



COURT OF APPEAL FOR ONTARIO

CITATION: Shah v. LG Chem Ltd., 2018 ONCA 819

DATE: 20181012

DOCKET: C64559

Rouleau, Roberts and Fairburn JJ.A.

BETWEEN

Khurram Shah and Alpina Holdings Inc.

Plaintiffs (Appellants)

and

LG Chem Ltd., LG Chem America, Inc.,
Panasonic Corporation, Panasonic Corporation of North America,
    Panasonic Canada Inc., Sanyo Electric Co., Ltd., Sanyo North America
    Corporation, Sanyo Energy (U.S.A.) Corporation
, Sony Corporation, Sony
    Energy Devices Corporation, Sony Electronics Inc., Sony of Canada Ltd., Samsung
    SDI Co., Ltd, Samsung SDI America, Inc., Samsung Electronics Canada Inc.,
    Hitachi, Ltd.,
Hitachi Maxell, Ltd., Maxell Corporation of America
,
    Maxell Canada, GS Yuasa Corporation, NEC Corporation, NEC Tokin Corporation,
    NEC Canada,
Toshiba Corporation,
Toshiba America
    Electronic Components, Inc.,
and
Toshiba of
    Canada Limited

Defendants (Respondents)

Reidar Mogerman, Jean-Marc Leclerc and Bridget Moran,
    for the appellants

John F. Rook, Q.C., Christiaan A. Jordaan and Emrys
    Davis, for the respondents Panasonic Corporation, Panasonic Corporation of
    North America, Panasonic Canada Inc., Sanyo Electric Co., Ltd., Sanyo North
    America Corporation and Sanyo Energy (U.S.A.) Corporation

J. Kevin Wright and Todd Shikaze, for the respondents
    Hitachi Maxell, Ltd. and Maxell Corporation of America

Laura F. Cooper and Vera Toppings, for the respondents Toshiba
    Corporation, Toshiba America Electronic Components, Inc. and Toshiba of Canada
    Limited

Maureen Littlejohn, for the respondents LG Chem. Ltd. and
    LG Chem America, Inc.

Heard: May 7, 2018

On appeal from the order of the Divisional Court
    (Justices Frances P. Kiteley, Ian V.B. Nordheimer, and William M. LeMay), dated
    April 26, 2017, with reasons reported at 2017 ONSC 2586, varying the order of
    Justice Paul M. Perell of the Superior Court of Justice, dated October 5, 2015,
    with reasons reported at 2015 ONSC 6148.

By the Court:

A.

OVERVIEW

[1]

The appellants are representative plaintiffs in a certified class action.
    They sued the defendant manufacturers and suppliers on the basis that they conspired
    to raise, maintain, fix and/or stabilize the price of lithium-ion batteries (LIBs)
    sold in Canada between January 2000 and December 2011 (the conspiracy period).
    Their collusion is said to have impacted the entire LIB market by triggering an
    increase in the price for all LIBs and lithium-ion products (LIB products) during
    the conspiracy period, beyond what the free-market would naturally produce. Accordingly,
    the conspiracy is alleged to have impacted all purchasers, those whose LIBs
    originated from the defendants (the non-umbrella purchasers) and those whose
    LIBs originated from non-defendants (the umbrella purchasers).

[2]

The appellants sought to have multiple causes of action certified under
    the
Class Proceedings Act
,
1992
, S.O. 1992, c. 6, including
    unlawful means conspiracy and a statutory cause of action under s. 36 of the
Competition
    Act
,

R.S.C., 1985, c. C-34, for breach of s. 45 of the Act
    (the statutory claim).

The
    certification judge refused to certify the unlawful means conspiracy claim but
certified
    the statutory claim, although only in relation to the non-umbrella purchasers
.
The certification judge provided several reasons for excluding the
    umbrella purchasers from the class pursuing relief in respect of the certified
    statutory claim, including that the defendants would be exposed to
    indeterminate liability if the claim by umbrella purchasers were allowed to
    proceed.

[3]

The appellants sought leave to appeal the certification judges decision
    to the Divisional Court. The Divisional Court granted leave to appeal on only two
    issues: (a) whether the certification judge erred in denying certification of
    the appellants unlawful means conspiracy claim; and (b) whether the certification
    judge erred in removing the umbrella purchasers from class membership:
Shah
    v. LG Chem., Ltd.
,

2016
    ONSC 4670, at para. 46. The Divisional Court found error on the first point,
    resulting in the certification of the unlawful means conspiracy claim, but no
    error on the second point, agreeing with the certification judges concern over
    indeterminate liability.

[4]

The Divisional Court also expressed the view that the appellants had
    failed to: (a) plead the requisite elements of the claims relating to the
    umbrella purchasers; (b) establish common issues for the umbrella purchasers;
and (c) propose a separate representative plaintiff
    for the umbrella purchasers
.
Accordingly, the Divisional
    Court upheld the certification judges decision, refusing to certify the claims
    by umbrella purchasers.

[5]

The appellants were granted leave to appeal from the Divisional Court
    decision. We note that not all of the defendants are participating on this
    appeal because some of them have settled the claims against them.
[1]
In these reasons, we will use the term defendants to refer to the defendants
    named in the Fresh as Amended Statement of Claim (the statement of claim) and
    the term respondents to refer to only those defendants who are participating
    on this appeal.

[6]

The issues for resolution in this court relate only to the umbrella
    purchaser claims - their statutory claim and their unlawful means conspiracy
    claim. The appellants argue that the Divisional Court erred in concluding that:

(a)    it
    is plain and obvious that the umbrella purchaser claims do not disclose a cause
    of action under s. 5(1)(a) of the
Class Proceedings Act
because,

(i)
         the respondents would be exposed to indeterminate liability; and

(ii)
         the requisite elements of the claims have not been properly pleaded;

(b)    the umbrella purchaser claims do not raise common
    issues within the meaning of s. 5(1)(c) of the
Class Proceedings Act
;
    and

(c)    a separate representative plaintiff for the
    umbrella purchasers would be required under s. 5(1)(e) of the
Class
    Proceedings Act
.

[7]

The respondents add that, even if the appellants succeed on these issues,
    this court should conclude that a class proceeding is not the preferable
    procedure for resolving issues related to the umbrella purchasers.

[8]

For the reasons that follow, we conclude that:

(a)    the principle of indeterminate liability does not
    apply to either the statutory claim or the unlawful means conspiracy claim;

(b)    the claims were properly pleaded;

(c)    with the exception of the quantification of damages
    for the umbrella purchasers, the issues can be resolved on a common basis;

(d)    a separate representative plaintiff is not
    required for the umbrella class; and

(e)    a class proceeding is the preferable procedure for
    resolving the issues in common.

[9]

Accordingly, we would allow the appeal.

B.

GENERAL BACKGROUND FACTS

(1)

Claims Against the Defendants

[10]

The
    claims against the defendants relate to the sale of LIBs and LIB products. LIBs
    are a form of rechargeable battery. They provide a source of energy to goods,
    devices and machines, but their most common use is in notebook computers and
    cellular phones.

[11]

The
    statement of claim is brought on behalf of 
all
persons in Canada who, at least as early as January 1, 2000 and continuing
    until at least December 31, 2011  purchased [LIBs]  and/or [LIB products] (emphasis
    added). As the proposed class includes
all
those who bought LIBs and LIB products during the stated period, it includes those
    who bought LIBs (or LIB products containing LIBs) produced by the defendants as
    well as those produced by non-defendants. Accordingly, the proposed class
    includes the umbrella purchasers.

[12]

The
    statement of claim alleges that the defendants and unnamed co-conspirators
    engaged in illegal and secretive meetings and made agreements relating to the
    prices, market share divisions and production levels for lithium batteries. The
    claim asserts that the defendants and unnamed co-conspirators conspired to
    enhance unreasonably the prices of [LIBs] and/or to lessen unduly competition
    in the production, manufacture, sale and/or supply of [LIBs] in North America
    and elsewhere. The conspiracy is said to have moderated the downward pressure
    on the prices of LIBs and LIB products.

[13]

The
    allegations include, but are not limited to, the following factual assertions
    about the defendants behaviour:

·

they had illicit meetings beginning in 2000;

·

they agreed upon floor pricing;

·

they conspired to allocate volumes of sales and reduce
    production, manufacture and supply;

·

they used code words to communicate pricing;

·

they agreed not to forward sensitive e-mails;

·

they had discussions about avoiding trails of correspondence and erasing
    correspondence; and

·

they submitted collusive, non-competitive and rigged bids.

