The Quebec Court of Appeal has overturned no less than eight lower court decisions over the past year that denied class action certification, signaling a possible discord that shows little sign of abating between motion judges more likely to cast a critical eye and the higher court intent on strictly adhering to case law and the teachings of the Supreme Court of Canada, according to class action experts.
With the Quebec justice system under severe strain, beset by underfunding and vexed by a dire shortage of court personnel, with more than 20 per cent of employees resigning in a year, leaving many Quebec judges compelled to share judicial assistants, class action lawyers speculate that motion judges are taking a harder line on the viability of class actions, all the while taking into consideration the impact it would have on an overtaxed justice system. “Perhaps what is happening is that trial judges have a more concrete understanding of the fact that there are already too many class actions going on in Quebec, be it at the authorization stage or at the trial level,” said Éric Préfontaine, a Montreal class action defence lawyer with Osler, Hoskin & Harcourt LLP. “There seems to be some kind of disconnect between the assessment some motion judges make” and the Appeal Court.
At present, it’s becoming increasingly difficult to get hearing dates for preliminary motions, management conferences, and court dates for trials on the merits, even though Quebec Superior Court launched in 2018 a class action chamber aimed at reducing delays, remarked Montreal class action defence lawyer Sylvie Rodrigue, Ad. E., of Torys LLP. “Even with a specialized class action chamber, when you need to see the judge for an hour, sometimes you have to wait weeks, months,” explained Rodrigue. “It’s not the defence lawyers or the plaintiffs’ lawyers who delay the process. It is the impossibility of having judges to talk to us, it’s not the judges’ fault. The judges are completely overwhelmed, there is a glaring lack of judges.”
In Quebec, long viewed as a plaintiff-friendly class action jurisdiction ever since it became the first province to introduce the procedure in 1979, motion judges have little discretion to refuse authorization, and are expected to weed out putative class actions at the certification stage only if they are frivolous or stand no chance of success, according to class action lawyers. The bar is deemed to be lower in Quebec than in the rest of the country, with plaintiffs seeking certification only having to fulfil four criteria spelt out in article 575 of the Code of Civil Procedure. In order to obtain authorization, a class must raise identical, similar or related questions, the facts alleged must seem to justify the conclusions sought, the proposed class must be large enough that it is not feasible to obtain a mandate from all members, and the representative plaintiff must show that he is able to adequately represent the interests of the class. A series of Supreme Court rulings — beginning with Infineon Technologies AG v. Option consommateurs, 2013 SCC 59,  3 S.C.R. 600 and Vivendi Canada Inc. v. Dell’Aniello, 2014 SCC 1,  1 S.C.R. 3, followed by more recent decisions in L’Oratoire Saint-Joseph du Mont-Royal v. J.J., 2019 SCC 35,  2 S.C.R. 831 and Desjardins Financial Services Firm Inc. v. Asselin, 2020 SCC 30 – confirmed the low bar and reaffirmed the “flexible,” “liberal,” and “generous” approach to authorization under the Quebec class actions legal regime, said class action lawyers.
“The Supreme Court had, in all of these cases, rendered decisions that essentially stated that in Quebec the authorization process is a simple filtering mechanism intended to exclude only cases that have no reasonable chance of success, and unless the trial judge is convinced that the case has no chance of success, it must be allowed to proceed on its merits,” explained Préfontaine. “So normally, it’s very rare and it should be only the exception when a class action authorization is rejected in Quebec.”
But motion judges have over the past year become more sceptical and have denied certification if the class action does not pass the “smell test,” deeming them to be undeserving of the attention of the courts at a time of scarce judicial resources, noted class action experts. “There seems to be a certain desire at the level of the Superior Court to limit the authorizations,” said Bruce Johnston, a Montreal class action plaintiff lawyer with Trudel Johnston & Lespérance LLP. “It is their role to filter out claims that are clearly ill-founded. But in my opinion, there may be a misperception of the usefulness of collective action. There is a lot of justice that is accomplished in class actions and a lot of injustice avoided or suppressed. The big problem is that the Superior Court lacks resources.”
Motion judges are however facing pushback from the Appeal Court. According to the Quebec Superior Court’s registry of class actions, there were 51 class actions filed in 2022, compared to 75 the preceding year and 104 in 2020. Only 23 per cent of class actions certifications were rejected in 2022, and in 16 per cent of the cases, a settlement agreement was reached at the authorization stage, according to figures compiled by the class action practice at Borden Ladner Gervais LLP.
