Ontario’s statutory regime for secondary market liability came into effect in 2006 as a result of amendments to the Securities Act (Ontario) (OSA), which created a statutory cause of action for deficient market disclosure.  Through a requirement that plaintiffs obtain leave of the court before commencing such an action, the provincial legislature granted the courts a gatekeeper function to control litigation and to ensure that only claims with some merit proceed.  Many provinces (including British Columbia and Quebec) have adopted similar provisions.

As we wrote about here, recent decisions of Ontario’s, British Columbia’s and Quebec’s courts indicate that the threshold for obtaining leave might be increasing from the initially low threshold adopted in early Ontario decisions.  Nevertheless, the existing jurisprudence still establishes a low threshold for obtaining leave in Ontario and appellate guidance is ultimately necessary to clarify this important matter.