2014 NBCA 10, 2014 NBCA 10

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 27-12-CA ALBERT JOHN GAY, KIMBERLEY ANN DOYLE and JAMES BLISS WILSON APPELLANTS ALBERT JOHN GAY, KIMBERLEY ANN DOYLE et JAMES BLISS WILSON APPELANTS - and - - et - REGIONAL HEALTH AUTHORITY 7, a corporation incorporated under the laws of the Province of New Brunswick RESPONDENT RÉGIE RÉGIONALE DE LA SANTÉ 7, personne morale constituée en vertu des lois de la Province du Nouveau-Brunswick INTIMÉE - and – - et - DR. RAJGOPAL S. MENON RESPONDENT D r RAJGOPAL S. MENON INTIMÉ Gay et al. v. Regional Health Authority 7 and Dr.

Menon, 2014 NBCA 10 Gay et autres c.

Régie régionale de la santé 7 et D r Menon, 2014 NBCA 10 CORAM: The Honourable Chief Justice Drapeau The Honourable Justice Deschênes The Honourable Justice Robertson CORAM : l’honorable juge en chef Drapeau l’honorable juge Deschênes l’honorable juge Robertson Appeal from a decision of the Court of Queen’s Bench: March 8, 2012 Appel d’une décision de la Cour du Banc de la Reine : le 8 mars 2012 History of Case: Historique de la cause : Decision under appeal: 2012 NBQB 88 Décision frappée d’appel : 2012 NBBR 88 Preliminary or incidental proceedings: 2013 NBCA 10 Procédures préliminaires ou accessoires : 2013 NBCA 10

Appeal heard: January 16, June 11, 12 and 13, 2013 Appel entendu : le 16 janvier, les 11, 12 et 13 juin 2013 Judgment rendered: February 6, 2014 Jugement rendu : le 6 février 2014 Reasons delivered: May 8, 2014 Motifs déposés : le 8 mai 2014 Joint reasons for judgment by: The Honourable Chief Justice Drapeau and The Honourable Justice Deschênes Motifs de jugement conjoints : l’honorable juge en chef Drapeau et l’honorable juge Deschênes Dissenting reasons by: The Honourable Justice Robertson Motifs dissidents : l’honorable juge Robertson Counsel at hearing: For the appellant: Chesley F. Crosbie, Q.C., Michael F.

Donovan, Q.C., and Raymond F. Wagner, Q.C. For the respondent Regional Health Authority 7: David T. Hashey, Q. C., Catherine M. Bowlen, and Philippe M. Frenette For the respondent Dr. Menon: Charles A. LeBlond, Q.C., Catherine A. Fawcett, and Mary M. Thomson Avocats à l’audience : Pour les appelants : Chesley F. Crosbie, c.r., Michael F. Donovan, c.r., et Raymond F. Wagner, c.r. Pour l’intimée, la Régie régionale de la santé 7 : David T. Hashey, c.r., Catherine M. Bowlen et Philippe M. Frenette Pour l’intimé, le D r Menon : Charles A. LeBlond, c.r., Catherine A. Fawcett et Mary M.

Thomson THE COURT The dismissal of the appellants’ motion for certification in the Court of Queen’s Bench is the result of reversible error. The appeal is allowed with costs, Robertson, J.A., dissenting. The Court orders certification of the underlying action as a class proceeding. The Court’s order also prescribes the terms required under ss. 10(1)( a ) (class definition), 10(1)( b ) (appointment of class representative), 10(1)( c ) (statement of nature of the claims), 10(1)( d ) (statement of relief sought), and 10(1)( e ) (specification of common issue).

The other terms under s. 10(1) stand to be determined by the Court of Queen’s Bench. Of course, and as all stakeholders know full well, the Court’s order does not determine the merits of the action but simply allows it to go forward as a class proceeding.

The judgment of the Court was delivered by DRAPEAU, C.J.N.B. and DESCHÊNES, J.A. I. Introduction [ 1 ] This appeal is all about procedure, more precisely the procedure applicable to class action certification. As is typically the case, the procedural skirmish traces its genesis to a plea of wrongdoing. [ 2 ] Broadly stated, the complaint here is that all members of the proposed Class (more than 15,000 patients of the Miramichi Regional Hospital) incurred expenses and suffered harm as a result of systemic failures attributable to malpractice on the respondents’

part in the organization, management and operation of the Regional Hospital’s pathology department and laboratory. Thus, it is alleged in the Amended Statement of Claim that Dr. Rajgopal S.

Menon, over the course of more than a decade in the employ of Regional Health Authority 7, whether as Chief of Pathology, Director of Clinical Laboratory Services, or as an anatomical pathologist at the Miramichi Regional Hospital, performed his work in such substandard fashion that his employer, sometime after becoming aware of the magnitude of the problem, concluded broad remedial action was required for the safety of its patients. That remedial action featured an independent review of Dr. Menon’s work, including a re-examination of the specimens he examined and reported on over the course of his employ.

It also involved notifying, directly or indirectly, the members of the proposed Class: (1) of the wholesale review of Dr. Menon’s work, including his assessment of their particular specimen(s); and (2) implicitly, if not explicitly, of the risk that a previous cancer-related diagnosis may have been erroneous. [ 3 ] It is also asserted in the Amended Statement of Claim that all proposed Class members, whether the initial diagnosis based on Dr.

Menon’s pathology work was eventually confirmed or not, suffered from mental distress and anxiety to a degree compensable at law and that each incurred out-of-pocket expenses as a direct result of the Regional Hospital’s remedial action and the prompting substandard professional services provided by Dr. Menon. As well, the Amended Statement of Claim features the allegation that the diagnosis for some patients turned out to be wrong and the product of negligence on Dr. Menon’s

part in the examination and assessment of their particular specimen(

s) and that, as a result, those members of the proposed Class sustained even greater harm, losses and expenses. At any rate, special (out-of-pocket expenses), general and aggravated damages are sought on behalf of all members of the proposed Class. The causes of action asserted in the Amended Statement of Claim are founded in tort, breach of contract, breach of fiduciary duties and “equitable fraud”. [ 4 ] The motion for certification of the action as a class proceeding was vigorously opposed on every conceivable basis, whether germane or not, by both Dr. Menon and the Regional Hospital.

Ultimately, the motion judge sided with them (see Gay et. al. v. Regional Health Authority 7 et al. , 2012 NBQB 88 , 389 N.B.R. (2d) 150 ). Few would disagree with this suggestion: as a practical matter, it is unlikely that, absent appellate intervention, Dr. Menon and the Regional Hospital will ever have to answer in a court of law for the troubling allegations of misconduct found in the Amended Statement of Claim. [ 5 ] Class action legislation has been part of the legal landscape of this Province since 1982, beginning with Rule 14, a provision that admittedly suffered from sketchiness and vagueness.

Since mid-2007, class actions are governed by statute. An action has yet to be certified as a class proceeding under the original statute or its successor, the Class Proceedings Act , R.S.N.B. 2011, c. 125, the Court of Queen’s Bench having declined certification in all contested cases submitted for its consideration (see Bryson v. Canada (Attorney General) , 2009 NBQB 204 , 353 N.B.R. (2d) 1 ; O’Neill v.

St-Isidore Asphalte Ltee , 2013 NBQB 72 , 400 N.B.R. (2d) 111 ; and the case at bar). [ 6 ] Without in any way impugning the correctness or reasonableness of the first two decisions, that history stands in stark contrast with the Supreme Court of Canada’s record of liberal

interpretation and generous application of certification legislation to a wide array of alleged mass wrongdoing: Hollick v. Toronto (City) , 2001 SCC 68 , [2001] 3 S.C.R. 158 , Rumley v. British Columbia , 2001 SCC 69 , [2001] 3 S.C.R. 184 , Western Canadian Shopping Centres Inc. , 2001 SCC 46 , [2001] 2 S.C.R. 534 , Pro-Sys Consultants Ltd. v. Microsoft Corporation , 2013 SCC 57 , [2013] S.C.J. No. 57 (QL) , Sun-Rype Products Ltd. v. Archer Daniels Midland Company , 2013 SCC 58 , [2013] S.C.J. No. 58 (QL) , Infineon Technologies AG v. Option consommateurs , 2013 SCC 59 , [2013] S.C.J.

