Divisional Court File No.: 100/8
Released: 20080507
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Re: John Risorto and Khalid Malik (Respondents) and State Farm Mutual Automobile Insurance Company (Applicant)
Proceeding under the Class Proceedings Act, 1992
Before: J. Macdonald J.
Counsel for: John Risorto and Khalid Mailik Mr. Kirk Baert and Mr. Jonathan Ptak
Counsel for: State Farm Mutual Automobile Insurance Company Mr. Mark A. Gelowitz
Heard at Toronto: April 22, 2008
AMENDED ENDORSEMENT
The Amended Endorsement contains minor changes to paragraphs 18 and 19.
E N D O R S E M E N T
1The applicant seeks leave to appeal to the Divisional Court from Cullity J.'s Order of February 28, 2008 which reopened the motion to certify this action as a class proceeding. The Motion's Court judge had dismissed this motion on February 22, 2007. The Order of February 28, 2008 permitted the respondents to file additional affidavits which, as the Motion's Court judge noted in his Endorsement, were intended to remedy the deficiencies which he had identified in dismissing the motion for certification.
2The applicant relies on both clauses of rule 62.02(4) of the Rules of Civil Procedure. This rule states:
62.02(4) Leave to appeal shall not be granted unless,
(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or
(b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matter of such importance that, in his or her opinion, leave to appeal should be granted.
BACKGROUND
3The respondents were involved in motor vehicle accidents and external parts of their vehicles could not be repaired. They claimed for this property damage against their insurer, the applicant. The applicant paid for, inter alia, the replacement of these external parts. However, these replacement parts were not made by the original equipment manufacturers (O.E.M.'s). These parts were made by other manufacturers and were, therefore, "non-O.E.M. parts". The respondents allege that the non-O.E.M. parts were not of like kind and quality to the parts which they replaced. The respondents therefore allege that the applicant breached their insurance contracts by not restoring the vehicles to their pre-loss condition.
4The respondents sought to certify this action as a class proceeding because they allege that all of the many non-O.E.M. parts used in the 1990's were not of like kind and quality to either the part replaced or to new O.E.M. parts. In seeking certification, the respondents relied on the evidence of Mr. Timothy Leier, an engineer, to establish that the claims of putative class members contain common issues. Mr. Leier gave the opinion that non-O.E.M. parts were categorically inferior to O.E.M. parts.
5Mr. Leier's proposed evidence had been in substantial dispute for several years before the certification motion was heard. In particular, the applicant disputed Mr. Leier's professional qualifications and his right to express this opinion. Despite this, the respondents elected to proceed on the basis of Mr. Leier's evidence.
6The respondents also did not file their own affidavits attesting to their suitability as representatives of the putative class. Instead, they relied on an affidavit from a solicitor who had not met them.
7In dismissing the certification motion, the Motion's Court judge held that Mr. Leier's evidence was inadmissible because he was not qualified to express the aforesaid opinion and that the evidence of the respondents' suitability was unsatisfactory.
8The order dismissing the certification motion was not taken out pending the determination of costs. When costs were argued, the respondents' counsel advised the Motion's Court judge that he intended to move for leave to re-argue the certification motion based on new expert evidence and affidavits from the respondents about their suitability.
9In the order in issue, the Motion's Court judge granted leave to the respondents to re-open the certification motion and to file the aforesaid fresh evidence.
THE MOTION COURT JUDGE'S REASONS FOR REOPENING THE MOTION
10I summarize the Motion's Court judge's reasons as follows:
(a) The evidence of the proposed new expert was intended to replace that of Mr. Leier. The evidence from the respondents was intended to supplement the Motion Record;
(b) The proposed new expert evidence on the categorical inferiority of non-O.E.M. parts would address an issue which the Motion's Court judge had held to be "fundamental to the commonality of a proposed common issue that was the linchpin of the case for certification";
(c) The Motion's Court judge rejected the applicant's submission that the test for reopening the motion was established in 67112 Ontario Ltd. v. Sagaz Industries Canada Inc. 2001 SCC 59, [2001] 2 S.C.R. 983, which held that, while the court has a discretion to permit fresh evidence to be advanced, the court should do so only if the new evidence would probably have changed the result at trial, and could not have been discovered previously by an exercise of reasonable diligence;
(d) The Motion's Court judge held that the test in Sagaz was not applicable to procedural motions to certify proceedings under the Class Proceedings Act (the CPA). Further, the discretion conferred by s. 5(4) of the CPA was not intended to be governed by the principles found in Sagaz and in other cases which involve tendering fresh evidence after a trial. Section 5(4) of the CPA states:
The court may adjourn the motion for certification to permit the parties to amend their materials or pleadings or to permit further evidence.
