Canada: In And Out: Ontario Superior Court Of Justice Redefines Certified Global Class To Exclude Members Of A Parallel U.S. Class Action

Last Updated: May 2 2013
Article by Wendy Berman and Jonathan Wansbrough

A recent decision by the Ontario Superior Court of Justice in Silver v. IMAX Corporation amended a previously certified global class to carve out approximately 85% of its members who were overlapping class members in a parallel U.S. action, which had conditionally settled. This decision, a first in Canadian securities class actions, is a significant development in multi-jurisdictional parallel class proceedings and indicates not only the court’s willingness to recognize foreign class settlements but also its willingness to significantly amend the class on the basis that an Ontario proceeding no longer remains the preferable procedure for that portion of the class.

This decision provides welcome comfort to public companies that, where appropriate, Ontario courts will recognize foreign settlements as binding on overlapping class members but will also likely have a significant impact on settlement dynamics. Although the decision arguably alleviates the pressure to reach a global coordinated settlement it may ultimately trigger a “race to settle” with different pressures.  

The IMAX case with a “certify now, worry later” approach to global classes deferred consideration of complex jurisdictional issues, including the reasonable expectations of overlapping class members, to a much later stage in the proceeding. This recent decision reducing the class in the Ontario proceedings by 85% sharply illustrates some of the legal and practical complexities of overlapping multi-jurisdictional class proceedings, including fairness, efficient use of resources and comity for both companies and investors in class actions. It remains to be seen whether this decision will ultimately temper enthusiasm for global classes in Canada. 


In 2006, parallel class proceedings were commenced in Canada and the United States against IMAX Corporation, a publicly traded Canadian company with its shares listed on both the TSX and NASDAQ, alleging material misrepresentations in its financial disclosure. In the United States, eight proposed class actions were commenced claiming relief under Rule 10b-5 of the Securities Exchange Act of 1934 and were ultimately consolidated into a single proceeding (the “U.S. Proceeding”).  In Canada, the class action commenced in Ontario asserted both common law claims and statutory claims under the secondary market liability regime in Part XXIII.1 of the Ontario Securities Act (the “Ontario Proceeding”).
Notably, the Ontario Proceeding was certified as a global class and included all persons who acquired IMAX shares on the TSX and the NASDAQ. Originally the plaintiff in the U.S. Proceeding also sought to certify a global class but was obliged to narrow the class definition to include only persons who acquired IMAX shares on the NASDAQ a result of the U.S. Supreme Court’s decision in Morrison v. National Australian Bank Ltd., which effectively mandates exclusion of purchasers of shares on any foreign exchanges from the U.S. class action regime. As result, there was a significant overlap between the Ontario and U.S. classes.

Although the Ontario Proceeding progressed more rapidly, the parties in the U.S. Proceeding settled first and entered into a settlement agreement in January 2012, for a total amount of US$12 million, inclusive of costs. Of interest to the Ontario court was the fact that despite the distribution of 87,000 notices of the proposed settlement, only one investor objected to the settlement and only seven opted out of the class settlement. The settlement was approved by the court in the U.S. conditional on the Ontario court amending the Ontario class definition to exclude the members of the U.S. class, being all NASDAQ purchasers. Shortly thereafter, IMAX, together with the other defendants in the Ontario Proceeding, brought a motion for an order amending the Ontario class definition to exclude those persons who would be bound by the settlement of the U.S. Proceeding.

The Decision

The Ontario court considered four primary issues in deciding whether to grant the defendants’ motion to amend the class definition, including: a) whether it had authority to amend the class to exclude the overlapping class members; b)  whether to recognize the U.S. settlement; c) whether the motion was, in effect, for the approval of a settlement under the Class Proceedings Act (CPA); and d) whether the Ontario Proceeding remained the “preferable procedure” for the overlapping class members given the finalization of the U.S. settlement.

a) The Court has Authority to Amend the Class Under the CPA

The Ontario court confirmed its authority under section 10(1) of the CPA to amend the class definition where, as a result of developments in the U.S. Proceeding, such proceeding no longer remained the “preferable procedure” for the determination of the claims of the overlapping class members who have not opted out of the U.S. settlement. Contrary to arguments raised by the plaintiff, the Ontario court concluded that the existence of the U.S. settlement was “clearly relevant to the question of whether the Ontario Action remains the preferable procedure” for resolving the claims of the overlapping class members.

