Class actions are allowed in most Canadian provinces. Several recent developments, including application of lax certification procedures and the spread of third party litigation funding (TPLF), suggest that Canada is becoming even more hospitable to class actions.
Not surprisingly, the high likelihood of class certification is affecting how class actions are being litigated in Canada. A March 2015 ILR research paper, “Painting an Unsettling Landscape: Canadian Class Actions 2011 – 2014,” (also available in French, Perspective d’un horizon incertain – Recours collectifs au Canada 2011 – 2014) investigates trends from 2011- 2014 and notes several of these developments. First, an increasing number of class actions are being certified and resolved via trials on the merits. Second, settlements still remain a frequent method for resolving class actions, even where the lawsuit is of dubious merit or, if more stringent criteria were applied, would not be tried as a class proceeding. Third, the increased use of TPLF threatens to undermine the effectiveness of the “loser pays” policies adopted by some jurisdictions to discourage non-meritorious litigation. Some positive trends are also noted, such as the increasing use and success of summary judgment by defendants.
Because TPLF is largely unregulated in Canada, courts addressing class action funding contracts have established piecemeal standards, creating inconsistency across cases. While judicial oversight is a legislative requirement in representative proceedings, non-representative proceedings where TPLF is also used, such as personal injury or commercial litigation, are not subject to judicial controls.
The Law Commission of Ontario (LCO) could have a significant impact on the Canadian class action environment, as it conducts a review of experiences with the Ontario Class Proceedings Act over the last 20 years as requested by the Ontario Ministry of the Attorney General. While the study is currently on hold and will only present one province’s examination of its own class action process, the findings and recommendations could influence practices nationwide, particularly given Ontario’s status as the most populous province.