A broad and expansive approach the Court’s inherent jurisdiction to do justice between parties by granting orders nunc pro tunc (or with retroactive effect) formed the basis of Justice van Rensburg’s decision in favour of the plaintiffs in Silver v. Imax1 to address the expiry of a limitation period to commence an action under Part XXIII.1 of the Ontario Securities Act (the “OSA”) while the motion for leave was under reserve.
In Silver v. Imax, Imax brought a motion to dismiss the plaintiffs’ claims for secondary market misrepresentation on the ground that it was statute-barred under section 138.14 of the OSA. In accordance with section 138.14 of the OSA, claims for misrepresentations in public disclosure documents must be commenced within three (3) years of the alleged misrepresentations. In accordance with section 138.8 of the OSA, no action may be commenced under section 138.3 of the OSA without leave of the court.
Imax argued that the alleged misrepresentations to the secondary market were made between February 17 and March 9, 2006, and although the Statement of Claim pleaded that the plaintiffs intended to bring a motion for an order to seek leave to proceed with the statutory misrepresentation claims and such motion was brought and heard within the limitation period, leave was granted and the Amended Statement of Claim was issued more than three years after the alleged misrepresentations. Notably, Silver v. Imax was the first action under Part XXIII.1 of the OSA to proceed to a hearing on the leave motion.
Justice van Rensburg’s decision to dismiss Imax’s motion and amend nunc pro tunc the order granting leave under section 138.8 of the OSA stands in contrast to the recent decisions Sharma v. Timminco Limited2 and Green v. CIBC3, which applied a stricter approach to the statutory limitation period.
In Sharma v. Timminco Limited, the Court of Appeal held that the limitation period in section 138.14 of the OSA is not suspended by section 28 of the Class Proceedings Act, 1992. In Bell v. CIBC, Strathy J. dismissed a motion for leave under section 138.8 of the OSA when the motion was argued after the limitation period had already expired. While recognizing the unfairness in the result, Strathy J. considered himself bound by the decision in Sharma v. Timminco Limited to dismiss the action for statutory secondary market misrepresentation.
Justice van Rensburg, however, held that the court is not precluded from granting nunc pro tunc relief when dealing with the limitation period under section 138.14 of the OSA. Justice van Rensburg noted that unlike the situation in Sharma v. Timminco Limited, the plaintiffs moved expeditiously to advance the motion for leave and there was nothing more that the plaintiffs could have done to comply with the limitation period. Further, Justice van Rensburg noted that a “material difference” between Green v. CIBC and Silver v. Imax was that the limitation period in Green v. CIBC had already expired when the motion for leave was argued, whereas the limitation period in Silver v. Imax expired while the decision on the leave application was under reserve. Justice van Rensburg noted that in any event, her Honour would nevertheless take a more expansive approach to the court’s authority to grant orders nunc pro tunc and reasoned that the ability of the court to make an order nunc pro tunc ensures that the rights of the parties will not be impacted arbitrarily by the court’s schedule. According to Justice van Rensburg, “no public interest would be served by permitting a cause of action to be defeated by delays inherent in the litigation process”.
In appropriate circumstances, Silver v. Imax provides a limited foundation for plaintiffs to attempt to overcome impact of the statutory limitation period in the OSA and distinguish their cases from other recent decisions that have applied a stricter approach to limitation periods to secondary market misrepresentation claims. An appeal of Justice van Rensburg’s decision, however, would not be surprising given other recent decisions that have provided defendants with cause for optimism that the courts are developing a restrictive approach to securities misrepresentation cases.