Court File and Parties

COURT FILE NO.: CV-20-643488-CP

DATE: 20210527

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

WORKMAN OPTOMETRY PROFESSIONAL CORPORATION, 1298928 ONTARIO LTD., THE SUIT SHOP CO. LTD., 2328867 ONTARIO INC (o/a BOOSTER JUICE 369, BOOSTER JUICE 388, BOOSTER JUICE 375, AND BOOSTER JUICE 452), 2635774 ONTARIO INC (o/a BOOSTER JUICE 275), 2660364 ONTARIO INC (o/a BOOSTER JUICE 200), IN HARMONY DANCE STUDIO LTD, RANA TAJI OPTOMETRY PROFESSIONAL CORPORATION

Plaintiffs

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AVIVA INSURANCE COMPANY OF CANADA, AVIVA GENERAL INSURANCE COMPANY, AVIVA CANADA INC., CO-OPERATORS GENERAL INSURANCE COMPANY, CONTINENTAL CASUALTY COMPANY, DESJARDINS GENERAL INSURANCE SERVICES INC., ECONOMICAL MUTUAL INSURANCE COMPANY, FEDERATED INSURANCE COMPANY OF CANADA, GORE MUTUAL INSURANCE COMPANY FOUNDATION, GORE MUTUAL INSURANCE COMPANY, INTACT INSURANCE COMPANY, INTACT FOUNDATION, LLOYD'S CANADA INC., MARC LIPMAN AS ATTORNEY-IN-FACT IN CANADA FOR LLOYD'S UNDERWRITERS, LLOYD'S UNDERWRITERS, NORTHBRIDGE GENERAL INSURANCE CORPORATION, NOVEX INSURANCE COMPANY, ROYAL & SUN ALLIANCE INSURANCE COMPANY OF CANADA, SGI CANADA INSURANCE SERVICES LTD., TD GENERAL INSURANCE COMPANY, TRAVELERS INSURANCE COMPANY OF CANADA, THE WAWANESA MUTUAL INSURANCE COMPANY and WYNWARD INSURANCE GROUP

Defendants

Proceeding under the Class Proceedings Act, 1992

BEFORE: Justice Edward Belobaba

COUNSEL: Sarah Armstrong, David Rosenbaum and Rachel Laurion for the defendants Intact and Novex / Moving parties

Kirk Boggs and Jacqueline Palef for the defendant Gore Mutual / Moving party

Mark Gelowitz, Laura Fric and Mark Sheeley for the defendant Economical Mutual / Moving party

Michael Rosenberg, Christopher Hubbard, Hovsep Afarian, Eric Block, Sean Petrou, Sharanya Thavakumaran and Gabrielle Schachter for the plaintiffs in the 17 Served McCarthy Actions / Responding parties

HEARD: April 30, 2021 via Zoom video

MOTION TO STAY INDIVIDUAL ACTIONS

[1] I am currently case-managing two proposed class actions and 17 individual actions that are advancing insurance claims for business income losses sustained during the COVID-19 lockdowns and restrictions. The Workman class action targets some 15 defendant insurers other than Aviva; the other proposed class actions, proceeding in parallel, focus only on Aviva. The reasons for the Aviva “carve out” are set out in my carriage decision.[^1]

[2] This motion relates to the individual actions that are under my case-management jurisdiction. A variety of businesses using various law firms commenced individual actions against their insurers after being denied coverage for COVID-related “business interruption” claims. As it happened, the McCarthy Tetrault firm was retained by a large number of small business owners, mainly dentists and physiotherapists.

[3] To date, McCarthy Tetrault has served 17 individual statements of claim: four against Intact, five against Novex, four against Gore, and four against Economical. The damages alleged in each action are substantial and range from $250,000 to over $3 million. I am case managing the 17 served McCarthy actions (the “McCarthy Actions”).[^2]

[4] The four affected insurers (Intact, Novex, Gore and Economical) that are also defendants in the Workman class action bring this motion to temporarily stay only the individual actions that have been commenced by McCarthy Tetrault until the certification of the Workman class action has been decided. Why the moving parties target only the McCarthy Actions and not the many other individual actions filed throughout the province by other law firms is not explained.

[5] Shortly after hearing the stay motion, I advised counsel in writing that the motion would be dismissed with reasons to follow. I delayed the release of these reasons because of indications from counsel that the parties involved in the Workman class action were considering a consent certification. A consent certification would have made the stay motion moot and there would have been no need for written reasons.

[6] However, given that the issue of consent certification is not yet resolved, I am releasing my reasons for dismissing the motion to stay the McCarthy Actions.

Applicable law

[7] The applicable law is not in dispute.

[8] This court has jurisdiction under s. 13 of the Class Proceedings Act[^3] (“CPA”) to “stay any proceeding related to the class proceeding before it, on such terms as it considers appropriate.” The court has a similar jurisdiction under ss. 106 and 107(1)(e)(i) of the Courts of Justice Act[^4] and Rule 6 of the Rules of Civil Procedure.[^5]

[9] Let me first clarify the reach of s. 9 of the CPA. The fact that this provision allows a class member to opt-out of the class proceeding “in the manner and within the time specified in the certification order” does not mean that all related individual actions are automatically stayed until certification is decided. If a plaintiff has good reason to reject the class proceeding and pursue an individual claim, then as a general proposition they should have every right to do so. The CPA was designed to enhance access to justice. It would be ironic in the extreme if this important procedural vehicle delayed such access for legitimate individual litigants.

[10] Justice Cullity made this clear almost 18 years ago:

The CPA was not intended to prevent, or impede, actions by individuals for no other reason than they are, or may be, members of a putative class in an action commenced by another party. [^6]

[11] This general proposition is well understood by this court. For example, as Justice Perell explained in Vaeth v. North American Palladium:[^7]

I can understand why in some class actions, a putative class member with sufficient resources to take on the defendants directly would be prepared to forgo the advantages of being a class member and not wait to learn the outcome of a certification motion … [for example] … a personal injury claim where an individual plaintiff with a substantial claim may actually need the compensation sooner than the later of a class action that requires certification before it can progress.

[12] In other words, the opt-out opportunity set out in s. 9 of the CPA does not preclude legitimate individual actions that have good reason to proceed. Indeed, if s. 9 of the CPA automatically locked in all potential litigants until certification was decided, there would be no need for a temporary stay motion such as the one herein. The applicable law, in the matter before me, is the s. 13 stay provision, not the s. 9 opt-out provision.[^8]

[13] An individual action may be temporarily stayed pending the certification of a proposed class action if the following four prerequisites are satisfied: (a) there is substantial overlap of issues in the two proceedings; (b) the two cases share the same factual background; (c) issuing a temporary stay will prevent unnecessary and costly duplication of judicial and legal resources; and (d) the temporary stay will not result in an injustice to the party resisting the stay.[^9]

Analysis

[14] As I advised counsel at the hearing, I am prepared to assume that the first three prerequisites are satisfied on the evidence herein. When one compares the Workman class action and the McCarthy Actions, it is obvious that there is (i) a substantial overlap of issues, (ii) the same factual background and (iii) some duplication of judicial and legal resources if the class and individual actions proceeded in tandem. In my view, the motion to stay turns on the fourth prerequisite — the injustice or prejudice to the individual plaintiffs if their actions are stayed pending certification.

[15] In Carter v. LifeLabs,[^10] I stayed the individual actions pending certification of the class action because there was no evidence of any such injustice or prejudice to the individual plaintiffs.[^11] Here there is an abundance of such evidence.

[16] Consider the uncontroverted affidavit evidence filed by a Brampton dentist, a Dundas-based physiotherapist and the COO of Sunwing Travel Group. All three set out compelling reasons for their rejection of the Workman class action and their desire to pursue individual actions.

[17] Here is the evidence of Dr. Azeem Sheikh and Ms. Heidi Gerber:

I am not interested in a class proceeding because I want to retain the ability to make my own decisions about the prosecution of my action. In particular, I want the ability to direct any settlement negotiations and approve any proposed resolution of my claim.

The COVID-19 pandemic has been hard for the Clinic and for me personally. Before all of this happened, my business interruption insurance policy from Intact gave me peace of mind. But Intact has denied my claim, and they have made no offer of settlement. I am tired of waiting for Intact to do the right thing, and I want my claim prosecuted quickly. It would really help to recover my COVID-19-related losses.

I do not want litigation hanging over my head for years, and distracting me from my personal and professional obligations. I did not ask for a lawsuit. It was only necessary because Intact refused to pay my claim. But the money will be most useful now, while the Clinic is still trying to recover financially from the impact of COVID-19. I do not want to wait for money that should already be back in my business. Accordingly, I have instructed McCarthy Tetrault to advance my claim expeditiously. I am willing and prepared to go through discovery and proceed to a hearing on the merits of my case on an expedited basis. I am hopeful that my case can be resolved by the end of the year or shortly thereafter

[18] Here is the evidence of Mr. Andrew Dawson, COO for Sunwing Travel Group:

Sunwing has a subscription insurance policy underwritten by the defendant Economical Mutual Insurance Company (“Economical”), and Allianz Global Risks US Insurance Company (“Allianz”), an insurer that is not a party to this action.

On January 22, 2021, McCarthy Tétrault commenced Sunwing’s action against Economical and Allianz for damage and loss related to the COVID-19 pandemic and the Orders. Sunwing seeks damages in the amount of at least $125,500,000

I am advised by Sunwing’s counsel at McCarthy Tétrault, and I verily believe, that it may take months or even years to finally determine the issue of certification in the proposed class actions. The past year has been difficult for our business, and Sunwing wants its claim prosecuted as quickly as possible. Sunwing’s claim is sizeable, and any recovery will be most impactful now, while Sunwing is trying to recover financially from COVID-19 and the Orders. Moreover, we do not want unnecessarily prolonged litigation distracting our company and the senior leadership team. Sunwing is willing and prepared to go through discovery and proceed to a hearing on the merits of its case on an expedited basis.

