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Class Action (Fed) - Certification (2). McMillan v. Canada
In McMillan v. Canada (Fed CA, 2024) the Federal Court of Appeal considered an appeal, this from federal class action orders from a motion judge of the Superior Court that "dismissed Mr. McMillan’s motion to certify the action as a class proceeding on the basis that his statement of claim failed to disclose a reasonable cause of action" and refused "leave to amend his statement of claim".
Here the court sets out the appellate SOR for the CPA s.5(1)(a) 'failed to disclose a reasonable cause of action' issue [which is the same issue as striking pleadings under Ontario's RCP R21.01(1)(b)]:[56] Whether a pleading discloses a reasonable cause of action is primarily a question of law. Consequently, the standard of appellate review of the Federal Court’s decision on both the motion to strike and the first certification condition is that of correctness: Brink v. Canada, 2024 FCA 43 at para. 40, leave to appeal to SCC refused, 41266 (10 October 2024); Canada (Attorney General) v. Nasogaluak, 2023 FCA 61 at para. 21, leave to appeal to SCC refused, 40734 (14 December 2023); Pioneer Corp. v. Godfrey, 2019 SCC 42 at para. 57; Canada (Attorney General) v. Jost, 2020 FCA 212 at para. 21. On this standard, this Court owes no deference to the Federal Court: Housen v. Nikolaisen, 2002 SCC 33 at para. 8. . McMillan v. Canada
In McMillan v. Canada (Fed CA, 2024) the Federal Court of Appeal considered an appeal, this from class action orders from a motion judge of the Superior Court that "dismissed Mr. McMillan’s motion to certify the action as a class proceeding on the basis that his statement of claim failed to disclose a reasonable cause of action" and refused "leave to amend his statement of claim".
Here the court considers class action certification under the Federal Rules:B. Mr. McMillan’s Certification Motion
[156] Rule 334.16(1) of the Federal Courts Rules governs motions to certify an action as a class proceeding. It provides that a judge shall certify a proceeding as a class proceeding if the following five requirements are met:. the pleadings disclose a reasonable cause of action;
. there is an identifiable class of two or more persons;
. the claims of the class members raise common questions of law or fact, whether or not those common questions predominate over questions affecting only individual members;
. a class proceeding is the preferable procedure for the just and efficient resolution of the common questions of law or fact; and
. there is a representative plaintiff or applicant who would , amongst other things, fairly and adequately represent the interests of the class. [157] Each of these requirements will be addressed below.
(1) Does Mr. McMillan’s Statement of Claim Disclose a Reasonable Cause of Action?
[158] The first requirement for an action to be certified as a class proceeding is that the pleadings disclose a reasonable cause of action: Rule 334.16(1)(a). This is to be assessed on the same standard that applies on a motion to strike a pleading: Brink, above at para. 48; Pro-Sys Consultants Ltd., above at para. 63; Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19 at para. 14. In other words, for an action not to be certified, it must be plain and obvious that the claim discloses no reasonable cause of action, assuming the facts pleaded in the statement of claim to be true: Greenwood, above at para. 143.
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[160] The list contained in Rule 334.16(1) is conjunctive: that is, all five requirements must be satisfied in a given case before the Court can certify an action as a class proceeding: Samson Cree Nation v. Samson Cree Nation (Chief and Council), 2008 FC 1308 at para. 35, aff’d 2010 FCA 165 at para. 3.
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(3) Is Mr. McMillan an Adequate Representative Plaintiff?
[164] The final requirement for the certification of a class proceeding is that there be a representative plaintiff who can satisfy the Court that he or she would, amongst other things, "“fairly and adequately represent the interests of the class”": Rule 334.16(1)(e)(i). The Federal Court found that Mr. McMillan was not an adequate representative plaintiff in this case, as his own claims were statute-barred: Federal Court reasons at para. 115.
