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A Superior Court Judgment Sheds Doubt on the Legal Effect of Notices and the Ultimate Purpose of Class Action Judgments

Date

February 23, 2012

AUTHOR(s)

Michel Gagné
Jérémie-Nicolas Moisan


On January 4, 2012, Québec Superior Court Justice Martin Dallaire rendered a decision in Renaud c. Holcim Canada Inc.1 (Holam Canada Action). This decision may have significant repercussions as it allows for the institution of a new class action by a group that was excluded from a previous class action which was granted on the merits, and which decision was then confirmed by the Supreme Court of Canada in the St. Lawrence Cement Inc. v. Barrette2 case (St. Lawrence Cement Action).

In the St. Lawrence Cement Action, the company, which operated a cement plant, was ordered to pay damages for neighbourhood disturbances. After a legal battle that lasted approximately 15 years, the Supreme Court of Canada recognized that there was no-fault liability in an environmental law context for neighbourhood disturbances. In the St. Lawrence Cement Action, resident neighbours of the cement plant in the Villeneuve neighbourhood had been excluded from the perimeter of the disturbance at the origin of the lawsuit. In the Holam Canada Action, these same residents have now been authorized by Justice Dallaire to institute a class action against the company that operated the former cement plant, which closed several years ago.

Summary of the facts

This decision is based on the following facts:

In accordance with the applicable procedural rules, a public notice was issued and published in Le Soleil newspaper on May 8, 1994, after Justice France Thibault authorized the St. Lawrence Cement Action against the cement plant on March 31, 1994. The notice listed the areas that were covered by the class action, and unequivocally excluded the area in which the applicants in the Holam Canada Action resided. Therefore, these applicants were not part of the group for which the St. Lawrence Cement Action was authorized. These applicants claim that they were never aware of the published notice. They were only aware of the claims in the St. Lawrence Cement Action and alleged that they erroneously believed that they were included in the group.

When they discovered that they were excluded from that group, the applicants aggressively petitioned the court to amend the description of the group so as to include the persons who were excluded (and who, in their opinion, should have been included) so that these persons could submit claims and obtain compensation. Justice Yves Alain rejected the applicants’ claims, on the grounds that it was no longer possible to amend the designated group. It is noteworthy that Justice Alain’s decision came after the final judgment was rendered by the Supreme Court of Canada.3 The Court of Appeal confirmed this decision, putting an end to any attempt by the applicants to take part in the St. Lawrence Cement Action. The applicants’ efforts and proceedings, which were initiated after the final judgment regarding the matter was rendered by the Supreme Court of Canada, clearly came too late.

Given the above-mentioned circumstances, the applicants decided to take a new approach and filed an application on behalf of the group of residents who were neighbours of the cement plant and who were excluded from the group identified in the St. Lawrence Cement Action.

Decision

Unexpectedly, in the Holam Canada Action, Justice Dallaire ruled in favour of the applicants and authorized the institution of a second class action against the Respondent.

In his decision, the judge mentions his difficulty in coming to a conclusion as the case required that he choose between the applicants' desire for social justice by compensating the "forgotten" victims, and the need to apply precise and defined rules of law to prevent the case from continuing indefinitely.

First, Justice Dallaire considered the proposed group and deemed it to be adequately specific and identifiable, emphasizing the fact that the area is geographically identifiable and that the inclusion in the group is based on facts specific to its members, namely the fact that they were not aware of the publication of the notice in the St. Lawrence Cement Action. With respect to the class representatives, the judge concluded that they met the requirements to lead a class action, insisting on the energy they had invested and the fact that they had exercised their legal rights with composure and determination.

Justice Dallaire then analyzed the key questions raised in this case. Referring to the useful and necessary role of the published notice in the St. Lawrence Cement Action, he found that the notice was in fact ineffective. Indeed, the evidence confirmed that many of the persons concerned were unaware of it.

