Sun-Rype Products Ltd. v. Wendy Weberg, 2013 SCC 58

SUPREME COURT OF CANADA Citation: Sun-Rype Products Ltd. v.

Archer Daniels Midland Company, 2013 SCC 58, [2013] 3 S.C.R. 545 Date: 20131031 Docket: 34283 Between: Sun-Rype Products Ltd. and Wendy Weberg Appellants/Respondents on cross-appeal and Archer Daniels Midland Company, Cargill, Incorporated, Cerestar USA, Inc., formerly known as American Maize-Products Company, Corn Products International, Inc., Bestfoods, Inc., formerly known as CPC International, Inc., ADM Agri-Industries Company, Cargill Limited, Casco Inc. and Unilever PLC doing business as Unilever Bestfoods North America Respondents/Appellants on cross-appeal - and - Attorney General of Canada and Canadian Chamber of Commerce Interveners Coram: McLachlin C.J. and LeBel, Fish, Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner JJ.

Reasons for Judgment: (paras. 1 to 80) Dissenting Reasons: (paras. 81 to 122) Rothstein J. (McLachlin C.J. and LeBel, Fish, Abella, Moldaver and Wagner JJ. concurring) Karakatsanis J. (Cromwell J. concurring) Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2013 SCC 58, [2013] 3 S.C.R. 545 Sun-Rype Products Ltd. and Wendy Weberg Appellants/Respondents on cross-appeal v. Archer Daniels Midland Company,

Cargill, Incorporated, Cerestar USA, Inc., formerly known as American Maize-Products Company, Corn Products International, Inc., Bestfoods, Inc., formerly known as CPC International, Inc., ADM Agri-Industries Company, Cargill Limited, Casco Inc. and Unilever PLC doing business as Unilever Bestfoods North America Respondents/Appellants on cross-appeal and Attorney General of Canada and Canadian Chamber of Commerce Interveners Indexed as: Sun-Rype Products Ltd. v. Archer Daniels Midland Company 2013 SCC 58 File No.: 34283. 2012: October 17; 2013: October 31.

Present: McLachlin C.J. and LeBel, Fish, Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner JJ. on appeal from the court of appeal for british columbia Civil procedure — Class actions — Certification — Direct and indirect purchasers — Plaintiffs allege that defendants fixed price of high-fructose corn syrup and overcharged direct purchasers and overcharge was passed on to indirect purchasers — Whether indirect purchasers have right to bring action against alleged overcharger — Whether inclusion of indirect and direct purchasers in proposed class warrants dismissing action — Whether case meets certification requirement of having an identifiable class of indirect purchasers — Whether direct purchasers have cause of action in constructive trust — Class Proceedings Act, R.S.B.C. 1996, c. 50, s. 4(1) .

The appellants, direct and indirect purchasers, brought a class action alleging that the respondents engaged in an illegal conspiracy to fix the price of high-fructose corn syrup (“HFCS”) resulting in harm to manufacturers, wholesalers, retailers and consumers. HFCS is a sweetener used in various food products, including soft drinks and baked goods. The respondents are the leading producers of HFCS in North America.

On the application for certification, it was determined that the pleadings disclosed causes of action for the direct purchasers in constructive trust and for the indirect purchasers under s. 36 of the Competition Act , in tort and in restitution. The action was certified. On appeal, the majority of the court allowed the appeal with respect to the indirect purchasers and held that it was “plain and obvious” that indirect purchasers did not have a cause of action. The appeal with respect to direct purchasers was dismissed.

The matter was remitted to the British Columbia Supreme Court to reconsider the certification of the action of the direct purchasers alone. In this Court, the appellants challenge the decision that the indirect purchasers have no cause of action. On cross- appeal, the respondents request dismissal of the direct purchasers’ claim in constructive trust. Held (Cromwell and Karakatsanis JJ. dissenting on the appeal): The appeal should be dismissed and the cross-appeal allowed. Per McLachlin C.J. and LeBel, Fish, Abella, Rothstein, Moldaver and Wagner JJ.: Having decided in Pro-Sys Consultants Ltd. v.

Microsoft Corporation , 2013 SCC 57 , [2013] 3 S.C.R. 477, that indirect purchasers have the right to bring an action, a question in this case is whether the additional challenges that arise where the class is made up of indirect and direct purchasers are sufficient to warrant dismissing the action. The inclusion of indirect and direct purchasers in the proposed class does not produce difficulties that would warrant dismissing the action.

Where indirect and direct purchasers are included in the same class and the evidence of the experts at the trial of the common issues will determine the aggregate amount of the overcharge, there will be no double or multiple recovery. The court also possesses the power to modify settlement and damage awards in accordance with awards already received in other jurisdictions if the respondents are able to satisfy it that double recovery may occur.

Assuming all facts pleaded to be true, a plaintiff satisfies the requirement that the pleadings disclose a cause of action unless it is plain and obvious that the claim cannot succeed. In relation to the causes of action in restitution for the indirect purchasers, the requirement that there be a direct relationship between the defendant and the plaintiff for a claim in unjust enrichment is not settled. Case law does not appear to necessarily foreclose a claim where the relationship between the parties is indirect.

It is not plain and obvious that a claim in unjust enrichment should fail at the certification stage on this ground alone. As to the recognition of passed-on losses — the injury suffered by indirect purchasers is recognized at law as is their right to bring actions to recover for those losses. No insurmountable problem is created by allowing the claims in restitution to be brought. Nor is it plain and obvious that a cause of action for the indirect purchasers under s. 36 of the Competition Act cannot succeed and this cause of action should therefore not be struck out.

A court must certify a proceeding if, among other requirements, there is an identifiable class of two or more persons. Thedifficulty lies where there is insufficient evidence to show some basis in fact that two or more persons will be able to determine if theyare in fact a member of the class.

Allowing a class proceeding to go forward without identifying two or more persons who will be able todemonstrate that they have suffered a loss at the hands of the alleged overchargers subverts the purpose of class proceedings, which is toprovide a more efficient means of recovery for plaintiffs who have suffered harm but for whom it would be impractical or unaffordableto bring a claim individually. Here, there is no basis in fact to demonstrate that the information necessary to determine class membershipis possessed by any of the putative class members.

The appellants have not introduced evidence to establish some basis in fact that atleast two class members could prove they purchased a product actually containing HFCS during the class period and were thereforeidentifiable members of the class. The problem in this case lies in the fact that indirect purchasers, even knowing the names of theproducts affected, will not be able to know whether the particular item that they purchased did in fact contain HFCS. While there mayhave been indirect purchasers who were harmed by the alleged price-fixing, they cannot self-identify using the proposed definition.

Thefoundation upon which an individual action could be built must be equally present in the class action setting. That foundation is lackinghere. In the end, given the finding that an identifiable class cannot be established for the indirect purchasers, the class action as it relatesto the indirect purchasers cannot be certified. With respect to the one cause of action remaining to the direct purchasers, it is determined that the cause of action inconstructive trust should fail.

Neither the requirement of a proprietary nexus nor the requirement that the constructive trust be imposedonly where a monetary remedy was found to be inadequate were met in this case and as such it is plain and obvious that the directpurchaser claim in constructive trust has no chance of succeeding. Per Cromwell and Karakatsanis JJ. (dissenting on the appeal): In this case, there is some basis in fact to find an identifiableclass of two or more persons that includes indirect purchasers.

The requirement that the class be identifiable does not include the requirement that individual members be capable ofproving individual loss. The Class Proceedings Act (“CPA”) is designed to permit a means of recovery for the benefit of the class as awhole, without proof of individual loss, even where it is difficult to establish class membership. Thus, if no individual seeks anindividual remedy, it will not be necessary to prove individual loss.

Such class actions permit the disgorgement of unlawful gains andserve not only the purposes of enhanced access to justice and judicial economy, but also the broader purpose of behaviour modification. Further, the aggregate damages provisions in the CPA are tools which are intended to permit access to justice and behaviourmodification in cases where liability to the class has been proven but individual membership in the class is difficult or impossible todetermine. The legislation explicitly contemplates difficulties or, in some cases, impossibility in self-identification.

Such difficultieshave not been considered fatal to authorizations under the CPA provided that there is some basis in fact that the class exists. The criteriafor membership must be clearly defined — not the ability of a given individual to prove that they meet the criteria. Whether claimantscan prove their claim for an individual remedy is a separate issue that need not be resolved at the certification stage. Here, the record contained an evidentiary basis to establish the existence of the class and to show that the members of theclass suffered harm.

