Legislative Reform

Forms of representative or “class” proceedings can be traced to the 19th century English courts, and rudimentary class procedures have been available under Ontario civil procedure since 1881. 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 [1979] OJ No 4013 reversed [1983] 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:

• judicial economy;
• access to justice; and
• behaviour modification.

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 Ontario's 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, the resistance largely subsided when the Supreme Court of Canada released a seminal trilogy of cases in 2001:

• Western Canadian Shopping Centres v Dutton 2001 SCC 46;
• Hollick v City of Toronto 2001 SCC 68; and
• Rumley v British Columbia, 2001 SCC 69.

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.

Subsequent Developments

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 being drawn from established firms. Canadian courts frequently hear motions for class action certification (or, in Quebec, authorisation) and other substantive and procedural motions and applications arising from class proceedings; 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 by Canadian courts. 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 USA 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, and 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:

• Alberta – Class Proceedings Act, SA 2003, c C-16.5;
• British Columbia – Class Proceedings Act, RSBC 1996, c 50;
• Manitoba – Class Proceedings Act, CCSM c C130;
• New Brunswick – Class Proceedings Act, RSNB 2011, c 125;
• Newfoundland and Labrador – Class Actions Act, SNL 2001, c C-18.1;
• Nova Scotia – Class Proceedings Act, SNS 2007, c 28;
• Ontario – Class Proceedings Act, 1992, SO 1992, c 6;
• Prince Edward Island – Class Proceedings Act, RSPEI 1988, c C-9.01;
• Quebec – Act respecting the Fonds d’aide aux actions collectives, CQLR c F-3.2.0.1.1;
• Saskatchewan – The Class Actions Act, SS 2001, c C-12.01; and
• Federal Courts Rules (SOR/98-106), Part 5.1.

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, consumer protection, privacy law, employment issues, aboriginal/First Nations redress, environmental law, personal injury, human rights, 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.

Certification

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 for certification 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 pleading or the notice of application discloses a cause of action;
• there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;
• the claims or defences of the class members raise common issues;
• a class proceeding would be the preferable procedure for the resolution of the common issues; and
• there is a representative plaintiff or defendant who:
1. would fairly and adequately represent the interests of the class;
2. has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class, and of notifying class members of the proceeding; and
3. does not have, on the common issues for the class, an interest in conflict with the interests of other class members.

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 balance of probabilities standard that would be applied at trial.

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.

Discoveries

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 through 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 is no upward limit 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.

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.

Multiple Proceedings

If multiple persons bring two or more class proceeding concerning the same or similar subject matter, 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; for this purpose, it 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 related proceedings.

The length and timeframe for class 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 availability.

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 size 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 if the certification motion is not brought 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 can impact the life cycle of a class action, including jurisdictional challenges, motions to disqualify experts and motions to strike pleadings.

Delays are common in class proceedings. Certain legislative reforms have been enacted to minimise 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 action funding, such as contingency fees and third-party litigation funding, are available but subject to court approval.

Costs

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 cost award if the proceeding was a test case, raised a novel point of law, or involved a matter of public interest. Still, 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.

Cost 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

Contingency fees are often employed in class proceedings. Class counsel and the representative plaintiff will usually 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 witness fees. 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, the court will not approve a third-party funding agreement unless it is satisfied that:

• the agreement, including indemnity for costs and amounts payable to the funder under the agreement, is fair and reasonable;
• the agreement will not diminish the rights of the representative plaintiff to instruct the solicitor or control the litigation, or otherwise impair the solicitor-client relationship;
• the funder is financially able to satisfy an adverse cost award in the proceeding, to the extent of the indemnity provided under the agreement; and
• any prescribed requirements and other relevant requirements are met.

The funding agreement also needs to be subject to:

• the same confidentiality requirements in respect of confidential or privileged information in the proceeding to which the representative plaintiff would be subject; and
• the deemed undertaking rules established by the rules of court, as if the funder were a party to the proceeding.

A court will also consider whether the representative plaintiff received independent legal advice regarding the agreement.

Discovery Process

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 certain confidential information be prohibited from public disclosure.

Privilege

Evidence in class proceedings is subject to several forms of privilege, including the following.

• Solicitor-client privilege – this privilege applies to communications between a lawyer and client in connection with providing legal advice.
• Litigation privilege – this privilege applies to communications between lawyers, clients and third parties where the dominant purpose of the communication is to prepare for current or reasonably contemplated litigation.
• Settlement privilege – this privilege applies to communications between the parties and their representatives in contemplation of resolving the dispute.
• Common interest privilege – this privilege concerns communications between parties with a common interest in actual or pending litigation. It is common in complex multiparty class actions that several defendants enter into a “joint defence agreement” or a “common interest privilege agreement” to formalise their claims to privilege.

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

Mediation is well-established in Canada, including in class 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.

Settlement

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. At 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 rewrite 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 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:

• are set out in the certification order;
• relate to claims or defences described in the certification order; and
• relate to relief sought by or from the class or subclass as stated in the certification order.

Courts have discretion to distribute amounts awarded in class action judgments. Courts may order that:

• the defendant distributes directly to class members the amount of monetary relief to which each class member is entitled by any means authorised by the court, including abatement and credit;
• the defendant pay into court or some other appropriate depository the total amount of the defendant’s liability to the class until further order of the court; and
• any person other than the defendant distributes directly to class members the amount of monetary relief to which each member is entitled by any means authorised by the court.

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 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 time-frame, 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 that identified several areas of potential reform in light of the Ontario Report.

Similarly, in 2021, Quebec began a public consultation with a view to class action reform following a September 2019 report by the l’Université de Montréal 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, which continues to persist. Reform proposals intend to increase the efficiency of the class action process, eliminating dormant class proceedings and resolving cases more expeditiously.

With regard to the legislative reform in progress or foreshadowed in respect of the matters mentioned in the foregoing sections, see 5.1 Policy Development.

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.