Law Times

Law timeS • September 3, 2012 SCC denies leave in Timminco case FOCUS BY JULIUS MELNITZER For Law Times the most important decision yet on secondary-market class actions. It preceded last week' I n early August, the Supreme Court of Canada denied leave to appeal in a case some defence lawyers have called ation, the Ontario Court of Ap- peal' ruling in another notable matter, Silver v. Imax, that bucked recent trends on the issue (see page 20 for more details). The matter under consider- s lion case of Sharma v. Timminco Ltd., had overturned an earlier ruling by Ontario Superior Court Justice Paul Perell. He ruled that s. 28 of the Class Proceedings Act, which suspends limitation pe- riods applicable to class actions "on the commencement of the class proceeding, s decision in the $520-mil- running of the three-year limita- tion period from the time that the plaintiffs announced their inten- tion to seek leave in their state- ment of claim, which is precisely what the Timminco plaintiffs did. But Won Kim of Toronto' " suspended the Kim Orr, who with colleagues Michael Spencer and Victoria s Paris represented the plaintiff, says the Court of Appeal' is unfair to potential plaintiffs. "By requiring the actual grant- s ruling ing of leave before the limitation period is suspended, the decision gives defendants an incentive not to make full and fair disclosure, he says. "As well, plaintiffs who do not discover the wrongdoing until close to the ex- piry of the three years." As it turns out, in February it prejudices " that it's significant that the Court of Appeal didn't dismiss the statutory misrepresentation case but merely ruled that the limita- tion period had run out. According to Kim, this will plaintiffs beyond the period allowed to individual plaintiffs or shareholders," he says. "The court also recognized allow him to go back to Per- ell and ask him to backdate the leave order, thereby obviating the limitation problem. But Alan D'Silva of Stikeman 2011, just a few weeks before the three-year period would have expired, the plaintiffs re- quested a case conference with Perell to deal with the prospect of a limitation problem. At the case conference, which took place on March 10, 2011, Kim and his colleagues asked Perell to accelerate the leave motion to a date before the limitation period expired on March 17, 2011. Although Perell refused to do expedited procedural steps "that may address the risk." Against this background Elliott LLP, who with colleagues Daniel Murdoch and Lesley Mercer, represented Timminco, disagrees. "Nobody asked the Court of Appeal to dismiss the case but only to determine whether the limitation period had been sus- pended, decision is that the statutory claim for misrepresentation is dead and the plaintiffs will not be able to rely on the events that took place at the case conference to revive it." D'Silva maintains that Perell' so because it wouldn't be "proce- durally fair, " he ordered certain and in the context of a heavily litigated lawsuit subject to case management, Kim maintains ruling created a disparity be- tween individuals who chose to sue by way of class proceedings and those who sued individually. "The Court of Appeal, cor- s " he says. "The effect of the By way of example, Dolman cites Ontario's Arthur Wishart that this interpretation was con- sistent with the legislative pur- pose of ensuring that secondary- market claims proceeded with dispatch so they are not held over the heads of the company and other potential defendants." The case is an important Act that governs franchise agree- ments. The legislation requires a party that asks the court to rescind a franchise agreement to give notice within certain time limits. " one, says Jennifer Dolman of Osler Hoskin & Harcourt LLP. "Timminco will have profound implications for many types of class actions," says Dolman, who practises on the defence side. "There are other statutes with preconditions to litigation, such as the requirement to give notice or obtain leave, and Timminco is certainly open to the broader in- terpretation that the Class Pro- ceedings Act does not suspend time limits for satisfying the preconditions that are found in these particular statutes." rectly in our view, determined that to hold otherwise would be unfair because it would extend the limitation period for class court ruled that the right to sue did not arise until leave was ob- tained, courts have ruled that the right to seek rescission in a franchise case does not arise un- less notice was given in a timely fashion," says Dolman. Ontario' As in Timminco, where the tion Act has a similar notice pro- vision for consumers who want to rescind their contracts. The Proceedings Against the Crown Act does so as well. It requires citizens who want to sue the gov- ernment to give notice before starting their lawsuits. 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