The Ontario Superior Court of Justice recently released its new certification decision in Nordik Windows Inc. v. Aviva Insurance Co., 2023 ONSC 1804. The decision of Justice Morgan was the second certification motion for the proposed class action, after Justice Belobaba issued an Order that a new hearing be convened and recused himself, due to a perception of bias that had arisen during the first hearing. The entire certification motion was heard de novo and was not a review or appeal of the previous decision of Justice Belobaba.
Context of Claim
The proposed class action was brought by corporations which had purchased business interruption policies from Aviva. Throughout the COVID-19 pandemic, many businesses were forced to close by public health guidelines and orders from the Government of Ontario restricting the operation of non-essential businesses.
These businesses brought claims under their business interruption insurance policies. Aviva issued a denial of the applications, stating that the various clauses of the business disruption policy did not apply to closures of the businesses due to COVID-19. Specifically, Aviva argued that the physical damage coverage provided by these policies did not apply as there was no direct physical loss or damage to the property, and the negative publicity and restricted access coverages under the policies did not apply as these coverages do not extend to global pandemics.
Class Proceedings Act, 1992, Test for Certification
The certification of a class proceeding is governed by section 5(1) of the Class Proceedings Act, 1992 (”CPA”). Section 5(1) states:
5 (1) The court shall, subject to subsection (6) and to section 5.1, certify a class proceeding on a motion under section 2, 3 or 4 if,
(a) the pleadings or the notice of application discloses a cause of action;
(b) there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;
(c) the claims or defences of the class members raise common issues;
(d) a class proceeding would be the preferable procedure for the resolution of the common issues; and
(e) there is a representative plaintiff or defendant who,
(i) would fairly and adequately represent the interests of the class,
(ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and
(iii) does not have, on the common issues for the class, an interest in conflict with the interests of other class members.
All five criteria must be met in order for an action to be certified.
Previous Certification Hearing
The previous hearings of the certification motion took place before Justice Belobaba from May through September of 2021. Throughout the certification process the parties agreed, after some negotiation, that the criteria in subsection 5(1)(a) and subsection 5(1)(c) were met. The parties disputed the class definition, and the suitability of Nordik as a representative plaintiff.
Regarding the class definition, Justice Belobaba found that the class definition proposed by class counsel, which included language that mirrored the language of the policies being disputed, was a merits-based class definition (meaning that a determination of whether a potential claimant is a class member would require some determination of the merits of the claim), contrary to the principles set out in Western Canadian Shopping Centres Inc. v. Dutton. Justice Belobaba substantially accepted the definition proposed by Aviva, but amended the definition to include not only those who have submitted a claim, but also those who will submit a claim to Aviva. The accepted class definition was as follows:
All persons, natural or corporate, who were insured by and have submitted or will submit an insurance claim to Aviva Insurance Company of Canada (“Aviva”) under an “Aviva Policy” (as defined below) and who claimed or claim a loss of business income:
a) caused by the interruption of their business when ingress to or egress from their premises was restricted in whole or in part (“Restricted Access”) by the mandatory closure order made by the Province of Ontario on March 23, 2020, and similar closure orders made in all Provinces and Territories in Canada in March or April 2020 (the “Closure Orders”); and/or
b) caused by the interruption of its business when ingress to or egress from its premises was restricted in whole or in part by any other orders of civil authority or, in the case of Form H-001803 and Form H2, any other orders of civil authority or Public Health Authority or similar Authority [Form H-001803 and Form H2 are the policies applicable to Hotels]; and/or
c) as a direct result of an outbreak of COVID-19 within 25 kilometres of its premises [if the NP PCI is certified].
Justice Belobaba addressed the issue of whether Nordik and 3 other parties were suitable as representative plaintiffs in a separate addendum decision. Counsel for Aviva argued that Nordik did not have a cause of action, as it was an essential business that was not ordered to close by the Ontario Government. Justice Belobaba rejected this argument, taking the position that it is sufficient for a representative plaintiff to have only one viable cause of action, and that Nordik was forced to reconfigure its operations to comply with Ontario guidelines, which was alleged to cause the interruption. Justice Belobaba stated “at certification, it is enough if the plaintiff can establish an arguable basis for the interpretation that is being advanced. In my view, it has done so.”
The class action was fully certified by Justice Belobaba with four companies serving as representative plaintiffs.
De Novo Decision of Justice Morgan
The de novo hearing by Justice Morgan took place from January 30th through February 1st, 2023. Justice Morgan noted that the claims include breach of contract and breach of the duty of good faith, and therefore met the first part of the certification test.