[14]

The
    pleadings specifically allege that the co-conspirators were aware of and
    intended that the alleged conspiracy would result in increased prices for
    [LIBs] and [LIB products]. Further, the pleadings suggest that the
    co-conspirators unlawful acts were directed at the proposed class, and
    that the defendants knew that those acts were likely to cause injury to the
    Plaintiffs and other members of the proposed class.

[15]

The
    defendants are said to have controlled the majority of the LIB market in Canada
    during the conspiracy period. For instance, in 2008, the defendants controlled
    about 70 percent of the international LIB market. By 2011, they controlled about
    75 percent of that same market. Their market share was even higher in Canada.
    The appellants maintain that because the alleged cartel held so much of the
    market share, the increase in the cartels prices caused non-conspirators to
    also raise their prices. This is referred to as an umbrella effect, about
    which we will have more to say shortly.

(2)

Umbrella Purchaser Claims in Canada

[16]

Liability
    to umbrella purchasers is a contested issue as demonstrated by the back and
    forth between courts in Ontario and British Columbia.

[17]

Following
    the certification judges decision in this case, the umbrella purchaser issue
    came before the British Columbia Supreme Court in
Godfrey v. Sony Corp.
,
    2016 BCSC 844 (
Godfrey BCSC
)
,
where that court rejected the reasoning of the certification judge in
    this case
and certified the umbrella claim.

[18]

The
    Divisional Court in this case then addressed the
Godfrey BCSC
judgment,
    and specifically rejected that courts reasons in relation to indeterminate
    liability.

[19]

The
    British Columbia Court of Appeal then considered and rejected the Divisional
    Courts reasoning relating to the indeterminate liability point:
Godfrey v.
    Sony Corporation
, 2017 BCCA 302, 1
    B.C.L.R. (6th) 319
(
Godfrey BCCA
)
. Then l
eave to appeal to the Supreme
    Court of Canada was granted in
Godfrey
: [2017] S.C.C.A. No. 408. That
    appeal is yet to be heard.

C.

ANALYSIS

(1)

Overview

[20]

Section
    5 of the
Class Proceedings Act
contains the criteria for certifying
    class actions. The portions of s. 5(1) that are relevant to this appeal follow:

5(1) The court shall certify a class proceeding on a motion
    under section 2, 3 or 4 if,

(a)    the
    pleadings or the notice of application discloses a cause of action;

(c)    the
    claims or defences of the class members raise common issues;

(d)    a
    class proceeding would be the preferable procedure for the resolution of the
    common issues;

(e)    there
    is a representative plaintiff

[21]

This
    language indicates that the court shall certify a class proceeding if the
    requirements of s. 5(1) have been satisfied. The onus is on the representative
    plaintiff(s) to show why the certification criteria have been met.

[22]

The
    certification stage is not intended to test the merits of the claim or inquire
    into whether the claim is likely to succeed at the trial of the common issues:
Hollick
    v. Toronto (City)
, 2001 SCC 68, [2001] 3 S.C.R. 158, at para. 16;
Pro-Sys
    Consultants Ltd. v. Microsoft Corporation,
2013 SCC 57, [2013] 3 S.C.R.
    477, at para. 102. Rather, in assessing whether the requirements of s. 5(1) have
    been met, the court will determine whether there is any basis in fact
    establishing the certification requirements, not whether there is any basis in fact
    for the claim itself:
Hollick,
at para. 25;
Pro-Sys
,

at
    para. 100.

[23]

We
    will address the relevant certification criteria in turn.

(2)

Section 5(1)(a): Do the Pleadings Disclose a Cause of Action?

(a)

Plain and Obvious Test

[24]

Section
    5(1)(a) of the
Class Proceedings Act
requires that the certification
    judge ask whether, assuming the pleaded facts to be true, it is plain and
    obvious that a claim does not exist or, to put it another way, whether the
    claim has no reasonable prospect of success:
Knight v. Imperial Tobacco
    Canada Ltd.
, 2011 SCC 42, [2011] 3
    S.C.R. 45,

at paras. 17, 22;
Anderson v. Wilson
(1999), 44 O.R. (3d) 673 (C.A.), at p. 679;
Cloud v. Canada (Attorney
    General)
(2005)
, 73 O.R.
    (3d) 401 (C.A.), at para. 41;
Hollick
, at para. 25.

(b)

The Divisional Courts
    Reasons

[25]

The
    non-umbrella purchasers have two certified claims: their statutory claim and
    their claim for unlawful means conspiracy. In excluding the umbrella purchasers
    from those claims, the Divisional Court agreed with the certification judge
    that to allow the umbrella purchasers, who did not purchase LIBs or LIB
    products containing LIBs originating from the defendants, to proceed would
    expose the respondents to indeterminate liability.
[2]


[26]

The
    appellants contended before the Divisional Court, and continue to contend in
    this court, that the principle of indeterminate liability does not apply to
    claims involving an intentional component. They say indeterminate liability - which
    is a relevant consideration in assessing whether a
prima facie
duty of
    care in the negligence context is negated by residual policy considerations - is
    not relevant to the statutory claim or the unlawful means conspiracy claim.

[27]

The
    Divisional Court rejected the appellants indeterminate liability argument. While
    acknowledging that there are some situations where negligence concepts may not
    apply to intentional torts,
[3]
the Divisional Court saw no reason why claims for conspiracy should not be
    assessed for indeterminacy. The court concluded that this was particularly so,
    given that the claims in this case are for pure economic loss and advanced on
    behalf of a large, and currently unknown number of people:
Imperial Tobacco,
at para. 100;
Design Services Ltd. v. Canada,
2008 SCC 22, [2008]
    1 S.C.R. 737, at para. 62.

[28]

The
    court found that to allow the umbrella class to proceed with their proposed
    claims would be to expose the defendants to indeterminate liability because the
    defendants had no control over: (a) the non-defendant manufacturers conduct; or
    (b) the volume of LIBs and LIB products that the non-defendants chose to
    produce and sell. In addition, the court noted that the respondents had no
    dealings with the umbrella purchasers and would not know how many such
    purchasers they may be liable to. Accordingly, the court concluded that the
    umbrella purchasers claims did not satisfy the s. 5(1)(a) criterion.

(c)

Indeterminate Liability: The Statutory Claim

(i)

Interpretation of ss. 36 and 45 of
    the
Competition Act

[29]

The
    statutory cause of action arises from s. 36(1) of the
Competition Act,
which
    allows for the recovery of damages that result from, among other things,
    conduct that is contrary to the provisions of Part VI of the
Act.
Section 36(1)
reads:


36(1)
Any person who has suffered loss or damage
    as a result of

(a)
conduct that is contrary to any provision of
    Part VI
,

may, in any court of competent jurisdiction,
sue
    for and recover from the person who engaged in the conduct

an amount
    equal to the loss or damage proved to have been suffered by him
, together
    with any additional amount that the court may allow not exceeding the full cost
    to him of any investigation in connection with the matter and of proceedings
    under this section. [Emphasis added.]

[30]

The
    appellants contend that the acts listed in the statement of claim constitute a
    conspiracy within the meaning of s. 45(1) of the
Competition Act
,
    which falls within Part VI of the
Competition Act,
Offences in
    Relation to Competition. That provision was amended during the conspiracy
    period by the
Budget Implementation Act, 2009
, S.C. 2009, c. 2, s. 410,
    but the core elements for the s. 45 offence remained the same. For the purposes
    of this appeal, the salient portions of the two versions read:

Pre-Amendment

45 (1) Every one who
conspires
with
    another person

(b) to prevent, limit or lessen, unduly, the manufacture or
    production of a product or to
enhance unreasonably the
    price
thereof,

(c) to
prevent or lessen, unduly,
    competition in the production, manufacture  or supply of a product
,  or

(d) to otherwise restrain or injure competition unduly,

is guilty of an indictable offence and liable to imprisonment
    for a term not exceeding five years or to a fine not exceeding ten million dollars
    or to both.

(2.2) For greater certainty, in establishing that a conspiracy
     is in contravention of subsection (1), it is necessary to prove that the
    parties thereto
intended to and did enter into the
    conspiracy
but it is
not necessary to prove
    that the parties intended that the conspiracy
have an effect set out
    in subsection (1). [Emphasis added.]

Post-Amendment

45 (1) Every person commits an offence who,
with a competitor of that person
with respect to a
    product,
conspires


(a) to
fix, maintain, increase or control
    the price
for the supply of the product;

or

(c) to fix, maintain, control, prevent, lessen or eliminate the
    production or supply of the product.

(2) Every person who commits an offence under subsection (1) is
    guilty of an indictable offence and liable on conviction to imprisonment for a
    term not exceeding 14 years or to a fine not exceeding $25 million, or to both.
    [Emphasis added.]

