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Top court dashes hopes for national class clarity

|Written By Julius Melnitzer

Because most Canadian provinces have class action legislation, class definitions can and do overlap jurisdictional boundaries. 

Barry Glaspell believes Lépine signals a very cautious approach to national classes.

Nevertheless, the exact status of national class actions - and whether settlement of parallel class actions binds residents of a particular province - are issues that courts have not had to face squarely.

Earlier this year, however, the Supreme Court of Canada faced those questions in Canada Post Corp. v. Lépine. Because the case gave the court the opportunity to deal with the issue directly, expectations were high that it would provide useful guidance. But arguably, it all came to naught.

“Lépine is certainly much less of a statement in favour of national classes than many lawyers would have liked to see,” says Barry Glaspell of Borden Ladner Gervais LLP’s Toronto office.

The case revolved around the cutting of a free Internet service and the subsequent imposition of a monthly charge. Three class actions were filed: one in Quebec on behalf of that province’s residents; one in Ontario on behalf of all Canadian residents save those in Quebec; and one in British Columbia on behalf of B.C. residents.

Eventually, the Ontario and B.C. actions settled, but the Quebec plaintiffs refused to participate. The Ontario settlement, approved by the Superior Court, included a provision that purported to bind Quebecers.

The motion for authorization in Quebec was heard and reserved while the B.C. and Ontario settlements were pending approval. While the decision was still reserved, the Ontario court approved the settlement there. Two weeks later, the Quebec court granted authorization. Several months after that, the B.C. courts

approved the local settlement.

The defendant, Canada Post, then moved to have the Ontario agreement recognized in Quebec. Citing confusion in the public notices of the Ontario and B.C. settlements, the Quebec Court of Appeal refused to recognize the Ontario ruling. It also suggested the Ontario court ought to have declined jurisdiction over Quebecers.

“The difficulty in Canada is there is no harmonization in the law with respect to recognition and enforcement of class action judgments that have extra-provincial effect,” says Donald Bisson of McCarthy Tétrault LLP’s Montreal office. “It’s an issue that hasn’t been settled by the Constitution, so the provinces are fighting over it.”

Adding to the difficulty is the fact Quebec’s Code of Civil Procedure has unique enforcement rules.

“These rules are sometimes difficult to reconcile with the statutes and jurisprudence from other provinces,” says Bisson.

The issue is an important one for plaintiffs and defendants alike.

“Plaintiffs are interested in having full recognition because it’s easier to have a settlement enforced across the board as opposed to starting all over again,” says Bisson. “And defendants are interested in the certainty and finality that a fully enforceable settlement brings.”

In the end, the Supreme Court unanimously upheld the Quebec Court of Appeal’s decision to refuse enforcement of the Ontario settlement. But the ruling turned largely on the inadequacy of the notices issued to the class.

On the other hand, the high court disagreed with the Quebec Court of Appeal’s conclusion that the Ontario courts had no jurisdiction to approve a settlement with Quebec residents. It is this aspect of the judgment that some observers see as an affirmation of the propriety of national classes.

Otherwise, however, the court ducked the national class and parallel actions issues, dealing with them only briefly near the end of its reasons that smacked of afterthought.

“In addition to its conclusions of law, the Quebec Court of Appeal seems to have had reservations or concerns about the creation of classes of claimants from two or more provinces,” the court wrote.

“We need not consider this question in detail. However, the need to form such national classes does seem to arise occasionally.

The formation of a national class can lead to the delicate problem of creating subclasses within it and determining what legal system will apply to them.

In the context of such proceedings, the court hearing an application also has a duty to ensure that the conduct of the proceeding, the choice of remedies, and the enforcement of the judgment effectively take account of each group’s specific interests, and it must order them to ensure that clear information is provided.

“As can be seen in this appeal, the creation of national classes also raises the issue of relations between equal but different superior courts in a federal system in which civil procedure and the administration of justice are under provincial jurisdiction.

This case shows that the decisions made may sometimes cause friction between courts in different provinces. This of course often involves problems with communications or contacts between the courts and between the lawyers involved in such proceedings.

However, the provincial legislatures should pay more attention to the framework for national class actions and the problems they present.

More effective methods for managing jurisdictional disputes should be established in the spirit of mutual comity that is required between the courts of different provinces in the Canadian legal space. It is not this court’s role to define the necessary solutions. However, it is important to note the problems that sometimes seem to arise in conducting such actions.”

Glaspell believes Lépine signals a very cautious approach to national classes.

 “The court talks about the fact that the need for national classes arises ‘occasionally,’ which to my mind means that it considers the norm to be provincial classes rather than national classes,” he says.

“I think that springs from the court’s view that provincial classes are the most respectful of the property and civil rights issues at stake, which often involve provincial legislation.”

But the overriding message to the class action bar, it appears, is this: until legislative action intervenes, boys and girls, figure it out for yourselves.

“So now, it’s clearly our problem,” says Ward Branch of Vancouver’s Branch MacMaster.

Indeed, there’s room for the view that on the issue of national classes, Lépine’s inconclusiveness raises the spectre of more problems than the case resolves.

“For example, some people are interpreting the decision as creating a race-to-the-courthouse situation, where the first national class action filed will have precedence,” says Glenn Zakaib of Toronto’s Cassels Brock & Blackwell LLP. “I’m not at all sure that’s a satisfactory outcome.”

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