On February 3, 2014, the Ontario Court of Appeal released
Green v. CIBC, which overruled the Court's previous
decision in Sharma v. Timminco Ltd. As determined in
Green v. CIBC, a statutory misrepresentation claim is
brought within time so long as the action is commenced within the
time limits prescribed by the securities legislation.
Prior to Green v. CIBC, the time limit to bring a
statutory misrepresentation claim was governed by Sharma v.
Timminco Ltd. In Timminco, the plaintiff commenced a
proposed class action against the defendant, alleging that the
defendant's misrepresentations adversely affected shares in the
In the Timminco statement of claim, the plaintiff
indicated that it would seek an Order granting leave to assert the
statutory cause of action for misrepresentation. Specifically,
Ontario's Securities Act required the plaintiff to
seek leave of the Court before commencing an action based in
However, the Securities Act also required the plaintiff
to commence its action for statutory misrepresentation within three
years from the date of the misrepresentation. Prior to the
expiration of the three years, the plaintiff had yet to obtain
leave and moved for an Order declaring the limitation period was
Ultimately, the Court of Appeal dismissed the plaintiff's
motion. In so doing, the Court of Appeal in Timminco held
that the three-year limitation period would only be met when leave
to bring the statutory cause of action was granted by the
Timminco thus required securities class action
plaintiffs to apply for leave, obtain leave, and commence a
statutory misrepresentation claim within three years from the date
of the misrepresentation. Such a timeline was often unworkable,
particularly in light of the fact that a misrepresentation may not
be discovered for years and the delays which can occur in the
commencement of, and leave motions for, securities class
Ontario judges struggled with the Court's decision in
Timminco. Conflicting case law emerged on whether the
limitation period could be extended, or whether leave could be
granted retroactively to circumvent the harsh effect of
A special five-member panel of the Ontario Court of Appeal
considered these issues in Green v. CIBC. As a result of
Green v. CIBC, Courts no longer need to resort to such
measures. So long as the representative plaintiff in a class action
brings its action within the limitation period prescribed by the
Securities Act and pleads an intention to seek leave to
commence an action under the Act, the action will not be
In addition to overruling Timminco, Green v. CIBC
further clarified that the threshold a plaintiff must meet to
obtain leave of the Court is a relatively low threshold. To obtain
leave, the plaintiff must show that its claim has a
"reasonable" prospect of success, as opposed to a
"mere" possibility of success.
Without a doubt, the Court's landmark decision in Green
v. CIBC will be utilized by plaintiffs' counsel to
preserve a representative plaintiff's secondary market
misrepresentation claim. However, defence counsel should also take
note – while Green v. CIBC may be considered a major
win for plaintiffs, the Court also expressly rejected the
"fraud on the market" or "efficient market"
theories. As a result, plaintiffs who wish to pursue a common law
negligent misrepresentation claim must still prove individual
As the securities acts in most provinces contain similar
provisions, there is a strong likelihood that Green v.
CIBC will be followed in other provinces.
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.
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