Supreme Court Grants Leave to Appeal in Securities Class Actions

Written By Jeffrey S. Leon, Michael A. Eizenga, Ranjan K. Agarwal, Jonathan G. Bell, Preet K. Bell

All three of these cases address how the three year limitation period under the Ontario Securities Act applicable to secondary market class actions should be applied. In order to bring a secondary market class action under the Ontario Securities Act, a plaintiff must first obtain leave of the court and, pursuant to section 138.14, the action must be commenced within three years. In 2012, the Ontario Court of Appeal interpreted this limitation period to mean that plaintiffs must obtain leave from the court to commence the action within the three year period (Sharma v. Timminco). This decision was generally welcomed by defendants but attracted much concern among plaintiffs' class action counsel. Earlier this year, in Green v. CIBC, a rare five judge panel of the Ontario Court of Appeal reversed its own decision in Timminco (with two companion decisions in Silver v. IMAX and Celestica v. Millwright). The Court of Appeal found that articulating an intention to seek leave to commence the secondary market claim under the Securities Act was sufficient to suspend the limitation period, even though leave had not yet been granted to commence such an action.

The Supreme Court of Canada will now have the final say on how this three year limitation period is to be applied. It's possible that the Supreme Court could revert to the Court of Appeal's position in Timminco, uphold the Court of Appeal's existing decision in Green v. CIBC, or perhaps articulate its own interpretation of this limitation period. Regardless of the outcome, the Supreme Court's decision will have an impact on numerous securities class actions already before the courts and those to come.

Download PDF