[31]

We
    turn now to the interpretation of these sections, remembering the guiding rule
    on statutory interpretation that the words of an Act are to be read in their
    entire context and in their grammatical and ordinary sense harmoniously with
    the scheme of the Act, the object of the Act, and the intention of Parliament:
Bell ExpressVu Limited Partnership v. Rex
, 2002 SCC 42, [2002] 2
    S.C.R. 559, at para. 26.

(ii)

Plain Meaning

[32]

The
    appellants assert that the Divisional Court was wrong to superimpose the
    principle of indeterminate liability upon the clear language of ss. 36 and 45.

[33]

On
    its face, s. 36(1) confers a private right of action to [a]ny person who has
    suffered loss or damage arising from conduct that is contrary to, in this
    case, s. 45 of the
Competition Act.
The language is broad and
    inclusive. Conspicuously absent from s. 36(1) is any restriction on who can
    claim losses.

[34]

On
    a plain reading, if the umbrella purchasers can prove loss resulting from a
    proven conspiracy under s. 45, s. 36(1) grants those purchasers a statutory
    means by which to recover those losses. Taking the language at face value, the
    umbrella purchasers right of recovery is limited only by their ability to
    demonstrate two things: (1) that the respondents conspired within the meaning
    of s. 45; and (2) that the losses or damages suffered by the appellants resulted
    from that conspiracy.

[35]

Thus,
    a plain reading of ss. 36 and 45 supports the appellants position. Admittedly,
    however, the plain meaning is not the end of the matter. We turn next to the
    purpose of the
Competition Act
.

(iii)

Purpose of the
Competition Act

[36]

Section 1.1 of the
Competition Act
sets out its purpose,
    including the desire to maintain and encourage competition in Canada in order
    to promote the efficiency and adaptability of the Canadian economy, as well as
    providing consumers with competitive prices and product choices.

[37]

Various authorities have extended the purpose of the
Competition
    Act
beyond what is set out in s. 1.1
,
including reference to the Acts
    promotion of compensation and deterrence:
Infineon Technologies AG v.
    Option consommateurs
, 2013 SCC 59, [2013] 3 S.C.R. 600,

at para. 111;
Sun-Rype Products Ltd. v. Archer Daniels Midland Co.
, 2013 SCC 58, at
    paras. 24-27;
Pro-Sys
, at paras. 46-49. Moreover, the overall
    objective of the
Competition Act,
has been described as serving to
    promote vigorous and fair competition throughout Canada:
R. v. Wholesale
    Travel Group Inc.
, [1991] 3 S.C.R. 154, at pp. 256-257.



[38]

It seems self-evident that when clandestine agreements between
    competitors are made to increase prices and lessen competition, ones that
    result in actual harm to consumers, that the purposes of the
Competition
    Act
are thwarted. Conspiracies among competitors to fix prices and lessen
    competition are the very antithesis of the
Competition Act
s objective
    of promoting competition. Undoubtedly, where there is a wider berth for
    liability, the greater the availability of compensation for harm flowing from
    prohibited conduct, the greater the deterrent effect flowing from the award of damages,
    and the greater the protection for a strong, vibrant and healthy economy. In
    our view, interpreting s. 36(1) in a way that includes all those who have
    suffered losses as a result of a conspiracy  both umbrella and non-umbrella
    purchasers  accords with the purposes of the
Competition Act.


(iv)

Relevant Legal Norms

[39]

The
    respondents urge the court to apply a contextual approach, one that draws from
    the legal norms that inform the setting within which s. 36(1) resides. They
    maintain that the Divisional Court correctly took that broader context into
    account when applying the principle of indeterminate liability to s. 36(1) of
    the
Competition Act
, thereby placing the statutory provision beyond
    the reach of umbrella purchasers.

[40]

In
    making that argument, the respondents point to two cases in which negligence
    principles have been applied to statutory claims in the past:
Taylor v.
    1103919 Alberta Ltd.,
2015 ABCA 201, 19 Alta. L.R. (6th);
Haughton v.
    Burden
, [2001] O.J. No. 4704 (S.C.). The
Taylor
judgment involves
    the principle of remoteness being applied to a statutory claim under the
Land
    Titles Act
, R.S.A. 2000, c. L-44. The
Haughton
judgment involves
    that same principle being applied to a statutory claim under the
Liquor
    Licence Act
, R.S.O. 1990, c. L.19. The respondents suggest that because
    remoteness has been applied to statutory claims, then indeterminate liability
    should apply to s. 36 of the
Competition Act
.

[41]

The
    appellants, on the other hand, urge this court to find that the principle of
    indeterminate liability has no application outside of the negligence context. They
    maintain that indeterminate liability is a concept that resides only within the
    second prong of the
Anns/Cooper
test, a test that is designed to
    ascertain whether a duty of care exists in the negligence context:
Anns v.
    Merton London Borough Council
, [1978] A.C. 728 (U.K. H.L.);
Cooper v.
    Hobart
, 2001 SCC 79, [2001] 3 S.C.R. 537. At a minimum, they say the
    principle of indeterminate liability cannot be applied to claims that are
    rooted in intentional conduct, like claims of conspiracy.

[42]

The
    respondents answer the appellants submission by saying that s. 36 creates
    liability for entirely non-intentional conduct that can be proven on a
    negligence standard, such as deceptive telemarketing and deceptive notice of
    winning a prize.

[43]

It
    is important to remember what is and what is not at issue on this appeal. We
    need not decide whether negligence concepts, such as indeterminate liability,
    can never apply outside of the negligence context, whether indeterminate
    liability can never apply to a claim that requires proof of intention, or
    whether indeterminate liability might apply to non-conspiracy rooted claims
    under Part VI of the
Competition Act.
Nor do we have to decide whether
    statutory claims are impermeable to negligence principles. Rather, we need only
    decide a narrow question: does the principle of indeterminate liability apply
    to the statutory claim under s. 36 for recovery arising from conspiratorial conduct
    under s. 45?

[44]

Turning
    to that question, we agree with the respondents that the court is obliged to
    consider the context within which the provision resides:
ATCO Gas &
    Pipelines Ltd. v. Alberta (Energy & Utilities Board)
, 2006 SCC 4, [2006] 1 S.C.R. 140
(S.C.C.), at para. 48. Indeed, to give life to its meaning, the court is
    required to look to the purpose of the provision and to the relevant legal
    norms amplifying it:
R. v. Alex,
2017 SCC 37, [2017] 1 S.C.R. 967, at
    para. 31. (See also:
McLean v. British Columbia (Securities Commission)
, 2013 SCC 67, [2013] 3 S.C.R.
    895
, at para. 43; Ruth Sullivan,
Sullivan on the Construction of
    Statutes
, 6th ed. (Markham, Ont.: LexisNexis Canada Inc., 2014), at s. 2.9.)
    However, while we agree those interpretative principles must be applied, we
    disagree with the way the respondents say they apply in this context.

[45]

It
    is helpful to review how the concept of indeterminate liability comes into play
    in the negligence context. In that context, a court will apply the
Anns
/
Cooper
test in assessing whether the defendant owes a duty of care to the plaintiff.
    At the first stage of the test, the court considers proximity and
    foreseeability. If the court concludes the defendant owes a
prima facie
duty of care to the plaintiff, it will go on at the second stage of the test to
    consider whether residual policy concerns, such as indeterminate liability, negate
    the imposition of a duty of care. In
Deloitte & Touche v. Livent Inc.
    (Receiver of)
, 2017 SCC 63, [2017] 2 S.C.R. 855, at para. 43, the majority
    described what is meant by indeterminate liability:

Indeterminate liability is liability of a specific character,
    not of a specific amount. In particular, indeterminate liability should
    not be confused with significant liability. Certain activities  like flying
    commercial aircraft, manufacturing pharmaceutical drugs, or auditing a large
    corporation  may well give rise to significant liability.. [T]he liability
    arising from these high risk undertakings may only be characterized as
    indeterminate if the scope of such liability is impossible to ascertain (Blacks
    Law Dictionary (10th ed. 2014), sub verbo indeterminate). In
    other words, liability is truly indeterminate if the accepted sources of law
    and the accepted methods of working with those sources such as deduction and
    analogy  are insufficient to resolve the question. More specifically, there
    are three pertinent aspects to so-called indeterminacy in these cases: 
    (1) value indeterminacy (liability in an indeterminate amount); (2) temporal
    indeterminacy (liability . . . for an indeterminate time); and (3) claimant
    indeterminacy (liability . . . to an indeterminate class). [Citations
    omitted.]

