MacKinnon v. National Money Mart et al

On March 1, 2005, certification of this proposed industry wide class action against payday lenders was refused in British Columbia. The scope of the litigation was large. The plaintiff estimated that there would be in excess of 140,000 class members with claims dating as far back as 1993. More than 20 defendants were named in the action.
The proposed class was comprised of people in British Columbia who borrowed short-term loans, commonly referred to as “payday loans” because they are generally due around the borrower's next scheduled payday. The plaintiff alleged that the fees charged for these payday loans contravened s. 347 of the Criminal Code because the contracts contemplated payment of interest, and other fees and charges that also constituted interest as defined under the Code, at a criminal rate.

Justice Brenda Brown concluded that the action, as presently constituted, could not be certified and dismissed the plaintiff's application. The plaintiff failed to satisfy her that there were common issues or that the class action was the preferable procedure for the resolution of the claims. She held that the proposed common issue only had an appearance of commonality because of the generality with which they were stated. She concluded that no common issues concerning whether these payday loans contravened s. 347 of the Code existed across the entire proposed class, and that the other common issues could not stand independently without a common determination that the defendants had received interest at a criminal rate. On preferability, Justice Brown held that individual issues overwhelmed any common issues since the claim as a whole required a review of individual circumstances with respect to each separate form of agreement and fee charged.

She concluded that the necessity of proceeding in this fashion demonstrated that a class action would not be the preferable procedure for the action as presently constituted. Each defendant would be required to attend and participate in the review of agreements and business models that have little in common with theirs. Individual plaintiffs would be required to wait for determination of their claim while unrelated fees and agreements were considered. She held that this was neither a fair nor efficient use of judicial resources. However, she noted that it may be that these claims could be pursued effectively in “less ambitious” class proceedings.

She ordered that the parties could schedule a hearing to address the matters raised in section 9 of the Class Proceedings Act.

In Reasons for Judgment, released June 16, 2005, Justice Brown allowed an application by the plaintiff brought under section 9, and ordered that the action could be continued as separate proceedings against several defendants from which the plaintiff had borrowed, including National Money Mart, and granted leave to apply for certification in each of those continued actions.

The defendants have been granted leave to appeal the June 16 decision.

National Money Mart was represented by F. Paul Morrison, John Brown, Elaine Adair and Jill Yates of McCarthy Tétrault LLP. The plaintiff was represented by Paul Bennett and Mark Mounteer of Hordo & Bennett.