Executive Summary: Key legal and evidentiary issues

• Whether the motion judge properly applied the “some basis in fact” test for certifying common issues under the Class Proceedings Act

• The extent to which individualized factual determinations were required to resolve the misclassification claims under ESA sections 74.3, 1(1), and common law

• Whether systemic commonality existed to justify class treatment of the employment status issues

• Whether the proposed fiduciary duty issue could be certified without first establishing an employment relationship

• The appropriateness of awarding over $300,000 in costs following an unsuccessful certification motion in a public interest class action

• Whether the Divisional Court correctly determined that it had jurisdiction over the appeal

Facts of the case

Ann Davidson brought a proposed class action against T.E.S. Contracting Services Inc. alleging misclassification of workers as independent contractors rather than employees under the Employment Standards Act (ESA). She asserted that workers were thereby denied statutory entitlements. Davidson sought to certify a class action on behalf of all persons contracted through T.E.S. since 2009 who were allegedly misclassified. She further claimed that T.E.S. owed fiduciary duties to class members.

The motion judge refused certification, concluding that the key issues—whether T.E.S. was an employer under ESA s. 74.3, s. 1(1), or at common law—could not be determined on a common basis. T.E.S. had varying contractual arrangements across clients and workers, with services ranging from payroll administration to recruitment. Determining employment status would require individual trials. Without sufficient systemic commonality, the fiduciary duty issue could also not proceed. The motion judge awarded costs of $333,114.05 to T.E.S.

Outcome

The Divisional Court dismissed the appeal and denied leave to appeal the costs award. It held that the motion judge applied the correct legal principles and made no palpable or overriding errors of fact. The court found the evidence did not establish commonality of experience among the putative class members, and systemic issues were not present. The costs award was also upheld as reasonable. The Court confirmed it had jurisdiction to hear the appeal and ordered costs of $25,000 in favour of T.E.S..