Canadian Imperial Bank of Commerce Appellant v. Howard Green and Anne Bell, 2015 SCC 60

SUPREME COURT OF CANADA Citation: Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, [2015] 3 S.C.R. 801 Date: 20151204 Docket: 35807, 35811, 35813 Between: Canadian Imperial Bank of Commerce Appellant and Howard Green and Anne Bell Respondents And Between: Gerald McCaughey, Tom Woods, Brian G. Shaw and Ken Kilgour Appellants and Howard Green and Anne Bell Respondents - and - Canadian Foundation for Advancement of Investor Rights, Shareholder Association for Research and Education, Ontario Securities Commission and Insurance Bureau of Canada Interveners And Between : IMAX Corporation, Richard L.

Gelfond, Bradley J. Wechsler, Francis T. Joyce, Neil S. Braun, Kenneth G. Copland, Garth M. Girvan, David W. Leebron and Kathryn A. Gamble Appellants and Marvin Neil Silver and Cliff Cohen Respondents - and - Canadian Foundation for Advancement of Investor Rights and

Ontario Securities Commission Interveners And Between: Celestica Inc., Stephen W. Delaney and Anthony P. Puppi Appellants and Trustees of the Millwright Regional Council of Ontario Pension Trust Fund Respondent And Between: Celestica Inc., Stephen W. Delaney and Anthony P. Puppi Appellants and Nabil Berzi Respondent And Between: Celestica Inc., Stephen W. Delaney and Anthony P. Puppi Appellants and Huacheng Xing Respondent - and - Canadian Foundation for Advancement of Investor Rights and Ontario Securities Commission Interveners Coram: McLachlin C.J. and Rothstein, Cromwell, Moldaver, Karakatsanis, Gascon and Côté JJ.

Reasons Dissenting in Part ( CIBC and IMAX ); Reasons for Judgment ( Celestica ): (paras. 1 to 129) Reasons Concurring in the Result With Those of Karakatsanis J. ( CIBC and IMAX ) and Concurring With Those of Côté J. ( Celestica ): (paras. 130 to 159) Reasons for Judgment ( CIBC and IMAX ); Dissenting Reasons ( Celestica ): (paras. 160 to 214) Côté J. (McLachlin C.J. and Rothstein J. concurring) Cromwell J. Karakatsanis J. (Moldaver and Gascon JJ. concurring) Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, [2015] 3 S.C.R. 801 Canadian Imperial Bank of Commerce Appellant v.

Howard Green and Anne Bell Respondents and Gerald McCaughey, Tom Woods, Brian G. Shaw and Ken Kilgour Appellants v. Howard Green and Anne Bell Respondents and Canadian Foundation for Advancement of Investor Rights, Shareholder Association for Research and Education, Ontario Securities Commission and Insurance Bureau of Canada Interveners - and - IMAX Corporation, Richard L. Gelfond, Bradley J. Wechsler, Francis T. Joyce, Neil S. Braun, Kenneth G. Copland, Garth M. Girvan, David W. Leebron and Kathryn A. Gamble Appellants v. Marvin Neil Silver and Cliff Cohen Respondents and

Canadian Foundation for Advancement of Investor Rights and Ontario Securities Commission Interveners - and - Celestica Inc., Stephen W. Delaney and Anthony P. Puppi Appellants v. Trustees of the Millwright Regional Council of Ontario Pension Trust Fund Respondent and Celestica Inc., Stephen W. Delaney and Anthony P. Puppi Appellants v. Nabil Berzi Respondent and Celestica Inc., Stephen W. Delaney and Anthony P. Puppi Appellants v. Huacheng Xing Respondent and Canadian Foundation for Advancement of Investor Rights and Ontario Securities Commission Interveners Indexed as: Canadian Imperial Bank of Commerce v.

Green 2015 SCC 60 File Nos.: 35807, 35811, 35813. 2015: February 9; 2015: December 4.

Present: McLachlin C.J. and Rothstein, Cromwell, Moldaver, Karakatsanis, Gascon and Côté JJ. on appeal from the court of appeal for ontario Securities — Class actions — Limitation of actions — Statutory action for secondary market misrepresentation — Suspension of limitation period — Plaintiffs in three class proceedings claiming damages under common law tort of negligent misrepresentation and under statutory cause of action for secondary market misrepresentation in s. 138.3 of Securities Act — Leave required to commence statutory action under s. 138.8 of Securities Act — Limitation period for statutory action expiring prior to leave being granted — Whether s. 28 of Class Proceedings Act, 1992 , operates to suspend limitation period applicable to statutory action before leave to commence statutory action is granted — Whether statutory action time-barred — If yes, whether statutory action can be saved by order granting leave nunc pro tunc or doctrine of special circumstances — Whether threshold of reasonable possibility of success applies for leave to commence statutory action under s. 138.3 of Securities Act — Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 28 — Securities Act, R.S.O. 1990, c.

S.5, ss. 138.3, 138.8, 138.14 . Civil procedure — Class actions — Preferable procedure — Plaintiffs in three class proceedings claiming damages under common law tort of negligent misrepresentation and under statutory cause of action for secondary market misrepresentation — Whether Court of Appeal erred in holding that five of seven common issues relating to common law misrepresentation claim should be certified. The appeals in these three cases ( CIBC , IMAX and Celestica ) stem from motions in class proceedings brought before different judges of the Ontario Superior Court of Justice.

In each case, the respondent plaintiffs claimed damages under the common law tort of negligent misrepresentation and pleaded an intention to claim damages under the statutory cause of action in s. 138.3 of

Part XXIII.1 of the Ontario Securities Act (“ OSA ”) for alleged misrepresentations in respect of shares trading in the secondary market. None of the plaintiffs obtained leave to commence the statutory action, required under s. 138.8 OSA , before commencing the class proceeding based on the common law cause of action. In all of the cases, the limitation period for the statutory action, if not suspended, would have run out prior to leave being obtained.

In CIBC , the motion for leave was filed before the expiry of the limitation period; in IMAX , the motion for leave was filed and argued before the expiry of the limitation period; and in Celestica , the motion for leave was filed after the expiry of the limitation period.

Section 28 of the Class Proceedings Act, 1992 (“ CPA ”) operates to suspend the limitation period for a cause of action asserted in a class proceeding in favour of the members of a class on the commencement of the class proceeding. During the course of the class proceedings at issue in these appeals, the Ontario Court of Appeal released its decision in another matter, Sharma v. Timminco

Ltd. , 2012 ONCA 107 , 109 O.R. (3d) 569 (“ Timminco ”), in which it interpreted the application of s. 28 CPA to the limitation period in s. 138.14 OSA for the first time. The panel held that s. 28 CPA did not operate to suspend the limitation period in s. 138.14 OSA until leave was obtained under s. 138.8 OSA . The motion judges considering the issue of leave to commence the statutory action in the present cases found that they were bound by Timminco .

The motion judges in IMAX and Celestica applied the common law doctrines of nunc pro tunc and special circumstances to save the statutory claims in those proceedings from being statute-barred. The motion judge in CIBC found that those doctrines were inapplicable, and that the statutory claim could not be saved. In CIBC , in addition to the limitation period issue, the defendants challenged the threshold that must be met by a plaintiff applying for leave under s. 138.8 OSA and the plaintiffs sought certification for seven common issues relating to the common law misrepresentation claim.

Despite his finding that the statutory action was statute-barred, the motion judge interpreted s. 138.8 OSA as establishing a relatively low threshold. With respect to certification of the issues, the motion judge held that reliance, a necessary element of a common law misrepresentation claim, was not an issue that was capable of resolution on a common basis, and that a class proceeding would not be the preferable procedure for resolving a reliance-based claim. He refused to certify all seven issues relating to the common law misrepresentation claim.

On appeal, the three cases were heard together by a five-member panel of the Ontario Court of Appeal. The panel unanimously overruled the

interpretation of Timminco , holding that s. 28 CPA operates to suspend the limitation period for all class members once the statutory cause of action is asserted in a class proceeding by a representative plaintiff, even if leave has not yet been granted under s. 138.8 OSA , as long as the facts that found the action and the intent to seek leave to commence the action have been pleaded. As a result, the court concluded that in all three cases, the plaintiffs’ statutory claims for secondary market misrepresentation were not statute-barred. With respect to the threshold to be met for leave to be granted under s. 138.8 OSA , the Court of Appeal upheld the

interpretation of the motion judge in CIBC . Finally, the Court of Appeal upheld the motion judge’s decision in CIBC not to certify the issues relating to reliance and damages, but it held that five out of the seven issues proposed by the plaintiffs related to the intent and conduct of the defendant CIBC and should be certified as against that defendant in order to advance the litigation against it. Held (McLachlin C.J. and Rothstein and Côté JJ. dissenting in part): The appeals in CIBC should be dismissed. McLachlin C.J. and Rothstein, Cromwell and Côté JJ. find that the statutory action is time-barred.

