In Sharma v. Timminco Limited Justice Perell heard two motions from two law firms, each of which represent different representative plaintiffs in separate class proceedings dealing with the same subject matter. Each of the two law firms moved for an order staying the other law firm’s class proceeding in favour of its own.

Both proposed class proceedings alleged securities misrepresentation at common law and under the Ontario Securities Act. The defendant issuer in both cases, Timminco, had released quarterly results in which it reported that previously released information about costs, production volumes and revenues might no longer be valid. This allegedly caused Timminco’s share price to drop dramatically in the ensuing period of time. Two separate law firms investigated potential class actions in relation to Timminco and both ultimately commenced class proceedings on behalf of separate representative plaintiffs alleging securities misrepresentation.

The Court ultimately decided to stay one of the class proceedings in favour of the other. The Court placed particular emphasis on the fact that the law firm which brought the class proceeding that was ultimately stayed had framed the cause of action in a complex manner that would have set a higher and more challenging legal bar for the representative plaintiff, and for the class, to meet. For example, the law firm whose proceeding was ultimately stayed had pled a substantially longer class period and a broader class definition which created substantive challenges for the class. This was the most critical factor informing the Court’s decision to issue the stay.

The Court did not place weight on the fact that one of the lawsuits was issued first. In this regard, the Court noted that both law firms investigated the claim independently and neither law firm copied the other.

The Court also rejected attempts by one of the law firms to disqualify the other on the basis that the latter was obtaining strategic guidance and advice from a U.S. based law firm.

The Court also emphasized that both of the plaintiff law firms had excellent track records in the class actions field and good reputations. Had there been dramatic disparity in terms of the two firms’ respective expertise, this may have changed the outcome.

The case was particularly timely in light of the increasing growth of securities class actions in Ontario and indeed Canada. Plaintiff-side class actions law firms are increasingly following the lead of their U.S. counterparts in investigating and prosecuting securities class actions. In many cases, these class actions are the object of creative investigation by the law firms.