COURT FILE NO.: 02-CV-224966CP
DIVISIONAL COURT FILE NO.: 163/07
DATE: 20071224
SUPERIOR COURT OF JUSTICE - ONTARIO
DIVISIONAL COURT
RE: FRANK DEFAZIO, MIKE CRAMAROSSA AND ASSUNTA DEFAZIO Appellants (Plaintiffs)
- and -
HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTRY OF LABOUR, TORONTO TRANSIT COMMISSION AND PINCHIN ENVIRONMENTAL CONSULTANTS LTD. Respondents (Defendants)
BEFORE: CARNWATH, PIERCE AND HACKLAND JJ.
COUNSEL: Charles C. Roach & Samuel I. Willoughby, for the Appellants Giovanna Asaro, for the Crown John C. Field & Lauri A. Wall, for the Defendant, Toronto Transit Commission David Waterhouse, for the Defendant, Pinchin Environmental Consultants Ltd.
HEARD: December 5, 2007
E N D O R S E M E N T
CARNWATH J.:
[1] The appellants appeal from the decision of Hoy J. (hereinafter called “the judge”) in which she refused to certify the appellants’ action as a class action. The appeal raises four questions:
(a) Did the Class Proceedings Judge err in striking out the Plaintiffs’ Amended Statement of Claim and in deciding not to certify the class action without consideration of the Amended Statement of Claim?
(b) Did the Class Proceedings Judge properly exercise her discretion in finding that the class action was not the preferable procedure pursuant to section 5(1)(d) of the Class Proceedings Act?
(c) Did the Class Proceedings Judge err in finding that the Appellants were not suitable as Representative Plaintiffs pursuant to section 5(1)(e) of the Class Proceedings Act?
(d) Was the Order for Costs in keeping with the text and spirit of the Class Proceedings Act and the jurisprudence on costs in class proceedings?
BACKGROUND
[2] The action concerned alleged behaviour of the Toronto Transit Commission (“TTC”) in permitting the release of airborne asbestos fibres, dust and debris and thereby contaminating the atmosphere at the Sheppard subway station frequented by workers and commuters during demolition activities over a two-year period. It also alleges negligence on the part of the Ministry of Labour (“MOL”) and Pinchin Environmental Consultants Ltd. (“Pinchin”), one of Canada’s largest asbestos-testing corporations.
[3] Broadly put, the plaintiffs sought to represent all workers at the Sheppard subway station, all commuters who pass through the subway station and all persons who came in contact with those persons in the defined period of approximately two years.
- Did the Class Proceedings Judge err in striking out the Plaintiffs’ Amended Statement of Claim and in deciding not to certify the class action without consideration of the Amended Statement of Claim?
[4] At the opening of the appeal, counsel were canvassed as to the appropriateness of dealing with this question first, and if possible, to receive a decision from the panel before continuing with the subsequent issues in the appeal. Counsel agreed and counsel for the appellants made submissions on the above question. The panel retired, considered the submissions and concluded it would not be necessary to hear from the respondents. Upon return, I read the following oral reasons to counsel to support our finding that the judge made no error in her decision on this matter.
[5] On the issue of the election to which the appellants were put, the following are our reasons for finding that the Class Proceedings judge made no error.
[6] The appellants submit Hoy J., (hereinafter referred to in these reasons as the “judge”) erred in striking out the appellants’ Amended Amended Statement of Claim. Indeed, they submit the judge denied them the opportunity to amend their pleadings to recast their case to take advantage of concerns of defence counsel. To say the least, this submission is slightly disingenuous.
[7] It is instructive to review the history of events leading up to the point where the judge put the appellants to their election – to abandon the Amended Amended Statement of Claim or proceed with it after submissions on costs thrown away.
[8] At the conclusion of the Certification Hearing, the appellants sought leave to further amend the already Amended Statement of Claim. They handed up a document which redefined the class, pleaded a breach of fiduciary duty and particulars of alleged negligence and misrepresentation by Pinchin. They had not prepared an Amended Amended Statement of Claim. The judge granted leave to bring a motion for leave to amend.
[9] Counsel for the appellants stated he did not wish to proceed with a motion to amend. The judge stood the case down to give appellants’ counsel a chance to seek instructions and reconsider. Counsel confirmed to the judge he did not wish to seek to amend, citing, among other things, costs considerations.