McLachlin C.J. and Rothstein and Côté JJ. would allow the appeals on this issue. Cromwell J. would grant leave nunc pro tunc and dismiss the appeals. Moldaver, Karakatsanis and Gascon JJ. find that the statutory action is not time-barred and would dismiss the appeals. On the issues of the threshold for leave and the certification of common issues, a unanimous court would dismiss the appeals. Held (McLachlin C.J. and Rothstein and Côté JJ. dissenting in part): The appeal in IMAX should be dismissed. McLachlin C.J. and Rothstein, Cromwell and Côté JJ. find that the statutory action is time-barred.

McLachlin C.J. and Rothstein and Côté JJ. would allow the appeal with respect to the defendants who were not parties to the original statement of claim but would grant leave nunc pro tunc and dismiss the appeal with respect to the defendants who were parties to the original statement of claim. Cromwell J. would grant leave nunc pro tunc and dismiss the appeal with respect to all defendants. Moldaver, Karakatsanis and Gascon JJ. find that the statutory action is not time-barred and would dismiss the appeal. Held (Moldaver, Karakatsanis and Gascon JJ. dissenting): The appeal in Celestica should be allowed.

McLachlin C.J. and Rothstein, Cromwell and Côté JJ. find that the statutory action is time-barred and would allow the appeal. Moldaver, Karakatsanis and Gascon JJ. find that the statutory action is not time-barred and would dismiss the appeal. The issues are decided as follows: 1. On a majority reasoning by Côté J. (and McLachlin C.J. and Rothstein and Cromwell JJ.), s. 28 CPA operates to suspend the limitation period in s. 138.14 OSA applicable to a statutory cause of action under s. 138.3 OSA at the time when the action is commenced, that is, when leave is granted under s. 138.8 OSA in a class proceeding.

Moldaver, Karakatsanis and Gascon JJ. (dissenting on this issue) would find that s. 28 CPA operates to suspend the limitation period in s. 138.14 OSA once the representative plaintiff properly commences a class proceeding for a common law cause of action and pleads the statutory cause of action and its constituent elements in the statement of claim. 2. McLachlin C.J. and Rothstein, Cromwell and Côté JJ. hold that courts have the inherent jurisdiction to issue orders nunc pro tunc for leave to proceed with an action where leave is sought prior to the expiry of the limitation period.

In CIBC , McLachlin C.J. and Rothstein and Côté JJ. would not exercise their discretion to grant such an order, but Cromwell J. would. In IMAX , McLachlin C.J. and Rothstein and Côté JJ. are of the view that the motion judge exercised her discretion to grant such an order correctly with respect to the defendants who were parties to the original statement of claim, but not in respect of the defendants who were not parties to any statement of claim at the time when argument on the leave application was concluded.

Cromwell J. is of the view that the motion judge was correct to exercise her nunc pro tunc discretion in respect of all of the defendants. In Celestica , McLachlin C.J. and Rothstein, Cromwell and Côté JJ. would deny the nunc pro tunc order. 3. McLachlin C.J. and Rothstein, Cromwell and Côté JJ. hold that the doctrine of special circumstances is of no avail to any of the plaintiffs in the three cases since neither the limitation period in s. 138.14 OSA nor the leave requirement in s. 138.8 OSA can be defeated by amending the pleadings to include a statutory claim under s. 138.3 OSA . 4.

Unanimous: the threshold that must be met by a plaintiff applying for leave under s. 138.8 OSA is that there must be a reasonable or realistic chance that the action will succeed. Moldaver, Cromwell, Karakatsanis and Gascon JJ. find that the CIBC plaintiffs have met the required threshold. 5. Unanimous: in CIBC , the Court of Appeal did not err in holding that five of the seven common issues proposed by the plaintiffs relating to the common law misrepresentation claim should be certified. Interaction Between

Section 28 CPA and

Section 138.14 OSA Per McLachlin C.J. and Rothstein and Côté JJ. (majority opinion): Pleading an intention to seek leave in respect of a s. 138.3

OSA claim in a class proceeding together with a common law cause of action amounts to neither the assertion of the statutory cause of action nor the commencement of a class proceeding for that statutory cause of action under s. 28 CPA . Accordingly, the limitation period at s. 138.14 OSA cannot be suspended in favour of the class members under s. 28 CPA before leave is granted under s. 138.8 OSA to commence the statutory action. There is no ambiguity in the interaction of s. 28 CPA with

Part XXIII.1 OSA .

Section 28 CPA requires “a cause of action asserted” in order for the limitation period to be suspended in favour of the class members on the commencement of the class proceeding. The

interpretation of the meaning of the word “assert” in s. 28 CPA proposed by the Court of Appeal in Timminco is correct. The assertion of a cause of action must be premised on the existence of a “right of action”. Given the clear wording of s. 138.3 OSA , pleading a factual matrix and an intention to seek leave under s. 138.8 OSA cannot amount to the assertion of the statutory cause of action.

Section 28 CPA does not operate to suspend the limitation period applicable to a cause of action until the commencement of a class proceeding in which the cause of action is asserted. This commencement cannot occur under

Part XXIII.1 OSA until leave is granted.

Section 138.8(1) OSA is clear that no action may be commenced under s. 138.3 without leave of the court. Even if there was an ambiguity in the wording of the relevant provisions — which there is not — the legislative purpose and structure of those provisions would nonetheless support this conclusion. To hold that s. 28 CPA operates to suspend a limitation period for a statutory claim under s. 138.3 OSA before leave is obtained would be to circumvent the carefully calibrated purposive balance struck by the limits to the statutory action provided for in

Part XXIII.1 OSA and render s. 138.8 OSA ineffective. A careful consideration of the context of limitation periods, the CPA and

Part XXIII.1 OSA reveals that the Court of Appeal’s decision in the instant cases broadly undermines the legislative structures and the purposes at stake in these appeals. On the one hand,

Part XXIII.1 OSA strikes a delicate balance between various market participants: the interests of potential plaintiffs and defendants and of affected long-term shareholders have been weighed considerably and deliberately in light of a desired precise balance between deterrence and compensation. On the other hand, class actions are procedural mechanisms which can only extend the substantive rights of the representative plaintiff to the other class members: before there is a right of action or a suspension of the limitation period flowing from the operation of the statutory scheme itself, the CPA cannot be interpreted in such a way as to create either one.

Part XXIII.1 OSA , the more recent legislation, creates a scheme that is intended to be comprehensive, and was crafted with the CPA in mind. The purposes associated with the CPA — judicial economy, access to the courts and behaviour modification — were each explicitly considered in developing the structure of

Part XXIII.1 OSA . Policy concerns, as compelling as they are, do not override the plain meaning of the text and the intent of the Ontario legislature. This is not altered by the fact that both the CPA and

Part XXIII.1 OSA are remedial in nature, and should thus be interpreted broadly and purposively. The end result of the legislature’s consideration was that the scheme includes a leave requirement that serves as a precondition to the commencement of an action, a limitation period and no requirement to prove reliance on the misrepresentation. The combined effect of these features is to promote efficiency and fairness for both parties. The

interpretation proposed by the Court of Appeal in these cases also significantly affects the protection provided against strike suits, which aims to screen out strike suits as early as possible in the litigation process. The preliminary leave requirement in s. 138.8 OSA was added because the usual measures under the CPA did not provide appropriate safeguards. Requiring merely that a statutory cause of action be mentioned in an existing class proceeding for the limitation period to be suspended can hardly be said to achieve the intended protection. Per Cromwell J.: The conclusions of Côté J. on the

interpretation of the limitation and leave provisions are agreed with. Per Moldaver, Karakatsanis and Gascon JJ. (minority opinion): The five-member panel of the Court of Appeal was correct to overturn that court’s earlier

interpretation of the application of s. 28 CPA to the s. 138.14 OSA limitation period. As long as the statutory cause of action in

Part XXIII.1 OSA is asserted in a properly commenced class proceeding, s. 28 CPA will suspend the limitation periods applicable to all causes of action asserted — including the limitation period governing the statutory claim — regardless of whether leave has been obtained under s. 138.8 OSA . This understanding of s. 28 CPA best accords with the words, scheme and purpose of the CPA , as well as the language, purpose and operation of

Part XXIII.1 OSA . A harmonious

interpretation that respects the ordinary meaning of the text of both the CPA and the OSA and the context and the purpose of the CPA , recognizing its intended application in the securities context, must be sought. As both the CPA and

Part XXIII.1 OSA are remedial in nature, the provisions from those statutes must be interpreted broadly and purposively. Moreover, in analysing the interaction between the laws of one legislature, it must be presumed that the laws are meant to work together, both logically and teleologically, as parts of a functioning whole. The relevant provisions in the OSA were enacted after the CPA , and it is clear that

Part XXIII.1 OSA was intended to operate in the context of class proceedings legislation.

Section 28 CPA is engaged upon the commencement of a class proceeding with respect to “a cause of action asserted” in the class proceeding. “Assert” has multiple dictionary meanings, and “to assert” is defined variously as “to invoke or enforce a legal right” or “make or enforce a claim to”. The Court of Appeal’s conclusion that “asserting” a cause of action in s. 28 CPA refers to “invoking the legal right” or “making the claim” is more consistent with the English and the French text of s. 28 CPA and with the context of that provision.

In order to “make the claim” or “invoke the legal right”, the representative plaintiff must plead the essential factual elements required to constitute the cause of action.

Section 138.3 provides injured shareholders with four causes of action tied to misrepresentations or the failure to make timely disclosure of a material change. Leave is not one of the factual elements set out in that provision. Therefore, the leave requirement in s. 138.8 OSA is not a constituent element of the statutory cause of action set out in s. 138.3 OSA . Rather, obtaining leave under s. 138.8 OSA is a procedural requirement.

It is necessary for the right arising from s. 138.3 to be ultimately exercised, adjudicated at trial and enforced; however, “asserting” the statutory cause of action for the purposes of s. 28 CPA does not require the representative plaintiff to first obtain leave. The statutory cause of action can therefore be asserted in a class proceeding statement of claim before leave is obtained.

Section 28 CPA suspends the running of the limitation periods upon the “commencement of the class proceeding”. “Commencement” for the purpose of this provision refers to the commencement of an intended class proceeding under the CPA prior to certification. To commence a class proceeding, the representative plaintiff must file a statement of claim. The text of s. 28 recognizes that multiple causes of action could be asserted in a single statement of claim.

Section 28 does not condition the commencement of the class proceeding on the prior fulfillment of all procedural requirements in respect of every cause of action asserted in the proceeding. On a plain reading of s. 28, the limitation periods applicable to all causes of action asserted in the proceeding are suspended upon the commencement of the proceeding, regardless of whether some would require leave to proceed individually.

Thus, s. 28 CPA will suspend the limitation period in s. 138.14 OSA once the representative plaintiff properly commences a class proceeding for a common law cause of action and pleads the statutory cause of action and its constituent elements in the statement of claim. Excluding the statutory cause of action in

Part XXIII.1 OSA from the protection of s. 28 CPA until leave has been granted removes compliance with the limitation period from the plaintiff’s control. It would also necessarily oblige potential class members to file a multitude of individual motions for leave to commence the statutory claim, thus unnecessarily adding procedural steps and increasing costs and delays for all parties involved. Such an obligation is not required by the text of s. 28 CPA , nor by the context or purposes of the CPA . Such a result serves neither judicial economy nor access to justice. Rather, it undermines the harmonious operation of class proceedings in the securities context. An

interpretation that suspends the limitation period where leave has not yet been granted under s. 138.8 OSA promotes the purposes of the CPA , is harmonious with the language, purpose and operation of

Part XXIII.1 OSA , and allows the class proceeding to remain an effective vehicle for the pursuit of

Part XXIII.1 statutory claims while respecting the policy underpinnings of limitation periods. In each of the three cases under appeal, the plaintiffs commenced class proceedings and pleaded the constituent facts of the tort of negligent misrepresentation and of the statutory cause of action in

Part XXIII.1 OSA in their statements of claim. This pleading constitutes an assertion of the statutory cause of action for the purposes of s. 28 CPA . Thus, the limitation periods for the statutory claims at issue in these appeals are suspended as of the date of filing of their statements of claim and none of the claims are statute-barred. Remedies Per McLachlin C.J. and Rothstein and Côté JJ.: Nunc pro tunc and special circumstances are two separate doctrines, which need to be addressed separately. The courts have inherent jurisdiction to issue orders nunc pro tunc , that is, to backdate their orders.

This power is implied by rule 59.01 of the Ontario Rules of Civil Procedure . The following non-exhaustive factors guide the courts in determining whether to exercise their inherent jurisdiction to grant such an order: (1) the opposing party will not be prejudiced by the order; (2) the order would have been granted had it been sought at the appropriate time, such that the timing of the order is merely an irregularity; (3) the irregularity is not intentional; (4) the order will effectively achieve the relief sought or cure the irregularity; (5) the delay has been caused by

an act of the court; and (6) the order would facilitate access to justice. None of these factors is determinative. An order granting leave to proceed with an action can theoretically be made nunc pro tunc , where leave is sought prior to the expiry of the limitation period. However, a court should not exercise its inherent jurisdiction where this would undermine the purpose of the limitation period or the legislation at issue. This is because, as with all common law doctrines and rules, the inherent jurisdiction to grant nunc pro tunc orders is circumscribed by legislative intent.

Nunc pro tunc orders will not be available if they are precluded by either the language or the purpose of a statute. Accordingly, the courts’ inherent jurisdiction to issue nunc pro tunc orders in relation to leave to commence claims under s. 138.3 OSA is not unlimited and should be exercised bearing in mind that the leave requirement, and its interaction with the limitation period, are central to the delicate balance struck in

Part XXIII.1 OSA . The standard of review that ordinarily applies to a judge’s discretionary decision on whether to grant an order nunc pro tunc is that of deference: if the judge has given sufficient weight to all the relevant considerations, an appellate court must defer to his or her exercise of discretion. However, if the judge’s discretion is exercised on the basis of an erroneous principle, an appellate court is entitled to intervene. In CIBC , the motion judge found that he did not have jurisdiction to make the order nunc pro tunc .

It follows that he did not actually exercise any discretion, and there is therefore no decision to defer to. But, even if he had done so, his reasoning on whether the order should be granted nunc pro tunc was based on an erroneous principle. In IMAX , in exercising her discretion, the motion judge failed to address or distinguish the situation of the defendants who were not parties to the original statement of claim. Therefore, no deference applies.

In CIBC , the plaintiffs were aware of the requirement of obtaining leave but made the choice not to expedite the leave motion, proceeding on the assumption that the court had the jurisdiction to extend the limitation period and that the discretion would be exercised in their favour by granting leave nunc pro tunc . In this case, to grant a nunc pro tunc order even though the plaintiffs did absolutely nothing to prevent the expiry of the limitation period would have the effect of overriding the legislature’s intent.

In IMAX , the motion judge exercised her discretion correctly in making a nunc pro tunc order in relation to the defendants who were parties to the original statement of claim. However, as regards the other defendants, who were not defendants in any proceeding at the time when argument on the leave application was concluded, the plaintiffs, who waited more than two years after leave was granted before issuing a first statement of claim against them as defendants and provided no valid explanation for this delay, certainly cannot be said to have acted diligently.

Granting relief to the plaintiffs against those defendants would undermine the strict limitation period set out in s. 138.14 OSA and the balance struck in the legislation. In Celestica , no motion for leave was filed before the expiry of the limitation period. Accordingly, a nunc pro tunc order could not remedy that expiry. This is sufficient to deny such an order.

The doctrine of special circumstances allows a court to temper the potentially harsh and unfair effects of limitation periods by allowing a plaintiff to add a cause of action or a party to the statement of claim after the expiry of the relevant limitation period. The circumstances warranting such an amendment will not often occur. In the case of statutory actions under s. 138.3 OSA , the legislature specifically barred a plaintiff from commencing such an action without first obtaining leave of the court.

Accordingly, the doctrine of special circumstances is of no avail to any of the plaintiffs in the three instant cases. Neither the limitation period in s. 138.14 OSA nor the leave requirement in s. 138.8 OSA can be defeated by amending the pleadings to include a statutory claim under s. 138.3 OSA . The

doctrine, therefore, does not provide the plaintiffs with an effective remedy, since it cannot on its own overcome the leave requirement ofs. 138.8 OSA. Per Cromwell J.: Agreement is expressed for the reasons of Côté J. in respect of the discretionary power of the courts togrant leave nunc pro tunc after the expiry of the limitation period to commence a statutory claim for secondary market misrepresentation.

In CIBC, the motion judge was ideally placed to assess and weigh all of the many considerations that are relevant to thequestion of whether the court’s discretion should be exercised in the plaintiffs’ favour. His assessment of those considerations and theweight to be given to them should be treated with deference on appeal. There is no error in the principles that the motion judge applied,in the factors that he considered relevant or in his assessment of the evidence. Accordingly, there is no basis to interfere with hisconclusion that the nunc pro tunc discretion should be exercised in the plaintiffs’ favour.

The motion judge in IMAX was also correct to exercise her nunc pro tunc discretion. The motion judge was intimatelyfamiliar with the progress of this file with which she had been dealing over several years. There is no basis on which to interfere with herassessment of the equities of the situation or of the plaintiffs’ diligence. The conclusions of Côté J. in Celestica are agreed with. Cases Cited By Côté J. Applied: Theratechnologies inc. v. 121851 Canada inc., 2015 SCC 18, [2015] 2 S.C.R. 106, rev’g 2013 QCCA 1256;approved: Sharma v. Timminco Ltd., 2012 ONCA 107, 109 O.R. (3d) 569; referred to: Logan v.

