Docket: 1920 Red Seal Vacations Inc. Appellant (Defendant) - v. -, 2011 SKCA 117

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2011 SKCA 117 Date: 20111018 Between: Docket: 1920 Red Seal Vacations Inc. Appellant (Defendant) - and - Rosa Alves, Danielle Bercovitch, Brendan Kennedy, Inez Sanche, and Peter Tatham Respondents (Plaintiffs) - and - MyTravel Canada Holidays Inc., First Choice Canada Inc., and Transat A.T. Inc. Non-Parties (Defendants) Coram:

Vancise, Richards and Caldwell JJ.A. Counsel: Mirilyn R. Sharp for the Appellant E.F. Anthony Merchant, Q.C. and Casey R. Churko for the Respondents Appeal: From: 2010 SKQB 104 Heard: November 8, 2010 Disposition: Appeal dismissed Written Reasons: October 18, 2011 By: The Honourable Mr. Justice Richards In Concurrence: The Honourable Mr. Justice Vancise The Honourable Mr. Justice Caldwell Richards J.A. I. Introduction [ 1 ] In 2004, the respondents, Rosa Alves et al , took Christmas-period vacations in the Holguin region of Cuba.

A drought and associated water shortages in the region caused them to have some unpleasant experiences. As a consequence, and acting as representative plaintiffs, they commenced an action under The Class Actions Act , S.S. 2001, c. C-12.01 (the “ Act ”) against a number of tour companies, including the appellant, Red Seal Vacations Inc. (“Red Seal”).

Their statement of claim seeks damages on behalf of the class of people who purchased a vacation package to a Holguin area resort, or stayed at such a resort, during late 2004 and early 2005. [ 2 ] Red Seal sold Holguin vacation packages to individuals who took holidays during the time period covered by the claim. However, the statement of claim does not name a plaintiff who purchased a vacation from Red Seal. Red Seal’s potential liability arises only as the result of the claim being advanced by Ms.

Alves et al on behalf of the as yet unidentified members of a class comprising individuals who purchased Holguin packages for, or stayed at, Holguin resorts during the relevant time period. [ 3 ] This set of circumstances led Red Seal to bring a motion pursuant to Rule 173(

a) of The Queen’s Bench Rules . The motion asked that the claim in relation to Red Seal be struck as disclosing no cause of action because there was no party plaintiff asserting a claim against it. The certification judge refused the motion by relying on Frey v. BCE Inc. , 2006 SKQB 328 , [2006] 12 W.W.R. 545 and Frey v. BCE Inc. , 2006 SKQB 331 , 282 Sask. R. 35.

In those cases, Justice Gerein had said only one representative plaintiff is required in class action proceedings, regardless of whether there are defendants against whom no named plaintiff asserts a cause of action. [ 4 ] Red Seal appeals the decision of the certification judge and asks us to overturn it on the basis that, unless there is a party plaintiff making a claim against it, the action must be dismissed. [ 5 ] For the reasons set out below, I conclude this appeal must be dismissed. One defendant in a multi-defendant action commenced under the Act cannot have the claim struck pursuant to Rule 173 (

a) for failing to disclose a cause of action simply and only because there is no party plaintiff alleging a claim against that defendant. In light of the nature of proceedings under the Act , it is sufficient that a representative plaintiff asserts a cause of action on behalf of a class of persons whose putative members are alleged to have a claim against the defendant. [ 6 ] This conclusion does not, of course, mean that Ms. Alves et al have successfully set out a legal theory and related facts amounting to a cause of action in their statement of claim. That question is the subject of Rosa Alves v.

First Choice Canada Inc., 2011 SKCA 118 . The present appeal deals only with the narrow issue of whether the failure to name a party plaintiff with a cause of action against Red Seal means the claim against Red Seal should be struck.

