



COURT OF APPEAL FOR ONTARIO

CITATION: Fantl v. Transamerica Life Canada, 2016 ONCA 633

DATE:.20160822

DOCKET: C61284

Strathy C.J.O., Blair and Lauwers JJ.A.

BETWEEN

Joseph Fantl

Plaintiff/Respondent

and

Transamerica Life Canada

Defendant/Appellant

Mary Jane Stitt and Doug McLeod, for the appellant

David F. OConnor and J. Adam Dewar, for the respondent

Heard: May 11, 2016

On appeal from the order of the Divisional Court (H.
    Sachs, D.L. Corbett and Gilmore JJ.), dated March 9, 2015, with reasons
    reported at 2015 ONSC 1367, setting aside in part the certification order of
    Justice P. Perell of the Superior Court of Justice, dated April 18, 2013, with
    reasons reported at 2013 ONSC 2298.

Strathy C.J.O.:

A.

introduction

[1]

The issue on this appeal is whether a class action for negligent
    misrepresentation is the preferable procedure for the resolution of the class
    members claims.

[2]

The certification judge held that it was not, because the individual
    issues of reliance, causation and damages would overwhelm or subsume the
    common issues. The Divisional Court allowed the appeal, noting that the
    certification judge did not have the benefit of the Supreme Court of Canadas
    decision in
AIC Limited v. Fischer
, 2013 SCC 69, [2013] 3 S.C.R. 949
.

[3]

For the reasons that follow, I would dismiss the appeal.

B.

the facts

[4]

The proposed class is composed of investors in Transamericas Can-Am
    Fund, an investment vehicle offered under insurance contracts sold by Transamerica
    between October 1992 and March 2001.
It
    was a synthetic fund, similar to a mutual fund and designed to replicate the
    performance of the S&P 500.

[5]

The respondents class action encompasses 53
    different insurance contracts. Five of these contained an express statement
    that the fund would on a best efforts basis replicate the performance of the
    S&P 500 Total Return Index.

[6]

The other 48 contracts did not contain this express
    statement. However,
beginning in 1994, every investor in the Can-Am Fund
    received an information folder containing a statement that
the
    goal of the fund was to replicate, on a best efforts basis, the performance
    of the S&P 500 Total Return Index.

[7]

The information folder was provided pursuant to regulations under the
    Ontario
Insurance Act
,
R.S.O. 1990, c. I.8, which required that
    investors receive a disclosure document before investing in a segregated fund
    like the Can-Am Fund. That document, referred to as an information folder, is
    required to disclose the funds investment policy and objectives. Investors are
    required to acknowledge receipt of the information folder.

[8]

The respondents negligent misrepresentation claim arises from the best
    efforts statement in the information folder. He says this representation was
    untrue.

C.

Decisions below

[9]

I will give a brief overview of the reasons in the courts below. Further
    detail will be added in the Analysis section.

(1)

The certification judge

[10]

The
    certification judge certified the plaintiffs action for breach of contract
    based on the five insurance contracts that contained an express best efforts
    clause. He did not certify the negligent misrepresentation claim in relation to
    the statements in the information folders provided to investors in the other 48
    contracts.

[11]

He
    found that two, or possibly three, of the five constituent elements of the tort
    of misrepresentation could be common issues: (a) the existence of a duty of
    care; (b) whether the representation was untrue, inaccurate or misleading; and
    (c) whether the misrepresentation was made negligently. This left issues of
    reliance and damages to be decided at individual trials  issues that he
    regarded as critical, difficult, and contentious.

[12]

He
    concluded that these individual issues overwhelmed or subsumed the common
    issues, and that resolving the common issues would mark just the beginning of
    the process leading to a final disposition of the claims of class members. For
    this reason, he said, a class action was not the preferable procedure for the
    negligent misrepresentation claims. Moreover, this was not a case in which the
    policyholders claims were so small that access to justice would not be
    available absent a class action.

(2)

The Divisional Court

[13]

The
    Divisional Court noted that although a certification judges decision on
    preferable procedure is normally entitled to deference, the judge here did not
    have the benefit of the approach to the preferability analysis set out by the
    Supreme Court in
Fischer
.

[14]

Applying
    that analysis, the Divisional Court held that a class proceeding was a fair,
    efficient and manageable method of advancing the claim and the only reasonable
    way to remove the economic barriers to access to justice. It also found that
    the certification judge had overstated the value of the plaintiffs claim in
    coming to his conclusion that it was economically viable as a stand-alone
    claim. It was not viable and there was no reasonable alternative.

[15]

The
    Divisional Court recognized that
Fischer

does not displace or
    eliminate the requirement that the proposed class proceeding must be a fair,
    efficient and manageable method of resolving the claims. However, as the certification
    judge noted, two, and perhaps even three, of the five elements of the tort of negligent
    misrepresentation could be dealt with at a common issues trial.

