Court of Appeal for Ontario

Date: September 2, 2025

Docket: COA-24-CV-0846

Judges: Copeland, Monahan and Rahman JJ.A.

BETWEEN

Terry Longair Professional Corporation

Plaintiff (Respondent)

and

Akumin Inc., Riadh Zine-El-Abidine, Mohammad Saleem, Thomas Davies, Stan Dunford, Murray Lee, James Webb, and Ernst & Young LLP

Defendants (Appellants)

Counsel

For the Appellants: Eliot N. Kolers, Daniel S. Murdoch and Brittany A.S. Davis

For the Respondent: Paul Guy and Garth Myers

Heard: May 27, 2025

On appeal from: The order of Justice Jasmine T. Akbarali of the Superior Court of Justice, dated June 26, 2024, with reasons at 2024 ONSC 3675.

Monahan J.A.:

A. OVERVIEW

[1] This appeal arises out of alleged misrepresentations made by the appellant corporation, Akumin Inc. ("Akumin"), in certain of its public disclosure documents and financial statements (collectively the "Impugned Statements"). The respondent seeks certification of a class proceeding against Akumin and certain of its officers and directors for both primary and secondary market liability, pursuant to Parts XXIII and XXIII.1 of the Securities Act, R.S.O. 1990, c. S.5 (the "SA") respectively, as well as for common law negligence.

[2] As legislatively required under s. 138.8(1) of the SA, the motion judge granted leave to the respondent to proceed with his claim under s. 138.3(1) for secondary market misrepresentation (the "Leave Order"), and certified as a class proceeding the following: (i) the respondent's claim for secondary market misrepresentation under s. 138.3(1); (ii) his primary market misrepresentation claim under s. 130.1 of the SA; and (iii) his common law negligence claim, pursuant to s. 5(1) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the "CPA") (the "Certification Order").[1]

[3] The appellants appeal both the Leave Order and the Certification Order.

[4] The appellants argue that the motion judge erred in granting the Leave Order since Akumin's alleged misrepresentations had not been "publicly corrected". They also argue that the motion judge erred in granting leave to pursue a claim on behalf of secondary market purchasers of secured notes issued by Akumin since the secured notes do not trade in an efficient market, which they allege is a requirement before granting leave under s. 138.8 of the SA.

[5] With respect to the Certification Order, the appellants argue that the motion judge improperly certified the common law negligence claim, since a statutory claim under the SA is the preferable procedure for pursuing the respondent's claims in relation to the Impugned Statements. They also argue that the motion judge erred in certifying the primary and secondary market misrepresentation claims of holders of the secured notes, which do not trade in an efficient market, and by extending the class period beyond the date when there was a statistically significant decline in the price of Akumin's common shares.

[6] As I explain below, the motion judge made none of the errors alleged by the appellants.

[7] In issuing the Leave Order, the motion judge correctly determined that Akumin's disclosures were "public corrections" since they prima facie informed investors of errors and/or misstatements in the Impugned Statements. A plain reading of the disclosure shows that Akumin sought to clarify or correct information about the Impugned Statements and would have been so understood by the market. The motion judge similarly did not err in granting leave to proceed with a Secondary Market Claim on behalf of holders of the secured notes, notwithstanding the fact that the secured notes did not trade in an efficient market. As I explain below, to hold otherwise would be inconsistent with the underlying purposes of Part XXIII.1, which include making it easier for investors to obtain compensation for misrepresentations, thereby incentivizing accurate and timely disclosure by public issuers.

[8] Nor did the motion judge err in her Certification Order. There is ample precedent for certifying a common law negligence claim alongside statutory misrepresentation claims under the SA. The motion judge applied the correct legal principles governing the certification of class proceedings under s. 5(1) of the CPA and did not commit a palpable and overriding error in applying those principles.

[9] I would therefore dismiss the appeal.

B. BACKGROUND

[10] Akumin is an Ontario corporation that operates outpatient medical imaging clinics in the United States.

[11] Akumin's common shares (the "Common Shares") began trading on the TSX on December 1, 2017 and the NASDAQ on September 20, 2020. It issued the secured notes in three separate tranches, totaling US$850 million, between November 2, 2020 and August 9, 2021. (The Common Shares and the secured notes will be referred to collectively as "Akumin Securities").

[12] On June 25, 2021, Akumin announced an agreement to acquire Alliance Healthcare Services Inc. ("Alliance"), a leading provider of radiology and oncology solutions in the United States. The transaction was valued at US$820 million and was expected to close in the third quarter of 2021. The transaction was described as "transformative", greatly expanding the scope and diversity of Akumin's business and roughly tripling its size.

[13] On August 15, 2021, Akumin announced that it would be late in filing its Q2 2021 financial statements (the "August 15, 2021 Disclosure"). The press release announcing the delay indicated that management and Akumin's auditor had agreed that additional information and analysis was necessary relating to "potential additional credit losses with respect to prior years". Akumin advised that it expected to be able to file the financial results within 60 days of the original filing deadline and that it had applied to the Ontario Securities Commission, as Akumin's principal regulator, for the imposition of Management Cease Trade Orders ("MCTO").