No. 59 (QL) , and AIC Limited v. Fischer , 2013 SCC 69 , [2013] S.C.J. No. 69 (QL) . It should go without saying that all courts are duty bound to do more than pay lip service to the principles that emanate from that authoritative jurisprudence.

[ 7 ] The present appeal raises the usual threshold issue, which is whether, having regard to the accepted standards of review, the motion judge committed reversible error in dismissing the motion for certification. The appellants contend he did and for the reasons that follow, we respectfully agree and conclude a certification order ought to have been granted.

Bluntly put, our view is that, if certification is not appropriate in a case such as the present one, informed observers might be forgiven for wondering if the Class Proceedings Act is not merely a trompe l’oeil in terms of access to justice for innocent victims of systemic failures whose harm and expenses are relatively modest (see AIC Limited , paras. 22-34 ). There will always be an argument against certification.

However, no objection can be rooted in the substantive merits of the action, and, ultimately, the question to be resolved is whether any arguable procedural objection should overwhelm the case in favour of collective relief. Where, as here, there is some basis in fact for the conclusion that each of the statutory conditions for certification has been met, denial of certification cannot be upheld on the basis of judicial discretion. After all, s. 6(1) of the Class Proceedings Act is unambiguous: the court must certify if the statutory conditions are met.

At any rate, fear of the unfamiliar is no reason for refusing certification. II. Context [ 8 ] The statements that follow under this rubric are not intended as findings of fact. Rather, our intention is to set out a context for which, in our view, the record provides some foundation. In truth, most, if not all, of the statements that follow are beyond dispute having regard to the record as a whole. A final preliminary note: the expression “patients” is used in these reasons in its broadest sense to refer to recipients of healthcare services. [ 9 ] A new regional hospital was to open in Miramichi in 1995.

It was generally recognized that if the new institution was to operate as a regional hospital with a functional department of surgery, it was vital that pathologists be brought on staff to run laboratory services where anatomical assessment could take place on site. [ 10 ] Recruitment efforts were initiated in 1993 with a view to hiring two pathologists. However, Dr. Menon was the only applicant. He was hired and joined the staff in January 1994. The positions Dr.

Menon occupied over the course of his tenure at the Regional Hospital are described in the record as Chief of Pathology , Director of Clinical Laboratory Services and anatomical pathologist . Whatever the title, his responsibilities included the supervision and operation of the pathology department and laboratory. The related formal contracts, if any, and other work-related documents will be disclosed and produced in the course of documentary and oral discovery. At any rate, it appears Dr. Menon was the sole anatomical pathologist at the Regional Hospital for a few years after his hiring. [ 11 ] One of Dr.

Menon’s initial responsibilities was to assist in the planning and establishment of the laboratory at the new Regional Hospital, which would provide anatomical pathology services. [ 12 ] Fairly early on, concerns emerged with respect to the quality of Dr. Menon’s work and the turn- around time for the results of his pathological assessments. These problems were reported to the appropriate individuals but it appears they were not taken seriously. [ 13 ] There are also indications Dr.

Menon offered neither guidance nor advice with respect to any quality assurance or quality control program in the laboratory under his control and supervision and that no quality assurance and quality control procedures for cancer tests were ever instituted. Additionally, there are suggestions that, as Chief of Pathology and Director of Clinical Laboratory Services , Dr.

Menon resisted implementation of any quality assurance standards and quality control mechanisms for the operation of the laboratory. [ 14 ] Although problems in the nature of sporadic clinical errors, unacceptable turn-around time and lack of a quality control program in the laboratory percolated early on, it was not until the spring and summer of 2006 that the significance of Dr. Menon’s substandard work prompted the Regional Hospital to take remedial action. [ 15 ] At that time, the Regional Hospital retained the services of an expert pathologist to conduct an external peer review of Dr. Menon’s pathology work.

The results of that independent review were such that the Regional Hospital and/or the Provincial government decided to have all specimens handled by Dr. Menon from 1995 to 2007 reviewed by experts at an independent laboratory in Ontario. [ 16 ] Concomitantly, the Regional Hospital took steps to alert implicated patients and their personal

physicians or referring surgeons that a retrospective review of Dr. Menon’s pathology work was being conducted. As might be expected, the Regional Hospital’s advice to the patients in question was that they should consult their personal physicians for information and follow-up. Needless to say, the recommended consultation would be expected to entail outlays for travel and incidental expenses. [ 17 ] More than 20,000 specimens involving approximately 15,000 patients were reviewed at the laboratory in Ontario. The results of that review proved alarming for the Regional Hospital and the Provincial government.

As a result, a Commission of Inquiry was established. [ 18 ] In due course, the Commission, chaired by the Honorable Paul S. Creaghan, produced a comprehensive report, which was received in evidence at the hearing in the court below. The motion judge’s decision on admissibility is reported at 2010 NBQB 128 , 361 N.B.R. (2d) 1 . While that ruling was challenged in the Regional Hospital’s written submission on appeal, the issue was not forcefully pressed at the hearing.

The fact is that the disposition of the present appeal does not turn on any controversial feature of the Commission’s report and, in any event, we have not been persuaded that the motion judge’s admissibility ruling is unsustainable, having regard to the limited purpose for which the report was received. [ 19 ] That said, all acknowledge the Commission found serious and alarming deficiencies in Dr. Menon’s work over the years, a pattern of errors that, arguably, should have been detected and corrected sooner.

Amongst other findings, the Commission identified deficiencies in the recruitment and hiring policies of the Regional Hospital in Dr. Menon’s case and a distressing lack of quality assurance and quality control programs in the pathology laboratory which, in turn, meant there was no meaningful peer review of Dr.

Menon’s work throughout the years he functioned as Chief of Pathology , Director of Clinical Laboratory Services and as an anatomical pathologist . [ 20 ] It is against this background, which remains to be proven at trial , that the appellants sought an order certifying the underlying action as a class proceeding. Importantly, the appellants characterize the case advanced on behalf of all proposed Class members as “ a hospital-based medical malpractice case founded on systemic failures with class wide effects ” (emphasis added).

The Appellants’ Submission describes the action being prosecuted on behalf of all proposed Class members in these terms: […] a hospital-based medical malpractice rooted in institutional failures of practice and procedure, i.e. systemic breach of duty . [para. 44] [Emphasis added.] Nothing turns on the point, at least at this juncture, but the record suggests the word “medical” is used here in its broadest sense.

In any event, the quoted word does not appear to add anything to the complaint: malpractice is malpractice. [ 21 ] The foregoing description of the wrongdoing affecting all members of the proposed Class reflects pleaded allegations of fault or negligence against the Regional Hospital and Dr. Menon. We engage in a fulsome discussion of those allegations under “Analysis and Decision”. [ 22 ] Significantly, the Amended Statement of Claim does not include a prayer for relief in the nature of an aggregate award of damages, within the meaning of s. 31 of the Class Proceedings Act .

We return to this omission when dealing with the question of “common issues”. [ 23 ] The Regional Hospital filed an Amended Statement of Defence disputing its liability for any of the claims advanced in the Amended Statement of Claim. Few, if any, of the allegations in that pleading are admitted. Many are flatly contradicted. The Regional Hospital also filed a Cross-Claim in which it claims contribution and indemnity from Dr.

Menon for any claims arising from: (1) “misdiagnosis that resulted in failure to provide a timely or any treatment”; (2) “failure to meet professional standards of practice”; (3) “liability resulting from [his] failure to advise the [Miramichi Regional Hospital] of any lack of professional qualifications to conduct a pathology practice”; and (4) his “failure […] as Head of the pathology department or as a trained pathologist to institute any or appropriate quality assurance programs at the [Miramichi Regional Hospital] which may have impacted patient care” (para. 54). [ 24 ] However, Dr.

Menon has yet to file a Statement of Defence. Nor has he filed a Defence to Cross-Claim. The record shows that, on consent of all parties, the motion judge relieved Dr. Menon of his obligation under the Rules of Court to file those documents until after the hearing of the motion on certification. Thus, what defences Dr. Menon might formally raise

remain unknown. [ 25 ] We pause to record our disapproval of this circumvention of s. 3(4) (

a) of the Class Proceedings Act and Rule 29.03(1) (“Time for Filing and Serving Statement of Defence and Cross-Claim”). Section 3(4)(

a) contemplates that a motion for certification will only be presented after the Statement of Defence has been served and the close of pleadings. The Rules of Court apply to the processes contemplated by the Class Proceedings Act (see s. 42). Rule 29.03(1) required Dr. Menon to file his Statement of Defence and Cross-Claim within the applicable deadline under Rule 20.01 (“Time for Delivery of Statement of Defence”). Despite the parties’ consent, certification judges should, as a general rule, insist on the filing and exchange of a full set of pleadings before hearing the parties.

