Law Times

PAGE 14 FOCUS March 16, 2009 • Law TiMes ment that Bill 198 — the legisla- tion that introduced liability for misrepresentation in the secondary Ainslie makes it more difficult to bring an action T BY JULIUS MELNITZER For Law Times he business world may re- call the assurances given by the Ontario govern- DD LT Qtr-Np1 NAP ad 3/9/09 10:29 AM Page 1 market into the Ontario Securities Act — would not produce a fl ood of litigation because the legislation had a "gatekeeper" mechanism. That is, plaintiffs would require leave to proceed by convincing a judge that the action was brought in good faith and that there was a "reasonable possibility of success." without appropriate facts in hand would not be allowed to continue. If the business world does indeed Presumably, potential plaintiffs recall such assurances, the Ontario Superior Court's decision in Silver v. IMAX Corp. granting plaintiffs the right to conduct what amounted to examinations for discovery in FROM COAST TO COAST BASICS is the largest 100% Canadian Office Products Buying organization and is more than ready to serve Canadian Businesses with all their Office Product needs from Coast to Coast. support of the application, and the court's subsequent refusal to allow an appeal of that decision to the Divisional Court, is likely to create amnesia around the topic. Making matters worse, both the motions judge and the leave appli- cation judge stated in no uncertain terms that each defendant to a pro- posed action was under a compul- sion to fi le an affi davit in response to the leave application. But then along came Ainslie v. CV Technologies Inc. "Ainslie makes it more diffi cult to bring an action than plaintiffs may have hoped, but I think that's it's consistent with the intent of the leave provisions," says Peter Doo- dy, a partner with Borden Ladner Gervais LLP's Ottawa offi ce. The case arose when sharehold- ers commenced a class proceeding against CV, some of its offi cers and directors, and its auditors, alleg- ing that the company's disclosure documents for 2006 and 2007 contained misrepresentations. The plaintiffs fi led affi davits MILLS SUPREME CRITES & RIDDELL COVEY BASIN ACCOUNT PROGRAM NATIONAL • Next Day Delivery to MAJOR City Centres across Canada • Consistent Product Offering with a National Catalogue • Highly Competitive and Consistent Pricing • Quality Basics Branded Products • Save Shipping Costs with Local Distribution O NETWORK OF DEALERS A NATIONAL EACH 100% CANADIAN OWNED AND OPERATED DYE & DURHAM BEATTIES DICKS in support of their application for leave. CV fi led two experts' affi da- vits in opposition, but the auditors fi led none. The plaintiffs, represented by William Sasso, a partner at Wind- sor's Sutts Strosberg LLP, brought a motion asking the court to compel each of the defendants to swear an affi davit. According to Sasso, ss. 138.8(2) of the act contained mandatory language requiring "each defendant" to serve and fi le "one of more affi davits setting forth the material facts upon which each intends to rely." But Superior Court Justice Joan compensation. "The focus on deter- rence was in part a recognition that while compensation of a prospectus investor would generally involve the culpable issuer returning subscrip- tion money it received from ag- grieved investors, by contrast, com- pensation of aggrieved secondary market investors would come at the expense of other innocent investors, particularly the issuer' shareholders," Lax wrote. The purpose of the leave mech- s continuing anism, Lax noted, was not only to minimize the prospects of an ad- verse court award in the absence of meritorious claims but more im- portantly to try to ensure that un- meritorious litigation was avoided or brought to an early end. "[The plaintiffs' submission] ignores the legislative purpose of section 138.8," Lax wrote. "The section was not enacted to ben- efi t plaintiffs or to level the play- ing fi eld for them in prosecuting an action [for secondary market liability]. Rather, it was enacted to protect defendants from coer- cive litigation and to reduce their exposure to costly proceedings." In Lax's view, IMAX did not stand for the proposition that each defendant was required to fi le an affi davit. The ruling in IMAX, she noted, dealt with the scope of ex- amination once an affi davit had been fi led and should be seen in light of the fact that the defendants there had elected to fi le affi davits. "A decision to the contrary in For more information contact john_trevisan@dyedurham.ca Cross-Border Litigation: Inter-Jurisdictional Practice and Procedure Kenneth C. MacDonald "… This will be a very useful and timely addition to the library of any litigator involved in inter-jurisdictional disputes." Brian Casey, International Lawyer, Baker & McKenzie LLP • • • • • • • • • Cross-Border Litigation: Inter-Jurisdictional Practice and Procedure offers practical guidance on all aspects of cross-border litigation, covering everything from deciding where to commence litigation to enforcement of a judgment. It is an excellent handbook to help you understand the legal considerations involved and map out the right course of action, such as: where is the best place to sue strategies for challenging the plaintiff's choice of venue how to ensure proper service outside your jurisdiction how to determine which jurisdiction's laws apply obtaining evidence from other jurisdictions responding to requests for evidence from other jurisdictions pleading and proving foreign law pre-judgment cross-border remedies enforcing foreign judgments at home and domestic judgments abroad ... and more This resource includes time saving features such as a decision tree to help analyze where a case should be litigated, appendices with related Hague Service Conventions and a glossary of terms. ORDER your copy today Hardbound • Approx. 370 pp.• May 2009 • Approx. $110 • P/C 0291010000 • ISBN 978-0-88804-484-6 Lax ruled that while defendants could choose to fi le affi davits, they were under no compulsion to do so. The legislation, she noted, was aimed at deterrence rather than Ainslie would have undermined the whole idea of having the courts act as gatekeepers through the mechanism of a leave motion," says Alan D'Silva, a partner with Stikeman Elliott LLP, who repre- sented CV and its executives. "If a plaintiff decided to sue 20 or 30 defendants, anyone with potential liability under the act would have to fi le regardless of whether there was validity to the individual claim against them." But the issue is not yet settled: Guidance on all aspects of cross-border litigation for inter-provincial, international and multiple jurisdictions in February, Justice Denise Bel- lamy granted leave to appeal to the Divisional Court. IMAX, she agreed, was not strictly speaking a confl icting deci- sion because the remarks of Justice Katherine van Rensburg, the mo- tions judge, regarding the need to fi le affi davits was obiter. "Having said that, however, it is important to note that there are two judges of the same level of court as the motions judge [in Ain- slie] who have drawn the opposite conclusions from her on this very subsection: van Rensburg, J., who ruled on the refusal motion and who is the case management judge dealing with all issues arising in the IMAX matter, and [Kenneth] Langdon, J. who disposed of the application for leave to appeal on the same matter." Both IMAX rulings, Bellamy observed, contained "decidedly strong conclusory remarks" re- garding the issue. "These observations regarding the apparently mandatory language of the subsection contradict the in- terpretation ascribed to it by the motions judge," Bellamy wrote. The resolution of the "novel For a 30-day, no-risk evaluation call: 1.800.263.2037 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com MacDonald_CBL (LT 1-3x4).indd 1 3/11/09 1:47:28 PM LT1603 issue" at stake, she concluded, was open to "very serious debate" and "is of general public impor- tance requiring the attention of an appellate court." LT T 1 C 0 0 O A % A C C T A A T N O D A I N S S AND JUST AROND THE CORNER

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