[165] Mr. McMillan accepts that a person who is not a member of a proposed class cannot be an adequate representative plaintiff in a class proceeding in the Federal Court: see the discussion of this issue at paragraphs 103−110 of Jost, above. . Brink v. Canada
In Brink v. Canada (Fed CA, 2024) the Federal Court of Appeal considered the appellate standard of review (SOR) for issues of striking of pleadings, and as well here for the related legal step of certification of a class action:V. Standard of Review
[40] Whether a pleading discloses a cause of action is primarily a question of law. The standard of appellate review of the Federal Court’s decision on both the motion to strike and the first certification condition is thus that of correctness: Canada (Attorney General) v. Nasogaluak, 2023 FCA 61 at para. 21; Pioneer Corp. v. Godfrey, 2019 SCC 42 at para. 57; Canada (Attorney General) v. Jost, 2020 FCA 212 at para. 21. On this standard, this Court owes no deference to the Federal Court: Housen v. Nikolaisen, 2002 SCC 33 at para. 8. . Brink v. Canada
In Brink v. Canada (Fed CA, 2024) the Federal Court of Appeal considered an appeal from a denial of a Charter s.15 ['discrimination'] class action certification motion, here where the motion judge struck the claim (without leave to amend) on the basis that no Charter claim was made out on the pleadings. The claim was with respect to immigration process fees charged by the government to "non-Canadian born" individuals.
These quotes address the law of striking a claim, which here also resulted in the denial of a class action certification motion:[24] Citing this Court’s decision in Wenham v. Canada (Attorney General), 2018 FCA 199 at para. 29, the Federal Court recognized that its task was not to assess the odds of a cause of action ultimately succeeding. The test was, rather, "“whether a cause of action has been pleaded that is not plain and obvious to fail”": Wenham, above at para. 31. The appellants do not take issue with the test identified by the Federal Court, but rather with its application in this case.
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[38] The primary issue raised by the appellants is whether the Federal Court erred in law in failing to find that it was at least arguable that being "“non-Canadian born”" could qualify as an analogous protected ground for the purposes of section 15 of the Charter. The appellants further argue that the Federal Court erred in denying them leave to amend their statement of claim.
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VI. Principles Governing Motions to Strike
[42] As noted earlier, the parties agree that the Federal Court properly identified the principles governing motions brought pursuant to Rule 221(1)(a) of the Federal Court Rules, SOR/98-106 to strike statements of claim on the basis that they do not disclose a reasonable cause of action.
[43] That is, a statement of claim should not be struck unless it is plain and obvious that the action cannot succeed, assuming the facts pleaded in the statement of claim to be true: Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93 at 980; Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 at para. 63. In other words, the claim must have no reasonable prospect of success: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at para. 17.
[44] The onus is on the party who seeks to establish that a pleading fails to disclose a reasonable cause of action: La Rose v. Canada, 2023 FCA 241 at para. 19; Edell v. Canada, 2010 FCA 26 at para. 5. The threshold that a plaintiff must meet to establish that a claim discloses a reasonable cause of action is a low one: Brake v. Canada (Attorney General), 2019 FCA 274 at para. 70.
[45] Pleadings must, moreover, be read generously, in a manner that accommodates any inadequacies in the allegations that are merely the result of deficiencies in the drafting of the document: see Operation Dismantle Inc. v. The Queen, 1985 CanLII 74 (SCC), [1985] 1 S.C.R. 441, [1985] S.C.J. No. 22 at 451.
[46] Motions judges should not delve into the merits of a plaintiff’s argument, but should, rather, consider whether the plaintiff should be precluded from advancing the argument at all: Salna v. Voltage Pictures, LLC, 2021 FCA 176 at para. 77. Recognizing that the law is not static, motions judges must also err on the side of permitting novel, but arguable claims to proceed to trial: R. v. Imperial Tobacco, above at paras. 19-25; Mohr v. National Hockey League, 2022 FCA 145 at para. 48, leave to appeal to SCC refused, 40426 (20 April 2023).
[47] That said, it must also be recognized that there is a cost to access to justice in allowing cases that have no substance to proceed. The diversion of scarce judicial resources to such cases diverts time away from potentially meritorious cases that require attention: Mohr, above at para. 50; Coote v. Lawyers’ Professional Indemnity Company, 2013 FCA 143 at para. 13.
[48] Insofar as the appellants’ certification motion is concerned, Rule 334.16(1) of the Federal Courts Rules identifies five conditions that must be satisfied for a proceeding in the Federal Court to be certified as a class proceeding. The first of these requires that the pleadings disclose a reasonable cause of action. This condition is assessed on the same standard that applies on a motion to strike out a pleading: Pro-Sys, above at para. 63; Salna, above at para. 72; Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19 at para. 14; Nasogaluak, above at para. 18.
