Round v. MacDonald, Dettwiler and Associates Ltd. et al., 2012 BCCA 456

• Judge: Low, Groberman and MacKenzie, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: November 02, 2012
• Jurisdiction: British Columbia
• Citations: 2012 BCCA 456;(2012), 330 B.C.A.C. 30 (CA)

Round v. MacDonald, Dettwiler (2012), 330 B.C.A.C. 30 (CA);

    562 W.A.C. 30

MLB headnote and full text

Temp. Cite: [2012] B.C.A.C. TBEd. DE.004

Lesley Round (appellant/petitioner) v. MacDonald, Dettwiler and Associates Ltd., Daniel Friedmann, Magued Iskander, Peter Louis, Robert Phillips, Terrance W. Piche, Marshall Prentice, Gordon D. Thiessen, Martin Willard, and Anil Wirasekara (respondents/respondents)

(CA039489; 2012 BCCA 456)

Indexed As: Round v. MacDonald, Dettwiler and Associates Ltd. et al.

British Columbia Court of Appeal

Low, Groberman and MacKenzie, JJ.A.

November 2, 2012.

Summary:

Round applied under Part 16.1 of the Securities Act for leave to commence an action for damages against her employer and others for misrepresentation of material facts and failure to disclose material changes.

The British Columbia Supreme Court, in a decision reported [2011] B.C.T.C. Uned. 1416, dismissed the application, holding that there was no possibility that Round could succeed at trial because (1) the material facts upon which she relied all occurred before the statutory cause of action in Part 16.1 existed and the legislation did not apply retrospectively; and (2) she had no cause of action because she did not acquire or dispose of her share on the secondary market, but instead had acquired the share from her employer's treasury through her voluntary participation in an employee share purchase plan. The court awarded costs to the defendants. Round appealed and applied to introduce fresh evidence.

The British Columbia Court of Appeal refused to admit the fresh evidence and dismissed the appeal.

Actions - Topic 1501

Cause of action - General principles - When cause of action arises - General - Round applied under Part 16.1 of the Securities Act (BCSA) for leave to commence an action for damages against her employer and others for misrepresentation of material facts and failure to disclose material changes - A chambers judge dismissed the application, holding that there was no possibility that Round could succeed at trial because, inter alia, the material facts upon which she relied all occurred before the statutory cause of action in Part 16.1 existed and the legislation did not apply retrospectively - The British Columbia Court of Appeal dismissed Round's appeal - Retroactive operation of a statute was highly exceptional, whereas prospective application was the rule - As the BCSA created a new obligation, it was substantive and did not apply retroactively - The chambers judge correctly refused to rely on the Ontario Securities Act as Ontario law was not pleaded - The court could not give leave under the BCSA to bring an action under Ontario legislation - Further, the question of whether the BCSA was intended to be retroactive could not depend on the existence of legislation in another jurisdiction - The presumption against retroactivity was not rebutted simply by showing that the purpose of a provision was public protection - The emphasis was not on the legislature's intention or motivation, but on the consequences attached by the legislation to the past acts or conduct - The BCSA attached new liabilities to conduct that previously did not attract liability and therefore imposed prejudicial consequences - Further, the judge correctly found that the employer fulfilled its disclosure obligations after it disclosed the Minister's rejection of the proposed sale of one of the employer's Divisions in a May 9, 2008 news release and in documents that were filed with SEDAR on May 12, 2008 - The news release was sufficient disclosure to the public under Part 16.1 - Finally, the judge correctly found that Round's cause of action was not ongoing as no damages were incurred, at the latest, after May 23, 2008 (the date that the market price of the employer's shares rebounded) - See paragraphs 36 to 48.

Practice - Topic 210.3

Actions - Commencement of - Individuals and corporations - Status or standing - Class or representative actions - Costs - Round applied under Part 16.1 of the Securities Act for leave to commence an action for damages against her employer and others for misrepresentation of material facts and failure to disclose material changes - If she was granted leave under Part 16.1, she intended to bring a class action - A chambers judge dismissed the application and awarded costs to the defendants - Round appealed, asserting that the judge erred in awarding costs to the defendants, as the no-cost regime in s. 37 of the Class Proceedings Act (CPA) governed - The defendants asserted that the costs award was not governed by the CPA as that regime was not engaged before the hearing of the class action certification application - They also pointed to Supreme Court Rule 1-2(a) which provided that the Rules governed every proceeding in the Supreme Court, unless an enactment otherwise provided - They asserted that, as the Securities Act was silent on the issue of costs, the regular principles under the Rules applied and costs were awarded to the successful party - They also asserted that there was no evidence to support an assertion that Round's counsel had not indemnified Round - They noted that representative plaintiffs in class action proceedings often entered into retainer agreements with class counsel that provided indemnification from adverse costs awards - The British Columbia Court of Appeal dismissed an appeal - The court agreed that the no-costs regime in the CPA did not apply - The judge properly exercised his discretion by awarding costs to the defendants - See paragraphs 58 to 63.

