


COURT OF APPEAL FOR ONTARIO

CITATION: Sharma v. Timminco
    Limited, 2012 ONCA 107

DATE: 20120216

DOCKET: C53624, C53642 and C53644

Goudge, Armstrong and Lang JJ.A.

BETWEEN

Ravinder Kumar Sharma

Plaintiff (Respondent)

and

Timminco Limited, Photon Consulting LLC, Rogol Energy
    Consulting LLC, Michael Rogol, Dr. Heinz Schimmelbusch, Robert Dietrich, René Boisvert,
    Arthur R. Spector, Jack L. Messman, John C. Fox, Michael D. Winfield, Mickey M.
    Yaksich and John P. Walsh

Defendants (Appellants)

Proceedings under the
Class
    Proceedings Act, 1992

Alan L.W. DSilva, Daniel S. Murdoch and Lesley Mercer,
    for the appellants Timminco Limited, Dr. Heinz Schimmelbusch, Robert Dietrich,
    René Boisvert, Arthur R. Spector, Jack L. Messman, John C. Fox, Michael D.
    Winfield and Mickey M. Yaksich

Paul Le Vay and Brendan Van Niejenhuis, for the
    appellant Photon Consulting LLC

Derek J. Bell, for the appellant John P. Walsh

Michael C. Spencer, Won J. Kim and Victoria Paris, for
    the respondent

Heard: November 2, 2011

On appeal from the order of Justice Paul M. Perell of the
    Superior Court of Justice, dated March 31, 2011, with reasons reported at 2011
    ONSC 2040.

Goudge
    J.A.
:

[1]

The issue raised by this appeal is whether s. 28 of the
Class
    Proceedings Act, 1992
, S.O. 1992, c. 6 (the
CPA
) can operate to
    suspend the limitation period applicable to the statutory cause of action for
    misrepresentation provided by s. 138.3 of Part XXIII.1 of the Ontario
Securities
    Act
, R.S.O. 1990, c. S.5 (the
OSA
) before an action under that
    part is commenced.

[2]

At first instance the motion judge answered that question
    affirmatively.  For the reasons that follow, I have come to the opposite
    conclusion and I would therefore allow the appeal.

[3]

The essential facts are easily stated.  On May 14, 2009 the respondent
    commenced a proposed class action alleging misrepresentations by the appellants
    that adversely affected the value of shares of Timminco Limited in the
    secondary market.  These misrepresentations are alleged to have commenced on
    March 17, 2008 and continued until November 11, 2008.

[4]

The respondents statement of claim alleges two common law causes of
    action, negligence and negligent misrepresentation.  It also indicates that the
    respondent will seek an order granting leave to assert the statutory cause of
    action for misrepresentation provided by s. 138.3 of Part XXIII.1 of the
OSA
.

[5]

By the end of February 2011, the respondent had not yet sought that
    leave and, as a result, was faced with a possible limitation issue.  Part
    XXIII.1 imposes a limitation period of three years from the misrepresentation
    for the commencement of an action under this Part.  It also provides that such
    an action can be commenced only with leave.

[6]

Faced with this, the respondent moved for an order declaring that this
    limitation period is suspended pursuant to s. 28 of the
CPA
.  The
    result was the order that is now appealed.

[7]

The relevant statutory provisions in the
OSA
are found in Part
    XXIII.1 of the legislation, which was proclaimed in effect on December 31,
    2005.  Part XXIII.1 provides for statutory civil liability where
    misrepresentations are made that adversely affect the value of securities
    purchased in the secondary market (as opposed to purchases from an issuer in a
    primary distribution).  Enacted after much careful study, this Part provided
    the counterpart to Part XXIII, which, for some time, has provided a statutory
    cause of action for misrepresentation to purchasers of securities in the
    primary market.

[8]

In Part XXIII.1, section 138.3 provides a statutory cause of action
    against an issuer and those acting on its behalf for misrepresentation to
    persons who acquire the issuers securities in the secondary market.

[9]

Section 138.8(1) provides that an action under s. 138.3 may not be
    commenced without leave of the court.  This differs from Part XXIII, which does
    not require leave for commencement of an action.  Section 138.8(1) reads as
    follows:

Leave to
    proceed

138.8 (1)
No
    action may be commenced under section 138.3 without leave of the court granted
    upon motion with notice to each defendant. The court shall grant leave only
    where it is satisfied that,

(a) the action is being brought in good faith; and

(b) there is a reasonable possibility that the
    action will be resolved at trial in favour of the plaintiff.

