- Securities Class Actions: A Need to Prove Reliance on a Uniform Misrepresentation Does Not Necessarily Bar Certification
- May 12, 2015 | Authors: Maureen Doherty; James Gibson; Rahim Jamal; Kristen Riess
- Law Firm: Borden Ladner Gervais LLP - Toronto Office
- Fantl v. Transamerica Life Canada, 2015 ONSC 1367 (Div. Ct.), per Sachs J.
An offering was made of the Can-Am Fund, an investment fund related to several different insurance contracts that was similar to a mutual fund. The Defendant represented in its disclosure documents that the fund would use “best efforts” to replicate the performance of the S&P 500 Total Return Index. Investors brought a class action alleging, among other things, that this claim amounted to a negligent misrepresentation.
The Court declined to certify the class action, finding that a class action was not the preferable procedure to advance the class claims. It was held that the class members had individual issues that would not be advanced by resolving the proposed common issues, specifically whether an investor had relied on the misrepresentation when deciding to invest and what damages an investor had suffered.
The Divisional Court allowed the appeal and certified the class action, relying on the framework set out in the Supreme Court’s decision in AIC v. Fischer. Specifically, the Divisional Court found that given that individual actions were not economically viable, there was no alternative means of pursuing the claims.
The Court stated that individual inquiries about an investor’s reliance need not be complex because one uniform representation had been made to all investors. Although the Court agreed that the calculation of damages would be complex, it found that the need for individually assessed damages did not detract from the preferability of a class action.
A copy of the decision can be found - check http://www.canlii.org/en/on/onscdc/doc/2015/2015onsc1367/2015onsc1367.pdf