Date: 19990315 Docket: A982836 Registry: Vancouver IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: ALFREDA HOWARD, in her capacity as Executor of the Estate of James Ernest Howard, and JANET MAJNARICH, in her capacity as Executor of the Estate of Josephine Majnarich PLAINTIFFS AND: HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF BRITISH COLUMBIA DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE PITFIELD Counsel for the Plaintiffs: J. MacMaster, W. Branch, D. Lebans, J. Motiuk Counsel for the Defendant: G. Copley, Q.C., J. Eastwood Place and Date of Hearing: Vancouver,, B.C. February 12, 1999 Introduction [1] This is an application for an order certifying the action commenced by the plaintiffs Howard and Majnarich against the defendant as a class proceeding under the Class Proceedings Act, R.S.B.C. 1996, c. 50. [2] The action relates to the recovery of probate fees paid pursuant to the Supreme Court Rules, B.C. Reg. 221/90 as specifically amended by B.C. Reg. 30/97 and follows upon the decision in Re Eurig Estate (1998), 165 D.L.R. (4th) 1 (S.C.C.), in which the Supreme Court of Canada held that the Ontario probate fee was a tax which had not been lawfully enacted by the legislature of that province. [3] Ms. Howard applies for certification of a class comprised of all estates in British Columbia which paid a fee after April 1, 1998 to obtain a grant, or ancillary grant, of probate or letters of administration or to reseal a grant of probate or letters of administration under the Probate Recognition Act, R.S.B.C. 1996, c. 376. Ms. Howard seeks appointment as the class representative. [4] Ms. Howard applies for certification of the following questions described as common issues: 1. Is there a nexus between the probate fee and the cost of the service provided by the defendant? 2. Is the revenue earned from the probate fee intended for a public purpose rather than to simply offset the cost of providing the service? 3. Does the probate fee violate the Constitution Act, 1867? 4. Is the probate fee invalid and unenforceable? 5. Is the defendant's imposition of the probate fee or the failure to repay the Fee to class members unjust, discriminatory, oppressive or an abuse of authority? 6. Is the class entitled to restitution of amount paid in relation to the probate fee? [5] The defendant opposes the application for certification and submits the following: (i) Ms. Howard is not an appropriate class representative; (ii) a class proceeding is not the preferable procedure for the fair and efficient resolution of the issues in dispute; and (iii) other means of resolving the claim are more practical and efficient. [6] S. 4 of the Class Proceedings Act, provides that I must certify the proceeding as a class proceeding if, having exercised discretion in a judicial manner, I conclude that all of its requirements have been satisfied. S. 4(1) provides as follows: 4(1) The court must certify a proceeding as a class proceeding on an application under section 2 or 3 if all of the following requirements are met: (a) the pleadings disclose a cause of action; (b) there is an identifiable class of 2 or more persons; (c) the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members; (d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues; (e) there is a representative plaintiff who (i) would fairly and adequately represent the interests of the class, (ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and (iii) does not have, on the common issues, an interest that is in conflict with the interests of other class members. Consideration of S. 4 Requirements Do the Pleadings Disclose a Cause of Action? [7] Ms. Howard, in her capacity as executor of the estate of James Ernest Howard, paid the sum of $3,304 to obtain a grant of probate in respect of an estate valued at somewhat in excess of $260,000. Payments on account of the fee were made March 17 and May 8, 1998. [8] Ms. Majnarich, in her capacity as executor of the estate of Josephine Majnarich, paid a fee of $14,008 on September 17, 1998 to obtain a grant of probate in respect of an estate valued at $1,024,076.41. [9] The plaintiffs plead that the fee was a direct tax imposed upon them because there was no nexus between the fee and the cost of the service provided by the defendant. The plaintiffs say the revenue earned from the fee was intended for a public purpose rather than merely off-setting the cost of providing the service. They also plead that the defendant did not have the authority to impose the tax by virtue of the Constitution Act, 1867. The statement of claim, as amended, purports to paint the issue with the brush used by the Supreme Court of Canada in Re Eurig Estate. [10] The plaintiffs plead that the defendant has been unjustly enriched at the expense and to the detriment of the plaintiffs without reason for the enrichment or corresponding deprivation; the defendant is a constructive trustee and the monies paid by the plaintiffs are impressed with the trust in their favour; and the defendant's