Moyes v. Fortune Financial Corp.

67 O.R. (3d) 795

[2003] O.J. No. 4731

Court File No. 679/02

Ontario Superior Court of Justice

Divisional Court

Cunningham A.C.J.S.C.J., Dunnet and Coo JJ.

October 31, 2003

Civil procedure -- Class proceedings -- Certification -- Common issues -- Preferable procedure -- Investment adviser recommending [page796] investment in company developing new technology -- Investment a fraud -- Proposed class proceeding against investment advisor for negligence, misrepresentation, fraud and conspiracy -- Resolution of common issues would not sufficiently advance litigation -- Class action not preferable procedure -- Motion for certification dismissed -- Class Proceedings Act, 1992, S.O. 1992, c. 6.

Civil procedure -- Class proceedings -- Certification -- Appeals -- Standard of review -- Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 30(1).

On an appeal to the Divisional Court from an order refusing to certify a proceeding as a class proceeding, the appellate court owes deference to the decision of the motions judge. The appellate review is limited. The question is whether the motions judge proceeded on a wrong legal basis, abused his or her discretion, or erred on a matter of general principle. Whether any member of the appellate panel would likely have dealt with the certification matter in the same manner as the motions court judge was not the issue.

APPEAL pursuant to s. 30(1) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 from an order of Nordheimer J. [page797] (2002), 2002 23608 (ON SC), 61 O.R. (3d) 770, [2002] O.J. No. 4297 (S.C.J.) refusing to certify a proceeding as a class proceeding.

Cases referred to Abdool v. Anaheim Management Ltd. (1995), 1995 5597 (ON SCDC), 21 O.R. (3d) 453, 121 D.L.R. (4th) 496, 31 C.P.C. (3d) 197 (C.A.), affg (1993), 1993 5430 (ON SC), 15 O.R. (3d) 39, 16 C.P.C. (3d) 142 (Gen. Div.); Algoma Steel Inc. v. Union Gas Ltd. (2003), 2003 30833 (ON CA), 63 O.R. (3d) 78, 39 C.B.R. (4th) 5, [2003] O.J. No. 71 (QL) (C.A.), revg in part (2001), 2001 28274 (ON SC), 30 C.B.R. (4th) 163 (Ont. S.C.J.); Anderson v. Wilson (1999), 1999 3753 (ON CA), 44 O.R. (3d) 673, 175 D.L.R. (4th) 409, 36 C.P.C. (4th) 17 (C.A.) [Leave to appeal to S.C.C. refused (2000), 258 N.R. 194n], revg in part (1998), 1998 18878 (ON SC), 37 O.R. (3d) 235, 156 D.L.R. (4th) 735, 18 C.P.C. (4th) 208 (Div. Ct.), revg in part (1997), 1997 12104 (ON SC), 32 O.R. (3d) 400 (Gen. Div.); Canadian Imperial Bank of Commerce v. Deloitte & Touche (2003), 2003 38170 (ON SCDC), 33 C.P.C. (5th) 127, [2003] O.J. No. 2069 (QL) (S.C.J.); Carom v. Bre-X Minerals Ltd. (2000), 2000 16886 (ON CA), 51 O.R. (3d) 236, 196 D.L.R. (4th) 344, 1 C.P.C. (4th) 62, 11 B.L.R. (3d) 1 (C.A.), revg (1999), 1999 19916 (ON SCDC), 46 O.R. (3d) 315n, 6 B.L.R. (3d) 82, 1 C.P.C. (5th) 82 (Div. Ct.), affg (1999), 1999 14794 (ON SCDC), 44 O.R. (3d) 173, 46 B.L.R. (2d) 247, 35 C.P.C. (4th) 43 (S.C.J.) (sub nom. 3218520 Canada Inc. v. Bre-X Minerals Ltd.); Equity Waste Management of Canada Corp. v. Halton Hills (Town) (1997), 1997 2742 (ON CA), 35 O.R. (3d) 321, 40 M.P.L.R. (2d) 107 (C.A.), revg (1995), 22 M.P.L.R. (2d) 167 (Ont. Gen. Div.), supp. reasons (1994), 1995 7182 (ON SC), 22 O.R. (3d) 796, 27 M.P.L.R. (2d) 123 (Gen. Div.); Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, 56 O.R. (3d) 214n, 205 D.L.R. (4th) 19, 277 N.R. 51, 24 M.P.L.R. (3d) 9, 2001 SCC 68, 13 C.P.C. (5th) 1; Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 219 Sask. R. 1, 211 D.L.R. (4th) 577, 286 N.R. 1, 272 W.A.C. 1, [2002] 7 W.W.R. 1, 30 M.P.L.R. (3d) 1, 2002 SCC 33, 10 C.C.L.T. (3d) 157; Metera v. Financial Planning Group, [2003] 10 W.W.R. 367, 36 C.P.C. (5th) 284, 2003 ABQB 326, 12 Alta. L.R. (4th) 120, [2003] A.J. No. 468 (QL) (Q.B.); The Queen in Right of Canada v. Saskatchewan Wheat Pool, 1983 21 (SCC), [1983] 1 S.C.R. 205, 143 D.L.R. (3d) 9, 45 N.R. 425, [1983] 3 W.W.R. 97, 23 C.C.L.T. 121 (sub nom. Saskatchewan Wheat Pool v. R.); Western Canadian Shopping Centres Inc. v. Dutton, [2001] 2 S.C.R. 534, 94 Alta. L.R. (2d) 1, 201 D.L.R. (4th) 385, 272 N.R. 135, [2002] 1 W.W.R. 1, 2001 SCC 46, 8 C.P.C. (5th) 1 (sub nom. Western Canadian Shopping Centres Inc. v. Bennett Jones Verchere)