The class definition proposed was once again disputed by Aviva. In the decision of Justice Edwards, however, the focus of the decision was the inclusion of parties who are yet to submit an insurance claim. Justice Morgan accepted the position of the plaintiffs, stating that the nature of the blanket denial by Aviva created a circumstance where many may have found it futile to attempt to submit a claim, and that to require individuals to have submitted notices of claim would not be in conformance with the required purposive approach to the notice requirement.
Regarding the suitability of Nordik as a representative plaintiff, Aviva continued to challenge whether Nordik sustained any losses, and brought a summary judgment motion within the context of the certification motion. Counsel for Aviva again contended that as an essential business, Nordik cannot show that it suffered any losses from the restricted access to the property, and that no government order ever restricted access to the business premises of Nordik. Aviva argued that Nordik was not even aware of the specific legislation that they were now relying on to assert their claims.
Justice Morgan, did not accept this line of argument. His Honour stated:
“proving” that a deponent does not know the specific terms of O. Reg. 42/20 is akin to proving that a deponent does not know the specific terms of subsections 146(2) and (4) of the Highway Traffic Act, RSO 1990, c. H.8 – i.e. the traffic light sections that require drivers to stop on red and go on green. Almost no one is aware of the legislative measures, but virtually everyone is aware of their content.
Regarding whether Nordik suffered losses, Justice Morgan reiterated that the test does not require Nordik to prove losses at this time, only to show there is a genuine issue requiring trial, and that despite some of Aviva’s valid concerns about Nordik’s ability to show damages, these questions were best suited for the hearing of the case on its merits.
The summary judgement motion was dismissed. Although a summary judgement motion against a representative plaintiff is possible and can be fatal to a class action, Justice Morgan found that this was not an appropriate action for summary judgement. Justice Morgan stated:
In general, summary judgment motions against representative plaintiffs should be limited to those that do not raise the common issues. Summary judgment should not pre-empt consideration of the common issues: Moyes v. Fortune Financial Corp.,  OJ No 4455 (SCJ); McKenna v. Gammon Gold Inc., 2009 CanLII 66994 (SCJ).
More specifically, Aviva has not demonstrated that Nordik’s claim presents no genuine issue requiring a trial. The contentious nature of some of the issues raised by Aviva seem to call out for a full trial.
Justice Morgan found that all aspects of the certification test were passed. The class action was once again certified.
Tolling of limitation motion
Aviva also sought a declaration from Justice Morgan that section 28(1) of the Class Proceedings Act, 1995 does not toll the limitation period for parties to give written notice of their insurance claims.
Subsection 28(1) of the CPA states:
28 (1) Any limitation period applicable to a cause of action asserted in a proceeding under this Act is suspended in favour of a class member on the commencement of the proceeding and, subject to subsection (2), resumes running against the class member when,
(a) the court refuses to certify the proceeding as a class proceeding;
(b) the court makes an order that the cause of action shall not be asserted in the proceeding;
(c) the court makes an order that has the effect of excluding the member from the proceeding;
(d) the member opts out of the class proceeding;
Justice Morgan found that Aviva’s motion for this relief required factual determinations that would be made at the common issues trial, and so if permitted would effectively pre-empt the determination of the common issues. Accordingly, Justice Morgan held that it would not be appropriate to consider the issues raised by Aviva’s motion at the certification stage, and instead deferred them to the common issues trial judge.
Class action proceedings are frequently complex and often have multifaceted disputes throughout. Despite this, certification is rarely the time for many of these issues to be disputed. Both Justice Belobaba and Justice Morgan found that many of Aviva’s arguments directed towards the merits of the claim being advanced by Nordik were not appropriately considered at the certification stage of the proceeding, and counsel should be very cognizant of what arguments are more appropriately raised at a later stage of the proceeding when disputing certification. In the end, both hearings resulted in the certification of the actions, with some differences in the common issues and class definition.
Another takeaway, made more clear in the decision of Justice Morgan, is that motions in the early stages of a class proceeding should not be used in an attempt to pre-empt the hearing of common issues. On Aviva’s motion for declaratory relief regarding the tolling of written notice periods, Justice Morgan was clear that motions that seek to resolve common issues are inappropriate and should be resolved at the common issues trial. Counsel should be conscious of the common issues in dispute throughout the class action, and should consider whether time should be spent on a motion that may simply be struck down due to being dispositive of a common issue.
Finally, this case is an example of the generally low bar for evidence in a class action certification. Certification does not involve an assessments of the merits of the claim, and is not the time for comment on the strength of the action.
 Supra note 3 at paras 97-98.