29-Apr-2002
Partially in response to a recent court case, the provincial Government has enacted the Class Actions Act ("the Act") effective April 1, 2002. The relevant court case, Kelly v. J.J. Lacey Insurance Ltd. (Bankrupt) involved an individual policyholder who attempted a representative action on behalf of 22,000 policy holders. The insurer was successful in itsApplication to strike out the representative or class aspects of the Statement of Claim. The case highlighted the weakness of the Newfoundland rules governing lawsuits by multiple plaintiffs against a single, or several defendants.
The newly proclaimed Class Action Act is designed to permit a single plaintiff (the representative plaintiff) to conduct a Court action to sue for himself/herself and other persons (the class) who allege that a particular defendant or group of defendants has harmed them by the same event or conduct. Class members' claims need not be exactly the same. Rather, their claims need only to be similar to the representative plaintiff's claim. Conversely, a party named as a defendant in more than one action may apply to have actions brought by multiple plaintiffs certified as class proceedings and to have a representative plaintiff named. The advantage to such a defendant is that the decision by the court will bind the class of plaintiffs, thus relieving the defendant from the expense of dealing with separate claims by multiple plaintiffs and having multiple inconsistent results.
The general principle is that all members certified to be a class are bound by the outcome of the proceeding. Class members may opt out of the proceedings provided they meet certain procedural and substantive requirements. Those who successfully opt out are neither bound by the results of, nor may they may benefit from, the class action judgment.
The Act is flexible. For example, it provides for the formation of sub-classes of plaintiffs. It also provides for the separate resolution of issues distinct to individual class members, while at the same time allowing the resolution of issues common to a class or sub-class. Statutory safeguards, combined with an expanded role for the Court in class proceedings, ensure that the interests of class members are adequately protected.
In order for a class proceeding to proceed, the Court must approve (certify) the case as a class proceeding, based on the criteria outlined in the Act. In addition, the Court must approve notice to class members, settlement or discontinuance of an action, and so on. Not all actions will be certified. Refusal by the Court to certify an action as a class proceeding does not preclude some or all of the matters continuing separately. The Court may also decertify an action where appropriate.
The principal advantage of the class action is that it allows for all types of litigation affecting many plaintiffs to proceed more efficiently through the Courts. One practical effect is that parties who have committed minor civil wrongs on a larger scale may now be more easily held accountable. Claims of lower monetary value that might never have been pursued under the prior legislative framework are now far more tenable.
The Act seeks to provide a streamlined and efficient framework for the initiation and conduct of class proceedings in this jurisdiction. Further, it attempts to balance the rights of parties involved while enabling increased access to justice for Plaintiffs.
You may contact one of the following lawyers from our Newfoundland office with questions about the contents of this Client Update.
Suite 1100, Cabot Place
100 New Gower Street
P.O. Box 5038
St. John's NF A1C 5V3
Telephone: 709.722.4270
Fax: 709.722.4565
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