Practice - Topic 7020.1

Costs - Party and party costs - Entitlement to - Successful party - General principles - [See Practice - Topic 210.3 ].

Practice - Topic 7053.1

Costs - Party and party costs - Entitlement to - Class or representative actions - [See Practice - Topic 210.3 ].

Practice - Topic 9031

Appeals - Evidence on appeal - Admission of "new evidence" or "fresh evidence" - Round applied under Part 16.1 of the Securities Act for leave to commence an action for damages against her employer and others for misrepresentation of material facts and failure to disclose material changes - A chambers judge dismissed the application - Round appealed and applied to introduce fresh affidavit evidence - She asserted that the evidence consisted of information which had always been known to the defendants, but was not known to her until days before the chambers judge released his decision and that she had not recognized the significance of the information until after the decision - Round asserted that nine of the 10 defendants failed to file affidavits thereby hampering her ability to present the true facts of the case - She asserted that that factor weighed in favour of granting her leave to introduce further evidence - She also asserted that the evidence was relevant and credible - Further, it demonstrated that she had acquired shares of her employer when she was employed by the employer contrary to the judge's rulings - The British Columbia Court of Appeal refused to admit the evidence - First, the evidence was available when Round applied before the chambers judge and she had not demonstrated that it could not have been adduced at trial with reasonable due diligence - Second, the evidence was not relevant to either of the issues upon which the court intended to dispose of the appeal - See paragraphs 27 to 34.

Securities Regulation - Topic 5362

Trading in securities - Civil liability (incl. secondary market disclosure) - Application of legislation (incl. exemptions) - [See Actions - Topic 1501 ].

Securities Regulation - Topic 5362

Trading in securities - Civil liability (incl. secondary market disclosure) - Application of legislation (incl. exemptions) - Round applied under Part 16.1 of the Securities Act for leave to commence an action for damages against her employer and others for misrepresentation of material facts and failure to disclose material changes - A chambers judge dismissed the application, holding that there was no possibility that Round could succeed at trial because, inter alia, she had no cause of action where she did not acquire or dispose of her shares on the secondary market, but instead had acquired the shares from the employer's treasury through her voluntary participation in an employee share purchase plan - Round appealed, asserting that the judge erred in finding that her shares were a "distribution" within the meaning of s. 140.2(b) of the Act - She asserted that her shares did not fall within the definition of "distribution" in s. 1.1, as there was no evidence that the shares had not been "previously issued" - She further asserted that the judge erred in holding that a "distribution" was exempt from s. 61 of the Act - She asserted that "Unless exempted under this Act" in s. 61 meant that any exemptions had to be found in the Act, without reference to regulations or other sources - As the Act did not contain any exemptions, she asserted that her shares were not exempt from s. 61, and therefore Part 16.1 applied to her intended action - The British Columbia Court of Appeal dismissed the appeal - The chambers judge correctly held that Round's shares were a "distribution" under the Act - The treasury shares were issued by the employer expressly for the voluntary employee share purchase plan - Section 33(6) of the Interpretation Act provided that "If an enactment refers to a matter 'under' a named or unnamed Act, an Act in that reference includes regulations enacted under the authority of that Act." - Therefore, "Unless exempted in this Act" in s. 61 referred to exemptions in the Act itself and in any regulations enacted under the authority of the Act - See paragraphs 49 to 54.

Securities Regulation - Topic 5363

Trading in securities - Civil liability (incl. secondary market disclosure) - Standing - Round applied under Part 16.1 of the Securities Act for leave to commence an action for damages against her employer and others for misrepresentation of material facts and failure to disclose material changes - A chambers judge dismissed the application, holding that there was no possibility that Round could succeed at trial because, inter alia, she had no cause of action where she did not acquire or dispose of her shares on the secondary market, but instead had acquired the shares from the employer's treasury through her voluntary participation in an employee share purchase plan - Round appealed, asserting that the judge erred in holding that an action under Part 16.1 could only be brought by a person who was properly a plaintiff - Round relied on s. 140.9 of the Act which addressed the notice requirements when leave was granted and referred to "A person that has been granted leave to commence an action under s. 140.3" - Round asserted that "person" was broader than "plaintiff" - The British Columbia Court of Appeal held that the Chambers judge correctly disposed of the argument as follows: "I cannot accede to this latter argument. Section 140.3 of the Act is explicit that the cause of action resides with 'a person who acquires or disposes' of shares of an issuer during periods of breach. The leave requirement, under s. 140.8, stipulates that the court may only grant leave where it is satisfied that, 'there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff' ... Jointly these provisions make it apparent that an action can only be brought by a person who has a cause of action and is, thereby, properly a plaintiff. If Ms. Round does not personally have a cause of action, leave cannot be granted to start the action." - See paragraph 55.