Canada (Minister of Health) (2004), (ON CA), 71 O.R. (3d) 451, aff’g ; Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010);Méthot v. Montreal Transportation Commission, (SCC), [1972] S.C.R. 387; Bell ExpressVu Limited Partnership v.Rex, 2002 SCC 42, [2002] 2 S.C.R. 559; Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27; Novak v. Bond, (SCC), [1999] 1 S.C.R. 808; M. (K.) v. M. (H.), (SCC), [1992] 3 S.C.R. 6; Coulson v. Citigroup GlobalMarkets Canada Inc., 2010 ONSC 1596, 92 C.P.C. (6th) 301, aff’d 2012 ONCA 108, 288 O.A.C. 355; Bou Malhab v.

DiffusionMétromédia CMR inc., 2011 SCC 9, [2011] 1 S.C.R. 214; St. Lawrence Cement Inc. v. Barrette, 2008 SCC 64, [2008] 3 S.C.R. 392; DellComputer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801; Turner v. London and South-Western Railway Co.(1874), L.R. 17 Eq. 561; Gunn v. Harper (1902), 3 O.L.R. 693; Young v. Town of Gravenhurst (1911), 24 O.L.R. 467; Hubert v.DeCamillis (1963), (BC SC), 41 D.L.R. (2d) 495; Monahan v. Nelson, 2000 BCCA 297, 76 B.C.L.R. (3d) 109; Medinav. Bravo, 2008 BCSC 1307, 87 B.C.L.R. (4th) 369; Canada (Attorney General) v.

Hislop, 2007 SCC 10, [2007] 1 S.C.R. 429; Re NewAlger Mines Ltd. (1986), (ON CA), 54 O.R. (2d) 562; Gallo v. Beber (1998), (ON CA), 116 O.A.C.340; Krueger v. Raccah (1981), (SK KB), 12 Sask. R. 130; Parker v. Atkinson (1993), (ON SC),104 D.L.R. (4th) 279; Hogarth v. Hogarth, (ON SC), [1945] 3 D.L.R. 78; Montego Forest Products Ltd. (Re) (1998), (ON CA), 37 O.R. (3d) 651; Couture v. Bouchard (1892), 1892 CanLII 73 (SCC), 21 S.C.R. 281; Westman v.Gyselinck, 2014 MBQB 174, 308 Man. R. (2d) 306; Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87; McKenna Estate v. Marshall(2005), 37 R.P.R. (4th) 222; Holst v.

Grenier (1987), (SK KB), 65 Sask. R. 257; CIBC Mortgage Corp. v. Manson(1984), (SK CA), 32 Sask. R. 303; Reza v. Canada, (SCC), [1994] 2 S.C.R. 394; Soulos v.Korkontzilas, (SCC), [1997] 2 S.C.R. 217; Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469, 90 O.R. (3d)401; Bikur Cholim Jewish Volunteer Services v. Langston, 2009 ONCA 196, 94 O.R. (3d) 401; Dugal v. Manulife Financial Corp., 2011ONSC 1764; Weldon v. Neal (1887), 19 Q.B.D. 394; Basarsky v. Quinlan, (SCC), [1972] S.C.R. 380; Frohlick v.Pinkerton Canada Ltd., 2008 ONCA 3, 88 O.R. (3d) 401; AIC Limited v. Fischer, 2013 SCC 69, [2013] 3 S.C.R. 949.

By Cromwell J. Referred to: Sharma v. Timminco Ltd., 2012 ONCA 107, 109 O.R. (3d) 569; Joseph v. Paramount Canada’s Wonderland,2008 ONCA 469, 90 O.R. (3d) 401; Bikur Cholim Jewish Volunteer Services v. Langston, 2009 ONCA 196, 94 O.R. (3d) 401; Dugal v.Manulife Financial Corp., 2011 ONSC 1764. By Karakatsanis J. Referred to: Sharma v. Timminco Ltd., 2012 ONCA 107, 109 O.R. (3d) 569; Hollick v. Toronto (City), 2001 SCC 68,[2001] 3 S.C.R. 158; Thibodeau v. Air Canada, 2014 SCC 67, [2014] 3 S.C.R. 340; Lévis (City) v. Fraternité des policiers de Lévis Inc.,2007 SCC 14, [2007] 1 S.C.R. 591; Letang v.

Cooper, [1965] 1 Q.B. 232; Markevich v. Canada, 2003 SCC 9, [2003] 1 S.C.R. 94;Dilollo Estate (Trustee of) v. I.F. Propco Holdings (Ontario) 36 Ltd., 2013 ONCA 550, 117 O.R. (3d) 81; Méthot v. MontrealTransportation Commission, (SCC), [1972] S.C.R. 387; Theratechnologies inc. v. 121851 Canada inc., 2015 SCC 18,[2015] 2 S.C.R. 106; Logan v. Canada (Minister of Health) (2004), (ON CA), 71 O.R. (3d) 451, aff’g ; Markson v. MBNA Canada Bank, 2007 ONCA 334, 85 O.R. (3d) 321; Cassano v. Toronto-Dominion Bank, 2007 ONCA 781, 87O.R. (3d) 401; Fulawka v.

Bank of Nova Scotia, 2012 ONCA 443, 111 O.R. (3d) 346; Pro-Sys Consultants Ltd. v. MicrosoftCorporation, 2013 SCC 57, [2013] 3 S.C.R. 477; St. Lawrence Cement Inc. v. Barrette, 2008 SCC 64, [2008] 3 S.C.R. 392; M. (K.) v.M. (H.), (SCC), [1992] 3 S.C.R. 6; Novak v. Bond, (SCC), [1999] 1 S.C.R. 808. Statutes and Regulations Cited Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 2(2), 5, 12, 23, 24, 28, 34. Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, ss. 20, 21. Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rr. 1.03(1) “action”, “originating process”, “proceeding”, 21, 59.01. Securities Act, CQLR, c.

V-1.1, s. 225.4.

Securities Act , R.S.O. 1990, c. S.5, ss. 1.1, 138 ,

Part XXIII.1, 138.3, 138.4, 138.8, 138.13, 138.14 [am. 2014, c. 7 , Sch. 28, s. 15]. Authors Cited Black’s Law Dictionary , 10th ed., by Bryan A. Garner, ed. St. Paul, Minn.: Thomson Reuters, 2014, “assert”. Canadian Oxford Dictionary , 2nd ed., by Katherine Barber, ed. Don Mills, Ont.: Oxford University Press, 2004, “assert”. Canadian Securities Administrators. “Proposal for a Statutory Civil Remedy for Investors in the Secondary Market and Response to the Proposed Change to the

Definitions of ‘Material Fact’ and ‘Material Change’”, CSA Notice 53-302, reproduced in (2000), 23 OSCB 7383 . Driedger, Elmer A. Construction of Statutes , 2nd ed. Toronto: Butterworths, 1983. Ontario. Attorney General’s Advisory Committee on Class Action Reform. Report of the Attorney General’s Advisory Committee on Class Action Reform . Toronto: The Committee, 1990. Ontario. Law Reform Commission. Report on Class Actions , vols. I and III. Toronto: Ministry of the Attorney General, 1982. Ontario.

Securities Commission. “Proposal for a Statutory Civil Remedy for Investors in the Secondary Market — Notice and Request for Comment” (1998), 21 OSCB 3335 and 3367. Perell, Paul M., and John W. Morden. The Law of Civil Procedure in Ontario , 2nd ed. Markham, Ont.: LexisNexis, 2014. Porretta, Christina, and Rahim Punjani. “The Clock Strikes: A Review of the Limitations Act, 2002 , A Decade Later” (2015), 44 Adv. Q. 346. Sullivan, Ruth. Sullivan on the Construction of Statutes , 6th ed. Markham, Ont.: LexisNexis, 2014. Toronto Stock Exchange. Committee on Corporate Disclosure.

Final Report — Responsible Corporate Disclosure: A Search for Balance . Toronto: The Exchange, 1997. Winkler, Warren K., et al. The Law of Class Actions in Canada . Toronto: Canada Law Book, 2014. APPEALS from a judgment of the Ontario Court of Appeal (Doherty, Feldman, Cronk, Blair and Juriansz JJ.A.), 2014 ONCA 90 , 370 D.L.R. (4th) 402, 118 O.R. (3d) 641, 314 O.A.C. 315, 50 C.P.C. (7th) 113, [2014] O.J. No. 419 (QL), 2014 CarswellOnt 1143 (WL Can.); setting aside a decision of Strathy J., 2012 ONSC 3637 , 29 C.P.C. (7th) 225, [2012] O.J.

