The Supreme Court of Canada has granted leave in a case
regarding the appropriate burden of proof to authorize an action
under the Quebec civil liability for a secondary market disclosure
On February 20, 2014, the Supreme Court of Canada granted an
application for leave to appeal filed by Theratechnologies Inc. and
two of its administrators in a securities class action filed by a
disgruntled shareholder who had lost monies because of the
Issuer's alleged omission to properly inform its shareholders
of a material change in the Issuer's operations.
Theratechnologies inc. c. 121851 Canada Inc.,
2013 QCCA 1256 concerns the interpretation of s. 225.4 of the
Quebec Securities act which allows an action in damages against
Issuers, administrators, executives, experts and other parties who
play an influential role in an Issuers compliance obligations
regarding its activities in the secondary markets. The appeal
is significant not only because it is the first decision to
interpret the scope of s. 225.4 of the QSA which came into effect
as a result of the famous Allen Report, but it is also important
because the action was also filed as a class proceeding – an
element which effectively colored much of the lower courts'
analyses of the QSA provision in comparison to the authorization
process found in the class context under Quebec's Code of civil
The Superior Court authorized the action under s. 225.4 of the
QSA, concluding that the evidence the plaintiff filed showed its
case had a reasonable chance of success at trial. Theratechnologies
Inc. and its two administrators appealed the decision, but the
Quebec Court of Appeal decided:
(1) that even though
the QSA does not explicitly allow an appeal, and even though an
authorization decision in the class context in not subject to
appeal under Quebec law, an action under s. 225.4 of the QSA could
be appealed as an interlocutory decision because the authorization
of the action would itself have significant consequences on the
Issuer which a final judgment on the merits could not be able to
(2) that the
Plaintiff's burden of proof at the authorization stage under s.
225.4 of the QSA is heavier than the «prima facie
case» threshold found at the authorization stage in class
proceedings because the plaintiff must show the Court that the
action has « a reasonable possibility that it will be
resolved in favour of the plaintiff ». The Court of Appeal
reasoned that in order to satisfy that threshold set by s. 225.4 of
the QSA, a Court must not decide whether the evidence presented by
the Plaintiff demonstrates whether or not a material change
occurred, but a Court should rather limit itself to determine
whether the Plaintiff's arguments are serious enough to
demonstrates has a reasonable chance to succeed.
In light of the Supreme Court's recent precedents regarding
the nature and scope of the authorization process in class actions
under Quebec law, we suspect the Supreme Court will use those
precedents to craft their analysis of the nature and scope of the
authorization process outlined in s. 225.4 of the QSA.
Lastly, given the fact that securities regulation in each of the
provinces is, in most respects, harmonized, at least with respect
to the inclusion of a similar remedy in their statutes, we strongly
suspect this ruling will carry persuasive authority outside of
Quebec as well.
It's not often that our little blog intersects with such titanic struggles as the U.S. presidential race – and by using the term "titanic" I certainly don't mean to suggest that anything disastrous is in the future.
J.J. v. C.C., is an interesting case in which the court held that an automotive garage owes a duty to minor children to secure the vehicles on the premises by locking the cars and safely storing the car keys...
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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