In that regard, we endorse the views of Perell J. in Pennyfeather v. Timminco Ltd ., 2011 ONSC 4257 , [2011] O.J. 3286 (QL) , at paras. 9 and 84 , and Labourers’ Pension Fund of Central and Eastern Canada (Trustees of) v. Sino-Forest Corp ., 2012 ONSC 1924 , [2012] O.J. No. 1331 (QL) . Pleadings define, in a formal way, the parties’ positions and the material issues.

As a result, litigation by ambush and boundless free-ranging debates and commission-type inquiries stand to be avoided (see Local 772 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada v. The United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 325 and Hughes and Wood , 2013 NBCA 33 , 404 N.B.R. (2d) 332 ).

Clarity is essential when considering the conditions for certification, particularly the “common issues” and procedural preferability questions. [ 26 ] In their Amended Notice of Motion, the plaintiffs sought an order that: 1. Certifies [the] action as a class proceeding; 2. Defines the “Class” and “Class Period” as follows:

a) Patients, including their estates, whose tissue samples underwent pathology testing for potential cancer or potential cancer-related disease, and were reported by [Dr. Menon], at the [Regional Hospital] during the class period, and whose tissue samples the [Regional Hospital] subsequently caused to be retested; and,

b) Children, parents and spouses (as defined by the Fatal Accidents Act ), of deceased patients (estates),

c) The “Class Period” is defined as: January 1, 1995 to February 7, 2007, or such other dates as may be approved by the court,

d) Such other persons as the Court recognizes and directs. 3. States the nature of the claims asserted on behalf of the Class to be negligence, breach of contract and breach of fiduciary duty; 4. States the relief sought by the Class Members to be issues of the Defendants’ liability and damages; 5. States the common issues to be:

a) Did the [Regional Hospital] owe a duty, in tort or contract or as a fiduciary, to credential competent medical staff, and if so,

b) Did the [Regional Hospital] breach that duty, and if so when?

c) Did [Dr. Menon] owe a duty of competence in tort or contract or as a fiduciary, and if so,

d) Did [Dr. Menon] breach that duty, and if so when?

e) Are the Defendants, or either of them, liable in tort, contract or for fiduciary breaches, for damages for mental distress?

f) If so, whether damages for mental distress should be assessed in the aggregate, and if so, what is the quantum of aggregate damages for mental distress?

g) Is an award of aggravated damages warranted, and if so, whether they can be assessed in the aggregate, and if so, in what amount?

h) Are the Defendants jointly and severally liable for the remedies for the conduct set out in the Statement of Claim? 6. Approves the form and content of notice to the Class; 7. Specifies that the following means shall be used to notify the Class of this action and the certification of the Class (“Notice Programme”):

a) The Plaintiffs shall send a copy of the notice to every Class Member who has contacted the Plaintiffs’ counsel for the purpose of receiving notice;

b) The Defendants shall mail a copy of the notice to any Class Members for whom it has a mailing address;

c) Notice shall be published in newspapers as approved by the Court; and

d) The Plaintiffs shall publish a copy of the notice on websites maintained by the Plaintiffs’ counsel. 8. Requires the Defendants forthwith to pay the cost of the Notice Programme; 9. Specifies that Class Members may opt out of this class proceeding by sending a written election by mail to the Plaintiffs’ solicitors before a date to be fixed by the Court; and 10. Approves the Plaintiffs’ proposed litigation plan for the conduct of this action as a class proceeding. [ 27 ] The litigation plan submitted for the motion judge’s consideration is far-reaching.

It deals with a host of issues, including: (1) notification of certification and opt-out procedure; (2) litigation steps prior to the determination of the common issues, including pleadings, production of documents, examinations for discovery and exchange of expert opinions; (3) trial of the common issues; and (4) steps following trial of the common issues, including notice of resolution of common issues and resolution of individual issues. The plan concludes with the observation that it “may be reconsidered and revised as necessary, under the continuing case management authority” of the Court of Queen’s Bench.

We readily agree with that observation. [ 28 ] Significantly, while the common issues described in the Amended Notice of Motion include whether damages for mental distress and aggravated damages should be assessed and quantified in the aggregate, like the Amended Statement of Claim, the litigation plan itself does not delve into that option.

To be clear, while it features general references to the common issues set out in the Amended Notice of Motion, the plan does not address the availability and appropriateness of an aggregate monetary award within the meaning of s. 31 of the Class Proceedings Act and, perhaps more importantly, the plan is mute on the subject of workable methods for the quantification of any such award.

In other words, no plan has been put forward to trigger the application of s. 31 and to quantify, in principled fashion, any aggregate monetary award. [ 29 ] We were advised at the hearing that no other action for damages, whether under small claims

legislation, Rule 79 (simplified procedure) or otherwise, has been launched by a member of the proposed Class against the Regional Hospital and/or Dr. Menon for any of the causes of action described in the Amended Statement of Claim. [ 30 ] The motion judge dismissed the application for certification for the following reasons: The plaintiffs have failed to establish an identifiable class, define [a] workable and manageable common issue or establish that a class action would be the preferable procedure for proceeding within the requirements of the Class Proceedings Act .

For the above reasons, this motion for certification, is therefore dismissed. [para. 115] III. The Issues on Appeal [ 31 ] In their Notices of Appeal, as well as their written and oral submissions, the appellants mount a sweeping challenge to the decision under appeal. It is contended in the Notice of Appeal itself that the motion judge committed reversible error: 1. […] in misconstruing and misapplying the requirements of

Section 6 of the Class Proceedings Act , in particular:

a) by rejecting propositions of law which are novel but arguable;

b) by making contradictory holdings of law;

c) by applying the recognizable psychological injury test from tort to causes of action in contract and fiduciary duty;

d) by misconstruing the task of true construction of the pathology testing contract to require individual evidence; and

e) by failing to consider the potential availability of aggregate monetary relief as a means of quantifying damages for mental distress. 2. […] by finding that the class definition was subjective and unreasonably overbroad; 3. […] by giving unintelligible reasons for decision which do not meet minimum standards of rationality and fail to perform the basic functions of reasons under the rule of law. [ 32 ] As for the respondents, their written and oral submissions touched upon all aspects of the dispute.

However, the flagship argument of their case on appeal is the contention that the Amended Statement of Claim discloses no cause of action whatsoever, whether for special damages (e.g. out-of-pocket expenses), general damages or aggravated damages.

Even though neither respondent filed a Notice of Contention, the debate on appeal over the course of several days left no issue unaddressed. [ 33 ] In those circumstances, and having regard to the nature of the underlying proceeding and the stakes, it is inappropriate for an appellate court to turn a blind eye to any relevant issue, whether formally raised in the Notice of Appeal, developed in the written submissions or simply referenced at the hearing.

At the end of the day, we must seek to do right according to law, which brings us to frame the overarching issue on appeal in these terms: was the dismissal of the motion for certification the product of reversible error?

The answer depends on whether the motion judge committed errors in principle: (1) in defining as he did the basis for the claims advanced in the Amended Statement of Claim, which, in turn, brings into the mix the pleaded causes of action, harm and losses (out-of-pocket expenses, general damages and aggravated damages); (2) in finding the record revealed neither a common issue nor an identifiable class of claimants; and (3) in concluding a class proceeding is not the preferable procedure.

