Limitation periods are intended to offer ‘repose’ to potential defendants, and they do – but, as often as not, they generate confusion and legal bills. In September 2006, Silver and Cohen commenced an action against IMAX Corp. and IMAX executives, alleging that the company had made misrepresentations in its secondary market disclosure. The plaintiffs advanced common law claims and indicated in November 2006 that they would seek leave to bring statutory claims under Part XXIII.1 of the Ontario Securities Act (OSA). The motion to seek leave for the OSA claims was served on the defendants in February 2007 and subsequently amended. Delays ensued, apparently because of the voluminous and complex nature of the motion record and because the leave motion was heard with other motions, including one to certify the action under the Class Proceedings Act (CPA). In December 2009, leave for the Part XXIII.1 claims was granted and the class action certified. Leave to appeal those decisions was ultimately denied in February 2011. In December 2011 the plaintiffs amended their statement of claim to include the statutory causes of action under the OSA, pleading new facts which had arisen since 2006 but generally along the lines of their November 2006 notice of motion. The defendants asserted that the Part XXIII.1 claims were barred by the three-year limitation period in the OSA, relying in part on the decision in Sharma v Timminco Ltd, 2012 ONCA 107, where it was held that leave to bring such a claim must have actually been granted in order to invoke the provisions of the CPA which suspend a limitation period that would otherwise apply.

Van Rensburg J distinguished Sharma on its facts: there, the plaintiff had not even brought a motion for leave under the OSA; in the IMAX case, the plaintiffs had moved expeditiously, delivered their notice of motion and argued the motion itself within the three-year period. Any delay was outside the control of Silver and Cohen and the parties seemed to have operated under the assumption that the limitation period had been suspended. If it hadn’t, the plaintiffs argued that the court had the discretion to grant leave retroactively, under the ‘special circumstances’ doctrine, and to amend the statement of claim to make it effective within the limitation period. The defendants also relied on Green v CIBC, 2012 ONSC 3637, where Strathy J declined to apply the doctrine of special circumstances in a similar case. Van Rensburg J rejected the plaintiffs’ argument that there was no limitations issue at all: they clearly needed to have obtained leave for a Part XXIII.1 claim, not merely to have pleaded it. The judge agreed, however, that she had the inherent jurisdiction to back-date the leave order to make it effective within the limitation period and thereby avoid injustice, distinguishing Green on the facts of its chronology. She also disagreed with Strathy J that this jurisdiction was displaced by the statutory scheme under Part XXIII.1. The doctrine of special circumstances did not need to be invoked. Retroactive relief was warranted on the facts before the judge, and leave to amend the leave order and the statement of claim granted as of December 2008, when the leave motion was concluded.

Given the departures from Green and Sharma, this one will probably go to the Court of Appeal.

[Link available here, here and here].