The Advent of the "Proportionate" Class Action?

Can certification of a class action be refused in Québec because it is disproportionate?

Apparently so, according to a narrow majority of the Supreme Court of Canada in Marcotte v. City of Longueuil.

Background

This case arose following the municipal amalgamation undertaken by the government of Québec earlier in the decade. The decision disposes of two appeals. The first appellant, Mr. Marcotte, is a citizen of Saint-Lambert who saw his property taxes increase when his city was amalgamated to Longueuil. The second appellant, Usinage Pouliot Inc., is a business from Saint-Bruno-de-Montarville whose business tax also increased following the amalgamation. The appellants contend that the bylaws imposing taxes in 2003, 2004 and 2005 were null because they exceeded the five per cent ceiling established by a series of provisions in the city charter. On this basis, they filled motions for "authorization" (called "certification" in the common law provinces) to institute class actions in order to have the bylaws quashed in four sectors of the new city and to have the respondents refund the amounts paid. Both the Superior Court and the Québec Court of Appeal rejected authorization on the basis that a class action was an inappropriate recourse for a request to quash a municipal bylaw.

Supreme Court

The question before the Supreme Court was the following: Can a class action be authorized in Québec where the petitioner seeks to recover municipal taxes paid pursuant to an allegedly unconstitutional municipal law? A narrow majority of the court answered "no." Aside from their substantive differences, the court split five to four over the proper approach to Article 4.2 of the Québec Code of Civil Procedure, which states that "the parties must ensure that the proceedings they choose are proportionate, in terms of the costs and time required, to the nature and ultimate purpose of the action or application and to the complexity of the dispute …."

Proportionality (Article 4.2 C.C.P.)

According to the majority view, a court hearing a motion for authorization can exercise discretion independent from the four conditions for authorization contained in Article 1003 C.C.P. if it deems the proposed class action disproportionate. The majority adds that from an administration of justice perspective, the principle of proportionality casts serious doubt on the appropriateness of a class action in which the petitioner is seeking to nullify a municipal bylaw. The minority, for its part, maintains that the purpose of Article 4.2 C.C.P. is to reinforce the authority of the judge as a case manager. Accordingly, the principle of proportionality should not be viewed as a fifth condition for authorization, but rather as a general principle to be applied by the judge in analyzing and applying each of these criteria.

The Merits

In addition to its comments regarding Article 4.2 C.C.P., the majority agreed with the lower courts that a class action is not an appropriate procedure for seeking to quash a municipal bylaw. In his reasons, Mr. Justice LeBel explains that the conclusions sought are unenforceable in the municipal context and that the reimbursement of municipal taxes is not compatible with the principles governing the restitution of payments set out in the Civil Code of Québec. Furthermore, with regard to the composition of the proposed class, the provisions regarding the right to opt-out could not be respected because if the motion were granted, it would apply to all the ratepayers independently of their willingness to participate in the action.

McCarthy Tétrault Notes

Marcotte is important because it shows that aside from the four criteria used to assess the viability of a class action — commonality, legal and factual consistency, practicability and adequacy of representation — proportionality can also be involved, separately, to complement the analysis of the motions judge. Given the court’s five to four split, however, the debate surrounding the role of Article 4.2 C.C.P. in the class action setting is probably far from over.