Pearson v. Inco has finally been certified as a class proceeding. Let me express a sigh of relief, and then go off on a rant.
Sometimes I wonder if our courts are unduly influenced by the size of claims. This comes into bold relief where a plaintiff claims an entitlement that threatens a whole industry.
For example, last June in David Polowin Real Estate Ltd. v. The Dominion Of Canada General Insurance Co., the Court of Appeal overturned its own recent decision in McNaughton on the very same issue of whether auto insurers must credit insureds for their deductibles when exercising salvage rights.
In the previous decision, Justice Sharpe held for the court, “I am unable to accept the proposition that the phrase ‘actual cash value’ in statutory condition 6(7) can be interpreted as ‘actual cash value minus any deductible’.�
Indeed, black is not white.
But in David Polowin, that very proposition carried the day, following the submissions of nine sets of insurance company lawyers. Judicial redrafting was not an available remedy in Tuttle v. The Travelers Indemnity Company, where the auto insurance statute was just as arguably deficient but where the circumstances were quite unusual. This is commented on elsewhere in this blog.
Or how about Albrecht v. Opemoco Inc. (1991), 5 O.R. (3d) 385, (C.A.), where Justice Rosenberg, a leading scholar on the Condominium Act, held that it was quite inconsistent with this consumer protection statute that condo developers could artificially inflate interim occupancy fees by requiring a “phantom mortgage� that purchasers had to pay off a month after closing. In the face of submissions that this decision could subvert the entire industry, the Court of Appeal found that a 30 day mortgage was within legislative intent.
Perhaps the biggest logical leap over an ocean of money came in Stephens v. Globe and Mail 28 O.R. (3d) 481 (C.A.), where the Ontario Court of Appeal considered whether statutory severance pay was payable in addition to contractual wages in lieu of notice of dismissal. The act stated, “Severance pay under this section is payable to the employee in addition to any other payment under this Act or contract of employment without set-off or deduction.� The court said that payment under a contract was entirely different from payment for breach of an implied term of that contract. Honestly, could the legislature have intended to penalize employers who reduce their commitments to writing and then honor them?
Similarly, I felt that environmental class actions were the subject of judicial flinching. First there was Hollick, in which courts said all the way up the ladder that class actions were well suited for environmental claims, yet at each level the courts refused certification of this apparently well suited proposed claim. Then there was Pearson v. Inco, in which the court of first instance not only refused certification but also visited on the proposed representative plaintiff a notoriously massive cost award. The conclusion was that if nickel oxide contamination over a defined area could not get certified, then why bother.
But things are changing. In Pearson, the Ontario Court of Appeal allowed an appeal from the courts below and certified the action. Crucially, the court pointed to its own decision from late last year in Cloud v. A.G. of Canada as representing a “more liberal approach� to certifying class proceedings. The court said nothing about the brutal cost award, since that issue was now moot.
Now here’s the rant.
Why does the law expose representative plaintiffs to massive cost awards? The Class Proceedings Act is all about access to justice. It also requires that a representative plaintiff be a person who would fairly represent the interests of the class. Yet by exposing this person to costs which vastly exceed that individual’s total personal interest in the action, our courts and legislature have limited the choice of representative plaintiffs to the very rich, the very poor and the very stupid.
This impedes, not promotes, access to justice.
Saskatchewan perhaps has it right. Section 31(1) of the Ont. CPA vests judges with broad discretion to award costs while s. 40 of the Sask CAA limits a court to awarding costs only where a party was vexatious, frivolous or abusive, or unnecessary steps were taken, or other exceptional circumstances exist. Section 66(1) of The Consumer Protection Act, S.S. 1996, c. C-30.1 (”CPA”), provides that no costs are to be awarded against a consumer who brings an action against a manufacturer, retail seller or warrantor for breach of warranty.