SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-10-397096CP
DATE: 20140808

RE: Trillium Motor World Ltd. / Plaintiff

AND:

General Motors of Canada Limited and Cassels Brock & Blackwell LLP / Defendants

Proceeding under the Class Action Proceedings Act, 1992

BEFORE: Justice Edward P. Belobaba

COUNSEL:
David Sterns and Marie-Andree Vermette for Trillium Motor World / Moving Party

Peter Griffin and Jonathan Laxer for Cassels Brock & Blackwell / Responding Party

HEARD: July 18, 2014

ENDORSEMENT

Motion to add punitive damages as a common issue

[1] Three common issues were certified in the portion of this class proceeding that is directed at the defendant law firm.[1] The plaintiff moves to add a fourth common issue dealing with punitive damages:

Does Cassels' conduct justify an award of punitive, exemplary and aggravated damages and, if so, in what amount?

[2] At the hearing of the motion, the plaintiff agreed to drop the last six words about quantum, but continued to argue that the narrower question, “Does Cassels' conduct justify an award of punitive, exemplary and aggravated damages?” should still be added as a new common issue. I agreed that the revised punitive damages question had sufficient commonality but I did not agree that it should be certified as a new issue. I dismissed the motion and advised counsel that my reasons for doing so would follow shortly.

[3] These are the reasons.

Analysis

[4] The factual background to this class proceeding has been set out in previous decisions[2] and will not be repeated here. I would only add the following. The plaintiff has recently discovered information that, in its view, would justify a punitive damages award against the defendant law firm, Cassels Brock and Blackwell (“CBB”). The plaintiff has amended its statement of claim accordingly and now seeks to have the punitive damages question added as a common issue. The common issues trial is scheduled to begin in September.

[5] The three common issues, (j), (k) and (l) that have been certified as against CBB focus on whether the defendant law firm had been retained as legal counsel to represent the GM dealer-class members’ interests and if so, whether any contractual, fiduciary or tort obligations were breached:

(j) Did Cassels Brock & Blackwell LLP ("Cassels") owe contractual duties to some or all of the class members and, if so, did Cassels breach those duties;

(k) Did Cassels owe fiduciary duties as lawyers to some or all of the class members and, if so, did Cassels breach those duties;

(1) Did Cassels owe duties of care to some or all of the class members and, if so, did Cassels breach those duties;

[6] Neither causation nor damages were certified as common issues. No one disputes that the three certified issues will advance the litigation, but absent findings of causation the common issues trial judge will not be able to determine the full extent of CBB’s liability, and certainly not damages. Causation and damages will require individualized assessments.[3] And it is only after the individualized assessments have been completed that the quantum of compensatory damages will be known. As the Supreme Court noted in Whiten v. Pilot Insurance Co., 2002 SCC 18 there is a direct link between compensatory damages and the entitlement to an award of punitive damages. The latter should be awarded “if and only if compensatory damages are inadequate to punish the defendant…”[5] An appellate court summarized the applicable law as follows:

Punitive damages are awarded only where compensatory damages and other normal civil remedies are insufficient to accomplish [punishment and deterrence] objectives, and in an amount that is no greater than necessary to accomplish that objective … It is axiomatic that until all the ordinary civil remedies are finally determined … it is impossible to determine whether punitive damages are required to meet the objectives of punishment, deterrence and denunciation.[6]

[7] Before a court awards punitive damages, it is obliged to consider at least five sub-issues: (a) the degree of misconduct on the part of the defendant; (b) the amount of harm caused; (c) the availability of other remedies; (d) the quantification of compensatory damages; and (e) the adequacy of compensatory damages to achieve the objectives of retribution, deterrence and denunciation.[7] It follows, therefore, that two-part punitive damage questions (that ask about justification and quantum) have rarely been certified as common issues because in most cases the determination of the amount of harm and the quantification of the amount of compensation require individualized trials.