It may never be necessary or legally required to identify individual class members. The CPA, while primarily aprocedural statute, also creates a remedy that recognizes that damages to the class as a whole can be proven, even when proof ofindividual members’ damages is impractical, and that is available even if those who are not members of the class can benefit. Thestatute should be construed generously to give life to its purpose of encouraging judicial economy and access to justice and modifyingthe behaviour of wrongdoers.

Even though it is not necessary at the certification stage to show that individual class members could stand alone asplaintiffs, this record contains a sufficient evidentiary basis to establish the existence of an identifiable class of two or more persons. Direct purchasers of HFCS used it extensively in products that were sold widely to retailers and to consumers. Given the nature of aprice-fixing case, loss flows directly from the purchase of HFCS, or in the case of indirect purchasers, products containing HFCS.

Claimants will not have to prove definitively that they purchased a particular product that contained HFCS. It will be sufficient if thetrial judge is satisfied, upon expert or other evidence, that an individual claimant probably purchased a product containing it. Therequirement that there be an evidentiary foundation — or some basis in fact — to support the certification criteria does not include apreliminary merits test and does not require the plaintiffs to indicate the evidence upon which they will prove these claims.

The questionat the certification stage is not whether the claim is likely to succeed, but whether the suit is appropriately prosecuted as a class action. The appellants in this case have tendered evidence which establishes some basis in fact to show that the proposed class is identifiableand that individual class members may be able to establish individual loss on a balance of probabilities. Individual claimants, includingindirect purchasers, would be able to self-identify as potential plaintiffs based on knowledge of the products in which HFCS is known tohave been commonly used. Cases Cited By Rothstein J.

Applied: Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R. xxx, rev’g 2011 BCCA 186,304 B.C.A.C. 90; referred to: Pro-Sys Consultants Ltd. v. Infineon Technologies AG, 2009 BCCA 503, 98 B.C.L.R. (4th) 272; Optionconsommateurs v. Infineon Technologies AG, 2011 QCCA 2116 , aff’d 2013 SCC 59, [2013] 3 S.C.R. 600; KingstreetInvestments Ltd. v. New Brunswick (Finance), 2007 SCC 1, [2007] 1 S.C.R. 3; Hunt v. Carey Canada Inc., (SCC),[1990] 2 S.C.R. 959; Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, [2011] 2 S.C.R. 261; Hollick v.

Toronto (City), 2001SCC 68, [2001] 3 S.C.R. 158; Peel (Regional Municipality) v. Canada, (SCC), [1992] 3 S.C.R. 762; Tracy (Guardian adlitem of) v. Instaloans Financial Solutions Centres (B.C.) Ltd., 2010 BCCA 357, 320 D.L.R. (4th) 577; Kerr v. Baranow, 2011 SCC 10,[2011] 1 S.C.R. 269; Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572; VitaPharm Canada Ltd. v. F.Hoffmann-LaRoche Ltd. (2002), 20 C.P.C. (5th) 351; Fairhurst v. Anglo American PLC, 2012 BCCA 257, 35 B.C.L.R. (5th) 45; BritishColumbia v.

Imperial Tobacco Canada Ltd., 2006 BCCA 398, 56 B.C.L.R. (4th) 263; Western Canadian Shopping Centres Inc. v.Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534; Lau v. Bayview Landmark Inc. (1999), 40 C.P.C. (4th) 301; Bywater v. Toronto TransitCommission (1998), 27 C.P.C. (4th) 172; Sauer v. Canada (Agriculture), ; Taub v. Manufacturers Life Insurance Co.(1998), (ON SC), 40 O.R. (3d) 379.

By Karakatsanis J. (dissenting on the appeal) Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534; Lau v. Bayview Landmark Inc.(1999), 40 C.P.C. (4th) 301; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158; Pro-Sys Consultants Ltd. v. MicrosoftCorporation, 2013 SCC 57, [2013] 3 S.C.R. 477; Steele v. Toyota Canada Inc., 2011 BCCA 98, 14 B.C.L.R. (5th) 271; Risorto v. StateFarm Mutual Automobile Insurance Co. (2007), 38 C.P.C. (6th) 373; Sauer v. Canada (Agriculture), ; Gilbert v.Canadian Imperial Bank of Commerce (2004), 3 C.P.C. (6th) 35; Cassano v.

Toronto-Dominion Bank (2009), (ONSC), 98 O.R. (3d) 543; Ford v. F. Hoffmann-La Roche Ltd. (2005), (ON SC), 74 O.R. (3d) 758; Alfresh BeveragesCanada Corp. v. Hoechst AG (2002), 16 C.P.C. (5th) 301; MacKinnon v. National Money Mart Co., 2006 BCCA 148, 265 D.L.R. (4th)214. Statutes and Regulations Cited Class Proceedings Act, R.S.B.C. 1996, c. 50, ss. 4(1), 29, 31(1), 34. Competition Act, R.S.C. 1985, c. C-34, ss. 36,

Part VI. Authors Cited Blynn, Daniel. “Cy Pres Distributions: Ethics & Reform” (2012), 25 Geo. J. Legal Ethics 435. Eizenga, Michael A., et al. Class Actions Law and Practice, 2nd ed. Markham, Ont.: LexisNexis, 2009 (loose-leaf updated May 2013,release 22). Maddaugh, Peter D., and John D. McCamus. The Law of Restitution, vol. I. Toronto: Canada Law Book, 2013 (loose-leaf updated May2013, release 10). APPEAL and CROSS-APPEAL from a judgment of the British Columbia Court of Appeal (Donald, Lowry andFrankel JJ.A.), 2011 BCCA 187, 305 B.C.A.C. 55, 515 W.A.C. 55, 331 D.L.R. (4th) 631, [2011] B.C.J.

No. 689 (QL), 2011 CarswellBC931, setting aside a decision of Rice J., 2010 BCSC 922, [2010] B.C.J. No. 1308 (QL), 2010 CarswellBC 1749. Appeal dismissed,Cromwell and Karakatsanis JJ. dissenting. Cross-appeal allowed. J. J. Camp, Q.C., Reidar Mogerman, Melina Buckley and Michael Sobkin, for the appellants/respondents on cross-appeal. D. Michael Brown, Gregory J. Nash and David K. Yule, for the respondents/appellants on cross-appeal Archer DanielsMidland Company and ADM Agri-Industries Company. J. Kenneth McEwan, Q.C., and Eileen M.

Patel, for the respondents/ appellants on cross-appeal Cargill, Incorporated,Cerestar USA, Inc., formerly known as American Maize-Products Company and Cargill Limited. Stephen R. Schachter, Q.C., Geoffrey B. Gomery, Q.C., and Peter R. Senkpiel, for the respondents/appellants on cross-appealCorn Products International, Inc., Bestfoods, Inc., formerly known as CPC International, Inc., Casco Inc. and Unilever PLC doingbusiness as Unilever Bestfoods North America. John S. Tyhurst, for the intervener the Attorney General of Canada. Davit D. Akman and Adam Fanaki, for the intervener the Canadian Chamber of Commerce.

TABLE OF CONTENTS Paragraph

Reasons of Rothstein J. I. Introduction . II. Background . III. S ummary of the Proceedings Below .. A. Commencement of the Action . B. Pre-certification Motion to Strike . C. Certification Proceedings in the British Columbia Supreme Court D........ Appeal of the Certification to the British Columbia Court of Appeal IV. Analysis . A. Indirect Purchaser Actions (the “Passing On” Issue)

(1) Double or Multiple Recovery as Between Indirect and Direct Purchasers .

(2) Over-Recovery as Between Jurisdictions .

(3) Restitutionary Law Principles .

(4) Deterrence and Compensation . B........ The Certification of the Class Action .

(1) Do the Pleadings Disclose a Cause of Action? . (

a) Restitution — Indirect Purchasers . (

b) Constructive Trust — Direct Purchasers . (

c) Section 36 of the Competition Act — Indirect Purchasers . (

i) Passed-On Losses Recognized at Law (ii) Jurisdiction Over Extraterritorial Conduct

(2) Are There Common Issues? .

(3) Is There an Identifiable Class? .

