Stats offer glimpse of how leave requirement has played out

Larry Lowenstein, Laura Fric

Mar 16, 2015

Julius Melnitzer, Law Times

(Recap)

To no one’s surprise, plaintiff and defence lawyers differ on the extent to which the threshold leave requirement in Ontario’s Securities Act has proven to be an effective filter against scurrilous secondary-market securities class actions.

Defence-side lawyer Larry Lowenstein of Osler, Hoskin & Harcourt LLP’s Toronto office agrees that the leave requirement has served a useful purpose.

“I agree that it’s not just a bump in the road and that the courts have been willing to say no in the right cases,” he says.

“But overall, the courts have set a disappointingly low test for the degree of scrutiny judges will give to the merits, so for the most part the leave test is working out to be the pretty low bar we have always expected it to be.”

Laura Fric, also of Osler, agrees that the number of filings has been relatively stable.

“To me, that indicates that we’re in a mature and stable environment,” says Fric.

“But the danger going forward, which I would call eyebrow-raising rather than alarming, is that we now have a pool of cases that is not insignificant and that has been growing.”

The silver lining is that the six actions settled in 2014 as well as the year before were twice as many as in 2012. And while it’s impossible to predict just how many of the 60 outstanding cases will settle or go to trial, Fric says the challenge for all stakeholders will be to move these cases along and try them efficiently.

“It looks like we’re pretty good at settling but we haven’t seen a single case go to trial yet.”

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