II. Background [ 7 ] The statement of claim was issued by Ms. Alves et al on January 25, 2005. It titles the action as having been “Brought under The Class Actions Act .” [ 8 ] The statement of claim sets out the problems encountered by Ms. Alves et al at the “Holguin Resorts,” a term defined as comprising eight specific resorts in the Holguin region of Cuba. [ 9 ] The statement of claim alleges that the defendants, including Red Seal, purchased space on airline flights and at Holguin Resorts and then advertised vacation packages to those Resorts.

It further says the defendants sold those vacation packages knowing of water shortages but failed to advise the purchasers of such problems. [ 10 ] Ms. Alves and the other named plaintiffs allege they each purchased a vacation package to a Holguin Resort from one of the defendants. Paragraph 14 of the statement of claim sets out the particulars in this regard: 14.

Plaintiffs directly or indirectly purchased Holguin Vacation Packages from Defendants: Inez Sanche and Peter Tatham from First Choice; Rosa Alves and Brendan Kennedy from MyTravel; and Danielle Bercovitch from Transat. (The version of the statement of claim included in the Appeal Book also refers in this paragraph to “Helen Roussy from Red Seal.” This is clearly an error as an application seeking to amend the Claim to add Ms. Roussy as a plaintiff was denied by the Chambers judge.) [ 11 ] The statement of claim goes on to outline what are described as causes of action in negligence and in contract.

It concludes by requesting, on behalf of the “Class,” an award of damages. “Class” is defined in para. 6(

c) to mean “all persons who purchased a Holguin Vacation Package or stayed at a Holguin Resort pursuant to a Holguin Vacation Package.” This, of course, would include individuals who had dealt with Red Seal. [ 12 ] In early 2009, Red Seal served a motion to dismiss the action as against it. As noted, the application was brought pursuant to Rule 173(

a) on the basis that the statement of claim disclosed no reasonable cause of action against Red Seal. Rule 173(

a) reads as follows: 173 The Court may at any stage of an action order any pleading or any part thereof to be struck out, with or without leave to amend, on the ground that: (

a) it discloses no reasonable cause of action or defence, as the case may be; III. The Decision Under Appeal [ 13 ] After a series of other motions and manoeuvrings, the application to strike was argued in January of 2010. [ 14 ] Red Seal contended that, at the pre-certification stage of the proceedings, The Queen’s Bench Rules apply in the regular way and that, as a result, the claim against Red Seal had to be struck because no named plaintiff asserted a cause of action against it. [ 15 ] The judge dismissed Red Seal’s application in his decision dealing with the merits of the certification application.

Relying on earlier rulings of Justice Gerein, he concluded as follows: [ 11] If I were to accept Red Seal's argument without qualification, then I would have to indeed dismiss the plaintiffs' claim against Red Seal. There is no plaintiff that on the face of the pleadings has alleged a distinct cause of action or connection regarding the defendant Red Seal.

Under normal civil procedure, the defendant would be correct and the action against that particular defendant would be dismissed summarily. [12] However, in my respectful opinion, Red Seal is incorrect in its approach. [13] Counsel for Red Seal failed to appreciate the interplay between the common law and The Class Actions Act and how such interplay relates to the unique relationship between "plaintiffs" and "defendants" in regards to an action brought under this Act .

I will comment on this in greater detail below in my discussion regarding s. 4(1) of the Act . [14] There need not be any connection between the representative plaintiff and all defendants. (See: Frey v. BCE Inc. 2006 SKQB 331 ; (2006), 282 Sask.R. 35 at paras. 12 - 16 and Frey v. BCE Inc. 2006 SKQB 328 ; (2006), 282 Sask.R.1 at paras. 78-80).

[15] Therefore, I dismiss Red Seal's motion brought under Rule 173(a). [emphasis added] IV. The Competing Case Law [16] Canadian courts have offered different answers to the question of whether, in a multi-defendant claim brought pursuant to classactions legislation, the claim can be dismissed against a defendant in relation to which there is no party plaintiff asserting a cause ofaction. This divergence of opinion is most clearly reflected in the decisions of the courts of British Columbia and Ontario. [17] The leading Ontario case is Ragoonanan Estate v.

