Decision Sets Clock Ticking on Class Actions; Tougher Time Limits

Jennifer Dolman

Feb 29, 2012

By Julius Melnitzer, Financial Post

Class action lawyers say that the Ontario Court of Appeal’s recent ruling in Sharma v. Timminco could be one of the most important decisions yet on secondary-market class actions.

The appellate-court decision requires plaintiffs in secondary-market securities class actions to seek the required leave to commence the action from the court within three years of the date of the impugned misrepresentation. The court's reasoning could have broad reaching implications for other types of class actions.

Jennifer Dolman  of Osler, Hoskin & Harcourt LLP, who practises on the defence side, agrees.

"There are other statutes with preconditions to litigation, such as the requirement to give notice or obtain leave," she says. "The Timminco decision is certainly open to the broader interpretation that the Class Proceedings Act does not suspend time limits for satisfying the preconditions that are found in these particular statutes."

By way of example, Ms. Dolman cites Ontario's Arthur Wishart Act, which governs franchise agreements. The legislation requires a party who asks the court to rescind a franchise agreement to give notice within certain time limits.

"As in Timminco, where the court ruled that the right to sue did not arise until leave was obtained, courts have ruled that the right to seek rescission in a franchise case does not arise unless notice was given in a timely fashion," Ms. Dolman says.

Ontario's Consumer Protection Act has a similar notice provision for consumers who want to rescind their contracts. So does the Proceedings Against the Crown Act, which requires citizens who want to sue the government to give notice before starting their lawsuits.

"The Court of Appeal has emphasized that time-limited preconditions to suing apply to class actions," Ms. Dolman says.

 

For more on the implications of the Timminco decision, please see our recent Osler Update.