Martindale v Mercon Benefit Services, 2023 ABKB 35

Court of King’s Bench of Alberta Citation: Martindale v Mercon Benefit Services, 2023 ABKB 35 Date: 20230119 Docket: 2103 10542 Registry: Edmonton Between: Evan Martindale, Matthew Baker, Michael Rempel, Merit OpenShop Contractors Association of Ontario, Merit Contractors Association of Nova Scotia, Merit Contractors Association Inc., and Merit Contractors Association of Manitoba Inc. as Representative Plaintiffs Plaintiffs/Applicants - and - Mercon Benefit Services, Merit Contractors Association, and Curtis Monsebroten, John Doe #1, John Doe #2, John Doe #3, John Doe #4, John Doe #5, John Doe #6, as Trustees for the Merit Contractors Association Benefit Plan Trust Defendants/Respondents Corrected judgment: A corrigendum was issued on January 30, 2023; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of the Honourable Justice Robert A.

Graesser _______________________________________________________

Introduction [ 1 ] This is an intended class proceeding. Evan Martindale, Matthew Baker, Michael Rempel, and the Merit Contractors Associations in Ontario, Nova Scotia and Manitoba have sued Mercon Benefit Services, Merit Contractors Association, and Merit Contractors Association Benefit Plan Trust arising out of breakdown of the relationships among various Merit Contractors Associations across Canada. [ 2 ] The Plaintiffs/Applicants claim to be beneficiaries of the Merit Contractors Association Benefit Plan Trust (“the Trust”).

The Trust was established to provide employee benefits to workers employed through various associations. [ 3 ] The Statement of Claim was recently amended to include Defendants who are alleged to be Trustees. The Trust was established a number of years ago when all of the Merit contractors’ associations were united in providing benefits to their members. The Plaintiffs/Applicants allege breaches of trust, fiduciary duty, good faith, negligent misrepresentation, statutory duty and contract on the part of the Trustees.

They claim that they have been wrongfully denied benefits and that the Trust and other beneficiaries have been unjustly enriched. [ 4 ] The funds held by the Trust are comprised of contributions from beneficiaries, including the Plaintiffs.

The Plaintiffs allege that since the breakdown of the relationships amongst the Associations, they have been denied benefits from the Trust and the Trust continues to hold the contributions they made to it and provide benefits to other beneficiaries. [ 5 ] I was appointed to case manage this action in accordance with the Alberta Rules of Court and the Class Proceedings Act , RSA 2003, c C-16.5 (“the Act ”). Until now, the parties have been able to agree on procedures.

The Plaintiffs filed their certification record in September 2022, with 10 supporting affidavits. [ 6 ] The Defendants have not yet filed a statement of defence. They wish to cross-examine the Plaintiffs’ affiants before being required to file their certification record. [ 7 ] The Plaintiffs argue that the Defendants should be required to file their certification record responding to their record, following which there should be one round of cross-examinations. [ 8 ] The Plaintiffs have brought this “sequencing” application for my directions as to how the parties should proceed.

Positions Plaintiffs [ 9 ] The Plaintiffs argue that the interests of justice and the objectives of class proceedings are better served by having all of the evidence filed, followed by questioning, rather than have the Plaintiffs file their evidence, have their witnesses cross-examined on it and then later, after the Defendants have filed their evidence, to be cross-examined on any reply evidence they file. [ 10 ] Their arguments are that streamlining the process is mandated by the Rules of Court , the purposes of class actions, and case law dealing with sequencing applications. [ 11 ] They cite a number of authorities in support of their position: 1.

Alves v Mytravel Canada Holidays Inc (Sunquest) , 2009 SKQB 77 ; 2. Cannon v Funds for Canada Foundation , 2010 ONSC 146 ; 3. Carlson v Transalta Corporation , 2018 ABQB 343 ; 4. Clearbakk Energy Services Inc v Sunshine Oilsands Ltd , 2022 ABQB 347 ; 5. Forster v Monsanto Company, 2020 BCSC 1376 ; 6. Garland v Consumers’ Gas Co , 2004 SCC 25 ; 7. Gill v Yahoo! Canada Co , 2018 BCSC 1376 ; 8. Holland v Saskatchewan (Agriculture, Food and Rural Revitalization) , 2009 SKQB 334 ; 9. Klassen v Canadian National Railway Company , 2022 ABQB 280 ; 10. Kohler v Apotex Inc , 2015 ABQB 610 ; 11.

