Ontario Court Of Appeal Overturns Itself On Limitation Periods In Securities Class Actions

On February 3, 2014 in its decision in Green v Canadian Imperial Bank of Commerce, 2014 ONCA 90, the Ontario Court of Appeal revisited its controversial decision in Sharma v Timminco, 2012 ONCA 107 [Timminco], in which the Court ruled that class actions asserting statutory claims for secondary market liability under Part XXIII.1 of the Ontario Securities Act (the "Act") are statute-barred if leave to commence such an action is not obtained within the specified three-year limitation period in the Act. In Timminco, the Court had also found that s. 28 of the Ontario Class Proceedings Act, 1992 (the "CPA") did not operate to suspend the running of that three-year limitation period until leave was obtained.

The decision in Timminco had drastic implications for securities class action plaintiffs, and in particular for three different class proceedings then before the courts: Green v Canadian Imperial Bank of Commerce, 2012 ONSC 3637 [Green], Silver v IMAX Corp., [2009] OJ No 5573 (Sup Ct J) [Silver], Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v Celestica Inc., 2012 ONSC 6083 [Trustees of the Millwright]. Each of the actions made claims both in common law negligent misrepresentation and under the Act, and each of the representative plaintiffs had issued and served their respective statements of claim within the three-year limitation period, but had not obtained leave.

The parties in Green were in the middle of their motions for certification and leave when Timminco was released. Justice Strathy explained that he would have granted leave and certified the action, but for the decision in Timminco. Certification was denied.

In Silver, Justice van Rensburg had already granted leave even though the limitation period had expired. Following the decision in Timminco, the defendants brought a motion for summary judgment dismissing the action as time-barred. Justice van Rensburg dismissed that motion and concluded that leave had been granted to apply nunc pro tunc.

Finally, in Trustees of the Millwright, Justice Perell granted the plaintiffs leave under the Act despite the expiry of the limitation period by applying the doctrine of "special circumstances."

In Green, the Court of Appeal heard appeals from all three proceedings together and Justice Feldman, writing for the Court, concluded, at paragraph 6, that:

The Timminco court's interpretation of the term "asserted" in s. 28 of the CPA was a viable one based on the arguments...