[46]

The
    second stage of the
Anns/Cooper
test comes down to a normative assessment
    of whether it would be better, for reasons relating to legal or doctrinal
    order, or reasons arising from other societal concerns, not to recognize a duty
    of care in a given case:
Livent
, at para. 40. A court may decline to
    recognize a
prima facie
duty of care on the basis of indeterminate
    liability, although indeterminate liability is merely a policy consideration,
    not a policy veto, and rarely should a concern for indeterminate liability
    persist if a proper proximity and foreseeability analysis is done at stage one
    of the
Anns
/
Cooper
test:
Livent
, at paras. 42, 45.

[47]

In
    our view, normative concerns about indeterminate liability do not apply in the
    context of the statutory claim in this case because, when it comes to a claim
    under s. 36 for loss or damage resulting from a conspiracy under s. 45 of the
Competition
    Act
,
the normative concerns
    have already been taken care of by Parliament. In other words, concerns that might
    otherwise drive the application of the principle of indeterminate liability
    disappear in the face of the exacting statutory provisions.

[48]

All
    claims under s. 36 require the plaintiff to establish that he or she suffered
    loss or damage as a result of  conduct that is contrary to any provision of
    Part VI. He or she may only recover loss or damage proved to have been
    suffered as a result of that conduct.

[49]

When
    the alleged conduct is a conspiracy under s. 45, the plaintiff must start by
    proving the defendant actually conspired to engage in anti-competitive conduct.
    The essence of conspiracy under s. 45 is an agreement  a meeting of the minds
     to do one of the things enumerated in that provision. Here, the defendants are
    alleged to have agreed to fix prices, unlawful conduct under the former s.
    45(1)(b) and the current s. 45(1)(a). They are also alleged to have agreed to
    unduly lessen competition in the production, manufacture, sale and/or supply
    of LIBs, unlawful conduct under s. 45(1)(c) of the former provision. This
    conduct is said to have resulted in increased prices. The pleadings suggest
    that the defendants directed their conduct at the proposed class (including umbrella
    purchasers), knowing and intending that the proposed class was likely to be
    injured.

[50]

Although
    the
actus reus
under s. 45 changed slightly when the provision was
    amended, it remained focused on whether the alleged conspirator was part of an agreement
    and whether that agreement was to do something that is prohibited by virtue of
    s. 45. The
mens rea
contained in s. 45 has both subjective and
    objective components. The subjective component requires that the defendant
intend
to agree, with
knowledge
of the terms of that agreement. The objective component requires that the
    defendant
objectively
intend to achieve the
    prohibited end, in this case, increasing the price of LIBs and lessening,
    unduly, competition: see
R. v. Nova Scotia Pharmaceutical Society
, [1992]
    2 S.C.R. 606, at pp. 659-60;
Watson v. Bank of America Corp.
, 2015
    BCCA 362, 79 B.C.L.R. (5th) 1,

at paras. 74-76;
R. c. Proulx
,

2016 QCCA 1425, [2016] Q.J. No. 11393, at para. 20.

[51]

The
    respondents argue that because a plaintiff does not have to prove that an
    alleged conspirators conduct is specifically directed at harming that
    plaintiff, indeterminate liability remains a concern in the context of the
    statutory claim. We reject the argument that indeterminate liability should be
    imported into the interpretation of the provisions for that reason. Even though
    s. 45 does not require proof that the conspirator was directing his or her
    actions at a specific plaintiff, it contains significant internal constraints.
    Section 45 limits the reach of liability to those who, at a minimum,
    specifically intend to agree upon anti-competitive conduct. When combined with
    s. 36(1), requiring proof of actual loss or damages arising from the
    conspiracy, concerns regarding overbroad liability evaporate.

(v)

Conclusion

[52]

On
    our interpretation of ss. 36 and 45, Parliament did not intend that the
    principle of indeterminate liability would apply to claims under s. 36 for
    recovery of damages arising from conspiratorial conduct caught by s. 45. The
    combined operation of ss. 36 and 45 of the
Competition Act
do all of
    the necessary work in terms of limiting liability. Thus, it is not plain and
    obvious that the umbrella purchasers statutory claim has no reasonable
    prospect of success.

(d)

Indeterminate Liability: The Tort of Unlawful Means Conspiracy

[53]

The
    Divisional Court certified the claim in unlawful means conspiracy for the
    non-umbrella group. The appellants maintain that the umbrella purchasers should
    not be excluded from that claim. We agree.

[54]

The
    tort of unlawful means conspiracy requires that:

·

the defendants conduct was unlawful;

·

the defendants conduct was directed at the plaintiffs alone or
    together with others;

·

the defendants knew that, in the circumstances, injury to the
    plaintiff was likely, or should have known that injury to the plaintiff
    would ensue; and

·

actual injury resulted: see
Cement LaFarge v. B.C.
    Lightweight Aggregate
, [1983] 1 S.C.R. 452, at pp. 471-472;
Pro-Sys
,
    at para. 80.

[55]

The
    elements of unlawful means conspiracy contain stronger inherent limitations
    than those contained within the
Competition Act.
By requiring that the
    conduct be directed at the plaintiffs, the tort of unlawful means conspiracy
    contains a more difficult hurdle than a claim under s. 36 of the
Competition
    Act.
Indeed, in arguing that the statutory claim is subject to the
    principle of indeterminacy, the respondents rely upon that difference to
    suggest that the tort of unlawful means conspiracy has indeterminate liability already
    built into it. As the respondents submit, [i]n the tort context, the
    requirement of intention erects an inherent limit to the potential liability
    commensurate with the defendants culpability.  As a result, indeterminate
    liability is already excluded by the proximity that the tort requires through
    the directed at element.

[56]

We
    agree that the intentional component of the unlawful means conspiracy tort eliminates
    any concern for indeterminate liability. The requirement for the plaintiffs to
    prove that the defendants conduct was directed at them, and that the
    defendants knew or should have known that injury was likely, creates an
    inherent limit on potential liability, one that the respondents acknowledge and
    that we agree is commensurate with the defendants culpability.

[57]

Accordingly,
    we also conclude that the principle of indeterminate liability does not apply
    to the tort of unlawful means conspiracy.

(e)

Alternative: There is No Concern for Indeterminate Liability

[58]

Even
    if the principle of indeterminate liability is relevant to the statutory claim
    or the unlawful means conspiracy claim, we would not conclude the umbrella
    purchasers claims fail on the basis of indeterminate liability.

[59]

As
    for the statutory claim, we agree with
Godfrey BCCA
, at paras. 229-34,

that concerns over indeterminate liability are mitigated by the
    limitations set out in ss. 36 and 45 of the
Competition Act.
The
    requirement of proving intentional wrongdoing, in accordance with the fault
    requirements under s. 45, combined with the need under s. 36 for the plaintiff
    to demonstrate loss resulting from that intentional wrongdoing, serves to limit
    any concerns about overly broad liability. We have already reviewed those
    statutory limitations. If the principle of indeterminate liability does apply
    in this context, those limitations serve to carefully circumscribe liability.
    As the court noted in
Godfrey, BCCA,
at para. 232, and as supported by
    our previous analysis: the tort of civil conspiracy provides even stronger
    built-in limitations controlling the scope of liability than those inherent in
    the
Competition Act
.

[60]

Even
    though the addition of umbrella purchasers would increase the plaintiff base
    and the potential damages to be paid, it is important not to confuse
    indeterminate liability with significant liability:
Livent,
at para.
    43. Certain activities, like conspiring to fix prices for batteries that are in
    high demand for contemporary society, may well come with significant liability.
    Although the addition of umbrella claimants would add additional exposure, that
    exposure would be in relation to specific products and limited by a defined
    class and a defined class period. It would not be limitless exposure.

[61]

We
    do not agree with the respondents assertion that they had no control over
    the actions of the non-defendants and so there is an indeterminacy problem. The
    Divisional Court addressed the no control point in its reasons. It concluded
    that the situation in this case was similar to the situation in
Imperial
    Tobacco
, where the Supreme Court concluded that the prospect of
    indeterminate liability was fatal to the tobacco companies claims of negligent
    misrepresentation against the federal government. The Supreme Court held
    that indeterminacy was a problem because, insofar as the claims were based on
    representations to consumers, Canada had no control over the number of people
    who smoked light cigarettes:
Imperial Tobacco
, at para. 99.

[62]

Like
Imperial Tobacco,
the Divisional Court concluded in this case that the
    defendants had no control over the actions of non-defendant manufacturers. In
    particular, they had no control over whether the non-defendant manufacturers chose
    to match the prices of the defendants and they had no control over the volume
    of sales by the non-defendant manufacturers.

