Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1511709
www.lexpert.ca 13 securities. ose are governed under the Securities Act, which has a higher threshold for certification than general civil liabilities class actions. "Judges have been more inclined to show more scrutiny and have a larger debate at the authorization stage and allow defen- dants to have a fuller defence at the authoriza- tion stage," says Paré. It's not just the judges who are looking harder at cases in the early stages. Defendants' counsels are also making more – and more complex – legal arguments earlier, says Toronto-based David Conklin, a partner at Goodmans LLP. He adds that this is working to limit the number of class actions launched, especially those related to securities and investments. "I hate to say this – it started with me 10 years ago – but defence counsel consistently are responding by putting in a significant eviden- tiary record themselves to try and demonstrate that the defined liability issues are too broad, or that there's no chance of success. And so that process for just getting the right to bring the action, plaintiff 's counsel will tell you, has become very burdensome. And, they would say, interferes with their business decision to bring a claim on a contingency-fee basis." Conklin adds that another factor that dissuades class securities-related actions is the cap on damages that an issuer is respon- sible for, which is set at five percent of market capitalization at the time of representation. For individual directors or officers, liability is capped at 50 percent of the compensation they earned in 12 months before any misrep- resentations they made. While there is no final data yet for 2023, Paré, Foreman, and Conklin all have the same sense: Overall, fewer class actions have been launched over the past year across the country. (Looking strictly at securities-based class actions, NERA Economic Consulting Eight reports that "eight new securities class actions were filed in Canada during 2022, two fewer than the 10 cases filed in 2021 and barely half of the 15 new cases filed in each of 2019 and 2020.") ere is a different story in BC, however; odds of being successfully argued, thereby preventing those suits from taking up valuable court time later in the process. Speaking from the West Coast, British Columbia-based Michelle Maniago, a partner in Borden Ladner Gervais LLP's disputes prac- tice, says when courts are looking at certifying class actions (accepting that the plaintiff has a case that is worth hearing on legal grounds and that the named plaintiff can represent all of the potential victims in the situation), they are finding that many cases don't clear the "low bar" of the compensable harm standard. She explains that "the courts are taking up the direction from the Supreme Court of Canada about grappling with tough legal issues and trying to decide those on an early basis, rather than letting cases drag on. ey're saying, 'What is this claim? And does this disclose a cause of action?' ere are a lot of cases that have been floundering on exactly that issue: whether a cause of action is disclosed." Maniago adds that courts in Saskatchewan have even begun dismissing cases on their dockets for years for want of prosecution or delay. Specifically, she cites Huard v. the Winning Combination Inc., 2022 SKCA 130 and Bovier v. Crary Company, 2023 SKKB 21. Halfway across the country in Quebec, François-David Paré, a partner and local chair of the dispute and litigation group in Montreal and national co-chair of class actions for Norton Rose Fulbright Canada LLP, explains the courts are behaving similarly and making it harder for cases to be certified. Partly, they're looking at lawyers' fees and not certifying cases if the class counsel fees are too high (which happened in A.B. c. Clercs de Saint-Viateur du Canada, 2022 QCCA 1224, for example). Other times, certifications are denied in what Paré calls hybrid class actions involving ANNUAL SECURITIES CLASS ACTIONS IN CANADA Source: NERA Economic Consulting The number of new securities class actions filed in Canada has been decreasing over the last few years: 2022 8 2021 10 "THE COURTS ARE TAKING UP THE DIRECTION FROM THE SUPREME COURT OF CANADA ABOUT GRAPPLING WITH TOUGH LEGAL ISSUES AND TRYING TO DECIDE THOSE ON AN EARLY BASIS, RATHER THAN LETTING CASES DRAG ON" Michelle Maniago BORDEN LADNER GERVAIS LLP 2020 15 2019 15