[14] On August 16, 2021, the Common Share price declined by approximately 20%.

[15] On October 12, 2021, Akumin announced that upon further review, it had identified errors in the calculation of credit losses or write-offs on accounts receivable for prior years (the "October 12, 2021 Disclosure"). Akumin stated that, as a result, "a material change to historical implicit price concessions… is required", and that it would be restating its annual financial statements for the periods ending December 31, 2019 and December 31, 2020, respectively, along with its interim financial statements for Q1 2021. Akumin advised that although the quantum was still being finalized, it was expected that these restatements would result in a negative adjustment of around $25-$30 million to accounts receivable.

[16] The October 12, 2021 Disclosure also announced that Akumin had identified an error in the capitalization of expenses relating to the replacement of certain equipment, which should properly have been captured as maintenance expenses. This error was expected to reduce the net book value of property plant and equipment ("PP&E"), although the extent of the required adjustment had not yet been quantified.

[17] In the two days following the October 12, 2021 Disclosure, there was a further decline in the Common Share price of approximately 12%.

[18] On November 8, 2021, Akumin advised that, while the quantum of the adjustment for PP&E was still being quantified, it was expected to result in a reduction of net book value of approximately $19 million (the "November 8, 2021 Disclosure").

[19] On November 15, 2021, Akumin announced that it had filed restated financial statements for the 2019 and 2020 years and released its Q2 2021 interim financial statements (the "November 15, 2021 Disclosure").

[20] There was no statistically significant decline in Akumin's Common Share price following the Disclosures on November 8 and November 15, 2021.

C. THE CLAIM

[21] The respondent is a former shareholder of Akumin who purchased Common Shares on the secondary market. He alleges that the Impugned Statements mis-stated (among other things) Akumin's revenue, accounts receivable and PP&E in 2019, 2020 and 2021, respectively; that these misstatements were "material" as defined in the SA[2]; and that Akumin publicly corrected the misstatements in its Disclosures on August 15, October 12, November 8 and November 15, 2021.

[22] He proposes to bring a class proceeding under ss. 130.1 and 138.3 of the SA, as well as for common law negligent misrepresentation (collectively, the "Claim"), on behalf of persons who purchased Akumin Securities between May 15, 2019 and November 15, 2021, other than:

(i) Persons who acquired secured notes in the primary market in a distribution outside of Canada; and

(ii) Persons who sold all of their Akumin Securities prior to August 15, 2021.

D. THE LEAVE AND CERTIFICATION MOTIONS

[23] As noted above, because the Claim includes allegations that the Akumin appellants are liable for secondary market misrepresentation under s. 138.3, this element of the Claim could only proceed with leave under s. 138.8. The respondent therefore brought two motions, the first for leave in respect of the Secondary Market Claim, and the second for certification of the entire Claim as a class proceeding under the CPA. Both motions were heard together by the motion judge.

[24] I consider first the expert evidence tendered by the parties, which is relevant to both motions. I then consider, in turn, the motion judge's decisions on each motion.

(1) Expert Evidence

[25] The parties tendered expert evidence from a number of qualified experts on a variety of issues. This included competing expert evidence on the materiality of Akumin's alleged misrepresentations, as well as the impact of the Disclosures on the market price of Akumin's Common Shares.

[26] Both parties' experts agreed that there was a statistically significant decline in the price of Akumin's Common Shares on the day following the August 15, 2021 Disclosure.[3] However, the experts disagreed as to the reason for that decline. The appellants' expert argued that the decline was attributable to concerns that a delay in the release of Akumin's Q2 2021 financial results would affect the planned September 1, 2021 closing of the Alliance acquisition. The respondent's expert, on the other hand, argued that the August 15, 2021 Disclosure alerted the market to significant concerns with respect to Akumin's accounts receivable and revenue, concerns that could reasonably be expected to cause a decline in the price of Akumin's Common Shares.

[27] The experts disagreed over whether the October 12, 2021 Disclosure was followed by a statistically significant decline in the price of Akumin's Common Shares. The appellants' expert argued that there was no statistically significant price decline on the day following the October 12, 2021 Disclosure. In contrast, the respondent's expert argued that the analysis should be based on a two-day "event window" and that there was in fact a statistically significant decline in Akumin's Common Share price over the two days following the October 12, Disclosure.[4]

(2) The Leave Motion

[28] The motion judge noted that there was no dispute that the respondent had commenced the proceeding in good faith. The issue was whether the respondent had satisfied the second element of the leave test, namely, whether there was a reasonable possibility that the action would be resolved at trial in his favour.

