Less than one month after the Supreme Court of Canada announced that it will hear appeals in a trilogy of Ontario securities class action cases that address how the three years limitation period under the Ontario Securities Act applicable to secondary market class actions should be applied, the Ontario Legislature has taken it upon itself to clarify the matter going forward.
In 2012, the Ontario Court of Appeal had interpreted the statutory limitation period to mean that plaintiffs must have obtained leave from the court to commence the action within the three-year period (Sharma v Timminco). Earlier this year, in Green v CIBC, a rare five-judge panel of the Court of Appeal reversed its own decision in Timminco (with two companion decisions in Silver v IMAX and Celestica v Millwright). The Court of Appeal found that articulating an intention to seek leave to commence the secondary market claim under the Securities Act was sufficient to suspend the limitation period, even though leave had not yet been granted to commence such an action. It was the defendants in this trilogy of cases that were granted leave to appeal to the Supreme Court of Canada.
Without any fanfare, section 138.14 of the Securities Act was amended as part of the Government's recent budget bill. The section now provides that the limitation period is suspended on the date a notice of motion for leave to commence the action is filed with the Court. This requires more than the Court of Appeal had required in Green v CIBC, but less than had been held to be required in Timminco.
Whether the Supreme Court now deals with this issue remains to be seen, as the legislative amendment likely is not retroactive. The strict three-year limitation period made sense from a policy point of view – companies should have certainty and not have to operate under the cloud of a threatened proceeding. And three years is ample time to get a leave motion heard and decided by a court. But the Legislature has spoken.
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.