CLASS PROCEEDINGS ACT, 1990 / LOI DE 1990 SUR LES RECOURS COLLECTIFS
LAW SOCIETY AMENDMENT ACT (CLASS PROCEEDINGS FUNDING), 1990
PARKDALE COMMUNITY LEGAL SERVICES
CONTENTS
Monday 2 December 1991
Class Proceedings Act, 1990, Bill 28 / Lois de 1990 sur les recours collectifs, projet de loi 28; Law society Amendment Act, (Class Proceedings Funding), 1990, Bill 29
Parkdale Community Legal Services
Koskie and Minsky
STANDING COMMITTEE ON ADMINISTRATION OF JUSTICE
Chair: Cooper, Mike (Kitchener-Wilmot NDP)
Vice-Chair: Morrow, Mark (Wentworth East NDP)
Carr, Gary (Oakville South PC)
Carter, Jenny (Peterborough NDP)
Chiarelli, Robert (Ottawa West L)
Fletcher, Derek (Guelph NDP)
Harnick, Charles (Willowdale PC)
Mathyssen, Irene (Middlesex NDP)
Mills, Gordon (Durham East NDP)
Poirier, Jean (Prescott and Russell L)
Sorbara, Gregory S. (York Centre L)
Winninger, David (London South NDP)
Substitutions:
Duignan, Noel (Halton North NDP) for Mr Mills
Phillips, Gerry (Scarborough-Agincourt L) for Mr Sorbara
Clerk: Freedman, Lisa
The committee met at 1538 in committee room 2.
CLASS PROCEEDINGS ACT, 1990 / LOI DE 1990 SUR LES RECOURS COLLECTIFS
Consideration of Bill 28, An Act respecting Class Proceedings / Projet de loi 28, Loi concernant les recours collectifs.
LAW SOCIETY AMENDMENT ACT (CLASS PROCEEDINGS FUNDING), 1990
Consideration of Bill 29, An Act to amend the Law Society Act to provide for Funding to Parties to Class Proceedings.
The Chair: I would like to remind everybody that we have Michael Cochrane from the Ministry of the Attorney General to answer any technical questions should they arise.
PARKDALE COMMUNITY LEGAL SERVICES
The Chair: Welcome. Could you please identify yourself for the record and then proceed. You will be given 15 minutes for your presentation and then 15 minutes for questions and answers, shared equally among all three caucuses.
Ms Gordon: I am Phyllis Gordon, the clinic director at Parkdale Community Legal Services. This is Ray Kuszelewski, the staff lawyer in the landlord and tenant division, and Bart Posiat, the community legal worker in the landlord and tenant division. We probably have more than 15 minutes of commentary. However, we will try to be as quick as we can. Essentially we would like you to consider three different amendments to the legislation of Bill 28 and Bill 29.
The first, the one we are most concerned about, is to ensure that Bill 28 will apply to summary proceedings under part IV of the Landlord and Tenant Act. The second issue for us is the right to appeal to Divisional Court, and our concern about the financial cutoff. Above $3,000, you have an automatic right to appeal; under $3,000 it is with leave, in the landlord and tenant context in particular. The third issue is with respect to Bill 29. We would like you to consider an amendment which would ensure that there is community public representation on the committee of five that will administer the funds under Bill 29.
The first issue we would like you to consider is a change to Bill 28 in section 1, the definitions section. This would be a very simple amendment which would say, "`Proceeding' includes an application under part IV of the Landlord and Tenant Act."
The reason why this is necessary is that by clause 37(a) of Bill 28, part IV will not apply because there is something called a "representative action" in part IV of the Landlord and Tenant Act. Perhaps I should step back one bit and explain that part IV of the Landlord and Tenant Act applies to residential tenancies, and we are looking for access to class proceedings on behalf of tenants who are perhaps the most difficult people to bring together for litigation. It is one of the groups with the most extensive needs in different sectors of Ontario society.
