While the Ontario Court of Appeal’s December decision in Bayens v. Kinross Gold went a long way to clarifying key issues around secondary-market misrepresentation class actions, the judgment’s half-life is as yet indeterminate given that the Supreme Court of Canada is poised to deal with the same questions in 2015.
“There had been some concern in the defence Bar regarding the blurring of the test for leave to proceed and the test for certification in secondary-market misrepresentation class actions,” says Robert Staley of Bennett Jones LLP’s Toronto office. “Kinross gives some momentum to the defence Bar, but until the SCC weighs in, nobody can be quite sure what the law is.”
The “blurring” arose from the appeal court’s previous decision in Green v. CIBC. There, the court held that the leave test for secondary-market securities class actions under the Securities Act was the same as the test for certification under the Class Proceedings Act — that is, whether the plaintiffs had demonstrated there was a “reasonable possibility” that the action would be resolved in their favour at trial.
The clarification from Bayens comes in the court’s exposition of the different contexts in which the test is applied. On a leave motion, both parties may file affidavits and cross-examine on them; on a certification hearing, there is no evidentiary record and the facts as pleaded are taken to be true. Put another way, the credibility of the plaintiffs is not in issue on a certification hearing, but it may be on a leave motion. The motions judge on Kinross, then, was correct in refusing leave to appeal after he determined that weighing the evidence of the plaintiff’s accounting expert and determining that it was fatally flawed.
Defendants have also welcomed the appeal court’s affirmation of the refusal to certify the parallel common law misrepresentation claims. While the Court affirmed that the denial of leave on statutory claims was not an automatic bar to certifying the common law class action based on negligent misrepresentation, it went on to say that standalone common law claims were not generally suitable for certification because they gave rise to unmanageable issues on causation and reliance that could only be resolved at individual trials.
“Kinross makes it significantly more difficult to get common law negligent misrepresentation claims certified on a stand-alone basis,” says Dimitri Lascaris of Siskinds LLP. “But it is important to note that Kinross involved several alleged misrepresentations and it remains to be seen whether and in what circumstances common law standalone cases based on a single misrepresentation will be deemed suitable for certification.”
Indeed, Justice George Strathy of the Ontario Superior Court – in both McKenna v. Gammon Gold and in Ramdath, Kovessy and Singh v. The George Brown College of Applied Arts – had previously accepted the proposition that a case based on a single misrepresentation at common law was suitable for certification.
Meanwhile, the SCC has granted leave in Green. At press time, a hearing had been scheduled for January which, in the normal course, means a decision will likely be rendered sometime during 2015.