Secondary Market Liability in Ontario: Interpreting the Leave Test Before and After Theratechnologies

• Author: Denisa Mertiri
• Pages: 39-68

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SECONDARY MARKET LIABILITY

IN ONTARIO: INTERPRETING

THE LEAVE TEST BEFORE AND

AFTER

THER ATEC HNOLOGIES

Denisa Mertiri

Abstract: This article reviews the evolution of the leave test for

securities cl ass actions for secondary market m isrepresentations

under Part XXIII.1 of Ontario’s Securities Act. The article will

explore whether the courts’ cu rrent application of the test ad-

equately meets the legislative purposes of this Part of the Act

in securing the dual goals of access to justice for aggrieved

investors while preventing unmeritorious claims from being

launched to pressure defendants into settlement. Given the

legislative purposes underlying Part XXIII.1, this article will

analyze the courts’ historical application of the leave test, the

challenges to secondary market class actions that the test

creates for litigants, a nd the ways that the test may be applied

in future case s to prevent such challenges. The article argues

that important lessons from cases applying a low threshold

burden to the leave test can still serve courts in adjudicating

leave motions in ways that are fair to participants, and that

meet the legislative goals of Part XXIII.1 of the OSA.