There are several important issues that bear watching in the Canadian courts in connection with class actions.

1. Limitation period under the Ontario Securities Act
On August 7, 2014, the Supreme Court of  Canada granted leave to appeal in three Ontario securities class action cases: Green v Canadian  Imperial Bank of Commerce, Silver v IMAX and Celestica v Trustees of the Millwright Regional  Council of Ontario Pension Trust Fund.

These cases address how the three year limitation period under the Ontario Securities Act  applicable to secondary market class actions should be applied. To bring a secondary market class  action under the Ontario Securities Act, leave of the court is required. Pursuant to section 138.14, the action must be commenced within three  years. Securities legislation in the other provinces contain similar provisions.

On February 16, 2012, in Sharma v Timminco, the Ontario Court of Appeal interpreted this provision  to mean that plaintiffs must obtain leave from the court within the three year period to commence  the action. This was a surprising and, for many securities class action plaintiffs, an unfortunate  decision, as in many pending cases the plaintiffs not obtained leave within the three years, but  had simply applied for leave, and the three year period had already expired.

In the wake of Timminco, there were several diverging decisions. On February 3, 2014, in Green v  Canadian Imperial Bank of Commerce, a rare five judge panel of the Ontario Court of Appeal reversed  its own decision in Timminco  (with companion decisions in Silver v IMAX and Celestica v  Millwright). The Court of Appeal found that articulating an intention to seek leave to commence the  secondary market claim under the Securities Act was sufficient to suspend the limitation period, even though leave had not yet been granted to commence such an action.

It is now down to the Supreme Court for the final say on how this three year limitation period is  to be applied. The Supreme Court’s decision will have a significant impact on numerous securities  class actions already before the courts and those to come.

2. Bank faces liability for breach of privacy
On June 6, 2014, in Evans v Bank of Nova Scotia, the Ontario Superior Court at first instance has  certified a class action against the Bank of Nova Scotia for vicarious liability for, among other  claims, the tort of intrusion upon seclusion: in effect, for the breach of privacy rights of  customers of the bank whose personal financial information had been disclosed illegally to hackers  by an employee of the bank.

This is the first time such a class action has been brought against a financial institution in  connection with this  tort. The tort of intrusion upon seclusion is relatively new, having been  recognized by the Ontario Court of Appeal in 2012 in Jones v Tsige. A necessary element of the tort is that the underlying conduct must be  intentional, which includes reckless conduct. The plaintiffs did not allege that the bank acted  intentionally but instead alleged that the bank was vicariously liable for its employee’s  intentional and wrongful actions against over 600 customers. Vicarious liability per se would  attach due to the relationship of the bank to the wrongdoer not due to its own conduct. The bank has vigourously  contested whether it can be vicariously liable for the employees actions.

If the claim is maintained, it opens up an additional exposure for banks and other entities which  possess and control financial and personal information. While the non-pecuniary damages for breach  of this tort are capped at $20,000 per person, this can be signigficant when hundreds of people are  affected.

3. Court of Appeal closes door on Canadian claims involving foreign investors
The decision of the United States Supreme Court in Morrison v National Australia Bank was a  landmark in securities class litigation, in that it ruled that foreign investors in foreign  companies who purchased their securities on foreign exchanges had no right of action under US securities laws.

Until recently, some Canadian courts had agreed to accept jurisdiction in similar situations, where they found that there was a “real and substantial  connection” between the action and the jurisdiction, and had certified “global” classes – although  not all agreed (e.g. McKenna v Gammon Gold). In the wake of Morrison, some wondered whether Canada  would become the go-to jurisdiction for foreign investors whose own jurisdictions did not have  similar remedies or the means of bringing class actions.

On August 14, 2014 the Ontario Court of Appeal rendered  its decision in Kaynes v BP, plc. The  representative plaintiff, an Ontario resident who purchased his BP American Depositary Shares  (“ADS”) on the New York Stock Exchange (“NYSE”), sought to certify a class of all Canadian BP  shareholders who purchased their shares between May 2007 and May 2010 regardless of which stock  exchange was involved. He asserted a statutory right of action for misrepresentation under the Ontario  Securities Act, arguing that BP, as a “reporting issuer”, was subject to Ontario securities  legislation. BP, a UK corporation headquartered in London, sought to have the action of those  plaintiffs who purchased their securities on an exchange outside Canada dismissed for lack of  jurisdiction.

The trial court had dismissed BP’s motion. However, the Court of Appeal reversed that decision,  finding that while the Ontario courts did have jurisdiction simpliciter, they should decline that  jurisdiction on grounds of forum non conveniens. It examined the remedies available to security holders under US and UK law, noting that there was a parallel shareholder class action by BP  shareholders in the US. It also noted the relative volume of shares traded in  the three  jurisdictions, and found that 0.0005% of BP shares had traded on the TSX. Remarking that the US and  the UK assert jurisdiction on the basis of the exchange where the securities are traded, the Court  ruled that “[a]sserting Ontario jurisdiction over the plaintiff’s claim would be inconsistent with  the approach taken under both US and UK law …” and that “the principle of comity requires the court  to consider the implications of departing from the prevailing international norm or practice,  particularly in  an area such as the securities market where cross-border transactions are routine  and the maintenance of an orderly and predictable regime for the resolution of claims is  imperative”. As for the consequences to the plaintiffs, the Court stated that “[i]t would surely  come as no surprise to purchasers who used foreign exchanges that they should look to the foreign  court to litigate their claims”.

Given BP’s concession that the Ontario court did have jurisdiction over the claims of those members  of the class who had purchased their shares on the TSX, the Court granted leave to amend the claim  accordingly. It seems unlikely, however, that those plaintiffs will pursue the claim, given that of  the total of 83,945 ADS which had  traded on the TSX, the number held through the end of the  proposed class period was somewhere between 14 and 7,477.