COURT FILE NO.: 305/06, 306/06, 307/06,

308/06, 309/06, 310/06,

311/06, 312/06

DATE: 20071218

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

GREER, JENNINGS and McCOMBS JJ.

B E T W E E N:

IAN McLAINE,

Appellant

• and -

LONDON LIFE INSURANCE COMPANY,

Respondent

AND B E T W E E N:

Linda Rothstein, Margaret Waddell, Odette Soriano, Kirk M. Baert and Celeste Poltak, Counsel for all of the Appellants in the 8 cases before the Court

Wendy Matheson and Andrew Gray, Counsel for the London Life Insurance Company, one of the Respondents

JOANNE LUMSDEN,

Appellant

CANADIAN IMPERIAL BANK OF COMMERCE,

Respondent

AND B E T W E E N:

STEWART GREGG,

Appellant

• and -

CANADA TRUSTCO MORTGAGE CORPORATION,

Respondent

AND B E T W E E N:

ROBERT SMITH AND FAY SMITH,

Appellants

• and -

LAURENTIAN BANK OF CANADA,

Respondent

AND B E T W E E N:

PAUL RYAN,

Appellant

• and -

NATIONAL BANK OF CANADA,

Respondent

AND B E T W E E N:

MAAROUF ARABI,

Appellant

• and -

THE TORONTO-DOMINION BANK,

Respondent

AND B E T W E E N:

THOMAS JOHN CONWAY, RITA FUNG and MIRIAM RODE,

Appellants

• and -

THE BANK OF NOVA SCOTIA and SCOTIA MORTGAGE CORPORATION,

Respondents

AND B E T W E E N:

RALPH WAKIM,

Appellant

• and -

BANK OF MONTREAL,

Respondent

Patricia D.S. Jackson and Stuart Svonkin, Counsel for CIBC, one of the Respondents

F. Paul Morrison and David Leonard, Counsel for Canada Trustco, one of the Respondents

J. Brian Casey and John Pirie, Counsel for Laurentian Bank, one of the Respondents

Paul Steep and Lisa Constantine, Counsel for National Bank, one of the Respondents

F. Paul Morrison and David Leonard, Counsel for the TD Bank

Martin Sclisizzi, Freya Kristjanson and Heather Pressione, Counsel for the Bank of Nova Scotia and Scotia Mortgage

Martin Sclisizzi, Freya Kristjanson and Heather Pressione, Counsel for the Bank of Montreal, one of the Respondents

HEARD at Toronto: September 10, 11, 12 and 13, 2007

REASONS: GREER J.:

1The eight Appellants (Plaintiffs) appeal from the Order of Madam Justice Ellen Macdonald (“the Judge”) released May 24, 2006, wherein she dismissed their Motions asking the Court to certify their proceedings under the Class Proceedings Act, 1992, c.6 (“CPA”or “the Act”). The Judge held, among other findings as to why the Motions should not be certified, that none of the Plaintiffs met the procedural requirements of s.5(1) of the CPA to have their actions certified.

2In paragraph 25 of her decision, the Judge held that there are common themes, which run through all actions. Rather than repeat the common themes for each action, the Judge selected one action and used it as a template to canvass all of the common themes. The action so chosen by the Judge is Wakim v. Bank of Montreal (“Wakim” or “BMO”). Other specific actions were also referred to her in her Judgment.

3Each Appellant has sued one or two banking or lending institutions namely, London Life Insurance Company (“London Life”), Canadian Imperial Bank of Commerce (“CIBC”), Canada Trustco Mortgage Company (“CT”), Laurentian Bank of Canada (“Laurentian”), National Bank of Canada (“NBC”), The Toronto-Dominion Bank (“TD”), The Bank of Nova Scotia/Scotia Mortgage Corporation (“BNS”), and the Bank of Montreal (“BMO”). Each Statement of Claim and Amended Statement of Claim alleges breach of contract of what the Appellants say are standard mortgage contracts. They allege that the Respondents incorrectly interpreted two mortgage provisions, namely annual payments on account of principal or the partial prepayment right and the early mortgage discharge provision.

4The Appellants’ counsel consider each plaintiff as being representative of persons who have been involved in such mortgage transactions. Each was involved in a mortgage application and transaction with one of the banks/lending institutions’ branches, all of which are located in the Ottawa area. There is, however, no standard form of mortgage common to each of the Respondents. Instead, there are multiple kinds of mortgages with multiple prepayment and discharge provisions.

5All the Appellants had been either an employee of, or a solicitor in the office of, or a client of the Ottawa law firm of Farah + Associates, whose principal is John Farah (“Farah”). He is the person who conceived the causes of action in each of the various proceedings. Farah or someone in his firm drafted all the Statements of Claim and Amended Statements of Claim, and contacted all the proposed Plaintiffs personally, after going through 50 boxes of files in his office, as no mortgagor had come forward to complain about these terms in his or her mortgage. Further, none of the mortgagors had started a civil action against any of the banks/lending institutions before Farah urged them or counselled them to do so.

6The Respondents say that there would be no actions had Farah not taken the steps he did, as not one mortgagor of any of the eight lending institutions raised or questioned the issue in court proceedings before Farah came up with the idea. They say that any such certification of these actions would give rise to such complexity and costs in actual time to try to trace possible claimants and judicial time involved, that it would not be a viable class action. Therefore, the Respondents say, the Judge’s refusal to certify the proceedings was justifiable.

Issues arising in the Appeals

7The Appellants say that the following issues are common to all of the actions:

1. Did the motion judge err in law in rendering decisions inconsistent with the Orders certifying CS Co-Op, HSBC and IA?

2. Did the motion judge commit a fundamental and overarching error that taints her entire decision in allowing Mr. Farah’s role to influence her analysis?

3. Did the motion judge err in failing to find that the pleadings disclose a cause of action? Specifically, did the motion judge err in failing to apply the “plain and obvious” test, in failing to refer to the precedent of Justice Nordheimer’s decision in BNS; and in determining the merits?

4. Did the motion judge err in failing to find that there was no identifiable class of two or more persons? Specifically:

(a) did the motion judge err in considering the ease or complexity with which class members could be identified from the defendants’ records?

(b) did the motion judge err in considering whether there was a collective will among the class members to advance the claims, and did she further err in concluding that there was none, despite the evidence to the contrary?

(c) Was the motion judge improperly swayed by the defendants’ suggestion that some members may not have suffered a loss?

5. Section 5(1)(c): Did the motion judge err in finding that there were no common issues?

Specifically:

(a) did the motion judge err in ignoring the certification order in CS C0-Op?

(b) did the motion judge err in ignoring the common issues proposed by the plaintiffs, and in using her analysis on a mischaracterization of the cause of action?

6. Section 5(1)(d): Did the motion judge err in finding that class proceedings are not the preferable procedure for these eight actions? Specifically:

(a) did the motion judge apply the wrong legal test and place undue weight on what she characterized as individual issues, and fail to consider the extent to which a determination of the common issues would substantially advance the claim?

(b) did the motion judge commit a palpable and overriding error in incorrectly and improperly concluding that these cases would be “completely unmanageable” as class proceedings, without any consideration or reference to the plaintiffs’ expert evidence?

(c) Did the motion judge err in law and in principle in failing to engage in any analysis whatsoever of whether the underlying goals of the Act would be advanced through class proceedings?

