BC Court of Appeal Clarifies the Good Faith and Best Interests Requirements of the Test for Leave to Commence Derivative Actions

By Steven Leitl, Aaron Stephenson and Preston Brasch on December 2, 2020 Posted in Civil claims

In a recent split decision, a panel of the B.C. Court of Appeal (BCCA) considered the good faith and best interests requirements of the test for leave to commence a derivative action: 2538520 Ontario Ltd. v. Eastern Platinum Limited, 2020 BCCA 313.

A derivative action is a procedure pursuant to which a shareholder or other “complainant” may commence and control litigation in the name of a corporation that declined to commence its own litigation in respect of a wrong allegedly done to it. Derivative actions are most frequently brought by shareholders to redress alleged wrongs perpetrated by … Continue Reading

IIROC Panel Rejects Majority of Respondent’s Affidavits at Sanctions Hearing

By Anisha Visvanatha on November 27, 2020 Posted in Securities regulatory decisions

At a sanctions hearing in Re Eley, a Hearing Panel of the Investment Industry Regulatory Organization of Canada (“IIROC”) (the “Panel”) disallowed evidence submitted by the respondent, Douglas Eley, that was found to amount to “a thinly disguised attempt to re-open the Panel’s findings on the merits” rather than evidence relevant to sanctions (the “Sanctions Decision”).

The Merit Decision

Following a contested hearing, the Panel released a decision (the “Merits Decision”) in which it found that Mr. Eley had altered previously signed client documents, “seriously violating industry regulations” and his firm’s policies. … Continue Reading

Stay of Proceedings, a Drastic Remedy Granted for Violation of Constitutional Rights

By Caroline Larouche on November 25, 2020 Posted in Civil claims

A few weeks ago, in R. c. Goldberg, 2020 QCCQ 4548, the Court of Québec (Criminal and Penal Division) granted the most drastic remedy by ordering a stay of the charges brought against Bouclair Inc. (Bouclair), Peter Goldberg and Erwin Fligel, respectively the company’s Chief Executive Officer (CEO) and vice-president, for alleged tax evasion offences.

Factual Background

In 2011, the Québec fiscal authority, the Agence du Revenu du Québec (ARQ), began a routine tax audit of Bouclair. In the early stages of the audit, the ARQ’s auditor discovered the diversion of the CEO’s personal … Continue Reading

Do’s and Don’ts When Applying for a Search Warrant

By Rachelle Powell Bergmann and Sophie Melchers on November 19, 2020 Posted in Civil claims

In the context of a lawsuit by the Agence du revenu du Québec (ARQ) for failure to report and remit various tax amounts, the defendants sought to exclude the evidence seized by the ARQ under a search warrant authorized by the Court of Quebec. The reviewing judge (also of the Court of Quebec), in Agence du revenu du Québec v. Exacte, 2020 QCCQ 2840, clarified the rules for obtaining a search warrant, particularly the requirements for drafting the required supporting affidavit, and defined the duties imposed on the party who appears ex parte before the authorizing judge. Those rules equally … Continue Reading

The Context of Materiality in Secondary Market Misrepresentation Claims: Miller v. FSD Pharma Inc. Securities Class Action

By Ted Brook on October 29, 2020 Posted in Class actions, Securities regulatory decisions

In Miller v. FSD Pharma Inc. (Miller), a decision released June 23, 2020, Morgan J. of the Ontario Superior Court of Justice granted leave to proceed with a putative secondary market securities class action under s. 138.3 of Part XXIII.1 of the Ontario Securities Act (OSA) against FSD Pharma Inc. (FSD), a new entrant into the Ontario cannabis production market.[1] The Miller decision is significant for two reasons. First, the Court applied the “market impact” test for assessing the materiality of the alleged misrepresentations. Second, the Court adopted a contextual approach to … Continue Reading

Quadrexx Hedge Capital Management Ltd. v. Ontario Securities Commission: First Application Of The Vavilov Standard of Review to an OSC Decision

By Elana Friedman on October 28, 2020 Posted in Other developments, Securities regulatory decisions

In a previous post, we discussed the new standard of appellate review of tribunal decisions described in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (Vavilov) and its implications for the Ontario Securities Commission (the OSC). In Quadrexx Hedge Capital Management Ltd. v. Ontario Securities Commission, 2020 ONSC 4392, the Divisional Court considered for the first time the application of Vavilov to a decision of an OSC Hearing Panel.

Background

After a contested hearing, a Hearing Panel of the OSC (the Panel) found that Miklos Nagy and Tony Sanfelice, … Continue Reading

Investor Protection Law Clinics Benefit from Cy-près Distribution of Settlement Funds: Makris v Endo International PLC

By Geoff Mens on October 27, 2020 Posted in Class actions, Other developments

Makris v Endo International PLC

On October 1, 2020 the Ontario Superior Court approved a securities class action settlement agreement in the amount of $700,000 and a plan of allocation providing for the distribution of the settlement amount, net of legal fees, disbursements and taxes, to two investor protection legal clinics.

The Cy-près Distribution of the “Uneconomic” Net Settlement Amount

During the class period, the defendant’s securities traded on both the Nasdaq and the TSX, with trading volumes on the TSX accounting for less than 1% of the trading volume on the US exchanges. Most class members in the Ontario … Continue Reading

BC Supreme Court examines validity of release and injunction clauses affecting third party rights in plans of arrangement

By Caroline Larouche and Sophie Melchers on October 21, 2020 Posted in Other developments

Summary

In iAnthus Capital Holdings, Inc.(Re)[1], Gomery J. of the Supreme Court of British Columbia, approved an amended plan of arrangement (the Amended Plan) after he invited the petitioners to narrow the release and injunction clauses of the first plan the petitioners had applied for (the First Plan).[2]

The initial release clause was broad enough to make Gomery J. declare that he did not have the power to make it an ancillary order under British Columbia’s Business Corporations Act (BCA), and that it rendered the otherwise acceptable plan unfair and unreasonable. The clause had the effect … Continue Reading

First Global Data Ltd (Re): OSC requires merits hearing to proceed via videoconference despite respondents’ objections

By Erika Anschuetz on September 30, 2020 Posted in Other developments, Securities regulatory decisions

COVID-19 continues to pose unique challenges to Canada’s legal system, including questions about how the Ontario Securities Commission (OSC) will conduct its proceedings. In a recent decision, a Hearing Panel of the OSC ordered a merits hearing to proceed by videoconference (First Global Data Ltd (Re), 2000 ONSEC 23), despite the respondents’ strenuous objections. This decision, which follows a determination on March 23, 2020 that an unrelated merits hearing would continue partly in writing (discussed in our previous post), highlights the evolution of the OSC’s response to COVID-19 in conducting its proceedings.

Commission’s Current … Continue Reading

Significant amendments coming to Ontario’s Class Proceedings Act, 1992

By Linda Fuerst, Randy Sutton and Ted Brook on July 22, 2020 Posted in Legislation, rules and policies, Other developments

On July 8, Bill 161, the Smarter and Stronger Justice Act, 2020 (the SSJA), passed a third reading in the Ontario provincial legislature and received royal assent, becoming law.

The SSJA includes significant amendments to Ontario’s Class Proceedings Act, 1992 (CPA), marking the first time that Ontario’s class action legislation has undergone major changes since its enactment over 27 years ago.

To learn more about these amendments, please refer to our legal update.… Continue Reading