Brown et al. v. The Attorney General of Canada

[Indexed as: Brown v. Canada (Attorney General)]

Ontario Reports

Court of Appeal for Ontario,

Rosenberg, Gillese and Tulloch JJ.A.

January 17, 2013

114 O.R. (3d) 355 | 2013 ONCA 18

Case Summary

Civil procedure — Class proceedings — Certification — Motion judge finding that statement of claim did not disclose cause of action — Judge erring in conditionally certifying claim framed in negligence and breach of fiduciary duty and permitting plaintiffs to plead fresh as amended statement of claim in accordance with his framing of new questions in respect of negligence and fiduciary duty — Conditional certification not open to motion judge once he concluded that statement [page356] of claim did not disclose cause of action — Motion judge having predetermined that viable cause of action in negligence and breach of fiduciary duty existed as framed by him — Divisional Court correctly allowing defendant's appeal and ordering that certification motion be heard by another judge.

Civil procedure — Class proceedings — Costs — Plaintiffs bringing proposed class action on behalf of aboriginals who allegedly suffered loss of aboriginal identity as result of having been placed in foster care or adoptive homes pursuant to child welfare legislation — Motion judge conditionally certifying claims framed in negligence and breach of fiduciary duty — Divisional Court awarding defendant its costs of successful leave application and appeal without giving reasons for its costs decision — Plaintiffs' appeal from costs order allowed — Divisional Court erring in failing to consider s. 31(1) of Class Proceedings Act — Proposed class proceeding being test case and raising novel points of law and matters of public interest — Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 31(1).

The plaintiffs brought a proposed class proceeding seeking compensation on behalf of aboriginal people who allegedly suffered the loss of their aboriginal identity as a result of having been placed in foster care or in adoptive homes between 1965, when Canada and Ontario signed an agreement under which Ontario assumed responsibility for providing child welfare services for certain aboriginal children with funds provided by the federal Crown, and 1984. The action was not brought against Ontario, but only against Canada, which the plaintiffs alleged wrongfully delegated its exclusive responsibility as guardian, trustee, protector and fiduciary of aboriginal persons by entering into the 1965 agreement. On a certification motion, the case management judge found that the statement of claim did not disclose a cause of action. However, he conditionally certified claims framed in negligence and breach of fiduciary duty and gave the plaintiffs an opportunity to plead a fresh as amended statement of claim in accordance with his framing of a new question in respect of negligence and fiduciary duty. The Divisional Court allowed the defendant's appeal and awarded the defendant its costs of the leave motion and the appeal in the amount of $25,000. The plaintiffs appealed.

Held, the appeal should be allowed in part.

The case management judge erred in conditionally certifying the class proceeding in the absence of a statement of claim that disclosed a cause of action. It is not possible to know whether an action can be appropriately prosecuted as a class action without identifying the fundamental issue of whether or not there is a cause of action. Certifying a class action in the absence of a statement of claim that discloses viable causes of action is not case management. Once the case management judge concluded that the statement of claim did not disclose a cause of action, it was not open to him to conditionally certify the class proceeding. He could have dismissed the motion for certification, adjourned the motion for certification under s. 5(4) of the Class Proceedings Act, 1992 (the "Act") to give the plaintiffs the opportunity to amend their statement of claim or granted the defendant's Rule 21 (of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194) motion and dismissed the action.

The case management judge had apparently predetermined that there were viable causes of action in negligence and breach of fiduciary duty. He effectively deprived the defendant of an opportunity to make submissions on whether the causes of action in breach of fiduciary duty and negligence, as framed by [page357] the case management judge, were viable. It was not self-evident that they were. The Divisional Court did not err in ordering that the certification motion be heard by another judge. Section 34(2) of the Act, which provides that the senior regional judge shall assign another judge where the case management judge "becomes unavailable for any reason", does not simply contemplate unavailability due to illness or death. The phrase "for any reason" is wide enough to include circumstances in which the principles of natural justice preclude the judge continuing with the case.

The Divisional Court did not give reasons for its costs order. It was an error in principle not to consider the factors set out in s. 31(1) of the Act. The proposed class action was in the nature of a test case and raised novel points of law. The treatment of aboriginal children in Ontario's child welfare system and Canada's responsibility for what occurred were matters of public interest. The significance of those factors and the importance of access to justice required some moderation of the normal rule that costs follow the event.

Cases referred to

Aksidan v. Henley, [2008] B.C.J. No. 178, 2008 BCCA 43, 291 D.L.R. (4th) 378, 77 B.C.L.R. (4th) 248, 251 B.C.A.C. 161, [2008] 7 W.W.R. 521; B. (K.L.) v. British Columbia, [2003] 2 S.C.R. 403, [2003] S.C.J. No. 51, 2003 SCC 51, 230 D.L.R. (4th) 513, 309 N.R. 306, [2003] 11 W.W.R. 203, J.E. 2003-1874, 187 B.C.A.C. 42, 18 B.C.L.R. (4th) 1, [2003] R.R.A. 1065, 19 C.C.L.T. (3d) 66, [2004] CLLC Â210-014, 38 C.P.C. (5th) 199, 44 R.F.L. (5th) 245, 125 A.C.W.S. (3d) 432; Blackwater v. Plint, [2005] 3 S.C.R. 3, [2005] S.C.J. No. 59, 2005 SCC 58, 258 D.L.R. (4th) 275, 339 N.R. 355, [2006] 3 W.W.R. 401, J.E. 2005-1925, 216 B.C.A.C. 24, 48 B.C.L.R. (4th) 1, [2005] R.R.A. 1021, 46 C.C.E.L. (3d) 165, 35 C.C.L.T. (3d) 161, 142 A.C.W.S. (3d) 1080, EYB 2005-96641; Bonaparte v. Canada (Attorney General) (2003), 2003 CanLII 40016 (ON CA), 64 O.R. (3d) 1, [2003] O.J. No. 1046, 169 O.A.C. 376, [2003] 2 C.N.L.R. 43, 30 C.P.C. (5th) 59, 121 A.C.W.S. (3d) 442 (C.A.), consd