7. Section 5(1)(e): Did the motion judge err in finding the representative plaintiffs will not fairly and adequately represent the interests of the class? Specifically, did the motion judge err in concluding that Mr. Farah’s conduct in relation to a handful of individuals should properly defeat class actions that affect the rights of hundreds of thousands of class members across Canada?

In addition to these issues, the Appellants also raise the issue of what is the standard of review on this Appeal and whether the Court should hear the motions de novo, given what they say is a lack of reasons in seven of the eight motions.

Standard of Review

8It is the position of the Appellants that the appropriate standard of review on this Appeal is correctness, relying on the principles set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (S.C.C.) at paras. 8 and 33, where the Court held that on a pure question of law, the standard is “correctness”. The Appellants say that at the heart of the appeals are the motion judge’s errors in the application of the five-part legal test for certification, which is a question of law. They further say that what might appear at first instance to be a question of mixed fact and law, can in fact be a pure error of law, if the court “has failed to consider the correct question when applying the law to the facts.”

9The Respondents agree that on a pure question of law the standard is one of “correctness”. They point out that in order to succeed on this appeal, the Appellants must demonstrate that the Judge made a reversible error with respect to every part of the certification test. The test on appeal is not what the members of the appeal panel may have done on the motion. The Respondents rely on the Divisional Court decision in Moyes v. Fortune Financial Corp., [2003] O.J. No. 4731 ) (Div. Ct.) at para. 5 as follows:

We review the decision to refuse certification on a limited basis. The motions court judge’s interpretation and application of the relevant legal principles is subject to review. A motions court decision cannot shelter behind discretion involving palpable error, or an error of law. The question here is, did the motions court judge proceed on a wrong legal basis, did he abuse his discretion in the legal sense of that word, or did he err on a matter of general principle?

10The Appellants say that the Judge’s decision should be given no deference as she erred in principle and had “little experience in class proceedings prior to these motions.” Further they say that she has not developed an expertise in this very sophisticated area of practice, relying on Anderson v. Wilson (1999), 44 O.R. (3d) 673 (C.A.). We reject this submission, and instead adopt the submission of the Respondents, that certification decisions of class action judges are entitled to deference on appeal. See: Boulanger v. Johnson & Johnson Corp. (2007), O.J. No. 1991 Court File No. 56/07 (Div. Ct. leave Motion), which followed the reasons of the Court of Appeal in Pearson v. Inco Ltd. (2006), 78 O.R. (3d) 64 (C.A.) at para. 43. The Judge’s Judgment is therefore entitled to deference.

The Legal Principles

11The parties agree that the CPA is remedial legislation and that an overly restrictive approach to certification is to be avoided in order to realize the benefits of the legislation as “…foreseen by its drafters, namely serving judicial economy, enhancing access to justice and encouraging behaviour modification by those who cause harm.” See: Cloud v. Canada (Attorney General) (2004), 247 D.L.R. (4th) 667 (C.A.) at para. 37.

12The Appellants argue that the reasons of the Judge were inadequate in their structure and analysis. They say that the purpose of certification is to provide access to the courts for large numbers of persons with similar legal issues, noting that it is useful “in cases where the individual harm is small, and the defendant might otherwise remain undeterred from continuing its wrongful acts.”

13The court directed that all eight certification motions be argued together since the same causes of action are alleged in each case. The Reasons of the Judge were released as one consolidated set of Reasons, denying certification in all eight cases, and finding that each failed to meet any of the elements required for certification under section 5(1) of the Act.

14The Appellants say that having a consolidated decision was wrong, and that the Judge failed to deliver adequate reasons in seven out of the eight actions. They say that by using the facts of Wakim, supra, and by using that case as a template, she failed to give adequate reasons for not certifying any of the other seven cases before her. Yet, in certification motions, the cases are argued together, and are heard not as separate cases. They are amalgamated together for expediency and commonality.

15The Respondents say that having all eight cases argued together is “a fair and efficient” method of procedure that leads to one single set of Reasons, which “canvass the common themes” among them. They say that the Reasons of the Judge clearly allow the Appellants to know what issues were decided against them, and they do not “prevent meaningful appellate review.”

16In determining whether certification is to be granted to various actions brought forward together, the Judge hearing the certification motion must assess what is being brought before him or her, given the 5 mandatory requirements of s.5(1) of the CPA, as follows:

The court shall certify a class proceeding on a motion under section 2, 3, or 4 if,

S.5(1) (a) the pleadings of the notice of application discloses a

cause of action;

(b) there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;

(c) the claims or defences of the class members raise common issues;

(d) a class proceeding would be the preferable procedure for the resolution of the common issues; and

(e) there is a representative plaintiff or defendant who,

(i) would fairly and adequately represent the interests of the class

(ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and

(iii) does not have, on the common issues for the class, an interest in conflict with the interests of other class members.

The Judge’s Analysis of s.5(1)

17In paragraph 3 of her Judgment, the Judge sets out the parameters of the actions before her, namely that while there are, “… significant factual variations in each of the eight cases, the claims are based on breach of contract”, more particularly, “implied breaches of mortgage documentation agreed upon by the individual customers and the lenders/financial institutions”, there are no claims in tort or equity.

18The Judge is alive to the fact that a certification motion is an important screening mechanism for claims that “…are not appropriate for class actions.” She then goes on in paragraph 9 to say the following about the test in s.5(1) of the CPA:

Although described in the jurisprudence as procedural and not being a test of the merits of the action, scrutiny required under each of the headings under s.5(1) compels a process, the consequences of which highlight the gate keeping role of the court on certification motions. This screening process, while described as procedural, does not obviate the necessity of a careful scrutiny under each of the headings of the s.5(1) of the CPA.

In using the Wakim (“BMO”) action as the template, the Judge carefully sets out in paragraph 35 BMO’s position as to why the plaintiff’s motion for certification ought to be dismissed. The subparagraphs in that paragraph deal with each subsection of s 5(1) of the CPA. She then goes on, in paragraphs 45 to 61 inclusive, to analyze each of the factors, in coming to her conclusion that none of the eight actions are certifiable under any of the subsections, and she dismisses the motions.

The role of Farah

19The Judge also raises and analyzes the role of Farah in having the eight Statements of Claim issued and in bringing the motions to Court. The Judge is critical of the roles played by Farah and his associate, Brian Wilson (“Wilson”) in combing closed out real estate files (the main area of law they practiced in) to search for clients who may be proposed representatives. In fact, one of the litigants was a law clerk of their firm for about 10 years and another was a co-owner of property with Wilson.

20The Judge states in paragraph 7 of her Judgment that the role of Farah in creating these proposed class actions, “…is an important factor in the determination of whether or not these claims survive s.5(1).” There is, in her mind, no question that Farah “generated these actions.” She also finds that Farah, in his role as these eight litigants’ lawyer/solicitor, never received a complaint from any of these litigants about their mortgage prepayment privileges, nor did he ever advise any one of them that they may have paid a small amount of extra interest on the one yearly prepayment made by them or on early discharge of the mortgage.

21The Judge sees Farah as having “recruited” these litigants to put forward his proposed claim. None of the Statements of Claim or Amended Statements of Claim vary from one another, yet Farah was pro-active in issuing press releases, giving interviews and in launching a website, says the Judge. She also finds that despite Farah’s removal as counsel of record in certain actions, he “continues to act as class counsel in five of the companion actions,” and continues to have an on-going financial interest in the proceedings.