Li v British Columbia , 2017 BCSC 1616 ; 12. Liu v Transportation Investment Corporation , 2016 BCSC 827 ; 13. McKay v Air Canada , 2016 BCSC 1691 ; 14. Ravvin v Canada Bread Company, Limited , 2019 ABQB 686, 2020 ABCA 424 ;

15. Stewart v Enterprise Universal Inc , 2010 ABQB 259 ; 16. Strohmaier v British Columbia (Attorney General ), 2017 BCSC 2079 ; 17. Thomson v Bryce , 2016 BCSC 687 , 18. Unterschultz v Clark , 2021 ABQB 635 ; and 19. Western Canadian Shopping Centres Inc v Dutton , 2001 SCC 46 . [ 12 ] They rely on various Rules of Court, the Act , the Canadian Judicial Protocol for the Management of Multijurisdictional Class Actions, and sections of the Judicature Act .

Defendants [ 13 ] The Defendants argue that Alberta civil practice gives the respondent in an application the right to cross-examine the applicant and the applicant’s witnesses on any affidavits filed in support of the application before the respondent is required to file any response to the application. They also argue that judicial economy may be satisfied by this sequential approach, as they will be able to file a more targeted response to the Plaintiffs’ application once they have had an opportunity to challenge the affiants on their evidence, and potentially elicit further evidence from these witnesses.

With this evidence, the Defendants may be able to streamline their response and ultimately get to the real issues in a more efficient and economical matter. [ 14 ] They cite: 1. Stewart v Enterprise Universal , 2010 ABQB 259 ; 2. Clearbakk Energy Services Inc v Sunbank Oilsands Ltd , 2022 ABQB 347 3. Unterschultz v Clark , 2021 ABQB 635 ; 4. John Doe v University of British Columbia ; 2019 BCSC 673 5. Ravvin v Canada Bread Company , 2019 ABQB 626 ; 6. Hollick v Toronto (City) , 2001 SCC 68 ; 7. Pro-Sys Consultants Ltd v Microsoft Corporation , 2013 SCC 37 ; and 8.

Western Canadian Shopping Centres Inc v Dutton , 2001 SCC 46 . [ 15 ] They also refer to various Rules of Court . Analysis [ 16 ] As far as counsel and I know there is no Court authority on the order of cross-examination of affiants before certification applications are heard. [ 17 ] The Applicants submit that it is standard practice in at least the common law provinces to have each party submit its certification records and then have a single round of cross-examinations on affidavits. They say if the cross-examination process is bifurcated, that may well add more than six months onto the

schedule towards their certification application. [ 18 ] The Respondents argue that if there is a standard practice in other provinces, that practice does not apply to Alberta because of clear case law giving the Respondent a right to cross-examine on affidavits before responding to the application. [ 19 ] I do not disagree that there is a risk that the process may be delayed if the Respondents succeed in being able to cross- examine the Applicant’s witnesses in advance of having to file anything in response. [ 20 ] The Applicants’ position is certainly consistent with the exhortations towards speedy resolution of civil matters and Rules of Court to that effect.

I need not review those authorities carefully as they are not in dispute. [ 21 ] The Respondents argue that economies may be realized if they can cross-examine the Applicant’s witnesses before responding, as the results of their cross-examinations may allow them to identify what the real issues are, to be able to focus on those issues and not have to respond to every allegation, and possibly to even agree to certification once they have had an opportunity to learn more about the Applicants’ case and to some degree test the strength of it through their witnesses. [ 22 ] There is no doubt that I have a broad jurisdiction to deal with procedural issues in a class proceeding.

Section 13 of the Act says: 13

(1) The Court may at any time make any order it considers appropriate respecting the conduct of a class proceeding to ensure the fair and expeditious determination of the proceeding and, for that purpose, may impose on one or more of the parties any terms or conditions that the Court considers appropriate. [ 23 ] The Rules of Court have no special rules for class proceedings. Rule 2.9 states:

2.9 Despite any other provision of these rules, the Court may order any practice and procedure it considers appropriate for a class proceeding under the Class Proceedings Act to achieve the objects of that Act . [ 24 ] I agree with what Justice Martin (as she then was) said about process in Stewart v Enterprise Universal , at paras 21 and 30: [21] With no prescribed order, timing is governed by the initiative of counsel and the direction of the court.

