Dismissal for Delay under Ontario’s Class Proceedings Act, 1992: Lamarche v Pacific Telescope Corp

April 29, 2022

Written By Alexander Payne, Ranjan Agarwal and Gannon Beaulne

In January 2022, Justice Belobaba (one of four judges on the Toronto Class Actions List) dismissed an action for delay under section 29.1 of Ontario’s Class Proceedings Act, 1992. Justice Belobaba’s decision in Bourque v Insight Productions was the first published decision interpreting section 29.1 of the Act after that provision was added to the statute in October 2020. It suggested that courts would strictly apply section 29.1 of the Act. We discussed Justice Belobaba’s decision and its implications in an earlier insight, Dismissal for Delay Under the Ontario Class Proceedings Act: The First Application of a New Rule.

On April 26, 2022, the second published decision interpreting section 29.1 of the Act was released. In Lamarche v Pacific Telescope Corp, a case involving alleged price-fixing of telescopes, Justice Gomery considered—and ultimately rejected—several new arguments against the strict application of the dismissal for delay provision, including that:

• the class action is meritorious;
• the Act creates hardship for plaintiffs in class proceedings involving foreign defendants; and
• dismissing the action is “pointless,” as it can be reconstituted with a new class representative.

Justice Gomery’s findings in response to those arguments are instructive for class actions stakeholders, and continue to suggest that the requirements under section 29.1 will be applied strictly.

The Merits are Irrelevant

Class counsel argued that, based on the outcome of parallel proceedings in the United States, the proposed class action had merit and thus should not be dismissed. Justice Gomery disposed of that argument summarily, confirming that “[t]he merits of the case are irrelevant on a s. 29.1 motion.”

Hardship for Plaintiffs in Cases Involving Foreign Defendants is Irrelevant

Class counsel also argued that the one-year limitation period under the Act is unfair, particularly in cases involving foreign defendants. In Lamarche, class counsel had to serve a defendant in China under the Hague Convention’s rules of service on foreign defendants. Class counsel had attempted to do so, having translated the pleading into Mandarin and having provided a copy of the pleading to the Chinese Central Authority. But as of the date of the motion, the Chinese defendant still had not been served.

Justice Gomery rejected that argument as well, finding that “class counsel… must live with the section as enacted.” That finding is notable, as it reinforces that, even where class counsel may have taken some steps to seek to advance the proceeding, if class counsel has not taken any of the specific steps within the timeline detailed in section 29.1, the proceeding will be dismissed for delay.

It remains to be seen whether Justice Gomery’s ruling regarding foreign defendants motivates class counsel to more diligently pursue service under the Hague Convention, or whether it discourages class counsel from suing foreign defendants in Ontario class actions in certain circumstances.

Whether a Class Proceeding Can be Reconstituted is a Question for Another Day

Relying on certain of Justice Belobaba’s comments in Bourque, class counsel argued that the dismissal of the proceeding for delay is “pointless” as the action can be reconstituted with another class representative. In our previous insight on Bourque, we noted that those comments were in obiter, and whether defendants could resist such a reconstitution, including based on abuse of process, was an open question. Justice Gomery took the same view, finding that this is a question for another day.

Importantly for defendants, even if a class proceeding were reconstituted, and even if defendants could not successfully resist that reconstitution, there may still be value to defendants in seeking dismissal for delay, particularly for older class actions started before the amendments to the Act came into force, as discussed in our previous insight, Major Changes to Ontario’s Class Proceedings Act Come into Force. In particular, the reconstituted class proceeding would be necessarily subject to the new, stricter certification test.

If you have any questions about the information in this article, please contact a member of the Bennett Jones Class Action Litigation group.

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