[29] This, in turn, involves consideration of two requirements that must be satisfied in order for s. 138.3(1) to apply: first, a responsible issuer must have released a document that contains a "misrepresentation"; and, second, the plaintiff must have acquired or disposed of the responsible issuer's security "during the period between the time when the document [containing the misrepresentation] was released and the time when the misrepresentation contained in the document was publicly corrected."

[30] The appellants' central submission on the leave motion was that none of the Disclosures between August 15, 2021 and November 15, 2021 were "public corrections", as that term is used s. 138.3(1). In particular, relying on a sentence in paragraph 66 of this court's decision in Badesha v. Cronos Inc., 2022 ONCA 663, 163 O.R. (3d) 481 which referred to the materiality of a correction, the appellants argued that in order for a disclosure to qualify as a "public correction", it must be followed by a statistically significant decline in the relevant security's share price, and the security must trade in an efficient market.

[31] The appellants maintained that none of the Disclosures on October 12, 2021, November 8, 2021 or November 15, 2021 were followed by a statistically significant decline in the Common Share price. Therefore, none of these Disclosures could constitute a public correction for purposes of s. 138.3(1).

[32] As for the August 15, 2021 Disclosure, although the appellants acknowledged that it was followed by a statistically significant decline in the Common Share price, they maintained that this disclosure did not "correct" anything but merely advised of a delay in the release of Akumin's Q2 2021 financial statements.

[33] The motion judge was not prepared to accept the appellants' proposed test for identifying a public correction, arguing that it "muddles the materiality of the representation with the materiality of the correction". While the impact of an alleged public correction on the price or value of a security (and in particular whether the public correction is followed by a statistically significant decline in price or value) is a factor that can assist a judge in determining whether the representation that had been corrected was material, the issue is the materiality of the representation, not the materiality of the public correction. The motion judge acknowledged that paragraph 66 of Cronos referred to the materiality of the correction but, in her view, it appeared that this court had erred in so doing.

[34] The motion judge was satisfied that the respondent had established a reasonable possibility that he will be able to prove that untrue statements in Akumin's financial disclosures were material for SA purposes. This finding was supported by the respondent's expert evidence, the share price movements of Akumin's Common Shares during the relevant period, along with other credible evidence. While the appellants had offered their own plausible theories to explain the market's understanding of information disclosed by Akumin, it was not the motion judge's role on a leave motion to resolve differences between divergent yet credible expert evidence.

[35] The motion judge was also satisfied that the respondent had established a reasonable possibility that all four Disclosures were partial public corrections, since they each expressly and on their face corrected or clarified information set forth in the Impugned Statements. That said, the motion judge had some difficulty with the notion that the public corrections on November 8 and November 15, 2021, which did not result in a statistically significant decline in Common Share price, could be a useful time post for calculating damages under the SA. However, the respondent's explanation for the absence of any price movement after these latter Disclosures was that the market had already incorporated the impact of the information from the earlier Disclosures. The motion judge found that this "truth-on-the-market" theory was plausible and concluded that it was best to leave the question of the role of public correction in these circumstances to be decided on a fully developed record at trial.

[36] The appellants raised a second objection to granting leave under s. 138.8(1), focusing specifically on the claim on behalf of purchasers of the secured notes. Relying, once again, on paragraph 66 of Cronos, the appellants argued that a claim for secondary market misrepresentation is only available in respect of securities that trade in an "efficient market". The appellants argued that because it was admitted that the secured notes did not trade in an efficient market, no secondary market claim could be asserted on behalf of purchasers of the secured notes.

[37] The motion judge found this argument to be problematic since it would deny purchasers of the secured notes access to the statutory regime at the leave stage. She noted that there was evidence in the record that the price of the secured notes had dropped following the August 15, 2021 Disclosure. She therefore found that the respondent had established a reasonable possibility that he will be able to prove that the Impugned Statements were material with respect to the value of the secured notes, despite the fact that the notes did not trade in an efficient market.

[38] Accordingly, the motion judge granted leave to the respondent to proceed with the Secondary Market Claim.

(3) The Certification Motion

[39] The motion judge found that the respondent satisfied all of the requirements for certification set out in s. 5 of the CPA. In particular she found that:

(i) the pleadings disclose a cause of action under both the SA and at common law;

(ii) there is an identifiable class of two or more persons that can be represented by the respondent, since the respondent has defined the class by reference to objective criteria such that a person can be identified to be a class member without reference to the merits of the action. The motion judge reiterated her reservations about the fact that there had been no statistically significant decline in Common Share price following the November 8 and 15, 2021 Disclosures. However, she was not inclined to shorten the class period since there was some basis in the evidence for the respondent's truth-on-the-market theory and a plausible legal theory as to why all of the identified Disclosures should be regarded as public corrections;

(iii) the respondent had shown some-basis-in-fact that there are common issues of fact or law that are a substantial ingredient of each class member's claim, the resolution of which will advance the case or move the litigation forward;

(iv) a class proceeding is the preferable procedure in this case since the common issues predominate in the litigation and there is no superior procedure that has been identified which could address the class members' claims; and

(v) the respondent is an adequate representative plaintiff despite the fact that he does not hold any secured notes. Representative plaintiffs are permitted to advance claims on behalf of class members that they do not have themselves, as long as they share common issues of fact or law and there is no conflict in doing so. Those requirements are satisfied in this case.