In Alberta all actions filed pursuant to the CPA become the subject of case management so there is the opportunity for an orderly and principled consideration of what matters should be heard when. ... [30] The case management judge should retain the discretion to determine the appropriate sequence and timing of applications to ensure the just and timely determination of procedures, to meet the goals of the CPA and the Rules of Court , and to ensure fairness between the parties. [ 25 ] To restate that and perhaps go a bit further, I would say that procedure in class proceedings in Alberta should follow the foundational principles in the Rules of Court and use the Rules themselves as guidelines.

Counsel and the case managing judge are, however, relatively free to determine the procedures and processes that are most likely to achieve the goals of the foundational rules: to fairly and justly resolve the issues in a timely and cost-effective way ( Rule 1.2(1)). [ 26 ] The intent of the “new” Rules of Court was to make the parties more responsible for the carriage of their actions and it was optimistically hoped that court applications, especially with respect to process, would be limited because the parties would have early in the process agreed to a case plan.

Whether that has actually been achieved is an unanswered question, but at a minimum the parties should be encouraged to plan their litigation in keeping with the foundational rules and the case planning rules. Generally, they are permitted to deviate from the Rules when they think it is appropriate. Only when they cannot agree do the Courts become involved. [ 27 ] I am of the view that significant deference is warranted regarding agreements between counsel.

As well, there should be some deference to counsel’s strategic decisions unless those decisions appear to be pursuing delay or for some improper purpose. [ 28 ] I have no doubt that the parties in the common law provinces (perhaps even Alberta) have on many occasions agreed to the process proposed by the Applicants. There are undoubtedly many cases where that is appropriate, such as where the action is especially time sensitive, or the issues are relatively straightforward.

Counsel are in the best position to judge what is the most effective process for them to advance their cases. [ 29 ] The Rules of Court are generalized rules. Case management as mandated in class proceedings allows for more flexibility than generally provided, recognizing that each class proceeding or intended class proceeding is unique.

The “one size fits all” approach mandated by the Rules is not always the best way of managing an action. [ 30 ] As for the order of cross-examination in civil proceedings generally, the Rules of Court have been interpreted so as to generally entitle the respondent in an application to cross-examine on any affidavits filed in support of the application before the respondent is required to prepare and file an affidavit in response to the application. [ 31 ] This is frequently referred to as a “right to cross-examine”, and in most situations there is no objection to that and applicants accept this as the normal course of things.

As an example, in family applications that require a special chambers application, Family Law Practice Note 2 contemplates a sequential, responsive process. The applicant files their materials (including affidavits), the respondent files their materials (including their affidavits and cross-examination transcripts from the applicant’s affidavits, and then the applicant files (if necessary) further materials including reply affidavits. [ 32 ] Sequencing on civil applications was most recently dealt with by Lema J in Unterschultz v Clark .

It is a very helpful decision and I do not need to repeat the analysis conducted by Justice Lema. His conclusion, with which I fully agree, is stated at paras 3: In a nutshell, the general rule in Alberta is that a party need not its affidavit first i.e. before cross-examining the opposite party. [ 33 ] Justice Lema was case managing the action. On the application, he saw no compelling reason to depart from the usual rule. [ 34 ] It is almost always helpful to have sequential processes. Defendants or Respondents are entitled to know the case they have to meet.

It makes little sense for them to guess at what the Plaintiff may say and provide a “shotgun” response to everything they might imagine could arise. [ 35 ] Some of that is accounted for by the fact that the Plaintiff in a class proceeding must file its certification application record first.

The Defendant then gets to respond to the Plaintiff’s specific allegations. [ 36 ] Generally, the Plaintiff in intended class proceeding makes their certification application without the benefit of the Defendant’s statement of defence and without record production. [ 37 ] That is so because the Plaintiff does not have to prove its case on the certification application. All it has to do is demonstrate that the pleadings disclose a cause of action.

Other factors under the Act that may get into factual questions include the presence of common issues and whether a class proceeding would be the preferable procedure for the “fair and efficient resolution of the common issues” [ 38 ] The bar for certification on the strength of the plaintiff’s case is low, and resembles the test for disclosing a cause of action on the pleadings, and negating frivolity and vexatiousness. It is akin to the test for committal for trial following a preliminary inquiry or extradition to a foreign country to face criminal proceedings there.

[39] Rooke ACJ discussed analyses of the merits of the case in Setoguchi v Uber in the context of the Court’s gatekeeper role inweeding out unmeritorious cases: [35] As Uber argues, in essence, and I find, in this era there is a need to weed out claims that run afoul of the “plain and obviousassessment” of Hunt v.

Carey Canada Inc., (SCC), [1990] 2 SCR 959 at para 980[28], where there is no real substantial(non de minimus) or meritorious basis for the claim, and especially, post-Hryniak[29], where “the role of certification [is] a ‘meaningfulscreening device’ and the Court has a concomitant ‘gatekeeper function’...”.

This function is important to stop the arguments of “fulldebate”[30] of possibilities where there is no apparent substance. [40] In considering Pro-Sys Consultants Ltd v Microsoft Corporation and Hollick v Toronto (City), 2001 SCC 68, leadingauthorities from the Supreme Court on the tests for certification, ACJ Rooke stated: [46] While perhaps limited to matters beyond “cause(

s) of action”, Pro-Sys has kept the rationale of “some evidence” and “somebasis in fact” in Hollick alive as a meaningful screening device: paras. 100 and 102. In the latter para (case references omitted) RothsteinJ. explained what some evidence or some basis in fact means: The Hollick standard has never been judicially interpreted to require evidence on a balance of probabilities.... The “some basis in fact”standard does not require that the court resolve conflicting facts and evidence at the certification stage.

Rather, it reflects the fact that atthe certification stage “the court is ill-equipped to resolve conflicts in the evidence or to engage in the finely calibrated assessments ofevidentiary weight....

The certification stage ... focuses on the form of the action in order to determine whether the action canappropriately go forward as a class proceeding....”. [41] ACJ Rooke amplified his analysis at para 33: [33] Put in other words, it seems to me that, if the “screening process” is to be “meaningful”, without determining the full legal andsubstantive merits of the litigation, including whether all elements of the Act to establish certification have been met, there must be someevidence or basis in fact for loss or damage.

The standard must be lower than the actual proof on a balance of probabilities necessary at acommon-issues trial (TR20-17/1-3), but the Representative Plaintiff must demonstrate at least some meaningful substance to the casebefore certification should be granted. It surely cannot be merely that, in effect, one needs only to speculate at the certification stage, only“establish [loss or damage] at the common issues trial” (TR20-12/9-29; 20/22-28), undoubtedly seeking a settlement in the interval.

Thisis the substance of why certification must and does fail in this case. [42] I need not delve into this area further, and reference it here only to emphasize that there is a legitimate, and possiblyincreasing, role for cross-examinations on the evidence, pre-certification. [43] Potential class proceedings that do not cross over the appropriate bar are frequently challenged by striking or

summarydismissal applications, as referenced in in Stewart v Enterprise Universal. [44] Class proceedings do not require an expedited approach to certification applications. They do not take priority over other typesof litigation. All are subject to the foundational rules. In most cases, large amounts of money are involved in class proceedings.Defendants are entitled to make striking applications and

summary dismissal applications to narrow the scope of the potential action, andto ensure that the statement of claim on which the action will proceed if certified is clear and discloses recognizable causes of action. [45] All of this may take time. [46] Any streamlining for certification applications mainly comes from not requiring record production, which can frequently bean enormous task. [47] The Applicants cite Carlson v Transalta Corporation regarding sequencing, in which Justice Michalyshyn referenced the so-called “Cannon Factors” arising from Cannon v Funds for Canada Foundation at para 10: [10] And in Cannon, at para 15, Strathy J (as he then was) further commented as follows on the exercise of his discretion: 15.

Without being exhaustive, some of the factors that I consider relevant to the exercise of my discretion include: (

a) whether the motion will dispose of the entire proceeding or will substantially narrow the issues to be determined; (

b) the likelihood of delays and costs associated with the motion; (

c) whether the outcome of the motion will promote settlement; (

d) whether the motion could give rise to interlocutory appeals and delays that would affect certification; (

e) the interests of economy and judicial efficiency; and (

f) generally, whether scheduling the motion in advance of certification would promote the “fair and efficient determination” of theproceeding (s. 12). [48] These factors are generally referenced in regard to applications preceding the certification application itself, and emphasizeeconomy and judicial economy. Cross-examinations are not “applications” but rather are a standard process in any application where theapplicant relies on affidavit evidence. [49] The Applicants also reference Forster v Monsanto Company.

In that case the British Columbia Supreme Court consideredthe Cannon Factors in class proceedings applications, noting that they were helpful, “particularly (on) stay or strike applications such as

those before the Court”. Justice Crerar noted that the Cannon factors had been amplified in Branch J’s text Class Actions in Canada , 2 nd Ed. (Toronto: Thomson Reuters, 2020), quoting the “Branch Factors” in para 57: [57] The factors guiding the court’s discretion in determining whether applications, particularly stay or strike application such as those before the Court, ought to be heard before certification are commonly referred to as the “Cannon Factors” (after Cannon v.

Funds for Canada Foundation , 2010 ONSC 146 ) or the “Branch Factors” from their expanded listing in Branch J’s seminal text, Class Actions in Canada , 2nd ed. (Toronto: Thomson Reuters, 2020) at 5.200. In Kett at paras. 11-12 , Branch J lists those factors (although he is too modest to refer to them as such) in two tranches, which I consolidate as follows: (

a) whether the motion will dispose of the entire proceeding or will substantially narrow the issues to be determined; (

b) the likelihood of delays and costs associated with the motion; (

c) whether the outcome of the motion will promote settlement; (

d) whether the motion could give rise to interlocutory appeals and delays that would affect certification; (

e) the interests of economy and judicial efficiency; and (

f) generally, whether scheduling the motion in advance of certification would promote the "fair and expeditious determination" of the proceeding (s. 12). (

g) the strength of the defendant's arguments: Li v. British Columbia , 2017 BCSC 1616 at para. 32 ; (

h) any delay by the plaintiff in advancing certification: Strohmaier v. British Columbia (Attorney General) , 2017 BCSC 2079 at para. 38 ; (

i) whether the defendant agrees not to pursue costs or otherwise agrees to facilitate the timely pursuit of the action, Li at para. 27 ; (

j) whether the defendant agrees to treat the motion as determinative of the s. 4(1)(

a) aspect of the certification motion, Lui v. Transportation Investment Corporation , 2016 BCSC 827 at para.19; (

k) whether there is likely to be an overlap in the issues raised on certification and the issues the court will consider on the motion to strike: Thomson v. Bryce , 2016 BCSC 687 at para. 19 . [ 50 ] In my view the Cannon and Branch factors have no direct application here, however they are always worthy of consideration on any application that precedes the certification application in an intended class proceeding. If the Cannon factors were required to be analyzed, only (g), the strength of the Defendant’s arguments, would favour an application.

But this application is to be permitted to exercise a near right that other respondents on civil applications have. Because of that, I do not think that the other considerations are particularly relevant. [ 51 ] Kohler v Apotex Inc and McKay v Air Canada are cited regarding inefficiencies in the litigation process.

The Applicants suggest that there will be “multiple, potentially repetitive rounds of questioning” which they suggest would be inefficient. [ 52 ] I do not see how the cross-examination would be repetitive as the affiants would only be questioned once on any affidavits they provide (subject to further cross-examination on undertakings and refusals. There should be no repetition. There may be some additional time required, but additional time does not automatically equate to inefficiency. I do not see that Kohler should be extended to cross-examinations or questioning.

Conclusion [ 53 ] Here, I am satisfied that some economies may be achieved by the Respondents cross-examining the Plaintiffs’ affiants before they must respond to the certification application. That is by no means a certainty but in my view the Respondents need only establish that their request is reasonable, and they are making it in good faith. I emphasize that the possibility of economies is not a determinative factor.

The most important factor on this application in my view is the fact that the order proposed by the Respondents is not motivated by any improper purpose and there is no suggestion that they have delayed the matter to date. [ 54 ] This staging of cross-examination normally a right for respondents in applications in Alberta and I see no reason in this case to depart from that practice.