[63]

The
    no control argument fails to account for the manner in which the claim has
    been pleaded and the very essence of an umbrella purchaser claim: the umbrella
    effect.

[64]

As
    for the manner in which the claim has been pleaded, the plaintiffs specifically
    allege that the defendants intentionally directed their conduct at the proposed
    class  a class that includes umbrella purchasers  and knew that their conduct
    was likely to cause injury to that class. Taking those pleadings as true, as we
    must at this stage, we would not agree that the defendants had no control over
    the non-defendants. The point is that they had control over the market and
    their intention was to move that market:
Godfrey BCCA,
at paras.
    238-39.

[65]

The
    umbrella effect must be taken into account at the certification stage. The
    theory of liability rests on the defendants alleged cartel activity, creating
    what the certification judge described in this case as supra-competitive
    prices that enable non-cartel members to set their prices higher than they
    otherwise would have under normal conditions of competition:
Shah v. LG
    Chem, Ltd.
, 2015 ONSC 6148,

at para. 159. If their claims are ultimately
    proven, the umbrella purchasers are financial victims of the defendants because
    of the umbrella pricing effects, a phenomenon that is described in the
    following passage:

Umbrella effects typically arise when price increases lead to a
    diversion of demand to substitute products. Because successful cartels
    typically reduce quantities and increase prices, this diversion leads to a
    substitution away from the cartels products toward substitute products
    produced by cartel outsiders. . [T]he increased demand for substitutes
    typically leads to higher prices for the substitute products. Such price
    increases are called umbrella effects and may arise either in the same relevant
    market  for example, in cases where a cartel covers less than 100 percent of
    the firms in that market  or in neighboring markets.

(See Roman Inderst, Frank P. Maier-Rigaud & Ulrich Shwalbe,
    Umbrella Effects (2014) 10:3 J. Competition L. & Econ. 739 at p. 740.)

[66]

As
    the pleadings allege that the defendants were aware of and intended that the
    conspiracy would result in the increase in prices of LIBs and LIB products, the
    increase in prices across the market were intended and foreseen. Accordingly, including
    the umbrella purchasers would not make the respondents liable for unforeseen
    damages.

[67]

The
    respondents also argue that allowing umbrella purchasers to claim relief under
    s. 36 could result in economic ripples downstream of the umbrella purchasers,
    causing further concern for indeterminate liability. They give the example of
    purchasers of services that rely upon LIB products, who could claim that they
    paid more for their services because their service provider paid more for the
    LIB products. That is not this case. The pleadings are specifically limited to
    those who purchased LIBs and LIB products during the conspiracy period.

[68]

In
    summary, even if indeterminate liability is relevant, the umbrella purchaser
    claims do not fail s. 5(1)(a) on the basis of indeterminate liability.

(f)

Are the pleadings sufficient?

(i)

The Divisional Courts
    Reasons

[69]

While
    recognizing that the decision on indeterminate liability was sufficient to
    dispose of the umbrella purchaser claims, the Divisional Court went on to
    consider other difficulties with certifying them. Among other things, the court
    found there was a pleadings problem:

While that conclusion [with respect to indeterminate liability]
    would be sufficient to address the second issue on which leave to appeal was
    granted, I believe two other points should be made, because they also undermine
    the argument for including the Umbrella Purchasers within the class. First and
    foremost is the fact that, as the respondents point out, the appellants have
    failed to plead the requisite elements of the claim that could be advanced for
    the Umbrella Purchasers. It seems to me that, at a minimum, that claim would
    require a pleading that:

(a)

the respondents
    conspired to fix prices for LIBs and LIB products;

(b)

that the
    respondents fixed those prices at a level higher than they otherwise would have
    been, if the conspiracy had not been engaged in;

(c)

that prices so
    fixed by the respondents allowed the non-defendant manufacturers to charge
    higher prices;

(d)

that the
    non-defendant manufacturers did, in fact, charge higher prices, and;

(e)

that the
    non-defendant manufacturers charged higher prices as a direct result of the
    opportunity created by the respondents.

On the most generous reading of the Fresh as Amended
    Consolidated Statement of Claim, only the first two facts are pleaded. None of
    the other requisite facts are pleaded either directly, indirectly, expressly or
    implicitly. The failure to plead the requisite facts in support of a claim is
    fatal:
Copland v. Commodore Business Machines Ltd.
,
Rules of Civil
    Procedure
,
r. 25.06(1).

(ii)

Sufficiency of the Pleadings

[70]

The
    respondents argue that the pleadings are deficient because they do not assert a
    causal link between the defendants alleged price fixing and the allegedly
    inflated prices charged by non-defendant LIB manufacturers. In essence, the
    respondents position is that, as suggested by the Divisional Court, a specific
    plea that the non-defendant manufacturers charged higher prices as a direct
    result of the opportunity created by the respondents was required.

[71]

The
    respondents also maintain that a pleading of generalized market effects is not
    sufficient and that a causal link to harm must be specifically pleaded. In
    support of this submission, the respondents rely on fraud on the market cases
    such as
McKenna v. Gammon Gold Inc.
, 2010 ONSC 1591, [2010] O.J. No.
    1057, and
Carom v. Bre-X Minerals Ltd.
(1998), 41 O.R. (3d) 780 (Gen.
    Div.), for the proposition that a causal link is required and reliance cannot
    be presumed.

[72]

We
    disagree.

[73]

The
    pleadings in the present case allege, in effect, that:


i.

the defendants conspired to unduly lessen competition and enhance the
    prices of LIBs and LIB products, contrary to Part VI of the
Competition Act
;


ii.

the conspiracy was directed towards the proposed class members and the defendants
    knew it was likely to cause injury to the proposed class members, rendering the
    defendants liable for the tort of civil conspiracy;


iii.

LIB and LIB product prices were fixed at artificially inflated levels as
    a result of the conspiracy;


iv.

members of the proposed class paid more for LIBs and LIB products than
    they would have, absent the conspiracy.

[74]

Although
    the pleading is somewhat lacking in particulars, specifically with respect to
    the claim that umbrella purchasers were harmed by the conspiracy, a generous
    approach must be taken when assessing the adequacy of the pleadings at this
    stage:
Imperial Tobacco
, at para. 21.

[75]

Though
    umbrella purchasers are not explicitly mentioned, they did not need to be. The
    allegation of damage at para. 76(c) of the statement of claim is broad enough
    to encompass the harm caused to umbrella purchasers. That paragraph reads as
    follows:

76. The Plaintiffs and other members of the proposed class have
    suffered damages as a result of the conspiracy alleged herein. The Defendants
    conspiracy had the following effects, among others:

(c)    the Plaintiffs and other
    members of the proposed class paid more for lithium batteries and lithium
    battery products than they would have paid in the absence of the conspiracy.

[76]

Reading
    the statement of claim as a whole, it is clear that the appellants allege that
    non-defendant manufacturers and suppliers raised their prices as result of the defendants
    conspiracy. In our view, that is sufficient for the purpose of certification
    and it is not fatal that the pleading does not expressly link the effects of
    the conspiracy to the pricing decisions of non-defendants.

[77]

Finally,
    the respondents reliance on case law in the securities class action context,
    in which courts have rejected the presumption of reliance created by the fraud
    on the market theory, is, in our view, misplaced. These cases have no
    application to cases such as the present. In fraud on the market cases, it
    cannot be assumed that all members of the class made their purchase in reliance
    on the misrepresentations by the defendants. If their purchase was not made as
    a result of the misrepresentation, the misrepresentation did not cause any
    damages. In contrast, where price fixing is alleged to have occurred, all
    purchasers suffered damages.

[78]

In
    conclusion, the pleadings are sufficient to meet the s. 5(1)(a) requirement.

(3)

Section 5(1)(c): Do the claims raise common issues?

[79]

In
    light of our conclusion on the s. 5(1)(a) requirement, we must consider whether
    the other requirements for certification are met with respect to the umbrella
    purchaser claims. We turn first to the common issues requirement.

[80]

The
    certified common issues as a result of the Divisional Courts decision were, to
    paraphrase: (a) whether the defendants breached s. 45 of the
Competition
    Act
, giving rise to liability pursuant to s. 36 of the
Competition Act
,
    and whether the class members suffered damage as a result; and (b) whether the defendants
    are liable in tort for the conspiracy to fix prices of LIBs, and associated
    issues with respect to the duration and effects of the conspiracy and the defendants
    efforts to conceal the conspiracy. With respect to damages, the common issue
    certified was whether damages for the class could be determined on an aggregate
    basis and, if so, the amount owing to the class. The court also certified the
    question of whether the costs of the investigation should be assessed on a
    global basis under s. 36 of the
Competition Act
and, if so, in what
    amount.

