Canada: The Ontario Court Of Appeal Confirms Scrutiny For Leave In Securities Class Actions

At the end of 2005, Ontario legislation came into effect which enabled aggrieved shareholders to bring a statutory action for secondary market misrepresentation against issuers and their directors and officers (and others) without the requirement to establish individual reliance. In order to commence such an action, however, a shareholder must first obtain leave from the Superior Court. Much of the jurisprudence in secondary market securities class actions has been devoted to examining the standard for leave.

The Court of Appeal for Ontario recently clarified the leave test in Bayens v. Kinross Gold Corporation.1 There are two primary points to take away from this decision; the Court:

  1. confirmed the merits-based test for leave to proceed; and
  2. affirmed that Motion Judges should not certify common law misrepresentation claims if leave to proceed with the parallel statutory claim is denied.


The plaintiff shareholders brought a common law claim against Kinross Gold Corp., a Toronto-based international mining company, and four of its officers, for alleged misrepresentations in connection with two of its gold mines in Africa. They asserted that Kinross overstated the value of the mines by failing to record a goodwill impairment charge on a timely basis.

On the shareholders' motion for leave to proceed with the statutory claim, the Court refused to grant leave because there was no reasonable possibility that it could succeed. The Motions Judge came to this conclusion due to deficiencies in the expert accounting evidence on which the plaintiffs relied to argue Kinross should have recorded the impairment charge sooner. The Court also refused to certify the plaintiffs' statutory and common law claims under the Class Proceedings Act, 1992,2 because it had refused leave to proceed with the statutory claims.3

The Court of Appeal unanimously dismissed the plaintiffs' appeal from the refusals to grant leave and to certify their action. In doing so, Justice Cronk addressed the leave requirement, and the relationship between the leave to proceed analysis and the certification criteria.

1.     The Leave Requirement: Just how low is the merits threshold?

To grant leave to pursue a secondary market misrepresentation claim under Ontario's Securities Act,4 a court must be satisfied that:

(a)   the action is being brought in good faith; and

(b)   there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.

The second part – the merits test – was in issue in Kinross.

Previous authority established that the leave test is a "relatively low threshold" and a "preliminary low-level merits based leave test".5 However, the Ontario Court of Appeal in Green had recently compared the merits test with the very low standard for striking out a claim as disclosing no reasonable cause of action, which is the same test applied under s. 5(1)(a) of the CPA.6 In Kinross, the same Court reiterated that although the court applies the same test for leave under the OSA and under s. 5(1)(a) of the CPA, the evidentiary record to which the test is applied is very different. Under s. 5(1)(a), the court assumes the facts in the Plaintiff's pleadings are true, but on the leave test, the court weighs the evidence filed by the investor and, if any, by the named Defendants and any cross-examination transcripts; from that evidence, it may draw reasonable inferences and make findings of fact.7 In short, Kinross clarified that while the standard for leave is not high, it is a true merits analysis, which critically assesses the evidentiary basis for the plaintiff's allegations.

2.     Leave and Certification: Are they Related?

In Kinross, the Court of Appeal also addressed the relationship between the leave test and the certification analysis under the CPA. Justice Cronk confirmed that when a court refuses leave to proceed with a statutory misrepresentation claim, that statutory claim also cannot meet the CPA certification criteria.8

However, the same is not true for its companion common law misrepresentation claim. Justice Cronk held that because the merits are generally irrelevant to certification, the refusal to grant leave because the statutory claim lacks merit will not automatically preclude certification of common law misrepresentation claims.9

Nonetheless, the refusal to grant leave to pursue a proposed OSA claim is relevant to the preferable procedure criterion of the certification analysis for the common law claims. The preferable procedure inquiry asks whether (1) a class action would be a fair, efficient and manageable way to prosecute the claims, and (2) a class action is preferable to other reasonably available means of pursuing the claims. Justice Cronk in Kinross explained that if a court certified common law misrepresentation claims after having refused leave to pursue statutory claims, the proceedings would effectively continue "against the backdrop of an existing judicial determination that the appellants' core claims of misrepresentation ... hold no reasonable prospect for success at trial," which would be contrary to the first preferability inquiry.10 This reasoning applies to common law misrepresentation claims in any case in which the court refuses leave for the OSA claims, and virtually forecloses any possibility that a common law claim will be certified if statutory leave is refused.


The Court of Appeal for Ontario's analysis in Kinross is significant for issuers and their executives for two reasons. First, the Court confirmed that although the leave requirement to proceed with a secondary market misrepresentation claim sets a relatively low standard, it is appropriate to weigh the evidence and make findings in relation to the plaintiffs' expert evidence. In doing so, the Court clarified the comparison in Green between the OSA leave test and the test under s. 5(1)(a) of the CPA. The Court's reasoning Kinross, confirming that Motion Judges must conduct a merits test, is a welcome development for issuers after the same Court's comments in Green.

Second, the Court held that a claim for common law misrepresentation could be certified under the CPA even if a court refuses the plaintiffs' leave to proceed with a companion statutory misrepresentation claim. However, the refusal to grant leave is relevant to the preferability criterion under the CPA and weighs powerfully against a class action's being the preferable means of resolving the claim. Indeed, in light of Justice Cronk comments, it appears very unlikely that a common law claim will be certified when leave to pursue a statutory claim has been refused.

Case Information

Bayens v. Kinross Gold Corporation, 2014 ONCA 901

Docket: C57988

Date of Decision: December 17, 2014


1 Bayens v. Kinross Gold Corporation, 2014 ONCA 901 [Kinross].

2 S.O. 1992, c. 6 [CPA].

3 Bayens v. Kinross Gold Corporation, 2013 ONSC 6864.

4 R.S.O. 1990, c. S.5, s. 138.8(1) [OSA].

5 Green v. Canadian Imperial Bank of Commerce, 2014 ONCA 90, leave to appeal granted, [2014] S.C.C.A. No. 137 [Green].

6 Green, at paras. 86, 89, citing R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45 at paras. 19-20.

7 Kinross, at para. 46.

8 Kinross, at para. 90.

9 Kinross, at para. 99, citing Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 at paras. 99 and 102.

10 Kinross, at para. 138.

To view original article, please click here.

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.