Canada: Securities Class Actions In Canada: The Supreme Court Weighs In

Earlier today, the Supreme Court of Canada released its highly anticipated decision in three Ontario securities class action cases: Canadian Imperial Bank of Commerce v Green, Silver v IMAX Corporation and Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v Celestica Inc.1 The decision had been on reserve since February 2015, when the Supreme Court heard oral argument in the three appeals together. The appeals were from a February 2014 decision of the Court of Appeal for Ontario.2

The Supreme Court's decision touches on the requirement that plaintiffs obtain "leave to proceed" with statutory claims alleging misrepresentations in a reporting issuer's secondary market disclosure, on common law negligent misrepresentation claims and on the three-year limitation period applicable to statutory secondary market claims.

The Test for Leave to Proceed

Under section 138.8 of the Securities Act, in order to obtain leave to proceed, a plaintiff must show that (i) the claim is being brought in good faith; and (ii) there is a reasonable possibility that the plaintiff will succeed at trial. The Court of Appeal, in its February 2014 decision, held that the second prong is "a relatively low threshold".3 However, in its April 2015 decision in Theratechnologies inc. v 121851 Canada inc.,4 the Supreme Court interpreted the Québec equivalent of section 138.8 somewhat differently. In that case, the Supreme Court affirmed that the "reasonable possibility" test is more than a "speed bump". The test requires the plaintiff to "offer both a plausible analysis of the applicable legislative provisions, and some credible evidence in support of the claim". 5 Today's decision confirms that the Court's comments in Theratechnologies also apply to the test for leave to proceed in Ontario.6

This may be of some comfort to reporting issuers. In the period since Theratechnologies was decided, a number of lower court decisions on whether to grant leave to proceed seem to have examined more closely the merits of the proposed claims. With today's decision, there remains reason for optimism that the leave requirement will become the gatekeeping mechanism it was intended to be.

Negligent Misrepresentation Claims

Plaintiffs in secondary market misrepresentation class actions almost invariably pursue common law negligent misrepresentation claims, in addition to statutory claims. They do so because common law claims are not subject to the leave requirement or to the liability caps imposed by the Securities Act. However, to succeed in a negligent misrepresentation claim, plaintiffs must prove that they actually relied on the alleged misrepresentation. Reliance is traditionally regarded as something that can only be proved on an individual basis, not on a class-wide basis. Today's decision from the Supreme Court leaves undisturbed the Court of Appeal's holding that an inference of group reliance cannot replace the inquiry into individual reliance in the secondary market context.7 Specifically, plaintiffs cannot invoke the "efficient market" theory to establish reliance on a class-wide basis. The efficient market theory posits that investors who purchase securities in the secondary market necessarily rely on the issuer's public disclosure because in an efficient market all publicly available information is incorporated into the price of the securities. The Supreme Court also upheld the Court of Appeal's ruling that other than reliance and damages, issues relevant to negligent misrepresentation claims could be certified.8

The result is that certain issues relevant to common law negligent misrepresentation claims can be certified in securities cases. However, it is questionable whether negligent misrepresentation claims are economically viable, because even if the class members succeed at the "common issues" trial, each class member will then need to prove actual reliance and damages in an individual trial. Only class members with substantial individual claims will have the economic incentive to pursue such an individual trial. That being said, plaintiffs will undoubtedly continue bringing common law negligent misrepresentation claims in securities class actions in an attempt to exert leverage over defendants for settlement purposes.

Limitation Period: When Does the Clock Stop Running?

In today's decision, the Supreme Court held that the clock stops running on the three-year limitation period only once the plaintiffs obtain leave to proceed under section 138.8 of the Securities Act. That provision states that no statutory secondary market misrepresentation action may be commenced without the court's permission to do so (as discussed below). In so holding, the Supreme Court disagreed with the February 2014 decision of the Court of Appeal, which held that in the class action context, the clock stops running as soon as the plaintiffs file a statement of claim. The Supreme Court nevertheless allowed the Part XXIII.1 claims to proceed in the CIBC and IMAX cases, on the basis that the order granting leave to proceed could and should be "backdated" to a point in time when the limitation period had not yet expired. The backdating remedy was not available in Celestica because the limitation period had already expired by the time the motion for leave to proceed was brought.

This aspect of the Supreme Court's decision is unlikely to have an impact on future securities cases because in July 2014, the Ontario legislature amended the Act to clarify that the limitation clock stops running when a notice of motion seeking leave to proceed is first filed in court, and not when leave to proceed is actually granted.


1. Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60 [Green SCC].

2. Green v. Canadian Imperial Bank of Commerce, 2014 ONCA 90 [Green ONCA].

3. Ibid. at paras. 88, 90.

4. 2015 SCC 18.

5. Ibid. at paras. 38-39.

6. Green SCC, supra note 1 at paras. 120-122.

7. Green ONCA, supra note 2 at paras. 97-99, 101-103.

8. Green SCC, supra note 1 at paras. 126-128.

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.

Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions