Court of Appeal for Ontario

Citation: Amyotrophic Lateral Sclerosis Society of Essex County v. Windsor (City), 2017 ONCA 555

Date: June 30, 2017

Dockets: C63030, C63032, C63246, C63247 and M47662

Panel: Hoy A.C.J.O., van Rensburg and Roberts JJ.A.

Parties

Between

Amyotrophic Lateral Sclerosis Society of Essex County Plaintiff/Appellant

and

The Corporation of the City of Windsor Defendant/Respondent

Between

Belle River District Minor Hockey Association Inc. and Essex County Dancers Incorporated Plaintiffs/Appellants

and

The Corporation of the City of Tecumseh Defendant/Respondent

Counsel

For the Appellants: Robert B. Bell and Brian N. Radnoff

For the Respondents: Brendan van Niejenhuis and Fredrick Schumann

Heard: June 20, 2017

On appeal from: The orders of Justice Terrence Patterson of the Superior Court of Justice, dated November 1, 2016 and January 13, 2017.

Reasons for Decision

van Rensburg J.A.:

Introduction

[1] These appeals arise in the context of related class actions, commenced in 2008 and certified in 2012, that are being case managed by Patterson J. (the "case management judge").

[2] The appellant charitable organizations seek remedies for what they characterize as unconstitutional or illegal taxation by the respondent municipalities. They take issue with bingo license and administration fees the municipalities charged.

[3] The appeals are from four orders of the case management judge, two in each proceeding.

[4] First I will deal with the orders dated January 13, 2017, granting a motion to lift orders in the two proceedings dated June 9, 2016, protecting from disclosure the identities of persons who opted out of the class (the "protective orders"). The respondents moved to quash the appeals to this court on the basis that the orders lifting the protective orders are interlocutory and that the route of appeal is to the Divisional Court with leave, under s. 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43. The court granted the motion to quash these appeals, with reasons to follow.

[5] Second, I will address with the appeals of orders of the case management judge dated November 1, 2016, refusing leave to the appellants to amend their amended statements of claim. These appeals were dismissed following oral argument, with reasons to follow.

A. Motion to Quash: Appeals of the January 2017 Orders

Background

[6] Some background to the January 2017 orders is useful. The proceedings were certified as class actions in 2015. The opt-out period ran from January 15 to May 15, 2016. The respondents organized a campaign to encourage class members to opt out. The case management judge determined the respondents went "over the line" and created "undue influence", and consequently ordered that those who had opted out be given a reconsideration period, which ran from August 11 to October 10, 2016.

[7] During the reconsideration period, the case management judge ordered the respondents not to communicate further with class members. Separately, and on consent, the protective orders were made, permitting the respondents' counsel to know the number and identities of opt-outs, but preventing them from sharing this information with their clients. The protective orders also provided for any information filed with the court revealing the identity of opt-outs to be sealed, however no such information was filed.

[8] Once the reconsideration period ended, the respondents' counsel sought to lift the protective orders so they could share the opt-out information with their clients. They asserted the protective orders were interim only for the reconsideration period, which had expired. Class counsel did not oppose the provision of information as to the number and identities of opt-outs to the respondents' clients, but sought conditions to protect the confidentiality of such information and a declaration that the implied and deemed undertaking rules applied to the information concerning the opt-outs. Class counsel argued that if the identities of the opt-outs were disclosed, the public would be able to deduce the identities of the class members.

[9] The case management judge ordered that the protective orders be lifted immediately. He characterized the protective orders as similar to sealing orders and, in determining whether the protective orders should be continued or lifted, applied the test in Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, [2002] 2 S.C.R. 522, requiring "a serious risk to an important interest." He concluded that there was insufficient evidence of a serious threat to the commercial interests of the appellants in this case. He observed that, while anonymity is part of class actions, and it is not unusual that a potential class member's identity is not known in the early stages of a class action, the identity of the class members would become public in any event when they proved their claims, and at an earlier stage if leave were granted to conduct cross-examinations. The case management judge concluded that, in any event, the protective orders were made on an interim basis and only related to the reconsideration issue, which had expired.

Analysis of Interlocutory vs. Final Orders

[10] In their appeals, the appellants assert that the case management judge erred in treating the motion as if it were a request for a sealing order and in failing to consider whether the implied or deemed undertaking rules apply to the information at issue and whether any conditions should be imposed on the respondents with respect to the use of the information.

[11] As the point of departure, I note that the January 2017 orders were made in the case management judge's exercise of his authority under s. 12 of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the "CPA"). The fact that the protective orders and the January 2017 orders were made under s. 12, which provides for orders to be made respecting the conduct of a class proceeding, does not necessarily determine the character of such orders as interlocutory. Section 30 of the CPA provides for a non-exhaustive list of orders that may be appealed and the routes of appeal. There is no reference in s. 30 to orders made under s. 12. When a judge of the Superior Court makes an order under the CPA that is not referred to in s. 30, the Courts of Justice Act governs the appeal route: Locking v. Armtec Infrastructure Inc., 2012 ONCA 774, 299 O.A.C. 20, at para. 8; Waldman v. Thomson Reuters Canada Limited, 2015 ONCA 53, 330 O.A.C. 142, at para. 5; Parsons v. Ontario, 2015 ONCA 158, 125 O.R. (3d) 168, at para. 39. The question here is whether the January 2017 orders are final and appealable to this court under s. 6(1)(b) or whether they are interlocutory and appealable to the Divisional Court with leave under s. 19(1)(b) of the Courts of Justice Act.