imposition of the tax and failure to repay it to the plaintiffs is unjust, discriminatory, oppressive and an abuse of authority. [11] In their amended pleading, the plaintiffs claim the following relief: 1. an order certifying the proceeding as a class proceeding; 2. a declaration that the provisions of B.C. Reg. 221/90, Appendix C, Schedule 1, s. 20 are invalid and unenforceable; 3. general and special damages; 4. restitution; 5. a declaration of trust over sums received by the defendant by reason of the foregoing; 6. costs pursuant to s. 37 of the Class Proceedings Act, R.S.B.C. 1996, c. 50; 7. interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79; 8. such further and other relief as to this Honourable Court may seem just. [12] The defendant contends that the plaintiffs' have framed their cause of action as the absence of a nexus between the fee charged and the cost of the service provided by the defendant upon the payment thereof. The defendant says it is "plain and obvious" that the amended statement of claim discloses no reasonable cause of action. The "plain and obvious" test is that employed in striking out pleadings under Rule 19(24) of the Supreme Court Rules (Hunt v. Carey Canada Inc., [1993] 4 S.C.R. 289 (S.C.C.)). [13] In my opinion, the defendant does not properly describe the plaintiffs' cause of action. The substance of the plaintiffs' claim is the right to recover amounts described as probate fees which were paid to the defendant. [14] The first step necessary to the success of the claim is a finding that the probate fee is a tax which was not lawfully enacted by the defendant. [15] The next step in the process is a determination with respect to a right of recovery based upon the remedies of unjust enrichment or constructive trust or a finding that the requirement of payment was unjust and discriminatory, oppressive and an abuse of authority. [16] While the pleading could have been more succinctly expressed, I am satisfied that when read in its entirety the amended statement of claim discloses a cause of action, namely, a right to recover amounts which constitute a tax for which there was no legislative authorization. [17] As a result, the requirement in s. 4(1)(a) of the Class Proceedings Act is satisfied. Is there an Identifiable Class of Two or More Persons? [18] Two persons are named in the action. Each has paid a fee since April 1, 1997 pursuant to the disputed regulation. Affidavit evidence filed by the defendant in the certification application contains an estimate that in the period July through December, 1998, probate was granted in relation to more than 6,500 estates, each of which had a value in excess of $50,000. [19] The executors or administrators of estates who have paid amounts in relation to probate where the value of the estate exceeds $50,000 since April 1, 1997 may be easily identified. These executors or administrators comprise an identifiable class. [20] Accordingly, the requirement of s. 4(1)(b) of the Class Proceedings Act is satisfied. Do the Claims of the Class Members Raise Common Issues, Whether or Not those Common Issues Predominate over Issues affecting only Individual Members? [21] One issue in relation to any claim for the recovery of an amount paid to obtain a grant of probate is the constitutional validity of the fee. Without a determination of that issue in favour of the plaintiffs or any class of plaintiffs, no action will succeed. [22] A second, and equally important, issue is whether, if the impugned regulation is found to be unconstitutional, there is a right to recover an amount paid as an unlawful or unconstitutional tax. In this respect, the court will be required to consider the merits of the general claim that a payor may recover an amount paid to the defendant as an unconstitutional tax. If a right to recover is found to exist, the court will be obliged to consider whether the right of recovery is affected by the fact that a claimant is a person who made payment under protest before October 23, 1998; a person who made payment without protest before October 23, 1998; a person who made payment under protest after October 22, 1998; or, lastly, a person who made payment without protest after October 22, 1998. October 22,1998 is the date on which the Supreme Court of Canada released its reasons in Re Eurig Estate. [23] All members of the class will be affected by a consideration of the first issue. All members of the class will fall into one of the four categories which may require separate consideration. [24] I am satisfied that the common issues of constitutional validity and the significance of protest before and after the Eurig decision will predominate over any issues which may be of concern to any individual member of the class. The only issues unique to each separate estate are the value of the estate and the amount paid to obtain a grant of probate or letters of administration. Neither issue is contentious. [25] Thus, the requirement of s. 4(1)(c) is satisfied. Is Ms. Howard a Suitable Representative