22The Appellants say that the Judge erred in directing so much attention to Farah’s conduct, since this is not an injunction case. They further say that it is not unlawful and not unethical to contact clients who had claims, and even if some are not suitable claimants, this flaw can always be corrected later on in the proceedings.

23The Appellants somehow want to disregard the fact that Farah was in a position of conflict. He now says that there is a claim, here when he never saw the claim when he advised each one of the eight to sign the mortgages he now questions. They now try to characterize it as simply following a pre-existing procedure to collect prepayment interest.

24In his affidavits, separately filed in each action, Farah testified that, “It was an implied term of the request for the Discharge Statement and Payout Amount that the defendant would provide a complete and accurate Discharge Statement.” When Farah was being cross-examined by counsel for Canada Trust and TD Bank, Farah’s answers indicate that he says the Claim is based on breach of both express and implied terms. When cross-examined by counsel for the CIBC, Farah says there is an implied term in the original mortgage but no express term. When cross-examined by counsel for the National Bank, he was asked at Q.1517: “If it’s your position, as stated in the Statement of Claim, that it’s an implied term of the National Bank mortgage that the bank must automatically, in the absence of a request from a client, apply the compensation charge to the outstanding principal less the pre-payment amount: correct?” Farah replied, “Yes”.

25This evidence makes it clear that Farah, on behalf of the plaintiffs, said from the beginning of the actions that their claims were based on an implied term in the contract. That information was before the Judge when she reached her conclusion. There was no express term in any of the mortgages in question relating to the issues in question.

26The Respondents say that the Appellants have been trying to distance themselves from Farah, given that he had a direct conflict of interest in four of the claims. They are further critical about Farah’s conduct, when he was removed from the case. He delayed removing himself, and continued to take a keen interest in the proceedings.

27The Respondents say that not one other real property lawyer across the country, of which they are aware, has come forward with the theory that Farah now proposes for a class action. Farah never explained this theory to any of the mortgagors while he represented them before he began the eight actions now before the Court.

28We find that the Judge made no fundamental error at law, which taints her entire decision in the comments made by her respecting Farah’s role in the litigation. It is a fact, which cannot be ignored, that Farah acted as the solicitor in each case against the eight different financial institutions and drafted all the Claims put forward. The Court is entitled to look at whether the litigation is driven by the class counsel or by the litigants themselves, and the Judge found it was driven by Farah.

Is this Appeal to be a de novo hearing?

29This Appeal was heard over 4 days. We were urged by the Appellants to hear the seven cases not referred to by name, by the Judge, as de novo hearings. The Appellants argued their cases as if each was such a hearing. The materials before us are massive. The combined casebook of the parties is 5 volumes in length and consists of 104 cases. Supplementary casebooks were also filed. Eighteen counsel appeared gowned on the Appeal.

30The Appellants argue that the Judge did not adequately analyze the positions of each proposed representative and failed to give reasons for dismissing the individual claims, when she relied on Wakim, as the standard for all. They point to recent case law from the Court of Appeal in Lawson v. Lawson, [2006] O.J. No. 3179 (C.A.) where the Court found at paragraph 9., while reasons do not need to be perfect nor lengthy, “…they must be sufficient to enable the parties, the general public and this court, sitting in review, to know whether the applicable legal principles and evidence were properly considered.” See also: R. v. Sheppard (2002), 2002 SCC 26, 162 C.C.C. (3d) 298 (S.C.C.), where the Court said that justice must not only be done but be seen to be done.

31While we do not see this Appeal as a de novo hearing of seven of the Motions, we have reviewed all the materials before us and have specifically examined each Respondent’s materials and position in the litigation. We are satisfied that the Judgment delivered by the Judge is sufficient to enable the parties, the general public and this Court, sitting in review, to know that the Judge considered the applicable legal principles and the evidence before her. Each case was proceeding on the same principle as alleged by the Appellants; that there was a “standard mortgage”; that a prepayment had occurred; and that there was no material difference in each proposed representative’s Statement of Claim and Amended Statement of Claim.

32The Judge carefully examined each subsection of the test and carefully analyzed the template case, finding that the reasons given applied to all actions.

33There is nothing in the legislation to indicate if there are multiple claims brought forward for certification under one action, that each such claim must be examined under a microscope, and that each claim deserves separate reasons. If the counsel bring such claims forward as deserving of certification, there must be basic principles that tie them together. There may be factual differences but counsel for the Plaintiffs must think that there is enough similarity to cause such motions to be brought on.

34We are satisfied that the Judge made no error in using a template to provide a combined set of reasons in dismissing the motions. We disagree with the Appellants’ position that the Judge clearly intimated that she intended to release separate reasons in each of the actions. The Judge makes reference to why she is using the template in paragraphs 25 and 26 of her Judgment, noting that all were assessed a prepayment penalty and then sets out what the proposed class is in paragraph 27. We find that justice was done in the way the Judgment was structured. All litigants knew why their motions for certification were dismissed and no error of law was made.

Is the denial of certification inconsistent with certain Certified Actions?

35The Appellants say that the Judge ignored the findings of the Court in four cases involving certification issues. One of the examples cited is Conway v. Bank of Nova Scotia, [2004] O.J. No.4038 (S.C.J.). In his brief Endorsement in this matter, Mr. Justice Nordheimer allowed the Plaintiffs to amend their statement of claim and add an additional representative plaintiff and a second corporate defendant. He noted in paragraph 4 of his reasons that he approached the issue as he would have on a Rule 21 Motion and said that the proposed plaintiff’s allegations of the interpretation of the mortgage documents as they relate to the prepayment and discharge provisions, “…are not so patently ridiculous that they should be dismissed at this stage.”

36Other cases referred to by the Appellants are Nehme v. Civil Service Co-Operative Credit Society, Ltd., [2004] O.J. No. 2552 (S.C.J.) (referred to as “CS Co-Op”), a decision of Mr. Justice Nordheimer, Hocking v. HSBC Bank of Canada, Court File No. 03-CV0245829CP (“HSBC”) and Alsaqqa et al. v. Industrial Alliance Life Insurance Company (“AL”) Court File No. 03-242537CP, the latter two being decisions of the Judge, herself. It is the position of the Respondents that all three of these cases settled on their individual bases for nuisance value by the financial institutions in question. These settlements, therefore, have no application to the actions, which were before the Judge.

37It must be noted that Mr. Justice Nordheimer was not hearing a certification motion in Conway, supra, as the matters were still at the pleadings stage. CS Co-Op, was the case of a plaintiff moving for certification with a settlement, where the defendant denied that it had improperly calculated the mortgagee’s rights under the clause. HSBC, supra, also involved a settlement.

38The Respondents point out that one cannot compare their contested certification cases with other matters, which proceed on consent in the Court, or are part of a settlement. As has been pointed out in other matters, which have proceeded on consent in the context of a settlement, the standard in those circumstances is lower than the standard is for a contested certification. See: CSL Equity Investments Limited v. Valois, [2007] O.J. No. 1585 (S.C.J.) at para. 5.

39The Respondent also says that the Appellants put forward no evidence before the Judge to suggest that the circumstances of a consent certification were comparable to the cases at bar respecting mortgages. In Bona Foods Ltd. v. Ajinomoto U.S.A., Inc. (2004), 2 C.P.C. (6th) 15 (O.S.C.J.), [2004] O.J. No.37708 (S.C.J.), Mr. Justice Cullity notes in para. 11 that parties who are seeking approval of a settlement, “…have not been required to satisfy the court that certification would have been granted in any event.”