IV. Analysis and Decision [ 34 ] There are many misconceptions about class actions and the process for class action certification, a procedural (as opposed to substantive) screening process. Instead of focusing on the pertinent statutory provisions, jurists quite often develop an understanding of the law by reference to judicial

interpretation and paraphrasing of those provisions. Occasionally, the Legislature’s choice of wording gets lost in the process. It is important, in our view, to begin the analysis with a consideration of the pertinent provisions of the Class Proceedings Act . A. Key Statutory Provisions with Annotations [ 35 ] Section 6(1) enunciates five conditions precedent to the issuance of a certification order. If there is some basis in fact for the conclusion that each condition is satisfied, the court must certify:

Certification of class proceeding 6(1) The court shall certify a proceeding as a class proceeding on a motion under

section 3 or 4 if, in the opinion of the court, (

a) the pleadings disclose or the Notice of Application discloses a cause of action, (

b) there is an identifiable class of two or more persons, (

c) the claims of the class members raise a common issue, whether or not the common issue predominates over issues affecting only individual members, (

d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the dispute, and (

e) there is a person seeking to be appointed as representative plaintiff for the class who (

i) would fairly and adequately represent the interests of the class, (ii) has produced a plan for the class proceeding that sets out a workable method of advancing the class proceeding on behalf of the class and of notifying class members of the class proceeding, and (iii) does not have, with respect to the common issues, an interest that is in conflict with the interests of other class members. Certification de l’instance à

titre de recours collectif 6(1) La cour saisie d’une motion visée à l’article 3 ou 4 certifie une instance à

titre de recours collectif si elle est d’avis que les conditions suivantes sont réunies :

a) les plaidoiries ou l’avis de requête révèlent une cause d’action;

b) il existe un groupe identifiable de deux personnes ou plus;

c) les demandes des membres du groupe soulèvent une question commune, que celle-ci l’emporte ou non sur les questions touchant seulement les membres individuels;

d) le recours collectif serait la meilleure procédure pour que soit réglé de façon juste et efficace le litige;

e) il y a une personne qui cherche à être nommée comme représentant demandeur pour le groupe et qui : (

i) représenterait de façon juste et appropriée les intérêts du groupe, (ii) a présenté, pour le recours collectif, un plan proposant une méthode efficace de faire avancer le recours collectif au nom du groupe et d’aviser les membres du groupe de l’existence du recours collectif, (iii) n’a pas de conflit d’intérêts avec d’autres membres du groupe en ce qui concerne les questions communes. [ 36 ] Some features of these provisions bear immediate highlighting. Section 6(1) (

a) is satisfied if the Amended Statement of Claim discloses “a” cause of action. Put another way, it is sufficient if that pleading discloses one valid cause of action; the test is not whether each of the causes of action pleaded is legally valid. Thus, assuming for the sake of argument that the Amended Statement of Claim does not disclose a cause of action for breach of contract, breach of fiduciary duties and “equitable fraud”, certification could not be denied once it is accepted that a cause of action in tort is pleaded.

That said, it is not plain and obvious to us that the Amended Statement of Claim fails to set out valid causes of action in all of the areas of the law it touches upon, and each of those causes of action is addressed under “Analysis and Decision”. We engage in that exercise because, arguably, there may be a more generous approach to the award of general damages for mental distress and anxiety for breach of contract, breach of fiduciary duties and “equitable fraud”.

[ 37 ] Likewise, numerous common issues are not necessary. Section 6(1) (

c) only requires that the claims asserted raise “a” common issue. [ 38 ] With respect to ss. 6(1) ( e )(i), (ii), and (iii), the record provides a sufficient basis in fact for the conclusion that the conditions precedent articulated therein have been met. To be clear, we are satisfied the appellants: (1) have produced a satisfactory litigation plan; (2) are not in a conflict of interest position; and (3) would fairly and adequately represent the interests of the Class.

Nothing further need be said on this point. [ 39 ] Section 6(2) lists the considerations that must inform the determination of procedural preferability. In determining whether a class proceeding is the preferable procedure, the motion judge must bear in mind that the objective is “the fair and efficient resolution of the dispute”: 6(2) In determining whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the dispute, the court shall consider (

a) whether questions of fact or law common to the class members predominate over any questions affecting only individual members, (

b) whether a significant number of the class members have a valid interest in individually controlling the prosecution of separate proceedings, (

c) whether the class proceeding would involve claims that are or have been the subject of any other proceedings, (

d) whether other means of resolving the claims are less practical or less efficient, (

e) whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means, and (

f) any other matter the court considers relevant. 6(2) Afin de déterminer si le recours collectif est le meilleur moyen de régler de façon juste et efficace le litige, la cour tient compte des facteurs suivants :

a) la question de savoir si les questions de fait ou de droit qui sont communes aux membres du groupe l’emportent ou non sur celles touchant seulement les membres individuels;

b) la question de savoir s’il existe un nombre important de membres du groupe qui ont véritablement intérêt à poursuivre des instances séparées;

c) la question de savoir si le recours collectif comprend des demandes qui ont été ou qui sont l’objet d’autres instances;

d) l’aspect pratique ou l’efficacité des autres moyens de régler les demandes;

e) la question de savoir si la gestion du recours collectif crée de plus grandes difficultés que l’adoption d’un autre moyen;

f) toute autre question que la cour estime pertinente. [ 40 ] Section 7(2) confirms that the merits stand undetermined by a certification order : 7(2) An order certifying a proceeding as a class proceeding is not a determination of the merits of the proceeding. 7(2) L’ordonnance certifiant une instance à

titre de recours collectif ne constitue pas une décision sur le fond de l’instance. A motion judge who delves into the merits of the dispute “[oversteps] the bounds of his role of screening motions at the authorization stage” (see Vivendi Canada Inc. v. Dell’Aniello , 2014 SCC 1 , [2014] S.C.J. No. 1 (QL) , at para. 4 ). As we will demonstrate, the decision

under appeal offends this principle. [ 41 ]

Section 9 sets out a number of objections that cannot, by themselves , be allowed, whether individually or collectively, to fuel a denial of certification: Certain matters not bar to certification 9 The court shall not refuse to certify a proceeding as a class proceeding by reason only of one or more of the following: (

a) the relief claimed includes a claim for damages that would require individual assessment after determination of the common issues; (

b) the relief claimed relates to separate contracts involving different class members; (

c) different remedies are sought for different class members; (

d) the number of class members or the identity of each class member is not ascertained or may not be ascertainable; (

e) the class includes a subclass whose members have claims that raise common issues not shared by all class members. Questions n’empêchant pas la certification 9 La cour ne doit pas refuser de certifier une instance à

titre de recours collectif en se fondant uniquement sur l’un ou plusieurs des motifs suivants :

a) les mesures de redressement demandées comprennent une demande en dommages- intérêts qui exigerait, une fois les questions communes décidées, une évaluation individuelle;

b) les mesures de redressement demandées portent sur des contrats distincts concernant différents membres du groupe;

c) des mesures de redressement différentes sont demandées pour différents membres du groupe;

d) le nombre de membres du groupe ou l’identité de chaque membre du groupe n’est pas établi ou ne peut l’être;

e) il existe au sein du groupe un sous-groupe dont les membres ont des demandes qui soulèvent des questions communes que ne partagent pas tous les autres membres du groupe. In the case at hand, the motion judge could not reject certification simply because the relief claimed included a claim for damages that would require individual assessment after determination of the common issues (s. 9( a )).

Likewise, it is no answer to a motion for certification in a case such as the present one that “different remedies are sought for different class members” (s. 9( c )) and that the class includes a subclass whose members have claims that raise common issues not shared by all class members (s. 9( e )).

Section 29 (“Determination of issues affecting certain individuals”) and s. 30 (“Individual assessment of liability”) are key in this regard. In our view, the decision under appeal is disharmonious with the principles and processes articulated in ss. 9, 29 and 30. [ 42 ] Section 10(1) specifies the essential features of a certification order:

Contents of certification order 10(1) A certification order shall (

a) describe the class in respect of which the order was made by setting out the class’s identifying characteristics, (

b) appoint the representative plaintiff for the class, (

c) state the nature of the claims asserted on behalf of the class, (

d) state the relief sought by the class, (

e) set out the common issues for the class, (

f) state the manner in which and the time within which a class member may opt out of the class proceeding, (

g) state the manner in which and the time within which a person who is not a resident of New Brunswick may opt into the class proceeding, and (

h) include any other provisions the court considers appropriate. Contenu de l’ordonnance de certification 10(1) L’ordonnance de certification :

a) décrit le groupe à l’égard duquel l’ordonnance a été rendue en précisant les traits caractéristiques du groupe;

b) nomme le représentant demandeur pour le groupe;

c) indique la nature des demandes présentées au nom du groupe;

d) indique les mesures de redressement demandées par le groupe;

e) énonce les questions communes du groupe;

f) indique la façon dont les membres du groupe peuvent se retirer du recours collectif et la date limite pour ce faire;

g) indique la façon dont les personnes qui ne sont pas des résidents du Nouveau-Brunswick peuvent participer au recours collectif et la date limite pour ce faire;

h) comprend toute autre disposition que la cour estime appropriée. [ 43 ] Section 10(4) makes plain that a certification order is not etched in stone for the duration of the litigation. Amendments in the interests of justice are obligatory: 10(4) At any time, the court may amend a certification order on the motion of a party or a class member or on its own motion. 10(4) La cour peut, de sa propre initiative ou sur motion présentée par une

partie ou par un membre du groupe, modifier à tout moment une ordonnance de certification. [ 44 ] Sections 29(1) and 30 provide a procedure to deal with issues, including liability, applicable only to some class members, which may be the case here for class members in the appellant James Bliss Wilson’s situation. We revisit this aspect of the case in short order:

Determination of issues affecting certain individuals 29

(1) If the court determines common issues in favour of a class or subclass and determines that there are issues, other than those that may be determined under

section 34, that are applicable only to certain individual class or subclass members, the court may (

a) determine those individual issues in further hearings presided over by the judge who determined the common issues or by another judge of the court, (

b) appoint one or more persons, including one or more independent experts, to conduct a reference into those individual issues under the Rules of Court and report back to the court, or (

c) with the consent of the parties, direct that those individual issues be determined in any other manner. Individual assessment of liability 30 Without limiting

section 29, if, after determining common issues in favour of a class or subclass, the court determines that the defendant’s liability to individual class or subclass members cannot reasonably be determined without proof by those individual class or subclass members,

section 29 applies with the necessary modifications to the determination of the defendant’s liability to those class or subclass members. Décision sur les questions visant certains individus 29

(1) Si la cour statue sur les questions communes en faveur d’un groupe ou d’un sous-groupe et décide qu’il y a des questions, à l’exception de celles pouvant être décidées en vertu de l’article 34, qui ne visent que certains membres individuels du groupe ou du sous-groupe, la cour peut prendre les mesures suivantes :

a) rendre une décision sur les questions individuelles dans d’autres audiences présidées par le juge qui a statué sur les questions communes ou par un autre juge de la cour;

b) nommer une ou plusieurs personnes, y compris un ou plusieurs experts indépendants, pour qu’ils procèdent à un renvoi sur ces questions individuelles en vertu des Règles de procédure et qu’ils présentent un rapport à la cour;

c) avec le consentement des parties, ordonner que ces questions individuelles soient décidées d’une autre façon.

Évaluation individuelle de la responsabilité 30 Sans que soit limitée la portée générale de l’article 29, si, après avoir statué sur les questions communes en faveur d’un groupe ou d’un sous-groupe, la cour décide que la responsabilité du défendeur envers les membres individuels du groupe ou du sous- groupe ne peut être raisonnablement établie sans que ces membres aient à en faire la preuve individuellement, l’article 29 s’applique, avec les adap[ta]tions nécessaires, pour établir la responsabilité du défendeur envers eux. [ 45 ] Section 31(1) stipulates the conditions precedent for the making of an aggregate monetary award in favour of class or subclass members:

Division B Aggregate Awards Aggregate monetary awards 31(1) The court may make an order for an aggregate monetary award in respect of all or any part of a defendant’s liability to class or subclass members and may give judgment accordingly if (

a) monetary relief is claimed on behalf of some or all class or subclass members, (

b) no questions of fact or law other than those relating to the assessment of monetary relief remain to be determined in order to establish the amount of the defendant’s monetary liability, and (

c) in the opinion of the court, the aggregate or a part of the defendant’s liability to some or all class or subclass members can reasonably be determined without proof by individual class or subclass members. 31(2) Before making an order under subsection (1), the court shall provide the defendant with an opportunity to make submissions to the court in respect of any matter relating to the proposed order, including but not limited to the following: (

a) submissions that contest the merits or amount of an award under that subsection; and (

b) submissions that individual proof of monetary relief is required due to the individual nature of the relief.

Section B Montant global des dommages-intérêts Montant global des dommages-intérêts 31(1) La cour peut rendre une ordonnance fixant le montant global des dommages- intérêts concernant la totalité ou une

partie de la responsabilité pécuniaire d’un défendeur envers les membres d’un groupe ou d’un sous-groupe et rendre un jugement en conséquence, si :

a) une réparation pécuniaire est demandée au nom de certains membres ou de tous les membres du groupe ou du sous-groupe;

b) seules des questions de fait ou de droit se rapportant à l’évaluation de la réparation pécuniaire restent à être décidées afin de fixer le montant de la responsabilité pécuniaire du défendeur;

c) selon la cour, la totalité ou une

partie de la responsabilité du défendeur envers certains membres ou tous les membres du groupe ou du sous-groupe peut raisonnablement être établie sans que des membres du groupe ou du sous-groupe aient à en faire la preuve individuellement. 31(2) Avant de rendre l’ordonnance prévue au paragraphe (1), la cour permet au défendeur de lui présenter des observations concernant toute question qui touche l’ordonnance proposée, y compris, notamment :

a) des observations sur le bien-fondé ou sur le montant des dommages-intérêts pouvant être accordés en vertu de ce paragraphe;

b) des observations sur la nécessité d’une preuve individuelle de la réparation pécuniaire étant donné la nature individuelle de ces mesures. B. The Correct Approach to the

Interpretation and Application of Class Action Legislation [ 46 ] The provisions of the Class Proceedings Act stand to be interpreted with a view to furthering its

objects: facilitating access to justice, modifying harmful behaviour and conserving judicial resources. The Supreme Court of Canada hasemphasized that the requirements for authorization of a class action under Quebec law have “on a consistent basis been interpreted andapplied broadly” (see Marcotte v. Longueuil (City), 2009 SCC 43, [2009] 3 S.C.R 65, at para. 22 and Infineon Technologies, at para. 60).As was noted in those two cases, the jurisprudence favours “easier access” to class actions as a means of achieving the twin goals ofdeterrence and victim compensation.

Despite the particular wording of Quebec class action legislation, there is no principled basis for aless generous approach to the

interpretation and application of s. 6 of this province’s Class Proceedings Act: Hollick, at paras. 14-16;Western Canadian Shopping Centres Inc., at paras. 26-29; Cloud v. Canada (Attorney General), v. Canada, (ONCA), [2004] O.J. No. 4924 (C.A.) (QL), at para. 37, leave to appeal to S.C.C. refused, [2005] S.C.C.A. No. 50; and Bryson, McNally J.,at para. 7. [47] At bottom, the decision under appeal reflects an impermissibly narrow

interpretation and a lessthan generous application of the statutory provisions applicable to certification. C. Standards of Review [48] Of course, this Court’s authority to intervene is subject to standards of review which, for themost part, call for great deference for the findings and conclusions of the motion judge (see, for example, AIC Limited, at para. 65). InCanada (Attorney General) v. Anderson, 2011 NLCA 82, [2011] N.J.

No. 445 (QL), the Court described the applicable standards ofreview in these terms: The standard of review with respect to the first criterion for certification set out in s. 5(1) of the Act, whether the pleadings disclose acause of action, “turns on determinations of law and, therefore, it is reviewed on the standard of correctness”: see Ring at para. 34. All ofthe other criteria enumerated in section 5(1) are questions of mixed fact and law and the certification judge’s determinations on theseissues are owed considerable deference.

They cannot be reversed absent a palpable and overriding error, unless it is clear that the trialjudge made some extricable error in principle with respect to the characterization of a legal standard or its application, in which case theerror may amount to an error in law and the applicable standard of review is correctness. See Ring at paras. 6-8. [para. 38] See, as well, Cloud, at para. 46, and Cassano v. Toronto-Dominion Bank, 2007 ONCA 781, [2007] O.J. No. 4406 (QL), at para. 23,leave to appeal to S.C.C. refused, [2008] S.C.C.A. No. 15. D.

The Issues [49] The motion judge relied upon three grounds to decline certification: (1) failure to establish an“identifiable” class; (2) failure to define a “workable and manageable common issue”; and (3) failure to establish that a class actionwould be the preferable procedure.

However, before turning to the motion judge’s reasons for refusing certification on these bases, someobservations are required with respect to his treatment of the question whether the Amended Statement of Claim “discloses a cause ofaction”, if only because the topic was the focus of discussion in the written and oral submissions on appeal.

