A series of recent decisions has given issuers, directors,
officers and other capital market participants reason for optimism
that the leave requirement in secondary market securities class
actions can fulfil its initial promise of screening clearly
The leave requirement requires a plaintiff seeking to proceed
under the right of action in Part XXIII.1 of the Ontario
Securities Act to establish that the action is brought in
good faith and that there is a reasonable possibility that the
action will be resolved at trial in favour of the plaintiff.
The Ontario Court of Appeal's decision in Bayens v. Kinross and the Supreme Court
of Canada's decision in
Theratechnologies show that courts are undertaking a
reasoned consideration of the evidence at the leave stage –
and are prepared to find in appropriate cases that there is no
reasonable possibility of success.1
In Coffin v. Atlantic Power Corp., Justice
Belobaba similarly concluded that the plaintiffs' action had no
reasonable possibility of success, as he found that Atlantic Power
had made no misrepresentations, whether by positive assertion or
omission. Atlantic Power is a good example of the type of
case in which opposing a leave application with a substantial
evidentiary record can be effective. Justice Belobaba stated that
the defendants had filed "a massive amount of non-public
(indeed court-sealed) internal and corporate narrative evidence to
fully rebut the plaintiffs' allegations and show they have no
reasonable possibility of succeeding at trial."
Justice Belobaba also declined to certify the parallel common
law claims, which rested on the same evidentiary foundation as the
statutory claims and therefore also had no reasonable possibility
of success. He concluded: "Encumbering the parties and the
courts with a complex class action that is destined to fail
promotes neither judicial economy nor access to justice. Therefore,
a class action is not a preferable procedure."
These recent decisions are encouraging and give reason to
believe that the protections in Part XXIII.1, including the leave
threshold, can be used at an early stage of proceedings to protect
issuers and other defendants from the costs, time and distraction
of actions without merit.
1. See also Justice Belobaba's decision in
Goldsmith v. National Bank of Canada, 2015 ONSC
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