[81]

In
    its brief reasons, the Divisional Court expressed the concern that no common
    issues had been proposed respecting the claims advanced by the umbrella
    purchasers. In our view, this concern can be addressed quite simply. The
    proposed class included both the non-umbrella and umbrella purchasers. As a
    result, the common issues proposed were, in essence, the same. Any specific
    issues relating to umbrella purchasers were, in effect, subsumed in the common
    issues proposed and accepted for the non-umbrella purchasers.

[82]

In
    their submissions before this court, the respondents, however, focused on the
    adequacy of the expert evidence underlying the appellants assertion of
    commonality. Specifically, the respondents submit that the appellants have not
    advanced a plausible methodology by which harm to the umbrella purchasers can
    be proven, and quantified, on a basis that is common to the rest of the class.
    As we will explain, we disagree with the first part of this submission. In our
    assessment, there is some basis in fact that harm to the class can be
    established in common. However, we are not satisfied that the umbrella
    purchasers damages can be quantified on a common basis. For that reason, a
    subclass must be created for the non-umbrella purchasers. We turn now to these
    issues.

(i)

Class-wide harm

[83]

Where,
    as here, expert evidence is relied upon to provide some basis in fact, it must
    offer a plausible methodology with a realistic prospect of establishing loss on
    a class-wide basis:
Pro-Sys,
at para. 118. In our view, the
    appellants expert, Dr. Reutter, offered such a methodology.

[84]

According
    Dr. Reutter, if the alleged collusion occurred, all members of the proposed
    class would have been impacted by such collusion. This conclusion is rooted in
    a two-pronged approach to establishing harm to the class.

[85]

First,
    Dr. Reutter identified four economic conditions present in the LIB market: a lack
    of economic substitutes, a commodity-like product, a concentrated market, and
    barriers to entry. In his view, assuming the alleged collusion occurred, these
    market conditions indicate that the alleged conspiracy would have resulted in
    higher prices for LIB products across the market.

[86]

With
    respect to the market concentration factor, Dr. Reutter noted that the
    respondents represented over 70 percent of global LIB sales during the conspiracy
    period. He described that, during the conspiracy period, the LIB market was
    bifurcated between high quality defendant manufacturers in Japan and Korea,
    and lower quality manufacturers in China. In his view, economic theory
    indicates that, to the extent that non-defendant Chinese manufacturers
    participated in the high quality market with the defendants, these
    non-defendants also would have charged higher prices due to the reduced
    competition caused by the alleged conspiracy.

[87]

The
    second part of Dr. Reutters approach to establishing class-wide harm is the
    creation of a supply and demand curve. In his opinion, based on the economic
    conditions described above, the LIB market is characterized by a typical supply
    and demand relationship. Accordingly, if the price of LIBs increased, the
    supply curve for LIB products would shift upwards and a new equilibrium would
    be established at a higher price across the industry. Dr. Reutter therefore
    concluded that the respondents are likely to have had an impact on the market
    price of all LIBs, and all Lithium Battery Products, sold globally and in Canada.

[88]

The
    respondents argue that Dr. Reutters evidence does not go far enough to
    establish that there is some basis in fact that harm to the class can be
    established on a common basis. They submit that the economic market conditions
    identified by Dr. Reutter would only permit conspirators to increase their own
    prices. Those conditions do not establish that the respondents had the ability
    to control the pricing decisions of other market participants. Further, on
    cross-examination, Dr. Reutter admitted that the response of non-defendant
    manufacturers to an alleged price increase would depend on individual decisions
    made by each manufacturer. He acknowledged that non-defendants might match
    their competitors increased prices, or they might lower or maintain their
    existing prices to increase market share. However, in the respondents
    submission, nowhere in Dr. Reutters report does he explain how the independent
    pricing decisions of non-defendants can be determined in common with the
    defendants, without conducting individual inquiries.

[89]

In addition, the respondents liken the deficiencies in Dr.
    Reutters evidence to those identified in
Ewert v. Nippon Yusen Kabushiki
    Kaisha
, 2017 BCSC 2357, [2017] B.C.J. No. 2635. They submit that, like the
    expert evidence in
Ewert
, Dr.
    Reutters report demands an assumption that the econometric model proposed to
    determine harm to the non-umbrella purchasers can be applied to umbrella
    purchasers, without providing any methodology for doing so. In
Ewert
, the court also expressed concern about the
    availability of the data required to implement the experts proposed
    methodology.

[90]

Finally,
    the respondents put forward expert evidence to the effect that any method to
    determine a potential impact of the alleged conspiracy on non-defendant prices
    would necessarily be different than the assessment of an impact on the
    respondents prices. This is due to the additional causal question of whether
    non-defendants increased their prices in reaction to the alleged collusion. As
    such, the question of harm to the class requires, in the respondents view, an
    individualized analysis and the question cannot be determined in common.

[91]

We acknowledge that Dr.
    Reutters methodology of proving harm does not expressly mention umbrella
    purchasers and that it is short on detail. The majority of his report focuses
    on the quantification of damages for the class rather than the threshold
    question of establishing harm.

[92]

Nonetheless, we are satisfied that Dr. Reutter has
    presented a theory and a methodology that offers a realistic prospect of
    establishing loss on a class-wide basis. In addition to
Dr. Reutters two-pronged
    approach to establishing harm to the class, Dr. Reutter proposes using regression
    analysis to prove that all members of the class, including umbrella purchasers,
    suffered harm. Although his regression analysis was designed to quantify
    damages, it offers insight as to whether the non-defendants in fact adopted
    higher prices as a result of the alleged collusion. For example, Dr. Reutter
    appears to be able to infer, from the stable market shares of the defendants
    and non-defendants during the conspiracy period, that non-defendants were not
    pricing to gain market share, which was the possible reaction suggested by the
    respondents expert as an alternative to charging a higher, allegedly colluded
    price.

[93]

We
    also note that the majority of the data Dr. Reutter identifies as necessary for
    implementing his proposed methodology of proving class-wide harm appears to be
    available through public documents or the discovery process. Thus, in our view,
Ewert
is distinguishable.

[94]

In
Ewert
, the court declined to certify any of the claims
    advanced by the class, which included indirect and umbrella purchasers. The
    focus of the courts analysis was on the experts failure to inquire into
    whether the data required to implement his proposed common methodology was
    available.
These deficiencies are not present in Dr. Reutters
    report. Dr. Reutter does not rely on unnamed sources of data and the majority
    of the data he identifies as necessary for implementing his proposed
    methodology of proving class-wide harm appears to be readily available in
    specified industry reports and government resources.

[95]

Dr. Reutter expects that the data relevant to other parts of his
    methodology, which appears to mainly consist of the respondents transaction
    data, will be made available during the discovery process. As noted in
Ewert
,
    a plaintiffs expert is not expected to have access to the defendants internal
    documents prior to discovery, and it can generally be assumed that defendant
    companies will produce sales and financial data: para. 48.

[96]

We are also satisfied
    that, although short on detail about the harm to umbrella purchasers, Dr.
    Reutters report sufficiently speaks to that question. In that way, this case
    is also distinguishable from
Ewert
.

[97]

The judge in
Ewert

noted that the
    expert report did not address how harm to the umbrella purchasers could be
    shown. In other words, the proposed methodology was designed to show harm only to
    the non-umbrella purchasers. In our view, Dr. Reutters report does not suffer
    from this deficiency. As we have explained, regardless of whether he expressly
    refers to the umbrella purchasers, Dr. Reutters opinion is that his proposed
    method will show that the alleged conspiracy increased the prices of LIBs and
    LIB products across the market, causing harm to the class as a whole. The
    language used in Dr. Reutters report refers to the market-wide characteristics
    of the LIB market, which indicate, in conjunction with a typical supply and
    demand curve, that the equilibrium price of
all
LIBs would have been
    higher as a result of the conspiracy.

[98]

The
fact that the respondents expert disagrees
    with Dr. Reutter that class-wide harm can be established on a common basis is
    of no moment at this point in the litigation. At the certification stage, the
    court is not required to resolve conflicting evidence:
Pro-Sys
, at paras. 102, 126. In fact, at this stage, the court is not
    equipped to engage in such an analysis:
Cloud
,
    at para. 50. The resolution of the disparities in the expert evidence is a
    matter for the trial judge, who will have the benefit of a full record at the
    trial of the common issues:
Pro-Sys
, at para.
    126.