[10] Following the Certification Hearing, and before she released her decision on the motion to certify, the judge wrote the appellants’ counsel asking if he intended to amend the Amended Statement of Claim, pursuant to Rule 26.02. No defence having been filed, the rule permits amending a Statement of Claim without leave. The appellants’ counsel replied they would serve and file an Amended Amended Statement of Claim. The Toronto Transportation Commission submitted they were not entitled to do so, and a motion was scheduled. Nevertheless, the appellants filed an Amended Amended Statement of Claim before the hearing of the motion.
[11] The judge found the changes in the proposed amendment went beyond those set out in the document handed up at the end of the certification hearing. Added to the mix were allegations of breach of contract, strict liability and breach of duty to warn.
[12] The judge considered Rule 26.02 which provides that a party may amend the party’s pleadings before the close of pleadings, i.e. before a defence is filed without leave. She also considered sections 12 and 35 of the Class Proceedings Act. Section 12 provides:
The Court on the motion of a party or class member may make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination and for the purpose may impose such terms on the parties as it considers appropriate.
[13] She noted that in the submissions of the appellants, they made it clear that they would prefer to have certification based on their original pleading rather than face a costs order.
[14] Following submissions, the judge concluded she could invoke s. 12 of the Class Proceedings Act, to require a hearing on whether and on what terms an Amended Amended Statement of Claim would be permitted. She felt it necessary to impose terms on the proceeding “to ensure its fair and expeditious determination” and for that purpose, she imposed terms on the appellants. Having regard to the time at and the manner in which the appellants effected the proposed amendment, and the history of the proceeding, she found it would be unfair to require the defendants to respond to the proposed amendment without being compensated for costs thrown away.
[15] She gave the appellants a choice: abandon the proposed amendment or proceed on the basis of the proposed amendment after submissions on costs thrown away. The appellants chose to abandon and the judge struck it out.
[16] In our opinion, the judge was correct in law in her analysis of the application of s. 12 of the Class Proceedings Act. Her use of it underscores its importance in class proceedings, where, as here, one party seeks to take what the judge found to be an unfair advantage of another. Indeed, the appellants conceded the amendments were prepared to address deficiencies in their case highlighted by the respondents and the judge’s concerns during the hearing.
[17] In applying the discretion granted by s. 12, the judge made no error. Indeed, in our view, she had no alternative. Had she not done so, the respondents would have been foreclosed from making submissions on certification in response to the new issues raised by the Amended Amended Statement of Claim.
[18] We reject the submission that s. 12 applies only after certification. If refers both to a party and a class member. The reference to a party clearly contemplates that the motion applies at any time during class proceeding matters. This can only mean that s. 12 applies throughout, not just after certification.
- Did the Class Proceedings Judge properly exercise her discretion in finding that the class action was not the preferable procedure?
[19] The judge’s reasons reflect clear findings on ss. 5(1)(a), (b) and (c). She assumed, for the purposes of certification, there was a cause of action.
[20] The judge found that the proposed class was not defined by reference to objective criteria as the class was defined by reference to alleged exposure to asbestos. Whether class members were actually exposed to asbestos is an issue in the litigation. She found, further, that the appellants failed to show a basis in fact for the very broad definition of the class which she found to be unmanageable. She found the number and identity of persons in the class would be next to impossible to ascertain.
[21] She then turned to the alleged common issues. She analyzed alleged common issues proposed by the appellants in their factum on the certification hearing and found most of them not to be common issues. She found that the appellants failed to provide any evidentiary basis to meet the test under s. 5(1)(c) of the Act.
[22] Given the highly individualized nature of the issue of exposure, causation, liability and damages issues, the judge found that the litigation could not be meaningfully advanced through a common issues trial.
[23] She then instructed herself with respect to the underlying concepts of the preferability requirement – the goals of judicial economy, access to justice and behaviour modification.
[24] As might be expected from her findings under ss. 5(1)(a), (b) and (c), she found judicial economy would not be achieved since the central issues involved proof of exposure, proof of causation, liability and actual damages or loss suffered by each individual class member and that such individual issues would overwhelm the limited common issues.
[25] The judge determined that the goal of behaviour modification did not overcome the other deficiencies in the proposed class proceeding.
[26] In her analysis, the judge properly instructed herself, took cognizance of the relevant evidence and made findings which she was entitled to do on the evidence. We find no misapprehension of the evidence and no palpable or overriding error. She was entitled to conclude as she did that a class action was not the preferable procedure for the advancement of the action.
- Did the Class Proceedings Judge err in finding that the Appellants were not suitable as Representative Plaintiffs pursuant to section 5(1)(e) of the Class Proceedings Act?
