Canadian Imperial Bank Of Commerce V. Green, 2015 SCC 60
In this highly anticipated trilogy decision, the Supreme Court of Canada made three important determinations regarding secondary market liability class action cases.
The Court unanimously confirmed that the merits test for leave to proceed with a proposed securities class action is to be construed as a "robust deterrent screening mechanism" across Canada. The Court emphasized that judges should apply real scrutiny to the evidence presented by investors to show a "reasonable possibility of success" for their proposed statutory claim.
By a 4–3 majority, the Court also clarified that the limitation period applicable to statutory secondary market misrepresentation claims in Ontario continues to run until the plaintiff obtains leave to proceed. The impact of this determination is limited given amendments to Ontario's Securities Act, which prescribe a different limitation period going forward.
Finally, of benefit to issuers, the Court unanimously rejected the argument that Canadian courts should endorse a U.S.-style "fraud on the market" theory, which would allow reliance to be inferred on a class-wide basis instead of requiring individual investors to establish actual reliance after a common-issues trial.For more on this decision and it potential impacts, see McCarthy Tétrault LLP's Canadian Appeals Monitor blog post entitled "Setting Limits: The Supreme Court Confirms a Robust Gatekeeper Approach to Secondary Market Liability Actions."
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