Top court dismisses fund companies’ appeal

Now the two companies are also facing a proposed class action by those same investors. The allegations put forth in the class action have yet to be proven.

Several other companies that were involved in the market timing settlements have already settled with the proposed class action plaintiffs. Initially, a judge denied certification of the case as a class action against the companies, however that decision was reversed by the Divisional Court, and later upheld by the Court of Appeal. Now, the Supreme Court has also upheld those later rulings, dismissing the fund companies’ appeals.

According to the SCC’s decision, the question is whether the proposed class proceeding is preferable “from the point of view of providing access to justice” to the already-completed OSC proceeding.

In this case, the court found that a potential class action resolves two barriers to justice in the case — the fact that individual claims would not be large enough to sustain their own suits, and there is no other process for seeking resolution of common issues for what could potentially be more than a million investors. The court found that a class action “has the potential to make it economically feasible to advance on behalf of the class a group of individual claims that would otherwise not be economically feasible to pursue in the courts and it provides class members with a fair process to resolve their claims.”

Moreover, it found that the OSC proceedings alone aren’t enough to provide access to justice for investors. “Investor participation in the process leading to compensation is an important factor to consider and one that weighs heavily in favour of finding that the class proceeding meets the preferability requirement in this case,” the court says.

It found that because investors generally don’t have standing at regulatory hearings, they may not get adequate justice through those proceedings. “The regulatory nature of, and the limited participation rights for investors in the OSC proceedings, coupled with the absence of information about how the OSC staff assessed investor compensation support the conclusion that significant procedural access to justice concerns remain which the proposed class action can address,” it says.

Additionally, it says that the investor plaintiffs in the case provided enough evidence to support the view that a class action “would overcome access to justice barriers that subsisted after the completion of the OSC proceedings and that a cost‑benefit analysis supported the conclusion that the class proceedings were the preferable proceeding for the investors to pursue their claims.”

As a result, it ruled, “The correct legal principles support the decision to certify the proposed class action.”