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Karine Chênevert, Borden Ladner Gervais LLP

COVID-19 related class action fails, a first in Quebec

Monday, May 10, 2021 @ 1:15 PM | By Luis Millán

A consumer class action arising from the COVID-19 pandemic against a popular ski hill operator was refused certification, the first in Quebec, after Quebec Superior Court found that the application lacked an arguable cause of action.

In a decision that is in line with recent class action case law, the ruling underlines that COVID-19 class actions cannot simply allege a breach of contract and expect to be certified; reiterates that class actions even in light of the pandemic nevertheless have to meet the relatively low burden of demonstration; and highlights the importance of the defence bar to adduce relevant evidence, according to class action experts.

 Shaun Finn, co-leader of the class action defence group at BCF Business Law

Shaun Finn, BCF Business Law

“This decision is sending a message to the plaintiff’s bar that you have to provide the court with the minimal amount of evidence that is necessary for it to determine whether or not an arguable case has been made,” observed Shaun Finn, co-leader of the class action defence group at BCF Business Law in Montreal and author of six books on class actions. “Another key thing to come out of the decision is that the mere fact that a service was not provided as a result of governmental actions taken in response to COVID-19 does not mean that it will provide you with an easy access to authorization.”

A flurry of COVID-19 class actions, 80 and counting, has been launched across the country since the pandemic took hold in March 2020. The claims fall broadly into four categories: negligence claims against long-term care home owners and operators; denial of business interruption suits against insurers; actions against the government for alleged unsanitary living conditions and overcrowding in penitentiaries which ostensibly heightened the risk of exposure to the virus; and a spate of actions over inadequate refunds and breach of contract initiated by frustrated consumers.

The suit against the popular ski hill resort owner and operator, Station Mont Tremblant, was launched after the ski hill closed in mid-March 2020 following a provincial government decree. The class sought the partial reimbursement of fees paid by consumers who purchased a ski pass, which allegedly promised skiers with 113 “fixed days” for skiing. The class action representative, Barry Nashen, argued that the class is entitled to a reduction under the Quebec Consumer Protection Act (Act) for failing to deliver the goods or to perform the service stipulated in the contract. Nashen also sought a partial reimbursement for consumers who bought an add-on to the ski pass that entitled purchasers to certain pre-paid items such as 20 coffees or hot chocolates. The class also claimed punitive damages of $100 for each member of the class because the ski hill owner did not provide a partial refund to consumers for either product.

Quebec Superior Court Justice Chantal Corriveau refused to grant authorization and castigated the class for failing to provide evidence, such as a copy of the contract, to back up its allegations. “Given the failure by the applicant to provide a contract that governs the parties, must the Court close its eyes and simply apply the reasoning put forward by them to determine whether the conclusions being sought seem to be justified?” rhetorically asked Justice Corriveau in Nashen c. Station Mont-Tremblant 2021 QCCS 1450, a decision issued on April 19.

 Karine Chênevert, a Montreal litigator with Borden Ladner Gervais LLP

Karine Chênevert, Borden Ladner Gervais LLP

“The court was very careful in its analysis of the evidence to avoid having the equivalent of a debate on the merits,” pointed out Karine Chênevert, a Montreal litigator with Borden Ladner Gervais LLP who successfully pleaded the case. “She wanted to ensure that the applicant met the burden of an arguable case, and that she had necessary tools to make her decision.”

Justice Corriveau found, after examining the contract which was filed by the defence with the approval of the court and which was not contested by the class, that the relevant contractual provisions contradicted rather than supported its allegations made in the application for certification. She found that the contract did not include any guarantee of access to the ski hill. Rather the contract stipulated the maximum amount of days a pass holder could have access to the ski hills. Moreover, the contract “clearly shows” that the ski pass was non-refundable, unless insurance was purchased, said Justice Corriveau.

“The case shows that the authorization judge must not only take into account the applicant’s allegations when applying the arguable case criterion contained in article 575 Quebec Code of Civil Procedure (CCP) but the relevant evidence as well,” said Finn. Article 575 outlines four criteria that the plaintiff must demonstrate in order for a class action to be certified, one of which is that the facts alleged appear to justify the conclusions sought.

This is entirely consistent with guidance provided by the Supreme Court of Canada in Infineon Technologies AG v. Option consommateurs [2013] 3 S.C.R. 600, added Finn. In Infineon, the Supreme Court stated that although the threshold for authorizing a class action is a relatively low bar, “mere assertions are insufficient without some form of factual underpinning.” The top court added that while an applicant’s allegations of fact are assumed to be true, “they must be accompanied by some evidence to form an arguable case.”

Justice Corriveau also rejected the argument made by the class that the non-refundable clause was illegal under the Act. The ski hill operator’s decision to close the trails did not constitute an abuse of right but was “directly and exclusively” a result of the health crisis and provincial government decrees. As a result, the claim for punitive damages could not be justified as it failed to demonstrate there was a fault or a breach of the law.

The Nashen case will likely be “useful” and be used by other courts given that it is the first judgment rendered in Quebec on an application for authorization to institute a class action in connection with a cause of action arising from the COVID-19 pandemic, said Chênevert. Justice Corriveau’s analysis was not strictly contractual, but also took into account external and contextual factors such as the pandemic and government decrees, added Chênevert. “This was not a case where non-access to the ski hill was due to a fault by the defendants,” said Chênevert. “It’s not because the defendants did not meet their obligations. Rather the judge states that there was an external factor that made it necessary to close the ski hill earlier than planned.”

Joey Zukran, a Montreal lawyer with LPC Avocat Inc. who represented the class action representative, declined to comment on the case. He did say that the case will be appealed. In Quebec a judgment denying authorization remains subject to an appeal as of right by the applicant.