Canada: Court Of Appeal Finds Limitation Periods Suspended Indefinitely Following A Denial Of Certification

In R.G. v. The Hospital for Sick Children, the Court of Appeal for Ontario found that limitation periods remain suspended for all individual claimants for an indefinite period of time following the denial of certification of a class proceeding. This decision confirms a decision of Justice Perell, which we wrote about here. Until very recently, section 28 of the Class Proceedings Act ("CPA") only provided for the automatic recommencement of limitation periods upon certain specified events, which did not include denial of certification. While the Court of Appeal found that the indefinite suspension of the limitation period is not necessary to promote the purpose of the CPA and undermines the purpose of the Limitation Act, 2002, the Court determined that this was a problem for the Legislature to address.

The recent amendments to the CPA, which we previously wrote about here, make precisely this change by adding denial of certification to the list of events that trigger the recommencement of limitation periods. However, these amendments only apply to class actions commenced after October 1, 2020.

Background

The Respondent was the representative plaintiff in a proposed class action alleging that the Appellants were negligent in operating the Motherisk Drug Testing Laboratory, which screened hair samples for the presence of drugs and alcohol. The tests conducted by the lab delivered false positive results and were used for various purposes, including the treatment of patients, criminal proceedings, and family law disputes. The Respondent's motion for certification was dismissed and leave to the Divisional Court was dismissed.

The Respondent brought a motion for an order:

• declaring that the putative class members' limitation periods continued to be suspended;
• permitting her to continue the proceeding as a multi-plaintiff action pursuant to s. 7 of the CPA; and
• granting leave to file an amended statement of claim to join approximately 200 individual claimants to her claim.

The Appellants did not contest the continuation of the Respondent's individual action under s. 7 of the CPA. However, they argued that the motion judge's interpretation of section 28 of the CPA resulted in the indefinite suspension of limitation periods following the denial of certification, a result they described as absurd. The Appellants argued that a denial of certification should reactivate the limitation period.

Limitation period remains suspended following denial of certification

Section 28(1) of the CPA provides that limitation periods are suspended until one of a list of the enumerated events occurs, such as where a decertification order is made or the class proceeding is dismissed, abandoned or settled. Prior to the recent amendments to the CPA, this list did not include the denial of certification. 

The Court of Appeal reviewed the purpose of section 28, which is to protect putative class members from limitation periods that would otherwise interfere with their ability to pursue a class action. The Court upheld the motion judge's finding that s. 28(1) establishes an exhaustive list of circumstances that govern the commencement and suspension of limitation periods in the context of class action proceedings. Given that denial of certification is not one of the enumerated circumstances that can restart a limitation period, the suspension of the limitation period remains in place following the denial of certification.

The Court observed that the result was "not ideal" as it means that limitation periods are suspended indefinitely in respect of individual claimants even though the rationale for continuing to toll limitation periods no longer applies once certification has been denied. However, this was the inescapable consequence of the clear wording of s. 28(1).

Can the limitation period suspension be lifted by the defendants?

The motion judge found that in order to recommence the running of limitation periods, the defendant must bring a motion under s. 29 of the CPA for a dismissal or discontinuance of the action. The motion judge found that such a motion would provide fair notice to putative class members that the certification motion had failed.

The Court of Appeal found that a motion to dismiss or discontinue the proceedings contemplates that a class action has begun, but the denial of certification means that no class action ever came into being. As a result, there is no action that could be dismissed or discontinued. In the view of the Court of Appeal, a denial of certification is akin to the decertification of a class action, but while the latter causes the limitation period to resume running under s. 28(1), the former does not.

Although the Court of Appeal disagreed with the mechanism proposed by the motion judge, the Court did not appear to suggest any alternative mechanisms that would allow defendants to recommence limitation periods. Without such a mechanism, defendants may remain indefinitely in limbo when certification is denied in a proposed class proceeding.

Can the action continue as a multi-plaintiff action?

The Court of Appeal confirmed that the test for whether a dismissed class proceeding can continue as a multi-plaintiff class action under section 7 of the CPA is the same as the test for joining multiple actions under the Rules of Civil Procedure.

The Court of Appeal agreed with the motion judge's finding that the Respondent's motion should be dismissed because there were insufficient facts pleaded to determine whether the test for joinder was satisfied. The amended statement of claim contained no material facts relating to the proposed co-plaintiffs and counsel for the Respondent refused to confirm that he was retained by any such plaintiffs. The Court of Appeal upheld the motion judge's decision to dismiss the motion without prejudice to the Respondent's right to reapply to join co-plaintiffs at a later date.

Conclusion

Amendments to the CPA which came into force of October 1, 2020 have now added the denial of certification to the list of events that trigger the recommencement of limitation periods. However, these amendments will not solve the problem of indefinite suspension of limitation periods where certification is denied for class actions commenced before October 1, 2020. For those cases, defendants should be aware that the limitation period for all putative class members remains suspended for an indefinite period of time following the denial of certification.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.