Imperial Tobacco Canada Ltd. (2000), (ON SC), 51 O.R.(3d) 603 (Ont. Sup. Ct.). It concerns an action commenced under the Class Proceedings Act, 1992, S.O. 1992, c. 6 against three tobaccocompanies. The essence of the claim was an allegation that injuries, deaths and property losses could have been avoided if the defendantcompanies had manufactured “fire safe” cigarettes, i.e. cigarettes with a reduced propensity to ignite upholstered furniture. Therepresentative plaintiff, Ms.

Ragoonanan, had a personal cause of action against only one of the companies but brought the action onbehalf of a class defined broadly in the pleadings as including persons in Canada who suffered loss or injury as a result of fire started bycigarettes igniting furniture or mattresses. [18] The two manufacturers against whom Ms. Ragoonanan did not have a personal cause of action brought an application to strike theclaim against them. They relied on Rule 21.01(1)(

b) of the Ontario Rules of Civil Procedure--the Ontario equivalent of Rule 173(a). Cumming J. reviewed the relevant authorities and concluded the claim against the two manufacturers should be struck. He explained hisreasoning as follows: [54] In my view, and I so find, it is not sufficient in a class proceeding, for the purpose of meeting the requirement of rule 21.01(1)(b), ifthe pleading simply discloses a "reasonable cause of action" by the representative plaintiff against only one defendant and then putsforward a similar claim by a speculative group of putative class members against the other defendants. [55] At the earlier point in time of the rule 21.01(1)(

b) motion, the representative plaintiff is the only plaintiff party to the pleading. Theputative class members cannot be considered parties until certification is granted by the court. In addition, in the case at hand therecannot be any certainty that there are any persons with a cause of action against RBH and JTI-M. There cannot be a cause of actionagainst a defendant without a plaintiff who has that cause of action.

In my view, for every named defendant there must be a partyplaintiff with a cause of action against that defendant to meet the Rule 21 threshold. [emphasis added] [19] This line of analysis was ultimately confirmed by the Court of Appeal for Ontario in Hughes v. Sunbeam Corp. (Canada) Ltd.(2002), (ON CA), 61 O.R. (3d) 433. It concerned a proposed class action against the manufacturers of ionizationsmoke alarms on behalf of all persons in Canada who had purchased such alarms.

The plaintiff had not bought a smoke alarm from eachof the defendant manufacturers and thus had no personal cause of action against some of them. Those manufacturers sought an orderpursuant to Rule 21.01(1)(

b) striking the claim against them on the basis that it disclosed no reasonable cause of action. Laskin J.A.,writing for the Court, referred to the relevant British Columbia case law but endorsed the approach taken in Ragoonanan. He said this: [15]

Section 35 of the Class Proceedings Act provides that "[t]he rules of court apply to class proceedings." Thus, even beforecertification, a defendant may bring a motion under rule 21.01(1)(

b) to strike a representative plaintiff's claim on the ground that itdiscloses no reasonable cause of action. See Stone v. Wellington (County) Board of Education (1999), (ON CA), 29C.P.C. (4th) 320 (Ont. C.A.). And, if the representative plaintiff does not have a cause of action against a named defendant, the claimagainst that defendant will be struck out. Put differently, as Nordheimer J. said in Boulanger v. Johnson & Johnson, [2002] O.J.

No. 1075(QL) (S.C.J.): "for each defendant who is named in a class action there must be a representative plaintiff who has a valid cause of actionagainst that defendant." … [17] Hughes relies on three decisions of the British Columbia Court of Appeal, in which that court appears to take a different view. InCampbell v.

Flexwatt Corp., (BC CA), [1998] 6 W.W.R. 275, 44 B.C.L.R. (3d) 343 (C.A.), the court held that, incertifying a class action under the British Columbia Class Proceedings Act, "there is no requirement that there be a representativeplaintiff with a cause of action against every defendant." See also Harrington v. Dow Corning Corp., 2000 BCCA 605 , [2000]11 W.W.R. 201, 193 D.L.R. (4th) 67 (B.C.C.A.). The same principle emerges from Furlan v. Shell Oil Co., 2000 BCCA 404 ,[2000] 7 W.W.R. 433, (2000), 77 B.C.L.R. (3d) 35 (C.A.), albeit in the context of a foreign defendant's challenge to service outside thejurisdiction.