No. 3072 (QL), 2012 CarswellOnt 8382 (WL Can.); affirming a decision of van Rensburg J., 2012 ONSC 4881 , [2012] O.J. No. 4002 (QL), 2012 CarswellOnt 10391 (WL Can.); and affirming a decision of Perell J., 2012 ONSC 6083 , 113 O.R. (3d) 264, [2012] O.J. No. 5083 (QL), 2012 CarswellOnt 13292 (WL Can.). The appeals in CIBC and IMAX are dismissed, McLachlin C.J. and Rothstein and Côté JJ. dissenting in part; the appeal in Celestica is allowed, Moldaver, Karakatsanis and Gascon JJ. dissenting. Sheila R. Block and James C. Tory , for the appellant the Canadian Imperial Bank of Commerce. Benjamin Zarnett , David D.

Conklin and Jonathan Edge , for the appellants Gerald McCaughey et al. R. Paul Steep , Dana M. Peebles and Brandon Kain , for the appellants IMAX Corporation et al. Nigel Campbell , Andrea Laing and Ryan A. Morris , for the appellants Celestica Inc., Stephen W. Delaney and Anthony P. Puppi. Peter R. Jervis , Joel P. Rochon , Sakie Tambakos and Remissa Hirji , for the respondents Howard Green and Anne Bell. A. Dimitri Lascaris , William V. Sasso , Michael Robb , Daniel E. H. Bach and Serge Kalloghlian , for the respondents Marvin Neil Silver and Cliff Cohen. Kirk M. Baert and Celeste B.

Poltak , for the respondents the Trustees of the Millwright Regional Council of Ontario Pension Trust Fund, Nabil Berzi and Huacheng Xing. Written submissions only by Margaret L. Waddell and Denise Cooney , for the intervener the Canadian Foundation for Advancement of Investor Rights. Bonnie Roberts Jones , for the intervener the Shareholder Association for Research and Education. Anna Perschy and Amanda Heydon , for the intervener the Ontario Securities Commission. Alan L. W. D’Silva , Daniel S. Murdoch and Sinziana R. Hennig , for the intervener the Insurance Bureau of Canada.

The reasons of McLachlin C.J. and Rothstein and Côté JJ. were delivered by Côté J. — I. Introduction [ 1 ] These appeals are the result of competing

interpretations of the interaction between two pieces of Ontario

legislation:

Part XXIII.1 of the Securities Act , R.S.O. 1990, c. S.5 (“ OSA ”), and s. 28 of the Class Proceedings Act, 1992 , S.O. 1992, c. 6 (“ CPA ”). [ 2 ]

Part XXIII.1 OSA provides, at s. 138.3 , for a claim for secondary market misrepresentation.

An action with respect to this statutory claim may be commenced only with leave of the court as prescribed by s. 138.8 and within the limitation period specified in s. 138.14 , that is, three years after the date of the alleged misrepresentations in the instant cases. [ 3 ] As for s. 28 CPA , it operates to suspend the limitation period for “a cause of action asserted in a class proceeding” in favour of the members of a class “on the commencement of the class proceeding”. [ 4 ] At issue in the court below was the meaning of the word “asserted” in s. 28 CPA .

Initially, a panel of three judges of the Court of Appeal ruled unanimously in Sharma v. Timminco Ltd. , 2012 ONCA 107 , 109 O.R. (3d) 569, that the statutory claim for secondary market misrepresentation cannot be “asserted” until a court has granted leave to do so.

As a result, the court held that the CPA could not operate to suspend the limitation period for class members (including for the representative plaintiff) until leave was obtained. [ 5 ] The ruling in Timminco was handed down in the midst of three class action suits for secondary market misrepresentations in Ontario: Canadian Imperial Bank of Commerce et al. v. Green and Bell (“ CIBC ”); IMAX Corp. et al. v. Silver and Cohen (“ IMAX ”); and Celestica Inc. et al. v.

Trustees of the Millwright Regional Council of Ontario Pension Trust Fund et al. (“ Celestica ”). [ 6 ] In each of those cases, the plaintiffs [1] had pleaded a common law cause of action together with an intention to seek leave to assert a statutory claim under s. 138.3 OSA within the statutory limitation period, but leave was not granted before the limitation period expired. It should be noted however that in CIBC , a motion for leave was filed before the expiry of the limitation period, and that in IMAX , a motion for leave was both filed and argued before the limitation period expired.

It is fair to say that Timminco came as a surprise to the litigants. [ 7 ] In the Superior Court, the motion judges considering the issue of leave to commence the statutory action found that they were bound by Timminco , although relief was granted in the form of a nunc pro tunc order in IMAX , and by applying the doctrine of special circumstances in Celestica . No relief was granted to the plaintiffs in CIBC . The appeals in the three cases were subsequently heard together by a five-judge panel of the Court of Appeal, which unanimously overruled the

interpretation of Timminco : Green v. Canadian Imperial Bank of Commerce , 2014 ONCA 90 , 370 D.L.R. (4th) 402. The Court of Appeal found that a representative plaintiff who pleads an intention to seek leave in respect of a s. 138.3 claim within the limitation period has “asserted” a cause of action within the meaning of s. 28 CPA even before the filing of a motion seeking leave.

As a result, the court held that in all three cases, the plaintiffs’ statutory claims for secondary market misrepresentation were not statute-barred. [ 8 ] In my opinion, pleading an intention to seek leave in respect of a s. 138.3 OSA claim in a class proceeding together with a common law cause of action amounts to neither the assertion of the statutory cause of action nor the commencement of a class proceeding for that statutory cause of action under s. 28 CPA . Not only is this

interpretation consistent with the fundamental principles and structure of class proceedings in Canada, but it is also the only one that is consistent with the wording of the provisions and the ordinary and grammatical meaning of the words used as well as with the rigorous and exhaustive legislative balancing that produced

Part XXIII.1 OSA . [ 9 ] Moreover, I am of the view that neither the doctrine of nunc pro tunc nor that of special circumstances can be of any avail to the plaintiffs in CIBC and Celestica . With regard to IMAX , relief should be granted to the plaintiffs in the form of a nunc pro tunc order, but only in relation to the defendants who were parties to the original statement of claim: IMAX Corporation, Richard L. Gelfond, Bradley J. Wechsler and Francis T.

Joyce. [ 10 ] Accordingly, I would allow the appeals in CIBC except in respect of the Court of Appeal’s conclusion that five of the seven issues proposed by the plaintiffs should be certified. I would allow the appeal and issue a partial nunc pro tunc order in IMAX , and I would allow the appeal in Celestica . II. Legislation A. Ontario Securities Act [ 11 ]

Part XXIII.1 OSA sets out a scheme of civil liability for secondary securities market misrepresentation in Ontario.

Section 138.3 creates a statutory cause of action for a misrepresentation made in a document or a public oral statement, or a failure to make timely disclosure, against a range of parties potentially implicated in the misrepresentation. This statutory cause of action accrues to those who acquired or disposed of the issuer’s security between the time of the misrepresentation and that of its correction. Explicitly not required for a finding of liability is proof of a plaintiff’s reliance on the misrepresentation, which is essential to a common law cause of action based on misrepresentation.

Furthermore, as s. 138.13 makes plain, this statutory right of action is in addition to any other rights of action the plaintiff may have. [ 12 ] Two components of this scheme are of particular relevance to these appeals. [ 13 ] First, s. 138.8 imposes a requirement that leave be granted before the statutory action based on a secondary market misrepresentation may be commenced: 138.8

(1) No action may be commenced under

section 138.3 without leave of the court granted upon motion with notice to each defendant. The court shall grant leave only where it is satisfied that, (

a) the action is being brought in good faith; and

(

b) there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff. [14] Second, s. 138.14 imposes a limitation period for statutory actions based on s. 138.3: 138.14 No action shall be commenced under

section 138.3, (

a) in the case of misrepresentation in a document, later than the earlier of, (

i) three years after the date on which the document containing the misrepresentation was first released, and (ii) six months after the issuance of a news release disclosing that leave has been granted to commence an action under

section 138.3 orunder comparable legislation in the other provinces or territories in Canada in respect of the same misrepresentation; [15]

Section 138.14 thus requires that the statutory action be commenced within the earlier of three years after the date ofthe misrepresentation and six months after a news release discloses that leave has been granted to commence a statutory action inOntario, or under parallel legislation elsewhere in Canada. It should be noted that the scheme contains no internal mechanism forsuspending the limitation period before or pending the granting of leave. B. Class Proceedings Act [16]

Section 28 CPA provides for the suspension of any limitation period in a class proceeding as follows: 28.

(1) Subject to subsection (2), any limitation period applicable to a cause of action asserted in a class proceeding is suspended infavour of a class member on the commencement of the class proceeding and resumes running against the class member when, (

a) the member opts out of the class proceeding; (

b) an amendment that has the effect of excluding the member from the class is made to the certification order; (

c) a decertification order is made under

section 10; (

d) the class proceeding is dismissed without an adjudication on the merits; (

e) the class proceeding is abandoned or discontinued with the approval of the court; or (

f) the class proceeding is settled with the approval of the court, unless the settlement provides otherwise.

