Whither Common Law Claims for Secondary Market Misrepresentation?: An Analyis of Certification Decisions in Mccann v Cp Ships , Silver v Imax , Mckenna v Gammon Gold , and Dobbie v Arctic Glacier

• Author: Andrea Laing and Robert Carson
• Pages: 103-148



WHITHER COMMON LAW

CLAIMS FOR SECONDARY

MAR KET MISR EPRESENTATION?:

AN ANALYSIS OF CERTIFICATION

DECISIONS IN

MCCANN V CP

SHIPS

,

SILVER V IMA X

,

MCK ENN A

V GAMMON GOLD

, AND

DOBBIE

V ARCTIC GL ACIER

Andrea Laing and Robert Carson

Abstract: Part XXIII.1 of the Ontario Securities Act provides a

statutory right of action for misrepre sentations or omissions

affecting the pr ice of securities on the secondar y market. Re-

cent decisions have reached st arkly contradictory conclusions

to the question of whether common law mis representation

claims — mea ning claims th at do not rely on the statutory

right of action — may also be ce rtif‌ied along with mi srepre-

sentation claim s commenced pursuant to Part XXIII.1. These

decisions provoke a ref‌lection on the origin al reasons for the

adoption of Part XXIII.1 and raise impor tant questions about

the past and future of t he common law misrepresentation

claims th at Part XXIII.1 was intended to supplement, if not

entirely supersede. The authors contend th at Strathy J’s rea-

sons for declining cert if‌ication of the common law misrepre-

sentation claim s in McKenna v Gammon Gold are consistent

with Canad ian jurisprudence before the en actment of Part

XXIII.1 and should be preferred to the rea soning in Silver v

IMAX, McCann v CP Ships and Dobbie v Arctic Glacier.

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WHITHER COMMON LAW CLAIMS

FOR SECONDARY M ARK ET

MISR EPRESENTATION?: A N A NALYSIS

OF CERTIFICATION DECISIONS IN

MCCANN V CP SHIPS

,

SILVER V IMA X

,

MCKENNA V GAMMON GOLD

, AND

DOBBIE V ARCTIC GLACIER

Andrea Laing and Robert Carson*

A. INTRODUCTION

Part XXIII.1 of the Ontar io Securities Act1 (OSA) now provides a statu-

tory right of action again st “responsible issuers” and var ious related par-

ties for misrepresent ations or omissions affecti ng the price of securities

on the secondary m arket. Recent decisions have reached sta rkly contra-

dictory conclusions to the quest ion of whether common law misrepre-

sentation claim s — meaning claim s which do not rely on the statutory

right of action — may also b e certif‌ied along with mi srepresentation

claims commenced pur suant to Part XXIII.1. A review of the certif‌ic a-

tion decisions of Rady J in McCann v CP Ships,2 van Rensburg J in Si lver

* Andrea La ing is a partner at Osler, Hoskin & H arcourt LLP and a member

of the f‌irm’s Clas s Action and Corporate and Secu rities Litigation Speci alty

Groups. Since the int roduction of statutory liabil ity for secondary market mi s-

representat ion in Ontario, she has been defend ing issuers against c lass actions

premised on mi srepresentation clai ms. Robert Carson is an a ssociate in the

litigation depa rtment at Osler, Hoskin & Harcourt L LP. His practice involves

a range of civil l itigation, including clas s actions and corporate matt ers. As

an articli ng student, he was seconded to the O ntario Securities C ommission.

The authors than k Larry Lowenstei n for his input and support and Stépha nie

Lafranc e and Brian Rakowski for th eir research assi stance.

1 Securities Act, R SO 1990, c S-5 [OSA].

2 McCann v CP Ships Ltd, [2009] OJ No 5182 (SCJ) [CP Ships].