Forms of representative or “class” proceedings date back to the 19th Century in the English Courts of Chancellery, and basic class procedures were available under Ontario civil procedure from 1881 onwards. However, the modern form of class proceedings in Canada arose from a series of legislative reforms in the late 1970s and 1980s.
In 1978, Quebec passed class action legislation. However, since Quebec has a civil law system, this reform was not consequential for the Canadian common law provinces.
In 1979, the Ontario Court of Appeal granted leave for several plaintiffs to bring a class action in Naken v General Motors of Canada Ltd  OJ No 4013 reversed  1 SCR 72. Canada’s Supreme Court overturned this decision in 1983, holding that the class procedures under Ontario’s rules of court were “totally inadequate” for such a complex action. The Supreme Court acknowledged some potential value of a class action regime but deferred to the legislature for reform.
Around the same time, the Ontario Law Reform Commission published the Report on Class Actions. The Commission recommended legislative reform to enable class proceedings. The introduction of class proceedings was intended to advance three objectives:
In 1989, the Ontario Attorney General’s Advisory Committee on Class Action Reform issued a report that heavily relied on the Report on Class Actions, and wrote a proposed bill setting out the legislation that would become the Class Proceedings Act, 1992. When it came into force in 1993, Ontario became the first common law province with class action legislation.
Changing Court Attitudes
While Canadian courts had initially been reluctant to embrace class actions, resistance largely subsided when the Supreme Court of Canada released a seminal trilogy of cases in 2001:
The Court acknowledged the growing importance of class actions and adopted the three objectives of class proceedings (ie, judicial economy, access to justice, and behaviour modification). The Court endorsed a flexible and expansive approach to class action procedure and even provided a framework for certification to those provinces without class action legislation. Canada’s three territories continue to rely on this framework today.
Since the passing of Ontario’s legislation, all ten Canadian provinces have adopted class proceedings legislation, with Prince Edward Island being the last in 2022. Parties can also bring class actions in the Federal Court if the subject matter of the underlying case falls within the Federal Court’s jurisdiction.
Class proceedings are now widespread in Canada, with many specialist plaintiff law firms prosecuting claims across the country and defence counsel typically drawn from established firms. Canadian courts frequently consider motions for class action certification (or authorisation) and other substantive and procedural class action motions, however, trials remain relatively rare.
While Canadian class action legislation initially drew some elements from American legislation, Canada’s overall regime is unique. For example, the requisite elements for class action certification originated in certain American statutes but were interpreted differently over time. More recently, however, amendments to Ontario’s Class Proceedings Act, 1992 have incorporated the concepts of superiority (ie, a class action must be a superior means of advancing issues common to the class) and predominance (ie, common issues must predominate over individual issues) into the certification analysis, bringing the Ontario test closer to American certification requirements.
Another key distinction is that certification in Canada occurs before discovery and involves a limited evidentiary record, while certification in the US typically occurs after extensive depositions have been conducted and, therefore, involves a more expansive evidentiary record.
The EU Collective Redress Regime has not been implemented in Canada.
Each of Canada’s ten provinces has separate class action legislation. A separate, federal statutory scheme governs class actions brought under the jurisdiction of the Federal Court. Canada’s three territories do not have explicit class action legislation but follow common law procedures. Class action regimes across Canada’s common law jurisdictions are largely similar with some important procedural differences. Canada’s lone civil law province, Quebec, follows substantially different class action procedures.
The relevant statutes are:
Class actions are procedural mechanisms that could be applied to cases touching on most areas of the law.
Class actions are frequently pursued in disputes concerning product liability, securities law, competition law, employment issues, aboriginal/First Nations redress, environmental law, personal injury, and other areas of law.
“Class actions” or “class proceedings” are generally defined as court proceedings that have been “certified” or “authorised” by the court to advance defined common issues on behalf of a defined class of similarly situated persons or entities. Before the certification/authorisation motion, the action will be referred to as a “proposed class action”.
Each of Canada’s ten provinces and three territories has a separate court system, which is the default court for most actions including class actions. Canada also has a parallel federal court system that hears actions touching on statutorily defined subject matters, including most areas of intellectual property, most proceedings against the Crown, tax, admiralty law, immigration, and other areas.