None of these three cases is strictly analogous to the present one. None of them dealt with a motion to strike a claim on thebasis that it disclosed no reasonable cause of action. Nevertheless, these cases signal that the British Columbia courts may be morewilling to let a proposed class action proceed against defendants against whom no representative plaintiff has a claim.

To the extent thatthese British Columbia decisions conflict with the Ontario cases of Boulanger and Ragoonanan, I prefer the reasoning in the Ontariocases. [18] In Ontario, a statement of claim must disclose a cause of action against each defendant. Thus, in a proposed class action, there mustbe a representative plaintiff with a claim against each defendant. Hughes, therefore, may not maintain his action against Sunbeam, BRK

Brands and Pittway. [emphasis added] [20] As indicated, the Court of Appeal for British Columbia has taken a different approach. Its general orientation was first evident inthree cases dealing not with applications to strike pursuant to Rule 19(24)--the British Columbia version of Rule 173(a)--but with thequestion of whether proposed class actions satisfied the criteria for certification. See: Campbell v. Flexwatt Corp., (BC CA), [1998] 6 W.W.R. 275 (B.C. C.A.); Furlan v. Shell Oil Co., 2000 BCCA 404, [2000] 7 W.W.R. 433, leave to appeal refused[2000] S.C.C.A. No. 476 (SCC); and Harrington v.

Dow Corning Corp., (BC SC), [1996] 8 W.W.R. 485 (B.C. S.C.),appeal dismissed 2000 BCCA 605, 193 D.L.R. (4th) 67, leave to appeal dismissed [2001] S.C.C.A. No. 21 (SCC). [21] The most notable of these decisions is Campbell v. Flexwatt Corp. It concerned a claim against manufacturers of defective radiantceiling heating panels and against a number of municipalities which had permitted the panels to be installed.

Cumming J.A., writing forthe Court, stated as follows: 42 There is no requirement that there be a representative plaintiff with a cause of action against every defendant; the legislation simplyrequires that there be a cause of action.

If a class includes a subclass whose members have claims that raise common issues not shared byall members of a class then the court must appoint a representative plaintiff for the subclass if the court determines that therepresentative plaintiff for the class could not fairly and adequately represent the interests of the subclass. 43 The defendants submit that the case of Harrington v. Dow Corning Corp. (1996), (BC SC), 22 B.C.L.R. (3d) 97(B.C. S.C.) is reflective of the proposition that a representative plaintiff must have a cause of action against each defendant. InHarrington Mr.

Justice Mackenzie stated at 114 paragraph 51: Negligence is a cause of action which involves the manufacturers severally and it may be appropriate to divide the class into sub-classesby manufacturer, with separate representatives for each sub-class. Justice Mackenzie then went on to certify the class action without requiring a representative plaintiff for each manufacturer irrespectiveof the fact that there were sixteen defendants and the representative plaintiff had a cause of action against only five of them.

Thisindicates, and I agree, that it is not necessary that a representative plaintiff have a cause of action against each defendant in order tocertify a proceeding as a class proceeding. [emphasis added] [22] The Court ultimately dealt squarely with the “application to strike” question in MacKinnon v. National Money Mart Co., 2004BCCA 472, [2005] 1 W.W.R. 233. There, an action brought under the Class Proceedings Act alleged that, in connection with their shortterm loan business, various lenders had levied fees and charges amounting to a criminal rate of interest. Mr.

MacKinnon was the soleplaintiff and he had dealt only with some of the lenders named as defendants. The other lenders argued that the claims against them hadto be dismissed because there was no named plaintiff with a cause of action against them. [23] Saunders J.A., writing for a five justice panel, carefully considered the Ontario case law on point but declined to endorse it. Sheacknowledged that the normal rules of civil procedure applied to class action proceedings but underlined that, in applying them, it wasimportant to recognize the special character of class proceedings.

