Narrowing The Case Before It Begins: Ontario Court Grants Pre-Certification Motions To Strike

Earlier this month, the Ontario Superior Court of Justice handed down its decisions in four separate actions in the Fortress cases,1 serving as a reminder to defendants about a useful tool that can still yield the favourable result of substantially narrowing a class proceeding: the pre-certification motion to strike.

Syndicated Mortgages

Four land development projects in the Greater Toronto Area sought financing by means of syndicated mortgages in which relatively small investors participated. The projects ultimately entered creditor protection, and certain investors commenced proposed class proceedings against a number of participants in the projects. Among the defendants was the trust company involved in the syndication. The investors' claim, which Justice Perell characterized as a "new genre of class action," sought mass rescission of the investments in the mortgage, combined with a mass mortgage enforcement action, combined with tort, contract and breach of fiduciary duty claims.2

Pre-Certification Motions to Strike

The first hurdle a class proceeding must clear to be certified is that it "discloses a cause of action".3 The same test applies under this section as that on a motion to strike - namely, that the class will succeed unless it is "plain and obvious" that the claim fails to disclose a reasonable cause of action.4 Because the same test is applied on a certification motion, class proceedings judges are typically reluctant to hear motions to strike in advance of certification, particularly where the motion will not dispose of the entire action; and, moreover, certification motions are generally to be the first motion heard in a class proceeding.5

Nonetheless, Justice Perell entertained the motions in these proceedings. It seems that the motions were appropriate despite the fact that they would not terminate the proceedings because of the weaknesses in the statements of claim. As Justice Perell described them:

Ms. McDowell's and Mr. Aversa's Amended Amended Statement of Claim is 90 pages in length. Its word count is 21,575 words. The pleading contains 214 main paragraphs and a total of 781 paragraphs and sub-paragraphs.

The allegations in the 781 main and sub-paragraphs, however, are sometimes inconsistent one with another. Many of the allegations are unclear. Many of the allegations, be they clear or unclear, are unnecessarily repeated. Some of the allegations properly group the Defendants, but, in other instances, the case...