In Knisley v. Canada (Attorney General), 2025 ONCA 185, the Attorney General of Canada appealed from a certification of a class action proceeding “subject to the class definition being amended to the satisfaction of the parties and the court.”
“We consider that this is a win for us,” said class counsel Darryl Singer of Diamond & Diamond, noting that Canada was unsuccessful on a number of other grounds of appeal and won only on a technical ground.
Darryl Singer, Diamond & Diamond
The respondent was a veteran of the Canadian Armed Forces. He joined in 2007 and was deployed to Afghanistan. In 2009, he was injured by an improvised explosive device, resulting in “amputation of his entire right leg at the hip, a traumatic brain injury, hearing loss, a scrotal injury, renal failure and ulnar nerve damage.”
He alleged that Canada incentivizes people to join the military by offering them entitlement to various benefits and programs, which include statutory disability benefits and disability awards under the Veterans Well-being Act, which is administered by Veterans Affairs Canada (VAC).
The respondent claimed that from 2009 to 2015, “VAC’s administration of his applications was marked by errors and delays that caused him significant psychological harm and aggravated his physical injuries.”
His leg amputation was wrongly assessed as being high-above knee, resulting in a 68 per cent disability, instead of closer to 100 per cent. Due to this assessment, he was “awarded a disability benefit for an injury substantially less serious than the one he sustained” and many months later was assessed at 89 per cent.
He also said that VAC wrongfully withdrew his hearing loss application without his knowledge, despite a completely ruptured eardrum and extensive medical documentation proving such. It also withdrew applications for compensation for renal failure and injury to his right arm without explanation.
VAC’s Service Standard for Disability Benefits is that 80 per cent of decisions are to be made within 16 weeks for first applications and reassessments, and 12 weeks for departmental reviews. The motion judge, Justice Phillip Sutherland, said that “VAC has not, at any time, attained this 80 per cent target.” By 2022, that percentage only rose to 46.
The respondent claimed that because of VAC’s failures to adhere to these standards and make timely payments, veterans have suffered damages, as many cannot move forward with their livelihoods, recovery or employment and do not know when their applications will be adjudicated.
The motion judge found that only the claim of negligence constituted a valid cause of action and rejected claims of breaches of Charter rights, fiduciary duty, contract and negligent misrepresentation. As well, the court found that the class as defined did not satisfy the identifiable class requirement and should be amended.
Canada appealed from the determination that the claim in negligence was valid and the finding that there were common issues and a class action was the preferable procedure. The appellate court found that conditional certification should not be granted unless the class as defined was directly impacted by common issues.
The motion judge had rejected the class definition as it limited the claims to those who were presently in case management, omitting “veterans that may be within the breadth of the cause of action but are excluded due to the definition.”
The evidence showed that veterans move in and out of case management at different times. Some veterans in case management are not receiving disability benefits, while some who are not in case management do receive benefits.
The appellate court found that in a circumstance where the class definition is not acceptable, the motion judge should either amend it to make it acceptable or dismiss the motion.
As well, the Class Proceedings Act does not contemplate “conditional” certification, the appeal court found. Issues arise from such a certification, including the parties not agreeing on a definition or finding one the court does not accept. Potential problems may also include what to do with a conditional certification if there is no workable class definition, and whether the certification simply lapses or needs to be decertified. The appeal route is also unclear, the appellate court found.
“The determination of an identifiable class is a crucial aspect of the certification process,” wrote Justice Ian Nordheimer in the decision. “It establishes whose rights are going to be determined in the proceeding and, consequently, it determines who has the right to opt out of that determination.”
“It is not acceptable to purport to certify a proceeding as a class action with that critical aspect undetermined. I would add, on that point, that almost a year has passed since the motion judge’s order and there is still no identifiable class.”
Singer said the most important thing in this case is that Justice Sutherland had rejected the government’s major argument that there was no negligence as there was no proximity, which was upheld by the Court of Appeal.
Justice Nordheimer agreed with the lower court that sufficient proximity was established in the relationship between VAC and veterans such that harm to veterans arising from misadministration of services for them was reasonably foreseeable. It would be known to VAC that veterans would be harmed if it failed in its obligation to properly administer the benefits system.
“If a government … chooses to establish a benefit system directed at a specific group of individuals, who may be enticed by that system to agree to join a government mandated operation … then policy considerations would appear to favour the conclusion that the government will administer that system in the best interests of those to whom it applies, and be held accountable if it does not,” said Justice Nordheimer.
Singer said these comments are applicable to many cases, including another proposed class action against Cadets Canada by women who were allegedly assaulted while in the Army Cadets by commanding officers, cited as Lockhart v. Canada (Attorney General), 2024 ONSC 6573. In that case, the federal government brought similar arguments against proximity and duty of care owed.
He expects the action to be certified once a workable class definition is presented.
“Even if Justice Sutherland has to undertake the analysis again, he has already undertaken the analysis and come out in our favour. And now on top of that, we have Justice Nordheimer’s comments, so I can’t imagine that Justice Sutherland is going to change his analysis of the remaining factors.”
The order of the motion judge to conditionally certify the class action was set aside and the matter was remitted for reconsideration and determination of an identifiable class. Justices Lene Madsen and Renee Pomerance agreed. Canada was entitled to costs of $30,000.
Counsel for the appellant were Kathryn Hucal and Monisha Ambwani of Justice Canada.
The respondent was also represented by Mathura Santhirasegaram and Shir Zisckind of Diamond & Diamond Lawyers and Ronald Davis and Shannon Reid of Fogler, Rubinoff LLP.
Editor’s note: This article has been updated to include comments from Darryl Singer.
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