Dolden Class Action Newsletter - March 2024 - Dolden Wallace Folick LLPDolden Wallace Folick LLP

March 11, 2024

Dolden Class Action Newsletter – March 2024

Back to Basics: Pre-Certification Jurisdictional Application Determined by B.C. Court

By Christine Galea and Jessa Conmigo, Dolden Toronto
Email: [email protected] and [email protected]

A recent jurisdictional application decision in a proposed class action before the Supreme Court of British Columbia serves as a practical reminder of how the Court will determine issues of jurisdiction simpliciter and forum non conveniens.

In Mayer v. Merchant Law Group LLP, 2023 BCSC 1797 (CanLII) [“Mayer”], a proposed class action, the defendant applied to stay or dismiss the claim brought against it in British Columbia for lack of territorial competence (jurisdiction simpliciter) or, alternatively, on the basis that the Court of King’s Bench of Saskatchewan (“Saskatchewan”) was the more appropriate forum (forum non conveniens). The Court rejected the defendant’s arguments and dismissed its jurisdictional application.

Factual Matrix

The case arises out of a proposed class action brought in Saskatchewan in Piett v. Global Learning Group Inc., KBG 590/16 (“Piett”). The Piett action was commenced by a law firm, Merchant Law Group LLP (the “Law Firm”), on behalf of donors who participated in a failed charitable donation tax program. The Piett action was found to be an abuse of process and was not certified as a class action.

The plaintiff in Mayer was a client of the Law Firm and a proposed class member in the Piett action. He commenced the Mayer action against the Law Firm, alleging that it induced the proposed class members to pay retainer fees through misleading solicitations and subsequently misused the collected trust funds. The plaintiff was a B.C. resident, whereas the Law Firm was a partnership formed in Saskatchewan with a registered office in Saskatchewan. It also had a registered partnership and offices in B.C.

Jurisdiction Simpliciter

Territorial competence in B.C. is governed by the Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28 (“CJPTA”), which has modified and codified the common law on territorial competence of the courts in B.C. Under the CJPTA, a court in B.C. will have territorial competence if the proceeding is brought against a defendant who was ordinarily resident in B.C. at the time the proceeding was commenced.

The Law Firm argued that because it was no longer physically occupying its registered office in B.C., it was not ordinarily resident in B.C. as contemplated under the CJPTA. The Court disagreed, stating that the defendant could not take advantage of its own failure to update its address to avoid the plain language of the CJPTA. The Court found that it had jurisdiction because the Law Firm was a partnership deemed ordinarily resident in B.C. as it had a registered office and operations in B.C. It did not matter that the Law Firm had a head office in Saskatchewan or that the legal work was not performed in B.C.

Territorial competence can also be established through other avenues codified in the CJPTA, such as a “real and substantial connection” between B.C. and the facts on which the proceeding is based. While initially advanced by the defendant in Mayer, the Court did not need to engage in this analysis because territorial competence was met through the defendant’s residency status in B.C.

Forum Non Conveniens

After establishing that B.C. had jurisdiction simpliciter over the matter, the Court addressed the issue of forum non conveniens. The legal principles of this doctrine are codified in s. 11 of the CJPTA.

The question is whether a court outside of B.C., such as Saskatchewan in this case, was the more appropriate forum in which to hear the proceeding. While the Court must consider various factors outlined in s. 11(2) of the CJPTA, the Court may also consider recognized common law factors.

Here, the collective weight of several codified and common law factors prevented the Court from finding Saskatchewan to be a clearly more appropriate forum. These factors included:
        a)   The plaintiff and a material number of proposed class members were residents in B.C.;
        b)   The defendant had operations and offices in B.C.;
        c)   The alleged misrepresentations were received in B.C.;
        d)   The subject retainer agreement was executed by the plaintiff in B.C.;
        e)   The subject retainer agreement contained a clause making B.C. law govern;
        f)   The retainer funds were delivered from B.C.; and
        g)   The plaintiff suffered his loss in B.C.

Factors that favoured Saskatchewan, such as Piett being a Saskatchewan action and the Law Firm’s primary operations being in Saskatchewan, were insufficient. The Court clarified that forum non conveniens does not involve a “tallying up of the score” of the factors under s. 11(2) of the CJPTA. The Court must instead consider all of the evidence and ask itself whether the alternate forum emerges as clearly more appropriate.

Takeaway

Defendants in B.C. proceedings will want to fully consider the CJPTA in assessing territorial competence, as the determination may not hinge on the claim having a “real and substantial connection” to the B.C. courts. In Mayer, the Court declined to consider the “real and substantial connection” argument advanced by the defendant because territorial competence had already been established by the defendant’s residency status in B.C.

Mayer also serves as a reminder that while there are mandatory factors codified in the CJPTA for the forum non conveniens analysis, these factors are not exhaustive. It is open to defendants to rely on other common law factors, such as where the cause of action arose, where the damage occurred, and any juridical disadvantage to the defendant, if it will help their case.

Footing the Bill: Class Action Costs Where There Is Partial Success

By Christopher Stribopoulos and Elka Dadmand, Dolden Toronto
Email: [email protected] and [email protected]

In Delorme v. Allstate Insurance Company of Canada, 2023 ONSC 4271, the Ontario Superior Court of Justice considered the issue of costs following a partially successful certification motion, ultimately deciding that each party should bear its own costs.

Factual Matrix

The matter involved a proposed employment law class action. The representative plaintiffs claimed that the defendant, Allstate Insurance Company of Canada, breached provincial employment standards statutes when calculating holiday and vacation pay. The plaintiffs claimed damages of $80 Million.

Procedural History

The certification motion proceeded in two rounds before Justice Belobaba. The first round did not go well for the plaintiffs. Justice Belobaba adjourned the motion to permit the plaintiffs to reformulate their position. The plaintiffs reduced their damages claim to $11 Million and returned for a second round of the motion. Justice Belobaba certified three of the 13 common issues.

Costs Motion

Justice Perell heard the costs motion. The plaintiffs claimed partial indemnity costs of $474,671.74, inclusive of disbursements and HST. The plaintiffs argued that they were successful in a novel class action and that they should not be penalized for narrowing the class membership. The defendant argued that the plaintiffs’ costs award should be discounted by 33% for the costs wasted on the first round of the motion and 50% for the failed certification issues. Since the defendant’s costs exceeded those of the plaintiffs, the defendant argued that it was owed $52,941.17 for the certification hearing.

Determination

Justice Perell disagreed with both parties. Justice Perell considered the cost award principles set out by the Court of Appeal in Pearson v. Inco Ltd., [2006] O.J. No. 991 (ON CA) and the costs factors set out in Rule 57.01(1) of the Rules of Civil Procedure. Justice Perell underscored the guiding principle that costs be fair and reasonable.

Justice Perell further considered the discretion of the court to make “no order as to costs” where the success on the motion was divided. The factors for consideration were: the amount claimed, the amount recovered, the apportionment of liability, the complexity of the proceeding, the importance of the issues, and the conduct of any party that shortened or lengthened unnecessarily the duration of the proceeding.

Ultimately, Justice Perell held that the appropriate award was for each party to bear its own costs. The plaintiffs’ claim for costs went “far beyond the reasonable expectations” of the parties, and the defendant was a “very successful unsuccessful party”.

Takeaway

An award of costs is not guaranteed to the party successful at a certification motion in Ontario. Additional factors must be taken into consideration when assessing entitlement to costs.