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Highlights
DIRECTORS' AND OFFICERS' LIABILITY
Implications of the Supreme Court of Canada's Decision in
Kerr v. Danier Leather for Directors' and Officers' Liability
Jeffrey S. Leon, Jason Woycheshyn, Lindsay Bailey
Jeffrey Leon, Jason Woycheshyn and
Lindsay Bailey analyze the ramifications of the Supreme Court of Canada's recent
unanimous decision in Kerr v. Danier Leather. The authors point out that
the Court approached the scope of an issuer's continuous disclosure obligations
in terms of the legislative policy reflected in the governing statute the
Ontario Securities Act. Compliance with the relevant statutory provisions
provided a shield against an action for misrepresentation. In holding that there
had been compliance with those provisions, the Court held that poor
intra-quarterly results did not constitute a "material change" because sales
often fluctuate due to external factors, a prime example being the unusually hot
weather that caused the downturn in Danier's sales in the spring of 1998. This
did not amount to a change in the issuer's "business, operations or capital."
Importantly, the Court held that the business judgment rule which
mandates curial deference to directors' business decisions, provided that they
are within a range of reasonable alternatives cannot override statutory
disclosure obligations. Finally, the Court's treatment of costs is noteworthy.
In approving a costs award against the unsuccessful representative plaintiffs,
the Court endorsed the "loser pays" approach in securities class actions
a welcome development for public companies' officers and
directors.
SECURITIES LITIGATION
Civil Liability Remedy for Secondary Market Disclosure Now
Available in Quebec
Christine Dubé, Marc Duquette
Quebec has joined other provinces in
enacting provisions that make it easier for investors to sue for damages if an
issuer releases documents or statements containing a misrepresentation or fails
to disclose a material change. As Christine Dubé and Marc Duquette
explain, because the Quebec legislation is modelled on its Ontario counterpart
(as is the legislation in British Columbia, Alberta and Manitoba), this remedy
has become highly harmonized. When pursuing this remedy, investors need not
prove reliance on a document or oral public statement containing a
misrepresentation or on the issuer having complied with its timely disclosure
requirements, and nor do they have to prove damage. As is the case in other
jurisdictions, actions may only be brought with the court's authorization and
several defences are available for issuers and non-issuers. The assessment of
damages and apportionment of liability are also similar to the formula used in
other jurisdictions. In addition to describing the many similarities of the
Quebec legislation to that of other provinces, the authors identify potential
distinctions between that legislation and other statutory regimes for secondary
market disclosure.
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Board
Brian J. Gover
Editor-in-Chief
Stockwoods LLP
Edward J. Babin
Davies Ward Phillips & Vineberg LLP
Michael E. Barrack
McCarthy Tétrault LLP
Robyn M. Ryan Bell
Bennett Jones LLP
William Brock
Davies Ward Phillips & Vineberg LLP
J. Thomas Curry
Lenczner Slaght Royce Smith Griffin
Ivan J. Derer
Gowling Lafleur Henderson LLP
Frank R. Foran, QC
Borden Ladner Gervais LLP
Donald H. Jack
Lerners LLP
André Legrand
Ogilvy Renault LLP
Jeffrey S. Leon
Fasken Martineau DuMoulin LLP
J. Bruce McMeekin
Miller Thomson LLP |