The Supreme Court of British Columbia has ruled that a company can sue the TSX Venture Exchange Inc., and isn’t required to direct its complaint to the BC Securities Commission first.
The court dismissed an application by the TSXV seeking to have a suit brought by AMS Homecare Inc. struck out on the grounds that the action constitutes an abuse of process. According to the judgment, the exchange argued that the matters raised by the company are all ones that ought properly to be determined by the BCSC and not by the court.
AMS claims damages based on the losses it alleges it suffered as a result of the exchange’s delay in processing its reverse takeover application. It alleges that the exchange “repeatedly exercised its regulatory process improperly, arbitrarily and in bad faith and with the intent of delaying the approval of the RTO application”.
None of these allegations have been proven. The exchange claims the approval process actually took no more than 11 months following the submission of all the necessary application materials, and that its review procedure was delayed as a result of the plaintiff’s own delays in assembling the necessary documents.
“In other words, assuming the truth of the allegation that the exchange and its employees acted deliberately and maliciously to delay the plaintiff’s application for approval of the Reverse Takeover Agreement, the exchange says that the plaintiff ought not to be allowed to seek a remedy in this court since it did not first seek a hearing of its complaints by the commission.”
The company argued that the court is the right place for the dispute because: it is not seeking to have the court overturn any decision of the commission; the regulatory process itself does not provide an avenue for the plaintiff to advance its claims; and, the plaintiff can only recover an award of damages in a civil action rather than through the regulatory process.
“The plaintiff styles this matter as an action in tort, while the defendant argues that the matter is rightly understood as an attempt to subvert an administrative tribunal, namely the commission, by going to court in spite of unused remedies before the commission. In my view, the law supports the plaintiff’s position,” the court ruled. It found that the exchange has not made out a plain and obvious case, and that the matter should be allowed to proceed to trial. “The result must be to deny the motion,” it said.
“The only risk in allowing the plaintiff’s action is that it might erode the commission’s authority in dealing with securities regulations in this province,” the court allowed. “ There is undoubtedly value in having the commission consider matters in areas where it has experience.”
“However, that value is not so great as to overwhelm the plaintiff’s right to direct its own litigation strategy,” it ruled. “Absent an existing decision or overlapping jurisdiction between the commission and this court over the claim as a whole, I cannot agree with the exchange’s suggestion that the claim is an abuse of process.”
Company can sue TSX Venture Exchange, court rules
- By: James Langton
- February 15, 2007 February 15, 2007
- 16:20