The Court set a schedule for the exchange of evidence and cross-examinations on the leave motion. The plaintiff brought a motion in 2021 for the requisite leave under the Securities Act. The plaintiff in Kwong alleges various misrepresentations or omissions by the defendant cannabis company, its CFO and its former CEO. The leave motion is “more than a speed bump” and is “a robust deterrent screening mechanism so that cases without merit are prevented from proceeding”. To obtain leave, the plaintiff must show that their claim has a reasonable chance of success at trial based on “some credible evidence”.
However, the legislation provides an important gate-keeping function for courts to prevent unmeritorious ‘strike suits’ against public issuers: a plaintiff must obtain leave from the Court to commence a claim. This makes a statutory claim more amenable to class proceedings than traditional common law claims. Importantly, the statutory cause of action does not require plaintiffs to prove that they relied on a misrepresentation in order to recover damages. Securities legislation in Ontario and other provinces creates a statutory cause of action against companies and certain individuals for misrepresentations in the secondary securities market. emphasizes that the leave mechanism provided in the Act is a balance struck by the legislature to protect investors and promote disclosure while avoiding the American experience of predatory ‘strike suits’. The decision of Justice Akbarali in Kwong v.
Jeffrey Levine*, Stephen Brown-Okruhlik, Guneev BhinderĪ recent Ontario court decision confirms that a plaintiff in an action for secondary market securities misrepresentation under the Securities Act is not entitled to documentary discovery of the defendants before they obtain leave of the court to bring their action. Municipal, Land Use Planning & Development.International Arbitration & Cross-Border Litigation.White Collar Defence, Fraud & Investigations.Structured Finance, Derivatives & Securitization.Competition, Antitrust & Foreign Investment.
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