Executive Summary: Key Legal and Evidentiary Issues

• Operation of the Class Proceedings Act, 1992, s. 29.1 mandatory one-year deadline and the strict, non-discretionary nature of dismissal for delay.
• Prolonged settlement negotiations did not excuse the plaintiffs’ failure to take any of the prescribed steps toward certification within the statutory timeframe.
• Absence of a concluded settlement agreement due to a fundamental impasse over the Distribution Protocol and the scope of the settling class.
• Tension between a proposed Ontario-only long-tenure class and the defendant’s insistence on a national class settlement binding most former employees.
• Concerns over fairness and feasibility of a settlement where only a small subset of longer-service Ontario employees would receive funds, leaving others to opt out or sue again.
• Ultimate dismissal of the proposed class action for delay, with only directions for notice and future written costs submissions, and no monetary award fixed.

Background and nature of the claim

This proceeding began as an employment-related proposed class action commenced on May 16, 2018 by two representative plaintiffs, Patrycia Tolhurst and Wesley Jordan, against their former employer, Rolf C. Hagen Inc. The claim alleged that the defendant failed to provide proper pay in lieu of notice and outstanding vacation pay to a putative class of approximately 440 former employees across multiple Canadian provinces. The plaintiffs sought to advance the case as a national class action for this group of former employees, positioning themselves as representative plaintiffs in a class proceeding governed by Ontario’s Class Proceedings Act, 1992 (CPA). The underlying subject matter therefore lay at the intersection of employment law and class actions procedure, with the quantum of entitlements varying depending on provincial employment standards and length of service, particularly for longer-tenured Ontario employees.

Procedural framework and statutory deadlines

The defendant brought a motion under section 29.1(1) of the CPA, which imposes a mandatory requirement on plaintiffs to move their proposed class action toward certification within fixed timelines. For actions commenced before October 1, 2020, plaintiffs were required, by no later than October 1, 2021, to either file a final and complete certification motion record, enter into a written timetable agreement with the defendant (and have it filed with the court), or obtain a court-approved timetable for certification steps. Section 29.1(1) directs that, on a defendant’s motion, the court “must dismiss” the action for delay if none of these steps has been taken within the prescribed time. Relying on the Court of Appeal’s decision in Tataryn v. Diamond & Diamond Lawyers LLP, the court emphasized that the one-year time parameter under s. 29.1 engages no judicial discretion: if the steps are not taken, dismissal is mandatory. Against this backdrop, the court examined whether the plaintiffs’ protracted settlement discussions could be treated as a functional substitute for the procedural steps mandated by the Act, and whether any settlement had crystallized in a way that might preclude the defendant from invoking s. 29.1.

Early case management and extended settlement discussions

Shortly after the action was commenced, counsel appeared before Justice Perell at an initial case conference in September 2018, with a further case conference originally scheduled for November 2018 and later rescheduled to early 2019. As settlement discussions appeared promising, counsel jointly advised the case management judge that a further case conference was not required at that time. From approximately November 2018 through to January 2025, the parties remained engaged in on-again, off-again settlement negotiations. Both sides acknowledged there were significant delays by each during this period. Around November 16, 2021, roughly three years into these negotiations, the parties reached what was described as a global settlement figure that the defendant was prepared to pay to resolve the claims of the entire putative class. Draft settlement documentation was exchanged, but key aspects of the settlement structure were never finalized. In particular, the parties were unable to reach consensus on how the settlement funds would be distributed, and the defendant repeatedly signalled that an agreed-upon Distribution Protocol was central to any deal. Without that agreement, the settlement could not be finalized or presented to the court for approval.

Distribution Protocol disputes and class definition tensions

The main stumbling block was the treatment of different categories of employees within the proposed class. In a draft Administration and Distribution Protocol, plaintiffs’ counsel proposed that only a relatively small subset of the class—Ontario employees with at least five years of service—would receive any payment from the settlement fund. Because Ontario’s employment legislation can yield significantly more generous entitlements for longer-service employees than other provincial regimes, this group stood to benefit most from any wrongful dismissal-type compensation. Counsel advised that among the roughly 440 former employees, only about 50 to 100 were Ontario-based employees with at least five years of service. The proposed structure thus contemplated that this minority group would receive all of the settlement proceeds, while the majority of class members outside Ontario or with shorter tenure would receive nothing. Recognizing the risk that such a structure might draw heavy objection or be rejected by the court as unfair at a settlement approval hearing, plaintiffs’ counsel floated the idea of changing the class definition. In a February 10, 2022 email, plaintiffs’ counsel suggested bringing a motion to amend the class to include only Ontario employees of five or more years’ service, and doing so without notifying the other putative class members who would be excluded. Plaintiffs’ counsel speculated that the case management judge might agree to such a change because the action had not yet been certified. This proposal triggered real concern for the defendant. From the defendant’s perspective, it was crucial that any settlement be national in scope and final in effect, binding as many former employees as possible and minimizing the risk of further litigation. A settlement that excluded a large portion of the existing putative class, or that predictably led to a rash of opt-outs, would undermine the very finality the defendant sought in exchange for the global settlement payment.

Impasse over settlement mechanics and absence of a concluded agreement

The dispute over the Distribution Protocol and the scope of the settling class persisted. The defendant insisted that the parties agree on a Distribution Protocol that was both equitable among class members and likely to keep opt-outs to a modest level. Plaintiffs, meanwhile, maintained that a settlement structure focusing on longer-tenure Ontario employees reflected the legal realities of differing employment standards and entitlements across provinces. A memorandum dated April 18, 2023 from defendant’s counsel clearly identified the Distribution Protocol and opt-out clause as unresolved and emphasized that without agreement on those issues, the settlement could not be submitted for court approval. By January 2025, with the impasse unresolved, the defendant terminated settlement negotiations. The litigation then lay dormant until the defendant revived the matter by seeking a case conference to set a date for the s. 29.1 motion to dismiss for delay. On the motion, plaintiffs argued that there was, in substance, an agreed settlement and that the remaining points were merely mechanical. They contended that, having agreed to a global figure, the defendant was estopped from relying on s. 29.1 to defeat the claim. The court rejected this characterization. Justice Morgan held that there had been no “meeting of the minds” and therefore no binding settlement agreement: the unresolved Distribution Protocol, going to who within the class would receive compensation and on what basis, was not a minor mechanical detail but a fundamental term. The defendant had contemplated a final resolution binding the national class, while the plaintiffs’ proposed distribution would effectively benefit at most one-fifth of the putative class and leave the majority free to sue again. In those circumstances, the court found no basis for estoppel and no concluded contract.

Operation of section 29.1 CPA and the dismissal for delay

With no enforceable settlement in place and no steps taken to fulfil the statutory preconditions, the court turned squarely to the operation of section 29.1. Eight years had passed since the Notice of Action and Statement of Claim, and yet the plaintiffs had not, by October 1, 2021 or thereafter, filed a complete certification motion record, entered into a filed written timetable agreement, or secured a court-approved timetable. Given the mandatory language of s. 29.1(1) and the Court of Appeal’s direction that there is “no judicial discretion” in applying the one-year parameter, Justice Morgan concluded that the action had to be dismissed for delay. The court refused the plaintiffs’ request to set a date for a settlement approval hearing, noting that a judge can only approve or reject a settlement as presented, and with no finalized settlement agreement between the parties, such a hearing would serve no purpose. Instead, the court granted the defendant’s motion and ordered that the action be dismissed under s. 29.1 of the CPA.

Consequences of the dismissal and absence of a monetary award

In terms of practical consequences, the court directed plaintiffs’ counsel, in accordance with s. 29.1(2)(a) and (b), to publish a notice and copy of the dismissal order on the law firm’s website and to notify all class members who had previously contacted the firm about the proceeding. The court also invited written submissions on costs, ordering that the defendant deliver brief submissions within two weeks, followed by the plaintiffs’ responding submissions two weeks later. Significantly, no damages, costs, or other monetary awards were fixed in this decision, and the earlier “global” settlement discussions never materialized into a binding, court-approved settlement. As a result, the successful party in this motion is the defendant, Rolf C. Hagen Inc., whose motion to dismiss the proposed class proceeding was granted. However, the total amount of any costs or other monetary awards in the defendant’s favour cannot be determined from this decision because costs were left to be addressed by subsequent written submissions and no specific figure was ordered at this stage.