Commencing a Class Action
The first step in launching a class action is filing a pleading in court. The pleading must indicate that the proceeding is being brought as a proposed class action. In addition to the various forms of relief and damages typically sought in civil pleadings, class action pleadings also seek certain procedural relief unique to class actions, including an order certifying the proceeding as a class action.
Next, the plaintiff will bring a motion/application to certify/authorise the action as a class proceeding. The Court will determine, after the certification motion, whether the case is appropriate to be “certified” as a class action.
In common law jurisdictions, subject to some variation across provinces, a party seeking to certify a class action bears the burden of establishing that:
The standard of proof is low. For the first requirement, the court needs to be satisfied that it is not “plain and obvious” that the pleadings fail to disclose a cause of action, even assuming the facts pleaded are true. For the remaining factors, a plaintiff needs to meet a slightly higher standard and show that there is “some basis in fact” that the requirement is fulfilled. Both standards are lower than the regular balance of probabilities standard employed in civil lawsuits.
In Quebec, a party seeking authorisation of a class action only needs to show that an “arguable case” exists. The court will assume that the facts alleged are true. There is no requirement to file any affidavit evidence in Quebec, and the defendant has to apply for leave of the court to cross-examine on any affidavit.
If the plaintiff prevails, the Court will certify a class definition that describes which persons are represented in the class proceeding. The Court will also certify a list of common issues to be addressed at trial.
Notice to Class Members
Once a class action has been certified and all appeals have been exhausted, the class members will be notified of the certification. The court has discretion to determine the form of the notice. Usually, it involves advertising in newspapers, on social media and law firm websites, or through direct notification to class members.
Class members are entitled to opt-out of (or, in some limited circumstances, opt-in to) the proceeding during a time period set out in the notice. If persons or entities captured by the class definition fail to opt-out, they will be bound by the result of the lawsuit.
Next, the parties will engage in a documentary discovery process where they are usually obliged to disclose all relevant documents in their power, possession, or control.
The parties will conduct examinations for discoveries in which each party can ask a representative of the opposing party about facts relevant to the issues in dispute. Usually, parties can only examine one witness per corporate party, however, the court has discretion to order additional examinations.
Common Issues Trial
Following discoveries, the parties will proceed to a trial of the certified common issues. Class actions usually settle after certification, and trials are relatively rare.
Individual Issues Trial
It is possible that individual issues remain to be determined following a common issues trial. In that circumstance, individual trials or hearings to resolve the remaining issues for individual class members can be carried out in court or by way of an alternative dispute resolution mechanism.
Any legal person can pursue a class proceeding. This includes individuals and corporations. The person must fall within the definition of the proposed class and cannot have conflicts of interest that collide with the proposed class members. If a class proceeding is certified, the court will appoint one or more representative plaintiffs.
While class proceedings involving representative plaintiffs are far more common, certain provinces permit class proceedings pursued by defendants. For instance, Ontario’s class proceedings legislation permits any party to a proceeding against two or more defendants to bring a motion to certify the proceeding as a class proceeding and appoint a representative defendant. The certification requirements are the same irrespective of whether a plaintiff or a defendant seeks certification.
When certifying/authorising a class proceeding, the court will issue a class definition setting out the persons included in the class action. The class must contain two or more class members, but there are no upwards limits on the size of the class.
The Court will prescribe an opt-out period during which persons captured by the class definition can choose not to be bound by the result of the trial or settlement. Certain Canadian jurisdictions have opt-in procedures for non-residents, however, those have largely been eliminated except in New Brunswick and Newfoundland and Labrador.
Joining Other Defendants
Defendants in a class proceeding can cross-claim against an existing defendant or bring a third-party claim to introduce a new party into the proceeding.
If multiple persons bring a class proceeding concerning the same or similar subject matter, the plaintiff’s counsel may bring a carriage motion/application asking the court to stay the other proceedings. In making this determination, the court decides which class proceeding best advances the claims of the class members efficiently and cost-effectively. The court will consider, among other factors, the theory of the cases being advanced, the relative likelihood of success of each proceeding, the expertise and experience of counsel, and the funding strategy for each proceeding. In many cases, plaintiff firms co-operate to avoid overlap by restricting class definitions to particular provinces or by voluntarily staying one action in favour of another.