[99]

Ultimately, it may be shown that Dr. Reutters methodology
    is not capable of proving harm to the umbrella purchasers. T
he comments
    of the Supreme Court in
Pro-Sys
, at para. 105, which refer to the
    British Columbia class proceedings legislation but apply equally to the Ontario
Class Proceedings Act
, are
    apposite here
:

I think it important to emphasize that the
    Canadian approach at the certification stage does not allow for an extensive
    assessment of the complexities and challenges that a plaintiff may face in
    establishing its case at trial. After an action has been certified, additional
    information may come to light calling into question whether the requirements of
    s. 4(1) continue to be met. It is for this reason that enshrined in the
CPA
is the power of the court to decertify the action if at any time it
    is found that the conditions for certification are no longer met (s. 10(1)).

[100]

These comments were echoed by this court in
Cloud
, where the court highlights, in the context of its preferable
    procedure analysis at para. 90, the great flexibility of process provided by
    the
Class Proceedings Act
. As the action
    unfolds, where it appears that the certification requirements cease to be met,
    the court may, pursuant to s. 10, amend the certification order, decertify the
    proceeding, or make any other order considered appropriate.

[101]

We
    acknowledge therefore that issues may arise with respect to the umbrella
    purchasers when the expert evidence is further developed and tested on the
    merits at the common issues trial. However, the fact that a question may give
    rise to nuanced answers as between class members does not defeat commonality:
Rumley
    v. British Columbia
, 2001 SCC 69, [2001] 3 S.C.R. 184, at para. 32;
Vivendi
    Canada Inc. v. DellAniello
, 2014 SCC 1, [2014] 1 S.C.R. 3, at para. 44.

[102]

Accordingly, we are satisfied that the question of class-wide harm
    should be certified as a common question.

(ii)

Qu
antification of damages

[103]

We turn now to the issue of aggregate damages. Because the courts
    below excluded the umbrella purchasers from the class, they did not consider
    whether aggregate damages for the class, when umbrella purchasers are included,
    could be certified as a common issue. Counsel gave limited treatment to this
    issue in their submissions. Based on our review of the statement of claim and
    the expert reports, we are of the view that, once the umbrella purchasers are
    included, aggregate damages for the class cannot be certified as a common
    question. A subclass composed of non-umbrella purchasers will have to be
    created for the aggregate damage issue.

[104]

In order for aggregate damages to be certified as a common question,
    the appellants must establish that there is a reasonable likelihood that the
    conditions required in s. 24 of the
Class Proceedings Act
for determining aggregate damages would be satisfied if the
    appellants are otherwise successful at the common issues trial:
Markson
    v. MBNA Canada Bank
, 2007 ONCA 334, 85 O.R. (3d) 321, at
    para. 44;
Fulawka v. Bank of Nova Scotia
, 2012
    ONCA 443, 111 O.R. (3d) 346, at para. 111.

[105]

Section 24 provides:

24 (1) The court may determine the aggregate
    or a part of a defendants liability to class members and give judgment
    accordingly where,

(a)    monetary
    relief is claimed on behalf of some or all class members;

(b)    no
    questions of fact or law other than those relating to the assessment of monetary
    relief remain to be determined in order to establish the amount of the
    defendants monetary liability; and

(c)    the aggregate or a part
    of the defendants liability to some or all class members can reasonably be
    determined without proof by individual class members.

[106]

Our concern is that both the statement of claim and Dr. Reutters
    report appear to quantify the aggregate damages as those that were suffered by
    the non-umbrella purchasers. Further, neither address how aggregate damages for
    umbrella purchasers could be quantified.

[107]

As set out above, para. 76(c) of the statement of claim pleads
    damages; namely, that all class members were harmed because they paid more for
    LIBs and LIB products due to the alleged conspiracy. However, the proposed
    quantification of those damages is pleaded as follows, at para. 77:

The Plaintiffs assert that their damages, along with those of
    other members of the proposed class, are capable of being quantified on an
    aggregate basis as the difference between
the amounts
    actually paid to the Defendants
for the lithium batteries and lithium
    battery products and the amounts which would have been paid in the absence of
    the conspiracy. [Emphasis added.]

[108]

In referring to the amounts actually paid to the Defendants, the
    quantification of damages proposed in the statement of claim effectively
    excludes any overpayment allegedly made by umbrella purchasers who acquired
    LIBs or LIB products from non-defendants.

[109]

On this issue, Dr. Reutters report
is somewhat
    confusing and of little assistance. The report does not directly address how
    aggregate damages for umbrella purchasers could be calculated and the report
    appears to adopt the same approach to calculating aggregate damages set out in
    the statement of claim that is, the difference between the amounts actually
    paid to the defendants for LIBs and LIB products and the amounts that would
    have been paid in the absence of the conspiracy.

[110]

We acknowledge that portions of Dr. Reutters report suggest that
    his regression model and the method of estimating overcharges caused by the
    alleged conspiracy could be used to calculate the aggregate amount of
    overcharges by both defendant and non-defendant producers of LIBs. For example,
    at para. 92 of his report, he explains that the law of one price suggests that
    the alleged conspiracy would have resulted in an overcharge that impacted both
    defendant and non-defendant Lithium Battery Products manufacturers by the same
    amount. Then again at para. 104, he concludes:

The increased price of LIBs and Lithium Battery Products would have
    been passed through to end users and others in the distribution chain, thus
    impacting all members of the proposed Class. Further, as described herein, it
    is my opinion that standard econometric and statistical techniques are available
    to estimate any overcharges and Class-wide damages.

[111]

While the above-noted excerpts suggest that he could calculate
    aggregate class-wide damage, including the damages suffered by umbrella
    purchasers, other portions of his report suggest otherwise. At paras. 84 and
    85, for example, he states that class-wide damages arise from four different
    sources. In his description of these four different sources, damages that might
    arise as a result of LIB purchases made from non-defendant producers of LIB are
    not included.

[112]

The fact that Dr. Reutters aggregate damage calculation does not
    include the damages suffered by purchasers of LIBs manufactured by
    non-defendants becomes clear from para. 60 of his reply report. There, under
    the heading calculating class-wide aggregate damages, he states:

The first step in estimating Class-wide
    damages is to use standard regression analysis to estimate any direct purchaser
    overcharge in the price of LIBs due to the alleged conspiracy. Once estimated,
    any overcharge is then applied to the value of LIBs
purchased directly from defendants
, to
    yield an estimate of the value of world-wide aggregate damages. [Emphasis
    added.]

[113]

We conclude, therefore, that consistent with the approach taken in
    the statement of claim, the methodology proposed by Dr. Reutter addresses only
    the calculation of damages for direct and indirect purchasers of LIBs
    manufactured by the defendants.

[114]

In the absence of any explanation of how damages could be quantified
    for the class as a whole, it is difficult therefore to say that there is a
    reasonable likelihood that the conditions for s. 24 could be met. For this
    reason, the question of aggregate damages is not certified as a common issue
    for the entire class. Dr. Reutter has, however, provided a method offering a
    reasonable likelihood of being able to determine the aggregate damages suffered
    by non-umbrella purchasers. This was accepted by the courts below as they
    certified the calculation of aggregate damages for the class, which then
    excluded the umbrella purchasers, as a common issue. As a result, a subclass should
    be created for non-umbrella purchasers with respect to the aggregate award of
    damages issue.

[115]

The fact that damages cannot be assessed on an aggregate basis for
    the class as a whole does not mean the action should not proceed as a class proceeding.
    Furthermore, the question of whether damages can be aggregated is ultimately a
    question for the common issues trial judge. Failure to certify the question of
    whether aggregate damages are available for umbrella purchasers does not
    preclude a trial judge from invoking s. 24 if he or she considers it
    appropriate once liability has been found:
Pro-Sys
, at para. 134.

[116]

Accordingly, the common issues certified are as follows:

a)

Did the Defendants, or any of them, breach s.
    45 the
Competition Act
(which is contained in Part VI of the
Competition
    Act
) giving rise to liability pursuant to s. 36 of the
Competition Act
?


i.

Between
    January, 1, 2000 and March 12, 2010, did the Defendants and/or any unnamed
    co-conspirators conspire, agree or arrange with each other to:

A.

prevent, limit or lessen, unduly, the
    manufacture or production of Lithium Batteries; and/or

B.

enhance unreasonably the price of Lithium
    Batteries?


ii.

Between
    March 12, 2010 and December 31, 2011, did the Defendants and/or any unnamed
    co-conspirators conspire, agree or arrange with each other to:

A.

fix, maintain, increase or control the price of
    Lithium Batteries;

B.

allocate sales, territories, customers or
    markets for the production or supply of Lithium Batteries; and/or

C.

fix, maintain, control, prevent, lessen or
    eliminate the production or supply of Lithium Batteries?


iii.