But by virtue of clause 37(a), tenants will be stripped of the right to apply for a class proceeding action because this act does not apply to the proceeding that may be brought in a representative capacity under another act. The Landlord and Tenant Act has section 119, which on its face is a representative action:
"119. Where more than one person has a common interest in respect of an application under this part, one or more of these persons may be authorized by a judge of the county or district court" -- read General Division -- "in which the premises are located to make or defend an application on behalf of, or for the benefit of all."
The problem is that the courts, with their judicial conservatism, have taken all meaning out of this section and in fact have relied on the old kinds of hesitancies about class actions. So this section, by virtue of judicial fiat, has become meaningless for tenants and landlords.
There are cases in point which have simply said this cannot possibly apply to the situation where there are different individual contracts applying. The kind of concerns that the traditional bench has looked at, in looking at landlord and tenant representative applications, are precisely the wrongs which section 6 of the class proceedings bill is trying to get rid of. We believe these sections are as pertinent to landlord and tenant as to any other kind of litigation in the province.
There is a second stumbling block for tenants and for the litigators of tenants and, I might add, for landlords. Although we are not here speaking on their behalf, we have certainly, in our experience in dealing with them, discovered that both landlord litigators and tenant litigators are constantly befuddled by the lack of application of the rules of court to the summary proceedings. We are not taking on all of that summary proceeding issue today. What we are suggesting to you, though, is that, in a complex action involving hundreds of thousands or potentially millions of dollars, the rules of court should apply. That is another reason why we want this legislation, so that the rules of court do apply.
Bart and Ray can speak to the kinds of actions we are talking about, but essentially they are large buildings where disrepair is an issue. I am going to rely on these two men to give you the real nuts and bolts of why this is so critical. I am talking more about the legal issues right now.
The important issue is the number of buildings that do not get represented. In terms of legal energy, Parkdale has by far the greatest workforce, with up to five students, two community legal workers and a lawyer to handle a case. We can only take on about one building at a time. There are hundreds of buildings in the province which would benefit from class actions.
Bart will talk to you about the organizing difficulties. First, I would like to point out as well that it is our information that at both the Ontario Law Reform Commission and the committee of the Attorney General, the sort of committee with professional lawyer types on it that led to the development of this bill, they did not really look at the issue of landlord and tenant matters in any depth.
How could tenants lose by not being part of this proceeding? First, there is a counterproposal that says you should wait and amend part IV; the whole thing needs an overhaul. We suggest we will be waiting for years if that is the case, and we cannot afford to wait that long.
We lose the advantages of subsection 31(1) of the Class Proceedings Act with respect to costs awards, which guides the court in terms of when it should award costs. We lose the contingency provision of section 33 and the contract between a solicitor and client in section 32 of Bill 28. Both of these will assist the private bar in taking on this kind of work and increasing access to justice.
The psychological or court cultural impact, we believe, of having landlord and tenant matters under the Class Proceedings Act will be something that might be measurable only to those of us who are there. But these cases are not normally taken very seriously by the courts, we regret to say, and require greater attention and concern by the judiciary.
What are the advantages of having rules in effect prior to starting an action? Bill 28 provides sufficient flexibility to arrange the proceedings according to its own needs by a judge with counsel, but we need the framework of known rules, procedures and expectations that Bill 28 provides. If we leave it simply to the judicial discretion of the summary application judge, we believe we will get caught up in months of legal wrangling about the process.
One of the buildings that has been featured most prominently in the press over the last six months is West Lodge -- it had already gone to the Supreme Court of Canada many, many years ago on parallel issues and is back in the courts again. Bart and Ray have been very involved in it. There were approximately 720 units. Some 35 people have benefited from a very powerful decision in what the other 690-odd tenants have not been able to benefit from, and had there been a class action, that ruling would benefit all the tenants in the building.