Sunwing does not want its action to be directed by counsel in the Workman Action, or counsel in any other class actions. Sunwing does not know or have any relationship with those legal counsel. Sunwing does not understand their legal goals, their strategy for the litigation, or the way in which they would approach Sunwing’s significant claim. Sunwing’s counsel of choice is McCarthy Tétrault, with whom we have built a relationship. I believe that McCarthy Tétrault are best placed to prosecute our claim and protect our interests. Sunwing wants its claim determined based on the approach developed and implemented by its counsel of choice.

[19] These are well-informed individual litigants pursuing individual actions for legitimate reasons — they believe they have substantial insurance claims, they have established the need for speedy judicial determinations, they want control over all aspects of their lawsuit including any settlement discussions and they desire to work with counsel of their choice.

[20] The fact that only three litigants filed personal affidavits is of no import. It is reasonable to infer that the COVID-related insurance claimants in all 17 McCarthy Actions (and indeed in all of the other related individual actions) have sustained significant “business interruption” losses. As I noted in the carriage decision:

The COVID-19 restrictions and lockdowns continue to decimate Canadian business. This is that rare class action where real people are sustaining real harm in real time. It is therefore important to every class of BII claimants to get to a legal determination as quickly as possible.[^12]

[21] The same reasoning applies here. If the individual actions are stayed, the plaintiffs will suffer real injustice and prejudice.

[22] Is there any prejudice to Intact, Novex, Gore or Economical if the individual actions continue pending the Workman certification? In my view, there is none. First, there is a possibility, as already noted, that the parties to the class action may shortly agree to a consent certification, making the stay motion moot. Second, and in any event, the defendant insurers can bring a Rule 21.01(1)(a) motion to determine a question of law (the availability of insurance coverage under the standardized “physical loss or damage” provision for COVID-related business losses)[^13] and potentially resolve all 17 individual actions (and arguably many more) without further litigation.

[23] Finally, as I reminded counsel for the moving party insurers, I am case-managing both the class actions and the 17 McCarthy Actions. If any issues of unfairness or unreasonableness in the progress of these proceedings materialize, I will be available to intervene as and when needed.

[24] In sum, the defendant insurers have not cleared the “no injustice or prejudice” hurdle. In my view, the requested stay would result in significant unfairness to the individual litigants who have obviously chosen not to participate in the class action and who wish to prosecute their claims expeditiously.

Disposition

[25] The joint motion brought by the insurers Intact, Novex, Gore and Economical to stay the 17 McCarthy Actions is dismissed with costs.

[26] If the parties cannot agree on a reasonable costs award, they should forward brief written submissions to my attention — the plaintiffs within 14 days and the defendant insurers within 14 days thereafter.

[27] My thanks to counsel on both sides for their assistance.

Signed: Justice Edward Belobaba

Notwithstanding Rule 59.05, this Judgment [Order] is effective and binding from the date it is made and is enforceable without any need for entry and filing. Any party to this Judgment [Order] may submit a formal Judgment [Order] for original signing, entry and filing when the Court returns to regular operations.

Date: May 27, 2021

[^1]: Workman Optometry et al v. Aviva Insurance et al, 2021 ONSC 142.

[^2]: Counsel advise that hundreds of similar individual actions are pending — the statements of claim have not yet been served. While the reasoning herein would likely also apply to these other actions, this decision relates only to the motion to stay the 17 served McCarthy Actions.

[^3]: Class Proceedings Act, 1992, S.O. 1992, c. 6.

[^4]: Courts of Justice Act, R.S.O. 1990, c. C.43.

[^5]: Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[^6]: Dumoulin v. Ontario (Ontario Realty Corp.), [2004] O.J. No. 2778, at para. 8. Also see Singh v. RBC Insurance Agency Ltd., 2020 ONSC 5368 at para. 75, where Glustein J., referring to Ground J.’s decision in Northfield Capital Corp. v. Aurelian Resources Inc., 2007 CanLII 6917, found it “significant” that “as Ground J. observed at para. 39, ‘the Plaintiffs have made it eminently clear that they had considered proceeding as a class action and decided against it and that they would definitely opt out of the Ontario class action if it is certified.’

[^7]: Vaeth v. North American Palladium Ltd., 2016 ONSC 5015, at para. 56.

[^8]: To the extent that I suggested otherwise in Carter v. LifeLabs, 2020 ONSC 7340, at para. 13, I now provide this clarification.

[^9]: Ibid., at para. 14, citing Singh v. RBC Insurance Agency Ltd., 2020 ONSC 5368 at para. 131.

[^10]: Supra, note 5.

[^11]: In Carter v. LifeLabs, supra, note 5 at para. 9, I questioned the legitimacy of the individual actions: “It was apparent to me from what was said by [the plaintiffs] at a case conference and also by his lawyer at the hearing that their primary mission may be less about the vindication of personal damage claims than about the extraction of a quick settlement from a deep-pocketed defendant.”

[^12]: Supra, note 1, at para. 20.

[^13]: Counsel in the McCarthy Actions agree that the “core” and “overarching” coverage issue “hinges on the existence of physical loss or damage…”