Securities Regulation - Topic 5364

Trading in securities - Civil liability (incl. secondary market disclosure) - Leave to commence action - Round applied under Part 16.1 of the Securities Act for leave to commence an action for damages against her employer and others for misrepresentation of material facts and failure to disclose material changes - A chambers judge dismissed the application - Round appealed, asserting that upon an application for leave to commence an action, s. 140.8(3) of the Act required each defendant to swear, file, and serve a personal affidavit and since the defendants failed to do so, leave should automatically have been granted - The British Columbia Court of Appeal rejected the assertion - As the judge held, s. 140.8(3) only required each party to file evidence, in affidavit form, of material facts on which that party intended to rely - It did not require each defendant to swear his or her own affidavit - See paragraph 57.

Securities Regulation - Topic 5365

Trading in securities - Civil liability (incl. secondary market disclosure) - Disclosure, sufficiency of - [See Actions - Topic 1501 ].

Statutes - Topic 5355

Operation and effect - Delegated legislation - Regulations - Force and effect of regulations - [See second Securities Regulation - Topic 5362 ].

Statutes - Topic 6703

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - What constitutes retrospective or retroactive operation - [See Actions - Topic 1501 ].

Statutes - Topic 6704

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Presumption against retrospectivity and retroactivity - [See Actions - Topic 1501 ].

Statutes - Topic 6705

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Presumption against retrospectivity or retroactivity rebutted - [See Actions - Topic 1501 ].

Statutes - Topic 6708

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Procedural and substantive matters defined - [See Actions - Topic 1501 ].

Statutes - Topic 6713

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Retrospective or retroactive operation - Public protection - [See Actions - Topic 1501 ].

Cases Noticed:

R. v. Palmer, [1980] 1 S.C.R. 759; 30 N.R. 181, refd to. [para. 28].

Barry and Brosseau v. Alberta Securities Commission, [1989] 1 S.C.R. 301; 93 N.R. 1; 96 A.R. 241, refd to. [para. 39].

Angus v. Hart and Angus and Sun Alliance Insurance Co., [1988] 2 S.C.R. 256; 87 N.R. 200; 30 O.A.C. 210, refd to. [para. 41].

R. v. Dineley (S.) (2012), 436 N.R. 59; 297 O.A.C. 50; 2012 SCC 58, refd to. [para. 41].

British Columbia Hydro and Power Authority v. Environmental Appeal Board (B.C.) (2003), 185 B.C.A.C. 94; 303 W.A.C. 94; 17 B.C.L.R.(4th) 210; 2003 BCCA 436, revd. [2005] 1 S.C.R. 3; 329 N.R. 6; 208 B.C.A.C. 4; 344 W.A.C. 4; 2005 SCC 1, refd to. [para. 45].

Seidel v. Telus Communications Inc., [2009] B.C.A.C. Uned. 70; 96 B.C.L.R.(4th) 24; 2009 BCCA 383, refd to. [para. 62].

Statutes Noticed:

Class Proceedings Act, R.S.B.C. 1996, c. 50, sect. 37 [para. 58].

Securities Act, R.S.B.C. 1996, c. 418, sect. 61 [para. 51 et seq.]; sect. 140.2(b) [para. 50]; sect. 140.3 [para. 55]; sect. 140.3(4) [para. 47]; 140.8(3) [para. 57].

Authors and Works Noticed:

Côté, Pierre-André, The Interpretation of Legislation in Canada (3rd Ed. 2000), p. 169 [para. 41].

Counsel:

E.F.A. Merchant, Q.C., and A.A. Tibbs, for the appellant;

R.S. Anderson, Q.C., T.M. Tomchak and N.T. Hooge, for the respondent.

This application and appeal were heard at Vancouver, British Columbia, on November 2, 2012, by Low, Groberman and MacKenzie, JJ.A., of the British Columbia Court of Appeal. MacKenzie, J.A., released the following judgment orally for the court on the same date.