The Ontario Court of Appeal has the final word in a securities class action in which it permitted a statutory secondary market misrepresentations claim to proceed under Part XXIII.1 of the Securities Act notwithstanding the assertion of the reasonable investigation defence.
Court of Appeal Decision Stands
On May 31, 2018, the Supreme Court of Canada denied the application by SouthGobi Resources Ltd. for leave to appeal a decision of the Court of Appeal which provided further guidance and clarification regarding the test for leave to proceed with a secondary market misrepresentation claim under section 138.8(1) and the defence of reasonable investigation under section 138.4(6)(a) of the Securities Act.1
The Court of Appeal held that on a motion for leave, the motion judge has an obligation to critically assess the evidence and where there are contentious issues of credibility or gaps that cannot be resolved on the evidentiary record, the motion for leave should be granted.
The Court of Appeal highlighted that leave motions are not to be treated as mini-trials, that the evidence before the court and the evidence not before the court must both be considered, and that the court’s analysis and decision should be animated by the fundamental public policy principles underlying the regulation of the capital markets, and in particular disclosure.
If you have any questions concerning this case or securities litigation generally, please contact Wendy Berman, John M. Picone, Danielle DiPardo, or any other member of the Cassels Brock Securities Litigation Group.
1 R.S.O. 1990, c. S. 5.