Other cases referred to

Brown v. Canada (Attorney General) (2011), 114 O.R. (3d) 352, [2011] O.J. No. 6070, 2011 ONSC 7712 (Div. Ct.), varg (2010), 102 O.R. (3d) 493, [2010] O.J. No. 2253, 2010 ONSC 3095, [2010] 3 C.N.L.R. 41, 94 C.P.C. (6th) 276 (S.C.J.) [Leave to appeal granted [2011] O.J. No. 940, 2011 ONSC 1193 (S.C.J.)]; Caputo v. Imperial Tobacco Ltd. (2005), 2005 CanLII 63806 (ON SC), 74 O.R. (3d) 728, [2005] O.J. No. 842, 250 D.L.R. (4th) 756, [2005] O.T.C. 160, 9 C.P.C. (6th) 175, 137 A.C.W.S. (3d) 686 (S.C.J.); Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401, [2004] O.J. No. 4924, 247 D.L.R. (4th) 667, 192 O.A.C. 239, 27 C.C.L.T. (3d) 50, [2005] 1 C.N.L.R. 8, 2 C.P.C. (6th) 199, 135 A.C.W.S. (3d) 567 (C.A.); Hollick v. Toronto (City), [2001] 3 S.C.R. 158, [2001] S.C.J. No. 67, 2001 SCC 68, 205 D.L.R. (4th) 19, 277 N.R. 51, J.E. 2001-1971, 153 O.A.C. 279, 42 C.E.L.R. (N.S.) 26, 13 C.P.C. (5th) 1, 24 M.P.L.R. (3d) 9, 108 A.C.W.S. (3d) 774; Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, 74 D.L.R. (4th) 321, 117 N.R. 321, [1990] 6 W.W.R. 385, J.E. 90-1436, 49 B.C.L.R. (2d) 273, 4 C.C.L.T. (2d) 1, 43 C.P.C. (2d) 105; Law Society of Upper Canada v. French, 1974 CanLII 24 (SCC), [1975] 2 S.C.R. 767, [1974] S.C.J. No. 125, 49 D.L.R. (3d) 1, 3 N.R. 410; McCracken v. Canadian National Railway Co. (2012), 111 O.R. (3d) 745, [2012] O.J. No. 2884, 2012 ONCA 445, 293 O.A.C. 274, 100 C.C.E.L. (3d) 27, 21 C.P.C. (7th) 57, [2012] CLLC Â210-041; Pearson v. Inco Ltd. (2006), 2006 CanLII 7666 (ON CA), 79 O.R. (3d) 427, [2006] O.J. No. 991, 267 D.L.R. (4th) 111, 208 O.A.C. 284, 20 C.E.L.R. (3d) 292, 25 C.P.C. (6th) 1, 146 A.C.W.S. (3d) 600 (C.A.); Ruffolo v. Sun Life Assurance Co. of Canada (2009), 95 O.R. (3d) 709, [2009] O.J. No. 1322, 2009 ONCA 274, 68 C.P.C. (6th) 322, 74 C.C.P.B. 191, 247 O.A.C. 209, 73 C.C.L.I. (4th) 185, 177 A.C.W.S. (3d) 538 [page358]

Statutes referred to

Child and Family Services Act, 1984, S.O. 1984, c. 55, s. 53(5)

Child Welfare Act, 1965, S.O. 1965, c. 14

Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 5(1), (a), (b), (c), (d), (e), (4), 10, 12, 31(1), 34, (1), (2)

Indian Act, R.S.C. 1985, c. I-5 [as am.]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21, 21.01(1), (b)

Authorities referred to

Canada-Ontario Welfare Services Agreement

APPEAL from the order of the Divisional Court (Cunningham A.C.J.S.C., Pardu and Mulligan JJ.) (2011), 114 O.R. (3d) 352, [2011] O.J. No. 6070, 2011 ONSC 7712 (Div. Ct.) allowing the appeal from the order of Perell J. (2010), 2010 ONSC 3095, 102 O.R. (3d) 493, [2010] O.J. No. 2253 (S.C.J.).

Jeffery Wilson and Morris Cooper, for appellants.

Owen D. Young, Paul J. Evraire, Q.C., and Michael W. Bader, Q.C., for respondent.

The judgment of the court was delivered by

[1] ROSENBERG J.A.: — The appellants, plaintiffs in a proposed class proceeding, appeal from the order of the Divisional Court that set aside the conditional certification of the class action by Perell J. and ordered that the certification motion be brought before another judge. The appellants also appeal from the order of the Divisional Court awarding costs of both the motion for leave and the appeal before the Divisional Court in the amount of $25,000.

[2] For the following reasons, I would allow the appeal only to the extent of quashing the costs order made by the Divisional Court.

