Governments Shirking Responsibility: The St. Clair Streetcar Class Action

Most Torontonians have been inconvenienced by the Toronto Transit Commission (“TTC”), but ultimately sigh and move on. This is not the case for a group of small-business owners, who have launched a $105 million lawsuit against the Ontario government, the City of Toronto and the TTC for lost business as a result of the St. Clair streetcar project.

Dozens of disgruntled St. Clair Avenue West merchants and landlords who claim to have suffered financial harm are named in the suit as plaintiffs. The proposed $48 million St. Clair project was intended to improve transit service in midtown Toronto. Presently, the final cost is tallied at well over $106 million.  The construction of the streetcar line has been plagued by delays and five years later, it remains incomplete. Representative plaintiff, Curactive Organic Skin Care Ltd., is one of the affected businesses. Hundreds of businesses in the area were allegedly forced into bankruptcy or experienced financial loss due to the construction blocking pedestrian and vehicle traffic. The Statement of Claim also accuses the City of using the construction as a means to “gentrify” existing businesses. Gentrification, or “blockbusting,” involves forcing small, weak entrepreneurs into bankruptcy, thereby enabling larger, established companies to move in. The suit is currently awaiting certification.

Certification, as the most difficult aspect of a class proceeding, is the “make it or break it” stage. This post will examine the test for certification of a class proceeding and explore the issues surrounding this particular suit. I predict this class proceeding will not achieve certification.

The class proceedings trilogy of Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, Rumley v. British Columbia, 2001 SCC 69 and Hollick v. Toronto (City), 2001 SCC 68 establish five threshold rules for certification.

(1) The pleadings must disclose a cause of action

The claim states that construction was directly responsible for financial harm to St. Clair businesses. Proving negligence of a public authority is more challenging than proving negligence of a private individual. More specifically, the Province is  alleged to have breached its duty of care through “insufficient oversight,” while the City is alleged to have breached its duty through public abuse of authority, malevolence and negligence, which are all recognized causes of action at law.

As determined the landmark case of Holland v. City of Toronto, [1927] S.C.R. 242 at p. 243, “fault (if any) attributable to a municipal corporation is so much more than merely ordinary neglect that it should be held to be very great or “gross” negligence.”

The challenge of satisfying this threshold concerns the question of whether a report commissioned by the TTC with respect to the St. Clair project provides enough evidence to establish gross negligence.

(2) There is an identifiable class of two or more persons

The identifiable class test will be the challenge for satisfying this threshold. While two or more persons certainly exist (as numerous parties have been named on the Statement of Claim) the problem will concern the simple question of “Is the class identifiable?”

What is “identifiable” is an issue that many class proceedings have struggled with. In Hollick, the SCC stated that it must be possible to describe the class in a “sufficiently narrow way”. Simply put, any member of society should be able to place themselves into the proceeding upon seeing the class description.

Whether this is possible in the St. Clair suit is unclear. A geographical approach will be emphasized, outlining those businesses in the area of St. Clair from Bathurst to Old Weston. However, this method may include businesses that were able to avoid financial loss, or possibly exclude individual establishments located on side streets whose customers may have relied on St. Clair as a method of travel. Moreover, it will be difficult for business owners to clearly identify the construction as being directly responsible for financial loss. Due to the significant difficulty in outlining an “identifiable class,” I predict the certification motion will fail on this threshold.

(3) The claim must raise common issues

Also discussed in Hollick, the common issue must be a substantial ingredient of each class member’s claim. It is likely that financial loss will easily qualify as a common issue among the plaintiffs.

(4) Preferability Analysis

The class proceeding method must be the ideal way of addressing the issue, and must be assessed in light of access to justice, judicial economy and behavior modification. Rumley set forth five guidelines to determine whether a class proceeding is the best way to proceed:

1. Whether questions of fact or law common to members of the class predominate over any questions affecting only individuals?
2. Whether a significant number of the members of the class have a valid interest in individually controlling the prosecution of separate actions?
3. Whether the class proceedings would involve claims that are or have been the subject of any other proceedings?
4. Whether other means of resolving the claims are less practical or less efficient?
5. Whether the administration of the class proceedings would create greater difficulties than those likely to be experienced if relief were sought by other means (e.g.  joinder)?

A class proceeding would certainly support behavior modification, as the City and the TTC would be forced to plan and implement projects effectively in the future. Further, access to justice would be improved since small entrepreneurs could benefit from the cost savings of a class proceeding. The issues  at stake are also common enough that judicial economy would favour the use of a class proceeding instead of giving rise to a multiplicity of proceedings. Provided that the “hundreds” of alleged St. Clair businesses (a) exist and (b) experienced financial loss, a class proceeding will likely be found as preferable. However, if the class is any smaller, there is a high probability that a joinder of parties may be preferable.

(5) Class Representative

There appear to be no issues with respect to the existing representative plaintiff, Curactive Organic Skin Care Ltd.

A Caveat

The decision of Western Canadian Shopping Centres also held that the court has discretion to determine whether it would be fair to allow a class proceeding to proceed, notwithstanding the conditions for certification have been met. Predicting the outcome of a discretionary-based decision is near impossible. The real challenge of this class proceeding concerns the significant economic recession which occurred at the same time the construction allegedly damaged the plaintiffs’ businesses. It will be  difficult for the class to prove that the construction delays (and not the economy), are responsible for the approximately 200 businesses’ financial ruin.

As well, proving gross negligence and abuse of authority will also be challenging. A similar suit in Vancouver, Heyes v. City of Vancouver, 2009 BCSC 651 was decided against only the transit authority and a provincial agency. Both the City and Province in that case were absolved of liability.  It appears that courts are hesitant to challenge governments with respect to policy decisions.

These hurdles may very well factor into a court’s decision to use its discretionary power to deny certification of the class proceeding. It would hardly be surprising if a court were to use this power to further an underlying goal of limiting the liability of provincial and municipal governments. Even if the plaintiffs were successful in having their class proceeding certified, it is quite likely that this claim, like similar cases that preceded it, will settle before trial. Time will only tell whether this attempt to hold the public authorities in charge of infrastructure development accountable will succeed in encouraging reform in this contentious area of urban planning.