Investors will get more time to pursue potential legal action against advisors and dealers for selling units in the funds offered by failed fund manager Bridging Finance Inc.
Chief Justice Geoffrey Morawetz of the Ontario Superior Court of Justice granted a motion from the law firm Bennett Jones LLP — appointed to represent investors in the receivership of Bridging — that asked the court to pause the limitation period for possible investor claims against their broker, advisor, planner or dealer stemming from their purchases of Bridging funds.
In an earlier filing, Bennett Jones said it sought the court order on behalf of investors amid concerns that the limitation period may expire before investors have a chance to pursue legal action, and that there may be a misunderstanding of its role in the receivership.
The firm said it was concerned that some investors may not understand that it’s not investigating possible individual claims against advisors or industry firms, and that its role is limited to representing investors’ interests in the receivership proceeding.
Additionally, it cited concerns that investors may not be able to accurately calculate their damages until the receivership is wrapped up.
The failure of Bridging is expected to result in at least $1.2-billion worth of investor losses. But without knowing the extent of their damages, it could be difficult for individual investors to determine whether it makes sense to pursue legal action or not.
The court granted the firm’s motion, which tolls the limitation period starting April 30, 2021 — the date when PricewaterhouseCoopers LLP was appointed to oversee Bridging and its assets at the behest of the Ontario Securities Commission (OSC), which was concerned about possible misconduct at the firm.
The OSC has brought enforcement proceedings against former executives at Bridging, but those allegations have not been heard. The case is slated to start later this year and is scheduled to run into February 2024.
Under the court’s order pausing the limitation period, the clock on investors’ potential legal claims against advisors and dealers likely won’t start running again until the receivership comes to an end.