Quebec appeal court sets high bar for leave to appeal in class action certification cases

The Quebec Court of Appeal upheld a ruling that certified a class-action lawsuit following an outbreak of Legionnaires’ disease in Quebec City in 2012 that is believed to have contributed to 14 deaths and lead 181 others to become ill from bacteria found to be in a cooling tower of a downtown office building.

The class action alleges that the building’s owner, the Centrale des syndicats du Québec, failed to properly clean its cooling towers and that public health officials authorities were too slow to act and inform the public about the outbreak. The suit is claiming $50,000 for people who fell ill, $140,000 for surviving spouses and $30,000 for the deceased victims’ children.

The appeal court found in Centrale des syndicats du Québec v. Allen 2016 QCCA 1878 that the trial judge was right to assert that, at the authorization or the certification stage, the class action respondents could legitimately claim that the union had committed a fault that led to its liability. The appeal court also dismissed arguments by the Attorney General of Quebec that the judge of first instance committed a palpable error of law or of fact. According to the case law, it is up to the trial judge to analyze the value of a defence based on State immunity, noted the appeal court.

But the ruling, along with two concurrent decisions issued on the same day by the Quebec appeal court, has far wider implications. One of the most important changes that was introduced to the new Quebec Code of Civil Procedure, in force since January 2016, is that it once again grants defendants the right to seek leave to appeal before the Quebec Court of Appeal a lower court decision that certified a class action. When the Act respecting the class action was adopted in 1978, both plaintiffs and defendants could appeal, as of right, from a judgment on an application for authorization to institute a class action. In 1982, the defendant’s right to appeal a judgment authorizing a class action was revoked.

The three decisions outlines a new test that sets out the conditions that the appeal court will consider in deciding whether to grant leave to appeal a judgment authorizing a class action. While the legislator did not specify the criteria required to grant such leave, the appeal court relied on comments made by the Quebec Minister of Justice Stéphanie Vallée in which she said that “the appeal of the authorization should only deal with the conditions for granting it.” The appeal court held that to mean that the test should not be so strict that it “neutralizes” the right to appeal but neither should it be “so flexible” that it places both parties to the class action on an equal footing with respect to the right of appeal. In defining the test, the appeal court noted that the threshold required to obtain authorization to institute a class action is low and that the judge has broad discretion to grant the motion.

According to the three decisions, the appeal grant will grant permission to file leave to appeal only when the lower court decision appears to be riddled with a “decisive error“ in its interpretation of class action legislation or in its appreciation of the facts regarding the class action. The other situation where leave to appeal may be granted is in the case of “flagrant incompetence” by Quebec Superior Court. In short, the appeal court makes it clear that it will grant defendants leave to appeal only in “exceptional circumstances.”

This test respects the legislative intent that plainly states only the conditions for instituting class actions should be subject to appeal, said Quebec appeal court Justice Jacques Chamberland in a 15-page ruling in Allen, findings that were echoed in Énergie éolienne des Moulins, s.e.c.c. c. Labranche 2016 QCCA 1879 and in DuProprio inc. c. Fédération des chambres immobilières du Québec 2016 QCCA 1880. The test also respects the discretionary power of the judge who authorized the class action. Moreover it is “not so inflexible” that “it will indirectly increase the burden of those seeking to institute class actions and see that that they are heard within a reasonable time,” said Justice Chamberland. The test also avoids a long and costly debate on the merits where the class action is ill-founded, added Justice Chamberland.

Defense bar are disappointed with the ruling. According to Montreal class action expert Jean Saint-Onge of Lavery, de Billy, this ruling once again demonstrates the “liberal approach” adopted by the Quebec Court of Appeal regarding class actions. “I think the appeal court went too far,” said Saint-Onge, Ad.E., who heads the Quebec law society’s class action committee. “I’m not sure that, as Justice Chamberland suggests, that it really respects the legislator’s intention. We did not think that the appeal court would have imposed such a robust test. I have a hard time imagining what case will be granted leave to appeal.”

Saint-Onge believes that the appeal court wanted to avoid at all costs being overwhelmed by numerous appeals launched by class action defendants which in turn would have taxed the courts in terms of time and costs.

Montreal lawyer Catherine McKenzie too is surprised by the hardiness of the test. “I was surprised when the provincial government re-instituted the right to appeal because they got rid of it a long time ago and there were constitutional challenges to that that did not succeed,” said McKenzie, a partner with Irving Mitchell Kalichman. “The decision puts in a very high barrier to getting a leave to appeal in certification judgments, and even a higher or harder barrier than would normally be the case. The court is sending a very strong message – don’t bring us your leave applications unless you can show us that this is just wrong.”

But Montreal litigator and class action expert Sylvain Lussier was not surprised by the toughness of the test, particularly since comments made during hearings that examined the new Code of Civil Procedure before it was implemented clearly indicated that it would not be an “open bar.” Lussier also noted that in Charles v. Boiron Canada 2016 QCCA 1716, another Quebec appeal court decision issued in November, Justice Marie-France Bich invited in obiter the provincial legislator to reconsider the usefulness of the authorization stage. “It was clear that the Quebec appeal court would not open the floodgates to appeals on the granting of authorizations,” said Lussier, Ad.E. “The Allen decision corresponds to the appeal court’s philosophy regarding class action authorizations.”

Montreal class action lawyer Bruce Johnston, who acts for plaintiffs, is pleased that the test will mean that the right to file a leave to appeal in class action by defendants will be granted “parsimoniously and not systematically.” Johnston is not against the notion that class action defendants should have a right to appeal a judgement authorizing a class action. On the contrary. “It’s already happened to us that we have had a class action that was authorized, won the case before Quebec Superior Court only for the Quebec Court of Appeal to have said that the case should never have been certified and we lost the case,” said Johnston, a co-founder of Trudel Johnston & Lespérance. “So all that work was for naught, and that is not a good investment and a loss of energy, time and resources.”

While the defence bar may be discouraged by the robustness of the test, that will not prevent them from trying. “The amounts at issue are so important and the stakes so high that there will be other attempts,” said McKenzie. “People will be testing the limits of the test to find out what it means.”

This story was originally published in The Lawyers Weekly.

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