Outline of the Proposed Class Proceeding

[3] The proposed class proceeding arises out of a practice in Ontario between 1965 and 1984 in which welfare authorities removed Aboriginal children from their families and communities and, in accordance with court orders, placed them with non-Aboriginal families. In 1965, Canada and Ontario signed the Canada-Ontario Welfare Services Agreement. Under the agreement, Ontario assumed responsibility for providing child welfare services for certain Aboriginal children with funds provided by the federal Crown. The welfare services to be provided included [page359] "the protection and care of neglected children, the protection of children born out of wedlock and adoption services provided under the Child Welfare Act, R.S.O. 1960, c. 53". At the time, the Child Welfare Act, 1965, S.O. 1965, c. 14 did not require the Crown or the courts to take into account the Aboriginal status of the children in making decisions about taking children into care and placing them for adoption. That changed in 1984 as a result of the Child and Family Services Act, 1984, S.O. 1984, c. 55, which expressly made aboriginality a factor in provincial child welfare practice and required the court to place an Aboriginal child with a member of the child's extended family, a member of the child's band or native community, or another Indian or native family, unless there was a substantial reason for placing the child elsewhere (s. 53(5)).

[4] The plaintiffs allege that during this 19-year period, some 16,000 Aboriginal children were removed from their families and communities and thus lost contact with their Aboriginal cultural identity. The plaintiffs claim that they lost their language, culture, customs and heritage, as well as any benefits they might have as status Indians under the Indian Act, R.S.C. 1985, c. I-5.

[5] In the proposed class proceeding, the appellants did not bring action against Ontario, which administered the legislation, but Canada, which they allege wrongfully delegated its exclusive responsibility as guardian, trustee, protector and fiduciary of Aboriginal persons by entering into the 1965 agreement. As originally framed, the action alleged a deliberate program of "identity genocide".

[6] The central claim against the respondent is that it committed various actionable wrongs because it entered into the 1965 agreement with the province. This claim is fundamental to all of the pleaded causes of action, the identification of the class, the identification of the common issues, whether the appellants qualify as representative plaintiffs and whether a class proceeding would be the preferable procedure. In other words, the claim is fundamental to all of the requirements for certification in s. 5(1) of the Class Proceedings Act, 1992, S.O. 1992, c. 6.

[7] This appeal arises out of the reasons of Perell J., the case management judge, following a motion to certify the class proceeding and a motion brought by the respondent on the final day of argument of the certification motion to have the action dismissed under rule 21.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 as disclosing no reasonable cause of action: Brown v. Canada (Attorney General) (2010), 2010 ONSC 3095, 102 O.R. (3d) 493, [2010] O.J. No. 2253 (S.C.J.). [page360]

The Reasons of the Case Management Judge

Disclosure of causes of action -- Section 5(1)(a) of the Class Proceedings Act, 1992

[8] The appellants' original statement of claim, even with the particulars delivered by the appellants, was not drafted in a way that allowed for the easy identification of causes of action. In considering whether the statement of claim disclosed a cause of action as required for certification under s. 5(1) (a) of the Class Proceedings Act, 1992 and the Rule 21 motion, the case management judge identified five proposed causes of action. In doing so, he sometimes resorted to phrases such as "it is not entirely clear from the statement of claim", given the vagueness of the statement of claim. In the result, the case management judge found that none of the pleaded causes of action met the minimal "plain and obvious" test for disclosing a cause of action from Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93. Each of the proposed causes of action, as pleaded, had a problem or fatal flaw that precluded certification. The case management judge's reasons for that finding can be summarized as follows.

[9] The case management judge identified five causes of action pleaded by the appellants. First, he found that the appellants pleaded an independent cause of action based on the honour of the Crown. The case management judge held, and the appellants apparently conceded during argument, that there is no such independent cause of action.

[10] The second cause of action identified by the case management judge's interpretation of the statement of claim was the allegation that the federal Crown had committed the actionable wrong of "identity genocide". The case management judge held that identity genocide was not a viable cause of action for two reasons. First, the international instruments that may have been the basis for such a cause of action have not been implemented as part of Ontario's civil law. Second, the act of the federal Crown in signing the 1965 agreement, which, as the case management judge noted, at para. 102, "is alleged to be the predicate wrongdoing", was not an act committed by the federal Crown with the intent to destroy an identifiable group of persons or transfer children of a group to another group. As he said, at para. 103, the only intent that could be identified of the federal Crown in signing the agreement was the intent "to exercise the federal spending power to provide financial support to the province providing a wide range of welfare services". Without this intent, there could not be a cause of action of identity genocide. [page361]

[11] The third cause of action identified by the case management judge was breach of Aboriginal rights. It seemed to the case management judge that the appellants were claiming the respondent violated their Aboriginal right to an identity as an Aboriginal person. The case management judge found that this cause of action was at best "a disguised version of the plea of identity genocide", which he had found was not a viable cause of action (at para. 119).

[12] The fourth and fifth causes of action were framed in breach of fiduciary duty and negligence. These causes of action deserve some particular consideration because it is out of them that the case management judge seems to have found the kernels of viable causes of action to support certification. As with the other causes of action, these two were based on Canada entering into the 1965 agreement with Ontario. The case management judge concluded that though these causes of action were not viable, it was not obvious that they would not be viable if reframed as a different actionable wrong.

[13] The case management judge held that no viable cause of action could be founded in the act of entering into the agreement. Assuming a fiduciary relationship between Aboriginal people and Canada, the case management judge found that there could be no fiduciary wrongdoing by the exercise of the federal spending power. He noted, at para. 123, that a cause of action based on fiduciary wrongdoing entails an element of disloyalty and moral turpitude. The case management judge referred to B. (K.L.) v. British Columbia, [2003] 2 S.C.R. 403, [2003] S.C.J. No. 51, 2003 SCC 51, in which the Supreme Court had held that the province was not liable for breach of fiduciary duty to children abused by foster parents because, though negligent, the province was not disloyal and had not put its own interests ahead of the children. In this case, the case management judge did "not see how the federal Crown entering into The Canada-Ontario Welfare Services Agreement can be characterized as a betrayal of trust or disloyalty" (at para. 130).

