The Supreme Court of Canada has granted leave to appeal in three securities class action cases in which the defendants seek to enforce the three-year limitation period for commencing statutory secondary market securities class action claims in Ontario. All three appeals are from a February 2014 decision in which the Court of Appeal for Ontario overturned its own earlier decision that applied the three-year limitation period.
In its February 2012 decision in Sharma v. Timminco Limited, the Court of Appeal held that a statutory secondary market claim under the Ontario Securities Act is statute-barred if leave of the court to commence the action is not granted within three years from the date of the alleged misrepresentation or failure to make timely disclosure. The court further held that section 28 of the Class Proceedings Act does not suspend the running of the limitation period in favour of class members until leave to commence the action has been obtained.
In its February 2014 decision involving the three cases now appealed to the Supreme Court, the Court of Appeal held that its earlier decision in Timminco was incorrect. The Court of Appeal held that a secondary market securities class action is “commenced” when the statement of claim is filed — not when leave of the court is granted — and that filing the statement of claim “asserts” the statutory cause of action for the purposes of suspending the three-year limitation period.
The three cases that are now under appeal to the Supreme Court engage the three-year limitation period in different ways. In Green v. Canadian Imperial Bank of Commerce, the limitation period expired after the plaintiffs brought their motion for leave and certification, but before the motion was argued. The Timmincodecision was released in the midst of the motion hearing, and led the motions judge to dismiss the statutory component of the action as statute-barred. In Silver v. IMAX, the limitation period expired after the hearing of the plaintiffs’ motion for leave and certification, but before the motion was decided. The motions judge held that she had jurisdiction to grant the plaintiffs leave to proceed retroactively. In Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v. Celestica Inc., the limitation period expired before the plaintiffs brought their motion for leave and certification. The motions judge held that the limitation period applied, but that there were “special circumstances” relieving the plaintiffs from compliance with the limitation period.
In addition to the issues relating to the limitation period, the Supreme Court will also hear arguments as to whether the Court of Appeal applied the correct test in overturning its previous decision; whether the Court of Appeal applied the correct standard for granting leave to proceed under the Securities Act; and whether it is appropriate to certify common law misrepresentation claims alongside statutory secondary market misrepresentation claims. The Supreme Court has not previously considered the matters at issue in these appeals. However, the Supreme Court has granted leave to appeal in Theratechnologies Inc. c. 121851 Canada Inc., a case that deals with the leave standard under the secondary market liability provisions of the Quebec Securities Act. For more details on the Québec Court of Appeal decision, see our July 2013 Blakes Bulletin: Statutory Secondary Market Misrepresentation Claims: Quebec Court of Appeal’s First Decision. TheTheratechnologies appeal is tentatively scheduled to be heard by the Supreme Court in December 2014.