The Vancouver-based Shareholder Association for Research & Education (SHARE) is calling on legislators to clear up the uncertainty on how limitation periods apply in class-action lawsuits following a confusing and conflicting series of Supreme Court of Canada (SCC) decisions handed down Friday morning.
The SCC decisions involved proposed class actions against Canadian Imperial Bank of Commerce (CIBC), IMAX Corp. and Celestica Inc. on the issue of whether shareholder lawsuits could proceed in each case, or whether they were barred due to limitation periods. Ultimately, the court allowed the cases against CIBC and IMAX to go ahead, but the case involving Celestica was ruled out of time. Yet, the rulings also included several dissenting opinions.
SHARE, which intervened in favour of the proposed shareholder class actions, says that the decisions “underscore the importance of legislative action across Canada to ensure that shareholders have a clearly articulated process and timeline for seeking a remedy from the courts when public companies make misrepresentations.”
The shareholder advocacy group notes that the legislature in Ontario “has already acted in advance of this ruling to stop the running of the limitation period once investors file their motion for leave.” SHARE now says that Friday’s SCC decisions indicate that other jurisdictions need to follow suit.
“Investors’ ability to seek a remedy for public company misrepresentations is critical to healthy and transparent capital markets,” says Peter Chapman, executive director of SHARE, in a statement. “Investors, including our clients, depend on accurate disclosure from companies and a blatant failure to provide accurate information to investors must be actionable. That’s why we intervened in this case. Ontario has taken the first step; we’d like other jurisdictions to follow its lead.”
“While the court made it clear today that judges have discretion to extend the limitation period where the court’s process and other factors delay the determination of leave, investors cannot be assured that their rights are protected if factors beyond their control delay the process,” says Bonnie Roberts Jones, a senior lawyer with Groia & Co. in Toronto, who acted for SHARE in the case, in the statement.
“We need other provinces to enact legislation clarifying that investors will have access to justice even if the court process is delayed due to factors beyond their control,” she adds. “The conflicted nature of this decision underlines the importance of the need for clarity.”