Canadian Class Action Policy
| Author | Craig Jones |
| Pages | 99-116 |
CHAPTER
SIX
Canadian
Class
Action
Policy
A.
SUMMARY
OF
THEORETICAL OBSERVATIONS
In
the
previous part
I
have demonstrated
the
three ways
in
which aggregation
increases
the
internalisation
of
harm
by the
defendant:
first,
claims that otherwise
cannot
be
economically pursued (for both
financial
reasons
and
those based
on
non-pecuniary
utility
or
"psychological factors"
can be
advanced
in the
aggre-
gate; second,
the
"settlement depression
effect"
inherent
in
individual litigation
of
mass claims
due to
inequalities
in
plaintiffs'
and
defendants'
litigation
invest-
ment
incentives
is
reduced, facilitating
fuller,
more accurate settlements;
and
third, aggregation permits optimal litigation investment that increases
the
chances
that claims will,
on
average,
be
successful,
and
therefore
the
expected
value
of all
claims
is
raised closer
to the
optimal level.
We
can
then conclude that,
in
order
to
maximise deterrence,
an
aggregate lit-
igation system should
(a)
promote maximum claims aggregation;
(b)
promote
accuracy
in
settlements
and
awards;
and (c)
provide optimal litigation investment
incentives
for
plaintiffs.
The
question
of how
well,
or how
poorly, various statutory schemes
fit
these
theoretical
imperatives
is the
subject
of
this part.
99
—
Theory
of
Class
Actions
—
B.
FOUNDATIONS
OF
CANADIAN
CLASS
ACTION
POLICY
(1)
Origins
of
Aggregative
Proceedings
(a)
Common
Law,
Equity
and the
Rules
of
Court
Prior
to the
advent
of the
class
action
provisions
of the
U.S.
Federal
Rules
of
Civil
Procedure
(discussed
below),
representative
suits
were
not
unknown
to
Anglo-American
courts,
and had in
fact
been
recognized
in
various
forms
for
several
hundred
years.1
Representative
actions
developed
as an
exception
to the
"necessary
parties
rule"
in
equity,2
and
from
the
"bill
of
peace,"
an
equitable
device
for
combining
multiple
suits.3
Though
the
cases
from
this
early
period
are
not
numerous,
the
Courts
of
Equity
did
demonstrate
a
remarkable
flexibility
in
their
utilization
of
aggregative
actions.4
1.
See
generally S.C. Yeazell, From Medieval
Group
Litigation
to the
Modern Class
Action (New Haven, Yale University Press, 1987) [Yeazell, From Medieval
to
Modern];
S.C. Yeazell, "Group Litigation
and
Social Context: Toward
a
History
of
the
Class Action" (1977),
77
Colum.
L.
Rev. 866,
at 867 and
872;
Marcin,
"Searching
for the
Origin
of the
Class Action" (1973)
23
Cath.
U. L.
Rev.
515
at
517-524.
2.
The
"necessary parties" rule
in
equity mandated that "all persons materially inter-
ested, either
as
plaintiffs
or
defendants
in the
subject matter
of the
bill
ought
to be
made parties
to the
suit, however numerous they
may
be.":
West
v.
Randall,
721 (CC
RI)
(1820) (per Story J.).
By
contrast,
an
equitable class action
could assist where,
in the
words
of an
early case,
"it
would
be
impracticable
to
make
them
all
parties
by
name,
and
there would
be
continual abatements
by
death
and
otherwise,
and no
coming
at
justice,
if all
were
to be
parties":
Chancey
v. May
(1722),
Free.
Ch.
592,
24
E.R.
265 at
265.
See
generally Hazard, Gedid,
&
Sowle,
"An
Historical Analysis
of the
Binding
Effect
of
Class
Suits"
(1998)
146 U. Pa. L.
Rev.
1849, 1859-1860.
3.
A
"bill
of
peace"
could
be
maintained where
the
interested persons were numerous,
where they possessed
a
common interest
in the
question
to be
adjudicated,
and
where
the
representatives could
be
expected
fairly
to
advocate
the
interests
of all
members
of the
group:
see
Charles Alan Wright, Arthur
R.
Miller,
and
Mary
Kay
Kane,
Federal Practice
and
Procedure,
2nd ed.
(St. Paul,
Minn.:
West Publishing
Co., 1986),
at
§1751;
Zechariah
Chafee,
Jr.
Some Problems
of
Equity. (Ann Arbor:
University
of
Michigan
Law
School, 1950)
at
161-167,
200-203.
The
bill
of
peace
is
discussed more extensively
as a
consolidation device later
in
Part
III of
this book.
4.
The
Chancery Court
in
Wallworth
v.
Holt
(1841),
4 My. & Cr.
619,
244, noted that
"it
[is]
the
duty
of
this Court
to
adapt
its
practice
and
course
of
pro-
100
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