Canada: Ontario Court Amends Global Class To Exclude Class Members Participating In U.S. Settlement

On March 19, 2013, Justice van Rensburg of the Ontario Superior Court of Justice released her decision in Silver v. Imax ("Imax"), granting the defendants' motion to amend the previously certified class to exclude those class members who held shares purchased on the NASDAQ.  The decision in Imax should provide some assurance to public issuers and their directors and officers, who are regularly defendants in parallel securities class actions in Canada and the United States, that global settlements are not necessary and that settlements reached in the U.S. will likely be respected in Canada and bind class members provided that the settlement is fair to absent class members and is not in disregard of the jurisdiction of the Canadian court. 

IMAX, a Canadian public company whose shares are dual-listed on the TSX and the NASDAQ, is a defendant in overlapping class proceedings in Ontario and the United States. In Ontario, the plaintiffs assert both common law causes of action and secondary market liability under Part XXIII.1 of Ontario's Securities Act (the "Securities Act") against Imax and a number of its directors and officers alleging misrepresentations and omissions in respect of the financial reporting and recognition of revenue for Imax's theatre systems (the "Ontario Action").  In December 2009, Justice van Rensburg certified a global class which included all persons who acquired IMAX shares on the NASDAQ and the TSX and held such shares during the relevant class period. 

Similar proceedings were commenced in the U.S. alleging misrepresentations and omissions regarding revenue recognition in violation of federal securities laws (the "U.S. Action").  As a result of the U.S. Supreme Court's decision in Morrison v. National Australian Bank Ltd., 130 S. Ct. 2869 (2010), the plaintiff in the U.S. action was precluded from including purchasers of shares on foreign exchanges in the class.  Accordingly, the U.S. class included only those persons and entities that purchased or acquired IMAX shares on the NASDAQ.  As a result, the overlapping class members in the Ontario Action were those NASDAQ traders who acquired and held their IMAX shares during the class period.

The parties in the U.S. Action reached a U.S. $12 million settlement (the "U.S. Settlement") which had been approved by the U.S. Court, subject to an order amending the class definition in the Ontario Action (the "U.S. Fairness Decision").  Accordingly, the defendants in the Ontario Action brought a motion seeking an order amending the class definition to exclude from the certified class all persons who would be bound by the U.S. Settlement.  If amended, the resulting class in the Ontario Action would be much smaller, comprised of approximately 15% of the global class originally certified.

Justice van Rensburg held that the first step in determining whether to amend the class involved a determination of whether the Ontario Court should recognize the U.S. Fairness Decision.  In making this determination, Justice van Rensburg applied the following factors as outlined by the Court of Appeal for Ontario in Currie v. McDonald's Restaurants of Canada Ltd., (2005), 74 O.R. (3d) 321 (C.A.) for determining whether to recognize a decision of a foreign court approving a class action settlement so as to preclude an action for the same relief in Ontario: (i) the U.S. Court's "real and substantial connection" to the claims of overlapping class members, (ii) whether the absent class members were accorded procedural fairness, including adequate notice, and (iii) whether the interests of the absent class members were adequately represented. 

Justice van Rensburg held that there was no question that there was a real and substantial connection between the cause of action of the overlapping class members and the U.S. Court in that the U.S. Court clearly has a connection to the claims of persons who acquired their shares on the NASDAQ.

Justice van Rensburg also determined that the absent class members were accorded procedural fairness.  In particular, she noted that the notices of the proposed U.S. Settlement (which Ontario class counsel had input into) made specific reference to the Ontario Action, including the options available to overlapping class members, and that electing to remain bound by the U.S. Settlement would bar class members' ongoing participation in the Ontario Action.  Justice van Rensburg concluded that the same factors as would have been considered in Canada were considered by the U.S. Court in its determination that the U.S. Settlement was fair, reasonable and adequate.

In considering whether the interests of the class members sought to be bound by the U.S. Settlement were adequately represented, Justice van Rensburg considered the "race to the bottom" concerns that improvident settlements may result from bargaining between defendants and plaintiff's counsel who are motivated by self-interest in their fees and that a "reverse auction" may occur where a defendant in parallel class actions will pick the most ineffectual class lawyers to negotiate a settlement with, to the detriment of the class members.  Justice van Rensburg rejected these concerns in the circumstances of this case, noting that the U.S. Settlement occurred after 6 years of litigation, extensive documentary discovery and several rounds of negotiation. Justice van Rensburg also rejected the plaintiffs' contention that it was the duty of U.S. class counsel to bring the potential for an enhanced recovery under Ontario law to the attention of the U.S. Court and to justify the U.S. Settlement under Ontario law.

Accordingly, Justice van Rensburg concluded that the U.S. Fairness Decision should be recognized in Ontario.  Justice van Rensburg rejected the plaintiffs' argument that the motion was, in substance, a motion to approve a settlement of the Ontario Action which should have been brought under s.29(2) of the Class Proceedings Act, 1992 (the "CPA") and noted that the adequacy of the U.S. Settlement was not something for the Court to assess as part of the question of whether to recognize the U.S. Fairness Decision.

Next, Justice van Rensburg proceeded to consider whether the Ontario Action remained the preferable procedure under s.5(1)(d) of the CPA for resolving the claims of overlapping class members who had not opted out of the U.S. Settlement.

Justice van Rensburg ultimately concluded that the Ontario Action was no longer the "preferable procedure" for the determination of the claims of class members whose claims were covered by, and who had not opted out of the U.S. Settlement.  Justice van Rensburg found that there was no real question that the Court's recognition of the U.S. Settlement and the amendment of the class would serve the objectives of behaviour modification and judicial economy.  Rather, the real issues were whether the amendment would further "access to justice" for the overlapping class members and for the members of the class who would remain if the NASDAQ purchasers were "carved out", and whether the order sought would respect the integrity of Ontario's class actions regime. 

In considering the "access to justice" concerns, Justice van Rensburg considered the advantages and disadvantages to litigating the claims in Ontario as opposed to the U.S., and concluded that there was no compelling reason to conclude that the Ontario legal regime would be more favourable.  Justice van Rensburg held that participation in the U.S. Settlement would meet the objective of providing access to justice for the overlapping class members.  The Court also considered access to justice for the remaining TSX class members, including the economic viability of the claims, and noted that the same offer, proportionally, was made available to Ontario class counsel for resolution of the TSX class members' claims.  Justice van Rensburg specifically noted that there is always a risk for class counsel that the costs, time and effort invested in a class proceeding may not be recovered at the end of the day.  The Court rejected the plaintiffs' contention that the relief sought would challenge the judicial integrity of the Ontario Court or alter the typical approach to the resolution of cross-border class actions, noting that the existing framework for cross-border class actions allows for parallel proceedings and does not require global settlements.

Justice van Rensburg concluded that additional factors supported the exercise of the Court's discretion to amend the class, including: (i) the fact the U.S. Court has a strong jurisdictional connection with the matters at issue and, in particular, the fact that it would consistent with the reasonable expectations of overlapping class members that their rights could be determined by the U.S. Court; (ii)  the procedure followed by the U.S. Court was robust and resulted in a settlement that "was assessed as fair by a judge who had case managed the action for several years and was unquestionably familiar with the issues in the proceeding"; and (iii) the U.S. Court gave due attention to the existence of the Ontario Action.

Accordingly, the defendants' motion was granted and the class definition was amended to exclude from the certified class all NASDAQ purchasers who did not deliver an opt-out notice in the U.S. Action.

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.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.