Court File and Parties
COURT FILE NO.: CV-21-656203-CP DATE: 20210924
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
TYLER DUFAULT Plaintiff/Respondent
- and -
THE TORONTO-DOMINION BANK and THE CANADA TRUST COMPANY Defendants/Moving Parties
Proceeding under the Class Proceedings Act, 1992
BEFORE: Justice Edward Belobaba
COUNSEL: Christine Londsdale, Adam Ship and Adriana Forest for the Moving Party Adam Tanel and Elie Waitzer for the Responding Party
HEARD: September 13, 2021 via Zoom video
Sequencing Motion under s. 4.1 of the Class Proceedings Act
[1] The defendant bank has filed a motion for summary judgment asking that the plaintiff’s proposed class action alleging improper NSF charges be dismissed. The bank requests that its summary judgment motion be heard before the plaintiff’s motion for certification. The plaintiff says it makes more sense that the two motions be heard together.
[2] The sequencing of pre-certification motions is addressed in s. 4.1 of the amended Class Proceedings Act.[^1] The CPA amendments came into force on October 1, 2020 and apply to this proposed class action because it was filed after this date.[^2]
The sequencing amendment
[3] Section 4.1 of the amended CPA provides as follows:
Early resolution of issues
4.1 If, before the hearing of the motion for certification, a motion is made under the rules of court that may dispose of the proceeding in whole or in part, or narrow the issues to be determined or the evidence to be adduced in the proceeding, that motion shall be heard and disposed of before the motion for certification, unless the court orders that the two motions be heard together. [emphasis added]
[4] This legislative provision can to traced to a recommendation that was made by the Law Commission of Ontario in its Final Report on Class Actions.[^3] The LCO noted that “a consistent concern with almost all stakeholders consulted is the enormous expense and slow pace of class actions.”[^4] One of its recommendations was “that courts support / endorse pre-certification summary judgment motions or motions to strike if such a motion will dispose of the action, or narrow the issues to be determined or the evidence to be filed at certification.”[^5]
[5] The reason for the s. 4.1 amendment was made clear by the Attorney-General Doug Downey in a speech to the provincial legislature:
As I mentioned before, it often does take years for class actions to work their way through the court system … Not only does this use valuable court resources, but there are also significant financial and reputational risks for Ontario businesses. It is expensive and time-consuming for businesses to defend class actions that are dormant, that don’t have merit, or can’t be resolved in a reasonable amount of time. The cost of these lengthy lawsuits impacts shareholders, employees and consumers, and ultimately our economy. […]
[W]e are introducing measures that put an emphasis on early motions by the defendant to narrow or dispose of a case before the certification stage. […]
Mr. Speaker, to put it plainly, the current system … needs to change. …[^6]
[6] The legislative intention as set out in s. 4.1 is clear: if a pre-certification motion can arguably dispose of the proceeding in whole or in part, or can narrow the issues or the evidence, the motion must be heard before certification, unless the court orders that the two motions be heard together.
[7] Section 4.1 preserves a sensible measure of judicial discretion and gives the judge the last word. But it also shifts the presumptions about who has to show what. The defendant now has a presumptive right to have certain motions heard and decided before the plaintiff’s motion for certification. The plaintiff can displace this presumption by persuading the court that there is nonetheless an overarching and good reason for the two motions to be heard together.
[8] The sequencing decision will require judges to balance the first 58 words in the s. 4.1 provision (that set out the legislative preference) against the last 11 words (that preserve some measure of judicial discretion). Some judges may read the last 11 words literally, as preserving an unbounded discretion. They may conclude that many if not all of the “good reasons” that judges have used in the past to deny pre-certification motions — the added costs and delay of injecting a new appeal opportunity, or the need to discourage bifurcation and “litigation by instalment”[^7] — are still available even in the face of this amendment.
[9] Other judges, myself included, will take the first 58 words of the sequencing provision as a strong legislative signal that early motions by the defendant that can indeed narrow or dispose of a case before certification should presumptively be heard before certification. After all, both the LCO and the Attorney-General would have understood the costs and delay of adding an opportunity for appeal but obviously concluded that these costs were outweighed by the benefits of pre-certification rulings in certain situations.