[49] To fail at this stage of the test the claim must be "“bereft of any possibility of success”": Wenham, above at para. 33, citing Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc., 2013 FCA 250 at para. 47.
[50] As is the case with motions to strike, there is a heavy burden on a defendant trying to defeat a certification motion on the ground that the statement of claim fails to disclose a reasonable cause of action. Indeed, the burden resting on a defendant in such cases has been described by this Court as "“onerous”": Nasogaluak, above at para. 19; Canada v. Greenwood, 2021 FCA 186 at para. 144, leave to appeal to SCC refused, 39885 (17 March 2022). . Brink v. Canada
In Brink v. Canada (Fed CA, 2024) the Federal Court of Appeal considered an appeal from a denial of a Charter s.15 ['discrimination'] class action certification motion, here where the motion judge struck the claim (without leave to amend it) on the basis that no Charter claim was made out on the pleadings. The claim was with respect to immigration process fees charged by the government to "non-Canadian born" individuals.
Here the court endorsed the motion judge in applying 'Occam's Razor' in their legal reasoning, here as a matter of efficiency where one necessary element of a legal test was not made out:X. The Federal Court’s Failure to Address the Other Four Certification Criteria
[137] A motion to certify an action as a class proceeding in the Federal Courts is governed by Rule 334.16(1) of the Federal Courts Rules. This Rule states that a judge shall certify a proceeding as a class proceeding if the following five requirements are met:. the pleadings disclose a reasonable cause of action;
. there is an identifiable class of two or more persons;
. the claims of the class members raise common questions of law or fact (whether or not those common questions predominate over questions affecting only individual members);
. a class proceeding is the preferable procedure for the just and efficient resolution of the common questions of law or fact; and
. there is a representative plaintiff or applicant who would fairly and adequately represent the interests of the class. [138] This list is conjunctive: that is, the Court must be satisfied that all five requirements are satisfied in a given case before the Court can certify an action as a class proceeding: Buffalo v. Samson First Nation, 2008 FC 1308 at para. 35, aff’d 2010 FCA 165 at para. 3.
[139] As discussed earlier, the Federal Court found that the appellants’ statement of claim in this case did not disclose a reasonable cause of action. Consequently, the first of the five certification criteria was not satisfied, and it followed that the appellants’ certification motion must necessarily fail.
[140] Having found that the first of the certification criteria had not been satisfied in this case, it was entirely open to the Federal Court to determine that it was unnecessary to consider the remaining four certification criteria. Given that all of the certification requirements had to be satisfied before the action could be certified as a class proceeding, there was nothing that the Federal Court could decide with respect to the four remaining criteria that could have affected the outcome of the certification motion.
[141] That is, the existence of, for example, important common questions of law or a strong litigation plan could not make up for the lack of a reasonable cause of action in the certification process: Bou Malhab v. Diffusion Métromédia CMR inc., 2011 SCC 9 at para. 52.
[142] Whether or not to address the remaining outstanding issues in such circumstances was a matter wholly within the discretion of the motions judge. As noted earlier, this Court should not interfere with discretionary decisions of the Federal Court absent an error of law or a palpable and overriding error on a question of fact or of mixed fact and law, and the appellants have not identified a reviewable error in the Federal Court’s exercise of discretion in this regard. . Canada v. Hudson
In Canada v. Hudson (Fed CA, 2023) the Federal Court of Appeal considered (and dismissed) Crown appeals of stays issued [under Federal Court Act s.50(1)(b)] against two RCMP-related uncertified class actions (Hudson and Pierrot), here on the basis that they were duplicative of pre-existing (and certified) class actions (Greenwood and AMPMQ).