(e) Section 5(4) of the CPA is applicable in this case even though the motion was dismissed, initially. The Motion's Court judge rejected the submission that a dismissed motion cannot be adjourned within the meaning of s. 5(4). The court has a "general discretion…" to reopen proceedings before an order has been entered;
(f) Section 5(4) should be interpreted in a flexible manner because a certification motion is supposed to be a "flexible and somewhat fluid process…", based on the cases which permit amendment of the certification motion during the hearing, the adjournment of certification hearings to permit further evidence and the deferral of certification following the hearing to permit revision of the litigation plan required by s. 5 of the CPA, and other cases. Section 5(4) should be applied consistently with this flexible approach to the exercise of the jurisdiction contained in the CPA;
(g) Section 12 of the CPA also confers a wide ranging discretion, stating:
The court, on the motion of a party or class member, may make an 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.
Section 12 applies before as well as after certification of a proceeding. The "principles" in Sagaz also do not come into play for this reason.
(h) There are limits on the extent that the court will permit an ill-advised motion to be reconstructed.
(i) The Motion's Court judge admitted the fresh evidence and reopened the motion on the following basis: "…where…there is an arguable case that the new evidence might justify certification, I believe it should be admitted and the question of certification reopened";
(j) The respondent's counsel was aware that the applicant was likely to challenge Mr. Leier's qualifications to give expert opinion evidence. However, the respondents' decision to rely on his evidence does not prevent "an application of s. 5(4))" at the relevant state of the proceedings. If he had been asked, the Motion's Court judge would have adjourned the motion to enable the new expert evidence to be delivered; and
(k) The aforesaid conclusions on the scope of s. 5(4) apply even more strongly to the new affidavits of the proposed representative plaintiffs.
ANALYSIS
11It appears from the Motion's Court judge's reasons that, while he referred to the discretion found in s. 12 of the CPA and the court's general discretion to re-open, his decision to reopen the certification motion was based on s. 5(4) of the CPA, which deals with adjournments. Section 5(4) therefore was applied to a case in which the Motion's Court judge had delivered extensive reasons for dismissing the respondent's certification motion and in which there was a motion for leave to reopen the motion to permit fresh evidence, to remedy the deficiencies which had led the Motion's Court judge to dismiss it. In his reasons for the order which is now in issue, the Motion's Court judge stated explicitly that the question of certification should be "reopened".
12The substantial issue raised in this leave motion is the Motion's Court judge's determination of the criteria which governed his exercise of the discretion to reopen the certification motion, and to permit the filing of fresh evidence. The Motion's Court judge stated that both the "test" and the "principles" in Sagaz (supra) should not be applied herein. Instead, he applied the following criteria:
where there is an arguable case that new evidence might justify certification, it should be admitted and the question of certification reopened.
13The Motion's Court judge's articulation of these criteria conflicts with another portion of his reasons. The Motion's Court judge also stated that nothing in his endorsement "affects the right of the (applicant) on the resumption of the certification hearing to challenge the admissibility of – or the weight to be attributed to – the additional affidavits to be delivered on behalf of the (respondents)". (parentheses added)
14Looking at the whole of the Motion Court Judge's reasons, it is reasonable to conclude that he mis-described the basis on which he exercised his discretion to reopen because he intended that admissibility would be argued and determined separately. Accepting this, the criteria for reopening were as follows:
where there is an arguable case that new evidence might justify certification, the question of certification should be reopened.