[10] For my part, there are at least two “good reasons” for denying a defendant’s request for a pre-certification summary judgment motion under s. 4.1:
(i) the defendant’s motion does not raise any genuinely arguable issues that can narrow or dispose of all or part of the litigation and appears to be a delay tactic; or
(ii) the defendant’s motion does raise genuinely arguable issues that can narrow or dispose of all or part of the litigation but the existing or proposed dates for the certification motion and the summary judgment motion are sufficiently close that it makes sense to hear the two motions together.[^8]
[11] Here, as I explain below, the defendant’s motion for summary judgment does raise genuinely arguable issues that can indeed narrow or dispose of all or part of the litigation. And the plaintiff’s certification motion has not yet been scheduled. In this case, there is no good reason to deny the defendant’s request.
[12] For the reasons that follow, the defendant’s sequencing motion under s. 4.1 of the amended CPA is granted.
Discussion
[13] The plaintiff’s proposed class action alleges that the defendant bank unlawfully earned tens of millions of dollars by “charging multiple NSF fees on a single rejected payment or bounced cheque”.
[14] The plaintiff does not contest having to pay the first $48 NSF fee when he had insufficient funds in his account to satisfy a PayPal payment. He disputes the legality of the second $48 NSF charge imposed about a week later when PayPal resubmitted its request for payment.
[15] The plaintiff alleges that the second NSF charge was a breach of the account agreement, a violation of provincial consumer protection legislation and resulted in the bank’s unjust enrichment.
[16] The defendant bank submits that none of these claims will succeed and that its motion for summary judgment may well narrow or dispose of all or part of this litigation because:
(i) The plaintiff’s claims are barred by the 30-day verification obligation that is set out in the account agreement – the plaintiff did not notify the bank about the impugned (second) NSF charge within the agreed-to time frame;
(ii) There was no breach of the account agreement and no unfair or misleading practices –- in keeping with standard banking practice and federal regulatory requirements, each payment direction is assigned a unique identifying number and is processed by the bank as a separate and standalone transaction - the bank had no way of knowing that the second PayPal request related to the first rejected request and, in any event, the imposition of the second NSF charge was authorized by the account agreement; and
(iii) Given the sound juristic reason for the second NSF charge (the terms of the account agreement) there was no unjust enrichment.
[17] The defendant bank submits, in essence, that the plaintiff’s claims (and those of the proposed class) have no merit — and if the bank prevails on this pre-certification motion, both the parties and the court will save significant time and resources in unnecessary litigation. If the bank loses the motion, then this may well promote settlement and, in any event, will narrow the issues to be determined going forward.
[18] I agree with these submissions. I am also not overly concerned that my ruling on the summary judgment motion will only bind the plaintiff and not all the putative class members. It is important to remember that the judge who makes findings on the pre-certification motion will be the same judge at certification and will almost invariably apply the same findings.
[19] As already noted above in paragraph 11, I am satisfied that the defendant’s motion for summary judgment raises genuinely arguable issues that can narrow or dispose of all or part of the litigation and is not merely a delay tactic. I also note that no certification record has yet been filed and the certification motion has not even been scheduled.
[20] In sum, there is no good reason why a potentially dispositive motion should not be heard before certification.
Disposition
[21] The defendant’s motion for summary judgment shall be heard and decided as currently scheduled and before the plaintiff’s certification motion.
[22] Because this court’s interpretation and application of s. 4.1 of the amended CPA was a matter of first impression, the parties reasonably agreed that this was not a case for costs. No costs are awarded.
[23] Order to go accordingly.
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: September 24, 2021
[^1]: Class Proceedings Act, 1992, S.O. 1992, c. 6, as amended. [^2]: See Smarter and Stronger Justice Act, 2020, S.O. 2020, c. 11. This action was commenced on February 2, 2021. [^3]: Law Commission of Ontario, Class Actions - Objectives, Experiences and Reforms: Final Report, (July 2019). [^4]: Ibid., at 51. [^5]: Ibid., at 52. [^6]: The Hon. Doug Downey, Ontario Legislative Assembly, Hansard, 42nd Parl., 1st Sess., No. 143 (February 19, 2020) and No. 170 (June 24, 2020). [^7]: Austin v. Bell Canada, 2018 ONSC 4018, at para. 38. [^8]: For example, I would be hard-pressed to schedule an earlier summary judgment motion when, for example, a certification record has already been filed and the certification motion would be heard only a few months later. I would direct that they be heard together.