Perhaps we cannot see the use for it right now, but section 23 allows statistical evidence to go before the court, and there may indeed be landlord and tenant matters in the future where statistical evidence would be useful. We are simply looking for a fair and more sophisticated process for tenants, and we believe landlords in these major money cases would certainly benefit.
It is my understanding that the interim draft report on the law of standing, which is considered to be parallel legislation in many ways -- and this is an interim draft report at the current time -- has included applications under part IV of the Landlord and Tenant Act. We are looking for consistency, which would be critical. The same policy we are arguing here was adopted by that committee in its draft recommendations. I stress that it is draft.
The other major disadvantage if tenants and landlords are not on the class proceedings bill is, we believe, the very broad discriminatory effect that not being included in Bill 29 will have. The access to the fund of Bill 29 is as important for tenants as it is for any other group, and you must remember that Bill 29 not only pays for disbursements but, once that committee has decided that disbursements should be awarded, there is an indemnification of costs. We are not looking at this only from the legal clinic point of view but also from that of tenants across the province, who now are denied any kind of legal assistance because they cannot afford to carry the case on their own. Access to Bill 29 would have a tremendous impact for them.
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An argument has been made that our proposal will upset the balance that currently exists. We respond to that by saying, first, that there really is not currently much of a balance at all in terms of resources between tenants and large landlords in understanding the legal system or in the resources of it. Second, section 119 of the current Landlord and Tenant Act states the principle we are asking you to adopt for tenant matters and to give some procedure to. It has been judicial conservatism that has upset and undone that balance and that remedy. So we are asking really for no more than the procedural rights that are now recognized by the statute and that have been taken away, and for the positive access aspects of Bill 28.
We have a subsidiary issue which deals with the appeal rights -- this is the second concern -- under section 30. We believe in general that there should not be a monetary cutoff point as to whether one has an automatic right to appeal. We find it an odd piece of legislation that says that if you have been awarded more than $3,000 you get an automatic right to appeal and not otherwise.
There are two specific points with respect to landlord and tenant matters. Most often, awards on disrepair are less than $3,000, and Ray and Bart can explain why that is the case, but presently tenants under part IV do have an automatic right of appeal to the Divisional Court, no matter how small the award. The one bit of inelegance our amendment would require, I suppose, we consider the most important thing you allow us, but there is a secondary issue on appeal rights. I have a complicated draft -- there would be a subsection 30(12), I suppose -- that basically states that in a proceeding under part IV, where an individual class member is awarded less than $3,000, the individual class member, the representative plaintiff or the defendant may appeal to the Divisional Court from an order, notwithstanding subsections 30(9), (10) and (11). That is the one issue we see as a bit tricky.
The other issue I will speak to quickly -- but one that is critical for the record and we would like your very serious attention to it -- deals with Bill 29 and section 59b. Section 59b sets up the five-person committee that will in fact control who will effectively be able to take class actions in the province. This committee, as presently structured, is one person appointed by the foundation, one by the Attorney General and three who are agreed to jointly. We would like you to seriously consider an addition to clause 59b(1)(c), where it says, "three members appointed jointly by the foundation and the Attorney General," and ask that you consider adding, "one of whom shall be employed by a recognized Ontario public interest group and one of whom shall be employed at a community legal clinic funded by the Ontario legal aid plan."
What we are asking for is to have the access to justice enshrined in this piece of legislation so that two voices out of five would represent the community that is most likely to benefit from the Class Proceedings Act and would have the most experience with the difficulties of bringing these actions and with the financial issues, from the community group's point of view, that must be reviewed by the committee, always remembering that because this Bill 29 is as powerful as it is, the disbursement is perhaps minor.
It is the right to indemnification from costs that is the real door to access to justice for people coming in under section 59 and trying to access this fund. It is a very odd provision in some ways because it removes from the courts the consideration of costs in the cases where the five members of the committee have approved an action. We believe very strongly that the Attorney General should ensure that at least two of the five voices come from people who may not normally be considered capital-P professionals but in many ways are certainly very professional in understanding the nature and the importance of this litigation.
Those are my three points. I know I have gone way over my time and I am sorry for that, but it is important.
Mr Posiat: I do not know how much time I have left, Mr Chair. I will try to make it very brief and you can cut me off when the time is expired.
I would like to expand a little on the one example Phyllis has given, which is an interesting example because it happened recently. It is 103-105 West Lodge, a huge building, 720 apartment units. The disrepair situation in that building is just horrendous. The tenants have legal recourse and a legal course of action under section 96 of the Landlord and Tenant Act, but without some measure of class action or group representative action, what kind of tenants are able to take advantage of that under the present system?
These are people on very low incomes, many different language groups, recent immigrants, single mothers, people on welfare, people who are just trying to get by, especially under the present economic circumstances. These people cannot all afford to go to court, so after a lot of effort, finally a group of them -- it was originally a group of about 70 people -- was able to file individual applications. Of course, by the time it went to court, some people had fallen by the wayside. Eventually we won the case and it is a very good judgement. However, the landlord is appealing it, precisely under section 119, which says that tenants can take the representative group action, because that is a very vague section that has been interpreted in the court in different ways.
There is an imbalance in the present justice system for people on low income. There is also an imbalance with regard to those who represent people on low income, such as legal clinics, in the sense that for us to file a massive group action, we have to make individual applications in court and we simply do not have the resources, nor does the Ontario legal aid plan. I met somebody just today on my way over here who cannot even get a lawyer -- this is a different kind of thing -- in a criminal case. I do not know why, but the man is on welfare and he said: "I can't get a lawyer. They can't give me one." There are not endless amounts of money available under the legal aid system, and also, even if there were a group action, a representative group action would be much more effective.
Tenants and people on low income generally are at a disadvantage at present under the justice system. This could be corrected by a representative group action where one person or a few persons could represent everybody else who is living under the same conditions, such as at 103-105 West Lodge. So (a) it would be more cost-effective and (b) it would correct an imbalance for people who are disadvantaged who would be able to be represented more effectively in the justice system.
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Mr Kuszelewski: If I might speak very quickly to the procedural methods that are available to us now without the class proceedings, although section 119 of the act says quite clearly that representative actions can be taken, the courts have told us very clearly they cannot be taken for the simple reason that each tenant has an individual contract with his or her lawyer, so one cannot represent those differences in a class proceeding. That is how section 119 has been taken away from tenants.
What does that do for the tenants? As Bart said, it means we have to file individual applications for each tenant. We have come up with a method of filing where we just stack all the tenants' names on to one application. We then have to provide the same number of affidavits in support of that application just as though we were filing individual applications, and then we hope the other side does not try to have the application stayed because of that procedural difference.
In the West Lodge case, we did just that. We filed 35 people on one application. We managed to get through the entire course of the proceedings because the judge agreed with us it was an expedient way to do it, but now we are faced with an appeal to the Divisional Court, where one of the grounds of appeal is that we took advantage of a section that has basically been ruled not to apply, so there is a chance we will lose on that technical point.
Besides the difficulty of bringing in every tenant and swearing an individual application to an issue such as disrepair -- and I can tell you disrepair is the largest issue that is of concern to us, because that is the issue where the class generally comes together, the issue of disrepair in their units or in their building -- besides the fact of bringing them all together, swearing out affidavits in any number of languages, with affidavits in support because of the translations that are required, we have to bring all of those people to court. We cannot just put one person on the witness stand and say: "This is the way this building looks. This is the way these units are repaired or disrepaired." We have to put every one of those people on the stand. We have no form of representative action whatsoever available to us. In that sense, in the case of West Lodge, it makes it identical to taking 35 individual applications. Although they have one file number, we have had to present the case basically 35 times to the judge.
