The Court of Appeal's decision in Wong v
The lower court's decisions
The plaintiff commenced a common law and statutory secondary market misrepresentation class action against
In 2017, the motion judge granted leave to proceed1 under section 138.8 of the OSA, after concluding that there was a "reasonable possibility that the action would be resolved in favour of the plaintiff" at trial. The action was certified on consent in 2019, and it proceeded to summary judgment in 2020.
Despite having concluded at the leave stage that the plaintiff "established a reasonable possibility of success at trial," the motion judge ultimately granted summary judgment in favour of
The Court of Appeal's decision
The Court also held that the motion judge did not err in his analysis of materiality. Relying on the reasonable investor test rather than on the statutory 'move the market test' for materiality and liability, the Court posited that the central question is whether a reasonable investor would consider the information important in making an investment decision3
The plaintiff advanced several other arguments relating to the motion judge's improper reliance on the respondent's "post hoc, subjective views" and his error in failing to find a misrepresentation based on the drop in the price of
Key takeaways
This decision demonstrates that although the bar for leave to proceed with an action under the OSA is high, it does not guarantee that a plaintiff will be successful. Plaintiffs still bear the burden of proving that the impugned information was material and was required to be disclosed in the face of what is likely to be a more robust evidentiary record.
This decision also provides helpful clarity to issuers on relevant factors to consider when assessing their disclosure obligations, particularly when dealing with the expression of an opinion. The overarching question for an issuer evaluating materiality is to be approached as the Divisional Court put it in an earlier case: "materiality should be assessed objectively from the perspective of an investor and prospectively through the lens of expected market impact4." Information that is objectively unreliable is less likely to be material to an investor. Indeed, as the
Footnotes
1.Wong v
2.Wong v.
3.A future appellate court will need to determine the role of the reasonable investor test in assessing materiality in the context of the 'move the market' statutory requirement for disclosure and for liability for disclosure breaches. At footnote 5, the Court left that issue for another case.
4.Cornish v
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