40They further say that the inquiry in a consent certification in the context of approving a settlement is very different from a contested certification motion, as in a settlement there are no common issues that need to be determined for trial as there will be no trial. In addition there have been cases where certification has proceeded on consent and at a later stage, contested certification motions were heard and certification was denied by the Court of Appeal.

41We are satisfied that the Judge was alive to these differences when she reached the conclusion she did, and there was no need for her to make reference to any of the cases cited by the Appellants where settlements had occurred. A Judge does not have to mention every point raised by the litigants in reaching the decision she does. We therefore see no error at law in the Judge not following those cases or analyzing them.

The S.5(1) Analysis by the parties

42It is the position of the Appellants that the Judge erred in law on each element of the certification test. Earlier in these reasons, we set out what the Judge said with respect to the test and on what she relied in reaching the decision she did in refusing to certify the motions under the CPA. It is the position of the Respondents that the Judge’s denial of certification was grounded in the law and was amply supported by the evidence.

1. Subsection 5(1)(a): Pleadings do not disclose a Cause of Action

43The parties agree that the test to be met here is not meant to be a test on the merits of the eight Claims.

44The Appellants say that on a certification motion, the test to be applied is the test on a motion under Rule 21.01(1) (b). Assuming the facts can be proven as set out in the Statement of Claim and the Amended Statement of Claim in each action, the question is whether it is plain and obvious that the action will fail or whether no cause of action is disclosed. See: Cloud, supra, para. 41.

45The Appellants say that the Judge did just that, and determined, based on the Wakim case, that the claims had no merit and dismissed all of the claims based on Wakim. They say the Judge erred when she asked the question in para. 45 of her judgment, “Is there a legitimate cause of action?” They say that even if there is a strong defence put forward by the Respondents, the certification test does not assess the “legitimacy of the cause of action.”

46Further, the Appellants say that their claims are for breach of contract and that they do not seek to imply a term into their respective mortgage documents, and that their claims are based on the interpretation of express terms of their mortgages, whereby the Respondents are required to first reduce the outstanding principal balance of the mortgage in accordance with the penalty-free Partial Prepayment Right, and then calculate the prepayment penalty on the reduced principal balance.

47The Respondents say that the Judge did not determine the merits of the cases in reaching the decision she did. The Judge says that the claims are based on breach of contract and more particularly the “implied breaches of mortgage documentation agreed upon by the individual customers and the lenders/financial institutions.” They point to the fact that there is no express term of the kind alleged by the Appellants in the various Statements of Claim. Further, the contract itself (the mortgage) must be looked at to see if it supports the Claims made. If it does not, it is not a certifiable action. The rights of the parties rise and fall on the terms of the contract.

48We agree with the Respondents that there is no express term in any of the mortgages requiring the automatic crediting of any unused partial prepayment privilege or on an early discharge payment, and there is no express term requiring any particular information be shown on a discharge statement. Further, there is nothing which determines that these two privileges in a mortgage must be read together, as the Appellants are alleging should be done.

49Although no evidence is admissible on a Rule 21 Motion, a motions judge is entitled to look at the documents tendered to the Court by the parties. See: Web Offset Publications Limited v. Vickery (1999), 43 O.R. (3d) 802 (C.A.).

50The Respondents point to the fact that the McLaine/Wilson mortgage referred to in the Amended Statement of Claim was drawn up by Farah, himself, as McLaine’s and Wilson’s solicitor. It contains two NHA Mortgage Clauses. One clause allows a 15% non-cumulative prepayment privilege once per year on account of capital, as well as allowing a prepayment privilege of increasing the monthly payment by 15%. In addition, there is a double monthly prepayment clause.

51We see no such express terms in any of these paragraphs, as alleged by the Appellants. The Judge was therefore correct in her statement that the Claims are looking at implied terms and the Appellants have failed to plead the requisite material facts. We agree with her conclusions that the pleadings disclose no cause of action.

52The mortgage clauses in all eight actions are demonstrably different from each other. Each mortgage in the eight actions was drafted by a different financial institution. It is not, in our view, enough for the Appellants to allege similarity and to call all eight mortgages a “standard mortgage”. Each mortgagor is an individual customer of the mortgagee and each mortgage is tailored to some of the needs or requests of the individual by way of term, interest rate, prepayment privileges, penalties on early discharges, and portability of the mortgage.

53While there may be some “standard” mortgage clauses, which apply to every mortgage in the province where that provincial mortgage legislation applies, the entire document is not “standard”. The Judge correctly states in paragraph 46 of her Judgment that:

The reality is that the mortgage renewal agreement is clear that the partial prepayment right is in addition to the other privileges. As is stated in my reasons respecting the other Defendant financial institutions, a privilege is an option that must be exercised by the party seeking to rely upon it.

54A separate question arose in the McLaine case against BMO, that is, where is Wilson in this proceeding? The Respondents say he is a necessary party in the action and the McLaine Claim is accordingly flawed. Wilson’s knowledge and understanding is very important to this claim. He, however, is in a conflict of interest, given that he is a solicitor who worked with Farah.

55In our view, Wilson is a necessary party in the McLaine action since he worked and participated in the mortgage process and is deemed to be familiar with and understand the wording of the mortgage, given his role as a solicitor in the firm with Farah. He should have been added as a party to that proceeding but no such Motion to add him as a party was brought on by McLaine. It is trite to say that all necessary parties must be before the Court, and while a pleading can be amended at any time in a proceeding, in the McLaine case against BMO, the failure to add Wilson, taints the whole claim.

56With respect to the CIBC action, Farah had acted for Lumsden and her husband as co-mortgagors and for CIBC as mortgagee. Farah was therefore in breach of his duty to CIBC in suing them. Lumsden had been Farah’s law clerk since 1992 and Farah was removed, on motion by the court, from continuing to act in this action. In addition, the Lumsden mortgage principal was over 90% of the value of the property, and it was insured by CMHC. Lumsden incorrectly described the mortgage terms and the prepayment terms in her Claim. This mortgage is completely different from the other seven mortgages in that there is no right to prepay any portion of principal without charge. Further, it has a schedule of terms attached to it, which do not apply to a fixed-rate mortgage and there is a commitment letter from CMC, which sets out the following prepayment terms:

(a) The Full Prepayment Provision

(b) The 10% Prepayment Provision

(c) The Transfer Provision

The Spousal Status Provision, which requires notice of any change in spousal status or in the status of the Charged Premises. On default of this, the principal money and interest comes due.

57It was not until this action was started against CIBC that it found out that Lumsden and her husband were separated and that he had transferred his ownership in the property to her in 1996. She then sold the property in 1997 without ever informing the CIBC of these facts. Farah acted for Lumsden on the discharge but not for CMC. A charge was levied for the early discharge of the mortgage and was paid by Lumsden.

58Lumsden and her husband had never exercised a prepayment provision under the mortgage and so had no alleged claim under that provision. Lumsden even wrote the letter on Farah’s behalf to CMC noting that the amount being paid was the required amount. None of Farah, Lumsden and Henderson ever suggested that there was an ambiguity in the mortgage or that it contained implied terms. On cross-examination about this issue, Farah said he “overlooked” the issue.

