A Major Evolution in Class Action Litigation

Larry Lowenstein, Jennifer Dolman

December 2013

Julius Melnitzer

(Extract)

Enforcement issues and the fate of securities class actions are dominating what is turning out to be a watershed year in the evolution of class action litigation in Canada.

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Subsequently, in Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v. Celestica Inc., Justice Perell, in direct opposition to Justice Strathy, found that discretion to extend relief from the limitation period existed and applied the doctrine of “special circumstances” to extend the limitation period. He found that the defendants were not prejudiced by the extension because they had been aware of the claims since 2007 and had been defending parallel claims in the US since then.

The upshot is that the rulings in Silver and Celestica significantly diluted the hard-line approach taken by the Court of Appeal in Timminco, which created serious problems for plaintiffs who only discovered a misrepresentation well into the three-year period and then had to encounter the vagaries of a notoriously slow litigation process abetted by defendants well aware of the advantages of delaying the hearing of the leave application.

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But Larry Lowenstein of Osler, Hoskin & Harcourt LLP’s Toronto office, who represents defendants in class action cases, does not regard Celestica as opening the floodgates.

“Justice Perell recognized that the special circumstances doctrine is principled and narrow,” he says. “It comes down to an inquiry as to whether the plaintiffs, by initiating the litigation within the limitation period albeit not obtaining leave within that period, have put the defendants on proper notice to avoid prejudice.”

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“The decision will have profound implications for many types of class actions,” says Jennifer Dolman, a franchise law partner in Osler’s Toronto office. “There are other statutes with pre-conditions to litigation, such as the requirement to give notice or obtain leave, and Timminco is certainly open to the broader interpretation that the Class Proceedings Act does not suspend time limits for satisfying the pre-conditions that are found in these particular statutes.”

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