Plaintiff? [26] The defendant does not dispute the fact that Ms. Howard would fairly and adequately represent the interests of the class or the fact that an appropriate plan setting forth a workable method of advancing the proceeding on behalf of the class and notifying members of the class has been provided to the court. [27] The defendant's objection to the appointment is that, on the common issues, the representative has an interest that is in conflict with the interest or interests of other class members. [28] In this regard, I observe that the issue of whether the probate fee is or is not a tax is common to all members of the class. No member of the class can be in conflict with another on that point. [29] With respect to the right of recovery, the representative plaintiff does not appear to me to be in conflict with any other claimant. [30] All members of the class must be concerned with the general question of whether recovery by any claimant will be permitted. The representative is a plaintiff who did not pay under protest but who made payment before release of the Supreme Court of Canada decision in Eurig. No claimant who did not pay under protest after October 21, 1998 has been identified in this proceeding. [31] It is not evident, at this point in time, that the claim of an estate which did not pay under protest is so different from as to be in conflict with the claim of an estate which paid under protest. In the event a conflict does become apparent as the matter progresses, the court may amend the certification order to accommodate the change in circumstances in the manner contemplated by s. 10(1) of the Class Proceedings Act. [32] I am satisfied that Ms. Howard is a suitable representative plaintiff on behalf of the class at this point in time. Is a Class Proceeding the Preferable Procedure for the Fair and Efficient Resolution of the Common Issues? [33] The final matter to be addressed is whether a class proceeding is the preferable procedure for the fair and efficient resolution of the common issues as I have described them. The court is obliged to consider all relevant matters including those specified in s. 4(2) of the Class Proceedings Act providing as follows: 4(2) In determining whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues, the court must consider all relevant matters including the following: (a) whether questions of fact or law common to the members of the class predominate over any questions affecting only individual members; (b) whether a significant number of the members of the class have a valid interest in individually controlling the prosecution of separate actions; (c) whether the class proceeding would involve claims that are or have been the subject of any other proceedings; (d) whether other means of resolving the claims are less practical or less efficient; (e) whether the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by other means. [34] The questions of fact or law as they have been outlined in the statement of claim predominate over any questions affecting only individual members. Nothing is pleaded in the statement of claim which suggests that the individual circumstances of any member is a determinant or should be a determinant in the right to recovery. The claim is based entirely upon the allegation that the fee is an unconstitutional tax, and a right of recovery arises in respect of any payment made after April 1, 1997 with or without protest. [35] No member of the class has a valid interest in individually controlling the prosecution of a separate action. There is a community of interest in the claim. No individual should want to control the prosecution of any action by reference to individual circumstances. [36] If this action is not certified as a class proceeding, it is reasonable to assume that there will be other claims by other estates for the recovery of amounts paid to the defendant. A cost would be associated with the commencement of each of those claims, both from each plaintiff's point of view and that of the defendant. An unnecessary proliferation of individual actions would be the result with corresponding unnecessary cost and inconvenience in the administration of justice. [37] In this regard, there is no evidence from which I can or should conclude that the administration of the class proceeding would create greater difficulties than those likely to be experienced if relief were sought by some or all of more than 6,500 potential plaintiffs. [38] The final matter for consideration is whether other means of resolving the claims would be more practical or more efficient. In this regard, the defendant points to the fact that at the root of this action is a challenge to the constitutional validity of a fee levied by the defendant. The defendant says that the Supreme Court of Canada's ruling in Guimond v. Quebec, [1996] 3 S.C.R. 437, supports the proposition that actions challenging the constitutional validity of legislation should not generally be certified as class actions. The defendant