We do not think that is a fair way of expending resources. The representatives are those types of representatives who are dealing with scarce resources, and we have to pick and choose very carefully what we decide to do. An act such as the Class Proceedings Act would certainly make the practitioner's life quite a bit easier and in essence streamline what goes before the courts. Those are our submissions on that issue.
The Chair: Thank you very much. Any questions or comments? Mr Morrow.
Mr Morrow: I want to thank you for coming. I was at a function on the weekend with a couple of friends from McQuesten Legal and Community Services, Peter Cassidy and Denise. They said to say hello.
Mr Phillips: Good party, eh?
Mr Morrow: Actually, it was not.
You wanted to amend clause 59b(1)(c) in Bill 29. Can you give that to me again, if you would not mind?
Ms Gordon: The words we are proposing to add on are as follows -- we are describing two of the members that fall under the three who are jointly appointed -- "one of whom shall be employed by a recognized Ontario public interest group and one of whom shall be employed at a community legal clinic funded by the Ontario legal aid plan."
The Chair: Further questions or comments? Seeing none, on behalf of the committee, I would like to thank you for taking the time out of your busy schedule today to give your presentation.
KOSKIE AND MINSKY
The Chair: Our next presenter will be from Koskie and Minsky. I would like to thank you for being here today. You will be allowed half an hour for your presentation. That will consist of 15 minutes for your presentation and up to 15 minutes for questions and comments from each caucus. Please identify yourself for the record.
Mr Zigler: My name is Mark Zigler and I am a lawyer with the Koskie and Minsky firm in Toronto. I appear before you not just on behalf of myself. There is a group of labour lawyers who tend to represent trade unions who have some concerns about this bill. We met informally, and I am conveying some of their concerns as well. I left a brief handout with the clerk.
There are only two major issues I wish to address with regard to Bill 28. The first is with respect to allowing persons or entities other than individuals to act as representatives of a class. Often, particularly in the type of litigation we are involved with, a trade union or an unincorporated association, even a ratepayers association or some association like that, may be a better representative of a class than trying to put forward one or two individuals as representatives of a class. That way it is an organization that is accountable to the class. It usually represents most of its members anyway and can communicate with them a lot better.
The first point -- I will get into in a bit more detail in a minute -- pertains to amending the bill so it is clear that the people who can be appointed as representatives of a class under the bill need not be restricted to individuals and, in the appropriate case, it would be open to the court to appoint any form of incorporated or unincorporated association, such as a trade union, but not exclusively that, to represent the members of a class.
The second point pertains to trying to get injunctive relief under this statute from time to time. Among my past litigation was a case involving Varity Corp, which went bankrupt a number of years ago through one of its subsidiaries, resulting in a group of pensioners losing their health and dental benefits and supplementary health benefits. There was no class action rule, so they sued as 220 individuals but could not get any injunctive relief. Thanks to this bill, if this were to happen again today, at least the group could sue as a class as opposed to having 220 people bringing action.
Sometimes if there is an immediate loss over and above the usual monetary damages, as for an immediate injury, they would try to get injunctive relief. You could not get an injunction under this bill until you went through the entire class certification proceedings and sent notice to everybody, which could take up to 90 days or more. If you needed immediate relief, even temporary relief, from a court on the basis of a class, you could not get it unless the bill were amended to permit a court to grant an interim certification and interim relief, subject to the usual rules of obtaining interim relief.
To get into detail on the first point, the bill here permits the certification of persons to represent a class. My concern is that unincorporated associations under section 2 are not necessarily persons, so the bill should be amended to permit an unincorporated association or any other artificial entity, whether it is a corporation or a trust, to represent the class. We now see this happening when, in a form of representative proceeding, you have debates about employee benefits or pension surpluses when a pension plan is being wound up. There are a number of such cases before the courts.
This bill will certainly allow the employees to proceed as a class with common interests and we will not have debates about individual actions and individual damages. It is a good bill in that respect and its intent is good. The only technical amendments I would suggest are the two I have addressed.