[16]

Moreover,
    contrary to the certification judges finding that the common issues to be
    tried in the certified breach of contract claim would not assist the
    prosecution of the tort claim, the evidence on the breach of contract common
    issue would likely overlap with the evidence in the tort claim. That evidence
    would examine how the Can-Am Fund was invested and managed and how it ought to
    have been managed to replicate the performance of the S&P 500.

[17]

While
    the duty of care issue might not be particularly contentious, determining
    whether the representation was false and whether Transamerica was negligent
    would require expensive and complex expert evidence and it would be efficient
    to address these issues in a class action.

[18]

The remaining elements of the tort of misrepresentation 
    reliance and damages  were individual issues. The Divisional Court noted that
    there have been cases in which such reliance-based claims have not been
    certified due to the unmanageability of individual issues: see
e.g.
:
Musicians
    Pension Fund of Canada (Trustees of) v. Kinross Gold Corporation
, 2014 ONCA 901, 61 C.P.C. (7th)
    1
;
Green v. Canadian Imperial Bank of Commerce
,
2012 ONSC
    3637
,
[2012]
    O.J. No. 3072
, revd on other grounds, 2014 ONCA 90, affd, 2015 SCC
    60
.

[19]

On
    the other hand, it noted, claims involving a single representation, a uniform
    set of representations, or even separate representations having a common import
    have been certified, notwithstanding individual issues of reliance and damages,
    citing:
Ottawa Police Association v. Ottawa Police Services Board
,
    2014 ONSC 1584 (Div. Ct.), at para. 59;
Cannon v. Funds for Canada
    Foundation
, 2012 ONSC 399, at paras. 340, 350-351, leave to appeal to Div.
    Ct. refused, 2012 ONSC 6101 (Div. Ct.);
Ramdath v. George Brown College of
    Applied Arts and Technology
, 2010 ONSC 2019, 93 C.P.C. (6th) 106, at para.
    103;
Carom v. Bre-X Minerals Ltd.

(2000)
, 51 O.R. (3d) 236 (C.A.), at
    paras. 48-49;
Canadian Imperial Bank of Commerce v. Deloitte & Touche
,
    [2003] O.J. No. 2069 (Div. Ct.), at para. 35;
Lewis v. Cantertrot
    Investments Ltd.
, [2005] O.J. No. 3535 (S.C.), at para. 20;
Hickey-Button
    v. Loyalist College of Applied Arts & Technology
(2006), 267 D.L.R.
    (4th) 601 (Ont. C.A.);
Murphy v. BDO Dunwoody
, [2006] O.J. No. 2729
    (S.C.); and
Silver v. IMAX Corp.
, [2009] O.J. No. 5585 (S.C.), leave
    to appeal to Div. Ct. refused, 2011 ONSC 1035 (Div. Ct.)
[1]
.

[20]

Here,
    there was a single uniform representation, contained in a statutorily-mandated
    disclosure document, which was given to each class member and which each
    acknowledged receiving.

[21]

The
    Divisional Court considered, at para. 46, that the individual issues of
    reliance and damages might be capable of resolution through fairly
    straightforward mechanisms. While reliance would be an individual issue, a class
    member would not need to prove that the representation was the only factor that
    induced the investment, but simply that they relied on the representation
    (para. 44, referring to
NBD Bank, Canada v. Dofasco Inc.
(1999), 46
    O.R. (3d) 514 (C.A.) at para. 78, leave to appeal to SCC refused, [2000]
    S.C.C.A. No. 96).

D.

submissions of the parties

[22]

The
    appellant submits that
Fischer
does not eliminate
Hollick

s
    requirement that the proposed class action be a fair, efficient and manageable
    method of resolving class members claims. It says that this courts decision
    in
Kinross
illustrates that a class proceeding based on common law
    misrepresentation is unsuitable for certification because individual issues of
    reliance, causation, mitigation and damages make it unmanageable. As a result,
    it simply cannot promote judicial economy and efficiency.

[23]

The
    respondent argues, as he did in the Divisional Court, that deference is not
    owed to the decision of the certification judge as he did not have the benefit
    of
Fischer
, which refocused the preferable procedure analysis on
    access to justice. He says that the presence of individual issues does not
    preclude certification, for the reasons set out by the Divisional Court.

E.

ANALYSIS

[24]

I
    would dismiss the appeal, substantially for the reasons given by the Divisional
    Court.

[25]

The
    Divisional Court noted that a certification judges decision on preferable
    procedure attracts deference and a reviewing court should intervene only where
    the judge has made a palpable and overriding error of fact or has erred in
    principle:
Pearson v. Inco Ltd.