A defining feature of class actions is the high degree of judicial supervision and case management exercised by the court.
Generally, the same judge hears all motions before a common issues trial. Depending on the jurisdiction, the same judge could also hear the common issue trial.
The case management judge has broad, statute-based discretion to make any order he/she considers appropriate, respecting the conduct of a proceeding to ensure its fair and expeditious determination and, for this purpose, may impose such terms on the parties as it considers appropriate. This broad discretion can be applied in respect of, among other things, pre-certification motions, granting leave for the discovery or examination of non-representative parties, sequencing of motions, carriage motions, the form of the notice of certification and opt-out mechanisms, how class members participate, settlement approval, and staying or severing a related proceeding.
The length and timeframe for class action proceedings depend on the individual case, the nature of the claim, and the jurisdiction in which the class action is commenced.
Many factors influence the length and timeline of a class action, including the size of the class, the number of defendants, the complexity of the legal issues, the timing of potential summary judgment motions, and court delays.
A class action’s life cycle will also depend on whether and when a class action is settled. Settlements are common after class actions are certified. The timing of settlements will also depend on the class sizes and the timing for the court’s approval of the settlement.
In some provinces, a defendant can move for a mandatory dismissal of a class action proceeding for a delay to certify the class action within a specified timeframe.
Class actions can, and often do, take years to resolve.
Summary judgment motions are available to plaintiffs and defendants in class actions to dispose of the class action without trial. The party bringing the motion bears the burden of satisfying the court that there is no genuine issue requiring a trial to grant summary judgment. Such motions have been brought before, during, and after certification, and even after discovery.
Other preliminary motions that can impact the life cycle of a class action include jurisdictional challenges, motions to disqualify experts, and motions to strike pleadings.
Delays are common in class proceedings. Certain legislative reforms have been enacted to prevent delays. For example, in Ontario, unless the parties agree or the court orders otherwise, a class action will be automatically dismissed for delay unless, within one year of being commenced, the proposed representative plaintiff has filed a complete certification motion record.
Class actions involve risk and high expenses for all parties. In some provinces, this risk is exacerbated due to adverse cost awards against the unsuccessful party. Mechanisms for class actions funding, such as contingency fees and third-party litigation funding, are available but subject to court approval.
In Canada, a losing party usually bears a portion of the winning party’s legal costs, including in class actions in most provinces. This rule applies to each contested step within the proceeding.
The amount of costs ordered is generally within the discretion of the court. For example, in Ontario, a court may reduce the costs award if the proceeding was a test case, raised a novel point of law, or involved a matter of public interest. Still, these cost awards can be significant.
Some provinces deviate from the general “loser-pays” rule in class actions. For example, British Columbia has legislated that, subject to a few exceptions, each party to a class proceeding bears their own costs.
Costs awards do not usually apply to class members, except in respect of individual hearings or if they take an individual step in the proceeding, such as objecting to a settlement. Representative plaintiffs are typically indemnified by class counsel or third-party funders.
Contingency fees are often employed in class proceedings. Usually, class counsel and the representative plaintiff will set out the contingency fee in a retainer agreement. Some provinces, such as Alberta, explicitly mandate that contingency fee arrangements be set out in writing, witnessed, and formally served on the representative plaintiff.
Class counsel’s legal fees are subject to court approval. Courts will consider several factors in determining class counsel fees, including the complexity of the case, the risk undertaken by class counsel for bringing the case, the degree of responsibility assumed by class counsel, the monetary value of the matters in issue, the importance of the matter of the class, the results achieved, the ability of the class to pay, and the degree of skill and competence demonstrated by class counsel.
Third-Party Litigation Funding
Third-party litigation funding is permitted and increasingly popular in Canada. Several providers offer to indemnify plaintiffs against adverse cost awards and provide funding for disbursements like expert costs. In Quebec and Ontario, class action funding is also available through public sources.
Third-party litigation funding is subject to court approval. For instance, in Ontario, a court will not approve a third-party funding agreement unless the court is satisfied that:
The funding agreement also needs to be subject to:
A court will also consider whether the representative plaintiff received independent legal advice regarding the agreement.
