In its recent decision in Bradley v Eastern Platinum
Ltd., 2016 ONSC 1903, the Ontario Superior Court of
Justice denied leave to commence a secondary market securities
class proceeding under Part XXIII.1 of the Securities Act.
This decision confirms that the leave hurdle is a meaningful
screening mechanism and that the proposed plaintiff must
demonstrate a realistic chance that its action will succeed in
order to be able to proceed with its claim.
In its proposed statement of claim, the plaintiff alleged that
the defendant mining company failed to disclose a complete or
partial shutdown of operations at its platinum mine in South Africa
in 2011, which was a material change requiring disclosure. The
plaintiff then amended its proposed statement of claim to allege
that the introduction of certain support technologies at the mine
constituted a material change that the defendant failed to
The Application for Leave Test
Part XXIII.1 of the Securities Act sets out a
two-branch test which a plaintiff must meet in order to be
successful on a leave application: the plaintiff must establish
that (1) the action is being brought in good faith; and (2) there
is a reasonable possibility that the action will be resolved at
trial in favour of the plaintiff.
In her decision, Rady J. reiterated that the purpose of the
statutory leave requirement was to "prevent strike suits,
namely coercive and unmeritorious claims, which are aimed at
pressuring a defendant into settlement in order to avoid costly
litigation." Rady J noted that a motions judge must ensure
that "the leave requirement is more than a 'speed
bump' in the litigation".
Following the Supreme Court of Canada's guidance from
CIBC v Green, 2015 SCC 60, Rady J. described the leave test
as requiring a robust, meaningful examination and critical
evaluation of both the fact and expert evidence filed by the
parties. While not strictly necessary for the defendants to file
any evidence on these leave applications, as noted by Rady J.,
"it may be a risky venture not to do so particularly where
there are, as here, highly contentious factual issues."
In the result, the Court found that the evidence tendered by the
defendants overwhelmingly contradicted the plaintiff's
allegations. As such, the Court found that the plaintiff had no
reasonable prospect of success at trial and dismissed the
application for leave.
This case is a helpful recent illustration in Ontario of how the
leave test under Part XXIII.1 of the Securities Act can be
applied to screen out claims which do not have a reasonable chance
of success at an early stage in the proceedings. We will continue
to monitor how courts apply the principles regarding the leave
requirements for secondary market securities class actions.
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.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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