On page 290 of last week’s budget, under a section regarding consultations with the Ontario Securities Commission, it’s noted the government “plans to propose further changes to update the Securities Act.” That may include, “if needed, following current court cases that the government is monitoring closely, suspending the operation of the secondary market civil liability limitation period while leave to proceed is being sought.”
“My assumption is that it’s speaking to the Timminco case,” says Jeremy Devereux, a partner with Norton Rose Canada LLP, referring to Sharma v. Timminco Ltd., which denied a class action based on limitation period.
Devereux notes there are also three major cases going before the five-judge panel of the Court of Appeal.
“The government wants the public to know it’s an issue they’re aware of and state their position, which seems to be that if it turns out the limitation period does expire in three years, even though leave is being sought, it seems this government’s is saying they are going to change that.”
The cases include Silver v. Imax, Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v. Celesetica Inc., and Green v. Canadian Imperial Bank of Commerce.
“It looks like they’re waiting to see what happens with the cases currently before the Court of Appeal,” he says. “If the Court of Appeal finds a way of saying that the limitation period does expire in three years — provided you’re actually seeking leave to appeal from the court — even if it hasn’t been granted yet, I presume the government would say there is no longer a problem, we won’t do anything.
“But if the Court of Appeal says no, the limitation period does expire within three years, if you have not obtained leave, the government will intervene and amend the legislation to make it clear the limitation period stops running while leave is being sought.”
If a plaintiff intended to commence a securities class action, once they served the materials for leave under the Securities Act, then it would have the effect of stopping the limitation period from running.
Devereux notes that Justice Katherine van Rensburg in Imax and Justice Paul Perell in Celestica both found a way to allow the cases to continue even though leave had not been granted within the three year period.
Last July, in Green v. CIBC, Justice George Strathy took a different position and refused to certify based on expiration of the limitation period. In his view of the law, he wasn’t able to allow the case to continue. However, he noted in his decision that if it had not been “time-barred” he “. . .would have granted leave to pursue the statutory cause of action, and would have certified this action as a class proceeding for that purpose.”
Other items noted in the budget regarding the OSC indicate there is interest in updating the Securities Act including:
- expanding the insider-trading and self-dealing provisions, including in relation to their application to investment funds
- updating disclosure requirements for the exchange traded funds to provide plain-language, concise and comparable disclosure to investors that is more consistent with requirements that apply to mutual funds
- updating early-warning reporting and related requirements for take-over bids to provide more transparency to regulators and the public.