[40] Accordingly, the motion judge certified the proceeding as a class proceeding and appointed the respondent as representative plaintiff of the class.

E. GROUNDS OF APPEAL

[41] The appellants advance seven grounds of appeal, three relating to the Leave Order and four relating to the Certification Order.

[42] The appellants argue that the motion judge erred in the Leave Order by failing to apply the requirements for a public correction, which they argue were established in Cronos. They argue, in particular, that the motion judge erred in granting leave in the following respects:

(i) by finding that the August 15, 2021 Disclosure constituted a public correction without connecting the Disclosure to any of the alleged misrepresentations and assessing how it would be "understood in an efficient market";

(ii) by finding that the October 12, 2021, November 8, 2021 and November 15, 2021 Disclosures were public corrections, despite the fact that these Disclosures were not followed by a statistically significant decline in the Common Share price; and

(iii) by granting leave to holders of the secured notes to proceed with the Secondary Market Claim, when it is admitted that the secured notes did not trade in an efficient market.

[43] The appellants further argue that the motion judge erred in the Certification Order as follows:

(iv) by finding that a class proceeding is the preferable procedure in respect of the common law negligence claim;

(v) by extending the class period beyond October 12, 2021, despite the fact that there was no statistically significant decline in the Common Share price after that date;

(vi) by certifying the primary market claim under s. 130.1 of the SA on behalf of Canadian purchasers of the secured notes, when the primary market offering of the secured notes was distributed through U.S. underwriters; and

(vii) by certifying the Secondary Market Claim on behalf of holders of the secured notes, since the secured notes do not trade in an efficient market.

F. STANDARD OF REVIEW

[44] The standard of review depends upon the nature of the issue under consideration. In general terms, decisions on questions of law are reviewable on a standard of correctness whereas determinations of fact or of mixed fact and law are reviewable on a standard of palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 36. However, where an error of mixed fact and law can be attributed to the application of an incorrect standard or an error in principle, this amounts to an error of law, reviewable on a correctness standard of review: Housen, at paras. 33 and 36.

[45] As noted above, the primary issue in relation to the appeal of the Leave Order centres on whether the motion judge applied the correct test for identifying a public correction. This is a question of law reviewable on a standard of correctness. However, if the motion judge applied the correct test and did not otherwise make an extricable error of law, her determination of whether there had been one or more public corrections is a decision of mixed fact and law subject to review on a deferential standard of palpable and overriding error: Peters v. SNC-Lavalin Group Inc., 2023 ONCA 360, 166 O.R. (3d) 756, at para. 67, leave to appeal to S.C.C. refused, 41224 (September 26, 2024); Drywall Acoustic Lathing and Insulation (Pension Fund, Local 675) v. Barrick Gold Corporation, 2024 ONCA 105 ("Barrick #2"), at para. 16, leave to appeal to S.C.C. refused, 41228 (September 26, 2024); Mask v. Silvercorp Metals Inc., 2016 ONCA 641, 132 O.R. (3d) 161, at paras. 37-38, leave to appeal requested but application for leave discontinued, [2016] S.C.C.A. No. 454.

[46] Similarly, in class action certification appeals, the identification of the necessary elements of the pleaded cause of action is a question of law reviewable on a standard of correctness, whereas the assessment of whether the pleaded material facts actually support those causes of action is a question of mixed fact and law reviewable on a standard of palpable and overriding error: Lochan v. Binance Holdings Limited, 2025 ONCA 221, at para. 29. To the same effect, the identification of the correct legal test for determining whether there is "some basis in fact" for the remaining certification requirements under s. 5(1) of the CPA is subject to review on a correctness standard, while the determination of whether the evidence adduced satisfies the relevant s. 5(1) requirement is a question of mixed fact and law and should not be disturbed absent a palpable and overriding error: Lochan, at para. 30.

G. ANALYSIS

(1) The motion judge did not err in granting leave to proceed with the secondary market misrepresentation claim

[47] While the appellants raise three distinct grounds of appeal in relation to the Leave Order, they all relate directly or indirectly to the proper understanding of a public correction for the purposes of s. 138.3 of the SA. Accordingly, I first consider the principles governing the interpretation of this statutory term before turning to a consideration of the particular grounds of appeal advanced by the appellants with respect to the Leave Order.