Second, Justice Dallaire sought to answer two questions — firstly, did the fact that the members were not aware of the notice excuse their inaction, and, secondly, in the affirmative, did this render them truly unable to act. If they were truly unable to act then the applicants could claim that the limitation period had been suspended. Taking a broad and liberal approach, Justice Dallaire answered these questions in the affirmative, concluding that the members of the group in question may very well have been unable to act. In his opinion, the problem is simply due to an error that, given the circumstances, is understandable, since the notice published in the St. Lawrence Cement Action proved to be ineffective. This error would have placed the applicants in a position where they were unable to act.

However, Justice Dallaire notes that not being aware of a class action notice should not to be used as an easy excuse for filing a claim for compensation otherwise barred under the statute of limitations. In this particular case, he insisted, a series of circumstances unfortunately led to the applicants being unaware of the notice.

As for the Respondent’s claim that this lack of awareness was inexcusable since it stemmed from the victims’ negligence, Justice Dallaire exercised caution, noting that each member would nonetheless be subject to a condition, i.e., him/her not being aware of the notice. This will be examined objectively in an in-depth analysis on the merits in order to determine whether there was negligence on the applicant’s part. In the judge’s opinion, allowing negligence to be used as an argument at this stage would eliminate any grounds for the planned legal action, whereas the question requires more detailed evidence.

Finally, citing the principle of proportionality, the Respondent argued that a new class action would impose a heavy burden on it, insisting that it was legally entitled to rely on the decisions of the courts and to see the end of this debate, which otherwise could be before the courts for years. Justice Dallaire quickly dismissed these arguments, stating that [translation] "Admittedly, the process is gruelling, but it is, after all, a result of the Respondent’s operations."

Comments

This decision raises serious concerns which are not directly addressed in the judgment.

Regardless of what the Court says, the effectiveness of notices could be seriously compromised by this decision. It could become significantly easier to claim not being aware of a notice as an argument for an inability to act in the hopes of filing a second lawsuit against a Respondent that has already devoted substantial resources to its defence. Moreover, the question of negligence on the part of the members of a group appears to have been eliminated from the process of authorizing the class action and deferred to the assessment of the merits of the case.

A class action, through which it is possible for an applicant to sue a business on behalf of a group without a mandate, is a process that can weigh heavily on the company in question. By its very nature, a class action brings together persons who are not directly involved in the proceedings. The publication of a notice is the means prescribed by the law to communicate with the members of a group. To ensure the class action system is effective and equitable for all parties involved, including the Respondent, it is essential to allow published notices to have their full legal effect. Published notices will never reach all of the potential members of a class action. If the notice was duly approved by the Court and published in accordance with the judgment by which it was approved, it should be allowed to have its full effect, in keeping with the principle of the irrevocability of judgments, the stability of legal relationships between the parties involved, and equity toward the Respondents. If the legal effect of a notice to the members depended on the targeted individuals actually being aware of said notice, a class action proceeding would then not fulfill its current role in our legal system.

The group of individuals for whom the Holam Canada Action was authorized is the same group that attempted to have the description of the group involved in the St. Lawrence Cement Action amended following the decision of the Supreme Court of Canada. The Superior Court denied the application, and the right to appeal was also denied. The reasons cited by the Superior Court were contrary to those of Justice Dallaire. Justice Alain mentioned that the institution of a new class action by the proposed group would probably not be the appropriate solution, given the statute of limitations. He noted that authorizing an amendment in the St. Lawrence Cement Action would have granted permission to accomplish by indirect means that which could not be accomplished directly. Justice Alain also concluded that equity played in the Respondent's favour, citing the apparent negligence of the applicants. The reasons of Justice Alain therefore contradict those of Justice Dallaire. This raises major concerns about the consistency of decisions in a given case. The decision of Justice Dallaire is based on a notion of equity with respect to the interests of the group excluded in the previous decisions, and seems to have been taken at the expense of the rights of a respondent in a class action.

We now have to hope that this case remains the exception rather than the rule.


1 2012 QCCS 82

2 [2008] 3 S.C.R. 392

3 Barrette c. Ciment du St-Laurent, 2010 QCCS 1787; motion to appeal denied, Roy c. Ciment du St-Laurent inc., 2010 QCCA 831

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