Legal Feeds Blog
- High costs could deter lawyers from taking on similar claims, lawyers say
While a securities class action lawsuit concerning a Canadian mining company paid out millions in the United States, its counterpart in Ontario could not get off the ground.
|Lawyer Peter Roy says Ontario Court of Appeal decision 'really kills any kind of real initiative in this kind of securities litigation.'|
The Ontario Court of Appeal has dismissed the appeal of plaintiffs challenging the ruling of the motion judge, Justice Edward Belobaba, who refused to certify their proposed class action against Silvercorp Metals Inc.
The court upheld $500,000 in costs against the plaintiffs and added a further $75,000 — a penalty lawyers say could deter others from taking on similar cases in the future.
“This decision really kills any kind of real initiative in this kind of securities litigation,” says Peter Roy, a senior litigation counsel at Roy O’Connor LLP who has represented both plaintiffs and defence in class action proceedings.
“The cost consequences to a plaintiff side firm that generally takes this kind of stuff on spec is crushing.”
Roy says that the risk of the cost consequences for plaintiff lawyers in such suits will make it unlikely that firms will take on anything other than the most obvious cases in the future.
“You’ve got to be pretty brave to put your toe in that water,” he says.
The lead plaintiff on the claim, John Mask, alleged Silvercorp had misrepresented the quality of its mineral resources at a mine in China and that this had inflated the company’s share price. The plaintiffs, who were shareholders, then lost money when the price fell after “corrective disclosures” issued by an anonymous Internet poster in 2011, the decision said.
Belobaba, however, ruled that evidence Silvercorp submitted undermined that of the plaintiffs, whose claim was “so weak or has been so successfully rebutted by the defendants that it has no reasonable possibility of success.”
In their appeal, the plaintiffs argued that Belobaba had misapplied the test to grant leave for the action by “weighing the evidence on a balance of probabilities, turning the leave application into a mini-trial.”
They argued that Belobaba’s approach was inconsistent with the purpose and spirit of the Securities Act to screen out only plainly unmeritorious claims.
In the Court of Appeal decision, Chief Justice George Strathy said that scrutiny of the evidence on such a leave application should not be so limited.
“In my view, the ‘reasonable possibility’ requirement of the leave test requires scrutiny of the merits of the action based on all the evidence proffered by the parties,” he wrote.
“Far from undermining the objective of the legislation, such scrutiny of the entire body of evidence is necessary to give effect to the purpose of the screening mechanism.”
Matthew Fleming, of Dentons Canada LLP, says the decision continues a trend in secondary market securities class action claims where defendants are filing extensive evidence in response at the leave stage.
“In particular, they are rebutting what I might characterize as more speculative evidence that is being advanced by plaintiffs,” he says. “And in doing so, they’re making it far more difficult for plaintiffs to succeed at the leave stage.”
Fleming says the decision also confirms that motion judges are entitled to weigh that evidence.
“It’s not simply sufficient for a plaintiff to offer up some credible evidence in support of a claim, particularly where the defendants take on and rebut that evidence directly.”
Garth Myers, a class action lawyer with Koskie Minsky LLP, says it has been increasingly common for defendants to file a significant amount of evidence in these types of motions in order to dispute the claims advanced by the plaintiffs.
“As a result of the court’s increasing scrutiny of these claims at this stage, I think the defendants are encouraged to do so, but the downside of that is simply that it increases the cost and the complexity of these motions,” he says.
The settlement in the U.S. paid out US$14 million to investors who bought Silvercorp shares on the New York Stock Exchange between May 20, 2009 and Sept. 13, 2011.
Myers says it is easier in some ways and harder in others to push similar actions forward in the U.S. One difference is that there is a very different preliminary burden in Canada than in the U.S.
“In Canada, it’s evidentiary. You have to prove that there is a reasonable possibility of success and you do that using evidence,” he says.
“In the [United] States, the preliminary motion is typically a motion to strike. That’s just a pleadings motion and they look at whether the claim is capable of satisfying the pleadings requirements in the States, and that’s done without evidence and then subsequently they’re permitted to get discovery.”
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- ‘Significant breakthrough’ after period of intense campaign
After years of resistance, Legal Aid Ontario has agreed to come to the bargaining table to negotiate with its staff lawyers’ chosen union, the Society of Energy Professionals.
|LAO lawyers demonstrate outside a Liberal party fundraiser on July 13 in downtown Toronto. Legal aid has now agreed to negotiate with staff lawyers’ chosen union. (Photo: Alex Robinson, Law Times)|
Legal aid lawyers, who mounted an intense campaign on the LAO and the Ontario government in recent months, are calling this move a “significant breakthrough.” In the days ahead, the lawyers say the union and LAO will enter into negotiations they hope will end in the recognition of the Society of Energy Professionals as their bargaining agent.
“It’s a huge step,” says legal aid lawyer Dana Fisher. “It’s a step that they’ve refused to take until now.”
Legal Aid Ontario says it has agreed to meet with union reps to find out what its employees are looking for.
