2. Class Action Proceedings

Class actions are proceedings brought by a representative plaintiff on behalf of, or for the benefit of, a class of persons having claims with common issues. The fundamental purpose of a class action is to efficiently address cases of alleged mass wrong and to improve access to justice for those whose claims might not otherwise be pursued.

Canadian class actions have been commenced in such varied areas as product liability, environmental contamination, consumer protection, pension plan, securities, antitrust, financial services, insurance and employment disputes.

Class action legislation was not intended to create any new cause of action. Instead, it provides a purely procedural tool to address mass claims by allowing one or more persons to bring an action on behalf of many.

Formal class action legislation is currently in force in most provinces. The Supreme Court of Canada has held that class actions can be commenced even in those provinces without formal legislation.

2.1 Class Actions vs. Representative Actions

Virtually all Canadian provinces, including those with class action legislation, and the Federal Court, have rules permitting representative actions in certain circumstances. In representative actions, one or more persons may be appointed to represent a person or class of persons who cannot be readily ascertained, found or served. In a representative action, any order (including a settlement order) is binding on a person or class of persons represented, and success for one of the plaintiffs must mean success for all.

Until more recently, Canadian courts interpreted the rules for representative actions very narrowly. However, in 2001, the Supreme Court of Canada ruled that a representative action rule provided a provincial court with a sufficient basis for a class action even in the absence of specific class action legislation.

Unlike the historical use of representative actions, class actions permit class litigation to proceed notwithstanding differences between class members. The legislation permits the global resolution of issues common to the class, with individual issues to be separately determined.

2.2 Certification and Decertification

Class proceeding legislation anticipates that a class action will be commenced in the same manner as an ordinary lawsuit. That action will include in it a claim that is brought on behalf of a defined class of two or more members against the defendants. In most provinces, the plaintiff is required to make an application to certify the action as a class proceeding shortly after the action is commenced. Until the action is certified by the court, the representative plaintiff cannot proceed on behalf of the class. In Quebec, the application or motion to certify the class proceeding is made before the claim is issued.

The certification application occurs before a judge. In the common law provinces, the requirements for certification of a proceeding as a class proceeding are similar and, in general, include the following:

• The pleading must disclose a cause of action.


• There must be an identifiable class of two or more persons.


• The claims of the class members must raise issues against the defendants that are common to all class members.


• The class proceeding must be the preferable procedure for the fair and efficient resolution of the common issues.


• There must be a representative plaintiff who would fairly and adequately represent the interests of the class and who does not have a conflicting interest with other class members.

Quebec has somewhat similar criteria for certification. While historically thought to have the lowest threshold for class certification because, unlike legislation in the common law provinces, its legislation made no express mention of “preferability” as a requirement, it can now be argued that the Quebec courts have adopted the preferability requirement in recent decisions from the Quebec Court of Appeal and the Superior Court of Quebec.

Notice of certification of a class proceeding must be given to members of the class. The method of providing a notice to the class members is largely dependent upon the size and nature of the class and can range from notice by mail to known class members to mass media publication. Notice of the certification order is given to all potential class members and a time period is established to allow the class members to opt out of, or for non-residents in some provinces, opt into the proceeding.

A court may also order the decertification of a class proceeding where new information arises or events occur in which the conditions for certification are no longer satisfied. If a class proceeding is decertified, the action may continue as one or more proceedings between different parties.

2.3 Class Membership Requirements

The Canadian provinces differ in their requirements for participation in a class proceeding.

Ontario, Manitoba, Saskatchewan, Quebec and Nova Scotia have “opt out” regimes regardless of residency, whereby all class members who do not wish to be members of the certified proceeding must take active steps to opt out of the proceeding or they will remain members of the class and be bound by a judgment or settlement of common issues.

In Alberta, British Columbia, Newfoundland and Labrador, and New Brunswick, there are separate regimes for resident and non-resident class members. In those provinces, resident class members are given an opportunity to opt out. However, class members who reside outside the province must opt into the class proceeding by taking an affirmative step (as set out in the certification order) if they wish to participate in, and be bound by, the class action.

Prince Edward Island is the only province in Canada without class proceedings legislation. However, under common law, the P.E.I. courts may certify class actions under existing rules of practice related to representative proceedings, applying principles and ad hoc procedures similar to those legislated in other provinces.