[14] The case management judge then considered Blackwater v. Plint, [2005] 3 S.C.R. 3, [2005] S.C.J. No. 59, 2005 SCC 58, in which the Supreme Court had similarly dismissed a breach of fiduciary duty claim against the federal Crown based on abuse by a teacher of students at a residential school. The court upheld the trial judge's ruling that breach of fiduciary duty was not made out because the Crown did not act dishonestly or disloyally. The court declined to address whether a breach of fiduciary duty could be sustained on the basis of a breach of fiduciary duty to Aboriginal children collectively, which was a basis for [page362] liability raised for the first time by intervenors at the Supreme Court of Canada. The chief justice described the argument in these terms, at para. 61 of the Blackwater decision:

This is the argument that the system of residential schools robbed Indian children of their communities, culture and support and placed them in environments of abuse. This, it is argued, amounted to dishonest and disloyal conduct that violated the government's fiduciary duty to Canada's Aboriginal peoples.

[15] She went on to hold, at para. 62, that it would be unfair to rely on material filed by the intervenors, none of which was filed in the lower courts, and "inappropriate to deal with the larger argument". Despite the fact that the Supreme Court in Blackwater had not dealt with the larger argument and had found the federal Crown to be a partner in the operation of the residential school operated by the United Church of Canada, the case management judge in the present case concluded as follows, at para. 134:

Nevertheless, assuming that the federal Crown did have a fiduciary relationship with the aboriginal children and assuming that the child welfare system in Ontario robbed these children of their communities, culture, support, and identity, in my opinion, it is not plain and obvious that there was no breach of fiduciary duty by the federal government when it allegedly did nothing to stop the Ontario system from operating in this way or when it allegedly did nothing to ameliorate any harmful effects of the child welfare scheme or when it did nothing to assure that Indian children were made aware of their status as Indians when they were placed in non-aboriginal homes.

(Emphasis added)

[16] The case management judge went on to distinguish a decision of the British Columbia Court of Appeal, Aksidan v. Henley, [2008] B.C.J. No. 178, 2008 BCCA 43, 291 D.L.R. (4th) 378, in which the court had found that the federal Crown was not liable for breach of fiduciary duty as a result of an agreement with British Columbia by which the province had taken responsibility for educating Aboriginal children. The plaintiff children had been sexually abused by a teacher. The case management judge distinguished Aksidan because there was "no suggestion that the delegation was unreasonable, [and] there was no basis for alleging that the delegation was dishonest or disloyal" (at para. 137). Significantly, the case management judge also noted that "there were no policy reasons why Canada should be implicated where control of all aspects of education had been reasonably delegated to provincial authorities, and there was no alleged duty of care of preserving cultural identity" (at para. 137). Despite this, the case management judge considered that "Aksidan is weaker in rebutting the argument that [page363] after entering into the agreement, the federal Crown breached a fiduciary duty or was negligent by not taking steps to prevent aboriginal children from losing their aboriginal identity as a byproduct of Ontario's child welfare policies that were being supported by federal funds" (at para. 138).

[17] The case management judge also referred to this court's decisions in Bonaparte v. Canada (Attorney General) (2003), 2003 CanLII 40016 (ON CA), 64 O.R. (3d) 1, [2003] O.J. No. 1046 (C.A.) and Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401, [2004] O.J. No. 4924 (C.A.). He agreed that these cases could not be used to support breach of fiduciary duty based upon entering into the 1965 agreement, which was the only basis for liability pleaded. But, it was not plain and obvious that these cases could not "be used to support the argument that the Federal Crown breached a fiduciary duty or was negligent by not taking steps to prevent aboriginal children from losing their aboriginal identity as a byproduct of Ontario's actions that were being supported by federal funds" (at para. 143). As he said, at para. 147, it was not plain and obvious "that there is no viable (and by viable all I am saying is that both the claim and the defence require a trial for a determination of their merits) action for breach of fiduciary duty".

[18] The critical passage in the case management judge's reasons is as follows, at paras. 148-49:

Thus, I conclude that in the case at bar, while it is, in my opinion, plain and obvious that the federal Crown's entering into The Canada-Ontario Welfare Services Agreement cannot be the basis for an action for breach of fiduciary duty, it is, however, not plain and obvious what is the answer to the question that I posed at the beginning of these reasons for decision, which is:

In Ontario, between December 1, 1965 and December 31, 1984, when an aboriginal child was placed in the care of non-aboriginal foster or adoptive parents who did not raise the child in accordance with the child's aboriginal customs, traditions, and practices, did the federal Crown have and breach a fiduciary or common law duty of care to take reasonable steps to prevent the aboriginal child from losing his or her aboriginal identity?

Technically speaking, I, therefore, conclude that the current pleading fails to plead a cause of action for breach of fiduciary duty and should be struck out but with leave to amend to properly plead the material facts of a claim of breach of fiduciary duty.

[19] The case management judge reached a similar conclusion with respect to the fifth cause of action of negligence. It was plain and obvious that, as pleaded, there was no cause of action in negligence based on entering into the 1965 agreement. However, he found that it was not plain and obvious that there could be no cause of action in negligence: "The negligence claim [page364] would be based on what Canada knew or ought to have known and what it did or did not do after Ontario welfare authorities began placing aboriginal children in non-aboriginal homes" (at para. 152).

