Aggregate Assessment of Damages – The Next Step in Class Actions Jurisprudence?

Aggregate assessment of damages is a powerful tool in class proceedings legislation that permits the court to determine all or part of a defendant’s monetary liability to a class without evidence from each individual class member.

The purpose of aggregate assessment of damages, as envisioned by the Law Reform Commission Report on Class Actions, is to provide “greater justice for class members and improved efficiency for courts, without unfairness to defendants.”[1]

The application of aggregate damages does not require that the defendant’s liability be assessed with the same degree of accuracy as in an ordinary action.[2] In Ontario, courts have accepted that some class members may end up over-compensated while others are under-compensated, as long as the defendant’s overall exposure to liability is the same.[3] In fact, the Court of Appeal in Markson v. MBNA Canada Bank confirmed that aggregate damages may even lead to situations where some class members who did not actually suffer damage receive a share of the award.[4]

In order to qualify for aggregate assessment of damages under section 24 of the Class Proceedings Act, 1992 (“CPA”), a representative plaintiff must show that:

1.) monetary relief is claimed on behalf of all or some class members;

2.) no questions of fact or law other than those relating to the assessment of monetary relief remain to be determined in order to establish the amount of the defendant’s monetary liability; and

3.) the aggregate or a part of the defendant’s liability to some or all class members can reasonably be determined without proof by individual class members.

Given the requirement that no questions remain other than those relating to the assessment of monetary relief, aggregate assessment of damages may not be available in cases where resolution of the common issues does not establish the defendant’s liability.

However, where it is available, aggregate assessment of damages can provide a solution to an inherent dilemma in class proceedings – the ever-present possibility that a class action does not settle, and thousands or tens of thousands of individual proceedings are unleashed in the courts following the common issues trial.

The vast majority of class actions do not get to this stage, often settling after certification, before the common issues trial. In the rare cases in which a class action has reached the individual issues phase (such as Webb v. Kmart[5]), the cost of proceeding individually has often rivaled or outstripped the amounts recovered by class members.

Yet common issues trials, as rare as they are, have been trending upwards in recent years, and as the existing pool of certified class actions matures, the possibility of an action successfully completing a common issues trial and proceeding to individual issues is increasing.

As such, it is perhaps unsettling to realize that, despite the fact that the CPA has been in effect for over two decades now, aggregate assessment has never before been considered or applied in a trial judgment in this province.

That may soon change. On January 7-9, 2014, a damages trial took place in the Ramdath v. George Brown College action, in which the Plaintiffs sought aggregate assessment of damages for breach of the Consumer Protection Act, 2002 (“Consumer Protection Act” or “Act”).  The trial was adjourned on January 9, with a continuation to be scheduled at the next case conference.

Background

The Ramdath v. George Brown action arose from George Brown College’s publication of

a description for its B411 International Business Management Program (“Program”) (“Program Description”) in its course calendar and on the George Brown website between September 2006 and September 2008. The Program Description indicated that students who completed the Program would receive an “opportunity to complete three industry designations in addition to the George Brown College Graduate Certificate”, and grouped the Program courses under headings for each of the three industry designations. The industry designations were considered valuable because they would provide industry recognized credentials to students who wished to work in the field of international business. However, at the end of the Program, students received only a George Brown certificate, and none of the three industry designations advertised in the Program Description.

The Plaintiffs launched a class action on behalf of students who enrolled in the Program during the time that the Program Description was in place, and advanced claims for breach of the Consumer Protection Act, negligent misrepresentation, and breach of contract stemming from publication of the Program Description. The action was certified as a class action by Justice Strathy on April 8, 2010.[6]

The common issues trial, held on October 23 and 26, 2012, proceeded largely by way of agreed facts and admissions made by George Brown College, including that it had no ability to independently confer any of the three designations to its students, and that it had no agreements in place with any of the three industry associations that would automatically award designations upon successful completion of the Program. Based on these admissions and the evidence at trial, the trial judge held that the Program Description was misleading, and found George Brown liable for committing an unfair practice under the Consumer Protection Act, 2002.[7]

The common issues trial judgment was upheld by the Court of Appeal in a decision released on July 9, 2013.[8] Apart from affirming the trial judge’s finding that the Program Description was misleading, the Court of Appeal’s reasons were particularly significant because they constituted the first appellate authority in Ontario to consider the definition of “consumer” under the Consumer Protection Act, and to confirm that reliance is not necessary for entitlement to a remedy under the Act.