b)  The U.S. Settlement Ought to be Recognized in the Ontario Proceeding

In determining whether to recognize the U.S. settlement, the court applied the factors set out by the Ontario Court of Appeal in Currie v. McDonald’s Restaurants of Canada Ltd. (Currie), namely, whether:

  • the U.S. court had a “real and substantial connection” to the claims of the overlapping class members;
  • whether the overlapping class members were accorded procedural fairness, including adequate notice; and
  • whether the interests of the overlapping class members were adequately represented.

The court concluded that the U.S. settlement should be recognized as binding on the overlapping class members in the Ontario Proceeding as the U.S. court properly had jurisdiction, there was order and fairness in the treatment of the claims of the overlapping class members and in their representation in the U.S. Proceeding. With respect to the factor of procedural fairness and notice, the court noted that U.S. court considered the same factors in its determination of the fairness of the U.S. settlement as considered by Ontario courts in determining whether to approve the settlement of a class proceeding.

c) Review and Approval of the U.S. Settlement is Not Required

Despite the arguments advanced by the plaintiffs, the court declined to review the adequacy or fairness of the U.S. settlement as part of its consideration of whether to recognize the U.S. settlement.  Rather the court determined that, based on the Currie decision, the focus of its review was on the process that was followed in the U.S. Proceeding and whether that process adequately protected the interests of absent class members.  However, the court considered the adequacy of the U.S. settlement in its determination of whether the Ontario Proceeding remained the preferable procedure for a global class.

d) The Ontario Proceeding is No Longer the “Preferable Procedure” for the Overlapping  Class Members

The question of whether the Ontario Proceeding remains the “preferable procedure”, involves a consideration of whether it is preferable “to other ‘reasonably available means of resolving the class members’ claims” and having regard to the objectives of class proceedings, including: judicial economy, access to justice and behaviour modification.

The court compared the advantages and disadvantages associated with continuing the claim of the overlapping class members in its determination of whether it was the preferable procedure to amend the global class.  Importantly, and in contrast to its recognition of the U.S. settlement, the court did consider the adequacy of the U.S. settlement in this portion of its analysis, including expert evidence of both parties (the plaintiffs experts concluded the U.S. settlement provided a recovery of either 11% or 13% of the maximum value of the damages for NASDAQ purchasers).  The court found that the evidence did not establish that the U.S. settlement was improvident compared to the resolution of other class actions in this jurisdiction.

Notably, the court indicated two specific factors which, although not determinative, weighed in favour of granting an order removing overlapping class members:  (i) the U.S. court had a strong jurisdictional connection to the overlapping class members and “it would be consistent with the reasonable expectations of the overlapping class members, who acquired their shares on the NASDAQ, and in circumstances where IMAX was subject to both U.S. and Ontario securities laws, that their rights could be determined by the U.S. court in the context of applicable U.S. law.”  and (ii) the robust procedure followed by the U.S. court, including the fairness consideration of the U.S. settlement. 

The court determined that in these circumstances remaining in the global class would be of no clear advantage to the overlapping class members and that participation in the U.S. settlement would satisfy the objective of access to justice. Similarly, the court rejected an argument that there would be a negative effect on TSX purchasers by removing the NASDAQ purchasers from the global class due to the inherent risks associated with litigation, and since the TSX purchasers were made the same offer (proportionally) as the NASDAQ purchasers. In concluding that access to justice was not impeded, the court stated:

It is not the function of this court to seek to jealously guard its own jurisdiction over a class proceeding that has been certified here. Such an approach is inconsistent with the principles of comity. It is also not the function of the court to favour or to protect the interests of class counsel within this jurisdiction...

Ultimately, the court found that it was the preferable procedure to remove the claims of the overlapping class members from the Ontario Proceeding and granted the order amending the class definition to exclude NASDAQ purchasers. 

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

Click to Login as an existing user or Register so you can print this article.

Wendy Berman
Jonathan Wansbrough
Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
Blake, Cassels & Graydon LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
Blake, Cassels & Graydon LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions