In July 2003, a settlement was reached between Canada Post, the internet supplier, Cybersurf Corp, and the class action plaintiffs in Ontario and British Columbia, pursuant to which every person in Canada who had subscribed to the service would be entitled to the reimbursement of the purchase price ($9.95) in exchange for the return of the software.  While this settlement specifically provided that it was subject to the authorization of the Ontario and British Columbia courts, no mention was made of the class action instituted in Québec, or of the need for the settlement to be approved by the Québec courts.

On December 22, 2003, the settlement was approved in Ontario with respect to all Canadian residents, with the exception of those residing in British Columbia having regard to the class action instituted in that jurisdiction.  Despite a specific request by counsel for the Québec plaintiffs, the Ontario court did not include a similar exception with respect to the Québec class action.  The settlement was later approved in British Columbia on April 7, 2004.

On July 20, 2005, the Québec Superior Court refused Canada Post's request to approve in Québec the settlement reached in the rest of Canada.  By its judgment of August 10, 2007, the Québec Court of Appeal upheld this decision.

The Québec Court of Appeal was troubled by the fact that the Ontario court approved a national settlement of the class action without regard for the fact that a class action was pending before the Québec courts and while the Ontario court made a specific exception to the settlement for British Columbia residents.  The Court of Appeal did not mince its words and stated that it was perplexed by the fact that the Ontario court had shown a courtesy to British Columbia, the last jurisdiction where the class action was launched, that it refused, without explanation, to extend to Québec.

The Québec Court of Appeal held that the Ontario judge should have declined jurisdiction with respect to Québec residents.  In addition, it held that the notices that were published advising class members of the proposed settlement were confusing and inadequate as they did not clearly provide for the position of Québec class members and that this constituted a violation of the fundamental principles of procedure which justified the refusal to approve the settlement in Québec.

Despite its holding in this case, the Court of Appeal specifically indicated that its judgment did not mean that a national or international class action was not possible in Québec; to the contrary, the Court noted that questions of provincial jurisdiction which would result in an unnecessary increase in class actions was to be avoided.  It reiterated that each case will be decided on its own merits.

From a practical standpoint, this judgment is an important reminder to parties who want to settle a national class action when proceedings are pending in Québec and elsewhere.  Excluding Québec counsel from the settlement discussions may lead the courts in Québec to refuse to approve the settlement.

In summary, while the class action against Canada Post is settled in the rest of Canada, it will continue to follow its course in Québec.  It will not be surprising if Canada Post seeks leave to appeal this decision to the Supreme Court of Canada.  It has 60 days to do so.

Do not hesitate to contact Marc-André Boutin (514-841-6527), David Stolow (6567) or any other member of the class action practice group at Davies in Montréal, namely Guy Du Pont (6406), Nick Rodrigo (6548),  or Brandon Wiener (6553), if you would like more information or if you would like to receive a full copy of this judgment.

Davies Ward Phillips & Vineberg LLP, with over 235 lawyers, practises nationally and internationally from offices in Toronto, Montréal, New York and an affiliate in Paris and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its North American and overseas clients.