(1) Disclosure of a Cause of Action in the Pleadings [50] In Sun-Rype Products Ltd., the Supreme Court of Canada reminds certification judges that thefirst statutory condition (the pleadings disclose a cause of action) stands to be determined on the standard applied in Hunt v. CareyCanada Inc. (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93 (QL): Section 4(1)(

a) of the CPA requires that the pleadings disclose a cause of action. This requirement is judged on the standard of proofapplied in Hunt v. Carey Canada Inc., (SCC), [1990] 2 S.C.R. 959, at p. 980, namely that a plaintiff satisfies thisrequirement 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, at para. 20 (“Alberta Elders”); Hollick v.

Toronto (City), 2001SCC 68, [2001] 3 S.C.R. 158, at para. 25). [para. 31] [51] The motion judge’s reasons for decision suggest he was aware of the test to be applied whendeciding whether or not the pleadings “disclose a cause of action”. On this point, he stated:

For an action to be certified under the class proceeding, it must disclose a cause of action. The “plain and obvious” test for disclosing acause of action is used to determine whether the proposed class proceedings may proceed. (See Hunt v. Carey Canada (SCC), [1990] 2 S.C.R. 959). On a certification application, the burden is on the Plaintiff to demonstrate affirmatively from the factspleaded in his statement of claim that a cause of action is properly pleaded (see Brogaard v. Canada (Attorney General) 2002 BCSC1149 , [2002] B.C.J. No. 1775), but this test has a very low threshold. (See Hollick v.

Metropolitan Toronto (supra)). [para. 35] However, the motion judge went beyond the Amended Statement of Claim and considered the affidavit evidence in the record to find itwas plain and obvious that the claims for damages for mental distress and anxiety could not succeed at trial. This was so because, in thejudge’s assessment of the evidential record, whatever non-physical harm had been suffered, it did not reach the threshold level ofpsychological or psychiatric injury required for compensation. [52] In our view, the motion judge addressed the wrong question.

On a certification motion, thequestion is not whether the claims are likely to succeed on the merits at trial, but whether a cause of action is formally advanced in thepleadings (see Hollick, at para. 16, and Vivendi Canada Inc., at para. 4). The issue under s. 6(1)(

a) of the Class Proceedings Act must bedetermined solely by reference to the pleadings as is the case on a Rule 23.01(1)(

b) motion to strike a statement of claim for failure todisclose a reasonable cause of action. The correct analytical framework is articulated in Sewell v. ING Insurance Co. of Canada, 2007NBCA 42, 314 N.B.R. (2d) 330: The principles that inform the determination of a defendant’s motion to strike under Rule 23.01(1)(

b) are well settled and can besummarized as follows: (1) the only question for judicial resolution is whether it is plain and obvious that the Statement of Claim fails todisclose the essential elements of a cause of action tenable at law. That conclusion should be reached only in the clearest of cases; (2)correlatively, absent exceptional circumstances, the court must accept as proved all facts asserted in the Statement of Claim and abstainfrom looking beyond the pleading itself and any documents referred to therein (see Hogan v. Doiron et al. (2001), 243 N.B.R. (2d) 263,[2001] N.B.J.

No. 382 (QL), 2001 NBCA 97, para. 38 and Boisvert v. LeBlanc (2005), 294 N.B.R. (2d) 325, [2005] N.B.J. No. 561(QL), 2005 NBCA 115, para. 21). To expand the exercise beyond those limits would operate to morph the motion under Rule 23.01(1)(b)into an application for

summary judgment under Rule 22, the appropriate vehicle to determine prior to trial whether there is factual meritto a claim; (3) the Statement of Claim is to be read generously to accommodate drafting deficiencies; and (4) where a generous readingof its provisions fails to breathe life into a pleading, all suitable amendments should be allowed (see Rule 27.10(1) and LeDrew et al. v.Conception Bay South (Town) (2003), 231 Nfld. & P.E.I.R. 61, [2003] N.J. No. 276 (QL), 2003 NLCA 56). [para. 26] [53] A motion for certification must not be transformed into a motion for

summary judgment, whichdeals with the merits of the action. Jurists with practical experience in the litigation process know full well that no plaintiff is required togather all of the relevant evidence prior to launching an action in damages. Indeed, the process of evidence gathering is ongoing as thelitigation unfolds. To some extent, this reality undergirds the belief that the stringency of the test for

summary judgment under Rule22.04 reflects the following longstanding conviction: “except in clear cases, the best truth-finding device is a trial” (see Cannon v. Lange(1998), (NB CA), 203 N.B.R. (2d) 121, [1998] N.B.J. No. 313 (C.A.) (QL), at para. 17). Moving from the general tothe particular, one would expect the proposed Class members will continue to gather evidence relating to liability and damages as thecase progresses.

Thus, for example, some members of the proposed Class may have undergone since the hearing in the court below ormay still undergo medical and/or psychological examination and the conclusion may be that some, if not all of those examined, haveindeed suffered from a medically recognized psychological or psychiatric illness as a result of the events described in the AmendedStatement of Claim. (

a) The claims in tort against the Regional Hospital and Dr. Menon [54] We begin the discussion on this topic by noting that proceedings in tort founded on systemicfault or negligence, some involving healthcare providers, have been certified as class actions. In Rumley, students at a residential schoolwho alleged sexual abuse by staff obtained certification as a class proceeding of their action founded on allegations of systemic fault ornegligence, namely “the failure to have in place management and operations procedures that would reasonably have prevented the abuse”(para. 30). See also:

(1) Anderson v. Wilson, (ON CA), [1999] O.J. No. 2494 (C.A.) (QL), a case dealing withuninfected patients (amongst others) alleged to have suffered mental distress as a result of notification of possible infection with hepatitisB;

(2) Healey v. Lakeridge Health Corporation, 2011 ONCA 55, [2011] O.J. No. 231 (QL) (certification involving uninfected patientswho suffered mental distress after being informed by the healthcare provider that they may have contracted tuberculosis and should betested); and

(3) Cloud, where former students of a native residential school sought to recover damages on the basis, among others, thatthe school had failed to have in place management and operations procedures for the prevention of abuse. [55] That said, our focus must be on the causes of action put forward in the Amended Statement ofClaim.

[ 56 ] The claim against the Regional Hospital in tort is founded upon its direct fault or negligence. Judgment is also sought against the Regional Hospital on the basis of its vicarious liability for “all loss or damage caused by Dr. Menon”. [ 57 ] In paragraph 65 of the Amended Statement of Claim, it is alleged the Regional Hospital is “corporately liable to the plaintiffs in tort of negligence”, its conduct having fallen “ below the reasonable standard of care expected of it under the circumstances and was corporate or systemic in nature ” (emphasis added).

It is specifically asserted the Regional Hospital was negligent in connection with Dr. Menon’s hiring, his credentialing over the years and its response to reports of substandard work on his part. A key complaint is that the Regional Hospital was negligent in failing to establish systems for the safe operation of the pathology department and laboratory, such as quality assurance programs and standard operating procedures.

The pleaded particulars of the Regional Hospital’s substandard conduct paint a portrait of incompetence, if not recklessness, that permeated practically all aspects of the staffing and organization of the pathology department and laboratory as well as their operation over several years: (

a) hired Dr. Menon against the advice of the Defendant’s Vice President of Medical Services, Dr. John Mackay; (

b) performed an inadequate background check and minimized or ignored warnings and cautions from previous employers including the Saint John Hospital; (

c) improperly credentialed Menon before hiring and credentialed him inadequately and in violation of by-laws on a regular (at least yearly) basis thereafter; (

d) ignored the advice of the Credentials Committee to offer Menon a one year probationary contract only, and appointed him Director of Labs without the advice of the Committee; (

e) chose to delay response or not respond to known and reported shortcomings in Dr. Menon’s completion of pathology reports and the accuracy of his pathology reports; (

f) chose to ignore or not to investigate inadequacies and inaccuracies and delays in pathology reports; (

g) chose to ignore delays in work completion and conflicts of interest caused by absences to pursue private business interests; (

h) chose not to monitor, not to investigate or not to adequately respond to diagnostic errors in Dr. Menon’s pathology reports; (

i) chose to continue with the contract with Dr. Menon or not to condition, suspend or supervise his privileges; (

j) established and maintained an inadequate or no quality assurance program for pathology; (

k) chose to establish an inadequate or no meaningful peer review program for pathology; (

l) chose to ignore periodic mentoring of medical staff including pathology staff as a means of quality control and assurance; (

m) established inadequate or no standard operating procedures for pathology; (

n) established an inadequate or no meaningful medical review committee of the hospital to supervise, control and discipline medical

staff including pathology staff; (

o) established an inadequate or no policy on minimal continuing education for medical staff including pathology staff; (

p) chose to ignore concerns and complaints about inadequate or no meaningful communication between technical and pathologystaff; (

q) chose not to engage in external proficiency testing; (

r) established an atmosphere that discouraged continuous quality improvement; (

s) chose to have an inadequate or no meaningful policy on conflicts or potential conflicts caused by the pursuit of private businessinterests by staff including pathology staff; (

t) established an inadequate or no meaningful policy to identify cases requiring remediation of staff including pathology staff, whereother authorities such as the College declined to act; (

u) ignored complaints about pathology staff’s professional competency; and (

v) credentialed a pathologist who was medically impaired and not competent. [58] Those allegations bring into play longstanding duties of hospitals to their patients, including: (1)the duty to select competent staff; (2) the post-selection duty to have in place processes designed to monitor and maintain the competenceof staff; and (3) most importantly, the duty to implement systems for the safe operation of hospital departments. The Court’s decision inComeau v.

