In a proposed securities class action, the plaintiffs sought leave under s. 138.8 of the Ontario Securities Act to commence a statutory secondary market misrepresentation claim against certain corporate directors.
The defendants had been noted in default and did not oppose the motion.
The court held that the statutory leave test requires a showing that the action is brought in good faith and that there is a reasonable possibility it will succeed at trial.
Given the deemed admissions arising from the defendants’ default and the evidentiary record concerning alleged misrepresentations in financial disclosure documents, the court found the threshold satisfied.
Leave to proceed against the directors under Part XXIII.1 of the Act was granted.