59The Lumsden discharge took place in 1998 and Farah did not begin his search of the files until 2002. Farah never asked either CIBC or CMC whether he could use their files nor did he ask for their consent. He refused to voluntarily remove himself as solicitor of record and the CIBC had to move in court to effect his removal. This fact added to the fact that Henderson was a joint obligee under the mortgage and was never joined as a plaintiff, is fatal to the Lumsden claim. Lumsden is therefore not a proper member of the proposed class and has no identifiable claim against CIBC.

60With respect to Ryan’s mortgage with National Bank, the express language of the Bank’s mortgage with Ryan and the renewal agreement, the prepayment privilege is clearly expressed in permissive language, such as “the Chargor may, once in each calendar year during the term of the charge, prepay an amount…” and “the Mortgagor may, without indemnity, during each calendar year prepay an amount not in excess of ten percent…”. Therefore, the term will not be automatically engaged or applied by the Bank without the mortgagor taking the step of actually paying the prepayment amount. The prepayment term is also separate and apart from the early payout term.

61Laurentian takes the position that there is no cause of action disclosed against it in the Appellants’ Amended Statement of Claim, as there is no term in its mortgage providing the mortgagor with the right to discharge the mortgage in full prior to maturity upon payment of an Interest Indemnity. Nor does the mortgage contain an express term requiring Laurentian to automatically exercise the customer’s Partial Prepayment Option upon a discharge. The Judge was therefore correct in holding that it is plain and obvious that no cause of action has been disclosed against Laurentian. We agree with Laurentian that the absence of the alleged Early Discharge Right in the Laurentian Mortgage is a fundamental flaw which completely undermines the cause of action.

62The Judge was correct in her analysis in paragraphs 45 to 61 that there is no cause of action in any of the Claims.

2. Section 5(1) (b): Identifiable Class

63Subsection 5(1)(b) of the CPA requires that there be an identifiable class of two or more persons in order to qualify for certification. The Appellants say that the class must be defined by reference to objective criteria, “..such that a given person can be determined to be a member of the class without reference to the merits of the action.” The objective criteria, they say are as follows:

(a) the person must have entered into a mortgage with a defendant financial institution where his or her mortgage terms includes a penalty-free Partial Prepayment Right, and a penalty payable on discharge before maturity;

(b) the person has elected to repay his or her mortgage at a time when the person had not utilized his or her penalty-free partial prepayment provisions; and

(c) the person was charged a prepayment penalty calculated on the basis of his or her outstanding principal balance at the time of discharge, without any credit given to the outstanding principal balance under the penalty-free Partial Prepayment Right.

64The say that the Judge erred in not finding that any of the claimants fell within this identifiable class. They disagree with the Judge’s analysis that given the state of the Respondents’ records and files, it would be unduly complex and time consuming to identify class members and to assess individual members’ damages. They see this as not a relevant factor. They also disagree with the Judge’s finding that the class definition is overly broad.

65Although it is the Appellants’ position that there is “little variation in the vast majority of the mortgage cases”, and that there are similar percentages used respecting prepayment privileges, if one examines the mortgages in question, this is simply not the case. They further say that common issues will remain the same with respect to each category of mortgagee.

66They also say that the Judge ignored the “direct and uncontested” evidence of Farah, in which he said there was substantial support and interest in the class proceeding. The Judge, however, found that there was not substantial support.

67The question is, “Is there a will among the class to bring on this lawsuit?” The Respondents point to the fact that there is no identifiable class since none of the actions brought forward came independently to the Court. All arose out of Farah’s own files and all were his clients and either he or one of his colleagues, wrote the reporting letters to these clients. He set up a website to generate interest and bring other claimants forward, but few came. The Respondents see these claims at odds with the legal advice Farah gave his clients and see his research of 50 boxes of closed files as “a misuse of client files.” In Zicherman v. Equitable Life Insurance Co. of Canada, [2000] O.J. No. 5144 at para. 7 (S.C.J.); conf’d, 2003 21250 (ON CA), [2003] O.J. No. 1161 (C.A.), the Court noted that no one other than Zicherman had raised a cause of action. Farah really raised the cause of action in files, where he had a conflict of interest, and where not one of his clients had independently come forward on advice of independent counsel.

68The Respondents point to the fact that the Judge found the class definition to be “erratically over inclusive” because it includes persons who would not have a claim at all, and it would be a massive, time-consuming and costly effort for each financial institution to comb all of its mortgage files within the period, to determine who may have a possible claim.

69In paragraph 48 of her Judgment, the Judge adopts the reasoning of the Supreme Court of Canada in Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, that there must be a rational connection between the defined class and the common issues. She finds that, in the eight cases before her, that in some instances, the class members “could not be identified without individual examinations of each person’s circumstances.” She is also satisfied that the “file review process required to assess each individual’s circumstances would be massive, time consuming and costly.” She also followed the finding of Mr. Justice Winkler, as he then was, in Mouhteros v. DeVry Canada Inc. (1998), 41 O.R. (3d) 63 (Gen. Div.) that the proposed class definition before her, was “over inclusive.”

70Using BMO as an example, the Judge notes in paragraph 52 that the evidence is uncontested that if BMO had to conduct such a manual review of up to 260,000 files for the relevant time period, it would take “180,000 hours of work”, which would be costly and lengthy”. She says on that basis alone, the certification of that action must fail. This principle also applies to the McLaine case against London Life.

71We agree with the Appellants that s.5(1)(b) does not contemplate that all class members must be entitled to damages. On the other hand, the position of BMO about the time and effort it would have to expend, may apply equally to all eight cases. The time expended for each, while perhaps less than that for BMO, when totalled, adds up to years of work. If one simply says that each day has 8 working hours, the BMO total means that it would spend 22,500 working days or 61 years approximately, if only one person did all the culling of files for the period in question.

72TD says that they could have as many as 190,000 mortgages of which it is the mortgagee, involved during the period in question. Although Farah created a website for mortgagors to sign on to be part of the class, only 250 of the possible 190,000 signed on out of a total of 375. CT says that it may have as many as 125,000 mortgagors who have borrowed from it during the period in question. The Respondents say that the “so-called class has no interest in acting.” They see it as nothing more than a “money-grab” on Farah’s part to get settlements and as being an erratically over-inclusive attempt to conjure a class.

73Richard Ian Mathes, a Vice President Real Estate Secured Lending Products, with TD, swore an Affidavit on September 29, 2004, which was before the Judge. He sets out in some detail certain changes, which took place between 1997 and 1999 and how many of the mortgage discharges involve transfers and TD’s practice of reducing or waiving compensation amount payable in certain circumstances. For example, between January 2004 and August 2004, 40,404 mortgage loans were discharged prior to maturity and of those, approximately 4,500 requested a reduction or a waiver of the compensation amount and it was paid.

74With respect to the CIBC mortgages, there is no centralized computer way that all mortgage data for the period in question can be located. Further, in 1998, CIBC amended the language that expressly indicates you cannot exercise the prepayment individual privilege and renew the mortgage at the same time. Some of their mortgages have commitment letters attached and others do not. Files would have to be examined individually to see what the terms are and to see whether the mortgage does or does not have a prepayment privilege. The variabilities of CIBC mortgages are explained by Sandra Milner-Docking in her affidavit sworn March 18, 2005, which was before the Judge.