(a) Public correction in the context of secondary market misrepresentation claims

[48] Although the existence of a misrepresentation is "at the heart of the statutory cause of action" (Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund v. Barrick Gold Corporation, 2021 ONCA 104 ("Barrick #1"), at para. 46, leave to appeal to S.C.C. refused, [2021] S.C.C.A. No. 202) and is "the wrong at issue" (Baldwin v. Imperial Metals Corporation, 2021 ONCA 838, 159 O.R. (3d) 241, at para. 50), the public correction requirement plays a subsidiary albeit necessary role in the statutory scheme. Broadly, a public correction establishes an end-point for the market distortion caused by a misrepresentation. The SA presumes causation: once a misrepresentation has been fully corrected (either by a single public correction or the cumulative effect of several partial corrections), the price of the security should no longer be impacted by the misrepresentation.

[49] Among other things, a public correction defines the class of putative plaintiffs, identifies the end of the class period, and plays a key role in the statutory formula for the calculation of damages: Barrick #1, at para. 71; Imperial Metals, at para. 51. It is thus important that the term be defined with clarity and precision, so as to not distract the court or litigants from the more important task of determining whether there has been a "misrepresentation" which "does the heavy lifting in the statutory cause of action": Imperial Metals, at para. 50.

[50] Three recent decisions of this court have clarified the role and meaning of "public correction" in the context of Part XXIII.1: Barrick #1; Imperial Metals; and Barrick #2. These cases have provided a straightforward definition of what constitutes a "public correction", as a disclosure that is "reasonably capable of being understood in the secondary market as correcting what was misleading in the impugned statement.": Barrick #1, at para. 76; Barrick #2, at para. 71.

[51] This court has further explained that a public correction can occur in one of two ways: Barrick #1, at paras. 48, 51 & 76. The first and most common way is through an express correction, where a subsequent disclosure expressly or on its face states that an assertion in a previously issued document was untrue at the time it was made. To provide a simple example, suppose Issuer A's prior year financial statements had asserted that the revenues for the year were $X. Suppose, further, that Issuer A later restates its financial statements for the relevant year and discloses that in fact the revenues for the year were significantly lower, namely, $Y. In such a case there is no need for a statistical or other complex analysis to recognize that there has been a public correction since it is plain and obvious on the face of the corrective disclosure that the statement of revenues in the prior year's financial statements was untrue. When this is so, the focus of the litigation can rightly focus on the more challenging and important question of whether the impugned statement (i.e. that Issuer A's revenues for the prior year were $X) amounts to a "misrepresentation", such that at the time it was made it "would reasonably be expected to have a significant effect on the market price or value of the [issuer's] securities": SA, s. 1(1).

[52] As this court pointed out in Imperial Metals, at para. 53, the vast majority of secondary market misrepresentation cases that have come before Canadian courts have involved express public corrections. Nevertheless, cases may arise where it is not entirely clear on the face of the alleged public correction whether it actually reveals to the market that a prior statement was untrue at the time it was made. This was the circumstance presented in Barrick #1, where the defendant made a number of announcements which, although resulting in significant declines in its share price, did not expressly state that prior statements it had made could no longer be relied upon. The motion judge found that these announcements could not be considered to be public corrections because they did not expressly state or identify any prior statements as being untrue.

[53] On appeal, this court held that the motion judge applied an unduly narrow understanding of what constitutes a public correction. The fact that the alleged public correction did not expressly identify a prior misstatement could not be the end of the analysis. This is because even if the subsequent disclosure did not expressly identify a prior error or misstatement, when considered in context and in light of all surrounding circumstances, the public correction was reasonably capable of being understood as revealing to the market the existence of an untrue statement of material fact or an omission to state a material fact: Barrick #1, at para. 76. As this court stated in Imperial Metals, at para. 54:

[T]he public correction need not be a "mirror-image" of the alleged misrepresentation or a "direct admission that a previous statement is untrue": at para. 62, citing Ironworkers Ontario Pension Fund (Trustee of) v. Manulife Financial Corp., 2013 ONSC 4083, at paras. 64-71. There need only be "some linkage or connection between the pleaded public correction and the alleged misrepresentation": Swisscanto, at para. 65; SNC-Lavalin, at para. 147; Cappelli, at para. 143; Kauf, at para. 124. That linkage or connection will assist the judge in determining how the alleged corrective disclosure would be understood in the secondary market. [Emphasis in original.]

[54] Finally, nothing in this court's decision in Cronos is inconsistent with this understanding of public corrections in the context of s. 138.3 actions.

[55] In Cronos, there was no dispute that certain untrue statements had been publicly corrected. The live issue was whether these untrue statements were "misrepresentations" and, if they were, whether the issuer had made thousands of separate misrepresentations as opposed to a single misrepresentation. In the course of summarizing the motion judge's reasoning on whether the impugned statements in that case were material and, thus, misrepresentations, this court noted that the motion judge had stated that "whether a correction is material is not a matter of semantics, but rather requires an understanding of how a specific correction would be understood in an efficient market and also requires a statistical analysis of the effect of the correction.": Cronos, at para. 66. But it would be a misreading of what was simply a summary of the motion judge's reasons in Cronos as having somehow altered the established meaning of "public correction", a matter that was not even at issue in that case.