The process for documentary disclosure in class actions is similar to the procedure for normal civil proceedings.
During the certification process, the representative plaintiff and the defendants are not subject to broad disclosure obligations. Typically, the parties will produce evidence and documents that support their position on the certification motion. This evidence is exchanged in the form of affidavits along with supporting documents. Depending on the jurisdiction, parties either have the right to cross-examine the opposing parties affiants or may do so on consent or with leave from the court.
As discussed in 4.2 Overview of Procedure, once a class action has been certified, the parties are obligated to disclose all relevant documents in their power, possession, or control and submit to examinations for discovery.
The discovery process will often involve confidential information. Parties can apply for protective orders from the court to request that at least some information is prohibited from public disclosure.
Evidence in class proceedings is subject to several forms of privilege, including the following.
In theory, all remedies available in individual proceedings are also available in class proceedings, including common law, statutory, and equitable relief.
The court has broad discretion in determining the monetary damage award. In appropriate circumstances, the court may award aggregate damages for the whole class without looking at the individual circumstances of individual class members. In most Canadian jurisdictions, courts can consider statistical evidence to determine the amount and distribution of an aggregate damage award as appropriate.
The court cannot award aggregate damages if proof of damages is required from individuals. In those circumstances, the court may make a class-wide finding of liability and then order streamlined individual trials to determine the loss of each class member.
Plaintiffs regularly seek punitive damages. A court will only award punitive damages following a trial of common issues where the defendant’s conduct was sufficiently “malicious, oppressive, and high handed [such] that it offends the court’s sense of decency”.
Mediation is well-established in Canada, including in class action proceedings. Following certification, it is common for class action parties to engage in mediation as a means of seeking a resolution, particularly where the class action involves complex legal and factual issues.
Most class proceedings are resolved by settlement. The timing of settlements varies. In some cases, defendants will consent to certification as part of an overall settlement agreement. In other cases, an adverse result at certification may compel one or more of the parties to settle. Other times, parties may settle after discoveries when the evidentiary record is clearer.
Settlements of class actions are subject to court approval. A settlement will not be binding unless the court has approved it as fair, reasonable, and in the best interests of the class. Courts will consider many factors, including the likelihood of recovery or likelihood of success, the amount and nature of discovery, evidence or investigation, and the proposed settlement terms and conditions. A court also needs to approve class counsel fees.
If a court rejects a settlement agreement due to specific concerns, it is common for the parties to renegotiate the settlement agreement to address the court’s concerns and seek court approval again. Courts will not re-write or amend settlement agreements on the settling parties’ behalf.
Usually, if there are multiple class actions across several provinces, defendants will require the settlement agreement to cover all proceedings. These settlement agreements will be conditioned on the approval of each settlement agreement in each court.
Following a trial on the common issues of the class action, a court will render a judgment.
A final judgment on the merits of the class action is binding on all class members and sub-class members except for those who have opted out (or those who failed to opt-in).
A judgment on common issues of a class or sub-class only binds the relevant class or sub-class members to the extent that the judgment determines common issues that:
Courts have discretion to distribute amounts awarded in class action judgments. Courts may order that:
Provincial legislations regularly update their class action regimes.
In 2019, the Law Commission of Ontario released the Class Actions Objectives, Experiences, and Reforms Final Report calling for sweeping changes to Ontario’s Class Proceedings Act. The Report listed 47 recommendations touching addressing pre-certification delay, class management, carriage, certification, settlement approvals, settlement distributions, fee approval, third-party litigation funding, and appeals.
Ontario lawmakers have adopted some but not all of these recommendations and significantly amended Ontario’s class action regime in 2020. For example, Ontario introduced modifications to the certification test, mandatory dismissals for a delay to certify the class action within a specified timeframe, and changes to the appeal routes of certification decisions.
Other provinces are reviewing their class action regimes. For example, in 2021, the Law Reform Commission of Saskatchewan published a consultation report which identified several areas of potential reform in light of the Ontario Report.
Similarly, in 2021, Quebec commenced a public consultation with a view to class action reform following a September 2019 report by the Universite de Montreal Class Action Laboratory, which called for more active case management and a review of the authorisation (Quebec’s equivalent of certification) regime.