[27] In considering the suitability of the appellants, the judge properly instructed herself with respect to whether she was satisfied that the proposed representative plaintiffs would vigorously and capably prosecute the interests of the class. (See: Western Canadian Shopping Centres Inc. v. Dutton (2001), 2001 SCC 46, 201 D.L.R. (4th) 385 (S.C.C.) at 401)
[28] Insofar as “vigorously” is concerned, the record of the appellants is lamentable. The action started in 2001. The plaintiffs failed to comply with the Proceedings Against the Crown Act, ignoring the obligation to serve a Notice of Claim at least sixty days before the start of the action.
[29] At the first case conference, a timetable was set for the plaintiffs to amend their claim. They failed to comply and amended their claim five months after the deadline. A timetable was set on the second case conference. The plaintiffs did not comply. They failed to meet the timetable established for the filing of reply material and conducting cross-examinations.
[30] The respondents asked for a third case conference. The plaintiffs failed to follow the directions of Winkler J. which led to a fourth case conference by telephone.
[31] Following the telephone conference, the respondents attempted to establish the appellants’ availability for the Motion for Certification on August 25, 2005.
[32] The appellants then sought leave to introduce fresh evidence. Their motion was dismissed. E. Macdonald J. held the appellants had been guilty of “egregious delay which was inexcusable”. The appellants then sought leave to appeal her decision to the Divisional Court. Their motion was dismissed December 1, 2005, with costs.
[33] E. Macdonald J. was replaced by Hoy J. in the action. It was the respondents who, in effect, forced the appellants on to the Certification motion finally heard December 11, 12 and 13, 2006.
[34] We turn to the “capability” of the appellants, and by extension, their counsel. The judge had concerns about the competency of counsel for three reasons. She noted this was counsel’s first class action. Moreover, she expressed concern at counsel’s response to the question of how subsequently afflicted members of the class would escape the doctrine of res judicata, given that the action contemplated subsequent lawsuits brought by members of the class for actual physical harm as opposed to the anxiety created by the alleged exposure to asbestos. The judge was not impressed by the appellants’ response to her concerns. The judge also commented on the better part of a day spent on counsel’s inappropriate submissions on reply.
[35] Finally, the judge questioned the capacity of the appellants to fund the litigation. Their tardiness in paying the costs awarded against them on the motion for leave to appeal raised doubts in her mind about their ability to advance the litigation.
[36] In her analysis of the suitability of the appellants in the litigation, the judge properly instructed herself, took cognizance of the relevant evidence and articulated her findings. We find no misapprehension of the evidence and no palpable or overriding error in the exercise of her discretion. She was entitled to conclude, as she did, that the appellants were not suitable within the meaning of s. 5(1)(d)(i). On this ground alone, the appeal must fail.
- Was the Order for Costs in keeping with the text and spirit of the Class Proceedings Act, 1992 and the jurisprudence on costs in class proceedings?
[37] The appellants sought leave to appeal the judge’s costs order. Leave is granted and the appeal is dismissed.
[38] We find the costs order to be a model of incisive analysis and persuasion. The judge properly identified the applicable principles, reviewed the case law and the factors under r. 57.01(1). In the result, she awarded approximately fifteen percent of the amounts claimed by the respondents. She applied the principle that costs awarded against unsuccessful plaintiffs in certification motions are typically modest, relative to the actual costs incurred by successful defendants and reflective of the objective of access to justice. It is difficult to imagine a fairer or more extensive treatment of costs than that accorded to the appellants.
CONCLUSION
[39] Deference is due to the judge’s findings:
This is the first time this court has considered the certification of a class action and I am mindful of the deference which is due to the Superior Court judges who have developed expertise in this very sophisticated area of practice. The Act provides for flexibility and adjustments at all stages of the proceeding and any intervention by this court at the certification level should be restricted to matters of general principle.
Anderson v. Wilson (1999), 44 O.R. (3d) 673 (Ont. C.A.), leave to appeal to the S.C.C. denied, [1999] S.C.C.A. No. 476, at p. 677
[40] McPherson J.A. repeated this principle when he noted that judges assigned to hear certification motions “develop an expertise which should be recognized and respected by appellate courts”. (Carom v. Bre-X Minerals Ltd. (2000), 51 O.R. (3d) 236 (C.A.) at pp. 247-8)
[41] The appeal is dismissed.
[42] The parties may make costs submissions limited to three pages within fifteen days of the issue of these reasons.
CARNWATH J.
PIERCE J.
HACKLAND J.
DATE: 20071224