refers specifically to the reasoning of Gonthier J., at page 361: ... While it is true that it is not necessary to pursue a class action to obtain a declaration of constitutional invalidity and[,] therefore, that it is generally undesirable to do so, it is not necessary, in this case, to canvass whether or not there resides a residual discretion to deny authorization should the constituent criteria of art. 1003 be met. [39] The statement that challenges to constitutional validity should not generally be certified as class proceedings is obiter. For purposes of this application, I adopt the reasons of Reed J. in Pawar v. Canada (1997), 137 F.T.R. 231 (Fed. Ct.), at page 234 as follows: I do not find that the Prothonotary mischaracterized the facts or that he misapplied the appropriate law. The comments at page 361 of the Guimond decision relate to a provision of the Quebec Civil Code of Procedure. It differs in content from the rule 1711 [of the Federal Court Rules]. More importantly, however, those comments are obiter and leave open the question of when a class action is an appropriate vehicle for pursuing a challenge to the constitutionality of a legislative provision. For the reasons given by the Prothonotary, the circumstances in this case are of such a type as to make it appropriate to allow the litigation to be pursued by way of a class action. [40] Certification is appropriate in this case notwithstanding the constitutional challenge. The principles underlying class proceedings are the promotion of judicial economy and efficiency, the finality of dispute resolution, and the availability of a means to ensure that all those affected by the subject matter of the dispute have an opportunity to put their position before the court. The facts of this action in the context of those principles point to the suitability of certification in this case. [41] The efficient and economic use of judicial resources compels certification where there may be as many as 6,500 claimants with essentially the same claim. [42] While the question of constitutional validity might be settled once and for all in a single action, the remaining issue of the right of recovery would not necessarily be resolved in that action given the existence of at least four different categories of payor. It is in the interests of the community of complainants and the administration of justice, that the issue of recovery be finalized for all who have paid the fee, should it be found to constitute an unconstitutional tax. No issue should be left, if at all possible, to be determined in a series of subsequent individual actions. [43] Finally, it is trite that litigation does not come without significant economic cost to the litigant. The amounts in dispute in relation to these two plaintiffs may not justify the assumption of the economic burden of this litigation for themselves or on behalf of other claimants. The practical reality is that, absent certification, the issues in this case may go unresolved because of the relatively insignificant quantum of any individual claim. That result would be unfair and should not be encouraged when the claims, in aggregate, are substantial. [44] Certification will have meritorious consequences and will move the litigation along. The opportunity always exists to vary the order of certification to accommodate the litigation as it develops having regard for the need to ensure fairness and promote the legitimate objectives of the Class Proceedings Act. [45] The plaintiffs' application for certification is granted. Common Issues [46] In my opinion the plaintiffs' statement of the common issues is unduly narrow. The common issues for the class are the following: 1. Is the amount payable after April 1, 1997 pursuant to B.C. Reg. 221/90 as amended by B.C. Reg. 30/97 in relation to the grant of probate or letters of administration to an estate with a value in excess of $50,000 a tax? 2. If the amount payable is a tax, is the tax lawful having regard for the Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3. 3. If the amount payable is an unlawful tax: (a) is recovery of the amount paid permitted to any person? (b) if recovery is permitted, is it permitted to a person who paid: (i) without protest prior to October 23, 1998? (ii) under protest prior to October 23, 1998? (iii) without protest after October 22, 1998? (iv) under protest after October 22, 1998? [47] The parties may speak to the form of certification order required by s. 8 of the Class Proceedings Act. [48] The plaintiffs' action arises because of the manner in which the defendant imposed charges with respect to the probate or grant of letters of administration of estates within the province. There is a vast number of such estates in the period covered by this action, namely from April 1, 1997 forward, particulars of which are known to the defendant. [49] In the circumstances, the burden of the cost of informing members of the class of the certification of this action shall be assumed by the defendant. "Pitfield, J."