(4) Conclusion on Identifiable Class . V. Conclusion . Reasons of Karakatsanis J. I. Overview .. II. Class Requirements — General Principles . III. Application to This Case . A. The Record and Position of the Parties . B. Class Identification Does Not Require That Individual Class Members Can Prove Individual Loss . C. Some Basis in Fact to Show That Individuals Could Prove Personal Loss/Class Members Are Identifiable . IV. Conclusion . APPENDIX: Common Issues Certified by Rice J. 1 4 6 6 7 8 10 13 16 17 21 22 24 28 31 33 39 42 42 44 48 52 77 80 81 89 92 92 96 110 121

The judgment of McLachlin C.J. and LeBel, Fish, Abella, Rothstein, Moldaver and Wagner JJ. was delivered by Rothstein J. — I. Introduction [1] In price-fixing cases, indirect purchasers are customers who did not purchase a product directly from the allegedprice-fixers/overchargers but who purchased it indirectly from a party further down the chain of distribution.

Those who say indirectpurchasers should not be able to bring actions against their alleged overchargers cite complexities in tracing the overcharge, risks ofdouble or multiple recovery and failure to deter anti-competitive behaviour as reasons why they should not be permitted in Canada.These were some of the issues before the Court in the companion case of Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC57, [2013] 3 S.C.R. 477 (“Pro-Sys”).

In that case, a proposed indirect purchaser class action, those arguments were found to beinsufficient bases upon which to deny indirect purchasers the right to bring an action against the alleged overcharger. [2] In this case, both the indirect and direct purchasers are class members. Having decided in Pro-Sys that indirectpurchasers have the right to bring an action, a question in this case is whether the additional challenges that arise where the class is madeup of indirect and direct purchasers are sufficient to warrant dismissing the action.

If the Court finds that the action may proceed, it mustthen consider whether the class action should have been certified by the applications judge. [3] For the reasons that follow, I would find that the inclusion of indirect and direct purchasers in the proposed classdoes not produce difficulties that would warrant dismissing the action. However, I find this case cannot meet the certificationrequirements because there is not an identifiable class of indirect purchasers as required for certification under the British ColumbiaClass Proceedings Act, R.S.B.C. 1996, c. 50 (“CPA”).

I would dismiss the appeal on that basis. The case of the direct purchasers, whichis restricted to constructive trust, is dismissed as I find there is no cause of action. The cross-appeal is therefore allowed. II. Background [4] Sun-Rype Products Ltd., a juice manufacturer, is the direct purchaser representative plaintiff and Wendy Bredin(formerly Wendy Weberg) is the indirect purchaser representative plaintiff in this action. The representative plaintiffs (referred tocollectively as the “appellants”), brought the class action pursuant to the CPA.

They allege that Archer Daniels Midland Company andADM Agri-Industries Company (the “ADM respondents”), Cargill, Incorporated, Cerestar USA, Inc., formerly known as AmericanMaize-Products Company, and Cargill Limited (the “Cargill respondents”), and Corn Products International, Inc., Bestfoods, Inc.,formerly known as CPC International, Inc., Casco Inc. and Unilever PLC doing business as Unilever Bestfoods North America (the“Casco respondents”) (collectively, the “respondents”), engaged in an illegal conspiracy to fix the price of high-fructose corn syrup(“HFCS”) resulting in harm to manufacturers, wholesalers, retailers and consumers. [5] HFCS is a sweetener used in various food products, including soft drinks and baked goods.

The respondents are theleading producers of HFCS in North America. The appellants claim that between January 1, 1988 and June 30, 1995, the respondentsengaged in an “intentional, secret and illegal conspiracy to fix the price of HFCS”, which allowed them to charge the class membersmore for HFCS than they would have charged but for the alleged illegal conduct (A.F., at paras. 9 and 11). III.

Summary of the Proceedings Below A. Commencement of the Action [6] The appellants commenced this class action in June 2005 on behalf of “all persons resident in British Columbia andelsewhere in Canada who purchased HFCS or products containing HFCS manufactured by the [respondents] (collectively, the ‘class’)from January 1, 1988 to June 30, 1995 (the ‘Class Period’)” (2010 BCSC 922 , at para. 2). It alleged the following causes ofaction (ibid., at para. 27):

a) contravention of s. 45(1) of

Part VI of the Competition Act giving rise to a right of damages under s. 36(1) of that Act;

b) tortious conspiracy and intentional interference with economic interests;

c) unjust enrichment, waiver of tort and constructive trust; and

d) punitive damages. B. Pre-certification Motion to Strike [7] The respondents brought a pre-certification motion to strike the appellants’ claims on the basis that they werestatute-barred. In an order dated May 10, 2007, the motions judge only allowed the claim for a remedial constructive trust because it wassubject to a longer (10-year) limitation period than the other claims (2007 BCSC 640, 72 B.C.L.R. (4th) 163). The respondents appealedthe order to the British Columbia Court of Appeal (“B.C.C.A.”) and the appellants cross-appealed (2008 BCCA 278, 81 B.C.L.R. (4th)199).

The result was that the B.C.C.A. found that the direct purchaser representative plaintiff, Sun-Rype, could maintain only its cause ofaction in remedial constructive trust and that all of its claims for damages, including damages under the Competition Act, R.S.C. 1985, c.C-34, were statute-barred. As to the indirect purchaser representative plaintiff, Wendy Bredin, the B.C.C.A. found that she couldmaintain all of her causes of action because the limitation period on her claims did not begin until “she received the telephone call from

her lawyer advising her of the proposed class action” (para. 138). C. Certification Proceedings in the British Columbia Supreme Court, 2010 BCSC 922 [8] The British Columbia Supreme Court (“B.C.S.C.”) dealt with the appellants’ application for certification by itsdecision dated June 30, 2010. As to the issue of whether indirect purchasers could bring actions against their alleged overchargers, RiceJ. found that it was “not plain and obvious” that indirect purchaser claims were unavailable as a matter of law in Canada (para. 58). [9] Rice J. then addressed the requirement under s. 4(1)(

a) of the CPA that the pleadings disclose a cause of action.Excluding the portions of the claim struck by the pre-certification decision on the limitation periods, Rice J. found that the pleadingsdisclosed causes of action for the direct purchasers in constructive trust and for the indirect purchasers under s. 36 of the CompetitionAct, in tort and in restitution. Rice J. also found that the remaining certification requirements, namely (

i) whether there were commonissues; (ii) whether there was an identifiable class; (iii) whether the class action was the preferable procedure; and (iv) whether Sun-Rype and Wendy Bredin could adequately represent the class, were met. He certified the action identifying common issues relating tothe indirect purchasers’ claims seeking statutory, common law and equitable damages and restitution based on allegations that therespondents engaged in an international and unlawful conspiracy to fix the price of HFCS during the class period. The common issuescertified by Rice J. are listed in the appendix to these reasons.

D. Appeal of the Certification to the British Columbia Court of Appeal, 2011 BCCA 187, 305 B.C.A.C. 55 [10] The majority of the B.C.C.A. (per Lowry J.A., Frankel J.A. concurring) held that it was “plain and obvious” thatindirect purchasers did not have a cause of action (para. 97). The majority reached this conclusion for the same reasons as in its decisionin Pro-Sys Consultants Ltd. v.

Microsoft Corp., 2011 BCCA 186, 304 B.C.A.C. 90: it held that the rejection of the passing-on defence inCanada carried as its necessary corollary a corresponding rejection of the offensive use of passing on in the form of an indirect purchaseraction.

The majority found Canadian law “to be consistent with American federal law as established by the Supreme Court of the UnitedStates in Hanover Shoe . . . and Illinois Brick” (Pro-Sys (C.A.), at para. 74). [11] With respect to the indirect purchasers, the majority allowed the appeal and found that the pleadings did not disclosea cause of action on their part (para. 98). However, with respect to direct purchasers, the majority found that the appeal should bedismissed (para. 74).

The B.C.C.A. set aside the certification order of Rice J. and remitted the matter to the B.C.S.C. to reconsider thecertification of the action of the direct purchasers alone. [12] Donald J.A., dissenting, as he did in Pro-Sys, would have found that indirect purchaser actions were permitted as amatter of law in Canada and would have certified the action for both direct and indirect purchasers, finding that all of the requirements ins. 4(1) of the CPA were met. IV. Analysis [13] This appeal was brought concurrently with the appeal in the companion case of Pro-Sys.

Counsel for the appellantsare the same in both cases, and the appellants in this case rely heavily on the appellants’ submissions in Pro-Sys to support theirarguments. In view of the significant overlap in issues, these reasons will frequently refer to the reasons in Pro-Sys. [14] In this Court, the three groups of respondents filed separate factums. However, each adopts the pleadings of theothers in the appeal and the cross-appeal. In the appeal, the respondents argue first and foremost that indirect purchasers do not have acause of action.