(b) The motion judge did not err in finding that the Disclosures were public corrections since they expressly identified errors or misstatements in the Impugned Statements

[56] As noted above, the appellants argue that none of the four Disclosures issued by Akumin between August 15 and November 15, 2021 constituted "public corrections" for purposes of s. 138.3. This is because: (i) the August 15, 2021 Disclosure did not "correct" anything; and (ii) the latter three Disclosures on October 12, November 8 and November 15, 2021, respectively, were not followed by statistically significant declines in the price of the Common Shares, which the appellants claim is a necessary component of a public correction in light of this court's comments in paragraph 66 of Cronos, as highlighted above.

[57] If the appellants' arguments were accepted, the outcome would be that Akumin's financial statements contained untrue statements; those untrue statements were material for SA purposes; those untrue statements were subsequently corrected in disclosures which were released publicly; and yet the untrue statements would never have been "publicly corrected".

[58] I see no merit to either of the appellants' arguments on this point. The motion judge applied the correct legal test for identifying public corrections, namely, did the Disclosures expressly or on their face identify misleading or erroneous statements in Akumin's previous financial statements. She did not make a palpable or overriding error in finding that the Disclosures satisfied that test.

[59] The motion judge correctly pointed out that the August 15, 2021 Disclosure alerted the market to the fact that Akumin's previous financial reporting of credit losses could no longer be relied upon. While Akumin was not in a position to quantify the extent of the additional credit losses incurred in prior years, it nevertheless made it clear that it expected to file updated financial results within 60 days.

[60] Thus, consistent with Barrick #1, the August 15, 2021 Disclosure expressly identified certain statements in Akumin's prior financial documents that were untrue or misleading. The motion judge rightly rejected the suggestion that this was not a public correction merely because Akumin was not then in a position to specify the extent of its prior misstatements. As the motion judge observed, such an interpretation might well encourage issuers to make vague disclosures such as "something has happened, and we are looking into it" in the hopes of escaping liability. This would be inconsistent with the underlying purposes of the statutory scheme, since it would "undermine confidence in the securities market and deprive shareholders of compensation.": Imperial Metals, at para. 57.

[61] Nor did the motion judge err in finding that the remaining three Disclosures on October 12, November 8 and November 15, 2021 constituted "public corrections". The appellants do not dispute that these Disclosures expressly and on their face publicly corrected untrue representations in Akumin's prior financial statements. The appellants nevertheless argue, based on the reference in paragraph 66 of Cronos to "statistical analysis of the effect of the correction", that a corrective statement can only constitute a public correction if it is followed by a statistically significant decline in the price of an issuer's securities. The appellants further argue that because there was no such decline in Akumin's Common Share price following these latter three Disclosures, the Disclosures cannot be regarded as public corrections.

[62] As the motion judge pointed out, this argument confuses the materiality of the misrepresentation with the materiality of the correction. The market reaction to a public correction can certainly be probative of whether the prior untrue statement was material for SA purposes. But whether the corrective statement constitutes a public correction does not require that it be followed by a statistically significant decline in the price of an issuer's securities. The appellants' attempt to extrapolate such a requirement from paragraph 66 of Cronos is unfounded.

[63] There is no materiality analysis for a public correction, nor is a drop in price required to establish a public correction. That would miss the point of the public correction inquiry. An issuer might plainly correct an untrue statement without discernable reaction from the market (this might affect materiality or damages, but not the existence of a correction). Equally, market movement may provide evidence of how a disclosure was perceived. For example, where a disclosure is not facially connected to the misrepresentation, a drop in price may indicate that the market viewed the disclosure as a correction. In all cases, the inquiry should be straightforward and functional: did the alleged correction actually correct the alleged misrepresentation or not?

[64] In this case, all four of the Disclosures expressly and on their face identified misleading or incorrect statements in Akumin's prior financial statements, which establishes that they were public corrections for purposes of s. 138.3 claims. The appellants do not appeal the motion judge's finding that the untrue statements in Akumin's prior financial statements were material. (Indeed, shortly after releasing the August 15, 2021 Disclosure, Akumin filed a Material Change Report acknowledging that the information it was disclosing was material for SA purposes).

[65] I would therefore dismiss the first two grounds of appeal in relation to the Leave Motion.

(c) The motion judge did not err in granting leave to holders of secured notes to proceed with the Secondary Market Claim, despite the fact the secured notes did not trade in an efficient market.

[66] The appellants argue that a corrective statement can only constitute a "public correction" for purposes of s. 138.3 claims if the corrective statement relates to securities that trade in an efficient market. Therefore, because the secured notes did not trade in an efficient market, the motion judge erred in granting leave to proceed with this aspect of the claim.

[67] The appellants cite no authority for this "efficient market" limitation on public corrections, other than the sentence in paragraph 66 of Cronos already discussed, which referred to the need to understand "how a specific correction would be understood in an efficient market and also requires a statistical analysis of the effect of the correction." (emphasis added).