The onus should be on the party opposing this normal practice in Alberta, and they have not met that onus here. [ 55 ] In saying so I do not intend to establish a “standard practice” for class proceeding certification applications in Alberta. I think cross-examining first for respondents is the starting point, but counsel may always agree to the contrary, and the case management judge is free to order that a respondent’s certification record be filed before any cross-examination take place.

It all depends on the circumstances and demands of the case. [ 56 ] Here, I will permit the Respondents to conduct their first round of cross-examinations before the are required to file their certification record. [ 57 ] In the ordinary course of cross-examination on affidavits, there may be undertakings given; there may be objections to questions; there may be refusals to provide undertakings; and there may be applications to compel answers. At the end of this process, the affiant may be required to reattend for cross-examination on undertakings and refusals.

[ 58 ] Because the standard of proof for the Applicants on the certification application is relatively low, I do not see the necessity for the Defendants to have completed the cross-examination process. The certification application itself will almost certainly not be decided on the minutia in the evidence on the merits or details of the case. As noted by Justice Neilson in Klassen v Canadian National Railway Company at para 16 , “the actual merits of the alleged tort are not before the [certification] application judge”.

In my view, the first round of questioning for each affiant should be sufficient for the Defendants to be able to provide their response affidavits. [ 59 ] My general rule on undertakings is that the parties should have one month to comply with undertakings generally.

For undertakings requiring obtaining records or information from people outside the affiant’s control, an initial request for that information should be made within a week of the undertaking being given, and a follow-up request made two weeks later if the information has not been provided. [ 60 ] From a scheduling perspective, the parties should arrange the first round of cross-examination of the affiants as soon as practicable. Once that round of cross-examination has taken place, the Respondents should have two months to prepare their certification record.

Any application on refusals should be made within two weeks from the refusal. [ 61 ] The Respondents should pursue applications on these matters, if necessary, concurrently with preparing their own materials. [ 62 ] I know that the parties previously agree that the Respondents would have four months from the filing of the Plaintiffs’ certification record. Mr.

McGarvey submits that they should have four months as previously agreed but not from the filing of the Plaintiff’s certification record but now from the completion of cross-examinations. [ 63 ] There was undoubtedly a misunderstanding between counsel as to what the cross-examination process would be and what would trigger the Respondents’ obligation to file. As matters have it, they have already had over four months from the Plaintiffs’ filing and will have some further months to finalize their response with the benefit of cross-examinations.

I cannot see that they reasonably need another four months after cross-examination. [ 64 ] The parties should now set aside some time for the Plaintiffs’ cross-examination of defence affiants as well as further cross- examination of the Plaintiffs’ affiants on undertakings and refusals sometime after the Defendants have filed their response. [ 65 ] If the Plaintiffs elect to file reply affidavits and a Reply to the Defendants’ certification record, the Defendants will have the right to cross-examine on those affidavits, but that process will not delay the matter. [ 66 ] Once the parties have agreed on dates for cross-examination of the Plaintiffs’ affiants, I should be able to arrange a date or dates for the certification application and scheduling other required tasks can be done to accommodate the hearing date. [ 67 ] I recognize that there is a strong argument that procedures for class proceedings be standardized across Canada as there are many multi-jurisdictional class proceedings.

That has not yet occurred regarding the timing of cross-examinations on affidavits in certification applications. Anecdotal evidence of counsel is not sufficient on which to be found in a standard procedure. Even if there was a “standard practice”, that would not prevent an individual case management judge from departing from it in appropriate circumstances. On the facts of this case, no compelling circumstances to depart from the Alberta standard practice has been established. Heard on 8 th day of December, 2022. Dated at the City of Edmonton, Alberta this 19 th day of January, 2023. Robert A.

Graesser J.C.K.B.A. Appearances: Anthony Leoni, Rice Harbut Elliott LLP for the Plaintiffs/Applicants Angela Bespfulg,

Murphy Battista LLP for the Plaintiffs/Applicants Donald J McGarvey, KC and Joel Franz, McLennan Ross for the Defendants/Respondents _______________________________________________________ Corrigendum of the Memorandum of Decision of The Honourable Justice Robert A. Graesser _______________________________________________________ - Style of cause has changed to reflect correct parties. - Changes made paragraphs 2 and 3.