They also argue that the class action should be decertified in respect of the indirect purchasers because the class is notidentifiable as required by s. 4(1)(

b) of the CPA. On the cross-appeal, the respondents request dismissal of the direct purchasers’ claim inconstructive trust on the grounds that the elements required to establish a constructive trust are not present. They also seek decertificationof the class action on the basis that Rice J. applied the wrong standard of proof in his analysis of the certification requirements. [15] As indicated, I am unable to find an identifiable class as it relates to the indirect purchasers and would dismiss theappeal on that basis. Nonetheless, for completeness, the various arguments presented in this case are assessed below.

I turn first to theindirect purchaser question and then consider the arguments pertaining to the certification of the class action. A. Indirect Purchaser Actions (the “Passing On” Issue) [16] The appellants largely adopt the submissions of Pro-Sys Consultants Ltd. on the passing-on issue. As the offensiveuse of passing on has been analysed in the reasons in Pro-Sys, it is unnecessary to repeat it in its entirety here. I add only the following toaddress the differences that arise with regard to passing on where indirect purchasers and direct purchasers are part of the same class.

(1) Double or Multiple Recovery as Between Indirect and Direct Purchasers [17] The respondents argue that the “fundamental difficulty with the case of the indirect purchasers is that they seekrecovery of amounts to which the direct purchasers have a valid claim, such that, to recognize the claim of the indirect purchasers wouldbe to recognize an overlapping claim to the same amount and the prospect of double recovery” (Cargill factum, at para. 54). They arguethat, because the passing-on defence has been rejected in Canada, the direct purchasers are entitled to 100 percent of the amount of theovercharge.

Consequently they say that indirect purchasers “make a duplicative and overlapping claim to an overcharge to which thedirect purchasers are entitled based on settled principles” (para. 61). [18] For the reasons given in the Pro-Sys appeal, this argument is insufficient to deny indirect purchasers the right to beincluded in the class action.

I agree with Rice J. that, by including both direct and indirect purchasers in the class and by using economicmethodologies to ascertain the aggregate amount of the loss, there will be no over-recovery from the respondents (B.C.S.C., at para. 53). [19] In this case, the appellants seek recovery of a defined sum equal to the aggregate of the overcharge. Where indirectand direct purchasers are included in the same class and the evidence of the experts at the trial of the common issues will determine the

aggregate amount of the overcharge, there will be no double or multiple recovery. Recovery is limited to that aggregate amount, nomatter how it is ultimately shared by the direct and indirect purchasers. This was the view of the B.C.C.A. in Pro-Sys Consultants Ltd. v.Infineon Technologies AG, 2009 BCCA 503, 98 B.C.L.R. (4th) 272 (“Infineon”), at para. 78, and of the Quebec Court of Appeal inOption consommateurs v. Infineon Technologies AG, 2011 QCCA 2116 , at para. 114. The appeal of the latter decision washeard together with Pro-Sys and this case. See Infineon Technologies AG v.

Option consommateurs, 2013 SCC 59, [2013] 3 S.C.R. 600. [20] To the extent that there is conflict between the class members as to how the aggregate amount is to be distributedupon the awarding of a settlement or upon a successful action, this is not a concern of the respondents and is not a basis for denyingindirect purchasers the right to be included in the class action.

(2) Over-Recovery as Between Jurisdictions [21] In addition to concern of double recovery as between indirect and direct purchasers, the respondents also expressconcerns of over-recovery arising from actions in the U.S. Specifically, the respondents state that in the U.S., direct purchasers of HFCShave already reached a settlement with the respondents for the entire overcharge.

They claim that if the rights of the indirect purchasersto bring an action are recognized in Canada, this will create “overlapping claims to the same loss between direct purchasers in the U.S.and indirect purchasers in British Columbia” (Cargill factum, at para. 71). As stated in the Pro-Sys reasons, the court is equipped to dealwith these risks. The court possesses the power to modify settlement and damage awards in accordance with awards already received byplaintiffs in other jurisdictions if the respondents are able to satisfy it that double recovery may occur.

If the respondents adduce relevantevidence, the court will be able to ensure that double recovery does not occur.

(3) Restitutionary Law Principles [22] The majority of the B.C.C.A. rejected the offensive use of passing on based on the theory that once the passing-ondefence is rejected, the direct purchasers would be entitled to the whole amount by which they were overcharged: . . . I am unable to see why the [direct purchasers] would not as a matter of law be entitled to the whole of the amount they overpaidregardless of any amount that may have been passed on to the [indirect purchasers] in the same way they would if they were the onlyplaintiffs in the action.

Anything less would serve to disadvantage them because of the nature of the proceedings such that they would bedeprived of what they would legally be entitled to recover. [para. 84] [23] I would agree that absent an action by indirect purchasers or absent the inclusion of indirect purchasers in the action,the direct purchasers would be able to recover the entire amount of the overcharge because the overcharger would be unable to invokethe passing-on defence.

However, this is not the same as saying the direct purchasers are entitled to the entire amount of the overcharge.The disgorgement of amounts obtained through wrongdoing is one of the fundamental principles of restitutionary law (P. D. Maddaughand J. D. McCamus, The Law of Restitution (loose-leaf ed.), vol. I, at p. 3-1). Restitutionary law is “a tool of corrective justice” thatseeks to take money away from the party who has unjustly taken it and return it to the party who unjustly lost it (Kingstreet InvestmentsLtd. v. New Brunswick (Finance), 2007 SCC 1, [2007] 1 S.C.R. 3, at paras. 32 and 47).

While a defendant cannot invoke the passing-ondefence, the direct purchasers cannot deny that they have passed on the overcharge to the indirect purchasers. Where indirect purchasersare able to demonstrate that overcharges were passed on to them, they are entitled to claim those overcharges.

(4) Deterrence and Compensation [24] As part of their argument that indirect purchaser actions should not be allowed, the respondents make much of thefact that in many other price-fixing cases in Canada, awards to indirect purchasers have been disbursed in the form of cy-près paymentsbecause the amounts in question were so small as to make identification of and distribution to each individual class member impractical.They claim that cy-près distributions do not advance the deterrence objective of the Canadian competition laws because any deterrencefunction could be achieved to an equal extent by a claim made solely by direct purchasers.

They also argue that because the award wouldbe distributed to a not-for-profit entity in place of the class members, the compensation goal of the Canadian competition laws is alsofrustrated. [25] There is merit to these arguments; however, the precedent for cy-près distribution is well established (see M. A.Eizenga et al., Class Actions Law and Practice (loose-leaf), at § 9.19). While cy-près distributions may not appeal to some on a policybasis, this method of distributing settlement proceeds or damage awards is contemplated by the CPA, at s. 34(1): 34

(1) The court may order that all or any part of an award under this Division that has not been distributed within a time set by thecourt be applied in any manner that may reasonably be expected to benefit class or subclass members, even though the order does notprovide for monetary relief to individual class or subclass members. [26] It is also a method the courts have used in indirect purchaser price-fixing cases, as demonstrated by the respondents’summary of nine cases in which distribution of the settlement funds was made on a cy-près basis.

And, while its very name, meaning“as near as possible”, implies that it is not the ideal mode of distribution, it allows the court to disburse the money to an appropriatesubstitute for the class members themselves (see D. Blynn, “Cy Pres Distributions: Ethics & Reform” (2012), 25 Geo. J. Legal Ethics435, at p. 435). [27] As such, while the compensation objective is not furthered by a cy-près distribution, it cannot be said that deterrenceis reduced by the possibility that a settlement will eventually be distributed in that manner.

These factors do not preclude indirectpurchasers from bringing an action or from being included in the class. B. The Certification of the Class Action [28] Having determined that indirect purchasers may pursue actions against their alleged overchargers, the issue is nowwhether this action should be certified. The analysis of the certification requirements was carried out by the applications judge, Rice J.,but was not addressed by the majority of the B.C.C.A. The majority of the B.C.C.A. disposed of the action based solely on its finding

that passing on could not be used offensively to allow indirect purchasers to bring an action. [29] The requirements for certification under the CPA are set forth in s. 4(1): 4

(1) The court must certify a proceeding as a class proceeding on an application under

section 2 or 3 if all of the followingrequirements are met: (

a) the pleadings disclose a cause of action; (

b) there is an identifiable class of 2 or more persons; (

c) the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting onlyindividual members; (

d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues; (

e) there is a representative plaintiff who (

i) would fairly and adequately represent the interests of the class, (ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class andof notifying class members of the proceeding, and (iii) does not have, on the common issues, an interest that is in conflict with the interests of other class members. [30] The respondents contest only three of the certification criteria. The first is whether the pleadings disclose a cause ofaction as required under s. 4(1)(a).