She said this: 33 It is true that in one sense the action, before certification, is an ordinary action. And s. 40 of the Class Proceedings Act expresslyprovides that the Rules of Court apply. It does so, however, with the caveat "to the extent those rules are not in conflict with this Act". Ithink it is also clear that an action commenced under the Class Proceedings Act is, even before the certification application, more thanjust "any old action": it is an action with ambition. That ambition, by Rule 4(4.1), must be reflected on the face of the pleadings.

Thequestion is whether that ambition stated on the face of the pleadings affects the application of Rule 19(24)(

a) to the question before thisCourt. [24] In the end, and referring to the test for striking pleadings, Saunders J.A. said it was not “plain and obvious” that the action had nochance of success. This was because there was a prospect the action could be certified as a class action notwithstanding that there was, atthe time, no plaintiff with a personal claim against the companies bringing the application to strike.

Saunders J.A. explained herreasoning as follows: 38 For the appellants to succeed on their Rule 19(24) application it must be plain and obvious that the action has no chance of success.In assessing the chance of success the action must be considered in the context of its stated ambition to be a class proceeding. On theauthority of Campbell v. Flexwatt and Harrington, it is not plain and obvious that the action against the appellants has no chance ofsuccess.

Those cases hold out the prospect that the action will be certified as a class action, and even that further representative plaintiffsmay be appointed to represent a sub-class of persons who did have contractual dealings with the appellants.

[25] There is also case law from other provinces but it is less helpful. The Alberta decisions are not fully consistent but most recentlyhave taken the British Columbia approach. See, for example: Pauli v. Ace Ina Insurance, 2002 ABQB 715, 322 A.R. 104; Gillespie v.Gessert, 2006 CarswellAlta 429; Condominium Plan No. 0020701 v. Investplan Properties Inc., 2006 ABQB 224, 57 Alta. L.R. (4th)310; Alberta Society for Pension Reform v. Alberta, 2008 ABQB 74, 450 A.R. 191; Eaton v. HMS Financial Inc., 2008 ABQB 631, 458A.R. 282.

The Quebec Court of Appeal, after initially going the other direction, seems to have endorsed the Ragoonanan view. See: Bouchard v. Agropur Cooperative, 2006 QCCA 1342. The only Manitoba decision on point has taken the British Columbia approach. See: Bellan v. Curtis, 2007 MBQB 221, 219 Man. R. (2d) 175. V. Analysis [26] Red Seal’s submission is ultimately very straightforward. It endorses the Ontario position as reflected in Ragoonanan Estate v.Imperial Tobacco Canada Ltd., supra and Hughes v. Sunbeam Corp. (Canada) Ltd., supra, and argues as follows: (

a) unless and until itis certified, an action commenced pursuant to the Act is just an ordinary action, (

b) in ordinary actions a plaintiff must plead a cause ofaction against the defendant, (

c) the statement of claim filed by Ms. Alves et al does not identify a party plaintiff with a cause of actionagainst Red Seal, (

d) therefore, the action against Red Seal must be dismissed. [27] This line of analysis must, of course, be assessed in the context of Rule 173(a). More specifically, Red Seal’s position must be thatthe action should be struck, as against it, because the statement of claim discloses “no reasonable cause of action” within the meaning ofthe Rule. The applicable test in this regard is the one articulated in cases such as Hunt v. Carey Canada Inc., (SCC),[1990] 2 S.C.R. 959 at p. 980 and Sagon v. Royal Bank of Canada (1992), (SK CA), 105 Sask. R. 133 (C.A.).

Thus,in order for its application to succeed, Red Seal must show that it is “plain and obvious” the statement of claim discloses no reasonablecause of action as against it. [28] In my view, the central difficulty with Red Seal’s argument is its contention that the proceeding commenced by Ms. Alves et al isan ordinary action--no different than any other--and that a clear line should be drawn between the “pre-certification” and “certification”stages of this kind of litigation.