15The Motion's Court judge's reasons for rejecting the applicability of both the "test" and the "principles" in Sagaz (supra) were as follows:
(a) The test in Sagaz is not applicable to procedural motions such as this certification motion;
(b) Section 5(4) of the CPA gives the court the power to adjourn a certification motion to permit the parties to deliver further evidence. In principle, there is no difference between a case where the court has denied certification unless and until further evidence is filed, and the present case where certification was denied and a motion to permit additional evidence was made before an order was entered. The ability to adduce further evidence in aid of certification should not depend upon whether the question was raised at the hearing, or later while the court remains seised of the motion;
(c) The principles in Sagaz (supra) arose from an attempt by a party to tender fresh evidence after a trial, and before judgment was entered;
(d) A certification motion, on the other hand, is intended to be a "flexible and somewhat fluid process", to further the objectives of CPA; and
(e) Section 5(4) of the CPA applies to the present facts even though the motion had been dismissed, because of the "general discretion of the court to reopen proceedings before an order has been entered".
16During the hearing, Mr. Baert submitted again that Sagaz (supra) involved a motion to reopen a trial and that the ratio therein is applicable only to determinations of the merits, not to procedural matters.
17I see no substantive distinction between the principles expressed in Sagaz (supra) and the test applied therein, which was based on those principles. The principles expressed in Sagaz include 1 whether fairness dictates that a trial should be reopened "at the expense of finality", the responsibility of a trial judge to "discourage unwarranted attempts to bring forward new evidence available at the trial to disturb the basis of a judgment delivered, or to permit a litigant after discovering the effect of a judgment to re-establish a broken-down case with the aid of further proof," and that the trial judge "must" exercise his or her discretion to reopen the trial "sparingly and with the greatest care" so that "fraud and abuse of the court's processes" do not result 2.
18While the Sagaz case was concerned with reopening a trial to permit fresh evidence, the principles of finality, avoiding collateral attacks on a judgment and preventing abuses of process are applicable, in my opinion, to judicial decisions in general, and not just to decisions on the merits of the substantive dispute in issue. My reasons for this conclusion are as follows.
19In Danyluk v. Ainsworth Technologies Inc. et. al., 2001 SCC 44, [2001] 2 S.C.R. 460, the plaintiff was said to be estopped from pursuing her claim to $300,000 of commission earnings against her former employer because of a determination under the Employment Standards Act, R.S.O. 1990 c. E14 (the ESA) that she was entitled to only two weeks of pay in lieu of notice. While the Supreme Court held at para. 57 that the ESA decision was "final for the purposes of the Act and therefore capable in the normal course of events of giving rise to an estoppel", the court exercised its discretion to allow the plaintiff to proceed with her lawsuit. In one sense, the ESA determination means that Danyluk involved a determination on the merits. However, in a more substantial sense, the ESA decision was not a final determination of the merits of the substantive issues in dispute because the court declined to enforce that decision and permitted the plaintiff to proceed with her lawsuit.
20Binnie J., for the court, held at paras. 18 and 19:
The law rightly seeks a finality to litigation. To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so. A litigant, to use the vernacular, is only entitled to one bite at the cherry. The appellant chose the ESA as her forum. She lost. An issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner. A person should only be vexed once in the same cause. Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided.
Finality is thus a compelling consideration and judicial decisions should generally be conclusive of the issues decided unless and until reversed on appeal …
21In para. 20 of Danyluk (supra) Binnie J. noted that one branch of estoppel addresses the concept of final determination of disputes, which I liken to Mr. Baert's concept of a merits based determination. However, another and, in my view, discrete aspect of "the judicial policy favouring finality", is the rule against collateral attack, as Binnie J. noted. The rule is that a judicial order pronounced by a court of competent jurisdiction should not be brought into question in subsequent proceedings, except those proceedings provided by law for the express purpose of attacking the order.
22The rule against collateral attack is of general application, in my opinion, and is based on the principles which are mentioned in Sagaz (supra)3, but which were not applied by the Motion's Court judge, of discouraging unwarranted attempts to bring forward evidence which was available at the first hearing, and also of discouraging litigants from learning the effect of a judgment and attempting to re-establish their lost position with the aid of further proof.