A common theme among the proposed reforms is addressing delays in class actions. The COVID-19 pandemic has exacerbated a significant backlog in Canadian courts. Reform proposals intend to increase the efficiency of the class action process, eliminating dormant class proceedings and resolving cases more expeditiously.
See 5.1 Policy Development.
Brexit has had little direct impact on class actions in Canada.
Class actions related to environmental, social, and governance issues are expected to become increasingly popular.
Class action claims for environmental damages have been common for years in Canada. Numerous class actions have sought redress for mistreatment of First Nations and Aboriginal groups, systemic discrimination and harassment by the police and armed services, “greenwashing”, and other environmental, social, and governance issues.
Key Developments in Canadian Competition, Securities, and Privacy Class Actions
Class actions are frequently brought in Canada. Over the past half-century, all Canadian provinces have introduced class action legislation, leading to a steady increase in class action filings. According to the Canadian Bar Association’s National Class Action Database, over 1,100 class actions have been commenced over the past five years. Class actions are brought in a variety of areas of law. This publication will focus on three subject areas that have witnessed significant recent developments: competition, security, and privacy law.
Competition class actions
Competition class actions have become commonplace in Canada. Many actions alleging anti-competitive activity have been certified or authorised to proceed as class actions. However, to date, there has never been a contested competition class action trial on the merits. Competition class actions that make it past the certification stage are usually settled. Therefore, while Canadian certification procedures and evidentiary requirements are well developed, there is little guidance from the case law about the evidentiary standards required for a finding of liability in a competition class action.
The causes of action advanced in competition class actions are usually drawn from the criminal provisions in Part VI of the federal Competition Act as well as common law causes of action like conspiracy. Typical causes of action include criminal conspiracies (Section 45), foreign directives (Section 46), bid rigging (Section 47), and deceptive marketing (Section 52).
Although the Competition Act is a federal statute, competition class actions can be brought in the provincial Superior Courts or the Federal Court of Canada. Procedure is governed by provincial class action legislation and the rules of court.
It is not necessary for Canada’s competition enforcement agency, the Competition Bureau, to complete an investigation before a class action is launched. The Courts, not the Competition Tribunal, will govern class action procedure and determine class action liability.
Several parties can bring competition class actions, including direct purchasers, indirect purchasers (who are one or more purchasing levels removed from the misconduct), and umbrella purchasers (who bought products that were never the direct subject of anti-competitive activity but were indirectly impacted nonetheless).
In recent years, competition class actions have been subject to significant jurisprudential and legislative developments. One key area of development is the potential liability for buy-side conspiracies carried out by employers.
Buy-side conspiracies treatment under the criminal provisions of the Competition Act
In Mohr v National Hockey League 2022 FCA 145, the Federal Court of Appeal held that the criminal provisions of the Competition Act only apply to “sell-side” agreements. They do not apply to “buy-side” agreements.
In this case, a former major junior hockey player alleged that several hockey leagues had engaged in a conspiracy contrary to Sections 45 and 48 of the Competition Act. The plaintiff alleged that the defendants conspired to impose unreasonable terms and conditions upon the putative class of hockey players, including the imposition of “nominal wages” and loss of marketing, sponsorship, and endorsement opportunities. The plaintiff also alleged that the defendants conspired to limit the opportunities of hockey players to negotiate with teams in various hockey leagues.
The Federal Court of Appeal upheld the dismissal of the claims at a preliminary motion, finding that the plaintiff’s claims had “no reasonable prospect of success”. The Court held that the conspiracy provision under Section 45 is restricted to sell-side agreements or arrangements concerning the supply or sale of products and does not apply to buy-side agreements.
This finding is consistent with decisions from other Canadian provinces. For example, in Latifi v The TDL Group Corp 2021 BCSC 2183, the British Columbia Supreme Court dealt with allegations that a standard clause in a franchise agreement, which prevented franchisees from recruiting employees from other franchisors, constituted a conspiracy to fix wages. Like in Mohr, the Court in Latifi found that the employees were service providers (sell-side) and the employers were purchasers of the services (buy-side). By being on the buy-side, the employers could not have engaged in unlawful activity under the Competition Act.
