Fischer et al. v. IG Investment Management Ltd. et al.,

• Jurisdiction: Ontario
• Judge: Epstein,Pardu,Winkler
• Neutral Citation: 2012 ONCA 47
• Date: 06 December 2011
• Court: Court of Appeal (Ontario)

Fischer v. IG Inv. Mgt. Ltd. (2012), 287 O.A.C. 148 (CA)

MLB headnote and full text

Temp. Cite: [2012] O.A.C. TBEd. FE.002

Dennis Fischer, Sheila Snyder, Lawrence Dykun, Ray Shugar and Wayne Dzeoba (plaintiffs/respondents) v. IG Investment Management Ltd., CI Mutual Funds Inc., Franklin Templeton Investments Corp., AGF Funds Inc. and AIC Limited (defendants/appellants)

(C53852; C53853; 2012 ONCA 47)

Indexed As: Fischer et al. v. IG Investment Management Ltd. et al.

Ontario Court of Appeal

Winkler, C.J.O., Epstein, J.A. and Pardu, J.(ad hoc)

January 27, 2012.

Summary:

The Ontario Securities Commission took enforcement proceedings against five mutual fund managers for failing to act in the public interest in relation to market timing activity in their funds. All the defendants entered into settlement agreements with the Commission pursuant to which they paid $205.6 million in compensation directly to their investors. All of the settlements specified that they were without prejudice to the rights of any person to bring civil or other proceedings against the mutual fund managers respecting the same subject matter. The settlements were approved by the commission as being in the public interest. Plaintiffs commenced an action against the mutual fund managers and moved to have the action certified as a class action. Three of the five managers entered into settlement agreements with the plaintiffs. According to the method of calculation preferred by the plaintiffs' expert, the claim against the remaining managers, over and above the settlements with the Commission, was $333.8 million.

The Ontario Superior Court, in a decision reported at [2010] O.T.C. Uned. 296, dismissed the motion where the plaintiffs had not established that a class proceeding was the preferable procedure. In making the determination, the court found that there was an identifiable class and, subject to two qualifications, accepted the definition of that class as proposed in the plaintiffs' "Option A". The plaintiffs appealed the motion's dismissal. They also asserted that the motion judge erred in determining the common issues and that the two qualifications to their definition of the class constituted errors in principle that should be set aside.

The Ontario Divisional Court, in a decision reported at 276 O.A.C. 84, allowed the appeal and issued a certification order on the condition that the motion judge approve a revised litigation plan. The class definition was to include the definition of the market timers which were excluded and there was not to be a specific prohibition against future amendments to exclude others from the class. The common issues were to be as directed by the motion judge. The managers obtained leave to appeal and appealed.

The Ontario Court of Appeal dismissed the appeal.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The Ontario Securities Commission took enforcement proceedings against five mutual fund managers for failing to act in the public interest in relation to market timing activity in their funds - The defendants settled with the Commission and paid $205.6 million in compensation directly to their investors - The settlements specified were without prejudice to the rights of any person to bring civil or other proceedings against the mutual fund managers respecting the same subject matter - Investors sued the managers and moved to have the action certified as a class action - Three of the managers settled with the plaintiffs - A motion judge dismissed the motion where the investors had not established that a class proceeding was the preferable procedure (Class Proceedings Act, s. 5(1)(d)) - The Divisional Court allowed an appeal, holding that the Commission's proceedings could not be the preferable procedure for recovering damages because the plaintiffs' action was for significant monetary damages beyond the amount that had been recovered in the Commission's proceedings - The Ontario Court of Appeal dismissed an appeal - In determining whether an alternative resolution method was preferable to a class action, the court had to examine the fundamental characteristic of the proposed alternative proceedings, such as the scope and nature of the jurisdiction and remedial powers of the alternative forum, the procedural safeguards that applied and the accessibility of the alternative proceedings - The court had to then compare those characteristics with those of a class proceedings to determine whether it was the preferable means of fulfilling the judicial economy, access to justice and behaviour modifications purposes of the Act - The essence of the Commission's initiative was that of a parallel or complementary proceedings to any civil action brought by the investors - The courts below erred by focussing on the substantive outcome of the Commission's proceedings - They should have considered the regulatory nature of the Commission's jurisdiction and its remedial powers, as well as the lack of participatory rights afforded to the affected investors - A consideration of those characteristics compelled the conclusion that the Commission's proceedings did not provide class members with access to justice in relation to their claims - Therefore, the Commission's proceedings could not constitute a preferable procedure for purpose of the Act.

Cases Noticed:

Markson v. MBNA Canada Bank (2007), 224 O.A.C. 71; 85 O.R.(3d) 321; 2007 ONCA 334, refd to. [para. 26].

Hollick v. Metropolitan Toronto (Municipality) et al., [2001] 3 S.C.R. 158; 277 N.R. 51; 153 O.A.C. 279; 2001 SCC 68, refd to. [para. 26].

Pearson v. Inco Ltd. et al. (2005), 205 O.A.C. 30; 78 O.R.(3d) 641 (C.A.), leave to appeal refused (2006), 357 N.R. 394 (S.C.C.), refd to. [para. 39].

Cassano et al. v. Toronto-Dominion Bank (2007), 230 O.A.C. 224; 87 O.R.(3d) 401; 2007 ONCA 781, refd to. [para. 40].

Cloud et al. v. Canada (Attorney General) et al. (2004), 192 O.A.C. 239; 73 O.R.(3d) 401 (C.A.), leave to appeal denied [2005] 1 S.C.R. vi; 344 N.R. 192; 207 O.A.C. 400, refd to. [para. 40].

Asbestos Corp., Société nationale de l'Amiante and Quebec (Province), Re, [2001] 2 S.C.R. 132; 269 N.R. 311; 146 O.A.C. 201; 2001 SCC 37, refd to. [para. 51].

Committee for Equal Treatment of Asbestos Minority Shareholders v. Ontario Securities Commission - see Asbestos Corp., Société nationale de l'Amiante and Quebec (Province), Re.

Fantl v. Transamerica Life Canada (2009), 249 O.A.C. 58; 95 O.R.(3d) 767; 2009 ONCA 377, refd to. [para. 61, footnote 6].

Statutes Noticed:

Class Proceedings Act, S.O. 1992, c. 6, sect. 5(1)(d) [para. 21].

Counsel:

Benjamin Zarnett, Jessica Kimmel and Melanie Ouanounou, for the appellant, CI Mutual Funds Inc.;

James D.G. Douglas, David Di Paolo and Heather Pessione, for the appellant, AIC Limited;

Joel Rochon, Peter Jervis and Sakie Tambakos, for the respondents.

This appeal was heard on December 6, 2011, by Winkler, C.J.O., Epstein, J.A., and Pardu, J.(ad hoc), of the Ontario Court of Appeal. Winkler, C.J.O., released the following judgment for the court on January 27, 2012.