[20] The case management judge concluded his discussion of s. 5(1)(a) of the Class Proceedings Act, 1992 (the "Act") with the following, at para. 154:

I also conclude that subject to amending their statement of claim to properly plead the action in negligence and the action for breach of fiduciary duty, Ms. Brown and Mr. Commanda have satisfied the first criterion for certification of their action as a class action. The fresh as amended claim should not include the claims for breach of the honour of the Crown, identity genocide of children or aboriginal rights.

Other elements of s. 5(1) of the Class Proceedings Act, 1992

[21] The case management judge went on to consider the other criteria for certification under s. 5(1) of the Act. As to the definition of the class (s. 5(1)(b)), he noted the many problems with the class as it was identified by the appellants. However, those problems, which rested on the causes of action that could not succeed, disappeared when the claim was reframed. He then defined the appropriate class, at para. 162, as follows:

Aboriginal persons in Ontario between December 1, 1965 and December 31, 1984 who were placed in the care of non-aboriginal foster or adoptive parents who did not raise the children in accordance with the aboriginal person's customs, traditions, and practices.

[22] It should be noted that this class is broader, perhaps much broader, than the class defined by the appellants [at para. 157]:

Class or class members are aboriginal persons who, as children in Ontario, were exposed to the consequences of the Defendant's breach of fiduciary obligation, duty of care and protection of aboriginal rights and identity genocide between December 1, 1965 to December 31, 1984, excluding those who were members of the class in action 00-CV-192059CP (S.C.J.) (the Residential Schools Abuse Class Action).

[23] The case management judge then turned to common issues (s. 5(1)(c) of the Act). Again, he noted the problems identified by the respondent with respect to those common objects. However, those problems were tied to the statement of claim as pleaded by the appellants. The case management judge held that a suitable common issue was found in the cause of action as he had framed it [at para. 12]:

In Ontario, between December 1, 1965 and December 31, 1984, when an aboriginal child was placed in the care of non-aboriginal foster or adoptive parents who did not raise the child in accordance with the child's aboriginal customs, traditions, and practices, did the federal Crown have and breach a [page365] fiduciary or common law duty of care to take reasonable steps to prevent the aboriginal child from losing his or her aboriginal identity?

[24] The case management judge found that this definition of common issues was similar to the first and second questions that had been originally proposed by the appellants:

(1) By its conduct in respect of the class during the period so identified above, did the defendant breach any fiduciary duty?

(2) By its conduct in respect of the class during the period so identified above, did the defendant breach any duty of care?

[25] The case management judge then considered the question of preferable procedure (s. 5(1)(d) of the Act). He noted that the respondent argued that a class proceeding would not be an appropriate way to advance the appellants' claims on behalf of the class and that the preferable procedure would be a test case. However, he held that these arguments are overcome with the reformulated class definition and common issue. Interestingly, at para. 185, he described the appellants' litigation, as amended, in these terms:

In a sense, the litigation of Ms. Brown's and Mr. Commanda's story will be the test case for determining whether the Federal Crown committed a civil harm.

[26] Finally, the case management judge briefly considered the requirement of a suitable representative plaintiff (s. 5(1) (e) of the Act) and held, at para. 195, that "based on an amended statement of claim, class definition and common issue and putting aside the matter of the litigation plan, the fifth criterion for certification is satisfied".

[27] In the result, the case management judge ordered that, conditional upon the appellants delivering a properly pleaded fresh as amended statement and the court approving a litigation plan, the "criteria for certification can be satisfied in accordance with the comments above about the definition and the common issue". Paragraph 1 of the formal order of the court reflects the reasons of the case management judge:

THIS COURT ORDERS THAT, upon the Plaintiffs delivering a Fresh as Amended Statement of Claim to plead claims in negligence and for breach of fiduciary duty in accordance with the Reasons for Decision herein, and the Court approving a revised Litigation Plan, the within action is hereby certified as a Class Proceeding under the Class Proceedings Act, 1992,

a. with the Class defined as:

Aboriginal persons in Ontario between December 1, 1965 and December 31, 1984, who were placed in the care of non-aboriginal foster or [page366] adoptive parents, who did not raise the children in accordance with the aboriginal person's customs, traditions and practices.

b. and with the common issue raised by the claim of the class members being stated as:

In Ontario, between December 1, 1965 and December 31, 1984, when an aboriginal child was placed in the care of non-aboriginal foster or adoptive parents who did not raise the child in accordance with the child's aboriginal customs, traditions and practices, did the Federal Crown have and breach a fiduciary or common law duty of care to take reasonable steps to prevent the aboriginal child from losing his or her aboriginal identity?

The Reasons of Swinton J.

[28] Swinton J. granted the respondent leave to appeal the case management judge's order to the Divisional Court: Brown v. Canada (Attorney General), [2011] O.J. No. 940, 2011 ONSC 1193 (S.C.J.). She read the reasons of the case management judge as precluding the respondent from attacking an amended pleading because he had already determined that there was a viable cause of action if the pleading was amended in accordance with his suggestions. She was of the view that the case management judge erred in granting certification, even on a conditional basis, without a proper pleading before him and without giving the respondent an opportunity to make submissions respecting the elements of s. 5(1) of the Class Proceedings Act, 1992. In her view, the case management judge should have adjourned the certification motion to permit the parties to amend their pleadings.

[29] Swinton J. also considered that there was good reason to doubt the correctness of the conclusion that the proposed question disclosed a cause of action. The case management judge had failed to do the legal analysis necessary to show that there was a viable claim for breach of fiduciary duty or negligence. Swinton J. described the potential frailties in the causes of action described by the case management judge. She also considered that there was good reason to doubt the correctness of the case management judge's conclusions on the common issues and the class definition. She noted, at para. 18, "In order to carry out the analysis in s. 5(1), it is necessary to have a proper pleading so that the motion judge can frame the common issues and the class definition in light of the pleading."

