Case information

Securities — Civil procedure — Class actions — Negligence — Leave granted to proceed with action claiming secondary market misrepresentation — Class proceeding certified for claims alleging negligence, primary market misrepresentation and secondary market misrepresentation — Whether a public disclosure that does not lead to a statistically significant share price decline can be considered a public correction — Whether principle of deemed reliance can apply to a security that does not trade in an efficient market — Whether public disclosure that does not lead to statistically significant share price decline can be considered a public correction — Securities Act, R.S.O. 1990, c. S.5, ss. 138.3 and138.8; Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1).

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Akumin Inc. has issued common shares and secured notes. Allegedly, share price declines were precipitated by disclosures of accounting errors. Expert evidence agrees that one common share price decline followed one disclosure but otherwise disputes whether price declines followed other announcements and causal links. Terry Longair Professional Corporation commenced a claim alleging breaches of the Securities Act and negligence, including claims of material misstatements that constitute primary market misrepresentation and secondary market misrepresentation that were corrected. Leave is required to proceed with the claim alleging secondary market misrepresentation. Terry Longair Professional Corporation brought a motion for leave and applied for certification of a class proceeding. The Ontario Superior Court of Justice granted leave to proceed with a claim under s. 138.3(1) of the Securities Act for secondary market misrepresentation and certified as a class proceeding a claim for secondary market misrepresentation under s. 138.3(1), a claim for primary market misrepresentation under s. 130.1 of the Securities Act and a negligence claim. The Court of Appeal dismissed an appeal.