Statutes referred to Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 30(1) Securities Act, R.S.O. 1990, c. S.5

Malcolm N. Ruby and Catherine E. Roberts, for appellant. H. James Marin and Diane L. Evans, for respondents except Tindall. No one appearing for respondent Tindall.

[1] Endorsement BY THE COURT: -- This is an appeal from the decision of Nordheimer J., a long-time member of the court class action team, not to certify this action as a class action. The appeal is brought under the unlimited provisions of s. 30(1) of the Class Proceedings Act, 1992, S.O. 1992, c. 6, which is as follows:

30(1) A party may appeal to the Divisional Court from an order refusing to certify a proceeding as a class proceeding and from an order decertifying a proceeding. 1992, c. 6, s. 30(1)

[2] The courts have an obligation, emphasized by the Supreme Court of Canada in Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, 205 D.L.R. (4th) 19 at paras. 14, 15, to construe the Act generously, in dealing with the certification issue, and to interpret the legislation in a way that gives full effect to the benefits foreseen by the drafters and that emphasizes the three principle advantages of class actions -- judicial economy, access to justice and behavioural modification. The importance of preferability for the resolution of the common issues, as opposed to the resolution of class members' claims must be borne in mind. Also, there are the linked principles that class actions may be allowed even where there are substantial individual issues; that they need not predominate, but that account must be taken of the importance of the common issues in relation to the claims as a whole: Hollick, paras. 29, 30.

[3] This court owes deference to the decision of the motions judge, on the following bases:

(a) that he is an acknowledged expert with vast experience in class action matters, following such cases as Anderson v. Wilson (1999), 1999 3753 (ON CA), 44 O.R. (3d) 673, 175 D.L.R. (4th) 409 (C.A.), at p. 677 O.R., and Carom v. Bre-X Minerals Ltd. (2000), 2000 16886 (ON CA), 51 O.R. (3d) 236, 196 D.L.R. (4th) 344 (C.A.), at p. 248 O.R., reflecting our Court of Appeal's emphatic direction that an appellate court's intervention should be restricted to matters of general principle; and

(b) the broader deference obligation expressed in more generally applicable principles in such cases as [page798] Algoma Steel Inc. v. Union Gas Ltd. (2003), 2003 30833 (ON CA), 63 O.R. (3d) 78, 39 C.B.R. (4th) 5 (C.A.), Equity Waste Management of Canada Corp. v. Halton Hills (Town) (1997), 1997 2742 (ON CA), 35 O.R. (3d) 321, 40 M.P.L.R. (2d) 107 (C.A.), and Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, 211 D.L.R. (4th) 577.

We follow those principles here.

[4] Whether any member of this panel would likely have dealt with the certification matter in the way in which the motions court judge dealt with it is not the issue. That is not what deference is all about. If it were otherwise, the principle would play no real part in the judgmental and analytical process. In effect what is complained of here, and what is at the heart of this appeal, is an invitation to second-guess the weight to be assigned to the various and sometimes competing elements of the evidence and to change the court's opinion over the weight to be assigned to the underlying facts, as those phrases are to be found in Housen, at para. 23. It must be said at once that the case was not formally argued using that language by the appellant.

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

Our answer is that he did not. Even counsel conceded that this is a "close case", and there is no doubt that the motions court decision was fact specific.

