Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
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38 LEXPERT MAGAZINE | Q3 2019 Permitting third-party funding under prescribed circumstances. All other proceed- ings would continue to have two-way costs applied, including motions to strike, dis- putes over jurisdiction, summary judgment motions, motions to de-certify, and trials. APPEALS e LCO recommended: Providing both parties with a right of appeal directly to the Court of Appeal from certification orders. e goal of this proposed reform is to reduce delay and the added expense associated with two levels of appeal. THE LCO'S CLASS ACTION FINAL REPORT: THE DEFENCE PERSPECTIVE BY MONIQUE JILESEN AND PAUL-ERIK VEEL As has now been widely reported, the Law Commission of Ontario has released its fi- nal report on class actions that makes rec- ommendations to improve the system of class actions in Ontario. We provide the defence counsel perspective here. (Our col- leagues, Brian Kolenda and Derek Knoke, commented on those that will be of inter- est to plaintiffs in their blog post https:// litigate.com/OnTheDocket#/lco-recom- mendations-point-to-meaningful-change- in-class-actions.) Overall, several recommendations made by the LCO will benefit defendants who face class proceedings and will contribute to the efficient administration of justice. e first two recommendations may be the most significant from a defence per- spective. e first recommendation pro- poses amending the Class Proceedings Act to provide that the certification motion must be heard within one year from the date the Statement of Claim is issued. e second recommendation provides that where a cer- tification motion has not been filed within a year, or where there has been some default in a timetable set for the delivery of certifi- cation materials, the proceeding should be administratively dismissed. ese recommendations are welcome for defendants and defence counsel, who have faced the problem of zombie class actions. Class actions in Ontario have historically been excused from the rules providing for automatic dismissal for delay under the Rules of Civil Procedure. Consequently, once a class action has been commenced, there is no mechanism for it to be automati- cally disposed of if plaintiffs' counsel does not pursue it. is has meant that defen- dants can face dormant, but ongoing litiga- tion for years or, in the worst cases, decades. is is not just annoying, but a practical and sometimes costly problem. Defendants may need to report ongoing litigation for an indefinite period. Defendants may have to undertake expensive preservation of docu- ments ordinarily disposed of in accordance with their organization's records retention policies. is proposed recommendation will help eliminate these costs in cases that plaintiffs' counsel do not intend to pursue. e LCO proposes that upon the admin- istrative dismissal, notice must be given to potential class members and that plaintiffs' counsel presumptively bears the cost of the notice. e provision that class members be given notice of the dismissal is reasonable: e dismissal of the action will resume the clock on the limitation periods on individu- als' claims. Putting the cost burden for dis- seminating notice on plaintiffs' counsel is a significant feature of the recommendation — the cost consequences should make them think twice before beginning unmeritorious actions they have no intention of pursuing. Other than the administrative dismissal provisions, our view is that the most sig- nificant proposed recommendations re- late to certification motions. e certifica- tion motion is oen the most significant part of class proceedings. e vast major- ity of class proceedings are never adjudi- cated on their merits. Rather, a significant percentage of class proceedings are settled following a successful certification mo- tion by the plaintiffs. Because certification is oen the key battle ground, it is also our primary focus of interest in reviewing the LCO's recommendations. At the outset, we note two recommenda- tions the LCO considered but did not ulti- mately make: 1) raising the certification standard from "The Report addresses a broad cross-section of issues, including the process for initiating a class action, certification, settle- ment approval and distribution, counsel fees, costs, and monitoring /reporting on class actions." NICHOLAS KLUGE GOWLING WLG LLP MAX MUNOZ GOWLING WLG LLP significant improvement, according to the LCO. It recommended: Setting higher evidentiary standards for settlement approval, including a require- ment that parties make full and frank dis- closure of all material facts. Adding more detailed requirements for settlement distributions, including provi- sions dealing with cypres distributions, claims administrators, notices to class members, and requiring detailed final outcome reports. COSTS According to the LCO, the rising amount of cost orders related to class action litigation is a significant barrier to access to justice. As a result, the LCO recommended: Implementing a no-costs regime for certification and ancillary motions.