This approach overlooks the central nature of the Act and the procedures it contemplates. [29] First, it is an over simplication to suggest there is necessarily a bright line separating “pre-certification” from “certification.” Thiscase illustrates the point perfectly in that Ottenbreit J. (as he then was) ordered in his fiat of February 17, 2009 that the Rule 173(a)issues were to be dealt with as part of the certification hearing. As a result, while its Rule 173(

a) motion was launched in advance of Ms.Alves et al filing their certification application, Red Seal’s argument on the matter was heard with the certification application properand was resolved by the certification judge in his decision dealing with certification. [30] Second, and more fundamentally, Red Seal’s argument fails to reflect the reality that an action like the one in issue here does notbegin as an “ordinary” action and then, at some later stage of the process, change into something wholly new. It is coloured by the Actfrom the outset.

After all, s. 4(1) of the Act provides as follows: 4(1) A resident of Saskatchewan who is a member of a class of persons may commence an action in the court on behalf of the membersof that class. It is no accident that the statement of claim filed by Ms. Alves et al is described, immediately after the style of cause, as being “Broughtunder The Class Actions Act.” [31] The fact that an action commenced under the Act has a special character from the beginning is underlined by s. 11 of the Act.

Section 11 indicates that, if certification is refused, the action does not automatically continue as a claim between the representativeplaintiff and the defendant as one might expect if Red Seal’s characterization of the situation is correct. Instead, in order for the claim tobe carried on, the court must make a special order: 11 If the court refuses to certify an action as a class action, the court may permit the action to continue as one or more actions betweendifferent parties and, for that purpose, may: (

a) order the addition, deletion or substitution of parties; (

b) order the amendment of the pleadings; and (

c) make any other order that it considers appropriate. [32] None of this is to say, of course, that an action originating under the Act is not, in virtually all important respects, an ordinaryaction. Obviously it is. The point is simply that, as Saunders J.A. observed in MacKinnon v. National Money Mart Co., supra, at para.33, an action commenced under the Act is, from the beginning, “an action with ambition.” It is initiated for the purpose of being certifiedas a class action and must be assessed in that light.

[ 33 ]

Section 44 of the Act does say The Queen’s Bench Rules apply to class actions. However, it also sets out an important qualification in this regard. The Rules apply only to the extent that they are not in conflict with the Act .

Section 44 reads as follows: 44 The Queen’s Bench Rules apply to class actions to the extent that those rules are not in conflict with this Act . [ 34 ] I note, as well, that Rule 77 of The Queen’s Bench Rules provides that “[u]nless provided otherwise by the [ Act ] or by the rules in this Division, the general procedure and practice of the court shall apply to actions and applications brought under the [ Act ].” But, this does not mean that, in the application of the Rules , a judge can or should turn a blind eye to the special nature of an action commenced under the Act . [ 35 ] In the result, it is clear that Rule 173(

a) must be applied here in a way which recognizes and is sensitive to the scheme of the Act and the class proceeding dimension of an action brought pursuant to the Act . [ 36 ] When Red Seal’s motion is considered in this way, it becomes apparent that it cannot succeed. The Act does not demand, as a pre- condition of certification, that for every defendant there be a party plaintiff with a cause of action against that defendant. Rather, s. 4(1) says a resident of Saskatchewan who is a member of a class may commence an action “on behalf of ” the members of the class. [ 37 ] Ms.

Alves et al are members of the class of persons referred to in the statement of claim as being the class for which the action is being brought. That class, it will be recalled, consists of “all persons who purchased a Holguin Vacation Package or stayed at a Holguin Resort pursuant to a Holguin Vacation Package.” Thus, on the face of things, Ms. Alves et al fall squarely within the reach of s. 4(1). They are members of a class of persons who have commenced an action on behalf of the members of that class.

In other words, nothing in s. 4(1) presents a basis for striking the claim against Red Seal. [ 38 ] I digress here to note that there is no doubt Red Seal sold vacation packages to members of the class in issue. The affidavit of Heather Metcalfe, Vice President of Operations with Red Seal, says some 2,864 persons booked vacation packages through Red Seal to Holguin, Cuba and stayed at a Holguin Resort between November 1, 2004 and February 1, 2005. [ 39 ] Having considered s. 4(1) of the Act , what then of the certification proceedings proper? This aspect of the matter is also fairly straightforward.