[12] The respondents contend that the January 2017 orders are interlocutory because they do not "determine the real matter in dispute between the parties – the very subject matter of the litigation": Hendrickson v. Kallio, [1932] O.R. 675 (C.A.), at p. 678.

Appellants' Arguments for Final Order Status

[13] In support of their contention that the orders are final, the appellants make two main arguments.

[14] First, they say that while the orders in question do not dispose of an issue in dispute in the litigation, they are res judicata and therefore final, on the issue of whether the identities of opt-outs can be disclosed without any qualifications, and respecting the application to such information of the deemed and/or implied undertaking rules.

[15] In Waldman, MacFarland J.A. rejected a similar argument, stating, at para. 22, "[t]his submission presumes that, to be a final order, an order need only dispose finally of whatever issue was before the motion judge irrespective of whether the order terminates the action or resolves a substantive claim or defence of the parties. Were that so, the distinction between interlocutory and final orders would cease to exist." Further, as stated in Hendrickson, at p. 678, an interlocutory order "may be final in the sense that it determines the very question raised by the application but it is interlocutory if the merits of the case remain to be determined."

[16] Stoiantsis v. Spirou, 2008 ONCA 553, 91 O.R. (3d) 184, a decision relied on by the appellants, involved an order that determined a preliminary factual matter in a medical malpractice action. Although the issues in the action were only partially resolved, the order was final because its effect was to deprive the defendants of a defence that could have been determinative of the entire action. Similarly, in Almrei v. Canada (Attorney General), 2011 ONCA 779, 345 D.L.R. (4th) 475, also referred to by the appellants, the finding, in a summary judgment motion, that issue estoppel from a prior proceeding did not apply, deprived the appellant of a substantive right that could have been entirely determinative of the defendant's liability.

[17] Here, by contrast, while the orders are res judicata on the question of whether the identities and other information concerning the opt-outs can be revealed, they are not res judicata and did not determine on any final basis any substantive issue or right that could be determinative of the action.

[18] Second, the appellants assert that the orders are final because they directly affect the substantive rights of the opt-outs, who are not parties to the litigation. The appellants rely on Hollinger Inc. v. The Ravelston Corp., 2008 ONCA 207, 89 O.R. (3d) 721, a case involving the appeal of an order continuing a protective order that sealed motion material making it unavailable to the public. This court characterized the order as final, in the context of an appeal by the Globe and Mail newspaper.

[19] The Hollinger case is readily distinguishable from the present case because it involved the final determination of the rights of a third party who brought an application before the court. An order that is otherwise interlocutory does not become final, as between the parties, simply because it affects the rights of a third party: Royal Trust Corporation v. Fisherman (2001), 55 O.R. (3d) 794 (C.A.), at para. 12. Here the appellants are the representative plaintiffs in the action. The opt-outs are not parties to the litigation, nor, as counsel emphasized in argument before this court, are they represented by or owed any duties by the appellants' counsel.

[20] I therefore reject the appellants' contention that, because the order may affect the rights of those who have opted out of the class, the order is final. As between the parties to the litigation, it is an interlocutory order that does not determine any rights or issues in the proceedings on a final basis.

[21] Finally, the case management judge observed that the protective orders were interim in nature, designed to safeguard the integrity of the reconsideration period and that they should not outlast it. As the protective orders were interim only, a decision to lift a protective order that was in place for a period that has expired is in effect a decision not to continue a protective order. Such an order is interlocutory. See Hollinger, at paras. 52-59.

[22] For these reasons the court quashed the appeals of the January 2017 orders.

B. Appeal: November 2016 Orders

Background to the Amendment Issue

[23] After the opting out period had expired, the appellants sought to amend the statements of claim in both actions nunc pro tunc.

[24] In the actions as currently framed, the representative plaintiffs seek declarations that the lottery licensing fees and lottery administration fees paid by the plaintiffs and the other class members to the defendant municipalities are taxes levied without legislative and constitutional authority and are ultra vires the defendant municipalities. They also claim an accounting of lottery licensing fees and administrative fees paid by the plaintiffs and other class members from and after October 24, 1993, and restitution in accordance with the accounting.

[25] The proposed amendments, in addition to the declarations, seek an accounting of licensing and administration fees received by the municipalities found to be levied without authority or ultra vires, and disgorgement of such fees, with an alternative claim of restitution of fees charged to the plaintiffs and other class members in accordance with the accounting. The proposed amendments respond to the opting out, and seek to recover for the class, fees received by the respondents from persons no longer in the class.

