Canada: Ontario Court Of Appeal Clarifies Tests For Leave To Proceed And Certification In Secondary Market Misrepresentation Class Actions

The Ontario Court of Appeal recently released its decision in Bayens v Kinross Gold Corporation,1 which provides important guidance on class actions for secondary market misrepresentation. The decision addresses the test under section 138.8 of the Ontario Securities Act for leave to proceed on statutory misrepresentation claims, as well as the certification of common law misrepresentation claims under the Class Proceedings Act, 1992 (the CPA).

Important takeaways of the decision include:

  • The standard for granting leave to proceed under subsection 138.8(1) of the Securities Act is the same as the standard for certification of a class proceeding, namely that there must be a reasonable possibility of success at trial. Importantly, however, the evidentiary record against which this standard is applied is different at the leave motion, on which the court may consider affidavit and cross-examination evidence, than it is at the certification stage, where the facts pleaded are assumed to be true.
  • On a motion for leave, scrutiny of expert evidence to determine its reliability is appropriate and necessary in cases where the asserted claim depends on such evidence.
  • Only claims that have been properly pleaded may be considered for certification on a motion for leave.
  • Determination of the merits of statutory misrepresentation claims has no place in the analysis of certification criteria with respect to common law misrepresentation claims, although the denial of leave for the statutory claims is a relevant factor in the preferable procedure segment of the certification analysis.


The appellants were the representative plaintiffs in a class proceeding against Kinross Gold Corporation and four of its current or former directors. The appellants had purchased shares in Kinross between February 2011 and January 2012, and claimed damages of $4 billion for alleged common law and statutory misrepresentations in relation to mines owned by Kinross.

Kinross overstated the mines' goodwill value, the appellants argued, by failing to issue a goodwill impairment charge on one of the mines (the Goodwill Impairment Claim), and also wrongly represented that its planned expansion of that mine was on schedule when the schedule was unrealistic (the Expansion Claim). The appellants brought a motion for an order granting them leave to proceed with the statutory action under subsection 138.8(1) of the Securities Act, as well as an order certifying the action as a class proceeding under the CPA.

The motion judge, Justice Perell of the Ontario Superior Court, dismissed the leave and certification motions. With respect to the leave motion, he ruled there was no reasonable possibility that the Goodwill Impairment Claim would succeed at trial because of fatal flaws in the expert accounting evidence relied on by the appellants to support their claim. Justice Perell refused to consider the Expansion Claim because it was not pleaded by the appellants. Finally, Justice Perell refused to certify the common law misrepresentation claims under the CPA because, having denied leave to proceed for the statutory claims, he held it "necessarily followed" that the certification criteria would not be satisfied by either the statutory or the common law claims.

The test on a leave motion

On appeal, the first issue was whether the appellants met the second branch of test for granting leave under subsection 138.8(1), namely whether they had demonstrated a "reasonable possibility" that the action will be resolved at trial in their favour.

The Court of Appeal clarified that, consistent with its decision in Green v Canadian Imperial Bank of Commerce,2 the leave test under subsection 138.8(1) is the same as the test for certification under subsection 5(1)(a) of the CPA, as the same words—"reasonable prospect," "reasonable chance" or "reasonable possibility" of success—are used to describe the standard.

However, the results of applying that test may be different because the evidentiary contexts in which the tests are applied are different. On a motion for leave, each side may file affidavit evidence and cross-examine on it, whereas on a certification motion, there is no evidentiary record; instead, the facts as pleaded in the statement of claim are to be taken as true.

The Court of Appeal held that, considering all the evidence, the motion judge had appreciated the key features of the test for leave and applied it correctly.

The appellants made two other main arguments that were also rejected by the court. Specifically, that the motion judge:

  • improperly undertook a trial-like weighing of technical evidence, including expert evidence, that was appropriate only for a trial or a summary judgment motion. The Court of Appeal clarified that scrutiny of expert evidence is "both required to determine its reliability and commonplace where the asserted claim depends...on expert evidence"; and
  • erred in assuming that all the relevant information about Kinross's drilling program was before the court on the leave motion, given that discoveries and documentary production had not yet taken place. The Court of Appeal held otherwise, determining that the motion judge only had to consider whether the appellants' action had reasonable possibility of success in light of the evidentiary record as filed, without regard to potential future evidence.

Pleading claims

The Court of Appeal rejected the appellants' argument that the motion judge erred by, and was being overly technical in, failing to consider the Expansion Claim because the appellants failed to plead the claim. The appellants advanced the claim for the first time in their factum on the leave motion, even though the material facts for asserting the claim were available to them well before the motion.

The Court of Appeal emphasized that fundamental fairness and the efficacy of the litigation process demand that a civil action be decided within the boundaries of the pleadings. The decision confirms that this principle applies equally to leave motions in statutory secondary market class actions.

Consequently, the Court of Appeal upheld the motion judge's denial of leave for the appellants on the statutory misrepresentation claims.

Certification ruling

The appellants also appealed the motion judge's decision to deny certification for the common law misrepresentation claims on the basis that, because of the overlapping evidentiary issues, the plaintiffs should automatically be denied leave to proceed with the common law claims once the court had denied leave on the statutory claim.

On this point, the Court of Appeal agreed with the appellants' argument that the outcome of a leave motion under subsection 138.8(1) is irrelevant to the question of whether an associated common law action should be certified. Instead, all that is required to succeed at the certification stage is that the plaintiff show some basis in fact for each of these requirements.

The Court of Appeal was explicit that the "determination of the merits of the statutory claims has no place in the analysis of these certification criteria," although the denial of leave for the statutory claims is a relevant factor in the preferable procedure analysis. It subsequently found the common law claim met a number of the components under the test under subsection 5(1)(a) of the CPA, as: a) a cause of action was disclosed, b) there was an appropriate class definition, c) there was an adequate representative plaintiff and, d) the claims raised common issues.

These findings notwithstanding, the Court of Appeal agreed that the common law claim did not merit proceeding by way of class action, as it would not achieve a fair, efficient and manageable procedure that is preferable to any alternative method of resolving the common issues. This was because, in the case of the common law misrepresentation claims, individualized inquiries and fact-finding will be necessary to prove reliance, causation and damages. These inquiries undercut the goal of judicial economy and could overwhelm the resolution of the common issues.

The Court of Appeal also held that, in circumstances where statutory and common law misrepresentation claims are combined and are based on the same evidentiary record, it is appropriate to consider the outcome of the leave motion for the statutory claims when determining how the "preferability" inquiry would apply to the common law claim.

In this case, the motions judge considered the evidentiary record relied on by the appellants and concluded that the statutory misrepresentation claims had no reasonable possibility of success. This favoured the conclusion that a class action is not the preferable procedure for the common law claims.

For these reasons, the Court of Appeal concluded that the common law misrepresentation claims do not satisfy the preferable procedure certification criterion.


  1. 2014 ONCA 901.
  2. 2012 ONSC 3637.

Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global legal practice. We provide the world's pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ('the Norton Rose Fulbright members') of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.