[68] I have already explained why paragraph 66 of Cronos did not alter the established understanding of a public correction in the context of claims for secondary market misrepresentation, and that argument will not be repeated here.

[69] Moreover, as the motion judge correctly pointed out, the "efficient market" precondition proposed by the appellants would be inconsistent with the text of the statute as well as the underlying goals of the statutory scheme. The text of s. 138.3(1) contains no such "efficient market" limitation on claims for secondary market misrepresentation, while ss. 138.5(1), (2) and (3) (as well as the regulations),[6] provide formulas for determining damages or limitations on liability in respect of securities that do not trade on a "published market". Nor would such an efficient market requirement accord with the policy objectives underlying the enactment of the civil liability regime in Part XXIII.1 of the SA, which included protecting investors from corporate nondisclosure. In fact, it would frustrate those objectives by denying investors who had suffered losses from secondary market misrepresentation from accessing the statutory remedy merely because the market in which their securities traded was not an efficient one. There is no support for the view that the legislature intended to protect only investors in exchange-traded securities.

[70] The appellants also argue that when a security does not trade in an efficient market, its price fluctuations cannot necessarily be attributed to specific public disclosures. But, as the Supreme Court instructed in Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, [2015] 2 S.C.R. 106, the leave process is not a mini-trial where conflicting credible claims are adjudicated based on a limited record. Rather, provided that a plaintiff can establish a reasonable possibility that they will ultimately succeed, the matter should proceed to trial.

[71] In this case, the motion judge found that there was credible evidence indicating that the price of the secured notes dropped following the August 15, 2021 Disclosure. She also pointed to other evidence on the record supporting the conclusion that there was a reasonable possibility that the Impugned Statements were material in relation to the secured notes. I see no palpable or overriding error in those findings and would thus dismiss this ground of appeal.

(2) The motion judge did not err in certifying the claim as a class proceeding

(a) The motion judge properly certified the common law negligent misrepresentation claim

[72] The appellants argue that the motion judge erred by finding that a class proceeding was the preferable procedure for pursuing the common law negligent misrepresentation claim, as required by s. 5(1)(d) of the CPA.

[73] The appellants submit, first, that common law negligent misrepresentation claims in securities cases are generally not suitable for certification because proof of reliance, causation and damages all require individualized inquiries that do not lend themselves to resolution on a class-wide basis.

[74] They further argue that where (as in this case) there is a statutory misrepresentation claim as well as a common law claim for the same misrepresentation, the statutory claim is the preferable procedure for resolving any common issues and the common law claim ought not to be certified.

[75] These arguments were not directly addressed by the motion judge, as it appears they were not raised before her. Nevertheless, both arguments were considered and rejected by the Supreme Court of Canada in Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, [2015] 3 S.C.R. 801 ("CIBC").

[76] In CIBC, the plaintiffs sought certification for seven common issues relating to a common law misrepresentation claim. The Supreme Court held that, while issues relating to reliance and damages ought not to be certified because they required individualized assessments, the remaining five issues related to the intent and conduct of the defendant, CIBC, and should be certified, as they could be answered on a class-wide basis and would advance the litigation.

[77] The same conclusion applies here. The common issues certified by the motion judge in relation to the common law misrepresentation claim can be resolved without the need to undertake individualized assessments of each investor's circumstances. Their resolution would avoid duplication of fact-finding or legal analysis, thereby facilitating judicial economy and access to justice: Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, at para. 15.

[78] The Supreme Court in CIBC also concluded that there was no difficulty in certifying a common law negligent misrepresentation claim alongside a statutory claim under s. 138.3 of the SA. As the court pointed out, the SA expressly provides that the right of action under s. 138.3 is "in addition to, and without derogation from, any other rights": CIBC, at para. 128.

[79] The court further pointed out that the objection raised by the defendants in CIBC (identical to that raised by the appellants here), "confuses procedure with substantive causes of action.": CIBC, at para. 128. The preferability analysis under s. 5(1)(d) requires a court to assess whether a class proceeding is the preferable procedure for pursuing a given cause of action. It does not involve an assessment of whether one cause of action is preferable to another in pursuing a claim arising from the same facts.

[80] I thus see no difficulty with the motion judge's certification of the common law misrepresentation claim and would dismiss this ground of appeal.

(b) The motion judge did not err in extending the class period beyond October 12, 2021, despite the fact that there was no statistically significant decline in the Common Share price after that date

[81] The appellants argue that the motion judge erred in extending the class period to November 15, 2021 despite the fact that there was no statistically significant share price decline subsequent to the October 12, 2021 Disclosure.

[82] This is in essence a restatement of the appellants' earlier argument that a corrective statement is only a public correction if it is followed by a statistically significant decline in the price or value of an issuer's securities. I have already explained in detail why the motion judge correctly rejected this argument.

