In Johnson v. Ontario[1], the Court of Appeal for Ontario confirmed the test governing judicial discretion to extend the time for a class member to opt out of a class action.
Background
The representative class members commenced a proposed class proceeding against the respondent, Her Majesty the Queen in Right of Ontario (Ontario), on behalf of all persons who were incarcerated at the Elgin-Middlesex Detention Centre (EMDC) between January 1, 2010, and May 18, 2017.
After the class action was certified on May 18, 2017, the Court approved a notice plan that advised class members of their right to opt out of the class action, the method, and the implications of doing so (the Notice Plan).
The Notice Plan provided that class members had to complete and return an opt out form by June 20, 2018. The Notice Plan contemplated that: the notice is published in two local newspapers, posted on the class counsel’s website, and sent by regular mail to the last known address of each class member.
The appellant was an inmate at EMDC within the class period but was transferred to a federal institution in August 2017, where he remained until 2019. During this time, class counsel mailed the long form of notice to the appellant’s last known address, where he had lived with his father prior to being incarcerated. While the appellant was in contact with his father, who was still residing at that address, the appellant denied receiving or seeing any notice regarding the class action before the opt out deadline.
In April 2020, the appellant commenced an individual action against Ontario and employees of EMDC, which included claims for breach of fiduciary duty and infringement of his Charter rights.
The appellant first learned of the class action in June 2020 when he received a letter from Ontario stating that his action overlapped with the class action and asking that the appellant discontinue his individual action against Ontario and its employees.
The appellant brought a motion in the Ontario Superior Court of Justice for an extension of time to opt out of the class action, arguing that he was not made aware of the consolidated class action until after he had commenced his own proceeding.
The motions judge denied the appellant’s motion, effectively terminating his individual action. The appellant appealed the order to the Court of Appeal for Ontario.
The Court of Appeal decision
The Court allowed the appeal and set aside the order of the motion judge, extending the time within which the appellant may opt out of the class action.
The motion judge had referred to Young v. London Life Insurance Co. (Young)[2] for the principle that the power to grant an extension of time to opt out will rarely be exercised. However, the Court of Appeal found that the motion judge neither identified the test that he was applying nor referred to the “excusable neglect/no prejudice test,” set out in Young. The operative test provides that an extension of time to opt out will only be granted when:
(i) The delay in opting out is due to excusable neglect – in good faith and with a reasonable basis; and
(ii) An extension will not result in prejudice to the class, the defendant, or the administration of justice.[3]
Finding that the motion judge failed to articulate and apply the required test, the Court of Appeal went on to apply the test to the appellant’s case.
i) Excusable neglect
The Court held that the appellant established that his delay in opting out arose from excusable neglect because the appellant was incarcerated when the notice was published, and the notice was sent to an address where he was not physically present and did not return to during the optout period.
The Court found that the respondent had not argued that the appellant had delayed requesting an extension of time to opt out after the appellant became aware of the class proceeding.
ii) Prejudice
The Court noted that there was no evidence of any judgment or settlement of the class proceeding or steps that might have been taken in reliance on the appellant being a participating class member or on the number of class members who had opted out. The Court acknowledged that had the appellant tried to extend the time for opting out after the class action had settled or resulted in a judgment, his request would most likely have been denied on the basis of prejudice.
Further, Ontario did not point to any prejudice that it would suffer, nor did the certified class oppose the appeal, which was a strong indicator that granting an extension of time to the appellant would not cause prejudice to the class.
Takeaway
A class member who seeks to opt out of a class action following the deadline to do so must show two things: (1) “excusable neglect” in failing to comply with the opt out deadline; and (2) that the extension of time to opt out will not prejudice the class, the defendant, or the administration of justice.
Plaintiffs who seek to retain their ability to bring individual actions would do well to keep an eye on proposed class actions and ensure that they opt out once they are aware of any obligation to do so. Johnson v. Ontario has clarified that if putative class members are not aware of their obligations, they may be excused, but only if there is no prejudice.
For more information, please reach out to the authors Matthew Fleming, and Janice Philteos.
[1] Johnson v. Ontario, 2022 ONCA 725
[2] [2002] O.J. No. 5971 (QL) [Young].
[3] Para 38-40.
