Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of class action certification orders, specifically the scope of leave requirements for commencing related proceedings.

• Determination of whether new class actions by non-class members require court leave under prior certification orders.

• Analysis of statutory context and purpose under the Class Proceedings Act, 1992, in defining class membership and procedural rights.

• Consideration of whether the language “relating to the subject matter of this action” extends to parties outside the certified class.

• Evaluation of the impact of overlapping claims and classes between earlier and subsequent class actions.

• Assessment of whether procedural errors, such as failure to seek leave, justify dismissal or constitute an abuse of process.

Background and facts

The case of Aizic v. Natcan Trust Company and its companion, Yeats v. BMO Investments Inc., arose from a series of class actions involving mutual fund management practices in Ontario. In 2018, class actions were commenced against trustees and managers of various mutual funds, including BMO Investments Inc. and National Bank Investments Inc./NatCan Trust Company. The plaintiffs alleged that these fund managers wrongfully paid trailing commissions to discount brokers, in breach of their trust and fiduciary duties. Trailing commissions are fees paid to dealers, including discount brokers, through whom investors acquire mutual fund units. Discount brokers, however, are legally prohibited from providing investment advice, and the plaintiffs claimed that compensating them via trailing commissions improperly reduced the value of investors’ holdings.

Subsequently, in 2020, additional class actions were filed, this time targeting discount brokers as defendants for the same alleged wrongful payment of trailing commissions. Some of these 2020 actions were denied certification or did not proceed.

In 2021 and 2022, the courts certified the 2018 actions against BMO and National Bank, each with orders that included a “leave requirement” clause: no other proceeding relating to the subject matter of the action could be commenced without leave of the court. The Gilani action (against BMO) specifically exempted BMO and its affiliates from this requirement.

In 2022, new class actions were launched by Vanessa Yeats and Angie Aizic against BMO and National Bank, respectively. These 2022 actions were brought on behalf of different classes—unitholders who did not hold their mutual funds through discount brokers, but who nonetheless claimed that the payment of trailing commissions to discount brokers increased costs for all unitholders. The 2022 actions were commenced without seeking leave of the court, prompting the defendants to argue that these actions were nullities or abuses of process due to non-compliance with the earlier certification orders.

Legal issues and court decisions

The central legal issue was whether the leave requirement in the 2018 certification orders applied to the 2022 actions, given that the new plaintiffs and classes were not members of the original certified classes. The appellants (BMO, Natcan Trust, and National Bank Investments) argued for a broad interpretation, claiming that any related proceeding required leave. The respondents (Aizic and Yeats) contended that the leave requirement only applied to the parties and class members in the original actions.

The motion judge dismissed the motions for summary judgment, holding that leave was not required for the 2022 actions because the plaintiffs and proposed classes were not members of the 2018 classes. The judge reasoned that the statutory scheme and context of the certification orders did not support extending the leave requirement to non-class members.

On appeal, the Court of Appeal for Ontario affirmed the motion judge’s decision. The appellate court found that the interpretation of the certification orders must be anchored in their text, context, and purpose. It agreed that the leave requirement was intended to prevent multiple overlapping actions by the same class or its members, not to bar unrelated parties from bringing new proceedings. The court emphasized that ambiguous procedural restrictions should be interpreted narrowly to preserve access to justice. The appeal was dismissed, confirming that the 2022 actions could proceed without leave.

Outcome and costs

The successful parties were the respondents, Angie Aizic and Vanessa Yeats. The Court of Appeal ordered the appellants to pay the respondents’ costs in the agreed all-inclusive amount of $25,000. No damages or other monetary awards were granted in this appellate decision, as the matter was limited to the procedural question of whether leave was required to commence the 2022 actions.