ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-O8-363847-CP
DATE: 20140808
B E T W E E N:
KATRINA RAMDATH, ZSOLT KOVESSY and ASHISH SINGH
Plaintiffs
- and -
THE GEORGE BROWN COLLEGE OF APPLIED ARTS AND TECHNOLOGY
Defendant
Won J. Kim, Aris Gyamfi and Alexandra Teodorescu for the Plaintiffs
Robert B. Bell, Michael C. Smith and Court Peterson for the Defendant
HEARD: Written submissions
Proceeding under the Class Proceedings Act, 1992
The damages trial – Part one
Addendum – Decision on Residual Value
Justice Edward P. Belobaba
Justice Belobaba:
[1] This is an Addendum to the decision released on June 25, 2014 wherein I concluded that aggregate damages were available for two of the four categories claimed – Direct Costs and Residual Value.[^1] I said this about Residual Value:[^2]
The plaintiffs submit that the GBC Diploma has absolutely no measurable market value and Residual Value should therefore be noted as nil. I do not agree. For at least some of the class members, the GBC Diploma had objective value: (1) for the 21 percent of domestic students that did not have a previous university or college degree, the GBC Diploma showed that he or she could start and finish a post-secondary program; and (2) for the few students that got a job in the trade area, the GBC Diploma provided a “knowledge base” for the later designations. I am therefore persuaded on the evidence before me that the GBC Diploma standing alone had a low but nonetheless measureable market value for some of class members, most likely in the range of 15 to 20 percent.[^3]
However, before making any final determination in this regard, I want to provide both sides with an opportunity to make an additional written submission on Residual Value if they wish to do so. The focus of the submission would be this: Given that I have found that Residual Value can reasonably be determined without proof by individual class members, what is the value that should be ascribed on the evidence herein? The brief (maximum three pages) submission should be based only on the evidence adduced at trial and should be forwarded to me within fourteen days.
[2] I thought it prudent to give both sides, and in particular GBC, an opportunity to restate their submissions about the value of the GBC Diploma standing alone and to correct any errors that I may have made in my assessment of the evidence on this important issue. I have now reviewed the supplementary submissions.
[3] The plaintiffs continue to argue, based on the evidence adduced at trial, that the Residual Value of the GBC Diploma standing alone is nil and, at most, 10 per cent. The plaintiffs also argue that if there is Residual Value it should be deducted only from the class members who did not have a previous university or college degree. GBC continues to argue that the Residual Value is 100 percent and thus no aggregate damages should be awarded at all (i.e. Direct Costs minus Residual Value [100 percent of DC] equals zero.)
[4] Some of the supplementary submissions made by GBC did not succeed because they were fully considered and rejected in the June 25 Decision. For example: GBC’s assertion, without evidence, that many of the foreign students stayed on and worked in Canada after graduation;[^4] GBC’s assertion, again without evidence, and frankly contrary to the findings of all of the judges that have heard this matter to date, that the GBC Program in question attracted a significant number of students who were interested in more than just an entry-level job in the international business area; or GBC’s assertion that because the number of student applications over the time period in question exceeded places available, the GBC diploma was therefore highly valued by “the market”. To repeat what I said in the June 25 Decision, the most reasonable measure of market value on the facts herein is the one that best mirrors the oft-repeated objective of the GBC Program - to help students get a job in the international business area. The most appropriate market measure is not what uninformed student applicants wanted to believe but what actually happened – namely, did the GBC Program help the class members get a job in the international business area? And here, as I have already explained, I mainly relied on the evidence that was presented by GBC, and in particular the evidence of its own witness, Mr. Stewart.
[5] One of the submissions made by the plaintiffs that did not succeed is that if some Residual Value was found, say for example 10 percent, this amount should only be deducted from the one class member who did not have a post-secondary credential and not from the 55 who did. Otherwise, 55 of the 56 class members would be undercompensated and GBC would be the beneficiary of an undeserved windfall. I do not agree with this submission. As I have already concluded, there is some “knowledge base” value in the GBC Diploma even for class members with post-secondary credentials.[^5] And, as already noted, one of the consequences of using an aggregate damages approach is the risk that some, perhaps many, of the class members will be under-compensated.[^6] This is a reality that a plaintiff must accept when he or she chooses aggregate damages over individualized assessments.
[6] Turning now to the supplementary submissions that were helpful and that caused me to reconsider what I said about RV in the June 25 Decision. The points that registered with me were these:
▪ GBC argues that 30% of the domestic students (not 21% as noted in my June 25 Decision) did not have a university or college degree. This submission gave me pause. However, as the plaintiffs went on to point out, according to the international and domestic student records admitted as trial exhibits, all of the international class members and 12 out of 13 domestic class members in the first and second cohorts already had a post-secondary degree or diploma prior to enrolling in the Program. Thus, more than 90 percent of the class members had achieved some level of post-secondary education. In other words, my initial 21 percent estimate should actually be reduced to about 10 percent.