[10]

Section
    138.14 provides that an action under s. 138.3 must be commenced within three
    years of the misrepresentation:

Limitation
    period

138.14
No
    action shall be commenced under section 138.3,

(a) in the case of misrepresentation in a
    document, later than the earlier of,

(i) three years after
    the date on which the document containing the misrepresentation was first
    released, and

(ii) six months after
    the issuance of a news release disclosing that leave has been granted to
    commence an action under section 138.3 or under comparable legislation in the
    other provinces or territories in Canada in respect of the same
    misrepresentation;

(b) in the case of a misrepresentation in a public
    oral statement, later than the earlier of,

(i) three years after
    the date on which the public oral statement containing the misrepresentation
    was made, and

(ii) six months after
    the issuance of a news release disclosing that leave has been granted to
    commence an action under section 138.3 or under comparable legislation in
    another province or territory of Canada in respect of the same
    misrepresentation; and

(c) in the case of a failure to make timely
    disclosure, later than the earlier of,

(i) three years after
    the date on which the requisite disclosure was required to be made, and

(ii) six months after
    the issuance of a news release disclosing that leave has been granted to
    commence an action under section 138.3 or under comparable legislation in
    another province or territory of Canada in respect of the same failure to make
    timely disclosure.

[11]

The
    relevant provision of the CPA is s. 28(1).  It provides for the suspension of
    the limitation period applicable to a cause of action asserted in a class
    proceeding, and for the circumstances under which it resumes running:

Limitations

28.  (1)
Subject
    to subsection (2), any limitation period applicable to a cause of action
    asserted in a class proceeding is suspended in favour of a class member on the
    commencement of the class proceeding and resumes running against the class
    member when,

(a) the member opts out of the class proceeding;

(b) an amendment that has the effect of excluding
    the member from the class is made to the certification order;

(c) a decertification order is made under section
    10;

(d) the class proceeding is dismissed without an
    adjudication on the merits;

(e) the class proceeding is abandoned or
    discontinued with the approval of the court; or

(f) the class proceeding is settled with the
    approval of the court, unless the settlement provides otherwise.

[12]

The
    motion judge granted the respondents motion.  His order declares that the
    limitation period in s. 138.14 of the
OSA
is suspended pursuant to s.
    28 of the
CPA,
effective as of the date of the issuance of the
    statement of claim on May 14, 2009.

[13]

At
    para. 50 of his reasons, the motion judge held that s. 28 of the
CPA
applies to any limitation period applicable to a cause of action and that
    this includes a cause of action under Part XXIII.1 of the
OSA
.  He saw
    no justification for s. 28 to operate for Part XXIII causes of action, but not
    for Part XXIII.1 causes of action just because of the leave requirement for the
    latter.  He pointed to s. 28 speaking of a cause of action being asserted and
    concluded that this did not depend on the commencement of litigation.  Rather,
    in his view, s. 28 requires only that a cause of action be mentioned in an
    already commenced class proceeding for the limitation period applicable to it
    to be suspended.  He held that to require that leave be granted before s. 28 of
    the
CPA
applied would defeat its purpose.

[14]

He
    therefore concluded that because the class proceeding commenced by the
    respondent for common law negligence and negligent misrepresentation mentioned
    the s. 138.3 cause of action, the limitation period applicable to it was
    suspended.

ANALYSIS

[15]

It
    is not disputed that there has been no leave granted pursuant to s. 138.8 of
    the
OSA
, that the respondents class proceeding is not an action
    commenced under s. 138.3, and that leave is required to add the s. 138.3 cause
    of action to the respondents class proceeding.  The question is whether the
    respondents mention in his class proceeding of his intention to seek leave is
    enough to activate s. 28 of the
CPA
, so as to suspend the limitation
    period applicable to the s. 138.3 cause of action.  Is it enough to be able to say
    that this cause of action has been asserted in the respondents class
    proceeding?

[16]

The
    suspension provision in s. 28(1) of the
CPA
provides that any
    limitation period applicable to a cause of action asserted in a class
    proceeding is suspended in favour of a class member on the commencement of the
    class proceeding.  These words must be read in their grammatical and ordinary
    sense, in the full context of the scheme of the
CPA
, its object and
    the intention of the legislature.  See:
Bell ExpressVu Limited Partnership
    v. Rex
, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26.

[17]

The
    Canadian Oxford Dictionary
, 2d ed., defines assert as make or enforce a
    claim to (
assert ones rights
).
Blacks Law Dictionary
defines assert as to invoke or enforce (a legal right): see Henry C. Black,
Blacks Law Dictionary
, 8th ed. (St. Paul: Thomson West, 2004).  By
    contrast,
The Canadian Oxford Dictionary
defines mention as refer
    to or remark on incidentally.
Blacks Law Dictionary
does not
    include the word.  Clearly, assert is a significantly more forceful concept.

[18]

Without
    leave having been granted, a s. 138.3 cause of action cannot be enforced.  It
    cannot be invoked as a legal right.  Section 138.14 says as much.  Thus, giving
    the suspension provision in s. 28(1) of the
CPA
its ordinary meaning,
    the s. 138.3 cause of action cannot be said to be asserted in the respondents
    class proceeding since no leave has been granted.