[8] Some judges have certified punitive damages questions that are explicitly limited to the justification issue.[8] But, in doing so, they first satisfied themselves that the justification question was simply a question about the “degree of misconduct” on the part of the defendant and that this degree of misconduct could reasonably be assessed on the evidence that would be presented at the common issues trial.[9]

[9] Here, however, the degree of misconduct on the part of the defendant law firm, cannot be assessed at the common issues trial because the full extent of the defendant law firm’s liability, if any, (and hence, the degree of misconduct) cannot be determined until its third party action against the local lawyers (who also provided legal advice to the GM dealer-class members) has been resolved. Thus, on the facts of this case, it makes no sense to certify even the justification portion of the punitive damages question as a common issue. Tracking the language of s. 5(1)(d) of the CPA, a class proceeding would not be the preferable procedure for the resolution of the proposed common question. At least, not until more information is gleaned from the individual trials.

[10] However, as I explained to counsel when I dismissed this motion, the fact that punitive damages are not being added as a common issue at this point in the proceeding is really of no moment. As the trial moves through the common issues phase to the individual trials, the court will retain an almost unbounded statutory power under s. 12 of the CPA, to “make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination.” Thus, at any point in the upcoming trial, whether during the common issues phase or thereafter, the plaintiff can resurrect the punitive damages question and the trial judge will do whatever he or she deems reasonable and appropriate.

[11] If the determination of punitive damages is deferred until the judge has a better sense of the compensatory damages (which may require individualized evidence) the judge can still use an aggregate approach under s. 24 of the CPA. That is, if the trial judge concludes that punitive damages are warranted based on the evidence as it develops, he or she can award an aggregate or global amount for punitive damages that would then be distributed in some appropriate fashion to the individual class members.

[12] In short, even though the plaintiff’s motion to add punitive damages as a common issue is being dismissed at this time, the potential claim for punitive damages remains alive and well.

Disposition

[13] The motion to add punitive damages as a common issue is dismissed.

[14] Costs, as agreed by counsel, are fixed at $5000 all-inclusive to be paid forthwith by the plaintiff to Cassels, Brock and Blackwell.

Belobaba J.

Date: August 8, 2014

[1] Trillium Motor World Ltd. v. General Motors of Canada Ltd., 2011 ONSC 1300, [2011] O.J. No. 889, aff’d 2012 ONSC 463, [2012] O.J. No. 1578 (Div. Ct.) and 2012 ONSC 1443, [2012] O.J. No. 1579 (Div. Ct.).

[2] Ibid. Also see Trillium v. General Motors of Canada, 2012 ONSC 5960 and 2013 ONSC 2289.

[3] As I noted in Trillium v. General Motors of Canada 2012 ONSC 5960 at paras. 14 and 34, the issues of causation and damages as they relate to CBB would largely be determined by the individualized evidence about the legal advice that each dealer/class member received from its own lawyer. Also see the comments of Lauwers J. writing for the Divisional Court in Trillium v. General Motors of Canada 2012 ONSC 144, at para. 12.

[4] Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595.

[5] Ibid., at para. 50.

[6] Apotex Inc. v Merck & Co., 2003 FCA 291, [2003] F.C.J. No. 1034, at para. 34 (Fed. C.A.).

[7] Robinson v Medtronic Inc., 2009 56746 (ON SC), [2009] O.J. No. 4366 at paras. 164, 189-190.

[8] See, for example, French v Investia Financial Services Inc., 2012 ONSC 1150, [2012] O.J. No. 712 (S.C.J.) and the discussion of the cases at paras. 72-76. Also see Schick v Boehringer Ingelheim (Canada) Ltd. 2011 ONSC 1942, [2011] O.J. No. 1381 at paras. 63-65 (S.C.J.); Robinson v Rochester Financial Ltd., 2010 ONSC 463, [2010] O.J. No. 187 aff'd 2010 ONSC 1899, [2010] O.J. No. 1481 (Div. Ct.) at paras 56-61; McCracken v Canadian National Railway Authority 2010 ONSC 4520, [2010] O.J. No. 3466 (S.C.J.) at paras. 326 and 360; and 578115 Ontario Inc. carrying on business as McKee's Carpet Zone v. Sears Canada Inc., 2010 ONSC 4571, [2010] O.J. No. 3921 (S.C.J.) at paras 52-53.

[9] French, supra, note 8, at para. 76.