​​The Ontario Court of Appeal has upheld​ a lower court's discretionary decision not to grant retroactive leave to a class of litigants who required the backdated relief in order to keep them inside the relevant limitation period under the Securities Act.

The plaintiff in Pennyfeather v. Timminco Limited commenced a proposed class action for misrepresentation in the secondary securities market, under the statutory cause of action set out in the Securities Act.

Ordinarily, the Ontario Class Proceedings Act suspends a ticking limitation period as of the commencement of a class proceeding. However, the statutory relief sought by Pennyfeather's class on the basis of Timminco's alleged misrepresentation in the securities market was subject to a three-year limitation period under the Securities Act. That limitation period was intended to prevent lingering claims from unduly affecting the market.

At the time that Pennyfeather's proceeding was commenced, it was a commonly held misconception that the Class Proceedings Act tolled the three-year limitation period contained in the Ontario Securities Act. The Supreme Court of Canada has since clarified that such tolling can only occur after leave to bring a secondary market claim under the Securities Act has been granted in the class action, and the statutory remedy has been asserted.

Having not yet been granted leave as a class, and facing a closing limitation period, Pennyfeather sought "conditional leave" in order to anchor a date that could apply as the retroactive pinpoint, if leave were ultimately obtained. The motions judge sided with Pennyfeather, holding that an intention to pursue the statutory claim was sufficient to allow the Class Proceedings Act to toll the limitation period under the Securities Act. This decision was then reversed on appeal on the basis that a mere intention to seek leave was in fact not only insufficient, but undermined the purpose of the Securities Act limitation period, which was to expediate secondary market claims.

Pennyfeather then brought a motion for ​retroactive leave, effective as of the date of the "conditional leave" motion, thereby bringing the claim within the limitation period. The motion judge held that such relief was inappropriate; Pennyfeather appealed to the Court of Appeal.

The Court of Appeal declined to interfere with the motion's judge's discretionary decision, and noted that Pennyfeather had not taken clear steps to expedite the action. Of particular note was the languishing of the action while settlement discussions were underway; the Court held that such endeavours did not absolve Pennyfeather from the expectation that the action be pursued swiftly.