They argue that the remaining cause of action of the direct purchasers in constructive trust should bestruck and that the indirect purchaser causes of action in restitution and under s. 36 of the Competition Act should fail. They do notcontest the indirect purchasers’ causes of action in tort. Second, they say that the requirement under s. 4(1)(

c) that the claims raisecommon issues is not met. Third, they argue that the class is not identifiable as it relates to the indirect purchasers as required under s.4(1)(b).

(1) Do the Pleadings Disclose a Cause of Action? [31] Section 4(1)(

a) of the CPA requires that the pleadings disclose a cause of action. This requirement is judged on thestandard of proof applied in Hunt v. Carey Canada Inc., (SCC), [1990] 2 S.C.R. 959, at p. 980, namely that a plaintiffsatisfies this requirement unless, assuming all facts pleaded to be true, it is plain and obvious that the plaintiff’s claim cannot succeed (Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, [2011] 2 S.C.R. 261 (“Alberta Elders”), at para. 20; Hollick v.

Toronto(City), 2001 SCC 68, [2001] 3 S.C.R. 158, at para. 25). [32] I first consider the respondents’ arguments in relation to the causes of action in restitution for both the indirect anddirect purchasers (remedial constructive trust) and then turn to the arguments against the cause of action of the indirect purchasers unders. 36 of the Competition Act. (

a) Restitution — Indirect Purchasers [33] In the alternative, the appellants claim that the respondents have been unjustly enriched as a result of the allegedovercharge on the sale of HFCS and that the class members have suffered a deprivation in the amount of the overcharge attributable tothe sale of HFCS in B.C. and in Canada. They plead that this overcharge resulted from wrongful or unlawful acts and that there can thusbe no juristic reasons for the enrichment.

The appellants seek the disgorgement of the alleged overcharge paid to the respondents by theclass members. [34] The respondents argue that “both the benefit conferred and deprivation (or loss) suffered was that of the directpurchasers alone” and as such, it is the direct purchasers alone who can bring a claim for restitution for wrongful conduct.

They submitthat no benefit was conferred directly by the indirect purchaser to the overcharger and that the deprivation in question was suffered bythe direct purchasers and not the indirect purchasers, because the passing on of losses is not recognized at law (Cargill factum, at para.30). [35] I understand the respondents to be making two separate points: one, that a direct relationship between a plaintiff and

a defendant is needed to ground a claim in unjust enrichment; and two, that because indirect purchasers cannot base a claim on passed-onlosses, they have no cause of action in unjust enrichment. Both of these arguments have been addressed in the reasons in Pro-Sys. [36] The requirement that there be a direct relationship between the defendant and the plaintiff for a claim in unjustenrichment is not settled. As indicated in the Pro-Sys reasons, Peel (Regional Municipality) v.

Canada, (SCC), [1992] 3S.C.R. 762, states only that “[t]he cases in which claims for unjust enrichment have been made out generally deal with benefits conferreddirectly and specifically on the defendant” (p. 797 (emphasis added)). Peel requires only that a claim in unjust enrichment must be basedon “more than an incidental blow-by” and that “[a] secondary collateral benefit will not suffice” (p. 797). These words would appear notto necessarily foreclose a claim where the relationship between the parties is indirect. However, as in Pro-Sys, this does not resolve theissue.

First, it is not apparent here that the benefit received by the respondents was mere “incidental blow-by” or “collateral benefit”. Second, the appellants in Pro-Sys argue that Alberta Elders is an example of a case where an unjust enrichment was found absent adirect relationship, calling the requirement into question.

Accordingly, it cannot be said that it is plain and obvious that a claim in unjustenrichment should fail at the certification stage on this ground alone. [37] As to the recognition of passed-on losses, that question has been answered conclusively: the injury suffered byindirect purchasers is recognized at law as is their right to bring actions to recover for those losses. For the reasons previously explained,no insurmountable problem is created by allowing the claims in restitution to be brought by a class comprised of both direct and indirectpurchasers.

Unjustly obtained amounts are recoverable on the basis that they have been extracted at the plaintiffs’ expense (Maddaughand McCamus, at p. 3-9). That is what is alleged to have occurred in this case. The appellants allege that the respondents committedwrongful acts that were directed at both the direct and the indirect purchasers and as such both groups should be able to recover theirlosses. [38] It is true that, absent indirect purchasers, the rejection of the passing-on defence entitles direct purchasers to 100percent of the amount of the overcharge.

However, this entitlement is altered when indirect purchasers are included in the action. Asexplained above, this does not mean, as the respondents suggest, that to allow indirect purchasers to join the action would be “to admit ofthe possibility that a plaintiff could recover twice — once from the person who is the immediate beneficiary of the payment or benefit . .. and again from the person who reaped an incidental benefit” (Cargill factum, at para. 32, citing Peel, at p. 797).

Rather, it means thatthe indirect and direct purchasers will share the aggregate amount recovered in the event that the action is successful. To the extent thatthere are competing claims among the direct and indirect purchasers, I agree with Rice J. that this may be sorted out at a later stage of theproceeding (B.C.S.C., at para. 195). At this stage, both groups share the common interest of maximizing the amount recoverable fromthe respondents. The indirect purchasers’ cause of action in restitution should therefore not be struck out. (

b) Constructive Trust — Direct Purchasers [39] On cross-appeal, with respect to the one cause of action remaining to the direct purchasers, the respondents arguethat the cause of action in constructive trust should fail. [40] The respondents claim that neither the requirement of a “proprietary nexus” nor the requirement that the constructivetrust be imposed only where a monetary remedy was found to be inadequate were met in this case.

As such it is plain and obvious that thedirect purchaser claim in constructive trust has no chance of succeeding (see Casco cross-appeal factum, at para. 28, citing Tracy(Guardian ad litem of) v. Instaloans Financial Solution Centres (B.C.) Ltd., 2010 BCCA 357, 320 D.L.R. (4th) 577, for the requirementsof a constructive trust). I agree. [41] In Pro-Sys, noting that Kerr v.

Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, was the relevant controlling authority, Ifound that the claim in constructive trust must fail because there was no referential property and no explanation by the appellants why amonetary remedy would be inappropriate or insufficient. For the same reasons, I find it plain and obvious that Sun-Rype’s claim inconstructive trust in this case must fail and should be struck. (

c) Section 36 of the Competition Act — Indirect Purchasers (

i) Passed-On Losses Recognized at Law [42]

Section 36 of the Competition Act provides a cause of action to “[a]ny person who has suffered loss or damage as aresult of (

a) conduct that is contrary to any provision of

Part VI”. The respondents, basing their argument on their fundamental positionthat passed-on losses are not recognized at law, assert that s. 36 was not intended to provide a right of action to indirect purchasers. [43] For the reasons explained in Pro-Sys, this argument is rejected.

It is not plain and obvious that a cause of action forthe indirect purchasers under s. 36 of the Competition Act cannot succeed. (ii) Jurisdiction Over Extraterritorial Conduct [44] The respondents argue that “an alleged conspiracy entered into outside Canada, among foreign defendants, to fixprices of products sold to foreign direct purchasers does not constitute an offence under the Competition Act giving rise to a right of civilaction” (ADM factum, at para. 54).

They claim that the jurisdiction of Canadian courts over violations of the Competition Act by foreigndefendants “will have to be determined by reference to the presumptive connecting factors identified in Club Resorts, whichdetermination is beyond the scope of the present appeal” (para. 53) and that conduct cannot be contrary to

Part VI of the Competition Act“unless there is a real and substantial link between that conduct and Canada” (para. 60). [45] I agree with the respondents that the framework proposed in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1S.C.R. 572, will need to be applied in establishing whether there is “real and substantial connection” sufficient to find that Canadiancourts have jurisdiction in this case.