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There is a third small concern, and I do not know what impact it will have on practitioners. It deals with the contingent fees and multipliers permitted under this statute. I have a concern that there will be pressure upon various members of the bar to take cases on a contingent fee basis, particularly those involving things like pension funds and so on. That may well be the intent of the bill and I think that is fine to a degree.
The concern I have is that contingent fees may not necessarily be the best way of dealing with litigation where you are dealing with assets in trust. It may be that if you are going to permit contingent fees in those circumstances, the bill should explicitly state that contingent fees, if they are awarded, are to be awarded by the court out of the trust, assuming that a policy decision is made to go ahead that way, or else not permit contingent fees in those circumstances.
Sections 33 of the bill permits contingent fees. If there is going to be a reference to them, perhaps legislative counsel and the Attorney General should consider the issue of how you deal with contingent fee arrangements where you are dealing with rights in a trust and assets of a trust.
Subject to any questions you may have, that is really all I have to say in terms of the bill.
Mr Harnick: Explain to me, in terms of an unincorporated association being a representative plaintiff, what would happen in the case of a costs award. How can you enforce a costs award against an unincorporated association?
Mr Zigler: In effect, you have unincorporated associations right now who are given the status to act as parties in things like applications for judicial review under the Judicial Review Procedure Act. Unions, if they have an award of costs against them, pay the costs. If you had to sue a union right now you would sue a representative of the union.
Mr Harnick: So why cannot a representative of the union be the representative plaintiff? Does that not do the same thing for you?
Mr Zigler: Such a person can be. The difficulty would be that the action is then in the hands of an individual.
Mr Harnick: Except that you and I know that the union is standing behind the person.
Mr Zigler: Usually that is the case.
The Chair: Any further questions or comments? Seeing none, on behalf of the committee I would like to thank you for coming out today and taking time out of your busy schedule to be here.
Mr Morrow: Is it my understanding that we are to move into clause-by-clause tomorrow?
The Chair: Right.
Mr Morrow: Can I ask that we have unanimous consent to do it now, but can I also ask that we have a 20-minute adjournment before we do that?
The Chair: Do we have unanimous consent to move to clause-by-clause today after a brief recess?
Mr Morrow: We can do it now if you want, it does not matter. I just thought there might be a couple of things we might want to look at. If you want to move into it now, I do not have any objection to that.
Mr Chiarelli: I understand that no party at this point is going to be moving an amendment.
The Chair: Not as far as I know.
Mr Chiarelli: Why not simply proceed with clause-by-clause?
Mr Harnick: Unless you tell us why you want 20 minutes. What is it you want to look at?
The Chair: Do we have unanimous consent to move to clause-by-clause today? Agreed? Immediately? You can ask for 20 minutes. On a vote.
Mr Chiarelli: Are you concerned you cannot carry the votes?
Mr Morrow: I am always concerned about that.
Mr Chiarelli: We give you our undertaking that we have no amendments.
Mr Morrow: Let's move into the clause-by-clause.
The Chair: On Bill 28, are there any questions, comments or amendments? Seeing none, shall sections 1 to 39 carry?
Sections 1 to 39, inclusive, agreed to.
Title agreed to.
Bill ordered to be reported.
The Chair: On Bill 29, are there any questions, comments or amendments?
Seeing none, shall sections 1 to 5, inclusive, carry?
Sections 1 to 5, inclusive, agreed to.
The Chair: Shall the title carry?
Mr Chiarelli: No, I would like to move an amendment to the title so that it is called the Ian Scott Class Proceedings Act.
The Chair: Thank you, Mr Chiarelli. Seeing none, the title carries.
Title agreed to.
Bill ordered to be reported.
The Chair: Seeing no more business before the committee, we will adjourn until next Monday at 3:30 pm.
The committee adjourned at 1616.