Ontario Divisional Court allows IMAX shareholder certification suit to proceed to trial

A motion for leave to appeal Silver v. IMAX Corporation to the Ontario Divisional Court has been denied.
IMAX is the first case to consider leave to proceed and class certification tests set forth in Bill 198.
A lower court decision in IMAX provided the first interpretation of leave requirements that must be met when shareholders wish to bring a civil secondary market liability claim for misrepresentation under the Ontario Securities Act.
Experts said the decision set a low standard for plaintiffs to pass the two-prong test for leave, ruling that plaintiffs only have to show there is a reasonable possibility for the action to succeed and that it is brought in good faith.
The case also certified a global class of Canadian and non-Canadian shareholders, regardless of whether they purchased their shares on the (Canadian) TSX or (American) NASDAQ stock exchanges.
In the leave for appeal, the defendants argued the motion judge erred in interpreting the Ontario Securities Act leave test to impose a reverse onus on defendants to demonstrate that any affirmative defences will render the plaintiff’s claim unlikely to succeed at trial, an Ogilvy Renault article says.
Justice D.L. Corbett accepted that the interpretation of the leave test raised a matter of general importance, but he was satisfied that the plaintiffs had an arguable case worthy of moving forward, The Ogilvy Reneault article says.
The defendants also argued that the motion judge erred in leaving it open to the plaintiffs to argue at trial that proof of individual reliance by each class member is not required, and that reliance can be inferred simply by proving the common act of purchasing IMAX shares on the secondary market.
Again, Justice Corbett accepted this was an important issue, but noted the motion judge does no more than permit the plaintiffs to proceed to trial. The Court of Appeal will be able to give full consideration to these issues if and when the case is appealed after a trial judgement, Ogilvy Reneault reported.
Finally, the defendants argued the lower court erred in certifying a global shareholder class despite the existence of an overlapping putative class action in the United States.
Justice Corbett said “it would be wrong to preclude [foreign investors] from participating in Canadian proceedings if they wish their claims to be pursued in Ontario,” the article continued.