[19]

The
    respondent argues that it is significant that s. 28(1) requires not that a cause
    of action be commenced, but only that it be asserted.  However, this choice
    of language is entirely appropriate.  A cause of action is not commenced.  That
    is a concept applicable not to a cause of action but to the litigation in which
    it is asserted.

[20]

Thus,
    in my view as applied to the s. 138.3 cause of action, the grammatical and
    ordinary meaning of the s. 28(1) suspension provision is that without leave
    being granted the cause of action cannot be said to be asserted in a class
    proceeding.

[21]

Indeed,
    the mention of the s. 138.3 cause of action in the respondents statement of
    claim appears to reflect this view, namely that leave is required before this
    cause of action can be asserted in the respondents class proceeding.

[22]

Paragraph
    117 of the statement of claim reads as follows:

PART XXIII.1 OF THE SECURITIES ACT

117.   The Plaintiff intends to deliver a notice of motion
    seeking, among other things, an Order permitting the Plaintiff to assert the
    statutory causes of action particularized in Part XXIII.1 of the Securities
    Act, and if granted, to amend this Statement of Claim to plead these causes of
    action.

[23]

The
    statutory context of the suspension provision in s. 28(1) of the CPA provides
    additional support for this interpretation.  The balance of the subsection
    lists the various circumstances that cause the suspended limitation period to
    resume running.  They do not include any reference to the leave motion required
    to add the s. 138.3 cause of action to the respondents class proceeding.  If
    mention of the intention to seek leave were enough to trigger the suspension of
    the applicable limitation period, surely the failure to proceed with the leave
    motion or the denial of leave would be included as circumstances causing its
    resumption.  Assume, for instance, that having pleaded his intention to seek
    leave, the respondent decides not to do so.  The consequence of his argument
    would mean that since the statutory cause of action is mentioned in his
    pleading, the limitation period applicable to it is suspended and remains so
    even though the class proceeding could never be the vehicle to vindicate the
    class members rights under Part XXIII.1.  That cannot have been the
    legislatures intention.

[24]

It
    is also clear that the interpretation I propose is consistent with the purpose of s. 28(1) of the CPA.  In Coulson v. Citigroup Global Markets Canada Inc., 2010 ONSC 1596, at para. 49, Perell J. described this purpose to be to protect class members from the operation of limitation periods without the need to themselves pursue individual actions in order to avoid being out of time until it has been determined whether they can get access to justice through the class proceeding.  That purpose was approved in this court in Coulson v. Citigroup Global Markets Canada Inc., 2012 ONCA 108.  In the context of this case, the respondent’s class proceeding gives class members no possibility of access to justice for their s. 138.3 causes of action because no leave to assert it has been granted.  The purpose of s. 28(1) of the CPA does not therefore require that the limitation period applicable to these causes of action be suspended pending the outcome of this class proceeding, since that action cannot give class members access to justice for their claims.

[25]

Indeed,
    the respondents proposal would reflect a different purpose that cannot have
    been intended by the legislature.  It would suspend the applicable limitation
    period for the s. 138.3 cause of action on the mere mention of that cause of
    action.  This is a benefit that would not come to the respondent if he were
    suing in an individual capacity and did the same thing.  It cannot have been
    the purpose of s. 28(1) of the
CPA
to put the class plaintiff in a
    better position than he would have been had he commenced an individual action.

[26]

The
    purpose of s. 138.14 of the
OSA
is also served by the interpretation of
    s. 28(1) of the
CPA
that I have described.  Section 138.14 was clearly
    designed to ensure that secondary market claims be proceeded with dispatch.
    That requires the necessary leave motion to be brought expeditiously. To
    suspend that limitation period with no guarantee that the s. 138.3 cause of
    action, including the prerequisite leave motion, will be proceeded with
    expeditiously is inconsistent with that purpose.

[27]

Finally,
    the interpretation I have given for s. 28(1) of the
CPA
does not make
    it inapplicable to a s. 138.3 cause of action under Part XXIII.1 of the
OSA
. 
    It simply requires that leave be granted before that happens.  The fact that by
    comparison no leave is required for s. 28(1) to apply to Part XXIII causes of
    action is simply a reflection of the legislative policy to require leave for
    secondary market causes of action but not for their primary market
    counterparts.

[28]

In
    summary, I conclude for a s. 138.3 cause of action to be asserted in a class
    proceeding, so as to trigger the suspension provision in s. 28(1) of the
CPA
,
    leave must be granted.  Since the respondent has not obtained leave, s. 28(1)
    has not been activated.

[29]

I
    would therefore allow the appeal and dismiss the respondents motion for an
    order declaring that the limitation period in s. 138.14 of the
OSA
is
    suspended.

[30]

As
    we indicated during argument, the parties may make written submissions of no
    more than eight pages addressing costs here and below.  These are to be filed
    within 30 days of the release of these reasons.

Released: February 16, 2012 STG

S.T.
    Goudge J.A.

I
    agree Robert Armstrong J.A.

I
    agree S.E. Lang J.A.