(2) Where there is a right of appeal in respect of an event described in clauses (1) (

a) to (f), the limitation period resumes running assoon as the time for appeal has expired without an appeal being commenced or as soon as any appeal has been finally disposed of. C. Interaction Between

Part XXIII.1 OSA and

Section 28 CPA [17] The primary issue in these appeals is the interaction of the leave requirement in

Part XXIII.1 OSA with thesuspension of the limitation period for a class proceeding under s. 28 CPA. Typically, where leave is not required, the operation of s. 28CPA is straightforward: the commencement of a class proceeding would coincide with a statement of claim asserting a cause of action tobe certified as a class action (Logan v. Canada (Minister of Health) (2004), (ON CA), 71 O.R. (3d) 451 (C.A.), at para.21). [18] Where leave is required, however, a statutory action cannot be commenced until leave is granted by the court.

Theissue in the cases at bar is whether s. 28 CPA operates to suspend the limitation period applicable to a statutory cause of action under s.138.3 OSA at the time when an intention to seek leave under s. 138.8 OSA is pleaded in a class proceeding for a common lawmisrepresentation claim. This question has plagued the Ontario courts. III. Judicial History and Facts

A. Timminco [ 19 ] These appeals trace back to the Court of Appeal’s ruling in Timminco . The appeal in that case concerned misrepresentations that had allegedly occurred between March and November 2008. The plaintiff had initiated a class proceeding in the Ontario Superior Court in which he asserted a common law cause of action for secondary market misrepresentation. An intention to seek leave for a statutory claim under s. 138.3 OSA was also stated in the pleadings, but leave had not been sought as of February 2011.

With the statutory claim in jeopardy because of the looming limitation period, the plaintiff moved, in March 2011, for an order declaring that the limitation period was suspended by reason of s. 28 CPA .

The motion judge granted the order ( 2011 ONSC 8024 ), which was then appealed. [ 20 ] This table illustrates the timeline of the events in Timminco : Alleged misrepresentations March 17 to November 11, 2008 Statement of claim filed pursuant to the CPA , pleading common law cause of action and an intent to seek leave for s. 138.3 statutory action May 14, 2009 Plaintiff requests case conference re limitation period End of February, 2011 Case conference March 10, 2011 Notice of motion filed seeking declaration that s. 138.14 limitation period is suspended and “conditional leave” to commence s. 138.3 action March 14, 2011 Limitation period expires for statutory action March 17 to November 11, 2011 Leave motion heard March 25, 2011 Declaration of suspension granted by motion judge March 31, 2011 [ 21 ] On February 16, 2012, Goudge J.A. held that under s. 28 CPA , a cause of action cannot be “asserted” until it can be enforced, and that in the case of a cause of action under

Part XXIII.1 OSA , this is only possible after leave of the court is obtained. Goudge J.A. stressed that this

interpretation of the provisions was the only one to produce textual coherence while also being consistent with the purposes of both the OSA and the CPA . To interpret “asserted” such that it includes a mere mention of an intention to seek leave, he concluded, would not be consistent with the ordinary meaning of the word and would produce results that the legislature could not have intended. For example, the limitation period would be suspended for the representative plaintiff in a class proceeding, but not for the same plaintiff in an individual proceeding. As a result, Goudge J.A. ruled that leave must be granted before the

Part XXIII.1 OSA statutory cause of action can be asserted within the meaning of s. 28 CPA , and that it is only then that the limitation period is suspended in favour of the representative plaintiff and the other class members.

B. Post-Timminco Decisions of the Ontario Superior Court [ 22 ] The decision in Timminco seems to have taken the Ontario Bar by surprise, throwing a wrench in the works of three proceedings that were then pending before the Superior Court and are now being appealed to this Court. In each of these cases, the motion judge found that he or she was bound by Timminco , but the three judges then diverged entirely on whether relief was available to the plaintiffs either by way of an order made nunc pro tunc (a Latin expression meaning “now for then” that is used to indicate that an act has retroactive legal effect) or by application of the doctrine of special circumstances.

(1) Green v. Canadian Imperial Bank of Commerce , 2012 ONSC 3637 , 29 C.P.C. (7th) 225 (

a) Facts and Procedural Timeline [ 23 ] The plaintiffs allege that, between May 31 and December 6, 2007, the defendants failed to amply record and disclose the extent of CIBC’s exposure to and position in the United States residential mortgage market as the subprime mortgage crisis unfolded. On July 22, 2008, the plaintiffs filed a statement of claim which contained a claim for a common law cause of action for misrepresentations and indicated that they intended to seek leave to proceed with the statutory action.

After a series of case conferences and amendments to the statement of claim, the plaintiffs filed a motion seeking leave for the statutory claim on January 21, 2010 in which they stated that leave would be sought nunc pro tunc if the limitation period were to expire. Discussions between counsel to

schedule the leave and certification motions continued until it was settled after a case conference in March 2010 that the motions would be heard a year later. On January 15, 2011, after the plaintiffs had completed their record in support of their motions, it was agreed that the original hearing dates were impractical, and the hearing was accordingly rescheduled for February 2012. [ 24 ] The ruling in Timminco was released on the penultimate day of the original hearing of the motions for leave and for certification in CIBC .

As the defendants put it, the ruling was a “thunderbolt” in a case in which the limitation period had never been at issue ( CIBC , at para. 475).

Following Timminco , counsel made additional representations on the limitation period issue, and another hearing was held on April 5, 2012. [ 25 ] This table illustrates the timeline of the events in CIBC : Alleged misrepresentations May 31 to December 6, 2007 Statement of claim filed pursuant to the CPA , pleading common law cause of action and intent to seek leave for s. 138.3 statutory action July 22, 2008 Notice of motion seeking leave under s. 138.8 January 21, 2010 Case conference March 17, 2010 Limitation period expires for statutory action May 31 to December 6, 2010 Plaintiffs’ record completed January 15, 2011 Leave and certification motions heard February 9, 10, 13-17; April 5, 2012 Timminco released February 16, 2012

Hearing on limitation period issue April 5, 2012 (

b) Disposition [26] In his exhaustive ruling, Strathy J. (as he then was) considered the requirements for granting leave under s. 138.8OSA: (1) that the action is being brought in good faith; and (2) that there is a reasonable possibility of success. Good faith, he held,requires an honest and reasonable belief that the claim has merit, and a genuine intent and capacity to pursue it. He found that theplaintiffs had met this requirement and that this had not been seriously challenged by the defendants.

As to the reasonable possibility ofsuccess requirement, Strathy J. stated that it is a “relatively low threshold” (para. 373) and that the question to ask is “whether, havingconsidered all the evidence adduced by the parties and having regard to the limitations of the motions process, the plaintiffs’ case is soweak or has been so successfully rebutted by the defendant, that it has no reasonable possibility of success” (para. 374).

Had he appliedthis standard, Strathy J. would have granted the leave motion, but he found that he was bound by Timminco, as he saw no way todistinguish it from the case before him. [27] Strathy J. went on to rule that he did not have jurisdiction to extend the limitation period either by issuing an ordernunc pro tunc or by applying the doctrine of special circumstances.

On the issue of nunc pro tunc, Strathy J. stated that the court hasinherent jurisdiction to correct a slip or an oversight in the name of justice, but added that this case does not “strictly speaking” involve aslip, since the plaintiffs had recognized the possibility of the limitation period expiring and had assumed that their motion for leavewould result in a nunc pro tunc order (para. 511). As regards both nunc pro tunc and the doctrine of special circumstances, Strathy J.found that he did not have jurisdiction, because

(1) Part XXIII.1 OSA is designed to be a comprehensive code under which a limitationperiod begins to run upon the occurrence of objective events; (2) nothing in the legislation or in the judicial

interpretation thereofsuggests that the court has jurisdiction to make such an order; and (3) the general philosophy underlying the law of limitations in Ontariois one of clearly defined periods that are not subject to judge-made exceptions. As a result, he held that the limitation period for theplaintiffs’ statutory action had expired and that no relief was available to them.

(2) Silver v. IMAX, 2012 ONSC 4881 (

a) Facts and Procedural Timeline [28] The plaintiffs allege that, between February 17 and March 9, 2006, the defendants made misrepresentationsoverstating IMAX Corp.’s revenue and net income for 2005. In their statement of claim, issued on September 20, 2006, the plaintiffsasserted a common law cause of action for misrepresentations and an intention to seek leave for a claim under s. 138.3 OSA. They servedtheir motion for leave on November 28, 2006, and the motion record in February 2007. A hearing was originally scheduled forDecember 2007.

However, delays ensued as the record became, in the motion judge’s words, “complex and voluminous” (para. 9). The parties requested that the leave motion be heard at the same time as the motion for certification and a motion under rule21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to strike certain common law causes of action from the statement of claim.Ultimately, the hearing on the three motions was concluded on December 19, 2008, though an additional attendance and further writtensubmissions followed on the certification and rule 21 motions.