Recent amendments to the Competition Act increase potential civil and criminal liability for employers
The Federal Court of Appeal’s decision in Mohr is particularly relevant in light of subsequent amendments to the Competition Act.
On 23 June 2023, Section 45 of the Competition Act was amended to create a criminal offence for buy-side conspiracies carried out by employers. As a result, it is now illegal for employers to conspire, agree, or arrange themselves with other employers regarding wages, working conditions, hiring practices, or any other terms and conditions of employment.
These amendments are broad, applying to all employers in Canada and all forms of agreements, including implicit or handshake agreements. The scope of the prohibition also includes agreements between employers in different industries who are not competitors.
The amendments have also increased the fines for criminal agreements under Section 45. The current maximum fine limit of CAD25 million has been removed, and fine amounts will be at the discretion of the Court. Employers who breach Section 45 may expose themselves to indeterminate financial penalties.
The amended provision is actionable as a civil claim, and it is expected that class actions will be filed alleging breaches of the amended legislation. The plaintiff in Mohr would have likely relied on these new provisions had they been in place at the time of his proposed class action.
While standard sell-side competition class actions have proliferated in Canada for several years, these buy-side amendments are expected to broaden the playing field and lead to more class action prosecution against employers.
Securities class actions
Securities class actions are frequently filed in Canada and are regularly certified or authorised to proceed as class actions.
Canadian provinces each have their own securities legislation. Secondary market purchasers routinely bring securities class actions for alleged misrepresentations, including in prospectuses and offering memoranda or alleged failures to make timely disclosures of material changes. Generally, plaintiffs prefer to bring statutory misrepresentation claims because they do not need to demonstrate individual reliance on the misrepresentation, which is an element of common law negligent and fraudulent misrepresentation.
Interpretation of material change
In two recent decisions, the Ontario Court of Appeal provided guidance on the requirement to disclose a “material change” under applicable securities legislation in the context of securities class action certification motions. The Court of Appeal arguably broadened the scope of events that could constitute a “change” and highlighted the distinction between a “material change” and a “material fact”. This distinction is significant because a material change must be immediately disclosed, but a material fact is not subject to the same urgent disclosure requirement. Reporting issuers must carefully evaluate whether an event constitutes a change, whether that change is material and, accordingly, whether it must be disclosed immediately.
In Markowich v Lundin Mining Corporation, 2023 ONCA 359, a mining company allegedly failed to immediately publicly disclose that a pit wall in one of its mines was unstable, which caused a rockslide and restricted access to part of the mine. A shareholder of the mining company brought a class action on behalf of all persons who acquired securities in the mining company between the day that the pit wall instability was detected and the date that the company disclosed the instability and the ensuing rockslide.
In Peters v SNC-Lavalin Group Inc, 2023 ONCA 360, the defending engineering company was charged with alleged fraud and corruption. The company discussed a potential remediation agreement with prosecutors. Prosecutors advised in a phone call that the company would not be invited to negotiate such an agreement, however, they would consider further submissions by the company. Later, prosecutors confirmed they would not extend an invitation to negotiate an agreement, at which point the company disclosed the prosecutors’ denial to shareholders. A shareholder filed a class action on behalf of all persons who acquired securities in the company between the date of the initial phone call advising that the company would not be invited to negotiate a remediation agreement and the date the company disclosed that information.
In both cases, the plaintiffs sought leave under the Securities Act to bring a statutory cause of action against the defendants for failure to disclose “forthwith” a “material change” in their “business, operations, or capital”. The plaintiffs also sought an order certifying the proceeding as a class action. In both cases, the lower courts denied leave under the Securities Act and refused to certify the proceeding as a class action.
The key issue in both cases was the interpretation of a material change, specifically the meaning of “change in the business, operations, or capital” as defined in the Securities Act. A material change in relation to a reporting issuer is defined as “a change in the business, operations, or capital of the issuer that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the issuer”. In contrast, a material fact is defined as “a fact that would reasonably be expected to have a significant effect on the market price or value of the securities”. The disclosure requirements for material changes and material facts differ. While the Securities Act imposes some disclosure obligations on issuers concerning material facts, issuers are not required to disclose material facts “forthwith” when they are known. A material change, on the other hand, must be disclosed “as soon as practicable”.