[6] We are not prepared to conclude that the motions court judge made any fundamental and basic error of general principle contended for by counsel for the appellant. Nordheimer J. was sensitive to the tests to be applied by him and the applicable principles to be brought to bear in making his decision not to certify. While perhaps two phrases in his reasons might, standing in isolation, be mildly supportive of a lack of awareness of fundamentals, his own encompassing language is a sufficient response to that challenge; and indeed the language itself does not support the appellant's contention.

[7] The motions court judge made it clear that while he recognized the common elements in the case, he also recognized the separate issues that might well differentiate the ultimate sustainability of the claims, and he was conscious of there being at [page799] least a possibility of the present plaintiff being at odds with others in the class group, so far as a conflict or difference in interest question is concerned. He did not feature the latter problem in his reasons, in light of his other conclusions, but he did point out the real possibility of conflict in regard to the execution of certain release documents.

[8] That there is an identifiable and not arbitrary class that shares the same interest is not seriously in issue. The class is small and known. Some have pursued remedies. Some have compromised their claims.

[9] It is readily apparent that the motions court judge bore carefully in mind the issue of whether the situation here presented a number of individual claims which it would otherwise be economically unfeasible to pursue, to borrow the language of this court in Abdool v. Anaheim Management Ltd. (1995), 1995 5597 (ON SCDC), 21 O.R. (3d) 453, 121 D.L.R. (4th) 496 (Div. Ct.), at p. 473 O.R. While the problem in Abdool arguably was not presented in the same dramatic way here, nevertheless the motions court judge did, quite correctly, take into account the differences in alleged detrimental reliance at the heart of the claims of the various claimants, and undoubtedly bore in mind the comments made in a different context by the Supreme Court of Canada in the Alberta case of Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534, 201 D.L.R. (4th) 385, at paras. 49, 55. Weighing matters on the scales, he saw that problem as one of importance and as working against the concept of judicial economy. It is clear that while the factor is not determinative, and was not seen to be so by the motions court judge, class action cases where individual discovery of all or several class members may well be important, probably even where the class is small, are the exception.

[10] There have been a small number of complaints about the motions court judge's language and its propriety as reflecting applicable principle, but we do not accept that his reasons reflect any error in principle. For example, his reference to the fact that a breach of a provision of the Securities Act, R.S.O. 1990, c. S.5 "would not be determinative of that issue [that is, negligence] . . ." was, in our view, clearly not intended to suggest that without this quality it ought not to be considered as supportive of a class proceeding. Rather it had reference to the decision of the Supreme Court of Canada in The Queen in Right of Canada v. Saskatchewan Wheat Pool, 1983 21 (SCC), [1983] 1 S.C.R. 205, 143 D.L.R. (3d) 9, in which it was spelled out that any such breach would only be evidence of negligence.

[11] We have been referred to the decision of this court in [page800] Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2003 38170 (ON SCDC), [2003] O.J. No. 2069 (QL), 33 C.P.C. (5th) 127 (S.C.J.). In that case, the Divisional Court chose to change the motions court judge's determination of one very important and fundamental legal issue before him, which was relevant to the issue of certification. One of the key findings of the Divisional Court in its reversal of the order refusing to certify was that the motions court judge failed to recognize that it was an essential element in that case that there was a legitimate allegation of a duty owed by the defendants to a class. There was also emphasis that the individual issues did not overwhelm the common issues, a factor that, in our view, is not an essential element in refusal of certification. In fact in Deloitte & Touche there was no certification order granted, since substantive and procedural issues remained to be determined.

[12] We do not conclude that there is any factor in Deloitte & Touche that requires us to overrule the decision of Nordheimer J. in this case.

[13] As for Metera v. Financial Planning Group, 2003 ABQB 326, [2003] A.J. No. 468 (QL), 36 C.P.C. (5th) 284 (Q.B.), the factual circumstances were different, and in any event there seems to have been in that decision an emphasis on common elements that led to the determination there, and a declination to accept that the motions court judge's decision in this case stood in the way of certification in the Alberta case. We see no conflict in principle involved between this decision in motions court and the two cases now referred to.

[14] We are of the view that certification has its attractions here. However, in the narrow and particular circumstances of this case, we do not see the determination by the motions court judge to involve a matter of general principle that would legitimately justify our replacing his opinion with what might have been ours.

[15] The appeal from the costs disposition below will be dismissed without costs. The motions court judge legitimately considered the relevant factors and came to a fair and practical conclusion.

[16] The appeal on the merits will be dismissed with costs to the respondent on the appeal, fixed at $8,000.

Appeal dismissed. [page801]