However, I would question the respondents’ characterization of the factual situation. [46] The conduct in question, while perpetrated by foreign defendants, allegedly involved each respondent’s Canadiansubsidiary acting as its agent. The sales in question were made in Canada, to Canadian customers and Canadian end-consumers. There is

at least some suggestion in the case law that where defendants conduct business in Canada, make sales in Canada and conspire to fix prices on products sold in Canada, Canadian courts have jurisdiction (see VitaPharm Canada Ltd. v. F. Hoffmann-LaRoche Ltd. (2002), 20 C.P.C. (5th) 351 (Ont. S.C.J.), at paras. 58 , 63-86 and 101-2 (“It is arguable that a conspiracy that injures Canadians gives rise to liability in Canada, even if the conspiracy was formed abroad”: para. 58); Fairhurst v.

Anglo American PLC , 2012 BCCA 257 , 35 B.C.L.R. (5th) 45, at para. 32 (the B.C.C.A. refusing to deny certification of a class action based on the argument that Canadian courts had no jurisdiction over Competition Act violations occurring outside of Canada); British Columbia v. Imperial Tobacco Canada Ltd. , 2006 BCCA 398 , 56 B.C.L.R. (4th) 263, at paras. 32-45 (“A conspiracy occurs in British Columbia if the harm is suffered here, regardless of where the ‘wrongful conduct’ occurred.

On that basis, the court has jurisdiction over the ex juris defendants who are alleged to be parties to the conspiracy”: para. 41)). [ 47 ] The respondents have not demonstrated that it is plain and obvious that Canadian courts have no jurisdiction over the alleged anti-competitive acts committed in this case. The cause of action under s. 36 of the Competition Act should not be struck out.

(2) Are There Common Issues? [ 48 ] Section 4(1)(

c) of the CPA requires that the claims of the class members raise common issues. The respondents’ arguments as to the commonality requirement centre on the standard of proof to be applied to this and the other certification requirements other than the requirement that the pleadings disclose a cause of action. Here, as in Pro-Sys , the respondents urge the Court to resolve the remainder of the certification requirements on a balance of probabilities. They say the Court should adopt the U.S. approach of weighing conflicting evidence at the certification stage.

For the reasons set out in Pro-Sys , the standard to be applied here is “some basis in fact” and not a balance of probabilities. [ 49 ] As to the standard to be applied to the expert evidence, the respondents do not argue that it is insufficient to demonstrate commonality; rather, they submit that Rice J. erred in that he applied the wrong standard of proof to the expert methodologies that he examined. [ 50 ] The reasons in Pro-Sys have set out that the standard to be applied to expert evidence is one requiring a credible and plausible methodology capable of proving harm on a class-wide basis. [ 51 ] It is evident that on the certification application, Rice J. analysed the significant amount of expert evidence that was before him and that he applied the correct standard to both the certification requirements (“plain and obvious” for s. 4(1) (

a) and “some basis in fact” for s. 4(1) (

b) to (e)) and the expert methodology required to establish some basis in fact (whether the expert evidence consisted of a credible and plausible model capable of proving harm on a class-wide basis). There is no basis upon which to interfere with his common issues determination.

(3) Is There an Identifiable Class? [ 52 ] Section 4(1)(

b) of the CPA provides that the court must certify a proceeding if, among other requirements, there is an identifiable class of two or more persons.

Hollick provides that this certification requirement will be satisfied by demonstrating “some basis in fact” to support it (para. 25). [ 53 ] The class definition proposed by the appellants is “all persons resident in British Columbia and elsewhere in Canada who purchased HFCS or products containing HFCS manufactured by the defendants (collectively, the ‘class’) from January 1, 1988 to June 30, 1995 (the ‘Class Period’)” (B.C.S.C., at para. 2). [ 54 ] The respondents take issue with the inclusion of indirect purchasers in the class.

They acknowledge that while impracticability or impossibility in distributing class action proceeds to indirect purchasers does not necessarily preclude finding an “identifiable class”, the facts of this particular case are such that the class cannot be found to be “identifiable” to the extent that it includes indirect purchasers (ADM factum, at para. 85).

The respondents argue that the inclusion of indirect purchasers in the class in the present case runs contrary to the purpose of the “identifiable class” requirement because indirect purchasers are not able, based on the class definition, to determine if they are members of the class. Relying on Western Canadian Shopping Centres Inc. v.

Dutton , 2001 SCC 46 , [2001] 2 S.C.R. 534, the respondents argue that the identifiable class requirement should allow for class membership to be determinable. [ 55 ] They argue that the proposed class definition does not allow for indirect purchasers to determine if they are in fact members of the class as defined.

Contrary to the Infineon and Pro-Sys cases where there was evidence that class membership could likely be determined, here “it is simply impossible to make a determination of the presence, or lack of presence, of HFCS in particular products a consumer in British Columbia may have purchased between 1988 and 1995” (ADM factum, at para. 97). They argue that prominent direct purchasers such as Coke, Pepsi, Vitality Foodservice Canada Inc., Ocean Spray Cranberries and George Weston Limited have used both HFCS and liquid sugar in their products.

In many cases, the labels on the products sold in Canada by these direct purchasers did not reflect which sweetener was used. They also point out that on cross-examination on her affidavit, the representative plaintiff Wendy Bredin stated that “she did not know whether any product she purchased during the class period actually contained HFCS” (para. 18).

They state that “[i]f the proposed representative Plaintiff in this action is unable to say whether any product she bought in the class period contained HFCS, it is difficult to see how any other potential class member could be aware of this fact” (para. 103). [ 56 ] This is not a typical ground on which the “identifiable class” requirement is challenged. Here, there is no question whether the class definition is too narrow or too broad, whether the definition contains subjective criteria or whether the class definition creates a need to consider the merits.

However, when the purpose for which there must be a class definition that designates an “identifiable class” is examined, the problems with the appellants’ case become evident. [ 57 ] I agree with the courts that have found that the purpose of the class definition is to (

i) identify those persons who have a potential claim for relief against the defendants; (ii) define the parameters of the lawsuit so as to identify those persons who are bound by its result; (iii) describe who is entitled to notice of the action ( Lau v. Bayview Landmark Inc. (1999), 40 C.P.C. (4th) 301 (Ont. S.C.J.) , at paras. 26 and 30 ; Bywater v. Toronto Transit Commission (1998), 27 C.P.C. (4th) 172 (Ont. Ct. J. (Gen. Div.)), at para. 10;

Eizenga et al., at § 3.31). Dutton states that “[i]t is necessary . . . that any particular person’s claim to membership in the class bedeterminable by stated, objective criteria” (para. 38). According to Eizenga et al., “[t]he general principle is that the class must simply bedefined in a way that will allow for a later determination of class membership” (§ 3.33). [58] I do not take issue with the class definition on its face. It uses objective criteria, it does not turn on the merits of theclaim, and it cannot be narrowed without excluding members who may have a valid claim.

Where the difficulty lies is that there isinsufficient evidence to show some basis in fact that two or more persons will be able to determine if they are in fact a member of theclass. [59] The appellants claim that the respondents “attempt to use the complexity inherent in claims arising from a large-scale price-fixing conspiracy to deny those injured by the alleged conduct a legal remedy” and that “courts have found that classdefinitions similar or identical to that proposed in this case were appropriate” (response factum, at paras. 58 and 61).

The appellants relyon the instruction in Dutton, at para. 38, that “[i]t is not necessary that every class member be named or known.” They cite Sauer v.Canada (Agriculture), (Ont.

S.C.J.), in support of the proposition that courts can engage in a “relatively elaboratefactual investigation in order to determine class membership” and that “[t]he fact that particular persons may have difficulty in provingthat they satisfy the conditions for membership is often the case in class proceedings and is not, by itself, a reason for finding that theclass is not identifiable” (para. 67, citing Sauer, at para. 28). [60] However, in Sauer the passage relied upon pertained to the issue of the objectivity of the criteria used in the classdefinition.

In that case, a class action involving cows infected with bovine spongiform encephalopathy (“BSE”) or “mad cow disease”,the class was defined to include “all cattle farmers in Canada”, except Quebec (para. 11). The representative plaintiff adduced evidenceof his own personal losses as well as those of others in the community as a result of the BSE crisis. The defendants challenged the term“cattle farmers” as being too broad and creating a problem for those farmers seeking to self-identify.

Lax J. of the Ontario SuperiorCourt of Justice held that in such situations the court could engage in a factual investigation to determine class membership. [61] That is not the situation in this case. Here, there is no basis in fact to demonstrate that the information necessary todetermine class membership is possessed by any of the putative class members. The appellants have an obligation at the certificationstage to introduce evidence to establish some basis in fact that at least two class members can be identified.

