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Issue link: https://digital.carswellmedia.com/i/1163340
LEXPERT MAGAZINE | Q3 2019 39 "Overall, the LCO recommendations of the Class Proceedings Act are a welcome step in the right direction. Unfortunately, some of those recommendations do not go far enough to ensure that the judicial resources and costs to the parties that class actions eflect are only spent where there is real merit to the proceeding continuing as a class action." MONIQUE JILESEN LENCZNER SLAGHT LLP PAUL-ERIK VEEL LENCZNER SLAGHT LLP "some basis in fact" to the usual balance of probabilities standard; and 2) introducing an initial merits review as part of the certi- fication motion. Both of these were missed opportunities to improve the screening role of the certification motion. First, with respect to the requirement that the standard for certification be set at the usual balance of probabilities, it contin- ues to surprise us that this would be conten- tious. e usual standard in civil proceed- ings in Ontario is the balance of probabili- ties, and there is no suggestion in the Class Proceedings Act that the standard should be anything else on a certification motion. A balance of probabilities standard en- sures that only those proceedings that can, more likely than not, proceed as class ac- tions are certified. As we have noted before in a previous blog, without a balance of probabilities standard, the parties can face the situation that a case proceeds to a com- mon issues trial where, on a balance of prob- abilities, there are no common issues for the court to resolve. is outcome is absurd. Introducing more substantial merits review is obviously more controversial. It has been clear from the outset in Canada's class proceedings that certification is pro- cedural rather than substantive. However, early merits analysis is not entirely foreign to class proceedings, such as in the leave re- quirement that exists for certain secondary market securities class actions. As we have suggested before in our article "Time to expand analysis of the merits in all class actions," there is value in an initial merits analysis, even at a low threshold. is ensures that the class actions that proceed are ones that, on the basis of some evidence, have some reasonable prospect of success. ey also ensure that defendants do not incur the extraordinary costs of discovery that can be required in class proceedings where there is no reasonable prospect that the plaintiffs will succeed. While concerns have been raised that an initial merits requirement would increase the length, cost and complexity of certifica- tion motions, these concerns are overblown. e typical certification motion already includes a lengthy factual record, gener- ally including expert reports, from plaintiffs and defendants. Given that evidence on the merits is oen already led by the parties on certification, there is little risk that they will become longer and more expensive. Despite our disappointment that the LCO did not adopt these recommendations, there are aspects of the changes to the certification process of which will contribute to more ef- fective administration of class actions. First, the LCO has recommended that case management judges should more lib- erally allow for both motions to strike and summary judgment motions pre-certifi- cation where such motions would help to resolve the dispute expeditiously or narrow the issues. is is a very positive develop- ment. As we have described in a previous blog, some courts have been overly restric- tive in letting defendants bring pre-certi- fication motions, on the theory that the certification motion should presumptively be the first step in the proceeding. is ap- proach is misguided. ere is significant merit to pre-certification motions, particu- larly where such motions could resolve all or part of the certification motion or other- wise streamline the proceeding. e LCO has also recommended a mod- ification of the appeal route from certifica- tion. Currently in Ontario, plaintiffs have an automatic right to appeal a denial of cer- tification to the Divisional Court, while de- fendants must seek leave to appeal a certifi- cation decision from the Divisional Court. e LCO has recommended scrapping the Divisional Court route, and simply provid- ing for a direct right of appeal for both par- ties to the Ontario Court of Appeal. is recommendation should be wel- come to all parties litigating class actions. Given the significance of the certification decisions, there is no justification for re- quiring defendants to seek leave to appeal. It merely adds an unnecessary step in the process that adds cost and delay for all par- ties. It will also be helpful for the Ontario Court of Appeal to hear more appeals of certification decisions in order to develop the law in the area. Finally, we also welcome the LCO's rec- ommendations for increased clarity regard- CLASS ACTIONS FEATURES ing the rules around third-party funding. ird-party funding is here to stay and has significant benefits to access to justice and behaviour modification. However, it is im- portant that third-party funding not undu- ly interfere with the rights of the parties to litigation, so more clarity and predictability around those rules would be welcomed. Overall, the LCO recommendations of the Class Proceedings Act are a welcome step in the right direction. Unfortunately, some of those recommendations do not go far enough to ensure that the judicial resources and costs to the parties that class actions reflect are only spent where there is real merit to the proceed- ing continuing as a class action.