Case Management Judge's Decision

[26] The case management judge refused the proposed amendments on the basis that they would fundamentally change the nature of the actions that had been certified. He had case managed the actions since 2008, and had provided three certification orders. In his opinion the language of the claims was "clearly an action for refund of monies paid by individual class members". The case management judge rejected the appellants' arguments that Kingstreet Investments Ltd. v. New Brunswick (Finance), 2007 SCC 1, [2007] 1 S.C.R. 3 supported the amendments. Kingstreet involved claims of individual taxpayers for recovery of user fees admitted to have been an unlawful tax. The court held that the plaintiffs' claims were for recovery of taxes as a public law remedy and not based on unjust enrichment. The case management judge noted, among other things, that Kingstreet did not support the appellants' argument that any tax paid gives rise to a claim for disgorgement of all monies received by the government for the entire tax paid. The case management judge also observed that the amendments would result in improperly taking funds from those who had opted out for distribution to the remaining members of the class. The case management judge also refused amendments to the statements of claim to claim aggregate damages on the basis that such amendments were unnecessary.

Appellants' Arguments on Appeal

[27] The appellants advance a number of arguments on appeal. They say the amendments should be permitted, notwithstanding that the action is already certified, as the amendments do not change the character of the claim but only clarify the remedy they are seeking, that the amendments were or should have been anticipated by the respondents, and there is no prejudice. The appellants contend that the respondents agreed that the statements of claim disclosed a cause of action under s. 5(1)(a) of the CPA, at the time the actions were certified – and that at all times they were asserting a "Kingstreet" claim. At their highest, the amendments seek a different remedy (disgorgement) for the same cause of action, and should be permitted because no new or additional material facts are pleaded. The appellants contend that the remedy of "disgorgement" is consistent with the behaviour modification goal of class proceedings. They also assert that it is premature to consider the effect of the amendments on opt-outs, and that the court can, if appropriate, avoid any windfall to the plaintiffs and other class members that exceed the amount of illegal fees they paid to the defendants.

Court's Analysis

[28] I would not give effect to these arguments. The proposed amendments are not simply the clarification of a cause of action already pleaded, nor do they advance a different remedy for the same alleged cause of action or wrong. The amendments seek to recast the claim from one for the return of fees paid by class members to a claim for disgorgement of all allegedly illegal license and administrative fees for bingo operations paid to the respondent municipalities within the class period, including those not paid by members of the class. Accordingly, the acknowledgment that the claim, as originally pleaded, disclosed a cause of action does not assist the appellants in respect of amendments that seek to reconfigure the claims.

[29] Contrary to the appellants' arguments, although Kingstreet is relevant to the claims as currently pleaded, it does not support the proposed amendments. While Kingstreet recognizes that a claim can be made for repayment of illegal taxes as a public law remedy, it is not authority for a claim for the "disgorgement" of all allegedly illegal fees obtained by the respondents during the class period, including those paid by persons other than class members. And, characterizing the remedy sought by the appellants as a "disgorgement" does not assist the appellants. Disgorgement permits a plaintiff to claim not only its own loss but also the profit or gain of the defendant as a result of the wrong to the plaintiff. It is not a vehicle for a plaintiff (or a certified class) to pursue a claim for relief owed to someone else, who is essentially a stranger to the action. In my view, there is no reasonable prospect that the appellants' proposed claim for repayment of allegedly illegal taxes paid by persons other than class members would succeed. The class actions objective of "behaviour modification" cannot serve to justify an amendment that is otherwise not supportable.

[30] I note that the appellants based their arguments in support of the amendments almost entirely on the authority of Kingstreet. As I have explained, I agree with the case management judge that Kingstreet does not support the amendments the appellants seek to make at this stage of the already certified class proceedings. There is another aspect of the case management judge's decision, however, that I would not endorse. At para. 20 of his reasons, the case management judge suggested that the Supreme Court's decision in Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, [2011] 2 S.C.R. 261 narrowed the Kingstreet constitutional/public law remedy when illegal taxes were paid to cases where the statute was subsequently declared unconstitutional, and that the plaintiffs in this case do not claim the unconstitutionality of the relevant statutes, resulting in his opinion that the Kingstreet remedy was not available. I do not necessarily agree that Elder Advocates narrowed Kingstreet in the manner suggested by the case management judge, or with his characterization of the appellants' claims in these proceedings. I do however agree with the balance of what he says at para. 20, that in these proceedings "each class member's claim is limited to the gain received by the defendants from the individual class member" and that "any refund would only allow the individual plaintiffs to recover the defendants' gain attributable to the wrong done to them".

[31] Finally, with respect to the proposed amendments to claim aggregate damages, the parties agree that the appellants will be able to advance such a claim in the proceedings (although the availability of aggregate damages is not admitted), whether or not it is asserted in the pleadings. Accordingly, there is no need for such an amendment.

C. Disposition

[32] For these reasons the appeals of the January 2017 orders were quashed and the appeals of the November 2016 orders were dismissed. The respondents shall have their costs in the amounts agreed between the parties: $3,000 for the motion to quash and $15,000 for the dismissed appeals, both amounts inclusive of HST and disbursements.

"K. van Rensburg J.A."

"I agree Alexandra Hoy A.C.J.O."

"I agree L.B. Roberts J.A."

Released: June 30, 2017