The Reasons of the Divisional Court

[30] The Divisional Court agreed with Swinton J. that the case management judge erred in conditionally certifying the class proceeding: [page367] Brown v. Canada (Attorney General) (2011), 114 O.R. (3d) 352, [2011] O.J. No. 6070, 2011 ONSC 7712 (Div. Ct.). The effect of the case management judge's order was to deprive the respondent of the opportunity to argue that the s. 5(1) elements were not satisfied. The Divisional Court also agreed with Swinton J. that the case management judge had erred in failing to conduct an analysis to determine whether a viable claim existed in either negligence or fiduciary duty. As it said, at para. 7, "The motion judge concluded that it was not plain and obvious that these duties did not exist without considering the necessary elements for there to be such duties."

[31] The Divisional Court, at para. 9, explained why it ordered the certification motion be brought before another judge, stating:

To appear before Perell J. with these apparently pre-approved amendments would be to appeal his determination.

[32] The Divisional Court also held that the case management judge's order was not appropriate case management.

[33] Accordingly, the Divisional Court ordered that the statement of claim be struck and the appellants be granted leave to amend their pleading. It also ordered that the certification motion be brought before another judge. Finally, it ordered that the respondent was entitled to its costs of the motion for leave and for the appeal before the Divisional Court fixed at $25,000, all inclusive.

The Positions of the Parties

The position of the appellants

[34] The appellants submit that it was open to the case management judge to certify the action as a class proceeding conditional upon approval of an amended statement of claim. They argue that the order of the case management judge did not preclude the respondent from arguing that the action should be dismissed under s. 5(1)(a) of the Act or in accordance with rule 21.01(1)(b). They note that s. 10 of the Act expressly contemplates the case management judge amending a certification order or decertifying the proceeding.

[35] The appellants argue that the order of the case management judge could be supported by s. 12 of the Act, which provides as follows:

12. The court, on the motion of a party or class member, may make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination and, for the purpose, may impose such terms on the parties as it considers appropriate. [page368]

[36] The appellants submit that the case management judge has a duty to assist in the framing of the action and that is what the case management judge did in this case. They argue that a case management judge ought to be able to give directions as to the nature of the required amended pleadings.

[37] The appellants also submit that the Divisional Court erred in disqualifying the case management judge from continuing case management. They rely on the provisions of s. 34 of the Act:

34(1) The same judge shall hear all motions before the trial of the common issues.

(2) Where a judge who has heard motions under subsection (1) becomes unavailable for any reason, the regional senior judge shall assign another judge of the court for the purpose.

(3) Unless the parties agree otherwise, a judge who hears motions under subsection (1) or (2) shall not preside at the trial of the common issues.

[38] The appellants concede that a case management judge would be disqualified from continuing with case management if there was a reasonable apprehension of bias, but point out that the Divisional Court made no such a finding.

[39] Finally, the appellants argue that the Divisional Court erred in ordering costs of the leave motion and of the appeal before the Divisional Court to the respondent without considering the terms of s. 31(1) of the Act, which provides:

31(1) In exercising its discretion with respect to costs under subsection 131(1) of the Courts of Justice Act, the court may consider whether the class proceeding was a test case, raised a novel point of law or involved a matter of public interest.

The position of the respondent

[40] The respondent relies on the reasons of Swinton J. and the Divisional Court. It accepts that the case management judge could have adjourned the certification motion and granted the appellants leave to amend their statement of claim along lines suggested in his reasons. The respondent also accepts that it may be proper to conditionally certify a class proceeding despite some deficiencies, such as deficiencies in the definition of the class and the common issues. However, it is not open to a case management judge to conditionally certify a class proceeding in the absence of a claim that sets out a viable cause of action.

[41] The respondent also agrees with Swinton J. and the Divisional Court that the case management judge erred in failing to conduct a proper analysis of whether there were viable causes [page369] of action in breach of fiduciary duty and negligence. In that respect, the respondent reads the reasons and the order of the case management judge as precluding it from arguing anything other than whether the amended statement of claim complies with the reasons of the case management judge. The reasons and order do not contemplate the respondent arguing that there is not a viable cause of action or that the other elements of s. 5(1) have not been satisfied.

[42] The respondent supports the order of the Divisional Court that another judge hear the certification motion. The respondent notes that the court's order does not purport to remove Perell J. from any other aspect of case management. The respondent submits that the Divisional Court was entitled to exercise its discretion in this way and that the order was justified because the respondent's right to be heard had been impaired. It submits that allowing the case management judge to rehear the certification motion would have the effect of the case management judge sitting on appeal of his own order. While it does not expressly argue a reasonable apprehension of bias, the respondent does argue that the nature of the case management judge's reasons creates the impression that he had a stake in the outcome of the certification motion.

[43] Finally, the respondent supports the Divisional Court's order on costs, which it says is consistent with this court's decision in Pearson v. Inco Ltd. (2006), 2006 CanLII 7666 (ON CA), 79 O.R. (3d) 427, [2006] O.J. No. 991 (C.A.).

Analysis

Conditional certification

[44] I agree with the Divisional Court that the case management judge erred in conditionally certifying the class proceeding in the absence of a statement of claim that disclosed a cause of action. As this case demonstrates, identification of a cause of action is fundamental. It is impossible for the defendant to meaningfully respond to an application for certification without knowing the cause of action. The definition of the class and the identification of the common issues depend upon the nature of the cause of action. As McLachlin C.J.C. wrote in Hollick v. Toronto (City), [2001] 3 S.C.R. 158, [2001] S.C.J. No. 67, 2001 SCC 68, at para. 16: "The question at the certification stage is not whether the claim is likely to succeed, but whether the suit is appropriately prosecuted as a class action". It is not possible to know whether an action can be appropriately prosecuted as a class action without identifying the [page370] fundamental issue of whether or not there is a cause of action. It is no answer that the defendant can bring a motion to decertify the action under s. 10 if the action should never have been certified in the first place.

[45] There is no question that class proceedings evolve as they work their way through the certification and case management process and that the case management judge plays an important role in guiding the evolution of the proceeding. But, certifying a class action in the absence of a statement of claim that discloses viable causes of action is not case management. Even the power to amend other aspects of the claim, such as the proposed common issues, should be exercised with caution and restraint: McCracken v. Canadian National Railway Co. (2012), 111 O.R. (3d) 745, [2012] O.J. No. 2884, 2012 ONCA 445, at para. 144. The courts have recognized that there is a distinction between the cause of action requirement for certification and the other criteria set out in s. 5(1). The cause of action requirement is not dependent upon evidence but is determined on the basis of the pleadings and whether it is plain and obvious that the claim cannot succeed. Unless the allegations of fact are patently ridiculous or incapable of proof, the facts must be accepted as pleaded for the purpose of determining if there is a viable cause of action. The other criteria are evidence-based, with the courts applying a "some basis in fact" test: McCracken, at paras. 75-80. The defendant cannot respond to the evidence-based criteria in the abstract without knowing the cause of action.

[46] Once the case management judge concluded that the statement of claim did not disclose a cause of action, it was not open to him to conditionally certify the class proceeding. He could have dismissed the motion for certification, adjourned the motion for certification under s. 5(4) of the Act to give the appellants the opportunity to amend their statement of claim, or granted the Rule 21 motion and dismissed the action.

[47] It follows that the Divisional Court was correct to allow the appeal from the order of the case management judge conditionally certifying the action.

Whether the certification motion should be heard by the case management judge

[48] The appellants submit that even if the case management judge erred in granting conditional certification, the Divisional Court erred in directing that the new certification motion be heard by another judge. The respondent agrees that it would have been open to the case management judge to adjourn the [page371] certification motion and grant leave to amend the statement of claim. It even agrees that it would have been open to the case management judge to provide guidance to the appellants as to how deficiencies in the claim could be rectified in the amended statement of claim. However, the respondent submits that in his reasons conditionally certifying the proceeding, the case management judge predetermined whether there was a cause of action. The respondent submits that it was deprived of an opportunity to make submissions on whether there was a viable cause of action; the only issue left was whether the amended statement of claim complied with the reasons of the case management judge.

[49] The appellants submit that, to the contrary, it would have been open to the respondent to argue before the case management judge whether the amended statement of claim disclosed a viable cause of action. The appellants also submit that, in light of s. 34 of the Act, it was not open to the Divisional Court to, in effect, order the appointment of a new case management judge absent a finding that there was a reasonable apprehension of bias.

[50] In one sense, it could be said that the case management judge had not predetermined whether there was a viable cause of action. Indeed, the case management judge never explicitly stated that there was a viable cause of action; rather, he posed a question. He wrote, at paras. 12-13:

The legitimate target or focus of the certifiable class action that emerges is that of answering a complex, difficult but largely legal question. The question is:

In Ontario, between December 1, 1965 and December 31, 1984, when an aboriginal child was placed in the care of non-aboriginal foster or adoptive parents who did not raise the child in accordance with the child's aboriginal customs, traditions, and practices, did the federal Crown have and breach a fiduciary or common law duty of care to take reasonable steps to prevent the aboriginal child from losing his or her aboriginal identity?

If this question were answered in the negative at a common issues trial, 16,000 potential claims would be dismissed. If this question were answered in the positive, then there would have to be individual trials to determine whether or not any individual class member can prove identification as an aboriginal, causation, damages and the quantum of compensation. Both the common issue and the individual issues trials will be difficult, particularly the matter of causation, but Ms. Brown and Mr. Commanda and any others like them should have their day in court to attempt to prove an entitlement to compensation, as should the federal Crown have its day in court to refute the allegations made against it.

[51] However, there are many other parts of his reasons that suggest the case management judge had determined there was a [page372] viable cause of action. I have set out the trial judge's reasons above at some length. The fact that he dealt at length with and distinguished authorities suggesting there was no viable cause of action tells in favour of the position taken by the respondent. I note in particular his discussion of Blackwater, Aksidan and Bonaparte. Perhaps of even greater significance is the case management judge's manner of dealing with the other pre-requisites for certification in s. 5(1). His findings that those other requirements were met must have been based upon a finding that there were viable causes of action in negligence and breach of fiduciary duty.

[52] As both Swinton J. and the Divisional Court noted, it is not self-evident that there are viable causes of action. The plain and obvious test sets a low threshold, but it will still be necessary for a court to determine whether the causes of action suggested by the case management judge can pass that test. The respondent is entitled to an opportunity to show that the causes of action are not viable.

