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www.lexpert.ca | LEXPERT • December 2015 | 19 CLASS ACTIONS Earlier rulings were split. In Round v. MacDonald, Dettwiler and Associates Ltd., a BC chambers judge said a proper analysis requires both sides to file affidavits laying out the material facts on which they intend to rely. In Green v. Canadian Imperial Bank of Commerce, an Ontario judge cautioned against making the threshold too high, saying the requirement is intended to weed out strike suits, not "deprive bona fide litigants, with a difficult but not impossible case, from having their day in court." In Ironworkers v. Manulife Financial, however, a different Ontario judge complained the threshold had become so low that the leave test was nothing more than a "speed bump." at was a complaint that largely resonated with the defense Bar, so all eyes were on the Supreme Court of Canada when the issue landed before the top justices in eratechnologies Inc. v. 121851 Canada Inc. out of Québec. In handing down guidance on the leave test, the Supreme Court said the threshold is more than a "speed bump" — and is actually higher than the threshold for certification. e leave test requires "sufficient evidence" and a "reasoned consideration of the evidence," the justices said. But they also cautioned it should not be treated as a mini-trial. Michael Eizenga, Chair of the class actions practice at Bennett Jones LLP in Toronto, says it's a very significant decision "that will encourage defendants to make sure that they put the plain- tiffs through the paces of meeting that threshold." An Ontario court dismissed a motion for leave within weeks of eratechnologies being handed down, citing the Supreme Court's teachings in the case. "What's interesting to me is the judge said he had felt bound by other case law to make it an extremely low threshold, and now in the first case he gets [aer] the Supreme Court's decision in eratechnologies he displayed a much more rigorous approach," Eizenga says. "So to the extent some Americans may have considered that Canada was a place where it was extremely easy to start second- ary-market misrepresentation class actions, that has clearly been modified." e decision should be seen as "a very positive development" for listed and interlisted companies, says Marie Audren, regional leader of the Class Action Group at Borden Ladner Gervais LLP in Montréal. "We can expect that in the future, Canadian courts will apply a rigorous test before giving the go-ahead for these types of class actions. It is more than a mere formality. "Clearly, the Supreme Court sent a message that they don't want US-style strike suits migrating north." A quick check of the numbers suggests cross-border share- holder class actions have not exactly been flooding Canadian courts. In 2014, just 10 secondary-market class actions were filed in Canada, according to a study released by NERA Economic Consulting, which keeps class-action databases. Of those, only three involve companies that were interlisted on the Toronto and New York stock exchanges and had parallel class actions in the US. Will there be fewer secondary market securities class actions next year because of eratechnologies? "It's hard to say," says Audren. "But certainly we won't see a major increase." THE THIRD DECISION that is promising to shape Canadian securities class actions in years to come has to do with costs. In 1146845 Ontario v. Pillar to Post, the Ontario Superior Court declined to waive or reduce costs against the plaintiffs in their unsuccessful defense of a motion to stay the action. e court stayed the suit, brought by three franchisees who successfully argued in favor of the arbitration provision in the franchise agreement. e defendants asked for partial costs of $120,000. e plaintiffs asked that costs be waived, or greatly reduced, due to the novel nature of the issues raised in the underlying case. In a decision highlighting the Ontario courts' reticence to reduce costs awards against unsuccessful litigants – even in the developing field of class actions – the judge said no because, ultimately, the case was said to be "commercially or financially motivated litigation. "In normal litigation, it is relatively rare that the court will invoke its discretion to eliminate or reduce an unsuccessful litigant's exposure to costs because the party was litigating a novel point or was litigating in the public interest," the decision says. "is follows because in the overwhelming majority of cases, the prime motivation of the parties will not be altruistic. "Class actions are no different. Although class actions are by design intended to be in the public interest and although they oen raise novel issues, it remains the case that it will be relatively rare that the court's discretion to negate or diminish a costs award will be exercised." Ward Branch, of Branch MacMaster LLP in Vancouver, says while some provinces such as BC have a no-cost regime, Ontario – which accounts for nearly 80 per cent of securities class actions filed – maintains a loser-pays regime that clearly favors large companies over plaintiffs. "When I do plaintiffs' cases in Ontario, it's really difficult to explain to someone why they should be a representative plaintiff when they could be dinged $200,000 in costs and their individ- ual claim's only worth $20," he says. "I always say you'd have to be an idiot to be a representative plaintiff in Ontario unless you can get some protection." at usually comes in the form of an indemnity from the law firm mounting the case. Each case can cost a plaintiff 's firm millions of dollars to carry, and they also face the possibility of a crushing cost award. e Law Commission of Ontario has been asked to review the Class Proceedings Act and one of the specific areas they're looking at is whether the province should move to a no-cost regime. Branch says unlike in the United States, where there is enough work to allow firms to do only plaintiff class actions, "in Canada it's hard to find enough cases to feed yourself over the course of the year. "at's why in Canada, you can't find a firm that just does plaintiff class actions, every firm does a little bit of something else. If these three cases say one thing, it's that this is not an area in which you want to dabble." Sandra Rubin is a Toronto-based writer and strategic consultant.

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