“At this point, we have agreed to meet with representatives of the Society of Energy Professionals to discuss arranging a vote to determine LAO’s staff lawyers’ wishes with regard to representation,” said Graeme Burk, spokesman for LAO. “We are taking this step because LAO wants to know conclusively what our staff lawyers want with respect to representation.”
Although her colleagues’ efforts are “finally paying off,” Fisher is careful not to declare victory just yet. “Saying that they’ll speak to us is a great first step and we’re really excited about it, but it’s certainly not the end of the road until we have something in writing,” she says.
Unlike most other workers, lawyers are not included in the Ontario Labour Relations Act. In order to unionize, they must obtain voluntary recognition from their employer. In 2013, LAO rejected its lawyers’ bid to unionize, saying it does not have a legal obligation to voluntarily recognize a trade union to represent its staff.
Later, LAO said it respects employees’ right to associate and is willing to consider associations other than the union the employees want to join. Legal aid expressed concerns about the fact that the Society of Energy Professionals is a trade union. But the lawyers were adamant, saying they’ve chosen the union because it is an “experienced and well-resourced association/union to mount an effective campaign.”
Since then, legal aid lawyers continued to pressure legal aid and the Ontario government, including the launch of a Charter challenge against them. They ratcheted up their efforts this summer, staging several demonstrations outside Liberal party fundraiser events and Premier Kathleen Wynne’s constituency office.
“I have never seen a group of workers as determined and dogged in their pursuit of collective bargaining rights as these Legal Aid lawyers,” said union president Scott Travers in a press release. “I am confident this breakthrough would not have been possible without the pressure Legal Aid lawyers and the Society exerted on the Wynne government and Legal Aid Ontario with the help of allies like the Ontario Federation of Labour.”
“Though we will move toward a normal, respectful bargaining relationship with Legal Aid Ontario, we will continue this public campaign until an agreement to recognize these lawyers' collective bargaining rights is final," Travers also said.
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For the first time in more than a decade, Nunavut Arctic College will be offering a law degree program in Iqaluit.
|Martin Phillipson, dean of law at University of Saskatchewan, wants to assemble ‘an A-team’ faculty to teach the program in Nunavut.|
Through a partnership with the University of Saskatchewan outlining a five-year fixed-term contract, the university’s faculty of law will graduate up to 25 law students.
“We have over 40 years of experience and commitment to delivering legal education to Canada’s indigenous people, so this is an absolutely natural progression for us,” says Martin Phillipson, dean of law at the University of Saskatchewan. “Our university has made it quite clear that indigenization is going to be one of the major goals of our college and our university to comply with the recommendations of the Truth and Reconciliation Commission, so this absolutely fits with our historical commitment to aboriginal legal education.”
The design and delivery of the program will be the responsibility of the university, and Phillipson says the four-year academic program will be broken down into a year of pre-law — a foundation year — and a three-year JD program, followed by one year of co-op or articling to ensure the students are ready to practise law.
Faculty will travel to Nunavut to teach the students in Iqaluit and, while U of S professors will do “the lion’s share” of the teaching, Phillipson says he aims to recruit faculty from across the country to build “an A-team” to deliver a high-quality legal education.
Phillipson says he’s already had professors reach out to him, interested in the opportunity to teach the program. He notes that when the college partnered with the University of Victoria for a similar law program in 2001 that saw 11 law students graduate, faculty from various law schools across Canada taught the courses.
“That’s clearly a model I’d like to replicate,” he says. “I want faculty from other schools who are interested and committed to indigenous education to have a role in the program if they want.”
As for the admissions process, grade 12 will be a prerequisite, but further post-secondary experience isn’t needed.
“The things that we’ll be looking for will be character references, writing skills and life experience,” Phillipson says.
He stresses that while the admissions process — which is still being hammered out with Arctic College — might look different from some other Canadian law schools, including not having an LSAT requirement, it’s no less rigorous.
As for funding, students will have access to the same help as any other sort of student in Nunavut would have for post-secondary education, and they will also be able to apply for funds from the University of Saskatchewan as any other law student would.
Phillipson says the schools will likely start the admissions process in October, with classes beginning in September 2017.
The hope is that the program will “increase the number of practising lawyers in Nunavut, while also meeting Sivumut Abluqta’s education priority to deliver relevant programming to meet the needs of Nunavummiut,” said a statement on the University of Saskatchewan’s web site. Sivumiut Abluqta: Stepping Forward Together is a four-part mandate from the Nunavut government. One of the four priorities is self-reliance and optimism through education and training.
With this new law program on offer, students at Arctic College can stay in their home territory of Nunavut and participate in three degree-granting programs in partnership with universities, including a bachelor of science in nursing in collaboration with Dalhousie University in Halifax and the teacher education program in partnership with the University of Regina.
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Ontario’s Law Practice Programs are kicking off for another year this week, marking the third year of the Law Society’s Pathways pilot project.
|Ryerson University’s 2016/2017 Law Practice Program kicked off yesterday in Toronto with 270 candidates. (Photo: Antonio Pendones: VCM Photography & Graphic Design)|
Ryerson University’s LPP program kicked off yesterday with 270 candidates enrolled in the program. Meanwhile, at the University of Ottawa’s French LPP program, there are 26 candidates enrolled.
The LPP provides aspiring lawyers another path to the Ontario Bar. The LPP consists of a four-month training course and a four-month work placement.
This spring, 219 candidates finished the Ryerson program, while 11 completed the French program in Ottawa.
Initially, there were 330 candidates interested in the 2016/2017 Ryerson LPP program.
“This year, we have definitely seen an increase in the number of candidates interested in the program. We do see a bit of attrition as the program begins and candidates determine whether it’s the right path for them, so it’s possible we could lose a few candidates between now and December as we did in the first two years,” says André Bacchus, assistant director, work placement office with the LPP at Ryerson.
Anne Levesque, co-director of the LPP program at the Faculty of Law at University of Ottawa, says many of the candidates for this fall are recent graduates coming to the program right out of law school.
Ottawa U’s online orientation starts next week and in person Sept. 2. Students to the French program are coming from the University of Ottawa, University of Montreal and Université de Moncton.
“They have a really diverse set of skills,” says Levesque. “Some have PhDs and many have done graduate studies.”
Levesque is joined at the French LPP program this year by co-director Lise Rivet, who has been with the program since its launch in 2014.
Rivet says a new component of the French program this year will be to have candidates take part in a one-day legal information clinic in Sudbury to expose them to practice in francophone and northern communities. Areas of law to be covered will include family law, wills and estates and landlord tenant issues.
“It will give them an opportunity to work with clients and give legal information,” she says. “They’ll also be networking with other lawyers in northern Ontario at that time.”
Not all of the 26 French LPP candidates will go on the trip north, but all will be helping with the program and doing equivalent activities.
Rivet says many lawyers in smaller northern communities such as North Bay are nearing retirement, while francophone areas such as Sudbury, Sault Ste. Marie, Elliott Lake and Sturgeon Falls are in need of French-speaking lawyers.
“We’re delighted that a lot of people are starting to choose the Law Practice Program as their go-to training during their access to the profession process,” says Rivet. “It’s exciting that people are interested in taking this type of practical training and getting exposed to many areas of law.”
Bacchus says Ryerson is seeing recent grads as well as those with previous careers and other experience as well.
“We’re also attracting people who are mature students or transitioning from other areas of practice and looking to get into Ontario,” he says.
Within six months of their call to the bar, Bacchus says, 75 per cent of Ryerson’s candidates are working in law.
Some of the French candidates have found jobs with a small criminal law firm in Ottawa, another had a contract renewed with a national union and another in a legal clinic.
“We were really happy about the criminal law job because when we did our initial consultation there was a shortage of criminal law lawyers available with French,” says Levesque.
At the end of this year’s programs, the Law Society of Upper Canada will review the LPP programs for possible renewal.
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- Plea comes as federal government launches public consultation on digital security
Technology lawyers say they’re hopeful the federal government’s public consultation on cybersecurity will result in a set of national standards for digital safety in Canada.
Technology lawyer Lisa Abe-Oldenburg says that, currently, it’s difficult to advise clients who ask about the level of security standards they should be following to protect their systems.
“There’s really not a lot of legislation we can point to to give them any kind of guidance and comfort,” she says. “It often becomes a negotiation between the customer and the supplier.”
Ira Nishisato, partner at Borden Ladner Gervais LLP, complains of the same issue.
“There are essentially no national standards,” Nishisato says. “From a legal perspective, the issue is always the question of standard of care — to what standard of care could an organization be held to in terms of ensuring the integrity and the security of its system?
“Right now, if you look for what you should be doing, it’s really not a question that avails itself of a straightforward answer,” he adds. “It would be extraordinarily helpful to have some sort of direction in terms of national guidelines or national standards for cybersecurity and cyber-risk management.”
Last week, the federal government announced it would be launching a public consultation “on the evolving cybersecurity landscape” with the goal of strengthening digital safety.
“The government’s cybersecurity review is an opportunity to build Canadian strength and expertise. Canadians spend more time online than people in any other country,” said Ralph Goodale, minister of Public Safety and Emergency Preparedness.
“We need to get really good at cybersecurity — across our personal, business, infrastructure and government sectors — so we can take full advantage of the digital economy, while protecting the safety and security of Canadians, and selling our valuable cyberskills and products into a booming market throughout the rest of the world,” Goodale added.
Current legislation and regulations around cybersecurity lack rigour, according to Abe-Oldenburg.
“We haven’t created any robust security regulations,” she says, noting that even recent legislation such as the Personal Information Protection and Electronic Documents Act falls short of specifying details such as the level of encryption required on personal information collected for commercial purposes.
Abe-Oldenburg also says the government should look at the various risks to which the public is exposed in the age of the Internet of Things, including vulnerabilities that may come with self-driving cars. She adds she’s hopeful the consultation will result in better regulations for products and services.
Lack of software safety standards for autonomous vehicles, for example, could jeopardize personal safety and data, Abe-Oldenburg continues. “If somebody hacks into a system that’s controlling a device, a machine or an automobile, there could be serious repercussions.”
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