75Farah also erred in using Conway and Fung as representatives of the action against BNS and Scotia Mortgage Corporation. When it was determined that they were not appropriate representatives of the class, Farah added Miriam Rode as a plaintiff. This amendment was allowed by Mr. Justice Nordheimer, on Motion before him. Such an amendment, however, does not mean that a cause of action is disclosed. The bald pleading remains simply that, and the Judge was never directed to the S.5(1) analysis.

76BNS objects to the way in which Farah obtained Rode as a client in order to manufacture her claim to fit into his own template. Rode executed a mortgage with BMO in 1987, which was assigned to BNS in 1989 and was renewed from time to time, with different prepayment privilege clauses. A lawyer named Habib had acted for Rode in April 2003 and Farah spoke to her before Habib requested the discharge. Habib did not advise Rode of the prepayment privilege but was aware of the Claim having been issued. The case is similar to that of Wakim, in that there was no disclosure by the lawyer who was aware of the Claim and issue raised in it. Therefore, Rode, also is not a proper plaintiff.

77We concur with the reasoning of the Judge and find that she was correct in her analysis that the class the Appellants are trying to create is overly inclusive as defined. Further, we disagree with the Appellants that there is similarity among the mortgagees and it is simply a matter of a percentage of prepayment interest. As has been noted, there are a variety of different mortgage provisions across the country among the various mortgagees as to when the prepayment privilege is allowed and the percentages, with variations as to how many years one formula was in place. Over the period in question proposed by the Appellants, there are multiple permutations and combinations.

78We see no error committed by the Judge in finding that there is no identifiable class.

3. Section 5(1)(c): Common Issue

79Under s.5(1)(c) of the CPA, the claims or defences of the class members must raise common issues. The Appellants say that the Court must avoid setting the bar too high for certification. They say that the common issues need only “advance the litigation.” In this case, the common issues, they say, “…pertain to the interpretation and interplay between the different provisions pertaining to prepayments in the defendants’ mortgage documentation.” In their view, the Judge mischaracterized the cause of action, which resulted in errors.

80The Appellants say that the common issues do not require any extrinsic evidence and do not require a finding of “the existence of implied terms.” They say the clauses at issue are “standard form mortgage terms” and, “boiler-plate contracts offered to borrowers on a take-it or leave-it basis.” There are, however, no such standard form terms, as noted earlier in these reasons, and there is no evidence that the terms relating to pre-payment privileges and discharge penalties, are “boiler-plate.” The Appellants argued that it is simply a matter of “contract interpretation as to how one reads the two provisions together” and that the Judge mischaracterized the contract.

81In Dumoulin v. Ontario, [2005] O.J. No. 3961, Court File No. 02-CV-223772, second reasons released March 29, 2006, Cullity J. emphasizes that there need only be a minimal factual basis for the common issues, and that it is not a question of whether a commonality of issues exists, but to whether the claims to which they relate have any factual support.

82The Respondents point out that while the Appellants listed 5 original common issues, they have now changed their minds and now, on appeal, include proposed common issues different from those which were before the Judge. The Appellants did not ask for leave to do so. For example, there is no reference in the original common issues to “standard form mortgage contracts”, which now appears in the new common issues proposed by the Appellants. The new issues also refer to allocations of a payment by a mortgagor, the wording of which is somewhat similar to issue (c) of the original issues. The new issues refer to “discharge statements” and “applicable limitation periods”, terms, which are used in the original issues provided to the Judge. It appears to us, that about 50% of the issues, which were before the Judge, have now been revised by the Appellants.

83On this Appeal we can only review what it was that the Judge had before her as we are sitting on Appeal, and there was no Motion before us to amend pleadings. Nor were we asked for leave to amend. Even if this had been done, such amendments are not sufficient to cure the overall defects as noted.

84The Respondents point out that an issue is only a common issue where its resolution is necessary to the resolution of each class member’s claim, and it must be a substantial ingredient of the claim of each proposed class member. See: Hollick and Cloud, supra.

85We agree with the Respondents that there is no one standard mortgage, nor is there one standard prepayment clause or prepayment discharge clause in each of the eight mortgages in question. In fact, there are material differences among all these mortgages, which require the case-by-case analysis, which the Judge refers to in her Judgment. We further agree with the Judge that these actions are really founded on implied terms and such claims are not amenable to certification, as each depends on its individual facts.

86Finally, the Respondents point out that all members of the class must benefit from the successful prosecution of the action, although not necessarily to the same extent. For example, if all the mortgages in question contained exactly the same prepayment privilege terms, their only difference would be in quantum received on a final determination of the issues. This, however, is not the case. The Judge, in paragraphs 53 to 56 of her Judgment, analyzes the problem of when a term is to be implied in a contract and the fact that an implied term “depends on the circumstances of each contract.” She also notes that the courts have held that is inappropriate to certify an action based on the existence of an implied term. See: Macleod v. Viacom Entertainment Canada Inc., [2003] O.J. No. 331 (S.C.J.).

87Section 1 of the CPA defines common issues as common but not necessarily identical issue of fact, or common but not necessarily identical issues of law that arise from common but not necessarily identical facts. Therefore, if the contract depends on an implied term, how can there be identical or nearly identical issues of fact? For example, if one cannot say that all London Life mortgages in question are nearly identical, then how can there be a common issue between it and the BMO or TD or Laurentian or CIBC or Canada Trustco or National Bank or BNS or Scotia Mortgage Corporation, all of which have different prepayment privileges and other mortgage terms, which do not coincide with each other?

88In Cloud, supra, the court points out that a case may still meet the common issues requirement, even if many aspects of liability and damages would have to be decided individually. The London Life mortgages are such that one would have to combine three documents from three different sources to see what terms just one mortgage has. In addition there are 12 different possible partial prepayment privilege terms and seven full payment terms, all of which add up to many permutations and combinations, which would have to individually be looked at. We therefore cannot see that the Judge erred in saying that there was no common issue among all these mortgagees, which could be raised by the various Appellants.

89With respect to the mortgages issued by National Bank, by far the largest number are those issued in Quebec. National Bank provided evidence to show that many of their mortgages were subject to waivers of interest on the part of the Bank, and many would therefore have no claim against the Bank. Even a manual review of all the mortgages would not reveal all instances where the individual branch waived certain interest payments. The Bank estimates that it would take one employee working an eight-hour day and 48 weeks per year, about 70 years to manually review the appropriate files.

90Ryan, the Appellant against the National Bank, took an affirmative step to make a payment in advance of his mortgage discharge, as it was his understanding that it was necessary for him to do this in order to trigger his prepayment privilege option. In Ryan’s case, the amount in issue is approximately $60, says the National Bank. Ryan’s case is different than what the other Appellants see as the issue. In 2002, when Ryan sold his 2 condominium units subject to the National Bank mortgages, he exercised his 10% prepayment privilege by advising the Bank in writing to debit his bank account for amounts equal to the annual 10% prepayment privilege, and it did so in relation to only one unit and erred in not deducting the other payment from the second unit. His claim, therefore, is not dependent upon an interpretation of the express language of the mortgage or even on an alleged implied term. It is founded on the fact he requested the Bank to make the prepayment and it erred in not making it.

91As was pointed out by the Court of Appeal in G. Ford Homes Ltd. v. Draft Masonry (York) Co. Ltd. (1983), 43 O.R. (2d) 401 (C.A.) and quoted by the Judge in paragraph 54 of her Judgment, “…the circumstances and background of the contract, together with its precise terms, should all be carefully regarded before a term is implied. As a result, it is clear that every case must be determined on its own particular facts.”

