Common issues trial considers honest performance in government contracts
Kim Orr
On February 19, 2016, Justice Gans of the Ontario Superior Court of Justice dismissed the class action in Mayotte v. Ontario, 2016 CarswellOnt 2647 (Ont. S.C.J.), following a 12-day common issues trial. The Court found that the government of Ontario did not act unreasonably or in bad faith when it failed to provide increases to the compensation package of private issuers of motor vehicle licenses and registrations. The decision is the first class action trial to apply the new common law duty of honest performance recognized by the Supreme Court of Canada in Bhasin v. Hrynew, and the second to consider the issue of aggregate damage at the trial level.
Background
The government of Ontario has been contracting with independent businesses to act as private issuers of motor vehicle licenses and registrations since 1917. Private issuers are appointed pursuant to the Highway Traffic Act, R.S.O. 1990, c. H.8, although they are not provincial employees. The government decides which transactions are to be serviced by private issuers, and provides manuals, policies and directives which the private issuers must follow, including fixing the charges (for the consumer) and the fees (which are retained by the private issuers). The relationship between the government and all of the private issuers is governed by a standard form contract, which has gone through four iterations, all of which require that the private issuers acknowledge that compensation is strictly limited to the amounts fixed by the Minister of Transportation. The current compensation formula has been largely unchanged since 1987, save for “modest” changes to the base rate.
The plaintiff, Michael R. Mayotte, was formerly employed as a private issuer of motor vehicle licenses and registrations, and commenced this action on October 23, 2009, on behalf of approximately 381 current and former members of the Private Issuers Network (“PIN”) who signed the standard form contract with Ontario between August 28, 2003, and August 5, 2010. The plaintiff alleged that by 2003, if not before, and continually since 2003, Ontario has not acted in good faith towards the class members, and has provided compensation which is unreasonable and not comparable to compensation paid to private insurers in other provinces.
In 2010, Justice Perell certified seven common issues relating to: Ontario’s contractual obligations regarding the private issuers’ compensation, any duties arising from a 2003 report of the Ministry of Transportation, unjust enrichment, damages, and a potential limitation period defence [Mayotte v. Ontario, 2010 CarswellOnt 4712 (Ont. S.C.J.); leave to appeal refused 2010 CarswellOnt 7557 (Ont. Div. Ct.)]. Leave to appeal the decision was denied [2010 CarswellOnt 7557].
A few months before the common issues trial was set to commence in 2015, Ontario brought a motion for summary judgment to have the class’ claims dismissed in their entirety. The plaintiff did not bring a formal cross-motion for summary judgment, but requested that Justice Perell make several summary judgment rulings relating to the common issues. On June 29, 2015, Justice Perell dismissed the motion for summary judgment, after finding summary judgment would not be in the interest of justice in a case with so many genuine issues for trial [2015 CarswellOnt 9799 (Ont. S.C.J.)].
The common issues trial proceeded in September 2015.
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