Once a claim is initiated pursuant to s. 4(1) , and a certification application is made, the court determines the appropriateness of the matter proceeding as a class action by reference to the criteria set out in s. 6(1) of the Act : 6

(1) Subject to subsections (2) and (3), the court shall certify an action as a class action on an application pursuant to

section 4 or 5 if the court is satisfied that: (

a) the pleadings disclose a cause of action; (

b) there is an identifiable class; (

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

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

e) there is a person willing to be appointed as a representative plaintiff who: (

i) would fairly and adequately represent the interests of the class; (ii) has produced a plan for the class action that sets out a workable method of advancing the action on behalf of the class and of notifying class members of the action; and (iii) does not have, on the common issues, an interest that is in conflict with the interests of other class members. [ 40 ] No aspect of s. 6(1) categorically forecloses the possibility of a multi-defendant class action being certified if there is not a party plaintiff with a cause of action against each defendant. Indeed, in Ragoonanan Estate v.

Imperial Tobacco Canada Ltd. itself, Cumming J., without being definitive, acknowledged the flexibility of the certification process on this point when he wrote as follows: [52] Looked at in the context of the motion for certification, there is arguably not a prerequisite required by s. 5(1) (

a) to have a representative plaintiff with a cause of action against each defendant. For the purposes of certification, it may be enough if the pleading provides that class members have a cause of action against the defendants and there is at least one representative plaintiff. …

[emphasis added] [ 41 ] The prospect of a representative plaintiff acting against a defendant in the absence of a direct cause of action between them is expressly reflected in s. 4(4) of the Act . It says a person who is not a member of the class may be named as a representative plaintiff in order to “avoid a substantial injustice to the class.” This too suggests it is not an essential feature of a class action that a representative plaintiff or plaintiffs have a cause of action against each defendant. See: MacKinnon v.

National Money Mart Co. , supra , at paras. 49 and 50 . [ 42 ] All of this accords with the views of the courts in British Columbia. As noted above, they have taken the position that, for purposes of certification, it may not always be necessary to have a representative plaintiff with a cause of action against each of several defendants. See: Campbell v. Flexwatt Corp. , supra at para. 43 ; Furlan v. Shell Oil Co. , supra at para. 22 ; and Harrington v. Dow Corning Corp., supra at para. 51 (B.C. S.C.). [ 43 ] In my opinion, this is the correct approach and it dictates the result of the Rule 173(

a) application in issue here. An action commenced pursuant to the Act must be seen as being connected to, and flowing directly into, the certification application. It is different than an ordinary action in this critical way. Under the certification process, an application to proceed against a defendant in a multi- defendant proceeding is not automatically doomed to fail because there is no party plaintiff with a cause of action against that defendant. This necessarily means the Rule 173(

a) application in issue here cannot succeed, i.e. it is not “plain and obvious” that a claim cannot be certified against Red Seal simply because the statement of claim does not include a named plaintiff with a cause of action against it. [ 44 ] This conclusion reconciles with the purpose of Rule 173(a). The aspect of the Rule in issue here reflects the idea that, in an ordinary action, there must be a named plaintiff with a personal cause of action against the defendant.

A good part of the traditional concern underlying this requirement is that courts should adjudicate only concrete disputes between parties who are genuinely adverse in interest and who can be counted on to present their positions effectively and energetically. This concern is rooted not just in a desire to ensure judges are presented with discrete problems where the litigants will advance the arguments and evidence essential to a decision.

It also reflects a kind of institutional self-restraint--the idea that, in a democratic society, courts should not overreach their historical roles and upset longstanding relationships with the legislative and executive branches of government. [ 45 ] These factors do not operate here. This is because s. 6(1) of the Act requires there to be both a cause of action (in the sense of a claim cognizable in law) and a representative plaintiff capable of effectively advancing the interests of the class.