23The decision in Marche D'Alimentation Denis Theriault Ltee. et al v. Giant Tiger Stores Ltd. (2007), 2007 ONCA 695, 87 O.R. 660 (C.A.) is also relevant. An action was dismissed by the Registrar pursuant to rule 48.14 of the Rules of Civil Procedure because of delay in setting it down for trial. In considering the proper exercise of the discretion to relieve against the dismissal, Sharpe J.A. for the court, at paras. 37 and 38, spoke of the importance of finality. Sharpe J.A. held that "(f)inality, like the avoidance of unnecessary delay, is a central principle in the administration of justice", citing the principles in Danyluk (supra) at paras. 18 and 19. This was so even though this case clearly did not involve either a merits based determination or a trial. As Sharpe J.A. explained in para. 38,
(e)ven when the order dismissing the action was made for delay or default and not on the merits, and even when the party relying on the order could still defend itself despite the delay, it seems to me that at some point the interest in finality must trump the opposite party's plea for an indulgence.
The Marche D'Alimentation decision stands for the proposition that the principle of finality attaches to all decisions, not just to trial decisions, or decisions on the merits.
CONCLUSION
24There is no argument of substance against the proposition that the Motion's Court judge was correct in concluding that relevant statutory provisions should be taken into account in exercising the undoubted discretion to reopen the dismissed certification motion.
25There is a strong argument that this was not a case of an adjournment, it was a determination of the merits of the certification motion, and a subsequent motion to reopen that determination. Consequently, there is a strong argument that s. 5(4) of the CPA was not intended by the legislature to apply to the circumstances in issue. At the same time, there is a strong argument that s. 12 of the CPA, which the Motion's Court judge mentioned but upon which he appears not to have based his discretion, is relevant to the exercise of the discretion in issue.
26There is a strong argument that the Motion's Court judge erred in determining the criteria for the exercise of the discretion in issue. Reopening the dismissed certification motion because there is "an arguable case that the new evidence might justify certification" does not take into account that finality is a compelling consideration in judicial proceedings so as to avoid duplicative litigation, potential inconsistent results, undue costs and inconclusive proceedings. This decision also does not take into account that litigants must put their best foot forward to establish the truth of their allegations "when first called upon to do so". It also does not take into account whether, at the expense of finality, fairness dictates that the certification motion be reopened. As well, it does not take into account the respondent's choice to rely upon the rejected evidence despite knowing of substantial objections to its admissibility. It also does not take into account that the Motion's Court judge should have exercised his discretion to reopen "sparingly and with the greatest care" so as to avoid abuse of the court's processes. Lastly, it does not apply s.12 of the CPA to these important considerations, in determining the criteria for reopening the motion.
27Turning to the test for granting leave in rule 62.02(4)(a), having taken into consideration the significance of s. 12 of the CPA in the exercise of the discretion in issue, I am nonetheless of the view that each of the decisions in Sagaz, Danyluk and Marche D'Alimentation (supra) is a conflicting decision on the criteria which should have been taken into account in the exercise of the discretion in issue. That exercise of discretion is the central issue in the proposed appeal.
28It is desirable that leave to appeal be granted because of the importance of class proceedings, the significance of certification motions in such proceedings and the number of fundamentally important considerations which were left aside in the criteria which the Motion's Court judge applied, in exercising the discretion in issue. The criteria applied seem likely to lead to failed certification motions being argued repetitively, and to successful certification motions being challenged on the basis of fresh evidence which arguably might lead to a different result.
29Turning to the grounds mentioned in rule 62.02(4)(b), there is good reason to doubt the correctness of the order in question because there is good reason to doubt the appropriateness of the criteria upon which the Motion's Court judge based his discretionary decision, for the reasons given. While there is good reason to think that the Motion's Court judge was mistaken in his reliance on s.5(4) of the CPA, I do not regard this as giving rise to the necessary importance because of what s.12 says. However, the importance of class proceedings, the significance of certification motions in such proceedings and the importance to litigants and a busy court of avoiding duplicative litigation, potentially inconsistent results, undue costs and inconclusive proceedings means that the Divisional Court should determine whether the criteria for the reopening of this dismissed certification motion were the appropriate criteria.
ORDER
30I grant leave to the applicant to appeal to the Divisional Court from Cullity J.'s order of February 28, 2008 which reopened the dismissed motion to certify this action as a class proceeding and permitted the respondents to deliver fresh evidence therein.
31The costs of the leave motion are reserved to the Divisional Court panel deciding the appeal.
original signed by “Mr. Justice John Macdonald”
John Macdonald J.
Released: May 7, 2008