On August 7, 2014, the Supreme Court of Canada granted leave in three securities class actions: Canadian Imperial Bank of Commerce et al. v. Howard Green et al., IMAX Corporation et al. v. Marvin Neil Silver et al. and Celestica Inc. et al. v. Trustees of the Millwright Regional Council of Ontario Pension Trust Fund et al. All three appeals will be heard together.
These three cases raise the question of how the three-year limitation period under Ontario's Securities Act should be applied.
Prior to the release of the Ontario Court of Appeal's decision in Green v. CIBC, the consequence of failing to seek leave before the limitation period expired was dictated by the Ontario Court of Appeal's decision in Sharma v. Timminco Limited.
In Timminco, the Court of Appeal held that class actions for secondary market misrepresentation under the Ontario Securities Act were barred unless the Plaintiffs were granted leave to proceed within three years of the misrepresentation.
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 Timminco.
Although leave to appeal the Timminco decision was dismissed, a five judge panel was appointed to reconsider the effect of Timminco based on an appeal of Green v. CIBC, Silver v. IMAX and Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v. Celestica.
Ultimately, the panel concluded that Timminco should be overturned, and therefore that action was not statute-barred. The effect of the Court of Appeal's decision is that a statutory secondary misrepresentation claim will be "within time" so long as the following requirements are met:
- A representative plaintiff has commenced a class action within the limitation period provided for by the Securities Act;
- The representative plaintiff has pled secondary market misrepresentation as a cause of action;
- The representative plaintiff has plead the facts to found the secondary market misrepresentation claim; and
- The representative plaintiff pleds the intent to seek leave to commence an action under the Securities Act.
In addition to overruling Timminco and addressing the limitations issue, Green v. CIBC further clarified that the threshold a plaintiff must meet to obtain leave of the Court is a relatively low threshold. Furthermore, the Court of Appeal partially certified the Plaintiffs' common law misrepresentation claim (leaving reliance and damages to be determined outside the class action) and overturned Strathy J.'s decision not to certify the action as a whole. In light of the SCC's recent decision to grant leave in this trilogy of cases, it is reasonable to expect that these issues will be argued before the SCC. However, the SCC does not provide reasons in granting leave to appeal; therefore, it is difficult to read into the decision with precision.
In any event, a decision from the SCC, which will be several months away, has the potential to provide some long-awaited and welcomed clarity to this area of the law.
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