Top 5 Civil Appeals from the Court of Appeal (March 2014)

Green v. Canadian Imperial Bank of Commerce, 2014 ONCA 90 (Doherty, Feldman, Cronk, Blair and Juriansz JJ.A.), February 3, 2014

Achilles Motors Limited v. 1717222 Ontario Inc., 2014 ONCA 139 (Hoy A.C.J.O., LaForme and Pardu JJ.A.), February 24, 2014

Knowles v. Lindstrom, 2014 ONCA 116 (Doherty, Goudge and Lauwers JJ.A.), February 13, 2014

Reisman v. Reisman, 2014 ONCA 109 (Hoy A.C.J.O., Laskin and Tulloch JJ.A.), February 11, 2014

Sawdon Estate v. Sawdon, 2014 ONCA 101 (Hoy A.C.J.O., Gillese and Strathy JJ.A.), February 5, 2014

  1. Green v. Canadian Imperial Bank of Commerce, 2014 ONCA 90 (Doherty, Feldman, Cronk, Blair and Juriansz JJ.A.), February 3, 2014

    A five-judge panel of the Court of Appeal heard three appeals --Green v. Canadian Imperial Bank of Commerce, 2012 ONSC 3637, 219 A.C.W.S. (3d) 692, Silver v. IMAX Corp, [2009] O.J. No. 5573, 66 B.L.R. (4th) 222 (S.C.J.), leave to appeal to Ont. Div. Ct. refused, 2011 ONSC 1035, 105 O.R. (3d) 212, and Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v. Celestica Inc., 2012 ONSC 6083, 113 O.R. (3d) 264-- together in order to determine whether to reconsider its decision in Sharma v. Timminco, 2012 ONCA 107, 109 O.R. (3d) 569, leave to appeal to S.C.C. refused, [2012] S.C.C.A. No. 157.

    In each of the three appeals, the plaintiffs were representative plaintiffs in a class proceeding, claiming damages under Part XXIII.1 of the Securities Act, R.S.O. 1990, c. S.5, s. 138.3 for misrepresentations alleged to have been made in respect of shares trading in the secondary market. In each case, the representative plaintiff commenced a class proceeding for common law negligent misrepresentation as well as a statutory claim based on the new statutory cause of action which came into force on December 31, 2005, allowing an investor, with leave of the court, to recover for losses suffered without proving any reliance on the misrepresentation in the purchase or sale of shares. In each case, the statement of claim was issued and served within the three-year limitation period for bringing the statutory claim, but leave to commence the statutory action was not obtained within that period.

    In Sharma v. Timminco, the Court of Appeal held that the statutory claim is statute-barred if leave to commence the action is not obtained within the three-year limitation period, and that s. 28 of the Class Proceedings Act, 1992, S.O. 1992, c.6, which addresses the operation of limitation periods in causes of action asserted in a class proceeding, does not suspend the running of the limitation period in favour of class members until leave has been obtained. Under Timminco, in order to fall within s. 28 of the CPA, the s. 138.3 cause of action had to have been "asserted" in a class proceeding. The Court held that because the cause of action could not be enforced without leave being obtained, it could not be "asserted" before leave was obtained.

    Writing for the Court, Feldman J.A. noted that the effect of Timminco on class actions under s. 138.3 of the Securities Act was that representative plaintiffs were required to move for and obtain leave from the court, as well as commence a class action containing the claim, within the three-year limitation period, a task which would be "either difficult or impossible." Feldman J.A. acknowledged that the Timminco interpretation of "asserted" in s. 28 of the CPA was a viable one based on the arguments made and the record before the court in that case. She conceded that, however, in light of the consequences of that interpretation, which left class members without the normal s. 28 protection from the passage of the limitation period, that interpretation was not correct.

    Feldman J.A. found that Timminco wrongly held that a class action properly commenced cannot also assert a cause of action for the statutory remedy under s. 138.3 unless leave has first been obtained, and that before leave is obtained, s. 28 of the CPA does not suspend the limitation period for all class members in a proceeding that claims a remedy under s. 138.3. She concluded that, consistent with David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Co. (2005), 76 O.R. (3d) 161, which focused on the "effect and future impact" of correcting the error, the decision in Timminco ought to be overturned. Instead, when a representative plaintiff in a class action brought within the Securities Act s. 138.14 limitation period also pleads a cause of action based on s. 138.3 of the Securities Act, together with the facts that establish the claim, and further pleads the intent to seek leave to commence an action under the Securities Act, then that claim has been "asserted" for the purpose of s. 28 of the CPA, and the limitation period is thereby suspended for all class members.

    As a result of this conclusion, none of the three actions under appeal was statute-barred.

    In Green v. Canadian Imperial Bank of Commerce, the leave motion in that case was dismissed on the basis of Timminco. The respondent submitted that if the s. 138.3 action was not statute-barred, the motion judge erred in concluding that leave should be granted on the evidence. The respondent argued that the motion judge erred in his interpretation of the "reasonable possibility of success" standard, and that he set the bar for granting leave too low when he held that the standard was intended to screen out cases so weak that they cannot possibly succeed. Feldman J.A. rejected the respondent's interpretation of the motion judge's ruling to mean that a mere possibility of success as opposed to a reasonable possibility is sufficient, finding that the motion judge applied the "correct level of scrutiny" when determining whether leave should be granted in respect to the claims.

    Feldman J.A. also addressed the appellants' submission that the motion judge erred by failing to certify some issues in the class action for common law negligent misrepresentation. The motion judge found that proof of reliance is a necessary component of a negligent misrepresentation claim, but that multiple plaintiffs would not be able to prove reliance as a common issue in a claim for negligent misrepresentation in either the primary or secondary markets. Such claims were therefore "fundamentally unsuitable for certification". Feldman J.A. dismissed the appellants' claim that the motion judge should have certified the issue of inferred common reliance based on the "fraud on the market" or "efficient market" theories. She agreed with the appellants, however, that the motion judge erred in restricting his analysis to the issue of reliance, finding that certifying other issues common to the negligent misrepresentation claims would significantly advance those claims.

    The Court allowed the appeal in Green v. CIBC to the extent that the order dismissing the class action as statute-barred should be set aside and the common issues in the common law claim relating to the conduct and intent of the defendants were certified.

    The Court dismissed the...

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