[53] While it was not always the case, I think it can now safely be said that judges cannot sit in appeal of their own decisions: see, e.g., Law Society of Upper Canada v. French, 1974 CanLII 24 (SCC), [1975] 2 S.C.R. 767, [1974] S.C.J. No. 125, at pp. 782-83 S.C.R., per Spence J., at p. 775 S.C.R., per Dickson C.J.C., dissenting. In my view, a reasonable interpretation of the reasons of the case management judge is that he had determined that viable causes of action existed as he framed them. It is obvious that the case management judge gave very careful consideration to the submissions of the parties. And, he may well have thought that the hearing afforded the parties ample opportunity to make submissions on breach of fiduciary duty and negligence generally. In some respects, it is the poor manner in which the causes of action were pleaded by the appellants that has led to this difficulty. However, the causes of action as framed by the case management judge are so radically different from the way they were pleaded in the statement of claim that I do not think it can be safely said that the respondent had an adequate opportunity to respond. To now give the respondent that opportunity before the same judge would, as the Divisional Court found, result in the case management judge sitting in review of his own decision.

[54] The appellants effectively concede that the respondent has not had an opportunity to make submissions on whether the causes of action in breach of fiduciary duty and negligence, as framed by the case management judge, are viable. Their position is that it is still open to the respondent to make those submissions to the case management judge. As I have said, in [page373] my view, a reasonable interpretation of the case management judge's reasons is that he has already determined that issue. It is not appropriate to require the respondent to return to the same judge unless the statute requires it to do so, the issue to which I now turn.

[55] As I have indicated, the appellants rely upon s. 34(1) of the Act, which provides that the same judge shall hear all motions before the trial of the common issues. Notwithstanding s. 34(1), the appellants concede that if there was a finding of a reasonable apprehension of bias, the case management judge could not continue to hear motions in the case. Section 34(2) contemplates that a case management judge may not be able to continue to hear motions in a case. It provides that the regional senior judge shall assign another judge where the case management judge "becomes unavailable for any reason". That subsection contains the broadest possible terms and, in my view, does not simply contemplate unavailability due to illness or death. The phrase "for any reason" is wide enough to include circumstances in which the principles of natural justice preclude the judge continuing with the case. The Supreme Court of Canada in Law Society of Upper Canada v. French, at pp. 783-84 S.C.R., per Spence J., held that the principle of natural justice that no one should be a judge in their own cause does not apply where the legislature has implicitly accepted such a duplication of function. In my view, when s. 34(1) is read with the proviso in s. 34(2), the legislature has not sanctioned an exception to this principle of natural justice.

[56] I would, however, slightly vary the order of the Divisional Court in order to comply with s. 34(2). Instead of ordering the motion for certification to be brought before "a judge other than the Honourable Justice Perell", the order should specify:

THIS COURT ORDERS AND DIRECTS that the plaintiffs' motion for certification of the action as a class proceeding based on the amended Statement of Claim is to be brought before and heard by another judge as assigned by the regional senior judge.

[57] Finally, as worded, it is only the further certification motion that is to be heard by another judge. While I think that order is consistent with s. 34(2), it will be for Perell J. to decide whether or not he should hear further motions if the action is certified. It may be more efficient for the new judge to hear all further motions. Having the same judge continue the case management will also provide the necessary continuity that is so important in achieving the objective of access to justice. [page374]

Costs

[58] The Divisional Court gave no reasons for its decision with respect to costs of the leave application and the appeal to the Divisional Court. Section 31(1) of the Act provides that a court, in exercising its discretion in fixing costs, may consider whether the class proceeding was a test case, raised a novel point of law or involved a matter of public interest. In addition, this court in Pearson has provided a list of principles and factors as further guidance in fixing costs of a certification motion, at para. 13:

(1) Ontario, unlike other class proceedings jurisdictions such as British Columbia, has not sought to interfere with the normal rule that costs will ordinarily follow the event.

(2) The costs must reflect what is fair and reasonable.

(3) The costs should, if possible, reflect costs awards made in closely comparable cases, recognizing that comparisons will rarely provide firm guidance.

(4) A motion for certification is a vital step in the proceeding and the parties expect to devote substantial resources to prosecuting and defending the motion.

(5) The costs expectations of the parties can be determined by the amount of costs that an unsuccessful party could reasonably expect to pay.

(6) The views of the motion judge concerning the complexity of the issues and what is fair and reasonable . . . .

(7) The case raised an issue of public importance.

(8) A fundamental object of the [Act] is to provide enhanced access to justice.

(9) The appellant's claim substantially evolved from the claim brought before the motion judge.

(Citations omitted)

[59] This case involves all three factors mentioned in s. 31(1). It is in the nature of a test case and raises novel points of law. The treatment of Aboriginal children in Ontario's child welfare system and Canada's responsibility for what occurred are matters of public interest. In my view, the significance of those factors in this case and the importance of access to justice require some moderation of the normal rule that costs follow the event. Despite the broad discretion given to courts in fixing costs, it was an error in principle not to consider the legislative factors set out in s. 31(1) of the Act. Though s. 31(1) does not replace the court's discretion, these factors, where they apply, should be given significance: Pearson, at para. 11; Ruffolo v. Sun Life Assurance Co. of Canada (2009), 95 O.R. (3d) 709, [2009] O.J. No. 1322, 2009 ONCA 274, at para. 29; [page375] Caputo v. Imperial Tobacco Ltd. (2005), 2005 CanLII 63806 (ON SC), 74 O.R. (3d) 728, [2005] O.J. No. 842 (S.C.J.), at para. 32. Given those considerations, I would not make any order for costs of the motion for leave to appeal or the appeal to the Divisional Court.

Disposition

[60] Accordingly, the appeal is dismissed subject to the minor variation of the order of the Divisional Court and to quashing the Divisional Court's cost order. If the parties cannot agree on costs of the appeal and the motion for leave in this court, they may make brief written submissions.

Appeal allowed in part.