The combined effect of these two provisions means a class action will necessarily involve a contested and concrete dispute. Further, to the extent the Act pushes the boundaries of traditional standing concepts, it does so deliberately and at the instance of the Legislature. In short, allowing the claim against Red Seal to proceed to certification sits much more readily with the rationale for Rule 173(

a) than might appear at first blush. [ 46 ] Red Seal nonetheless argues that allowing the claim against it to proceed will open the door to abuse. It says the result in the court below will empower counsel to launch claims on behalf of “phantom” classes with a view to extracting settlements from defendants.

In this regard, I understand Red Seal to be concerned about classes which, in fact, have no members and to imagine situations where claims might be advanced on behalf of putative class members when counsel knows that such class members do not exist. [ 47 ] In my view, this is not a compelling argument for four reasons. First, even if the point raised by Red Seal might be a realistic concern (and I have some doubt on this front), the Act nonetheless says what it says and implies what it implies.

There are no guarantees, at the outset of proceedings launched under the Act, that a class described in a statement of claim has (in fact) some minimum membership. This is true whether there is a representative plaintiff with a personal cause of action against the defendant or not. [ 48 ] Second, the reality is that a class proceeding advanced on behalf of a truly “phantom” class will not be certified. It will be weeded out at the stage of the proceedings where the representative plaintiff has a positive obligation to provide “some basis in fact” for the certification order. See: Hollick v.

Toronto (City) , 2001 SCC 68 , [2001] 3 S.C.R. 158 at para. 25 . Further, and in any event, a defendant brought into proceedings on the strength of the claims of a phantom class, while bearing no obligation in this regard, will have an opportunity at the certification hearing to show that, in fact, the class does not exist. Thus, for example, a manufacturer sued on behalf of a class of individuals said to have purchased defective product “X” during a particular time frame could show that it did not sell the product and that, as a result, the class does not exist.

Obviously, in this sort of situation, a certification order would not be made. [ 49 ] Third, tools outside the certification requirements found in s. 6(1) of the Act might also be available to address the sorts of potential abuses speculated about by Red Seal. Depending on the facts of any given case, it might be possible for a defendant concerned about a phantom class to use Rule 173(

c) or (

e) to strike a claim. (Rule 173(

c) allows claims to be struck if they are “scandalous, frivolous or vexatious.” Rule 173(

e) allows claims to be struck if they are “an abuse of the process of the Court.”)

[ 50 ] Fourth, and finally, although Saskatchewan is a “no costs” jurisdiction, s. 40 of the Act does allow costs to be awarded in special circumstances. They may be awarded if there has been “vexatious, frivolous or abusive conduct” on the part of any party or if there are otherwise “exceptional circumstances” making it unjust to deprive a successful party of costs. There might be circumstances where this authority may prove useful in policing or discouraging the sort of practice described by Red Seal. [ 51 ] In the end, I am not persuaded by Red Seal’s arguments and, with respect, decline to adopt the approach taken by the courts of Ontario. The Rule 173(

a) application must fail. Ms. Alves et al , acting as representative plaintiffs, advance a claim on behalf of putative class members alleged to have a cause of action against Red Seal. As a result, and because of the nature of class actions and the proceedings prescribed by the Act , it is not plain and obvious that no certification order will be made against Red Seal simply because no party plaintiff asserts a personal claim against it. As a consequence, it is not plain and obvious there is no cause of action against Red Seal. VI. Conclusion [ 52 ] This appeal must be dismissed.

Red Seal’s application was not tied directly to the certification proceedings and hence s. 40 of the Act does not prohibit an award of costs. However, in light of the full spectrum of the proceedings between Red Seal and Ms. Alves et al (of which this appeal is but a small part), I decline to make any such order. DATED at the City of Regina, in the Province of Saskatchewan, this 18th day of October, A.D. 2011. “Richards J.A.” Richards J.A. I concur “Vancise J.A.” Vancise J.A. I concur “Caldwell J.A.” Caldwell J.A.