92We see no error of law committed by the Judge in finding that there are no common issues among the plaintiffs.

4. Section 5(1)(d): Preferable Procedure

93The question to be answered under subsection 5(1)(d) of the CPA is whether a class proceeding is the preferable procedure for the resolution of the common issues. The Appellants say the Judge erred in not finding that the class proceeding was the preferable procedure, in that she applied the wrong legal test. They say that the Judge focused too much on the individual issues and failed to consider the extent to which a determination of the common issues would advance the claims. They say the Judge also erred in finding that the cases would be “completely unmanageable”, as a class proceeding. They also say that the Judge did not engage in any “meaningful analysis of whether the underlying goals of the CPA would be advanced through a class proceeding.

94The Appellants, again relying on Cloud, supra, point to two concepts set out therein, namely:

(a) whether or not the class action would be a fair efficient and manageable method of advancing the claim, and

(b) whether the class action would be preferable to other reasonably available means of resolving the claims of class members.

Relying also on Pearson, supra, the Appellants also say that the preferability requirement can be met even where there are substantial individual issues.

95The Appellants see all the eight mortgage documents as having “two express provisions.” Neither the Judge nor the Respondents see a common express provision in any of the mortgages. Further, as has been noted in these reasons, there are no standard mortgage provisions, which apply to prepayment privileges either yearly or upon discharge. Therefore the preferability analysis does not fit the context of what was before the Judge.

96The Judge found that common issues were completely subsumed by the plethora of individual issues, which would necessitate individual trials for virtually every class member. The Appellants say the Judge committed a palpable and overriding error in concluding that these cases will be completely unmanageable. They rely on the LECG report of Daniel L. Regard II, whom they say is a well-qualified expert in forensic information technology. The lending institutions refused to provide their records and access to their IT personnel to Mr. Regard II. He nevertheless went ahead and did a report based on limited evidence, concluding that LECG would be able to “efficiently identify class members and calculate their economic loss.”

97It is not sufficient to simply say that the forensic accountants should be allowed to examine the lending institutions’ records and be able to question their personnel. A person’s bank records are privileged information that cannot be released by the lending institutions without the customer’s permission or by way of a court order. Mortgage applications containing a customer’s full financial information, would be in such customer’s mortgage file. Further, not all of each lending institution’s records are kept in the same place. Province-wide searches would have to be made at branches and/or storage facilities. Some is on microfiche or other in electronic storage. The task would be monumental, even if the privilege issue did not exist. The Judge was alive to all of these facts.

98Further, the Appellants say that the Judge had an obligation to read the LECG Report and comment on it. A Judge does not have to comment on every document that it presented to him or her. This was not a trial, where the expert gave evidence. The Report was one document in many filed and/or referred to in the proceeding.

99Lastly, the Appellants say that the Respondents have put forward no alternatives to look at. Instead, they say that the Respondents are really saying that individual trials are preferable to a class proceeding.

100The Respondents say that even if the common issue requirement was satisfied, a class action would neither be fair nor efficient and manageable. They say that the Judge’s decision in this regard should be entitled to deference, as it is within her discretion to reach the decision she did. We agree with the Respondents that the case is, “…characterized by individual issues that overwhelm any potential common issues.” See: Nelson v. Hoops L.P. and others, 2003 BCSC 277, [2003] BCJ No. 382 (S.C.)

101The Respondents point to the fact that the onus was on the Appellants to provide a factual foundation for this certification motion, and they have failed in that regard. The Respondents point to the fact that the Appellants cannot produce any real complaints from any mortgagor among the eight mortgagees about prepayment privileges.

102Further, even after Farah instituted his website to search for additional members of the alleged class, only a few hundred persons out of thousands and thousands of mortgagors across Canada have even shown an interest in the whole procedure. To an outsider, the proceeding has no more than a narrow profile. It is not sufficient for the Appellants to simply toss out a ball-park figure of $50,000,000 for the court to consider as being damages allegedly caused by the terms in question.

103The Appellants say that the Judge did not have before her the most recent decision of the Court of Appeal in Markson v. MBNA Canada Bank, 2007 ONCA 334, [2007] O.J. No. 1684 Docket C45191 (C.A.) where the Court certified a class action, where the Motions Judge had failed to certify it and the Divisional Court upheld the Motions Judge. In Markson, the Court found that class proceeding was the only viable procedure for remedying the alleged wrong and calling the alleged wrongdoer to account. This case, however, involved the issuing of MasterCard credit cards to customers. At issue was whether a claim based on allegations that a financial institution received interest on cash advances in violation of s.347(1) of the Criminal Code. The bank was said to be charging a flat fee plus compound interest on every cash advance from its credit cards.

104The Court of Appeal found the Motion Judge had erred in finding that a class proceeding was not appropriate where all members of the class were at risk of being charged a criminal interest rate, but where only a much smaller number of the class were actually victims of the Bank’s practices and thus entitled to damage and restitution.

105Markson, supra, can be distinguished from the case at bar, given that in this case there is no one standard prepayment privilege or one early discharge penalty common to all mortgages in issue. In Markson, all customers were issued the same credit cards. Therefore, the Court found that an aggregate assessment was appropriate in the Markson case. The Court also applied the criteria for preferable procedure, as set out in Hollick, supra, at paras. 27-31, and found that they applied in Markson. In the case at bar, the Judge did look at the preferable procedure criteria and found this proposed class did not meet the three advantages of judicial economy, access to justice and behaviour modification. She found that the class proceeding would be neither fair, efficient nor manageable. Lastly, the Judge found there was no common issue in relation to the claims as a whole.

106The case law is clear that one does not have to identify all members of the class before certification takes place. However, in this case, the Judge properly found that the class action would neither be fair nor efficient and manageable. The mortgagees would have to do all the work to hope to find the very class that the Appellants say is there. The cost in time and money would be prohibitive. There is really no way of knowing how much interest is in issue on all mortgages of all these lenders, without examining each mortgage. It is not sufficient for the Appellants to simply toss out a ball-park figure of $50,000,000 for the court to consider as being damages allegedly caused by the terms in question.

107In Gregg v. Freightliner Ltd. (c.o.b. Western Star Trucks), 2003 BCSC 241, [2003] B.C.J. No. 345 (B.C.), the Court, at para. 81, sets out a list of 20 factors to consider when determining the preferable procedure to be followed when considering certification. The court cites the list in Maczko J.’s annotation of the CPA. We have chosen part of those factors to examine, namely:

(a) What is the relevant cost of the various proceedings?

(b) Will the class action be useful to modify the behaviour of the defendant?

(c) Will meritorious individual claims be lost if no class action is taken?

(d) Is the cost of the class action justified by the possible recovery?

(e) Will there be a saving of judicial time?

(f) Is the class such that a class proceeding will be unmanageable or impracticable? Will it become a monster of cost and complexity?

(g) Does the determination at trial of any of the proposed common issues economically or efficiently decide and dispose of issues that would move the litigation forward for all class members? If the court concludes that the certification would increase the time, cost, and expense of proceedings, and frustrate the Acts’ goals of access to justice and judicial efficiency, then the class proceedings cannot be the preferable procedure.

