In a decision relating to two proposed class proceedings – Pavlioglu et al. v. FinanceIt Canada Inc. and Quinn v. Vault Home Credit Corporation – the Ontario Superior Court considered the novel question of whether to grant the plaintiff’s “unprecedented” request for temporary stays of an indeterminate number of present and future related individual actions commenced by or against potential class members. The Court found that proposed class members were not “strangers” to the pre-certification class proceeding and the plaintiffs had standing to bring the stay motion in respect of the proposed class members’ related proceedings, but that a blanket stay of all the related proceedings did not meet the test prescribed in section 13 of the Ontario Class Proceedings Act.
Background
The decision of Pavlioglu et al. v. FinanceIt Canada Inc.; Quinn v. Vault Home Credit Corporation, 2026 ONSC 1416, relates to two proposed class actions against two separate corporations – FinanceIt Canada Inc. and Vault Home Credit Corporation. Both actions allege that the defendant corporations engaged in unlawful business practices in respect of loans associated with HVAC and home improvement purchases, and seek to represent classes of consumers who are or were party to a loan agreement with either FinanceIt or Vault.
The plaintiffs sought temporary stays of an indeterminate number of related proceedings (“Related Proceedings”) brought by the defendants against potential class members to enforce loan agreements in default and brought by potential class members against the defendants to terminate loan agreements. The best evidence before the Court was that there were at least several hundred of these Related Proceedings outstanding at the time of the motion hearing.
All parties agreed the relief sought by the plaintiffs was “unprecedented” in class proceedings, as most stay applications brought under the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”) were either brought by a defendant to stay parallel individual actions brought against them, or by plaintiffs seeking to stay overlapping class actions.
The defendants challenged the plaintiffs’ stay application on the basis that the plaintiffs did not have standing to seek a stay. The defendants also argued that the test the plaintiffs were required to meet was the RJR-MacDonald test for an interlocutory injunction, not the test developed under section 13 of the CPA, and that in any event, the plaintiffs could not meet the test for a stay under either test as an indefinite stay of the Related Proceedings would significantly prejudice the defendants.
Potential Class Members are Not “Strangers” to Pre-Certification Class Actions, Have Standing to Bring Stay Motions
The motion judge did not accept the defendants argument that the plaintiffs lack standing to bring the stay motion because it was advancing the purported interest of potential class members, who they argued are “strangers” to the action pre-certification.
First, the motion judge found that the CPA specifically contemplates that a proposed representative plaintiff or proposed class member may bring a stay motion under section 13, based on the definition of “party” and “class member” under section 1(3) of the CPA. Further, there is no requirement under the CPA that the plaintiffs themselves be parties to a related proceeding to bring a stay motion. Rather, section 13 of the CPA specifically contemplates that a party or class member may bring a motion to stay any related proceeding.
Second, the motion judge rejected the argument that proposed class members are “strangers” to the litigation, whether pre-certification or even if they are never parties to the litigation after certification, on the basis of existing class action jurisprudence, which has held that there is a “sui generis” relationship between proposed class members and representative plaintiffs’ lawyers. Further, the motion judge noted that other features of the class action regime, including the court’s supervisory jurisdiction over potential class members, confirm that pre-certification class members are not strangers to the action.
Appropriate Test for Stay of Actions Brought by Defendants Against Potential Class Members is Set Out in Section 13 of CPA
The motion judge also considered the appropriate test for a stay motion in the circumstances where the court is asked to stay individual actions brought by class action defendants against potential class members. The parties agree that this was a novel issue and has yet to be considered by the courts.
The plaintiffs argued the usual test for a stay under section 13 of the CPA applied, whereas the defendants argued that because the plaintiffs sought to stay actions by the defendants, the ordinary test could not apply, and the plaintiffs instead were required to meet the RJR-MacDonald test for an interlocutory injunction.
The motion judge found no reason to depart from the test for a stay under section 13 of the CPA that has been developed in the specific context of Ontario’s class action regime, noting that the usual test for a stay under section 13 has been applied in a variety of contexts. Further, the motion judge noted that section 13 does not include qualifying language as to the type of individual action sought to be stayed.
Test for a Stay Not Met as No Substantial Overlap Shown and Blanket Stay would Result in Injustice
The motion judge found that the plaintiffs failed to meet the test for a stay under section 13 of the CPA.
In particular, the motion judge found there was no evidence that there was a substantial overlap in the issues between the class actions and all the Related Proceedings. The motion judge highlighted that, “unlike all other stay decisions”, the plaintiffs in this case did not present a list of actions. Rather, the plaintiffs were asking the court to compare the class actions to hundreds of pleadings that were not identified, not in evidence, and that did not yet exist insofar as the stay applied to future Related Proceedings. As such, the motion judge could not conclude the substantial overlap criterion was met.
Further, the motion judge considered the prejudice to each party if a stay was granted or refused, in terms of access to the courts, delay, or harm to a party’s substantive rights. Having considered the defendants’ evidence on the impact of a stay of the Related Proceedings on their businesses, the motion judge found that the requested stay was a “far-reaching” order that would result in injustice against the defendants.
Disclosure of Class Proceedings to Proposed Class Members
Finally, the motion judge addressed the concern raised by the plaintiffs that some proposed class members may not be aware of the class actions and therefore may not know that there remained an option for a stay and to seek advice accordingly.
The motion judge found that there was no principled reason why the requirement that defendants must make full disclosure of a class proceeding when negotiating settlements should be limited to circumstances where a settlement is pending. Accordingly, pursuant to the court’s power under section 12 of the CPA, the motion judge ordered that the defendants disclose the proposed class proceedings, and the names and contact information of class counsel, to the consumers in the Related Proceedings, whether the consumers are plaintiffs or defendants in those actions.
Key Takeaways
Despite their limited rights as compared to named plaintiffs or post-certification class members, pre-certification class members are not to be treated as if they are any other non-party or “strangers” to the action. Proposed class members are connected to a proposed class action, and can benefit from the suspension of limitation periods, have standing to bring a stay action, and can be subject to court-ordered conditions imposed on defendant’s communications to them.
Further, this decision confirms that section 13 of the CPA provides broad authority to the court in respect of stay applications which relate to proposed class proceedings, including in novel circumstances.
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