It should be noted that as at December 19, 2008, 79 days remained of thethree-year limitation period under s. 138.14. [29] The judgment remained under reserve for nearly a year before van Rensburg J. (as she then was) granted leave inrespect of the statutory cause of action on December 14, 2009. During that period, the motion judge had held a telephone conference inthe course of which she raised the maxim actus curiae neminem gravabit —

an act of the court will prejudice no one — in relation to thelimitation period, and requested submissions from the parties, who agreed that the limitation period should be suspended while thedecision was under reserve. [30] After the granting of leave, it took another two years, until December 12, 2011, before the plaintiffs filed a freshstatement of claim in which they pleaded the statutory cause of action and added the following individuals as defendants: Neil S. Braun,Kenneth G. Copland, Garth M. Girvan, David W. Leebron and Kathryn A. Gamble. The defendants filed a statement of defence onFebruary 6, 2012.

This statement was amended on February 16, 2012, the day of Timminco’s release, to assert that the limitation periodapplicable to the plaintiffs’ statutory right of action had expired. [31] This table illustrates the timeline of the events in IMAX: Alleged misrepresentations February 17 to March 9, 2006 Statement of claim filed pursuant to theCPA, pleading common law cause of actionand intent to seek leave for s. 138.3 statutoryaction September 20, 2006

Notice of motion seeking leave unders. 138.8 November 28, 2006 Leave and certification motions heard December 15-19, 2008 Limitation period expires for statutoryaction February 17 to March 9, 2009 Leave granted and class action certified December 14, 2009 (the order wasbackdated to December 19, 2008 onAugust 27, 2012) Fresh statement of claim pleading statutorycause of action and adding new defendantsfiled December 12, 2011 Timminco released February 16, 2012 Leave order amended nunc pro tunc: leaveeffective December 19, 2008 August 27, 2012 (

b) Disposition [32] In her decision to amend the leave order, van Rensburg J., too, found that she was bound by Timminco, but sheparted company with Strathy J. by finding that she had an inherent jurisdiction to grant the motion for leave nunc pro tunc. She wrotethat absent an explicit prohibition of a nunc pro tunc order, a statute must be understood to contemplate the possibility of such an order.Furthermore, she drew attention to the inclusion of s. 138.14 in Sch.

B to the Limitations Act, 2002, S.O. 2002, c. 24, which according toher lists provisions in respect of which common law doctrines such as nunc pro tunc continue to apply. On her reading of thejurisprudence on nunc pro tunc orders, the case before her was clearly one in which the court has the ability to ensure that a plaintiff’srights will not be arbitrarily affected by matters outside his or her control, such as the court’s schedule. Van Rensburg J. added thatlimitation periods are not meant to foreclose causes of action that have been “actively and vigorously pursued” (para. 85).

She grantedthe plaintiffs leave nunc pro tunc effective December 19, 2008, the date argument was concluded on the leave motion, and authorizedthe plaintiffs to amend their statement of claim to assert the statutory claim, except against two of the proposed defendants, Mr. Utay andMr. Fuchs. Van Rensburg J. excluded them from the nunc pro tunc order as a result of her finding in Silver v. Imax Corp. (2009), (ON SC), 66 B.L.R. (4th) 222 (Ont.

S.C.J.), at para. 24, that the plaintiffs had no reasonable possibility of success againstthem. [33] Additionally, van Rensburg J. held that the doctrine of special circumstances was not applicable in this case. In herestimation, the doctrine is meant to allow amendments to an existing statement of claim which add new causes of action where thelimitation period has been suspended by the commencement of the action, whereas the plaintiffs in the case before her were seeking toamend their statement of claim to add a claim which stemmed from the same facts but required leave.

She found that the doctrine was“analytically irrelevant”, since it did not “fit within the framework of a limitation period such as that provided for in s. 138.14” (para. 77).

(3) Millwright Regional Council of Ontario Pension Trust Fund (Trustees of) v. Celestica Inc., 2012 ONSC 6083, 113 O.R. (3d)264 (

a) Facts and Procedural Timeline [34] The defendant Celestica Inc. is an electronics manufacturer incorporated in Ontario that trades shares on both theToronto Stock Exchange (“TSX”) and the New York Stock Exchange. The plaintiffs Trustees of the Millwright Regional Council ofOntario Pension Trust Fund (“Millwright Trustees”) purchased Celestica shares on both exchanges, whereas the plaintiffs Nabil Berzi

and Huacheng Xing purchased Celestica shares only on the TSX. The alleged misrepresentations relate to the progress and success of a $225 to $275 million restructuring of the company that took place between January 27, 2005 and January 30, 2007. [ 35 ] The Millwright Trustees launched a class action in the United States on March 2, 2007. On August 20, 2007, Mr. Xing filed a statement of claim in Ontario for a class proceeding concerning a common law cause of action for misrepresentation in which he pleaded an intention to seek leave in respect of a statutory claim under s. 138.3 OSA ; Mr.

Berzi did the same on August 27, 2008. The Millwright Trustees’ U.S. class action was dismissed in District Court on October 14, 2010 after a pivotal ruling in Morrison v. National Australia Bank Ltd. , 561 U.S. 247 (2010), to the effect that “foreign plaintiffs who purchased securities on foreign exchanges where there was no trading of those securities on any domestic U.S. exchange could no longer pursue actions under the U.S. Securities and Exchange Act of 1934 , 15 U.S.C. § 78a” ( Celestica , at para. 33).

In response, the Millwright Trustees filed a statement of claim for a class proceeding concerning a common law cause of action for misrepresentation in Ontario on April 8, 2011, alleging the same misrepresentations in Celestica’s public disclosure documents as in their U.S. case. On December 29, 2011, the U.S. Second Circuit Court of Appeals unanimously reversed the dismissal of the Millwright Trustees’ action and remanded that action for further proceedings. At that time, the pending actions of Mr. Xing and Mr.

Berzi in Ontario remained inactive. [ 36 ] The release of Timminco on February 16, 2012 spurred the plaintiffs into action on the Canadian front. The Millwright Trustees filed a motion for leave under s. 138.8 OSA on February 24, 2012. Perell J. then ordered the consolidation of the Millwright Trustees, Xing and Berzi cases on April 13, 2012. A motion to strike all claims as statute-barred was heard in October of that year. [ 37 ] This table illustrates the timeline of the events in Celestica : Alleged misrepresentations January 27, 2005 to January 30, 2007 Millwright Trustees file class action in U.S.

March 2, 2007 Xing files pursuant to the CPA a statement of claim for common law cause of action and pleading intent to seek leave for s. 138.3 statutory action August 20, 2007 Defendants in U.S. class action bring motion to strike March 17, 2008 Berzi files statement of claim for common law cause of action and pleading intent to seek leave for s. 138.3 action August 27, 2008 Limitation period expires for statutory action January 27, 2008 to January 30, 2010 U.S. Supreme Court decision in Morrison June 24, 2010 District Court dismisses Millwright Trustees’ U.S. class proceeding October 14, 2010

Millwright Trustees file statement of claim for common law cause of action April 8, 2011 U.S. Court of Appeals reverses dismissal of U.S. class action December 29, 2011 Timminco released February 16, 2012 Notice of motion seeking leave under s. 138.8 OSA filed by Millwright Trustees February 24, 2012 Xing, Berzi and Millwright Trustees actions consolidated April 13, 2012 (

b) Disposition [ 38 ] Perell J. ruled that as a result of Timminco , the statutory claim was time-barred, but he found that the doctrine of special circumstances could be applied so as to grant leave nunc pro tunc were it necessary to do so. Broadly, in his view, the doctrine is not limited to the addition of new causes of action, as van Rensburg J. had suggested, but is, rather, a discretionary doctrine that can be adapted to the factual circumstances of a particular case.

In addition, he wrote, the doctrine of special circumstances is a common law doctrine which is applicable to the s. 138.14 OSA limitation period as a result of that provision’s inclusion in Sch. B to the Limitations Act, 2002 . Perell J. then held that the following special circumstances existed in the case before him: . . . (1) the defendants have known of the factual allegations against them since 2007, including the

Part XXIII.1 claims; (2) the defendants have had a full opportunity to investigate the claims against them; (3) there is no prejudice to the defendants; (4) the law has changed unexpectedly — twice — each time to the plaintiffs’ and class’ detriment; (5) the plaintiffs’

Part XXIII.1 claims do not raise new factual allegations; and (6) the defendants did not raise limitation periods in any of the class proceedings until now. [para. 145] [ 39 ] Perell J. therefore ruled that these special circumstances would justify granting leave for the statutory action nunc pro tunc were it to be granted at a later date. Leave was eventually granted to the plaintiffs with respect to some of the alleged misrepresentations a year and a half later: 2014 ONSC 1057 , 49 C.P.C. (7th) 12 . C.

Ontario Court of Appeal Decision ( 2014 ONCA 90 ) [ 40 ] The Ontario Court of Appeal convened a panel of five judges to consider the appeals from the decisions on the motions in the three cases and to determine whether Timminco should be overturned. [ 41 ] Feldman J.A., writing for a unanimous court, held that for the purposes of s. 28 CPA , asserting a claim should be understood to mean “to invoke a legal right” rather than solely to “enforce” one, particularly considering that any ambiguity in interpreting a limitation provision must be resolved in favour of the plaintiff (paras. 45-47).