▪ GBC argues that the survey evidence shows that six months after graduation 53.4 percent of the graduates from the first cohort and 42 percent of the graduates from the second and third cohorts answered “yes” or “yes partially” to the question whether they had a job in a related field. Averaging the response percentages over the three cohorts, one arrives at 46 percent. The latter percentage compares favorably with the answers that were given to another survey question that shows that 44 percent of the graduates described themselves as “employed or self-employed.” But 29 percent of the “employed or self-employed” group also said that they were “looking for another job.” Therefore, considering these two data sets and noting the ambiguous response (“yes” and “yes partially”) on the first question, the most I can safely conclude on the survey evidence that is before me is that about 23 percent (half of the 46 percent)[^7] had landed jobs that were solidly (not just partially) in the international business area but only about 15 percent were content with the job they secured.
▪ This apparent level of job dissatisfaction can probably be explained by the data about average incomes. Census data over the time period in question shows that the average 25-year-old university graduate in Ontario earned approximately $42,000 per year. However, based on the survey data presented by GBC at trial, GBC Program graduates (the vast majority of whom already had university degrees) were earning only $28,000 to $29,000 per year. This caused Professor Charette to opine that the GBC Program actually had a negative impact on the earnings of Program graduates. In his opinion, a university graduate who decided to obtain a community college-level diploma was akin to a law student getting a law degree and then deciding to obtain a paralegal diploma. That student would be viewed by potential employers as having the earning capacity of a paralegal rather than a lawyer. Hence, Professor Charette’s point about the negative impact of the GBC Diploma for students that already had a university degree.
▪ The plaintiffs also submit that I may have been too generous in my “knowledge base” analysis - that is, in finding that the 21 percent of the domestic class members, now corrected to 10 percent, who landed jobs in the international trade area could use the GBC Diploma’s knowledge base two or three years into their job to signal a commitment to their employer and to this area of business. The plaintiffs rightly point out that given the time lapse between the Program and the date at which the so-called knowledge base can be used (two to three years later) that most if not all of the knowledge may have been forgotten or rendered obsolete. I acknowledge the validity of this submission and I am prepared to discount the value of the “knowledge base” component somewhat to reflect this reality.
[7] Having considered the supplementary submissions as set out above, I am now inclined to conclude that the Residual Value of the GBC Diploma on the evidence adduced at trial is probably around 10 percent and not 15 to 20 percent as was suggested in the June 25 Decision. However, I recognize that the value of the GBC Diploma standing alone (i.e. without the three promised designations that attracted the students in the first place) is not something that can be measured with arithmetical certainty. The judicial determination of Residual Value, in a case such as this, is at most a best estimate that completely depends on the evidence adduced at trial. What makes this determination somewhat frustrating, as I have already noted, is the quality of the evidence (or lack thereof) presented by GBC.[^8] Either counsel for GBC had nothing better to present or, for some reason, chose not to adduce it at trial.
Conclusion
[8] After reviewing the additional submissions set out above, and erring again in favour of GBC as I did in the June 25 Decision,[^9] I find that that for the 56 class members the Residual Value of the GBC Diploma standing alone, i.e. absent the three promised designations, amounts to about 15%. That is, RV is 15 percent of DC. In other words, if the plaintiffs are content with an aggregate damages approach for Direct Costs and Residual Value, the aggregate damages that can be awarded to the 56 class members that completed the Program amount to 85 percent of the Direct Costs. The aggregate damages that can be awarded to the 16 class members that did not complete the Program, as I have already explained in the June 25 Decision, are the Direct Costs minus any tuition-refunds.[^10]
[9] I thank the parties for their supplementary submissions and I remind counsel to schedule a Case Conference as soon as convenient to discuss next steps.
Belobaba J.
Released: August 8, 2014
[^1]: Ramdath v George Brown College, 2014 ONSC 3066.
[^2]: Ibid., at paras. 85-86.
[^3]: Ibid., at footnote 45: “My best estimate on the evidence presented is that the GBC Diploma has a residual value in the range of 15 to 20 percent. If I err in favour of GBC and accept at face value certain portions of the generally unsatisfactory survey evidence and all of the anecdotal affidavit evidence, the most I would be inclined to do at this point is ascribe a 20 percent value. But I will await the additional written submissions.”
[^4]: GBC says that the plaintiffs will be pursuing individual damage assessments to determine loss of earnings and that these individual trials will probably generate evidence about how many of the international class members have remained in Canada and found employment. However, the plaintiffs have not advised me about next steps, and there is no evidence before me supporting GBC’s assertion. And even if individual trials are being considered by the plaintiffs, this does not affect my aggregate damages analysis. As I have noted several times, GBC had ample opportunity to lead evidence as to how many foreign students (for example, in other cohorts) stayed on in Canada - but chose not to do so.
[^5]: Supra, note 1, at paras. 83-84.
[^6]: Supra, note 1, at paras. 49, 59 and 87.
[^7]: I cannot tell what portion of the graduates that were surveyed (and replied) answered “yes” and what portion answered “yes partially” – all I can do is assume equal portions for each category.
[^8]: Supra, note 1, at paras. 56 and 81.
[^9]: Recall supra, note 3.
[^10]: Supra, note 1, at para. 59.