Class Actions Seeking Punitive Damages: The Pendulum Swings Back In Favour Of Defendants

On March 6, 2013, the Québec Court of Appeal in Montréal (Ville de) c. Biondi, 2013 QCCA 404 ("Biondi"), rendered a long-awaited decision in the field of class action lawsuits. The decision was based on an appeal from a judgment of the Superior Court of Québec that ordered the City of Montréal and one of its unions (the "Union") to pay damages to the members of a class resulting from the delay in de-icing roads and sidewalks in downtown Montréal, and ordering the liquidation of the class action members' individual claims. In its judgment, the Superior Court had, among other things, ordered the Union to pay $2,000,000 in punitive damages to the class members before the individual claims were liquidated, which involves a long and complex process that would likely result in a multitude of mini-trials.

The Court of Appeal unanimously overturned this part of the judgment and unanimously held that the liquidation of punitive damages was premature. Article 1621 of the Civil Code of Québec provides that an award of punitive damages is to be assessed by taking into account, among other things, the "extent of the reparation for which [the defendant] is already liable to the creditor". Therefore, it was necessary to wait for the individual claims for compensatory damages to be liquidated prior to determining the quantum of punitive damages.

This decision is of particular importance in the context of jurisprudential developments in the field of class actions in recent years, which have encouraged the filing of claims primarily seeking an award for punitive damages. These developments are of two types:

Firstly, the Court of Appeal confirmed the independent nature of punitive damages in Brault & Martineau c. Riendeau, 2010 QCCA 366, thereby ending a controversy dating from the case of Béliveau St-Jacques v. Fédération des employées et employés de services publics inc., [1996] 2 S.C.R. 345. It held that it was possible, in the context of a class action, to award punitive damages even in the absence of a finding of compensatory damages. The Supreme Court of Canada subsequently confirmed this rule in de Montigny v. Brossard (Succession), 2010 SCC 51. Secondly, the Court of Appeal also confirmed in Collectif de défense des droits de la Montérégie (CDDM) c. Centre hospitalier régional du Suroît du Centre de santé et de services sociaux du Suroît, 2011 QCCA 826 and...