Changing Ontario’s Class Proceedings Act

Yesterday, Simon prepared a kind post to introduce me (again) to

I plan to post about civil litigation issues, class actions, and advocacy.

My first contribution is about Ontario’s Class Proceedings Act, 1992.

Last week, the Law Commission of Ontario released a list of issues it will consider to reform class action law in Ontario. The scope of its review will be broad, ranging from improving “take-up rates” by class members, canvassing different funding options for class actions, and providing guidance for when national class actions are appropriate.

For me, the topic that is most interesting about this review are cy-pres awards.

What are cy-pres awards? If it will be difficult to allocate money in a class action to class members, either because the individual amounts are too small, or because it may be difficult for people to prove they have a claim, compensation in a class action can be awarded in the form of a “cy-pres amount. The term cy-pres means that “if you can’t give money to the person that deserves it, pay the money instead to someone who is as close a substitute as possible.”

In the United States, many are critical of cy-pres awards, suggesting that they are just a way for class action lawyers to justify contingency fees without providing real compensation to members of the class.

We have not yet gone that way in Canada. Most debates have focused on whether the entity chosen to benefit from the cy-pres award is really an adequate substitute for the class members. In some cases, though, the decision can be really hard. Take a defective product, for example. The damages may be small but widespread. Anyone can find a consumer interest or public policy group to make a cy-pres award as a proxy for persons who do not make a claim. But the cy-pres doctrine limits the ability to venture far beyond these groups if the beneficiary is not closely tied to the class.

In considering changes to the Class Proceedings Act, 1992, I wonder whether the court should have an overriding discretion to open the door more broadly to deserving charities if a close substitute for class members is not apparent under the traditional cy-pres analysis. Surely, there is social utility in distributing class action funds to improve our society more generally. These and other issues may be debated as the Law Commission of Ontario begins its review of class action legislation in Ontario.

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