The Supreme Court of Canada has granted leave to appeal in a case that will determine how to apply the statutory limitation period for investors in Ontario who decide to sue public issuers and their executives under the Securities Act. Given similar legislation in other provinces, the case will be significant for investors and public issuers across Canada.
At issue is the February 2014 decision of a 5-member panel of the Ontario Court of Appeal covering three cases with different fact situations: Green v. CIBC, 2012 ONSC 3637; Silver v. IMAX, 2012 ONSC 4881; and Millwright Regional Council of Ontario Pension Trust Fund (Trustees of) v. Celestica Inc., 2012 ONSC 6083, each brought under Part XXIII.1 of the Ontario Securities Act. The Court of Appeal decision – 2014 ONCA 90 – was a dramatic and unusual reversal of its own decision on the same issue in Sharma v. Timminco, 2012 ONCA 107, less than two years prior.
As discussed in a blog post earlier this year, the three appeals at issue in Green required the Court of Appeal to decide when an investor advancing a proposed securities class action can be properly said to have "commenced" a claim, thus stopping the limitations period. In Green, the Court held that investors enjoyed the benefit of the limitation period suspension under s. 138.14 of the Securities Act once they have issued a common law claim and also pleaded an intention to seek leave to plead the statutory cause of action, even if leave is not then granted within the limitation period. This is in contrast to Timminco ( also discussed in an earlier post), in which the Court had held that leave must be granted within the three-year limitations period, or the claim was statute-barred.
The three claims giving rise to this appeal were each issued and served within the three-year limitation period, but leave was not granted within that timeframe. Motions judges had taken a different approach in each case in applying the statutory limitation period, which ultimately led the Court of Appeal to revisit its Timminco decision.
Between the Court of Appeal's decisions in Timminco and Green, the Ontario government announced that it was monitoring "current cases" and would consider amending the Securities Act limitation provisions if needed. Many observers were surprised to see the Court of Appeal reversing its own recent decision, rather than allowing the legislature to revisit the statutory framework if it deemed it necessary. It will be interesting to see what the Supreme Court says not only about the proper application of the limitation period in Securities Act cases, but how it addresses the Court of Appeal's departure from its own recent precedent.
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