The decision was welcomed by James Bliss Wilson, one of three patients who are suing Dr. Rajgopal Menon and the former Regional Health Authority 7.
"Somebody has to be held accountable," Wilson said outside the appeal court in Fredericton.
"As far as I'm concerned that's the most important thing for me."
Chief Justice J. Ernest Drapeau and Justice Alexandre Deschenes ruled that a lower court decision denying the lawsuit is out of step with the Supreme Court of Canada's interpretation of certification legislation.
Justice Joseph Robertson wrote a dissenting opinion, saying a class-action is not the preferable procedure for a fair and efficient resolution of the dispute.
In March 2012, the Court of Queen's Bench dismissed the class-action suit sought by three of Menon's patients, concluding that the plaintiffs failed to establish an identifiable class. Those plaintiffs are Wilson, Albert John Gay and Kimberley Ann Doyle.
David Hashey, lawyer for the former Regional Health Authority 7, said he was disappointed the earlier court decision was overturned.
"We were arguing that they were individual cases, that everybody subject to a medical case is an individual," he said. "The court has decided otherwise and we'll see where we go from here."
A lawyer for Menon declined comment outside court Thursday.
Menon worked as a pathologist at the Miramichi Regional Hospital between 1995 and 2007 until an audit of his work found 18 per cent of 227 breast and prostate cancer reports were incomplete. The review also concluded that three per cent of those tests were incorrect.
A later review of 23,000 tests done by Menon found a complete or partial change in the results in about a quarter of the cases. A public inquiry in 2007 concluded that the hospital had hired Menon in a rush and without proper background checks on his level of competency.
In an amended statement of claim, the plaintiffs allege the health authority's conduct fell below the reasonable standard of care expected of it. The document also alleges the authority is vicariously liable for all loss or damage caused by Menon, who they allege was not competent.
The plaintiffs say in their amended statement of claim that they have endured pain, mental distress and loss of life expectancy as a result of the pathology errors.
In an amended statement of defence, the health authority denies all allegations of negligence and breaches, saying it relied on Menon that he was appropriately qualified to practice pathology.
Menon has not filed a statement of defence.
The allegations have not been proven in court.
Wilson said he had biopsies done between 2004 and 2007 but didn't learn he had prostate cancer until the original test results were reviewed in 2007.
"Had it showed up the first time I probably would have had surgery and that would have been it, but by the time they found it, it was on both sides of my prostate, and that required treatment," Wilson said.
"I'm still on medication and will be for the rest of my life."
Raymond Wagner, one of the lawyers for the three plaintiffs, said the class-action lawsuit could involve more than 15,000 people who received letters from the health authority informing them their pathology tests may have been misread.
Lawyers for Menon and the health authority have 60 days to decide whether to appeal Thursday's ruling to the Supreme Court of Canada.