SCC denies leave in Sharma v. Timminco Limited

Alan D’Silva led the Stikeman Elliott team in the securities class action limitation periods case, Sharma v. Timminco Limited.

The Ontario Court of Appeal decision confirming a three-year time limit for actions against public companies for misrepresentations in their secondary-market disclosures will stand, after the Supreme Court of Canada denied leave to appeal in Sharma v. Timminco Limited on Thursday morning.

Alan D’Silva and his team from Stikeman Elliott LLP, the firm that represented Timminco Limited and certain of its directors and officers, provided Lexpert with the following key points from the Court of Appeal decision. (A full description of the case was featured in the May 2012 issue.)

  • The mere “mention” of the plaintiff’s intention to seek leave to bring a claim under s.  138.3 of the Securities Act in the Statement of Claim is not sufficient to engage s. 28 of the CPA so as to suspend the limitation period in section 138.14 of the Securities Act;
  • Section 28 of the CPA requires that a cause of action be “asserted” in a class proceeding in order for the limitation period applicable to the cause of action to be suspended, and a cause of action cannot be “asserted” under Part XXIII.1 of the Securities Act until after leave has been granted;
  • The representative plaintiff in this case has not been granted leave and therefore has not asserted a cause of action under Part XXIII.1 of the Securities Act. Rather, the Statement of Claim merely “mentions” the representative plaintiff’s intention to seek leave to assert such a cause of action and that in itself does not trigger any protections under the Securities Act or the CPA;
  • If the mere mention of the representative plaintiff’s intention to seek leave were sufficient to trigger the suspension of the limitation period, a representative plaintiff could simply do nothing towards obtaining leave or advancing the shareholders’ claim and thereby suspend the limitation period indefinitely;
  • An interpretation of s. 28 of the CPA that would suspend the limitation period before leave has been granted would unfairly benefit representative plaintiffs and class members in a class proceeding as it would not be available for a plaintiff suing in an individual capacity as s. 28 does not apply in individual actions. Such an interpretation favouring class representatives over individual plaintiffs could not have been intended by the legislature;
  • Requiring leave to be obtained before the suspension of the limitation period under s. 28 of the CPA is triggered is consistent with the legislature’s intention that secondary market claims be proceeded “with dispatch” in fairness to public companies and their shareholders.

Margaret Waddell of Paliare Roland Rosenberg Rothstein LLP also provides a case summary in her Trials & Tribulations column in Canadian Lawyer magazine.

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