ABSTRACT: Since the introduction of the Class Proceedings Act, 1992, carriage motions have been assessed on the basis of an indeterminate and multi-factor test that provides a wide degree of discretion for judges. This has resulted in inconsistent outcomes that have not promoted the test’s consistency with the three objectives of class actions. As noted in Chu v Parwell Investments, however, one potential remedy is to place greater emphasis on fee arrangements in the form of a determinative “reverse auction.” This paper proposes that courts in Ontario should seek to formalize the goals encompassed within a new “fee-driven” factor that emphasizes the court’s use of a reverse auction. Judicial oversight is one differentiating factor between how reverse auctions have been previously applied in the United States and how this concept is being considered in Ontario. The paper proposes that Ontarian courts should cultivate this culture of judicial oversight to ensure that any future application of a reverse auction substantively contributes towards all three objectives of class actions. This would allow the court to passively structure the fee-driven factor towards providing economic savings for the plaintiff class and incentivizing both class counsel and third party funders to structure more equitable funding practices. This fee-driven factor is intended to compliment the multi-factor test and may be introduced via incremental progress in jurisprudence. Consequently, the paper’s proposal provides pragmatic options that easily integrate with the Law Commission of Ontario’s pre-existing recommendations and recent amendments to the CPA introduced by the Smarter and Stronger Justice Act.
Timothy Law (Mon,) studied this question.