In Fanshawe College of Applied Arts and Technology v. Hitachi, Ltd.[1], the Ontario Court of Appeal provided guidance on appeal rights for class actions, particularly after the parties have reached a settlement. In doing so, the Court confirmed its judicial oversight and appellate consideration, even when there are settlement agreements in play.
Background and facts.
The plaintiffs commenced this class action to challenge the defendant electronics manufacturers’ attempts to fix the price of cathode ray tube products (the CRT Products). Following certification of the claims, the parties reached a settlement, which the Court approved and formalized in the distribution protocol, pursuant to s. 27.1 of the Class Proceedings Act[2] (the Distribution Protocol). The Distribution Protocol required claimants to provide supporting documentation for their claims if the claims administrator selected them for an audit.
The Distribution Protocol also gave the claimants a limited right of appeal to the Superior Court and provided that the decision on appeal was “final and binding and shall not be subject to any further appeal or review whatsoever.”[3]
Class Action Capital Recovery LLC (CAC) acted as a third-party filer for large institutional claimants, which the claims administrator subsequently chose for an audit (the CAC Claimants). The CAC Claimants were unable to produce documents showing proof of purchase because they were no longer available based on their document retention policies. As a result, the claims administrator rejected a majority of the CAC claims.
Motion judge’s decision.
CAC appealed the decision, by way of a motion for directions to the Superior Court. The motion judge partially allowed the appeals.
The Honourable Mr. Justice Grace held that the claims administrator had adopted a narrow definition of “documentary proof” and provided insufficient reasons to deny the claims. The judge instructed the claims administrator to reconsider every claim in which the claimant submitted a declaration attesting to the purchase of the CRT Products and supporting documentation (the January Decision).
CAC and the claims administrator, however, disagreed on the process for assessment of the remitted claims. The claims administrator maintained that it was only required to reconsider the claims based on the documentation, and then send out revised decision notices. CAC maintained that the January Decision required the claims administrator to restart the deficiency process, i.e., by identifying any deficiencies and providing the CAC Claimants with a chance to correct any deficiencies as set out in paragraph 43 of the Distribution Protocol.
On September 21, 2021, in response to CAC’s motion for further directions, Justice Grace provided a brief endorsement clarifying the January Decision to note that it did not refer to paragraph 43 of the Distribution Protocol, hinting that CAC’s position was incorrect (the September Decision).
CAC then filed its Notice of Appeal to appeal the September Decision to the Ontario Court of Appeal. Class counsel brought a motion to quash the appeal pursuant to s. 134(3) of the Courts of Justice Act[4] on the grounds that it contravened the Distribution Protocol and CAC did not have standing.
Ontario Court of Appeal’s decision.
In dismissing the motion to quash CAC’s appeal, the Court of Appeal considered four key issues:
- Whether it has the jurisdiction to hear the appeal;
- Whether CAC has standing to commence an appeal;
- Whether CAC’s appeal was out of time; and
- Whether CAC’s appeal was a collateral attack on the January Decision.
In considering each issue, the Court highlighted the following key principles:
Issue 1: The Court has jurisdiction to hear the appeal.
The Court has jurisdiction to hear the appeal as parties cannot contract out of judicial oversight and appeal rights unless permitted to do so by statute. In coming to this decision, the Court looked at the Arbitration Act and the International Commercial Arbitration Act, 2017 and the clear statutory authority that each provided for parties to contract out of judicial oversight or appeals.
The Court noted that there is no language in the Class Proceedings Act, nor in any other Ontario statute, ousting the Court’s jurisdiction. The Court held that a privately agreed upon paragraph in an agreement cannot have the same force and effect of a statute, and that paragraph is not sufficient on its own to oust the Court’s appellate jurisdiction under the Courts of Justice Act.
The Court confirmed that appeal rights under s. 6(1) of the Courts of Justice Act presumptively apply when legislation is silent on the proper appeal route. Section 30 of the Class Proceedings Act does not expressly address appeal rights for an order made on a motion for directions under a court-approved settlement agreement. When the Class Proceedings Act is silent, the appellate jurisdiction is not determined based on settlement agreements; rather, s. 6(1) of the Courts of Justice Act determines the parties’ appeal rights.
Issue 2: CAC has standing to commence an appeal.
The Court placed little weight on the parties’ substantive arguments grounded in case law or the nature of the appeal.[5] Rather, the Court held that class counsel cannot adjust the timeliness of any “standing” challenges based on its preference, noting that CAC’s standing for the January Decision went unchallenged. The Court therefore held that standing cannot now be challenged. Further, the Court confirmed CAC’s status as an agent for its clients and noted that, “adopting a more formalistic approach would only undermine the goals of class proceedings by, for example, requiring each claimant to inefficiently and expensively advance its own appeal.”[6]
Issue 3: CAC’s appeal was not out of time.
Pursuant to Rule 61.04 of the Rules of Civil Procedure, an appellant is required to serve notice of appeal within 30 days of the order appealed from. The Court confirmed prior jurisprudence[7] on this issue, noting that the clock to commence an appeal starts to tick when the reasons are pronounced in writing or orally, unless the judgment is uncertain on an issue. If the judgment is uncertain, then the clock only starts running once there is clarity and the potential disagreement has been resolved.
In this case, the parties had required and did not receive their answer until the Court released the September Decision. CAC therefore had 30 days from the date of the September Decision to appeal and it had brought its appeal in time.
Issue 4: Collateral attack arguments.
The Court did not substantively address this issue, but restated the principle that collateral attack arguments should be reserved for use as a defence and not a sword attempting to quash an appeal for lack of jurisdiction.
Significance and key takeaways.
Appeals are a fundamental part of our judicial system. Fanshawe is an important reminder that parties cannot agree to forego appeals without the statutory authority to do so. To that end, Fanshawe provides important guidance to class counsel and class members on their appeal rights: from standing to where their appeal rights may lie. When settlement agreements are being drafted, counsel should be mindful that they cannot curtail judicial oversight and that appeals may be made even during the settlement or distribution process, at a time when parties may believe that the lawsuit is already at an end.
If you have any questions regarding this insight or class action defence, please contact the author Radha Lamba, or any member of Dentons Canada’s Litigation and Dispute Resolution group.
[1] 2022 ONCA 144 [Fanshawe].
[2] Class Proceedings Act, 1992, S.O. 1992, c. 6 [“CPA”]
[3] Fanshawe at para 7.
[4] s. 134(3) of Courts of Justice Act [CJA].
[5] Class Counsel attempted to rely on the Court’s decisions in Bancroft-Snell v. Visa Canada Corporation, 2019 ONCA 822 and Dabbs v. Sun Life Assurance Co. of Canada (1998), 41 O.R. (3d) 97 (C.A.) to deny CAC’s standing. Meanwhile, at para 22 of Fanshawe, CAC focused on the fact that its appeal related to uphold the deficiency process in the Distribution Protocol and not the court approval of the settlement agreement.
[6] Fanshawe at para 23.
[7] Byers (Litigation Guardian of) v. Pentex Print Master Industries Inc. (2003), 62 O.R. (3d) 647 (C.A.).