(2005), 78 O.R. (3d) 641 (C.A).
    Here, the effect of
Fischer
, released subsequent to the certification
    judges decision, was to reduce the deference that would normally be given to
    the certification analysis. This is consistent with
Kinross
, at para.
    107, where this court considered that the failure of the certification analysis
    to comport with
Fischer
was a factor that reduced the deference owned
    to the certification judge and permitted the court to conduct its own analysis.

[26]

In
Fischer
, Cromwell J. emphasized that the preferability analysis is a
    comparative one that considers whether the proposed class action will achieve
    the goals of the
Class Proceedings Act, 1992
, S.O. 1992, c. 6, as
    compared to other means of resolving the claim. This requires a consideration
    of whether the process is fair and will provide claimants with a just and
    effective remedy. The remedy will not be just and effective if, at the end of
    the day, claimants remain faced with the same economic and practical hurdles
    they faced at the outset of the proceeding.

[27]

Fischer

requires us to consider (a) the barriers to access to justice; (b) the
    potential of a class action to address those barriers; and (c) the alternatives
    to a class action, including the extent to which the alternatives address the
    relevant barriers and how the two proceedings compare.

[28]

As
    Cromwell J. noted, the most common barrier to access to justice is an economic
    one. That is the case here.

[29]

The
    motion judge concluded that the amount of damages claimed at the individual
    issues trial could be substantial. He suggested that Mr. Fantl had the
    alternative of commencing an action in the Superior Court and that efficiencies
    might be obtained by joinder of plaintiffs. He made reference to the fact that
    Mr. Fantl had made a total investment of around $100,000.

[30]

As
    the Divisional Court pointed out, however, Mr. Fantl invested only a part of
    this amount in the Can-Am Fund. His investments in the Can-Am Fund during the
    material time ranged in value between approximately $27,000 and $52,000. His
    monetary damages, calculated on the difference between what he earned on those
    investments and what he would have earned had the representation not been made,
    would have been a fraction of his investment.

[31]

I
    agree with the Divisional Courts conclusion, at para. 32, that Mr. Fantls
    claim could not reasonably be viewed as economically viable to litigate in the
    Superior Court. The cost of expert evidence to establish that the
    representation was untrue or misleading, and that the misrepresentation was
    made negligently, would be out of all proportion to the amount at issue. That
    cost would be a significant barrier to access to justice. That barrier would
    not be addressed by joinder, which is not a practical means of bringing access
    to justice to a class of thousands. A class proceeding, on the other hand, has
    the potential to address this economic barrier by distributing the costs over
    thousands of class members, rather than one or even a few.

[32]

The
    real issue on this appeal was not at issue in
Fischer
, but was in
Kinross

 whether a class action would be a fair, efficient and manageable
    proceeding, having regard to the common issues in the context of the action as
    a whole and the individual issues that would remain after the common issues are
    resolved.

[33]

The
    appellant submits that the Divisional Courts decision is in direct conflict
    with this courts decision in
Kinross
. According to the appellant,
Kinross

establishes that common law negligent misrepresentation claims in investor
    class actions are inherently unsuitable for certification because the need for
    numerous individual inquiries undercuts the goal of judicial economy and
    overwhelms the resolution of the common issues, producing an inefficient and
    unmanageable class proceeding.

[34]

Kinross
involved claims under the
Securities Act
, R.S.O. 1990, c. S.5, for
    secondary market misrepresentation and common law claims for negligent
    misrepresentation. The motion judge denied leave to proceed with the statutory
    claims and declined to certify both the statutory and common law claims.

[35]

This
    court found that the motion judge had erred in refusing to certify the common
    law claims solely on the basis of the denial of leave for the statutory claims.
    While this court found that the motion judges preferability analysis did not
    comport with
Fischer
, it found that the proposed class action did not
    meet the preferable procedure criterion because the individual issues of
    reliance, causation and damages rendered the common law claims unsuitable for
    certification. It held, at para. 127, that a class proceeding would not
    represent a fair, efficient and manageable procedure that is preferable to any
    alternative method of resolving the common law claims.

[36]

Kinross
is distinguishable for several reasons.
First
, as I have noted, the
    action was for both the statutory remedy for misrepresentation in the secondary
    securities market and for common law misrepresentation. It has often been noted
    that securities cases frequently present difficulties in class actions, hence
    the statutory remedy, which obviates the need to prove reliance: see
Green
    v. CIBC

at paras. 595, 610-611. This court noted in
Kinross
that proof of reliance, causation and damages would pose particular
    difficulties, making it necessary to answer numerous investor-specific questions
    related to multiple representations, investors sophistication and investment
    advice, dates of acquisition and prices.  This court considered that the host
    of individual inquiries would make the common law claims unsuitable for
    certification.

