Law Times

Law Times • September 1, 2014 Page 11 www.lawtimesnews.com Province clarifies securities limitation period July budget legislation includes provision to suspend deadline By arshy mann Law Times quiet change to Ontario's Securi- ties Act has cleared up the issue of the three-year limitations period in secondary-market securi- ties class actions. e amendments to the Securities Act were part of the Liberal government's recent budget bill that received royal assent on July 24. Specifically, the government amended s. 138.14 to say that once a plaintiff has filed a motion of notice for leave to proceed, the limitation period stops running. "A limitation period es- tablished by subsection (1) in respect of an action is sus- pended on the date a notice of motion for leave under section 138.8 is filed with the court," the Securities Act now states. e limitation period re- sumes running on the date the court grants leave or dismisses the motion. Daniel Bach, a partner at Siskinds LLP, is happy with the change. "e amendments to the Securities Act that Ontario brought in in its budget are im- portant measures to protect shareholders and make sure that Part 23.1 of the Securities Act is a viable, comprehensive, and effective measure to ensure recovery for shareholders when they're wronged," he says. Part 23.1 refers to the por- tion of the law that lays out civil liability for secondary-market disclosure. "As far as I can tell, this is housekeeping in which the gov- ernment of Ontario remedied what was an obvious problem that was clearly not their inten- tion in the act," says Bach. e issue surrounding the three-year limitation period has its roots in amendments to the Securities Act establishing civil liability for secondary-market disclosure that came into force in 2005. While taking away the need for shareholders to prove they had relied upon alleged mis- information to make a share purchase and thus making it easier to certify class actions, the amendments also established protections for issuers. ey in- cluded requiring leave from the court to proceed with the case as well as establishing a three-year limitation period so that an ac- tion must commence within three years of the last alleged misrepresentation. However, the rules created uncertainty about when exactly an action commenced. In one case, Sharma v. Timminco Ltd., the Ontario Court of Appeal ruled that an action commences when the court gives leave to proceed. In the wake of Timmin- co, Ontario courts struggled to apply the precedent uniformly. In Silver v. IMAX, then-Su- perior Court (and now appeal court) Justice Katherine van Rensburg granted a motion for leave even though more than three years had passed since the last alleged misinformation. e limitation period had passed while the judge was consider- ing the decision. "e motion for leave to assert the statutory cause of action was brought promptly and pursued vigorous- ly and without any inappropriate delay on the part of the plaintiffs (or the defendants for that mat- ter)," she wrote. "e expiry of the limitation period had nothing to do with any act or default by any party." IMAX ended up in front of the Court of Appeal along with two other cases — Green v. Canadian Imperial Bank of Commerce and Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v. Celestica Inc. — that dealt with similar issues. e Court of Ap- peal eventually took the unusual step of overturning its previous ruling in Timminco, establish- ing a lower threshold for what it means to commence an action. While the Supreme Court of Canada has granted leave to appeal in the IMAX, CIBC, and Celestica cases, it's unclear how the changes to the Securities Act will affect ongoing cases. Ryan Morris, a partner with Blake Cassels & Graydon LLP who worked on Celestica, says the legislative revisions to the Securities Act at least provide clarity for cases going forward. "If that had been in place from the outset, I think the ter- rain would look a little bit differ- ent," he says. Morris says the statutory revisions chart a course that lies between the Court of Appeal's rulings. While they don't go as far as the appeal court originally did in Timminco in requiring plaintiffs to obtain leave to pro- ceed with an action before the end of the three-year deadline, they still ensure they have to file for leave. Bach, who worked as the plaintiffs' counsel in IMAX, says the changes avoid a situ- ation where judges would have to put aside other im- portant work to ensure secu- rities class actions obtained leave to proceed before the three-year deadline expired. "ink of a situation where you have a courthouse and a judge who hears mul- tiple types of cases who has various demands on her time, from criminal trials, family trials, civil litigation, securities fraud," he says. "Is she supposed to priori- tize securities litigation over people going to jail or not, people getting bail or not, people having their family matters disposed of in a fair and effective and quick man- ner because of this limitation period?" To Bach, the old system didn't make sense. "And I think that is exactly why Ontario took this step," he says. "And it's such a sensible change." LT FOCUS Draft your own customized documents with O'Brien's Encyclopedia of Forms, Eleventh Edition, Ontario – Family Law, Division VI. This service provides, both in looseleaf and electronic formats, a comprehensive collection of documents that can be easily adapted to suit your clients' needs. Compiled by a family law expert, O'Brien's Ontario – Family Law gives you convenient access to: • Domestic contracts with detailed commentary • A section on the division of pensions • Fillable court documents • Commentary on procedure in family law cases • Common Claims Checklist Save time with O'Brien's Online With O'Brien's Online, you can quickly search thousands of documents, pinpoint the right one, and download and edit it to suit your situation. 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