The court found that this

interpretation would not produce an indefinite suspension, which was a concern Goudge J.A. had raised in Timminco , because the diligence of the defendants and the class action case management judge would ensure that stalled proceedings are dismissed. Feldman J.A. reasoned that although this reading of s. 28 CPA produces the “unusual, if not anomalous effect” (para. 51) that the limitation period will be suspended if a s. 138.3 statutory claim is asserted in a class proceeding, but not if it is asserted in an individual action, this effect followed from a statutory scheme that was optimized for class proceedings.

Feldman J.A. also expressed concern for judicial economy, worrying that all members of a class would be required to start their own actions while waiting to see if leave would be granted in the class proceeding. Overall, the Court of Appeal ruled that its new

interpretation was consistent with the purposes of the CPA and the OSA , and of limitation periods generally. [ 42 ] As a result of the Court of Appeal’s conclusion that Timminco had been wrongly decided, the statutory actions in CIBC , IMAX and Celestica were each held not to be statute-barred. Feldman J.A. also upheld the

interpretation of the “reasonable possibility” threshold for granting leave under s. 138.8 OSA given by Strathy J. in CIBC . D. Legislative Amendment [ 43 ] Following the Court of Appeal’s decision in the cases at bar, the Ontario legislature amended s. 138.14 OSA to include the following subs. (2):

(2) A limitation period established by subsection (1) in respect of an action is suspended on the date a notice of motion for leave under

section 138.8 is filed with the court and resumes running on the date, (

a) the court grants leave or dismisses the motion and, (

i) all appeals have been exhausted, or (ii) the time for an appeal has expired without an appeal being filed; or (

b) the motion is abandoned or discontinued. IV. Issues [ 44 ] There are two issues common to each of these appeals: 1. Does s. 28 CPA operate to suspend the limitation period applicable to a statutory claim under s. 138.3 OSA at the time when an intention to seek leave under s. 138.8 OSA is pleaded in a proposed class proceeding alleging a common law misrepresentation claim? 2.

If not, can the plaintiffs obtain relief in the form of an order granting leave nunc pro tunc or pursuant to the doctrine of special circumstances? [ 45 ] In addition, there are two issues raised only by the defendants in CIBC which I will discuss at the end of these reasons: 1. Was the threshold test for leave under s. 138.8 OSA properly interpreted and applied? 2. Can a class proceeding based on a common law cause of action be the preferable procedure for resolving a secondary market misrepresentation claim? V. Analysis A.

Interpretation of the Legislation [ 46 ] In Timminco and the cases at bar, the Ontario Court of Appeal advanced two different

interpretations of s. 28 CPA . According to its decision in the cases at bar, pleading the relevant facts and an intention to seek leave for a statutory cause of action under s. 138.3 OSA is sufficient to trigger s. 28 CPA and suspend the limitation period for all class members, including the representative plaintiff. According to Timminco , leave must be granted under s. 138.8 OSA before the limitation period can be suspended under s. 28 CPA . Neither of these

interpretations matches the subsequent amendment to s. 138.14 OSA , which provides that the limitation period for a claimant is suspended upon the filing of a notice of motion seeking leave under s. 138.8 .

(1) Ordinary and Grammatical Meaning of the Words [ 47 ] In my opinion, there is no ambiguity in the interaction of s. 28 CPA with

Part XXIII.1 OSA . The ordinary and grammatical meaning of the words clearly confirms the ruling in Timminco regarding the aforementioned provisions. Furthermore, an analysis of the legislative context does not support the Court of Appeal’s decision in the cases at bar. Feldman J.A.’s

interpretation of s. 28 CPA goes against the very purpose of s. 138.14 OSA , namely to impose an additional mechanism designed to screen out strike suits as early as possible in the litigation process. [ 48 ]

Section 28 CPA requires “a cause of action asserted” in order for the limitation period to be suspended in favour of the class members “on the commencement of the class proceeding”.

Section 138.8(1) OSA is clear, however: “No action may be commenced under s. 138.3 without leave of the court . . . .” On its face, the timing is clear. Unless leave is granted, a statutory action may not be commenced under

Part XXIII.1 OSA , and it is not until the action commences that a limitation period can be suspended under s. 28 CPA . In short, I am of the view that, under s. 138.8(1) OSA , a statutory action commenced without having first obtained leave is a nullity and a statutory claim under

Part XXIII.1 OSA cannot be validly commenced without leave of the court. Therefore, the limitation period cannot be suspended in favour of the class members under s. 28 CPA before leave is granted. [ 49 ] The Court of Appeal’s ruling in the instant cases, if accepted, would create unnecessary inconsistencies between the two pieces of legislation and within the OSA itself. The result of Feldman J.A.’s

interpretation is that a plaintiff proceeding by way of a class action would have more rights than a plaintiff suing in his or her individual capacity.

Yet class actions are merely procedural vehicles, designed to extend the substantive rights of the representative plaintiff to the entire class, not to create substantive rights for the class which an individual plaintiff would not otherwise enjoy since they do not exist. [ 50 ] It is also quite troubling that the effect of the Court of Appeal’s ruling in the instant cases is that a class proceeding asserting a statutory cause of action can commence before a judge has granted the initial leave to allow the statutory action itself to commence.

This is plainly putting the cart before the horse: a class proceeding cannot commence before the action itself commences. [ 51 ] I also agree with the

interpretation of the meaning of the word “assert” in s. 28 CPA proposed by Goudge J.A. in

Timminco. The plaintiffs argue that to trigger the application of s. 28 CPA, it is sufficient to merely plead the material facts of the claimwhich are common to the statutory and common law causes of action together with an intention to seek leave under s. 138.8 OSA.Although it is true that the definition of “cause of action” is the set of facts that give rise to a legal right of action, I am of the view thatthe assertion of a cause of action must be premised on the existence of a “right of action”.

In this sense, the meaning of the word“assert”, plucked and isolated from the context of the provision, is a red herring. In Méthot v. Montreal Transportation Commission, (SCC), [1972] S.C.R. 387, the relevant limitation provision required that a written notice be provided before an actionwas commenced. This Court held that “the notice which is required is not simply a procedural step. It is part of the very formation of theright of action” (p. 396). The same reasoning applies here with respect to the leave requirement, and I do not share Karakatsanis J.’s viewthat that case dealt with a different issue.

Given the clear wording of s. 138.3 OSA, pleading a factual matrix and an intention to seekleave under s. 138.8 OSA cannot amount to the assertion of the statutory cause of action. [52] Furthermore, as can be seen from the legislative history, the original draft of what is now s. 28 CPA read “a cause ofaction advanced in a proceeding” before it was later changed to “a cause of action asserted in a class proceeding” in the final piece oflegislation: Report of the Attorney General’s Advisory Committee on Class Action Reform (1990), at p. 47.

In my opinion, this change isevidence that the legislature intended “assert” to represent a more forceful concept than a mere mention or advancement of a cause ofaction, since the change would otherwise have been unnecessary. [53] Viewing these provisions together, there is no ambiguity to speak of in their interaction.

Section 28 CPA does notoperate to suspend the limitation period applicable to a cause of action until the commencement of a class proceeding in which the causeof action is asserted. This commencement cannot occur under

Part XXIII.1 OSA until leave is granted. In this sense, the leaverequirement of s. 138.8 OSA is a hurdle which must be cleared before s. 28 CPA can operate to suspend the limitation period.

Thenecessity of the leave requirement is equally applicable for an individual plaintiff and for a representative plaintiff in a class proceeding.However, in the latter case, once leave has been granted to one plaintiff, the members of the group benefit from it and the limitationperiod is suspended for all. [54] Finally, considering the entire context, I am also of the view that pleading an intention to seek leave under s. 138.8OSA cannot have the effect of suspending the limitation period prior to the time when leave is granted by the court.

At that time, andonly at that time, the representative plaintiff will have the benefit of suspension of the limitation period, and a class proceeding in respectof the statutory claim may be commenced.

(2) Legislative Purpose and Structure [55] Even if we were to assume that there is an ambiguity in the wording of the relevant provisions — which there is not— the legislative purpose and structure of those provisions would nonetheless support my conclusion. In other words, “the scheme of theAct, the object of the Act, and the intention of Parliament” are consistent with the ordinary and grammatical meaning of the words,which is another reason not to depart from that meaning: E. A. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87; see BellExpressVu Limited Partnership v.

Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26; Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27, at para. 21. To hold that s. 28 CPA operates to suspend a limitation period for a statutory claim under s. 138.3OSA before leave is obtained would be to circumvent the carefully calibrated purposive balance struck by the limits to the statutoryaction provided for in

Part XXIII.1 OSA. Such an

interpretation would

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