Here, the court characterizes the nature of class action 'certification':[69] First, I do not accept that there is an extricable question of law. It is well-established that certification is not a determination of the merits of claims in a class proceeding: Hollick at para. 16; Pro‑Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 at para. 99; Bowman v. Ontario, 2022 ONCA 477 at para. 37. Certification simply means that the action is appropriately prosecuted as a class proceeding: Hollick at para. 16. . Canada v. Greenwood
In Canada v. Greenwood (Fed CA, 2023) the Federal Court of Appeal considered issue estoppel, here in a class action certification context:(1) Issue estoppel
[35] Issue estoppel is a common law doctrine that provides that once a judicial proceeding finally decides an issue, neither party can re-litigate that issue. The doctrine rests on the finality principle. As aptly summarized by the Ontario Court of Appeal in Smith Estate v National Money Mart Company, 2008 ONCA 746, 303 DLR (4th) 175 at para. 33: “[o]nce a point has been decided, the winning litigant is entitled to rely on the result, to be assured of peace and to be able to plan the future on the basis of the court’s decision.” The doctrine also exists to preserve scare judicial resources and prevent parties from exposure to additional legal costs, as well as to reduce the risk of undue litigation (Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, [2013] 2 S.C.R. 125 at para. 28).
[36] It is well established that issue estoppel emerges in the presence of three preconditions (Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460 at para. 25 (Danyluk)):(1) the same question has been decided;
(2) the judicial decision which is said to create the estoppel was final; and,
(3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies. [37] Furthermore, even if all the preconditions are established, a judge will retain a broad discretion to refuse to apply the doctrine of issue estoppel if its application were to create an injustice (Danyluk at para. 33):The first step is to determine whether the moving party … has established the preconditions to the operation of issue estoppel ... If successful, the court must still determine whether, as a matter of discretion, issue estoppel ought to be applied ... [emphasis in original] [38] In the present case, and I agree with the appellant on this point, the certification judge conflated whether the issue at hand was finally resolved with whether the entirety of the claim was finally determined. She did so in a cursory manner, without reference to the relevant case law.
[39] Indeed, there are decisions stating that the doctrine of issue estoppel applies to interlocutory orders (Hawley v. North Shore Mercantile Corp., 2009 ONCA 679, 99 O.R. (3d) 142 at para. 26, leave to appeal to SCC refused, 33440 (April 22 2010), citing Fidelitas Shipping Co. v. V/O Exportchieb, [1965] 2 All E.R. 4 at 10 (CA UK); see also R. v. Duhamel, 1981 ABCA 295 at para. 14, aff’d 1984 CanLII 126 (SCC), [1984] 2 S.C.R. 555). More particularly, in the context of class proceedings, a number of decisions confirm that issue estoppel applies to class certification motions with the understanding that judges retain discretion not to apply it when they are of the view it would lead to an injustice (see Risorto v. State Farm Mutual Automobile Insurance Co., [2009] O.J. No. 820, 72 C.C.L.I. (4th) 60 at para. 49; Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2014 BCSC 1280, 376 D.L.R. (4th) 302 at paras 28–30, 60, 78 (Pro-Sys); Turner v. York University, 2011 ONSC 6151, 209 A.C.W.S. (3d) 228 at paras 63–65; Corless v. Bell Mobility Inc., 2023 ONSC 6227 at paras 51–58 (Corless); Fanshawe College of Applied Arts and Technology v. LG Philips LCD Co., 2016 ONSC 3958, 270 A.C.W.S. (3d) 23 at paras 43–53).
[40] While certification orders do not dispose of the entire proceeding, they may yield final rulings on issues going to the merits of the case, such as class definitions and common questions. As it was put by our Court in Apotex Inc. v. Merck & Co. (C.A.), 2002 FCA 210, [2003] 1 F.C. 242 at para. 27:The decision which is said to give rise to the estoppel need not be a decision which determines the entire subject-matter of the litigation. The test for issue estoppel is a substantive issue test where the decision affects substantive rights of the parties with respect to a matter bearing on the merits of the cause of action. [41] Accordingly, certification orders issued in the context of class proceedings may be subject to issue estoppel. Although Rule 334.19 contemplates the possibility of amending a certification order, it does not displace the doctrine of issue estoppel that exists to prevent re-litigation. Both the rule and the doctrine have to be taken into account and the judge’s discretion has to be exercised consequently and appropriately (Pro-Sys at para. 28). Any other approach would undermine judicial economy (which the doctrine of issue estoppel fundamentally seeks to protect) by allowing litigants to repeatedly and endlessly re-open certification orders.
[42] That being said, there are circumstances where the doctrine of issue estoppel can be set aside, namely in the event of an appeal, a material change in circumstances, or new evidence (Donald J. Lange, The Doctrine of Res Judicata in Canada, 5th ed. (Toronto: LexisNexis, 2021) at 328).
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