenced in a province other than Ontario and involves similar subject matter and class members as a proceeding in Ontario, the court must determine whether it is preferable for some or all of the claims of some or all of the class members to be resolved in that other province

Added requirements for notice to class members

• Further proposed changes mandate that all notices to class members must now be communicated in English and in French and in plain language using the contents prescribed by the amended legislation.

In conclusion, Bill 161 contains a vast majority of the changes proposed by the Law Commission of Ontario, but it remains to be seen whether the streamlined procedural measures will be realized, given that the new predominance requirement in certification is likely to limit the availability of class actions in Ontario writ large. Bill 161 is now at first reading. Counsel and companies with class action exposure should keep a close watch as Bill 161 makes its way through the Ontario Legislature in 2020.