(h) Is the litigation driven by the class counsel rather than by the class members?

108We have selected factors, which illustrate some of the factors before the Judge, when she came to the conclusion that the class proceeding was not the preferable path to follow. In our view, the Judge was correct in her assessment of the overall cost of the proceeding and the fact that it would become a monster of cost and complexity. There would be no real saving of judicial time. The individual amounts in question, if applicable, are insignificant.

109The Judge properly saw the litigation as being driven by Farah, as the class counsel, rather than any class members. The Judge therefore did not err making Farah’s role clear in her Judgment, nor in finding that the preferable procedure was not a class action.

5. Section 5(1)(e) Representative Plaintiff

110The Appellants say that the Judge erred in only examining Wakim as a representative plaintiff, without examining each proposed plaintiff individually. All proposed plaintiffs were, however, selected personally by Farah and were all represented by him personally, until he was removed from the class proceeding record as representing all plaintiffs. It is not sufficient to now say that this will be changed by having some plaintiffs now select new counsel or by bringing on motions to add new plaintiffs or substitute representative plaintiffs.

111The Judge found that Wakim could not act as representative plaintiff against BMO because he is deemed to have the knowledge of this solicitor, Farah, including the fact that he had a purported right to an automatic deduction and failed to request such a right. This is also the case of all other proposed plaintiffs who are deemed to have the knowledge of their solicitor, Farah.

112As has been pointed out earlier in these reasons, McLaine is also not a proper plaintiff against London Life, for different additional reasons, and the fatal flaws in that action cannot be corrected or amended.

113Further, Lumsden is not a proper plaintiff against CIBC, as Lumsden’s mortgage was in arrears and therefore he would not qualify for any of the privileges offered in his CIBC mortgage.

114In addition, Conway and Fung are not proper plaintiffs against BNS, as their mortgage is a National Trust mortgage, not a mortgage entered into by the BNS.

115The Appellants rely on the decision of the Alberta Court of Appeal in Ayrton v. PRL Financial (Alta.) Ltd., 2006 ABCA 88, [2006] A.J. No. 296 [2006] ABCA 88 as to who and who cannot fairly and adequately represent the class. In that case, Ayrton was one of a class of persons who borrowed money on a short-term basis, to be paid on the borrower’s next payday. While there was an issue as to whether the interest so charged was in breach of the provisions of the Criminal Code, the Judge did not have to examine that issue on the certification motion. This has no similarities to the present case, which was before the Judge, when she found the eight actions to be unmanageable as a class proceeding. She made no error in law in this regard and was correct in her conclusions and analysis of s.5(1) of the C.P.A.

Post-Appeal Decisions of the Courts

116While this Appeal was under Reserve by the Court, a new class action decision was released by our Court of Appeal, Paul Cassano and Benjamin Bordoff v. The Toronto-Dominion Bank, released November 14, 2007, 2007 ONCA 781, 2007 ONCA781, Docket C46542. It, like Markson, supra, dealt with a credit card issue. The issue involved only one bank. The Court found in paragraph 57, that it “is a case much like Markson, where the preferable solution was to certify the class.” The class was easily identifiable as those persons with TD VISA cards who had made foreign purchases resulting in foreign exchange calculations. There the Court saw the common issue of breach of contract in relation to those transactions. Where the plaintiffs alleged that there were three components to the fees charged by TC of its VISA cardholders for foreign currency transactions, where two components, they said, were undisclosed and unauthorized. In the case before us, there is no standard contract, which applies to even one bank/lending institution, let alone eight different ones.

117In Cassano, supra, the Court of Appeal found that if the certification Judge held that there had been a breach of contract in connection with the charging of such fees, liability would be established on behalf of all members of the class. See: para. 47 of the decision, where the court analyzed how the case fell within the provisions of subsection 24(1)(b) of the CPA. This analysis does not apply to the case at bar, given how partial prepayment or discharge clauses are worded in all these different mortgages. In some cases the Compensation amount was discretionarily waived or refunded by the mortgagee. Other mortgagors received reimbursement for certain amounts after the early discharge of the mortgage or “ported” their mortgage to a new residence purchased and therefore did not want an early discharge privilege.

118What has already been pointed out in these Reasons, is the insurmountable difficulty that each lending institution would be faced with if it had to try to calculate the so-called damages in each mortgage it holds. There is no real way of calculating damages, as was pointed out by the Judge in her Judgment, in the case at bar.

119We do not see that Cassano, supra, applies to the case at bar, nor do we see that a combination of subsections 23, 24 and 26 of the CPA can be used to overcome the difficulties, which make these actions uncertifiable, as found by the Judge.

120It was also brought to our attention, after the Appeal was under Reserve, that the Superior Court of Quebec had released the decision of Options Consommateurs and Richard Hurtubise v. National Bank of Canada on October 11, 2007, No. 500-06-000237-046, in a proceeding to have a class action certified. In the Quebec action brought on solely against the National Bank, the plaintiff framed its action as a breach of a statutory duty to act in good faith, whereas Ryan, in the case before us, is framed as a breach of contract action. The Quebec Court, however, found that the claim was framed as a breach of contract and described it as an interpretation of the National Bank mortgage. This case also examined the National Bank mortgage terms in light of the fact that the Bank produced 10 other contracts in use by it in Quebec, involving certain “partial reimbursements” in the mortgage contracts. It found that the contract creates obligations for both parties, including the obligation “of the co-contractor to inform himself.” Finding that the designated member (or mortgagor) did not seek out the information regarding Prepayment privileges when entering into the contract, nor ask for it later, the Court concluded that the bank did not have an obligation to inform nor to provide explanations to its debtor.

121The Court points to the fact that very early on the Supreme Court of Canada wanted the courts to readily set aside a recourse that would be clearly ill-founded, since there must be “…in the opinion of the authorization judge, a serious colour of right in order to all the recourse to go beyond the authorization stage.” The Court dismissed the Motion for authorization to institute a class action.

122While the Quebec decision is not binding on this Court, it does show that mortgages are complex documents, which place obligations on both parties contracting to enter into the mortgage to know what the terms are and what rights and privileges or obligations attach to the particular mortgage entered into. The Quebec Court’s reasoning can be applied to all National Bank mortgages issued across the country.

No workable litigation plan

123The Respondents point out that the Appellants advanced no workable litigation plan, including issues with respect to the identification of class members and the determination of individual issues. They say the plan should be “detailed, should contemplate problems, and should contain solutions.” Further, the Respondents say that the larger the scale of proceeding, the more important is the litigation plan. Given that these eight Respondents are among Canada’s major institutional mortgage lenders, the scale of any proceeding containing that many proposed plaintiffs is monumental, yet there is no workable litigation plan. The Judge therefore did not err in dismissing all motions for certification.

Conclusion

124For the reasons set out herein, the Appeal is dismissed. If the parties cannot otherwise agree on Costs, we will receive brief written submissions on Costs or oral submissions on Costs, as the parties agree and advise us in writing.

Greer J.

I agree ___________________________

Jennings J.

I agree ___________________________

Date Released: McCombs J.

COURT FILE NO.: 305/06, 306/06, 307/06,

308/06, 309/06, 310/06,

311/06, 312/06

DATE: 20071218

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

GREER, JENNINGS and McCOMBS JJ.

B E T W E E N:

IAN McLAINE et al.

• and –

LONDON LIFE INSURANCE COMPANY et al.