Although the Supreme Court of Canada has not yet rendered a specific ruling on whether a provincial court can certify a national class, constitutionally or otherwise, nor on whether an order in such a proceeding will be enforceable against non-residents, the courts in a number of common law provinces have been willing to certify national classes (classes with members in more than one or all provinces). This raises the possibility of multiple competing provincial class actions. There is no formal procedure for co-ordination of class actions commenced in different provinces regarding the same subject matter. Quebec courts have, however, with two recent exceptions, resisted the urge to certify national classes. Where these national classes are certified, the Quebec courts have generally required class members to be residents of Quebec, or have a claim that has some connection to the province under the rules of private international law, such as where the party resided in Quebec at the time the initial wrong was done, or suffered the injury in Quebec, or was a party to a contract with obligations that were to be completed in Quebec.

2.4 Conduct of Class Action Proceedings

Once the action is certified, it will proceed through the normal discovery process on the common issues. The defendant has a right to examine for discovery the representative plaintiff(s) in the action. With leave of the court, the defendant may also discover other class members.

Generally, the judge who makes the certification order will hear all of the motions in the class proceeding up to the trial of the common issues. Depending on the province, that same judge may also hear the common issues trial.

The resolution of the issues in a class proceeding may require more than one trial. The first trial, on the common issues, will resolve the issues certified as common to the class. In some cases, the common issues trial may include a ruling on the entitlement to, and quantum of, aggregate damages. Statistical evidence may be used at the trial of the common issues in certain circumstances. Judgment on the common issues is binding on all members of the class who have not opted out of the proceeding and all consent resolutions of a certified class proceeding, such as settlement or dismissal, are also binding on the class members, provided they are approved by the court.

Once there has been a determination of the common issues, there will, in many cases, be a need for further assessment of individual claims. If there is an aggregate award in favour of the class, a method must be established, through consultation between court and counsel, to distribute the award to the class members. If individual issues remain to be determined after the court has adjudicated the common issues, then a procedure must be established for the assessment of those claims. The court has a broad discretion to establish methods of assessing individual claims ranging from the filing of proofs of claim to complete trials on individual issues. The method of assessment chosen by the Court will take into consideration the facts of each particular case, the amount of damages and the extent of the issues outstanding.

2.5 Appeals

In the common law provinces, there is a right of appeal from any order refusing to certify a proceeding or decertifying a proceeding. In some provinces, an order certifying a class proceeding may only be appealed with leave of the court. In Quebec, there is a right of appeal from an order refusing to authorise a class proceeding, but no such right is available from an order authorising a class proceeding.

There is a right of appeal in all provinces from a judgment on the common issues. In addition, appeals as of right are normally available from orders that determine individual issues.

If a representative plaintiff does not bring an appeal from an order made on the certification hearing or a judgment on common issues within the time limits for such an appeal, or abandons an appeal, any class member may pursue the appeal with leave of the court.

2.6 Awards, Costs, Funding and Counsel Fees

The Canadian jurisdictions differ on the matter of costs. In Ontario and Alberta, for example, costs may be awarded against the losing party in a class proceeding (that is, the representative plaintiffs or the defendants) in the same manner as in any other action. In British Columbia and Newfoundland and Labrador, on the other hand, costs are not normally awarded in a class proceeding. In these jurisdictions, the courts do have some discretion to award costs where the court considers the conduct of one of the parties to be vexatious, frivolous or abusive.

The representative plaintiff is required to retain a lawyer to act on behalf of the entire class for the determination of the common issues. Contingency fees are permitted in all provinces. The agreement respecting counsel fees and disbursements must be in writing and state the terms under which the fees and disbursements are to be paid, give an estimate of the expected fee, state whether that fee is contingent on success and set out the method by which payment is to be made. In most provinces, the agreement respecting fees and disbursements between a lawyer and the representative plaintiff is not enforceable unless it is approved by the court on the application of the lawyer. Amounts owing under an enforceable agreement are a first charge upon any settlement funds or monetary award.

In some jurisdictions, the representative plaintiff may obtain funding for some legal costs from publicly endowed funds.

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