Saint John Regional Hospital, 2001 NBCA 113, 244 N.B.R. (2d) 201, is directly on point: In Legal Liabilities of Doctors and Hospitals in Canada, supra, at p. 367, some of the most common duties owed by a hospital topatients are set out as follows: 1. To select competent staff and to monitor their continued competence. 2. To provide proper instruction and supervision. 3. To provide proper facilities and equipment. 4.

To establish systems necessary for the safe operation of the hospital. [para. 56] See also Jocelyn Downie, Timothy Caulfield & Colleen Flood, eds., Canadian Health Law and Policy, 4th ed. (Markham, Ont.:LexisNexis, 2011) at 147-148; Bateman v. Doiron (1991), (NB KB), 118 N.B.R. (2d) 20, [1991] N.B.J. No. 714(Q.B.) (QL), affirmed (1991), (NB CA), 141 N.B.R. (2d) 321, [1993] N.B.J. No. 598 (C.A.) (QL); and Gilbert Sharpe, The Law & Medicine in Canada, 2nd ed. (Toronto: Butterworths, 1987) at 123-125. Correlatively, in Yepremian v. ScarboroughGeneral Hospital, [1980] O.J.

No. 3592 (C.A.) (QL), the majority noted the public was entitled to expect that a hospital:

[…] has picked its medical staff with great care, has checked out the credentials of every applicant, has caused the existing staff to make a recommendation in every individual case, makes no appointment for longer than one year at a time, and reviews the performance of its staff at regular intervals. […] [para. 36] [ 59 ] The particulars of fault or negligence provided in paragraph 65 of the Amended Statement of Claim speak to the standards of hospital conduct described in the preceding paragraph of these reasons, all of which are well accepted in the jurisprudence.

In truth, there is very little novelty in the claim against the Regional Hospital based on its fault or negligence. [ 60 ] That being acknowledged, paragraph 66 of the Amended Statement of Claim does feature an uncommon imputation of wrongdoing: the Regional Hospital was negligent in “failing to advise the Plaintiffs and Class Members of their potential risk of illness at the earliest opportunity which at latest was February 2007”. The related complaint is that the claimants were deprived of “the opportunity to seek early medical attention”.

No judicial precedent has been invoked in support of that facet of the claim in tort. None may be necessary. At any rate, it is at least arguable that a hospital owes its patients an informational duty of the kind described in paragraph 66. [ 61 ] In light of the foregoing, we conclude it is far from plain and obvious that the Amended Statement of Claim does not disclose a cause of action in tort against the Regional Hospital. We now turn to the claim for fault or negligence against Dr.

Menon. [ 62 ] The proposed representative plaintiffs assert in paragraph 73 of the Amended Statement of Claim, under the heading of “ Fault or Negligence ”, that Dr. Menon owed them qua patients a duty to maintain competency, which he breached in failing to: (

a) introduce quality assurance programs in anatomical pathology while he was Director of Labs including: (

i) obtaining second opinions on all malignancies with his fellow pathologists or subspecialists; and (ii) participate in external proficiency programs; (

b) perform a reasonable turnaround time which resulted in delayed clinical management and severe mental distress and physical injury to the patients; (

c) undergo quality assurance initiated by the new Chief of Pathology (Dr. Strzelczak) in 2004 when he was dismissed as Chief of Pathology, despite frequent complaints of poor turnaround times, absenteeism and lack of consultation on malignancies; (

d) notify or minimized to the Chief of Pathology and record on his yearly application for renewal of active staff privileges to the Credentials Committee that he had health problems including cataracts which would interfere with his ability to properly gross specimens and use the microscope; (

e) participate in reviewing journals, continuing education, external examinations of professional tests or other external proficiency testing to ensure a level of competence expected by his patients; (

f) provide proper or any oversight with respect to standards of lab quality; (

g) produce additional slides to verify diagnoses; (

h) maintain necessary attendance and availability for essential pathology support service;

(

i) properly or effectively communicate with subordinates, management or others; (

j) ensure collegiality within the pathology department; (

k) follow appropriate protocols; (

l) in general, keep good and adequate records; (m) [put aside] his own agenda to invent a medical scanner separate from his work duties; (

n) properly use or put away slides used to further his own agenda […] Paragraph 73 concludes with the more general complaint that Dr. Menon did not possess the skill and knowledge expected by hispatients, and which were necessary to meet the standard of a competent anatomical pathologist or of a competent Chief of Pathology. [63] In paragraph 74 of the Amended Statement of Claim, it is alleged Dr. Menon “owed patients theduty to maintain competence”. It is also stated this duty was owed in tort and it was within Dr.

Menon’s contemplation “that a failure onhis part to maintain competency leading to a general questioning of his surgical pathology diagnoses and the need to repeat or reread histests, would cause mental distress to these patients” (emphasis added). [64] The law is clear. Dr. Menon, like every medical practitioner, was required to bring to his task areasonable degree of skill and knowledge and to exercise a reasonable degree of care.

More specifically, he was bound “to exercise thatdegree of care and skill which could reasonably be expected of a normal, prudent practitioner of the same experience and standing” and,since he was holding himself out as a specialist in pathology, “a higher degree of skill (was) required of him than of one who does notprofess to be so qualified by special training and ability” (see Crits and Crits v. Sylvester et al., (ON CA), [1956] O.J.No. 526 (C.A.) (QL), per Schroeder J.A., at para. 13, aff’d (SCC), [1956] S.C.R. 991, [1956] S.C.J. No. 71 (QL);Thompson v.

Creaghan and Miramichi Hospital (1983), (NB CA), 46 N.B.R. (2d) 271, [1983] N.B.J. No. 159 (QL)at para. 33 and Beshara v. Dysart (1998), (NB CA), 207 N.B.R. (2d) 14, [1998] N.B.J. No. 480 (C.A.) (QL), at para.8).

That time-honoured standard-of-care formula reflects every medical practitioner’s ethical responsibility to “[p]ractise the art andscience of medicine competently” and to “[e]ngage in lifelong learning to maintain and improve [his or her] professional knowledge,skills and attitudes” (see CMA Code of Ethics, online: <http://policybase. cma.ca/dbtw-wpd/PolicyPDF/PD04-06.pdf>, paras. 5 and 6).Nevertheless, one must not overlook the fact that several particulars of negligence or fault found in paragraph 73 of the AmendedStatement of Claim target Dr.

Menon’s duties and obligations as Chief of Pathology and Director of Clinical Laboratory Services,positions that arguably attracted a broad range of competence-related duties and obligations extending beyond those of a pathologist. [65] In our respectful view, it is far from plain and obvious that Dr. Menon, as Chief of Pathology,Director of Clinical Laboratory Services and on-site pathologist, did not owe “a duty to patients to maintain competency”, asparticularized in the Amended Statement of Claim.

Nor is it plain and obvious to us that the particulars formulated in paragraph 73 of theAmended Statement of Claim fail to evince actionable fault or negligence. [66] In his reasons for decision, the motion judge took a narrow view of the scope of the underlyingaction: Dr. Menon concedes also that there are proper causes of action to plead in the circumstances which [relate] to his administrative duties asChief of Pathology for which the Hospital is at law responsible or if [sic] Dr. Menon’s failure to discharge them has resulted in harm toindividual patients.