Did
    Class members suffer loss or damage as a result?

b)

Are the Defendants, or any of them, liable in
    tort for conspiracy to fix prices for Lithium Batteries? In particular:
[4]


i.

Did
    the Defendants and/or any unnamed co-conspirators engage in unlawful conduct
    (by contravening
section 45
of the

Competition Act
)?




ii.

Was the Defendants unlawful conduct directed
    towards Class members?


iii.

Did the Defendants know, or ought [they] to
    have known, in the circumstances that injury to Class members was likely to
    result?


iv.

Did Class members suffer loss or damage as a
    result?

c)

Over what period of time did the conspiracy
    take place?

d)

Over what period of time did the conspiracy
    affect the price of Lithium Batteries and/or Lithium Battery Products?

e)

Did the Defendants, or any of them, take
    affirmative or fraudulent steps to conceal the conspiracy?

f)

Can damages of the non-umbrella purchaser
    subclass be measured on an aggregate basis and, if so, what are the aggregate
    damages for the subclass?

g)

Should the full costs of the investigation in
    connection with this matter, including the cost of the proceeding or part
    thereof, be fixed or assessed on a global basis pursuant to s. 36 of the
Competition Act
and if so, in what amount?

(4)

Section 5(1)(e): Is there an appropriate representative plaintiff?

[117]

The Divisional Court expressed the concern that there was some
    potential for conflict to arise between direct and umbrella purchasers, and
    that a separate representative plaintiff would be necessary. At para. 51, the
    court noted:

The other point is that no common issues were proposed
    respecting the claims of the Umbrella Purchasers, as required by s. 5(1)(c),
    nor was there a proposed representative plaintiff for the Umbrella Purchasers.
    This latter point is of some consequence, since the appellants conceded that
    the Umbrella Purchasers would have to be a subclass, within the certified
    class.
Given that there would appear to be at least the
    potential for some conflict to arise between the direct purchasers and the
    Umbrella Purchasers, a separate representative plaintiff for the Umbrella
    Purchasers would seem to be necessary
. [Emphasis added.]

[118]

We assume that the courts reference to direct purchasers was in
    reference to the non-umbrella purchasers. The court did not articulate the
    nature of any potential conflict between the umbrella and non-umbrella
    purchasers.

[119]

In our view, the umbrella and non-umbrella purchasers have the same
    interest at the outset, that is, to demonstrate the existence of the conspiracy
    and the general increase in prices. Although we would create a subclass for
    non-umbrella purchasers, given that they have advanced the quantification of
    damages as a common issue, this does not put them in conflict with the umbrella
    purchasers.

[120]

In our assessment, the proposed representative plaintiffs, one
    direct and one indirect purchaser, remain appropriate at this juncture. There
    is some basis in fact to find that they can satisfy the requirements of s.
    5(1)(e); namely, that they would fairly and adequately represent the class,
    have produced a workable litigation plan, and are not in conflict with the
    other class members on the common issues. Although the litigation plan is not
    included in the materials before the court, the respondents do not appear to
    take issue with it. As we have explained, we do not, at this point, consider
    that there is a conflict between the two classes such that a separate
    representative plaintiff is required. If problems arise at subsequent stages of
    the proceedings, separate representation can easily be established:
Anderson
, at p. 684.

(5)

Section 5(1)(d): Is a class proceeding the preferable procedure?

[121]

The respondents submit that a class proceeding is not the preferable
    procedure for resolving issues related to the umbrella purchasers. Although
    that issue was not touched on by the Divisional Court, the respondents note
    that the certification judge, in a brief passage in his reasons, expressed
    doubt that the umbrella purchasers as a subclass could have satisfied the
    preferable procedure condition, even assuming that they had a cause of action.
    The certification judge and the respondents express concern that, if the
    umbrella purchaser claims are certified, difficult issues with respect to
    commonality will arise and the action will become unmanageable because loss by
    the class members cannot be determined on common evidence. The respondents
    submit that the loss-based questions give rise to excessive individual issues that
    will overwhelm the common issues and make a class proceeding unmanageable.

[122]

We disagree.

[123]

The preferable
    procedure analysis aims to answer two questions: first, whether a class
    proceeding would be a fair, efficient and manageable method of resolving the
    claim; and second, whether a class proceeding is preferable, in a comparative
    sense, to other available procedures:
Hollick
, at para. 28. The
    inquiry into preferable procedure must be informed by the three principal goals
    of class proceedings: judicial economy, behaviour modification, and access to
    justice:
Hollick
, at para. 27;
AIC Limited v. Fischer
, 2013
    SCC 69, [2013] 3 S.C.R. 949, at paras. 16, 22.

[124]

We are satisfied that there is some basis in fact to conclude that a
    class proceeding is the preferable procedure for resolving the common issues.
    As already explained, nearly all of the issues are common to all class members,
    with one exception related to the quantification of damages. In the context of
    the action as a whole, the resolution of the common issues relating to the respondents
    alleged wrongdoing, and the impact of that wrongdoing on the class members,
    would significantly advance the action:
Cloud
,
    at para. 76. The fact that individual issues, even a substantial number of
    individual issues, would remain to be determined after the common issues trial
    does not preclude certification in these circumstances:
Cloud
, at para. 75;
Hollick
, at para.
    30.

[125]

There is no reason to conclude, at this juncture, that the
    proceeding will be unmanageable. The respondents submission on this point
    essentially relies on their position that harm to the class cannot be
    established on a common basis, which we have rejected.

[126]

The fact that the resolution of the common issues would
    significantly advance the action suggests that proceeding as a class action
    would achieve judicial economy. Furthermore, even with respect to the issue of
    quantification of damages that has not been certified for umbrella purchasers,
    Dr. Reutters report appears to indicate that there is some overlap in the
    quantification of damages for the umbrella and non-umbrella purchasers, which
    would reduce duplication in fact-finding and legal analysis.

D.

CONCLUSION

[127]

In conclusion, therefore, we allow the appeal. Paragraphs 2, 3, 7
    and 8 of the certification order are to be amended to include umbrella
    purchasers in the class definition and a subclass of non-umbrella purchasers is
    to be created. Paragraph 8(b) of the certification order is to be amended to
    provide that the aggregate damages issue is certified as common only with
    respect to the non-umbrella purchaser subclass. Paragraph 4 has already been
    amended by the substituted order of the Divisional Court certifying the claim
    of unlawful means conspiracy. As we have already noted in a footnote above, the
    substituted certification order was not provided to the court. Any issues that
    arise with respect to the terms of the certification order as a result of this
    decision are to be addressed before the certification judge. As agreed by the
    parties, there will be no order as to costs.

R
eleased: PR Oct 12
    2018

Paul Rouleau J.A.
L.B. Roberts J.A.
Fairburn J.A.





[1]
It appears that only the Panasonic, Sanyo, Hitachi and Toshiba defendants
    remain involved in the action. The Certification Order states that the action
    was stayed, discontinued or dismissed against: Hitachi, Ltd.; Maxell Canada;
    NEC Canada, Inc.; NEC Corporation; NEC Tokin Corporation; Samsung Electronics
    Canada Inc.; GS Yuasa Corporation. As well, at the hearing of the appeal, the
    appellants counsel informed the court that the claims against the NEC, Samsung
    and Sony defendants have also settled. Materials have been filed but the
    settlements have not yet been approved. We were informed at the outset of legal
    argument that the LG defendants have also settled, and the fact of the
    settlement has been disclosed to the court but no further materials have been
    filed.



[2]

Although the certification judge gave four reasons for why the
    umbrella purchasers claims should not be certified, the Divisional Court only
    agreed with the reasoning related to indeterminate liability. The respondents
    do not object to the Divisional Courts rejection of the other three reasons
    given by the certification judge in support of his decision refusing to certify
    the umbrella purchasers claims. Consistent with the parties approach on
    appeal, we only address the question of indeterminacy and whether it justifies
    removing the umbrella purchasers from the claims.



[3]
The Divisional Court acknowledged that reasonable foreseeability does not apply
    to the intentional tort of battery:
Bettel v. Yim
(1978), 88 D.L.R. (3d)
    543 (Ont. Co. Ct.).



[4]
The amended certification order following the Divisional Courts decision
    certifying the unlawful means conspiracy claim was not provided to the court. For
    the purposes of this appeal, we have assumed that the unlawful means conspiracy
    issue was certified by the Divisional Court in the form proposed in the Fresh as
    Amended Notice of Motion, with the necessary modifications to reflect the
    common issues that were not pursued on the certification motion. Any issues
    that may arise regarding the proper wording of the certification order are to
    be addressed by the certification judge.