Here, they have not met eventhis relatively low evidentiary standard. [62] This is not a case of mere difficulty in proving membership in a defined class. That is what distinguishes this casefrom Pro-Sys. In Pro-Sys, even if class membership is not immediately evident to potential class members based on the class definition,records of purchase or the presence of the application software or operating systems that form the subject of the appeal on the computersof the putative class members would serve to identify them as part of the identifiable class.

Further, in Pro-Sys, Sam Leung, presidentand director of Pro-Sys Consultants Ltd., one of the representative plaintiffs, offered proof that he had purchased the product in questionin the form of the invoice for the purchase of the computer. That evidence demonstrated that class membership was determinable andestablished some basis in fact that there was an identifiable class. [63] Conversely, in this case, the respondents’ evidence is that HFCS and liquid sugar had been used interchangeably bydirect purchasers during the class period.

They also claim that Canadian labelling requirements during the class period were such that food and beverage producers were not required to specify whichof the two sweeteners was contained in their products. A generic label indicating “sugar/glucose-fructose” could be used for either liquidsugar or HFCS.

The result is that a consumer who purchased such a product during the class period would have had no way ofdetermining whether that product contained HFCS, even if they had bothered to check the label. [ADM factum, at para. 100] [64] The appellants say only that “hundreds of millions of dollars of HFCS was sold to Canadian direct purchasers duringthe Class Period” and that this HFCS was used in “products such as soft drinks, baked goods and other food products which arepurchased by restaurants, grocery wholesalers, supermarkets, convenience stores, movie theatres and others” (response factum, at para.69).

Their expert offers evidence that the amount of HFCS used and the specific products which contained it are identifiable (para. 69,citing the Leitzinger Report, at paras. 10-11, 18-20 and 27 (A.R., vol. II, at pp. 85-86, 89-91 and 95-96)). [65] The question, however, is not one of whether the identified products contained HFCS, or even whether theovercharge would have reached the indirect purchaser level (i.e. whether passing on had occurred).

The problem in this case lies in thefact that indirect purchasers, even knowing the names of the products affected, will not be able to know whether the particular item thatthey purchased did in fact contain HFCS. The appellants have not offered evidence that could help to overcome the identificationproblem created by the fact that HFCS and liquid sugar were used interchangeably. [66] Even Ms. Bredin testified that she is unable to state whether the products she purchased contained HFCS.

This factwill remain unchanged because, as noted above, liquid sugar and HFCS were used interchangeably and a generic label indicating only“sugar/glucose-fructose” could be used for either type of sweetener. Ms. Bredin presented no evidence to show that there is some basisin fact that she would be able to answer this question.

On the evidence presented on the application for certification, it appearsimpossible to determine class membership. [67] The appellants claim that “although some class members may not be able to self-identify, class membership isdeterminable by reference to the nature of the purchases made by each individual and the quantity of HFCS in the products purchased”(response factum, at para. 71). However, this is no answer to the self-identification problem. While there may have been indirectpurchasers who were harmed by the alleged price-fixing, they cannot self-identify using the proposed definition.

Allowing a classproceeding to go forward without identifying two or more persons who will be able to demonstrate that they have suffered loss at thehands of the alleged overchargers subverts the purpose of class proceedings, which is to provide a more efficient means of recovery forplaintiffs who have suffered harm but for whom it would be impractical or unaffordable to bring a claim individually. In this case, classmembership is not determinable. [68] Built into the class certification framework is the requirement that the class representative present sufficient

evidence to support certification and to allow the opposing party to respond with its own evidence (Hollick, at para. 22). The goal at thecertification stage is to ensure that this is an appropriate matter to proceed as a class proceeding (Pro-Sys, at para. 104). And while thecertification stage is not a preliminary trial of the merits, “the judge must be satisfied of certain basi[c] facts required by [the ClassProceedings Act, 1992, S.O. 1992, c. 6] as the basis for a certification order” (Taub v. Manufacturers Life Insurance Co. (1998), (ON SC), 40 O.R. (3d) 379 (Gen.

Div.), at p. 381). [69] In this case, the appellants argue that denying that there is an identifiable class is to confuse the ability to identify aclass with the ability to identify each individual member of that class (response factum, at para. 72). I agree that it is not necessary foreach individual class member to be identified at the outset of the litigation in order for the class to be certified. However, as set out in thelegislation, the matter will only be certified if, inter alia, “there is an identifiable class of 2 or more persons” (s. 4(1)(b)).

In this case, theproblem is that the indirect purchaser plaintiff did not offer any evidence to show some basis in fact that two or more persons couldprove they purchased a product actually containing HFCS during the class period and were therefore identifiable members of the class. [70] Justice Karakatsanis says that there is some basis in fact to conclude that some indirect purchasers could prove thatthey probably purchased products containing HFCS (para. 115). With respect, no evidence was provided to establish some basis in factthat any individual indirect purchasers could do so.

Allowing the class to be certified in such circumstances would be to lower theevidentiary standard necessary to satisfy the criteria at the certification stage from some basis in fact to mere speculation. [71] Justice Karakatsanis also states that “expert evidence may provide a credible and plausible method offering arealistic prospect of establishing loss on a class-wide basis” (para. 108).

However, even if expert evidence satisfies the certification judgethat the class as a whole was harmed, that does not obviate the need for the certification judge to be satisfied that there is some basis infact indicating that at least two persons can prove they incurred a loss. [72] A key component in any class action is that two or more persons fit within the class definition. If, as in this case,there is no basis in fact to show that at least someone can prove they fit within the class definition, the class cannot be certified becausethe criteria of “an identifiable class of 2 or more persons” is not met.

No amount of expert evidence establishing that the defendants haveharmed the class as a whole does away with this requirement. [73] This is not to say that an identifiable class could never be found in similar circumstances as appear in this case. Anidentifiable class could be found if evidence was presented that provided some basis in fact that at least two persons could prove theyhad suffered individual harm.

The problem in this case is that no such evidence was tendered. [74] Justice Karakatsanis writes that “if no individual seeks an individual remedy, it will not be necessary to proveindividual loss” (para. 97), and that the aggregate damages provisions of the CPA allow class actions to proceed “where liability to theclass has been proven but individual membership in the class is difficult or impossible to determine” (para. 102 (emphasis in original)). [75] As I understand it, Justice Karakatsanis’s point is that where liability to the class has been proven, there is norequirement to prove that any person is a member of a class or that any person has suffered individual damage.

The necessary implicationis that class proceeding legislation alters existing causes of action. For example, s. 36 of the Competition Act creates a cause of action for“[a]ny person who has suffered loss or damage”. My colleague’s approach would suggest a class action claim could proceed under s. 36of the Competition Act without any person establishing that they had suffered loss or damage. However, the CPA neither creates a newcause of action nor alters the basis of existing causes of action.

Rather, it allows claimants with causes of action to unite and pursue theirclaims as a class. [76] The aggregate damages provisions of the CPA allow the court to dispense with the need to calculate the quantum ofdamages for each individual class member and permits distribution of the proceeds on a cy-près basis rather than to individual membersof the class. However, where the proposed certified causes of action require proof of loss as a component of proving liability, thecertification judge must be satisfied that there is some basis in fact that at least two persons can prove they incurred a loss.

Establishingthat the class as a whole has suffered loss does not obviate this requirement.

(4) Conclusion on Identifiable Class [77] The goal of the certification stage, as indicated by McLachlin C.J. in Hollick, is to determine if, procedurally, theaction is best brought in the form of a class action (para. 16).

In this case, given that the appellants did not show that there was somebasis in fact to believe that at least two persons can establish they are members of the class, I am unable to answer that question in theaffirmative. [78] An advantage of a class proceeding is that it serves judicial economy by allowing similar individual actions to beaggregated (Hollick, at para. 15; Dutton, at para. 27). In my view, implicit in this objective is that the foundation upon which anindividual action could be built must be equally present in the class action setting.

That foundation is lacking here. [79] I do not disagree with Justice Karakatsanis that behaviour modification can be an objective of class proceedings.However, the circumstances here demonstrate that class proceedings are not always the appropriate means of addressing behaviourmodification. In cases in which loss or damage due to price-fixing cannot be proven, the appropriate recourse may be for theCommissioner of Competition to charge the defendants under the Competition Act. A process commenced by the Commissioner requiresonly proof of price-fixing.

