In Green v. CIBC, released on February 3, 2014, a
specially convened five-judge panel of the Court of Appeal for
Ontario addressed important issues for securities class actions
The Court held that its prior decision in Sharma v.
Timminco was incorrect, and effectively extended the
limitation period for statutory securities misrepresentation claims
asserted in class actions. The Court also considered the
certifiability of common law misrepresentation claims, and the
merits test for obtaining leave to bring a claim under Part XXIII.1
of the Ontario Securities Act.
Limitation Period under the Securities Act
Part XXIII.1 of the Securities Act establishes a
statutory cause of action for misrepresentations affecting the
price of securities on the secondary market.
In its 2012 decision in Timminco, the Court of Appeal
held that the limitation period under Part XXIII.1 requires a
plaintiff to obtain leave to proceed within three years of the date
that the alleged misrepresentation was made – otherwise, the
claim would be statute-barred.1 The
Supreme Court of Canada refused leave to appeal from that
In Green v. CIBC, the Court of Appeal set aside the
interpretation that it applied in Timminco. The Court
instead held that the limitation period for class action claims
will be suspended once a plaintiff: (i) pleads a cause of action
based on section 138.3 of the Securities Act; and (ii)
pleads the intent to seek leave.
The Court also noted that, to the extent that there are concerns
about plaintiffs bringing motions for leave in a timely fashion,
those concerns can be resolved by the parties and class action
judges, presumably through case management.
Certification of Common Law Misrepresentation Claims
The Court of Appeal also considered important issues about
common law claims, in an appeal from the lower court decision of
Justice Strathy (who has since been elevated to the Court of
Appeal) in Green v.
CIBC.3 Common law claims can
be significant because, unlike statutory securities
misrepresentation claims, they have no prescribed caps on
The Court of Appeal affirmed Justice Strathy's holding that
neither the 'fraud on the market doctrine' nor the
'efficient market theory' can supplant the need to prove
individual reliance in common law misrepresentation claims.
The Court therefore confirmed that the issue of reliance could not
be certified as a common issue.
The Court held that it may be appropriate in certain
circumstances to certify other common issues relating to common law
misrepresentation claims alongside Part XXIII.1 claims if a class
proceeding could significantly advance those common issues.
However, it remains unclear how individual issues of reliance
could ever be efficiently or effectively resolved for large numbers
of class members, even if common questions were successfully
The Test for Leave under Part XXIII.1
The Court of Appeal also considered the test for leave to
proceed with a statutory claim under section 138.8 of the
Securities Act. The Court affirmed Justice Strathy's
approach in CIBC. Justice Strathy had held that some
claims met the threshold for leave, while others did not. The Court
confirmed that the test for leave is higher than a "mere"
possibility of success: it requires a "reasonable"
possibility of success.
The Court stated that the test for leave would be the same as
the certification test for determining whether a claim discloses a
cause of action – although a key difference is that the test
for leave is determined not on the facts as pleaded, but on the
evidentiary record(s) filed by the parties on the leave motion.
This decision, like other recent decisions of the Supreme Court
of Canada and the Court of Appeal for Ontario, focuses on the goal
of providing access to justice for plaintiffs, and arguably less on
fairness to issuers and other affected parties.
There are, however, positive aspects of the decision for
defendants. By affirming Justice Strathy's approach on the test
for leave under Part XXIII.1, the Court of Appeal confirmed that
the leave stage can be used to narrow or eliminate unmeritorious
claims at an early stage of the proceeding. It is also significant
that the Court confirmed, for common law misrepresentation claims,
that the efficient market theory cannot supplant the need to prove
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.
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