The Aphria Decision: The Ragoonanan Rule Lives on in Ontario

  • October 30, 2021
  • Anthony O'Brien, Siskinds LLP

Background to the Aphria Decision

The Ragoonanan rule has been a fixture of Ontario class action law for approximately 20 years,[1] yet it remains controversial. The rule arises in multi-defendant class actions and requires that there must be a named representative plaintiff with a personal cause of action against each named defendant. In the absence of such a representative plaintiff, it is not sufficient for there to be class members who have claims against a particular defendant, even if those claims share a common factual or legal basis with the claim held personally by the representative plaintiff against another defendant. The rule has led to the practice of naming multiple representative plaintiffs in Ontario class actions to ensure a correlation between the named plaintiffs and named defendants.

The controversy around the Ragoonanan rule stems in part from the fact that the courts in other Canadian provinces have refused to adopt the rule. Instead, they have adopted a more permissive approach that does not require that there be a representative plaintiff with a cause of action against each defendant.[2]

The Ontario case law tends to approach this issue by viewing the class action essentially as an individual action, requiring that the pleadings disclose a cause of action between a plaintiff and a defendant, as required for any ordinary action.[3] By contrast, the approach in the Western provinces entails viewing the action as more than just an individual action – it is “an action with ambition”, as the British Columbia Court of Appeal has described it.[4] From the plaintiff perspective, the concerns underpinning the Ragoonanan rule are adequately addressed through the application of the class certification criteria, in particular an examination of whether the claims against all defendants raise common issues, and whether the representative plaintiff is a fair and adequate representative for the entire class or has a conflicting interest on the common issues. In addition, it is always open to the court to require an additional representative plaintiff if there is a subclass with claims that raise common issues not shared by all class members and the protection of the interests of the subclass requires that they be separately represented. From a policy perspective, the approach in the Western provinces best promotes the three goals of class proceedings (access to justice, judicial economy, and behaviour modification), by ensuring that the related claims of all class members are advanced in a single proceeding.

In more recent years, debate about the continued applicability of the Ragoonanan rule has centred on whether the rule needed to be revisited in light of the Supreme Court of Canada’s ruling in Marcotte.[5] That case involved class actions against multiple credit card issuing financial institutions under the Québec class action regime. The actions were authorized as class actions. The named plaintiffs did not have cardholder relationships with all of the defendants and, therefore, there was not a plaintiff with a personal cause of action against each of the defendants. The Supreme Court concluded that the representative plaintiffs had standing to bring a class action against all of the defendants, including those against which they did not have a personal right of action.

Does Marcotte mean that the Ragoonanan rule is no longer good law in Ontario? That is an issue that had been afforded judicial notice,[6] but never addressed head-on until the recent decision of Justice Perell in Aphria.[7]