There is no need to prove passing on or that any particular consumer overpaid for a particular product.Whether the Competition Bureau intends to prosecute the respondents in this case is not known. Regardless, it does not change the factthat in a case such as this, where certification criteria cannot be met, such prosecutions may have to be considered if behaviourmodification is the objective. V. Conclusion [80] Given the finding that an identifiable class cannot be established for the indirect purchasers, the class action as itrelates to the indirect purchasers cannot be certified.

I would dismiss the appeal with costs. Given the finding that the pleadings do not

disclose a cause of action in constructive trust, the claim of the direct purchasers cannot succeed and should be dismissed. The classaction as it relates to the direct purchasers cannot be certified. The cross-appeal is allowed with costs. The reasons of Cromwell and Karakatsanis JJ. were delivered by Karakatsanis J. (dissenting on the appeal) — I. Overview [81] I disagree with my colleague’s conclusion that the claim by the indirect purchasers fails to meet the certificationrequirement under s. 4(1)(

b) of the Class Proceedings Act, R.S.B.C. 1996, c. 50 (CPA). In my view, there is “some basis in fact” to find“an identifiable class of 2 or more persons”.

Accordingly, I would allow the appeal and remit the matter to the British ColumbiaSupreme Court for trial. [82] The appellants’ proposed class definition includes “all persons resident in British Columbia and elsewhere in Canadawho purchased HFCS or products containing HFCS manufactured by the defendants (collectively, the ‘class’) from January 1, 1988 toJune 30, 1995 (the ‘Class Period’)” (2010 BCSC 922 , at para. 2). [83] This class includes both the direct and indirect purchasers of high-fructose corn syrup (HFCS) — the subject ofalleged price fixing.

At issue is the identification of a class which would include indirect purchasers — the retailers and consumers —who purchased products containing HFCS. [84] Justice Rothstein notes that this definition of the class appears to satisfy the requirements of an identifiable class onits face. It uses objective criteria; it does not turn on the merits of the claim; and it cannot be narrowed without excluding members whomay have a valid claim (Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534, at para. 38).

However,the class of indirect purchasers is challenged on the basis that individuals will be unable to determine whether they purchased a productcontaining HFCS and thus whether they are a member of the class. The issue of the appropriateness of the representative plaintiff is notbefore the Court. [85] Justice Rothstein concludes that there is no basis in fact to identify a class because there is no or insufficientevidence that class members can be identified or can self-identify (paras. 58 and 65-67).

He concludes that it is impossible for theindirect purchasers to prove they purchased a product containing HFCS and thus suffered loss. [86] I have two objections to this conclusion. First, I am not persuaded that the requirement that the class be identifiableincludes the requirement that individual members of the class be capable of proving individual loss. Indeed, as discussed below, theCPA provides for remedies when the class has suffered harm that are available without proof of individual loss.

Such an approach bestserves the purposes of class proceedings, which are designed not only to provide enhanced access to justice and judicial economy, butalso to motivate behaviour modification. [87] Second, even if proof of individual loss is necessary to establish an identifiable class under the CPA, I do not agreethat, on this record, it will be impossible to determine whether an individual is a member of the class. [88] The application judge, Rice J., held that the appellants satisfied the requirement that there is an identifiable class.The Court of Appeal did not address this issue (2011 BCCA 187, 305 B.C.A.C. 55).

For the reasons that follow, I conclude that there isno basis to set aside the decision of the application judge. II. Class Requirements — General Principles [89] Section 4(1)(

b) of the CPA requires that there be “an identifiable class of 2 or more persons”. [90] In Dutton, this Court addressed the specific certification requirement that there be an identifiable class (para. 38): First, the class must be capable of clear definition. Class definition is critical because it identifies the individuals entitled to notice,entitled to relief (if relief is awarded), and bound by the judgment. It is essential, therefore, that the class be defined clearly at the outsetof the litigation. The definition should state objective criteria by which members of the class can be identified.

While the criteria shouldbear a rational relationship to the common issues asserted by all class members, the criteria should not depend on the outcome of thelitigation. It is not necessary that every class member be named or known. It is necessary, however, that any particular person’s claim tomembership in the class be determinable by stated, objective criteria . . . . [91] Obviously, it is not sufficient to make a bald assertion that a class exists. The record must contain a sufficientevidentiary basis to establish the existence of the class (Lau v. Bayview Landmark Inc. (1999), 40 C.P.C. (4th) 301 (Ont.

S.C.J.), at para.23). But the evidentiary standard at the certification stage is not onerous: the applicant must establish that there is “some basis in fact”for each of the requirements (Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, at para. 25). This standard falls below thestandard used in the United States and purposefully avoids a trial on the merits at the certification stage. See Pro-Sys Consultants Ltd. v.Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R. 477, at para. 102. III. Application to This Case A.

The Record and Position of the Parties [92] The respondents led evidence establishing that prominent direct purchasers such as Coke, Pepsi, Vitality FoodserviceCanada Inc., Ocean Spray Cranberries and George Weston Limited have used both HFCS and liquid sugar in their products. At the time,the relevant laws permitted the use of a generic label indicating “sugar/glucose-fructose” for either type of sweetener. In many cases, thelabels on the products sold in Canada by these direct purchasers did not reflect which sweetener was used. Indeed, the representative

plaintiff stated on cross-examination that she did not know whether any product she purchased during the class period actually containedHFCS. [93] HFCS was used in “products such as soft drinks, baked goods and other food products which [were] purchased byrestaurants, grocery wholesalers, supermarkets, convenience stores, movie theatres and others” (appellants’ response factum, at para.69).

The appellants filed expert evidence and proposed methodology to show that the amount of HFCS used and the specific productswhich contained it are identifiable (ibid., citing the Leitzinger Report, at paras. 10-11, 18-20 and 27). The expert evidence also providesspecific industry research confirming that the use of HFCS in the soft-drink industry was more prevalent as time went on, and largely hadreplaced liquid sugar as early as two years into the class period (A.R., vol.

II, at p. 94; Leitzinger Report, at para. 24). [94] The respondents’ position is that because HFCS was used interchangeably with liquid sugar, and because labelingrequirements during the class period did not require food and beverage producers to specify which of the two sweeteners was containedin their products, indirect purchasers (retailers and consumers) would have had no way of determining whether the product containedHFCS, even if they had checked the label (factum of Archer Daniels Midland Company and ADM Agri-Industries Company, at paras.99-100). [95] The appellants submit that “although some class members may not be able to self-identify, class membership isdeterminable by reference to the nature of the purchases made by each individual and the quantity of HFCS in the products purchased”(response factum, at para. 71).

Indeed, the industry research data suggests that such information may be more readily available forindirect purchasers who are commercial retailers with more consistent recording practices. B. Class Identification Does Not Require That Individual Class Members Can Prove Individual Loss [96] Justice Rothstein accepts that the class definition complies on its face with the Dutton criteria. However, heconcludes that there is insufficient evidence to show that any persons will be able to determine if they bought a product containing HFCSand thus if they are a member of the class.

My colleague says that if individuals cannot show they have suffered individual loss, this“subverts the purpose of class proceedings, which is to provide a more efficient means of recovery for plaintiffs who have suffered harmbut for whom it would be impractical or unaffordable to bring a claim individually” (para. 67 (emphasis in original)). [97] This is not the only purpose of class actions. Behaviour modification is an important goal, especially in price-fixingcases.

While class proceedings are clearly intended to create a more efficient means of recovery for plaintiffs who have suffered harm,there are strong reasons to conclude that class proceedings are not limited to such actions. As I detail below, the CPA is designed topermit a means of recovery for the benefit of the class as a whole, without proof of individual loss, even where it is difficult to establishclass membership. Thus, if no individual seeks an individual remedy, it will not be necessary to prove individual loss.

Such classactions permit the disgorgement of unlawful gains and serve not only the purposes of enhanced access to justice and judicial economy,but also the broader purpose of behaviour modification. Therefore, I am not persuaded that it is a prerequisite that individual membersof the class can ultimately prove individual harm. See, for example, Steele v. Toyota Canada Inc., 2011 BCCA 98, 14 B.C.L.R. (5th)271. [98] An identifiable class serves to give individual members notice so that they can exercise their willingness to be amember and to claim relief.

Nonetheless, there will often be circumstances where it is difficult for class members to self-identify basedon the class definition. [99] In Dutton, at para. 38, McLachlin C.J. held: “It is not necessary that every class member be named or known.” InRisorto v. State Farm Mutual Automobile Insurance Co. (2007), 38 C.P.C. (6th) 373 (Ont. S.C.J.), Cullity J. held, at para. 31: “The factthat particular persons may have difficulty in proving that they satis

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