In Johnson v. Ontario, the Ontario Court of Appeal (the “Court”) allowed for the extension of time within which the appellant could opt out of a class action. In doing so, the Court provided welcome appellate guidance on the test to be applied on a motion to extend the time to opt out of a class action.

Background

This class action was brought by representative class members against the Respondent Her Majesty the Queen in Right of Ontario (“Ontario”) on behalf of all persons who were incarcerated at the Elgin-Middlesex Detention Centre (“EMDC”) between January 1, 2010, and May 18, 2017. Among other things, the class action seeks damages for alleged negligence and violations of the Canadian Charter of Rights and Freedoms (the “Charter”) arising from the conditions at, and the operation and management of, EMDC during the class period.

After the class action was certified, the court approved a notice plan that advised class members of their right to opt out of the class action, the method, and implications of doing so (the “Notice Plan”). Specifically, the Notice Plan provided that class members had to complete and return an opt-out form by June 20, 2018. Pursuant to the Notice Plan, a short form of notice was published in two local newspapers and a long form of notice was sent to class members via regular mail to their last known address.

The appellant was an inmate at EMDC within the class period, but was transferred to a federal institution in August 2017, where he remained until 2019. During this time, class counsel had mailed the long form of notice to the appellant to his last known address, where he had lived with his father prior to being incarcerated. While the appellant kept in touch with his father, who still resided at that address, the appellant denied receiving or seeing any notices about the class action at any time before the opt-out deadline.

In April 2020, before he had become aware of the class action, the appellant commenced an individual action against Ontario and employees of EMDC for, among other things, breach of fiduciary duty, and for infringements of his Charter rights. In June 2020, counsel for Ontario wrote to the appellant’s counsel to advise that the individual action overlapped with the class action and that the appellant had failed to opt out before the June 2018 deadline. Ontario’s counsel requested that the individual action against Ontario be discontinued, at least in respect of events within the class period.

Claiming that he only became aware of the class action upon receiving the letter from Ontario’s counsel in June 2020, the appellant brought a motion in the Ontario Superior Court of Justice seeking to extend the time to opt out.

The motion judge’s decision

The motion judge dismissed the appellant’s request. Referring to the case of Young v. London Life Insurance Co., [2002] O.J. No. 5971 (“Young”), the motion judge noted that the jurisdiction to extend an opt-out period is rarely exercised. Among other things, the motion judge held that the notice sent to the appellant’s last known address “should have come to [the appellant’s] attention” and found that the appellant’s implicit assertion that he could not reasonably have known his cause of action until the fall of 2018 to be unsupported by any evidence.

The appellant appealed the decision.

The Court of Appeal Decision

The Court allowed the appeal and set aside the order of the motion judge and extended the time within which the appellant may opt out of the class action.

The Court held that, while the motion judge referred to Young for the proposition that the power to grant an extension of time to opt out will rarely be exercised, the motion judge did not identify the test he was applying, nor refer to the “excusable neglect/no prejudice test” articulated in Young that provides that an extension of time to opt out be granted only where:

(i) the delay in opting out is due to excusable neglect – in good faith and with a reasonable basis; and

(ii) an extension will not result in prejudice to the class, the defendant, or the administration of justice.

Noting that there is no appellate authority in Ontario that has settled the question of when the discretion to extend the time to opt out should be exercised, the Court stated it should take the opportunity to confirm that the excusable neglect/no prejudice test is to be applied on a motion to extend the time to opt out. According to the Court, this test balances the importance of the right to opt out with the importance of adhering to court-ordered deadlines.

Finding that the motion judge failed to articulate the required test and apply it, the Court went on to apply the test to the appellant’s case.

Excusable neglect

The Court held that the appellant established that his delay in opting out arose from excusable neglect as the short form of notice was published while the appellant was incarcerated, and there was no suggestion he should have seen it. Meanwhile, the long form of notice was sent to an address at which he was not physically present during the opt-out period. Moreover, the Court found that there was no assertion of any delay in requesting an extension of time to opt out after the appellant became aware of the class action.

The Court rejected the notion that any evidence about what the appellant may have done had he received the notices was relevant and confirmed that the appellant was not required to prove that he would have opted out based on what he knew at the June 2018 deadline. Rather, the question was whether “the fact that he did not opt out then, but was requesting an exercise of discretion to do so late, was the result of excusable neglect”.

Prejudice

The Court acknowledged that had the appellant tried to extend the time for opting out after the class action had settled or resulted in a judgment, his request would most likely have been denied on the basis of prejudice. However, in this case, the Court found there was no evidence of any judgment or settlement, and the appellant’s behaviour did not show any “strategic wait-and-see approach” such that granting him an extension would cause prejudice to the integrity of the process or the administration of justice.

Furthermore, Ontario did not point to any prejudice it would suffer, nor did class counsel oppose the appeal, which according to the Court was “a strong indicator” that granting an extension would not cause prejudice to the class in this case.

Key Takeaways

Johnson affirms that the excusable neglect/no prejudice test should be applied on a motion to extend the time to opt out of a class action. While the test may allow potential class members to extend the opt-out deadline, defence counsel may take comfort in the fact that the test also reinforces respect for court-imposed deadlines and certainty in class actions and emphasizes that class members may not be granted an extension to opt out where they adopt a “wait and see” approach that may prejudice defendants.