A two-step analysis is required to determine whether a material change has occurred. First, a Court must decide whether there has been a “change In the business, operations or capital of the issuer”. Second, the court must decide whether the change was material, meaning that “it would be expected to have a significant impact on the value of the issuer’s shares”. The Court of Appeal in Markowich adopted a broad, generous approach to interpreting a “change in the business, operations or capital of the issuer,” which must be interpreted in the specific factual context. The Court of Appeal in Peters confirmed that the only limits on what constitutes a “change” are the qualifying words in the definition, meaning that the change must be “in the business, operations, or capital”. As such, external factors that may impact share prices but do not affect a change in the issuer’s business, operations, or capital do not constitute a change within the meaning of material changes.
Applying this “generous approach” in Markowich, the Court of Appeal found a “reasonable possibility” that the wall instability and rockslide constituted a material change in the mining company’s operations. The Court of Appeal granted leave for the action to proceed under the Securities Act and remitted the certification issue back to the lower court.
In contrast, the Court of Appeal upheld the motion judge’s decision in Peters. The Court held that the motion judge adopted a broad and generous definition of “change”, and the initial call could not have constituted a change in the defendant company’s business, operations, or capital. Accordingly, there was no reasonable possibility of success at trial.
Privacy class actions
Class actions arising out of data breaches are routinely brought in Canada.
Privacy law in Canada is governed in part by federal and provincial statutes and in part by the common law.
The common law approach related to privacy has significantly changed over the last decade. In 2012, the Ontario Court of Appeal recognised the existence of the tort of intrusion upon seclusion. In 2016, the Ontario Superior Court recognised the tort of public disclosure of embarrassing private facts. Plaintiffs regularly advance these claims alongside negligence claims.
More recently, appellate decisions have shed light on the potential exposure of corporations that experience data breaches.
Privacy statutes may allow class action claims for breaches of privacy
The decision by the British Columbia Court of Appeal in Insurance Corporation of British Columbia v Ari, 2023 BCCA 331 highlights employers’ potential exposure for data breaches committed by their employees.
A provincial Crown corporation stored personal customer information of driving licence holders and registered motor vehicle owners. In 2011, one of the corporation’s employees improperly accessed, obtained, and sold private customer information to third parties. The third parties then used the information to commit arson and shooting attacks on the customers’ houses and personal property. A class action was filed against the Crown corporation on behalf of all customers whose personal information was improperly accessed by the corporation’s employee.
British Columbia’s Privacy Act gives rise to a statutory tort if a person wilfully and without a claim of right violates the privacy of another.
The Court established that the class had a privacy interest in their contact information (ie, names and addresses) and held that a reasonable person would expect their information to be used only for relevant business purposes. The Court also relied on the Crown corporation’s internal policies, which set out that the information was highly private and sought to protect it.
The Court found that the employee’s access and distribution of that personal information was a wilful breach of the Privacy Act. As the employer, the corporation was held vicariously liable for that breach. Further, the Court held that there was no barrier in the Privacy Act to the application of class proceedings legislation.
Similar cases may arise in the future in British Columbia and under privacy statutes in Manitoba, Saskatchewan, and Newfoundland and Labrador with similar causes of action.
Limits on liability for tort of intrusion upon seclusion in data breach cases
Last year, the Ontario Court of Appeal released a highly anticipated trilogy of decisions (Owsianik v Equifax Canada Co, 2022 ONCA 813; Obodo v TransUnion of Canada, Inc, 2022 ONCA 814; and Winder v Marriott International, Inc, 2022 ONCA 815) in which the Court held that corporate defendants could not be held liable for the tort of intrusion upon seclusion when information stored on their computer servers was accessed by unknown, third-party hackers.
Even where the corporate defendants allegedly failed to take adequate steps to secure the class members’ information, the Court of Appeal found they did not do anything that would constitute an act of intrusion or invasion – any intrusion or invasion was carried out by third-party hackers. As such, claims for negligence or breach of contractual or statutory duties may be available against corporate defendants housing private information but not claims of intrusion upon seclusion.