Raising the bar: first interpretation of new preferable procedure test by Ontario Superior Court

For the first time since the Class Proceedings Act, 1992 (CPA) was amended in 2020, the Ontario Superior Court has interpreted the new provisions under the preferable procedure branch of the certification test on a contested motion for certification. Under the new subsection 5(1.1) of the CPA, a class proceeding will be the preferable procedure for the resolution of the common issues only if, at a minimum, it is superior to all reasonable alternatives to a class action, and the questions of fact or law common to the class predominate over questions affecting only individual class members.

In Banman v. Ontario¹, a case against the Province of Ontario involving allegations of institutional abuse by former psychiatric patients of St. Thomas Hospital, the Court confirmed that “the purpose of the amendment was to raise the threshold, heighten the barrier, or make more rigorous the challenge of satisfying the preferable procedure criterion”.

What you need to know

• The Court applied a new test for preferability. In Banman, the Court set out the rigorous analysis to be applied under the new preferable procedure test to determine whether the proposed class action meets the predominance and superiority factors.
• The Court clarified the predominance new requirement. The Court clarified that predominance requires that the common issues as a whole predominate over the individual issues. If the common issues do not predominate, then a class action is not productive and is inferior to the alternative(s).
• Economic feasibility and efficiency were considered when determining superiority. A class action will not be preferable if, at the end of the common issues trial, claimants continue to face the same economic and practical hurdles that they faced at the outset of the proposed class action.

New test for preferability

The Court clarified that a more rigorous analytical methodology was required under the new preferable procedure test, which includes determining (a) whether the design of the class action is manageable as a class action, (b) whether there are reasonable alternatives, (c) whether the common issues predominate over the individual issues, and (d) whether the proposed class action is superior to (better than) the alternatives. The Court observed that alternatives to a class proceeding include individual actions, joinder, consolidation, test cases, quasi-judicial or administrative proceedings, and remedial schemes or programs outside of a proceeding.

To make these determinations, the Court must compare the advantages and disadvantages of the alternatives to the proposed class action through the lens of judicial economy, behaviour management and access to justice. The lens of access to justice is the prime lens for the preferability analysis and will never be a neutral factor.

The decision in Banman

The proposed class action arose in the unique circumstances of a systemic negligence and institutional abuse class action, which was preceded by a joinder action² involving similar allegations and subject matter that lasted 23 years. It concerned the psychiatric treatment of 429 patients detained in the forensic psychiatric unit of St. Thomas Psychiatric Hospital between 1976 and 1992. The representative plaintiffs claimed that the Government of Ontario and its Attorney General were liable for alleged harms to patients who received treatment in the psychiatric unit under a psychosocial treatment program.

The Court certified the class action against the Government of Ontario but found that causation and damages questions could not be certified as common issues and would be determined in individual issues trials.

The Court identified that, in the circumstances of this case, the crucial lens through which the preferability analysis had to be conducted was access to justice. The behaviour modification and judicial economy factors were neutral because of the historical circumstances of the case and the fact that a class action and all the reasonable alternatives involved the prospect of adjudicating 429 individual claims. Applying the new test, the Court found that the plaintiffs’ proposed class action satisfied the preferable procedure criterion.

Predominance

The Court found that the common issues predominated over the individual issues for all proposed class members, except those patients who had economically viable assault or sexual assault claims. Those claims involved too many individual issues to certify, but the lack of predominance for those claims did not negate preferability of a class action for the other class members.

The Court’s decision on predominance included a consideration of the economic diversity of the patients’ claims. Notwithstanding the fact that some class members would have monetarily substantial claims in this case (and could, therefore, likely achieve access to justice through individual proceedings), the Court found that, for many proposed class members, a class action was the only viable means to achieve access to justice because their claims would otherwise not be economically viable to litigate. In those circumstances, the Court concluded that the common issues did predominate over the individual ones but acknowledged that, on different economics, a different outcome on predominance may have resulted.

Superiority

Through the access to justice lens, the Court found that a class proceeding was the preferable procedure and superior to individual trials or joinder actions. In particular, the Court noted that a class action was more feasible and efficient than a joinder action because of the economic factors and barriers to access to justice raised in institutional abuse actions with highly marginalized class members.

The Court considered plaintiffs’ counsel’s experience in Barker v. Barker, a joinder action of 28 co-plaintiffs against the Government of Ontario with similar facts and allegations of harm. Plaintiffs’ counsel argued the significant costs of litigating group institutional abuse actions make them economically unattractive to prosecute absent certification as a class proceeding. The Court acknowledged the class counsel’s unwillingness to take on the risks of a joinder action, making a class action the only viable route to access justice for those with economically unviable claims, as a factor in favour of a class action’s superiority. The Court also observed that the defendants’ “with-prejudice” proposal of a narrower class implicitly conceded that a class action was preferable to the joinder action in Barker.

The superiority of a class action from the perspective of the defendant was also a factor. In this case, a class action was found to be the most favourable procedure for the Ontario Government because—whether it ended in individual issues trials or a settlement—the claims of class members would be addressed.

Implications

Banman begins a new era of class action jurisprudence under a new, stricter test for certification. While the Court found that the higher bar for preferability was met in the unique context of this institutional abuse and misfeasance action, it remains to be seen how courts will interpret the new preferable procedure approach in other factual contexts and as other alternatives are considered.