In a decision released on October 15, 2012 in the
Trustees of the Millwright Regional Council of Ontario Pension
Trust Fund v. Celestica Inc. securities class action, Justice
Perell held that the "special circumstances" doctrine can
be applied by courts to extend the limitation period contained in
section 138.14 of Ontario's
Securities Act (the "OSA" or the "Act")
which requires that a secondary market purchaser misrepresentation
action under Part XXIII.1 of the OSA must be commenced within three
(3) years of the alleged misrepresentation. In reaching this
conclusion, Justice Perell has taken a broader view than previous
rulings of the courts' jurisdiction to relieve against the
strict application of a limitation contained in the OSA.
In Celestica, the Plaintiffs allege that Celestica Inc. and two
of its former officers made misrepresentations about
Celestica's restructuring of its operation in the period from
January 27, 2005 through to January 30, 2007. The
Defendants brought a Rule 21 motion before Justice Perell seeking
to strike out significant portions of the Plaintiffs' Fresh as
Amended Statement of Claim on the basis that, amongst other things,
the Plaintiffs' had not obtained leave to proceed with their
action under section 138.8 of the OSA before the expiry of the
three-year limitation period set out in the Act. The
Defendants relied on the Court of Appeal's decision in
Sharma v. Timminco Limited, another proposed securities class
action, which found that the limitation in 138.14 of the OSA was
not suspended by section 28 of the
Class Proceedings Act, 1992 (the "CPA") unless and
until a proposed representative plaintiff obtains leave to bring
the class proceeding and then commences the action under section
138.3 of the OSA. The Defendants argued that it was plain and
obvious that the limitation period had expired and the
Plaintiffs' claim could not proceed and that the courts had no
discretion to extend the running of the limitation period by making
orders nunc pro tunc (meaning "now for then").
Justice Perell held that, given the Court of Appeal's ruling
in Timminco, it was clear that the limitation period in section
138.14 of the OSA had not been suspended by virtue of section 28 of
the CPA and accordingly the Plaintiffs' claim was
time-barred. However, the Court disagreed with the
Defendants' submissions that it had no discretion to relieve
against the operation of the statutory limitation period.
Rather, after a review of the case law and the provisions of
Limitations Act, 2002, Justice Perell held that the common law
doctrine of "special circumstances", which operates to
extend a limitation period where the interests of justice so
require, applied to section 138.14. The Court held that the
doctrine was "principled, limited and narrow" in nature
and would not operate if a defendant is prejudiced apart from the
prejudice involved in having to defend an action on its
merits. Justice Perell concluded that, if the Plaintiffs were
ultimately granted leave to proceed with their claim under section
138.8 of the OSA, this would be an appropriate case in which to
apply the special circumstances doctrine given that the Defendants
had been aware of the claims since 2007 and had been actively
defending similar claims brought against them in the United States
since that same time.
In the result, Justice Perell dismissed the balance of the
Defendants' motion to strike the claim, although he did strike
out certain common law causes of action for failure to plead the
requisite elements of the torts, but granted the Plaintiffs leave
to amend their claims with respect to those claims.
In finding that the special circumstances doctrine could be
applied to section 138.14, Justice Perell's decision stands in
stark contrast to the decision of Justice Strathy in
Green v. Canadian Imperial Bank of Commerce. In that
case, Justice Strathy concluded, based on his review of the cases
and the provisions of the Limitations Act, 2002 that the special
circumstances doctrine was not available within the
framework of section 138.14 of the OSA.
Accordingly, given these conflicting lower court decisions, it
is unclear whether the special circumstances doctrine may be
applied to extend the limitation period set out in section 138.14
of the OSA. Appellate intervention may prove to be necessary
in order to resolve this debate in the courts.
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