Class actions in Canada: what in-house counsel needs to know

Hundreds of class actions are brought every year across Canada in virtually all legal areas. In-house counsel based outside of the country often inquire about Canada’s class action regime. This article provides answers to some of the most pressing questions.

Why do class actions exist?

Class actions are procedural mechanisms that exist to further three policy goals:

  • Access to justice: class actions allow claimants to pursue claims that would be too costly to pursue as individual actions.
  • Judicial economy: class actions avoid unnecessary duplication in fact-finding and legal analysis.
  • Behaviour modification: class actions can deter unlawful behaviour that causes  widespread but individually minimal harm.

Does Canada have class action legislation?

Each of Canada’s ten provinces has its own class action regime. The governing legislation is similar in Canada’s nine common law provinces, but Quebec’s regime has important procedural differences. Parties can also pursue class actions in Canada’s three territories and, in certain circumstances, under the jurisdiction of the Federal Court which has its own regime similar to the common law provinces.

What is the life cycle of a class action?

Initially, after a claim is issued, a court must certify that the action can effectively proceed as a class action. Once certified, class members have a limited window within which to opt-out of (or in limited circumstances, opt-into) the class action. Next, the action proceeds toward a trial of the common issues. This stage includes the closing of pleadings1, the discovery process (ie, exchange of relevant documents and examinations of the parties’ representatives) and a merits trial on the certified common issues. At the conclusion of the common issues trial, the court will grant judgment on the certified common issues. In some cases, individual trials or hearings will follow the common issues trial to resolve any outstanding issues.

Class actions often take years to resolve. The length of a class action depends on several factors including the factual matrix, the nature of the claim, the jurisdiction, the class size, the number of defendants, the complexity and novelty of the legal issues, the timing of potential summary judgments or other dispositive motions, settlements, appeals, and court delays.

What is certification? Is certification a high bar?

Certification is a mandatory procedural step in any class action. It is not a determination of the merits. If certified, the court will order the form of the action, including naming a representative plaintiff, defining the class and the common issues, and approving a workable litigation plan.

Certification is a low bar, and many actions pass this stage easily. Plaintiffs must fulfil several criteria to certify an action. A plaintiff must establish that it is not ‘plain and obvious’ that there is no viable cause of action2. A plaintiff also needs to provide ‘some basis in fact’ that there is an identifiable class of two or more persons, the claims raise common issues, a class action is the preferable procedure to resolve those common issues, and there is a suitable representative plaintiff3. The required standard of proof is significantly lower than the regular balance of probabilities standard typically applied in civil suits.

What are the potential damages and cost consequences?

A court has the power to award all remedies available in individual proceedings in a class action, including common law, statutory, and equitable relief. Punitive damages are available, but only in exceptional circumstances.

The Canadian default cost rule is that the losing party bears at least some of the winning party’s legal costs. The ‘loser pays’ rule applies to class actions in most provinces, including Ontario. However, some provinces, including British Columbia, have legislated that subject to exceptions parties to a class action are responsible for their own legal costs.

Is there a collective settlement mechanism?

Yes, and most class actions settle. Class action settlements are subject to court approval. A court must approve the proposed settlement as fair, reasonable, and in the best interests of the class, and will consider several factors, including the likelihood of recovery or likelihood of success, the amount and nature of discovery, evidence or investigation, and the proposed settlement terms and conditions.

Can a non-Canadian entity become a party to a Canadian class action?

Yes, it is common for Canadian plaintiffs to pursue class action claims against non-Canadian defendants. Class actions are subject to regular conflict of laws considerations and, as such, Canadian courts will exercise jurisdiction over claims that have a ‘real and substantial connection’ to the court, which can include claims against non-Canadian entities. A ‘real and substantial connection’ may not always be obvious to non-Canadian entities. For example, in price-fixing conspiracy cases, Canadian courts have asserted jurisdiction where the conspiracy caused economic harm in the relevant jurisdiction, even if the conspiracy took place outside of Canada and the non-Canadian defendant has no presence or business in Canada.

What are the major business risks for non-Canadian entities?

Non-Canadian entities are often named as defendants in competition, securities, and product liability class actions.

Plaintiffs frequently bring class actions against non-Canadian entities alleging anti-competitive conspiracies such as price-fixing, market allocation, and bid-rigging schemes.

Securities law class actions are also routinely filed in Canada. Primary and secondary market purchasers often pursue defendants, including non Canadian entities, for alleged misrepresentations in public filings or failure to make timely disclosures of material changes.

Product liability class actions involving non-Canadian entities are also common. Plaintiffs typically allege that a product was negligently designed (ie, designed with a dangerous defect), negligently manufactured, or negligently marketed (ie, the product was marketed without adequately warning users of risks associated with the product).

Non-Canadian entities doing business in Canada, or even having indirect effects on Canadian commerce or consumers, are not immune to Canadian class action risk, particularly in light of the broad jurisdictional reach of the Canadian courts.


  1. In many Canadian proceedings, it is accepted practice to defer the delivery of Statements of Defence until after the class action has been certified.
  2. The factual allegations are taken as true for the purpose of this analysis and no evidence is admissible.
  3. Evidence is permitted to be filed on these components of the certification test.