[83] I would add that this is not a case such as Barrick #2, where the issuer had fully corrected the impugned misrepresentations as of a certain date and subsequent disclosures were not "public corrections" because there was nothing left to correct: Barrick #2, at paras. 81-86. I see no palpable or overriding error in the motion judge's finding that the August 15, 2021 and October 12, 2021 Disclosures only partially corrected the misrepresentations in the prior years' financial statements and those misrepresentations were not fully corrected until November 15, 2021.

[84] I would also point out that while the respondent does not dispute that there was no "statistically significant" price decline following the November 8 and November 15, 2021 Disclosures, he maintains that there was a substantial share price decline during the timeframe that the appellants are trying to exclude from the class period (i.e. after October 12, 2021). The respondent further argues that to the extent that there was no further price decline following the November 8 or November 15, 2021 Disclosures, this was due to the fact that the market had already priced in or "impounded" the value of new information provided in those latter two Disclosures. As the motion judge concluded, these are factual questions appropriate for determination at trial on a complete evidentiary record, rather than on a leave motion.

(c) The motion judge did not err in certifying the primary market claim under s. 130.1 of the SA on behalf of Canadian purchasers of the secured notes, regardless of whether the notes were distributed through U.S. underwriters

[85] The appellants argue that the primary market claim on behalf of purchasers of the secured notes is (or must be) limited to those purchasers who obtained the notes from Canadian underwriters. They argue that because the notes were distributed exclusively through U.S. underwriters, it is not possible to identify two or more Canadian purchasers of the secured notes who fall within the class definition, as required by s. 5(1)(b) of the CPA.

[86] The basis of this argument is not entirely clear. The appellants appear to be proceeding on the assumption that the respondent has limited the proposed class of primary market purchasers of secured notes to those who obtained them from Canadian underwriters.

[87] But this assumption is incorrect. The motion judge's Certification Order excludes from the proposed class "all persons and entities who acquired their Akumin notes in the primary market in a distribution outside of Canada" (Emphasis added). In other words, the primary market class, as certified, includes all investors who purchased Akumin notes under a primary market distribution in Canada, even if the distribution was offered in Canada through U.S. underwriters.

[88] This is consistent with the offering memoranda for the secured notes, which expressly state that the offering is being made "in Canada pursuant to Canadian securities laws". Thus, to the extent that the offering memoranda contain misrepresentations, s. 130.1 of the SA establishes a right of action for damages against the issuer, in this case, Akumin. Akumin cannot escape this statutory liability by choosing to distribute the notes to Canadian investors through U.S. underwriters. Nor, as explained above, has the respondent based his primary market claim on whether the notes were distributed by a Canadian, as opposed to a U.S., underwriter.

[89] I would therefore dismiss this ground of appeal.

(d) The motion judge did not err in certifying the Secondary Market Claim on behalf of holders of the secured notes despite the fact that the notes do not trade in an efficient market

[90] This final ground of appeal essentially repeats the appellants' earlier argument that holders of the secured notes do not have a cause of action under Part XXIII.1 of the SA because the notes do not trade in an efficient market.

[91] As explained above, the motion judge correctly found that there is no such "efficient market" precondition for secondary market misrepresentation claims under the SA. This ground of appeal is therefore without merit.

H. DISPOSITION

[92] For the above reasons, I would dismiss the appeal.

[93] I encourage the parties to resolve the issue of costs. In the event that they are unable to do so, the respondent will serve and file cost submissions of no more than three pages, not including Bills of Costs or Offers to Settle, within 21 days of the release of these reasons, and the appellants will serve and file responding cost submissions on a similar basis within 14 days following the date for the delivery of the respondent's cost submissions. There shall be no reply submissions.

Released: September 2, 2025

"J.M.C."

"P.J. Monahan J.A."

"I agree. J. Copeland J.A."

"I agree. M. Rahman J.A."

Footnotes

[1] The Certification Order also certified the respondent's class proceeding under corresponding provisions of the securities legislation of other provinces and territories. No issues are raised on appeal with respect to these aspects of the Certification Order, which will not be considered in these reasons.

[2] Section 1(1) of the SA defines a "material fact" as a fact that "would reasonably be expected to have a significant effect on the market price or value of the securities."

[3] A statistically significant movement in the price of a security is one that falls sufficiently outside the normal or expected range of that security's price fluctuation such that it is unlikely to have occurred by chance.

[4] The appellants' expert did not disagree that the decline in the price of Common Shares in the two days following the October 12, 2021 Disclosure was statistically significant, but maintained that the "event window" should be limited to a single day rather than the two days proposed by the respondent's expert.

[5] I put to one side the motion judge's suggestion that this court erred in summarizing the motion judge's reasoning in paragraph 66 of Cronos. As explained above, Cronos did not create any incremental changes in the law regarding public corrections. Nevertheless, the motion judge's comment regarding Cronos was ultimately immaterial to her analysis, which proceeded on the legally correct basis that the Disclosures were public corrections since they expressly identified errors in Akumin's prior financial reporting.

[6] See Securities Act, R.R.O 1990, Reg. 1015: GENERAL, ss. 249 and 251.