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.
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