Stays in the class proceeding context - You need only recover once

Hamm, Keepness and Tobin v. The Attorney General of Canada^[1]

In a recent decision of Justice Bercov of the Court of Queen's Bench of Alberta (the "Court") and upon application by the Defendant, the Attorney General of Canada (the "Crown"), the Court stayed the Plaintiffs' individual action following the certification of two class proceedings in Ontario involving a related set of claims.  In ordering the stay, the Court provided clarification of the applicable test for that determination, a question it viewed as still unresolved in the case law.  In so doing, the Court has created a more nuanced test for any stay application specific to the class proceeding context.

The claims in each of the individual Alberta action (the "Individual Action") and the two Ontario class proceedings arose from the use of administrative segregation for inmates in federal institutions (the "Class Actions").  The Crown argued that the Court should stay the Individual Action while the Class Actions proceeded in part because the Plaintiffs in the Individual Action were class members in at least one and possibly both of the Class Actions and had not exercised their right to opt-out.  The Crown had made a general payment in one of the Class Actions and an individual trial phase had been scheduled to deal with additional individual loss and damage.  The Plaintiff would be entitled to participate in both a share of the general payment and an individual issues trial.

In arguing that the Individual Action should proceed despite the inclusion of the Plaintiffs in the Class Actions, counsel argued that the addition in the Individual Action of distinct causes of action in tort, including false imprisonment, that were not plead in the Class Actions, meant the Individual Action was not strictly overlapping with the Class Actions.  The Court rejected this, finding that while different causes of action were plead, the segregation was the single source of the harm in all three actions and that participation in the individual trial phase of the Class Action might result in full recovery for the Plaintiffs rendering a hearing of the Individual Action unnecessary.  The Court was focused not on whether any causes of action plead were distinct and necessitated a determination but whether any potential loss or damage was distinct necessitating an opportunity for recovery in the Individual Action.

In arguing in favour of the stay, the Crown relied on a three-part test cited by the Alberta Court of Appeal that asks whether the issues in the actions are substantially the same and whether the Crown could show both that the continuance of the Individual Action would cause an injustice and that the stay would not cause an injustice.  The Plaintiffs relied on a modified version of the traditional three-part test for injunctive relief that would have required that the Crown show that there was a serious issue to be tried about whether the actions overlap, that a continuance of the Individual Action would cause irreparable harm to the Crown and that a stay would not cause prejudice to the Plaintiffs. 

The Court found both of the suggested tests to be unsuitable.  In arriving at its decision to grant the stay, the Court arguably applied a test less stringent even than that argued by the applicant Crown:

What test is appropriate depends on whether the plaintiffs in the individual action are class members and, if so, whether they opted-out of the class action.  If they have not opted out, I agree with the cases that require that the entire action be stayed where the individual issues are inextricably bound with resolution of the issues in the class action…Unless the unique issues can be separated from the class action issues, the entire action must be stayed.  It is not necessary for the defendant to prove irreparable harm or that the balance of convenience favours a stay.  These factors are already considered and balanced in the provisions of class action legislation.

The Court considered a previous decision of the Ontario Superior Court in Nutech Brands v. Air Canada, that held that it was inconsistent with the purposes of class proceeding legislation that a claimant be allowed to proceed against some defendants in a class action and then pursue individual litigation against other defendants.  The Court held the same principles applied to an attempt of the Plaintiffs to proceed with some causes of action against the Defendant in the Class Actions and then other causes of action against the Defendant in the Individual Action. 

The Court also provided direction on the analysis to be conducted in a stay application in which the Plaintiffs had opted-out of the related class proceeding.  In that case, the balance is between an individual's litigation autonomy and the potential for inconsistent decisions and inefficient use of judicial resources.  The Court listed the equally weighted factors to be considered in arriving at that balance: why the plaintiffs elected to opt-out; the status of the actions; the potential for inconsistent decisions; and the resources involved in litigating both actions.

The significance of this decision is highlighted by the subsequent costs decision. The parties could not agree to costs and the Crown brought an application seeking recovery of its costs as the successful party in the stay application.  In refusing to award costs, the Court held it was entitled to reject the application of the general rule awarding costs to the successful litigant due to the novelty of the issues argued in the stay application.  The Court held that costs were not appropriate where there was a lack of jurisprudence in Alberta and the rest of the country as to the test for a stay in the class proceeding context.  

This test as outlined by the Court in this case tends to favour stays of individual actions in the context of a class proceeding; in particular in cases where there is the potential that an individual claimant may obtain full recovery from a resolution of the class proceeding in which they are also a member of the class.  More particularly, it points to an important new clarification from the Courts in Alberta about the approach to be taken in any class action stay application.