In a decision with important ramifications for securities class actions across Canada, the Supreme Court of Canada has denied leave to appeal in Sharma v. Timminco, thereby upholding the Court of Appeal for Ontario’s decision that the Ontario Securities Act requires a plaintiff to obtain leave to proceed with a statutory claim for misrepresentation in the secondary market under Part XXIII.1 within three years of the date that the alleged misrepresentation is made. If a plaintiff does not obtain leave and commence its action within three years, the claim will be statute-barred under section 138.14. The Supreme Court’s decision comes on the heels of Green v. CIBC, in which Justice Strathy followed Timminco in dismissing the plaintiffs’ claims on the basis that this limitation period had expired. (For a summary of Green v. CIBC please see our Osler Update of July 5, 2012.)

Taken together, Timminco and CIBC are expected to lead plaintiffs to seek leave to commence actions under Part XXIII.1 more quickly, as the implications of failing to obtain leave within the three-year window are dire. It is also possible that the current convention of bringing the leave motion at the same time as a motion for certification in a securities class action may change as plaintiffs’ counsel seek to streamline the process for obtaining leave. The Supreme Court’s refusal to revisit the Court of Appeal’s decision in Timminco is also expected to have important consequences for existing proceedings – such as Silver v. IMAX – in which the plaintiffs did not obtain leave to proceed within the limitation period. The decision suggests that courts are starting to take a more restrictive approach as Canada’s securities class action regime matures, and should come as welcome news to Canadian issuers, officers and directors.