[37]

Here,
    in contrast, there was a single common written representation made in the
    English language materials. Moreover, every class member acknowledged receiving
    it. This substantially obviates the need for individual inquiries into whether
    the alleged misstatement was received by class members.

[38]

Second
, in
Kinross
there had been a judicial
    determination that the statutory misrepresentation claims, which rested on the
    same foundation as the common law claims, had no reasonable prospect of success
    at trial. This favoured the conclusion that a class action was not the
    preferable procedure for advancing the common law claims. That circumstance
    does not apply here.

[39]

Third
,
    in this case some of the necessary heavy lifting on the misrepresentation
    common issues will be shared with the certified breach of contract common
    issues. This will promote judicial economy and will avoid a multiplicity of
    proceedings. As the Divisional Court observed, at para. 41, referring to this
    courts decision in
Carom v. Bre-Ex Minerals Ltd.
, where there is
    substantial overlap between two legal claims advanced in the same proceeding
    and each claim raises common issues, a decision to certify one of the claims
    weighs heavily in favour of certifying the other.

[40]

Fourth
,
    the resolution of the common issues of duty of care, truth or falsity of the
    representation and negligence would go a long way towards the determination of
    the appellants liability and would significantly advance the claim of every
    class member.

[41]

If
    the common issues are resolved in favour of the defendant, that will be the end
    of the matter. If they are resolved in favour of the class, a class proceeding
    can provide a framework for the resolution of the individual issues. It is
    realistic to expect that having tried the common issues the trial judge will
    have a full appreciation of the individual issues and will be well equipped to
    devise a procedure for the resolution of those issues. Section 25 of the
CPA

gives the judge authority to craft fair, inexpensive and efficient
    procedures in order to do so. This is ancillary to the broad discretion
    conferred on the court under s. 12 to make any order it considers appropriate
    respecting the conduct of a class proceeding to ensure its fair and expeditious
    determination.

[42]

While
    damages might be a more complex individual issue, s. 6.1 of the
CPA

expressly provides that the need for individual assessments of damages is
    not, in itself, a bar to certification. See
Brown v. Canadian Imperial Bank
    of Commerce
, 2012 ONSC 2377, at para. 195, affd 2013 1284 (Div. Ct.), affd,
    2014 ONCA 677.

[43]

In
    my view, therefore, a class action in this proceeding has the potential to
    address the barriers to access to justice and can promote the resolution of
    claims that cannot be efficiently litigated through individual proceedings or
    by alternatives such as joinder.

[44]

Although
    class actions have been with us in Ontario for almost 25 years, there have, at
    most recent report, been less than 20 common issues trials: see  Jon Foreman
    & Genevieve Meisenheimer, The Evolution of the Class Action Trial in
    Ontario (2014) 4 Western Journal of Legal Studies. Few of these have resulted
    in individual issues trials. If class actions are to deliver on their promise
    of access to justice it is perhaps time to test some of the assumptions made
    about the manageability of the individual issues stage of a class action.
    This appears to be an ideal case in which to do so.

French language issue

[45]

The
    appellant raised for the first time an argument based on the difference between
    the French and English versions of the information folder.
Instead
    of the best efforts language, one French version states, afin de reproduire
    le plus précisément possible la performance de lindice de rendement global
    S&P 500.
Another French version uses the wording afin dafficher
    globalement, le plus .

[46]

The
    appellant claims that the phrase best efforts is a concept unique to common
    law jurisprudence that has a distinct meaning and specific legal implications.
    He says that the result is that the proposed class, which includes those who
    received French and English folders, is overbroad.

[47]

This
    issue was not raised in the courts below and there is no evidentiary basis for
    it in the record. For this reason, I would not consider it. It can be
    addressed, if necessary, in the ordinary course of case management, through the
    creation of a sub-class and sub-class common issues.

F.

order

[48]

For
    these reasons, I would dismiss the appeal, with costs of the leave motion and
    the appeal payable to the respondent in the agreed amount of $65,000, inclusive
    of disbursements and all applicable taxes.

Released: GRS  AUG 22 2016

G.R. Strathy C.J.O.

I agree R.A. Blair
    J.A.

I agree P. Lauwers
    J.A.





[1]
In
Silver
, van Rensburg J. (as she then was) rendered a separate
    decision concerning leave to pursue a claim for secondary market
    misrepresentation against the defendant. This decision was appealed to the
    Court of Appeal and thereafter to the Supreme Court of Canada:
Silver v.
    IMAX Corp.
, 2012 ONSC 4881, affd, 2014 ONCA 90, affd, 2015 SCC 60.


