Ontario Superior Court Refuses to Dismiss for Delay, Taking Functional and Contextual Approach to Section 29.1 of the Class Proceedings Act, 1992

October 25, 2024

Written By Alex Payne and Adam Walji

In McRae-Yu v Profitly Incorporated et. al., 2024 ONSC 5615 (McRae-Yu) the Ontario Superior Court of Justice refused to dismiss a proposed class action for delay under section 29.1 of the Class Proceedings Act, 1992. McRae-Yu aligns with other decisions that have refused to dismiss proceedings that are not wholly dormant and are being actively pursued in some way. These cases take a functional and contextual (rather than literal) approach to the interpretation of the language of section 29.1, underscoring that section 29.1 is not a “zero tolerance” regime designed to “catch plaintiffs out”.

On its face, section 29.1 requires the mandatory dismissal of a class proceeding if certain steps have not occurred within the first year of the proceeding, including (1) the Court setting a timetable for the completion of one or more steps “required to advance the proceeding”; (2) the filing of a “final and complete” certification motion record; or (3) the filing of an agreed upon timetable for the completion of one or more other steps “required to advance the proceeding”.

In McRae-Yu, no full and final certification motion had been filed within the first year of the proceeding, so the Court considered whether the scheduling of a motion for injunctive relief, and the timetables established by the Court for that purpose, qualified as a “timetable for completion of one or more steps required to advance the proceeding”.

In dismissing the motion, the Court acknowledged that (1) section 29.1 contains mandatory language regarding dismissal leaving little room for judicial discretion; and (2) seeking an injunction is not a step required to advance a proceeding (because seeking an injunction is not a mandatory step in any proceeding). But Justice McLeod nevertheless ruled that the steps taken towards obtaining and resisting the injunction advanced the proceeding.

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• In finding that the procedural steps regarding the injunctive relief advanced the proceeding, Justice MacLeod highlighted that (1) the motions dealt with significant aspects of the case, including the merits of the underlying case, the defendants’ assets, and defendants’ actions to dispose of assets or move them out of the jurisdiction; (2) the evidence from the injunction motion narrowed the issues, and could reduce the need for cross-examination on the certification motion; (3) from the plaintiff's perspective, unless an injunction was granted to preserve the assets, it might be futile to pursue the action as either a class proceeding or an individual action; and (4) based on information learned in the course of the injunction motion, the plaintiff refined the proposed class definitions and the proposed common issues.
• At least two Ontario judges have favoured a functional and contextual approach to the language of section 29.1, rather than a literal approach. Justice MacLeod’s comment in McRae-Yu that “context matters”, echoed Justice Morgan’s previous comment in Lubus v Wayland Group Corp., 2022 ONSC 4999 that “context counts”.
• McRae-Yu has similarities to St. Louis v Canadian National Railway Company, 2022 ONSC 2556, in which the Court refused to dismiss for delay because the plaintiffs “were not sitting entirely still.”

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