In 2022, the Quebec Appeal Court heard some 25 cases dealing with class actions, dealing with a host of issues such as evidence, cross-examination, jurisdiction, legal fees, and certification. Of those cases, the Appeal Court certified eight class actions that were rejected by motion judges, and modified the conclusions of four others. The Appeal Court “always, always” overturns lower court decision that deny certification for the same reasons, either because the motion judge “exceeded” his screening role, imposed too high a threshold of proof on the claimant, particularly in an arguable case, or made a decision on the merits of the case, said Jean Saint-Onge, Ad. E., senior counsel and class action expert at Borden Ladner Gervais LLP. “In recent years, the Supreme Court has further clarified the test in several judgments, and the Appeal Court is not interested in having its judgments reviewed by the Supreme Court of Canada,” said Saint-Onge. “So they are cautious and stick to the letter of the Supreme Court of Canada’s teachings.”
But some class action defence lawyers maintain that the Appeal Court has adopted a far too liberal approach towards class action certification. The Quebec class action legal environment has been likened to a pendulum, with waves swinging back and forth, from being hardly ever being certified as was the case at the beginning of the regime until the 1990s to a ripple where everything was authorized back to a honeymoon period for the defendants, said Rodrigue. From 2019 to 2021, the Quebec Appeal Court struck a “good” balance, with class actions that deserved to go forward were certified while others were justifiably denied authorization, added Rodrigue. Apart from the composition of the Appeal Court which has changed recently, the kinds of class action suits that were on the Appeal Court’s docket last year may explain the “liberal” approach undertaken by the court, with the vast majority of the cases dealing with consumer matters, added Rodrigue. The Quebec Consumer Protection Act and the legislative provisions covering class actions both have socially-focused access to justice objectives, pointed out Rodrigue, adding that this too may explain the liberal slant. “The problem with a test that is too liberal is that you end up with an absolutely dreadful backlog in the courts,” said Rodrigue. “While the legislator’s primary objective in terms of class actions is access to justice, it is not doing justice to it by systematically authorizing them and depriving judges of first instance of a certain screening role,” which is provided for by the Code of Civil Procedure.
Préfontaine goes further, and bemoans the tendency of the Appeal Court to “ignore” the standard of review it sets for civil and commercial cases in matters dealing with class action certification. There is a “desire” in Quebec judicial circles to ensure that the “vast, vast majority” of class actions are certified and allowed to proceed to a trial on the merits or be resolved through a settlement, added Préfontaine.
Johnston believes it’s a “healthy” development that the Appeal Court is stepping in as frequently as it did last year, noting that if there is a belief in “the corridors of the courthouse” that there are too many class actions, then it’s up to the legislator to change the criteria, and not the judges. An Appeal Court decision issued just before the Christmas holidays exposes the dangers of enforcing rigorous standards at the certification stage, added Johnston. In Nseir c. Barrick Gold Corporation, 2022 QCCA 1718, Quebec Appeal Court Justice Frédéric Bachand noted that the authorization stage is early in the proceeding, and “crucially, well before” any pre-trial discovery and disclosure has been undertaken. “This means that there is a real risk that the evidentiary record before the Court will not only be incomplete, but also tilted in favour of the defendant, who will — more often than not — have much better access to potentially relevant evidence,” said Justice Bachand in a unanimous decision, with Justices Manon Savard and Martin Vauclair concurring. Or as Johnston puts it: “It’s like being outside the house, looking in the window but once you have the authorization, you can enter the house, you can open the drawers and that changes a lot,” said Johnston. “That’s why it’s important not to be too strict with authorization.”
The Nseir case is also one of the few cases, if not the only one, where the appellate court shed guidance, said Préfontaine. Quebec Superior Court Justice Thomas Davis denied class action certification asserting primary and secondary market claims based on sections 217-218 and 225.8 of the Securities Act and a claim based on article 1457 of the Civil Code of Quebec. The Appeal Court in part overturned the lower court ruling, and authorized the appellant to assert on a class-wide basis a secondary market claim based on sections 225.2 et seq. of the Securities Act. It held that the notion of reliance is essential for an action under s. 1457 of the Civil Code in securities matters, clarifying an issue that has been the subject of contradictory decisions, said Préfontaine.
As disappointed as the class action defence bar may be over the Appeal Court’s penchant for certifying class actions, they are far from discouraged. “It doesn’t take much to get certification of a class action, but once you get to the merits, it’s a different story,” said Saint-Onge, pointing out that a growing of number of class action defendants are refusing to settle and are going to trial. Rodrigue revealed that for the first time in her career, she has more cases at the merits stage than at the authorization stage because “clients no longer” want to settle. “So, this objective of access to justice is not so much met if in fact, the files are authorized as it will take several years before the litigants win their case,” said Rodrigue.
But Johnston relishes the fight, and said it is often times necessary. “It is always a judgment call when you find yourself releasing rights,” said Johnston. “And to release rights, you have to know how much those rights are worth. There has to be a relationship between the amount of the settlement and the chances of winning on the merits. And to really understand that, you have to make them merit-based cases.”
This story was originally published in Law360 Canada