On October 15, 2012, the Ontario Superior Court of Justice
released its decision in Trustees of the Millwright Regional Council of
Ontario Pension Trust Fund v. Celestica
Inc.(Celestica). In Celestica, Justice Paul
Perell held that, where a claim for secondary market
misrepresentations under Part XXIII.1 of Ontario's
Securities Act was otherwise barred by the operation of
that Act's limitation period, courts nevertheless retained
discretion to grant relief from the limitation period in
"special circumstances." Celestica is
particularly noteworthy as it stands in direct contrast to the
Court's July 3, 2012 decision in Green v. Canadian Imperial
Bank of Commerce (CIBC)1,
where Justice George Strathy expressly held that the court did not
have such discretion. The conflicting decisions leave the issue of
how strictly courts will apply the statutory limitation period
under Part XXIII.1 in a state of uncertainty. As such, the issue
calls out for, and will almost certainly receive, appellate
In Celestica, three separate actions were brought
against the company and its former CEO and CFO, alleging both
statutory claims for secondary market misrepresentations under Part
XXIII.1 of the Securities Act and common law
claims for negligent misrepresentation. The actions related to
alleged misrepresentations made by the defendants between 2005 and
2007 as to the progress of Celestica's restructuring efforts.
The defendants brought a motion seeking, among other things, to
strike the plaintiffs' Part XXIII.1 claims as being
Following the Court of Appeal for Ontario's decision in
Sharma v. Timminco Ltd., (Timminco)2, Justice
Perell held that section 28 of the Class Proceedings Act
(which suspends the running of a limitation period once a class
proceeding has been commenced) cannot operate to suspend the
three-year limitation period under section 138.14 of the
Securities Act until leave to bring the action under
section 138.8 has been granted. Consequently, as the plaintiffs had
failed to obtain leave to commence their claims within three years,
they were statute-barred. However, Justice Perell found, after
conducting a comprehensive statutory interpretation analysis of the
interplay between the Securities Act and the
Limitations Act, 2002, that the "special
circumstances" doctrine, which allows courts to render an
otherwise limitation-barred claim timely in appropriate
circumstances, could apply in actions brought under Part XXIII.1.
This was the opposite conclusion from the one reached by Justice
Strathy in CIBC, where he conducted his own comprehensive
statutory interpretation analysis and held that the special
circumstances doctrine could not be relied upon in Part XXIII.1
claims. Justice Perell acknowledged the conflicting conclusions,
but found that the availability of the doctrine was necessary to
"ameliorate the rigours of an absolute limitation period in
appropriate circumstances" [paragraph 105], and that "the
Legislature did not intend to sacrifice access to justice on the
altar of expeditiousness" [paragraph 108]. Justice Perell
cautioned that the doctrine was "principled, limited and
narrow", and could not operate "if the defendant is
prejudiced apart from the prejudice of having to defend an action
on its merits" [paragraph 113]. He further pointed out that
the doctrine was "tethered to amending an existing claim, and
is not available to commence an action after the expiry of a
limitation period" [paragraph 136]. Nevertheless, he held that
it would apply in the circumstances of Celestica in the
event leave was granted at some point in the future. Justice Perell
did strike the plaintiffs' common law claims for negligent
misrepresentation for being improperly pleaded, but granted leave
to amend them.
The recent decisions in
CIBCappeared to indicate that the courts were taking a
hard-line approach as to the application of the limitation period
in section 138.14 of the Securities Act. However, the
introduction of the element of judicial discretion to extend that
period in Celestica casts doubt on whether this is in fact
the case. Given the glaring legal issue at the heart of the
discrepancy between the findings in CIBC and
Celestica, and the importance of this issue to both
plaintiffs and defendants in Part XXIII.1 actions, this is a matter
that will almost certainly find its way to an appellate court in
the relatively near future.
1. 2012 ONSC 3637. For a summary of CIBC, please see
Osler Update of July 5.
2. 2012 ONCA 107. For a summary of Timminco, please
Osler Update of August 2.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).