By not having to prove individual reliance to establish liability under the Consumer Protection Act, the Plaintiffs had effectively met one of the key requirements in section 24 and were one step closer to obtaining aggregate assessment of damages.

Since it is not disputed that monetary relief is claimed on behalf of the class members, the only issue at the damages trial was whether the Plaintiffs could demonstrate to the Court that the class members’ damages could reasonably be determined on an aggregate basis without proof by individual class members. To do so, the Plaintiffs retained an expert labour economist, who generated aggregate loss estimates based largely on demographic and background information gathered from student records provided by George Brown and census data.

Implications

It is not yet certain what the outcome of the damages trial will be. The Plaintiffs are pressing for complete aggregate assessment of damages, while the Defendant is insisting on individual discovery and proceedings. As section 24 contemplates the availability of partial aggregate assessment, the answer may alternatively lie somewhere in the middle of this spectrum.

Whatever the ultimate decision, the reasons from this trial will set a tremendous precedent in Ontario and in other common law provinces.

A decision in favour of the Plaintiffs will serve as a much needed blueprint for future aggregate assessment of damages in subsequent class actions. Aggregate assessment could prove particularly amenable in actions predicated on the Consumer Protection Act and Part XXIII of the Ontario Securities Act secondary market misrepresentations cases, both of which allow recovery for misrepresentation without proof of individual reliance. Application of aggregate assessment under section 24 could obviate the need for individual trials altogether and assess both liability and damages on a common basis.  Such an outcome would maximize the judicial economy, access to justice, and behaviour modification objectives of the Class Proceedings Act, as well as the general policy reasons underpinning securities and consumer protection legislation.

Conversely, a decision rejecting aggregate assessment of damages will constitute a missed opportunity to obtain insight on how exactly damages could be assessed on an aggregate basis without individual evidence. The bar will be forced to wait for another class action to reach trial, an all-too infrequent event (despite anecdotal opinion of many in the bar that more cases are going to trial, it remains true that trials are a very rare exception). This is significant because aggregate assessment is arguably the only practical way to deal with mass harm.

The unpleasant reality is that there is no actual infrastructure in place to handle an influx of individual proceedings after a common issues trial, and many class actions may not be feasible to prosecute on an individual level. In Ramdath v. George Brown, for example, more than ¾ of the class of 108 are international students, originating from 14 different countries. Attempting to track down and examine each student for discovery, produce an affidavit of documents for each student, generate an expert report calculating future economic loss for each student, and ultimately participate in an individual trial or assessment for each student would be tremendous undertaking of time and resources that may or may not be feasible, given the anticipated recovery. If the class were 10,000 instead of 108, it may very well be impossible.

At the end of the day, any judicial clarity on how and in what types of cases aggregate assessment should be applied will be welcomed. The class actions bar has been practicing in the dark for far too long on this issue, and it is time for section 24 of the CPA  to be put to the test.



[1] Ontario Law Reform Commission, Report on Class Actions, Vol II (Ministry of the Attorney General: Toronto, 1982) [“OLRC Report”] at p. 555.

[2] Compare wording of section 24(1)(c) of CPA to bill proposed in Ontario Law Reform Commission, Report on Class Actions, Vol III (Ministry of the Attorney General, 1982), at p. 869.

[3] Healey v. Lakeridge Health Corp., [2010] O.J. No. 417 at para. 282 (S.C.J.).

[4] Markson v. MBNA Canada Bank, [2007] O.J. No. 1684 at para. 49 (C.A.).

[5] Webb v. 3584747 Canada Inc., 2001 CarswellOnt 2390 (S.C.J.).

[6] Ramdath v. George Brown College of Applied Arts and Technology, [2010] O.J. No. 1411 (S.C.J.).

[7] Ramdath v. George Brown College of Applied Arts and Technology, 2012 ONSC 6173 (S.C.J.).

[8] Ramdath v. George Brown College of Applied Arts and Technology, 2013 ONCA 468 (C.A.).