Canadian Lawyer InHouse

MAY 2016 16 INHOUSE 2012 2014 2015 2016 2017 plausible analysis of the applicable legisla- tive provisions and some credible evidence in support of the claim. The fi rst appellate court to apply the test since the SCC ruling in CIBC was the On- tario Court of Appeal earlier this year, in dismissing a leave application in Goldsmith v. National Bank of Canada [see sidebar: Na- tional Bank ]. Even still, there are a number of different interpretations about the exact meaning of the test and what kind of evi- dence is going to be necessary to grant leave. Laura Cooper, a partner at Fasken Marti- neau DuMoulin LLP in Toronto, describes the recent SCC decisions as "promising" for the defence side of securities-based class ac- tions. "It is very important that the market is not overwhelmed by cases that should not go forward," she says. "I think it is often go- ing to be diffi cult to defeat leave, but I be- lieve we will see it [the test] refi ned through subsequent decisions," says Cooper, who is co-chairwoman of the fi rm's Class Actions Practice Group. The evidentiary threshold is still rela- tively low, says Kalajdzic. "It is not as high a standard as defendants would like to have seen," she says. For her part, Waddell believes the test will be applied more strictly and is less plaintiff- friendly. Plaintiffs are going to have to show it is "more likely than not" there was an al- leged misrepresentation. She also notes that since defendants are not required to provide an evidentiary record at this stage, a plain- tiff may not have more than the information disclosed in a company's public fi lings and the hope of fi nding a whistleblower to put forward its case. Where there is agreement by lawyers on all sides is that the leave motions will be very fact specifi c and of the importance of a thorough investigation early on in the liti- gation. "There is a lot of work to be done upfront. You have to do a very early merits- based investigation," says Cooper, who ex- pects plaintiffs to be making the same ef- forts before a leave hearing. Despite the caution by the SCC in Thera- technologies, many of these leave hearings may end up appearing a lot more like a "mini-trial" depending on the extent of the defence's evidentiary record. Vincent de l'Étoile, a partner in the litigation group at Langlois LLP in Montreal, says he believes it is usually a good idea for a defendant to put forward a record at the time of the certifi cation motion. "It is always a tough call. From the client's perspective, though, they have a shot at having a claim dismissed at a very early stage," says de l'Étoile. "Nearly everyone wants to take that shot." For a publicly traded company to succeed at the leave motion stage, it will in most cases be necessary to fi le a defence, says Fuerst, whose litigation practice has a focus on securities and class action matters. However, this could also disclose the nature of the defence, early in the litigation, she notes. "If you fi le an affi davit, you are exposing yourself to cross-examination. That is a risk," she says. The size of the company may also impact the decision on how vigorously to challenge the lawsuit at the leave stage, says de l'Étoile. More established corporations may have the resources to fi ght a costly legal battle at every stage, in comparison to startups and other smaller publicly traded entities, he says. The impact on a company's reputation is another consideration as well as the cost of defending an action. "With the Internet and social media, people are much more aware" of a public company's alleged wrongdoings, says de l'Étoile. In the original CIBC leaving hearing before Strathy, there were a total of seven expert witnesses representing the plaintiffs February: Ontario Court of Appeal issues its decision in Timminco. April: Actions against Celestica in Ontario are consolidated. April: Leave motion in CIBC is argued before Justice George Strathy. July: Justice Strathy fi nds that, as a result of Timminco, he does not have jurisdiction to extend the limitations period and does not grant leave in the action against CIBC. December: Justice Paul Perell declines to strike the claim against Celestica and invokes the doctrine of special circumstances. February: A special fi ve-judge panel of the Ontario Court of Appeal decides that Timminco was wrongly decided on the limitations period issues. It fi nds that the CIBC and IMAX actions can proceed and the leave hearing in Celestica may resume. February: Justice Perell grants leave to the plaintiffs in Celestica on some of the alleged misrepresentations. July: The Ontario Securities Act is amended so that the limitations period is suspended, once a notice of motion to seek leave in a secondary market securities class action is fi led. February: The Supreme Court of Canada hears a joint appeal in the CIBC, IMAX, and Celestica actions. December: Three separate judgments are issued by the SCC. The court is unanimous on the legal test to be granted leave. The Celestica action is dismissed 4-3. The CIBC and IMAX actions are permitted to continue under the Securities Act claims, also by a 4-3 vote, with Justice Thomas Cromwell the swing vote each time. Green v. CIBC / Silver v. IMAX / Trustees of the Millwright Regional Council v. Celestica January: An Ontario Superior Court judge approves a $3.75-million settlement inclusive of fees and disbursements to resolve the action against IMAX. A similar action was resolved in the U.S. for $12 million in 2012. The class action against CIBC related to alleged misrepresentations about its exposure to the U.S. sub-prime market in 2007 in the U.S. is expected to go to trial.

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