At bar, it must be tied to the standard of care owed by Dr. Menon which resulted in harm to an individual patient orpatients. Cases framed in negligence do not contain a general duty to maintain competence: it is whether Dr. Menon failed to meet the standard ofcare expected of him when reviewing the pathology tissue of a particular claimant and in the [affirmative], whether such breach causedinjury to that particular plaintiff. This must be proven on an individual basis not on a class-wide basis. [paras. 61-62]

[ 67 ] This understanding is at odds with a key element of the claims advanced on behalf of all members of the proposed Class: a hospital-based malpractice founded on systemic failures with class-wide effects (e.g. out-of-pocket expenses, as well as compensable mental distress and anxiety). The proposed representative plaintiffs seek compensation on behalf of each member of the proposed Class for those systemic failures, whether Dr. Menon’s pathological diagnosis was correct or not.

At the end of the day, it is the failure of the motion judge to keep in mind the true nature of the underlying basis for the claims brought on behalf of all members of the proposed Class and the full breadth of the relief claimed (including out-of-pocket expenses and general damages for mental distress and anxiety of a degree sufficient to warrant compensation ) which is largely responsible for the errors in principle that tainted his analysis under s. 6 of the Act . [ 68 ] Moreover, t here is no magic to the formula “duty of competency”.

Perhaps it should have been avoided, but, in our view, the debate regarding its acceptability as a basis for liability misses the mark. The phrase clearly relates to fault or negligence, particulars of which are set out in paragraph 73 of the Amended Statement of Claim. Those particulars advert to acts and omissions that may attract liability in tort. At any rate, it is at least arguable that pathological competency is not a matter within the exclusive domain of overseeing professional bodies.

The related argument may be summarized as follows: (1) every professional is duty bound to maintain a minimal level of competence in his or her field of activity; (2) any harm-causing failure in respect of that elementary obligation may negatively impact on a large number of recipients of professional services; (3) any such failure is triable in a court of law and may lead to a finding of liability and awards of damages; and (4) more particularly, if the work of a pathologist at a hospital shows a pattern of substandard quality over a significant period such that his or her competence is brought into question, that pathologist should expect his or her employer/principal to take steps with a view to getting the measure of the problem and avoiding harm to referred patients.

Those measures might well include a full review of his or her work and notification of that review to the patients in question.

Such a foreseeable course of action might well cause those patients to experience mental distress and anxiety and to incur out-of-pocket expenses for follow-up steps, including medical consultations. [ 69 ] Additionally, the following propositions are not plainly wrong: (1) the Regional Hospital owed a duty in tort to select competent medical staff, including a competent Chief of Pathology and Director of Clinical Laboratory Services; (2) it also owed a duty in tort to implement processes to monitor Dr.

Menon’s competence in all facets of his work at the Miramichi Regional Hospital and, where warranted, to compel remedial action; (3) both the Regional Hospital and Dr. Menon, as Chief of Pathology and Director of Clinical Laboratory Services, were required to establish systems for the safe operation of the pathology department and laboratory at the Miramichi Regional Hospital, all with a view to preventing the institutional failures described in the Amended Statement of Claim;

(4) Dr. Menon, as Chief of Pathology and Director of Clinical Laboratory Services, was duty bound to discharge his manifold responsibilities in competent fashion; and (5) competency in any of those areas of responsibility is not a matter reserved exclusively, if at all, for overseeing professional bodies. Every Chief of Pathology and Director of Clinical Laboratory Services is duty bound to maintain a minimal level of competence in the discharge of his or her responsibilities, and any harm-causing failure to do so may give rise to liability in a court of law.

More specifically, if the work of a Chief of Pathology and Director of Clinical Laboratory Services is significantly substandard over an extended period, his or her competence may be brought into question. If that occurs, he or she should expect the hospital to take steps with a view to sizing up the problem and avoiding harm to patients. Remedial measures could predictably include a wholesale review of the pathology work in the department and laboratory under his or her supervision, and notification of same to the patients in question.

That process might well result in mental distress and anxiety for the patients as well as out-of-pocket expenses for follow-up medical consultations. [ 70 ] In our view, it is far from plain and obvious that the Amended Statement of Claim fails to disclose a cause of action in tort against Dr. Menon, as Chief of Pathology, Director of Clinical Laboratory Services and/or as on-site anatomical pathologist. [ 71 ] As for the claim based on vicarious liability, it is articulated, albeit imperfectly, in paragraph 67 of the Amended Statement of Claim: Vicarious Liability 67.

The [Regional Hospital] is corporately and systemically liable. The [Regional Hospital] is also vicariously liable for all loss or damage caused by [Dr. Menon] due to having sponsored to the College, credentialed, and maintained on medical staff, a pathologist who was not competent. [ 72 ] The motion judge found that “[o]n the basis […] there is a cause of action against Dr. Menon for negligence and/or breach of contract and/or breach of fiduciary duty, the [Regional] Hospital could be vicariously liable to the Plaintiffs” (para. 45).

He made that finding although the claim against the Regional Hospital on the basis of vicarious liability, as formulated in paragraph 67 of the Amended Statement of Claim, is far from a model of clarity. Indeed, paragraph 67 actually provides particulars of direct liability on the part of the Regional Hospital. Yet, one can reasonably infer from a generous reading of the Amended

Statement of Claim that the particulars of Dr. Menon’s fault or negligence, including his failure to implement adequate quality assurance and quality control programs, are provided as foundational material for the Regional Hospital’s vicarious liability. (

b) The claims against the Regional Hospital and Dr. Menon based on breach of contract and breach of fiduciary duties and the claim against the Regional Hospital for equitable fraud [ 73 ] The plaintiffs further plead the Regional Hospital is liable for breach of contract, breach of fiduciary duty and “equitable fraud”. Those allegations are set out in paragraphs 68-72 of the Amended Statement of Claim: Breach of Contract 68. [Dr. Menon] has a contractual relationship for the provision of medical services to the Plaintiffs and other patients.

A major or important part of the contractual relationship is to provide the Plaintiffs and Class Members with peace of mind and psychological benefit. An implied term of that contractual relationship is that the [Regional Hospital] would employ competent and properly trained and supervised personnel in its pathological processes, and that it would have a proper quality assurance program, proper controls, and ensure an appropriate level of expertise and specialization among the pathology medical staff charged with responsibility for

interpretation of pathology testing, in the exercise of its contractual duties arising out of the testing, diagnosis and treatment of the Plaintiffs and Class Members. The [Regional Hospital] has breached this contractual duty. 69. Another implied term of the contractual relationship was that the [Regional Hospital] would promptly and appropriately notify the Plaintiffs and other patients of the discovery of testing errors and of the decision to embark on retesting of tissue samples, in a manner calculated to minimize the worry and concern that patients would feel. 70.

One of the purposes of accurate and reliable pathology testing is to provide peace of mind to the patient. The nature of the contractual relationship is such that it was foreseeable and/or within the reasonable contemplation of the parties that the [Regional Hospital]’s breaches of contractual duty set out herein would entail mental distress by the Plaintiffs and other patients. Breach of Fiduciary Duty 71.

The [Regional Hospital] stands in the position of fiduciary to the Plaintiffs and Class Members and has a duty of utmost good faith to be open and candid with the Plaintiffs and Class Members, and not to withhold information. The representative Plaintiffs repeat the foregoing and say that the [Regional Hospital] has violated duties of disclosure of a fiduciary nature, existing between the [Regional Hospital] and its patients. The [Regional Hospital] exercised its sole discretion in its decision not to tell the Plaintiffs and Class Members in a timely manner of the potential diagnosis problems.

In so doing, the [Regional Hospital] preferred its own interests to those of the Plaintiffs and Class Members. It did so in a manner that affects the interests of the Plaintiffs and Class Members by denying such persons knowledge of their medical conditions and the opportunity to seek early medical treatment. The Plaintiffs and other Class Members were peculiarly vulnerable and at the mercy of the [Regional Hospital] in the exercise of its sole discretion.

The Plaintiffs and other Class Members had no way of knowing of the [Regional Hospital]’s failure to ensure complete, accurate diagnostic testing but for the [Regional Hospital] informing them. Equitable Fraud 72. Having regard to the fiduciary relationship between the [Regional

[…]