Class Actions Twenty-five Years On
| Author | Suzanne Chiodo |
| Pages | 189-230 |
189
Chapter 6
CLASS ACTIONS TWENTY‑FIVE
YEARS ON
To bring about the Class Proceedings Act (CPA), the Attorney General’s
Advisory Committee (Advisory Committee) made a number of comprom-
ises in order to secure a consensus in an area that “has been the subject of
controversy and debate.”1 Consumer and environmental representatives
compromised on the issue of costs, while the business interests com-
promised on the issue of contingency fees and a no-merits certification
test. Both groups looked to the government to establish the Class Pro-
ceedings Fund (CPF) to provide further financial assistance to litigants.
While the result led to the advent of class proceedings in Ontario,
and thereafter in the rest of common law Canada, the underlying con-
troversies remained. The issue of costs was front and centre in the first
action brought under the CPA. In Smith v Canadian Tire Acceptance Ltd,2 as
detailed in the previous chapter, Larry Whaley attempted to shield him-
self from an adverse costs award by putting forward a “straw man” plain-
tiff. Although the court quickly thwarted this attempt, the case raised the
hackles of many who were already apprehensive of the new legislation.3
1 Ontario, Ministry of the Attorney General (MAG), Policy Development Division,
Report of the Attorney General’s Advisory Committee on Class Action Reform (Toronto:
Ministry of the Attorney General, 1990) at 24–25 [Advisory Committee Report].
2 1995 CanLII 7163 (Ont Ct Gen Div).
3 Jean-Marc Leclerc, “‘The Sport of Kings: Financing Class Actions in Ontario” (2012)
8:1 Canadian Class Action Review 121 at 129–31.
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Twenty-five years later, the controversies continue. Some were envis-
aged by the Advisory Committee, such as the intertwined issues of costs,
funding, and certification. Other issues have arisen because they were
not suciently addressed by the committee or by other bodies such as
the Law Society of Upper Canada, namely, the issue of ethics in class
actions. Still other controversies, such as carriage motions and overlap-
ping class actions, barely crossed the drafters’ minds, but today threaten
to undermine the very purposes of the CPA.
Given the controversial nature of the Act, as well as the dearth of pre-
cedents on which its drafters could rely (after the United States and Que-
bec, Ontario was one of the first jurisdictions in the world to enact class
proceedings legislation), it is scarcely surprising that such issues have
arisen. The nature of the Act’s framework papered over many of these
controversies and left much to the discretion of judges. For example,
while traditional costs rules continue to apply, courts have the discre-
tion to make no order as to costs pursuant to section 31; the certification
test under section 5(1) is silent regarding the evidentiary burden on the
plaintiff; and the Act makes no mention of carriage motions or national
class actions, which have been managed under the court’s residual power
to determine the conduct of its own proceeding under section 12, as well
as its ability to stay related proceedings under section 13. The caselaw
arising from such broad-brush provisions has given rise to uncertainty
and ineciency as the concept of class proceedings has matured and
expanded to other Canadian jurisdictions.
This is why the Law Commission of Ontario (LCO) commenced a
review of the CPA in 2013, stating “[i]t is unclear whether the CPA is work-
ing as intended and many unforeseen challenges associated with it have
become fodder for discussion in conferences, academic papers, profes-
sional associations, social media and other commentary.”4 This chapter
will review several of these class actions controversies, which stem from
the manner in which the CPA was drafted and passed, as well as the Act’s
4 Law Commission of Ontario, Review of Class Actions in Ontario: Issues to Be Consid-
ered (Toronto: Law Commission of Ontario, 2013) at 9, online: www.lco-cdo.org/
wp-content/uploads/2014/01/class-actions-issues-to-be-considered.pdf [LCO 2013].
After stalling for some time, this project was relaunched in 2017 and renamed “Class
Actions: Objectives, Experience and Reforms,” announcement online: www.lco-cdo.
org/wp-content/uploads/2013/04/CA-Press-Release-FINAL-Sept-22-2017.pdf. See
also Law Commission of Ontario, Class Actions: Objectives, Experiences and Reforms:
Consultation Paper (Toronto: Law Commission of Ontario, 2018) [LCO 2018].
Class Actions Twenty-F ive Years O n 191
various lacunae. The central issues that will be addressed include costs
and funding; the certification process; ethics; and overlapping actions,
including carriage motions. These issues are crucial to the operation of
the CPA and remain contentious despite a quarter of a century of caselaw.
A. COSTS AND FUNDING
The Advisory Committee recognized that the application of traditional
costs rules to class actions would expose a representative plaintiff to a
potentially enormous adverse costs award, far in excess of that plaintiff’s
interest in the proceeding. That is why the committee explicitly stated that
the class actions remedy was contingent on a public fund to indemnify
representative plaintiffs.5 Neither the Ontario Law Reform Commission
(OLRC) nor the Advisory Committee reports foresaw the development
of third party litigation funding;6 however, the Advisory Committee, at
least, recognized the underlying necessity of such funding.7 Subsequent
caselaw also noted the “grim reality” posed by the traditional costs rules:
[N]o person in their right mind would accept the role of representative
plaintiff if he or she were at risk of losing everything they own. No one,
no matter how altruistic, would risk such a loss over a modest claim.
Indeed, no rational person would risk an adverse costs award of several
million dollars to recover several thousand dollars or even several tens
of thousand dollars.8
Funding, whether by the CPF or by a third party funder, is therefore
essential in order to remove a barrier to access to justice: “the prospect
of a crushing costs award to be borne by the representative plaintiff or
counsel.”9 Such arrangements are a reality of the committee’s recommen-
dation that the traditional costs rules apply to class actions.
5 Advisory Committee Report, above note 1 at 72. See also David Gourlay, “A Class Act
Comes of Age: Costs and Certification as the OLRC Report Turns Twenty” (2004)
1:2 Canadian Class Action Review 273 at 280.
6 Jon Bricker, “Ontario’s Class Proceedings Fund: A Good (If Less Than Perfect) Class
Action Costs Model” (2008) 4:2 Canadian Class Action Review 399 at 417.
7 Advisory Committee Report, above note 1 at 56–59.
9 Ibid at para 33. While an indemnification by class counsel would serve the same
purpose as an indemnification by a funder, this brings with it its own problems that
will be addressed further below.
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