Court File and Parties

Court File No.: 12-CV-453236CP Date: 2017-04-10 Ontario Superior Court of Justice

Between: THE TRUSTEES OF THE DRYWALL ACOUSTIC LATHING AND INSULATION LOCAL 675 PENSION FUND and 0793094 B.C. LTD., Plaintiffs – and – SNC-LAVALIN GROUP INC., IAN A. BOURNE, DAVID GOLDMAN, PATRICIA A. HAMMICK, PIERRE H. LESSARD, EDYTHE A. MARCOUX, LORNA R. MARSDEN, CLAUDE MONGEAU, GWYN MORGAN, MICHAEL D. PARKER, HUGH D. SEGAL, LAWRENCE N. STEVENSON, GILLES LARAMÉE, MICHAEL NOVAK, PIERRE DUHAIME, RIADH BEN AÏSSA and STÉPHANE ROY, Defendants

Counsel: Douglas Worndl, Ronald Podolny, Michael Robb, and Peter Jervis for the Plaintiffs Steve Tenai and Kate Findlay for the Defendants, SNC-Lavalin Group Inc., Ian A. Bourne, David Goldman, Patricia A. Hammick, Pierre H. Lessard, Edythe A. Marcoux, Lorna R. Marsden, Claude Mongeau, Gwyn Morgan, Michael D. Parker, Hugh D. Segal and Lawrence N. Stevenson Paul Guy, James Gibson and Iris Graham for the Defendant, Riadh Ben Aïssa Max Muñoz and Steven Sofer for the Defendant, Pierre Duhaime Nick Kennedy for the Defendant, Michael Novak Laura Young for the Defendant, Stéphane Roy

Proceeding under the Class Proceedings Act, 1992

Heard: March 27 and 28, 2017

Before: Perell, J.

Reasons for Decision

“Well, here's another nice mess you've gotten me into : ” Stan Laurel and Oliver Hardy (1929-51)

A. Introduction

1. The Motions

[1] There are eight motions before the court in this billion-dollar-misrepresentations-in-the-secondary-market-securities-class-action. The motions are:

(1) a motion by the Defendants SNC-Lavalin Group Inc. (“SNC-Lavalin”) and Ian A. Bourne, David Goldman, Patricia A. Hammick, Pierre H. Lessard, Edythe A. Marcoux, Lorna R. Marsden, Claude Mongeau, Gwyn Morgan, Michael D. Parker, Hugh D. Segal and Lawrence N. Stevenson, who were the Outside Directors of SNC-Lavalin (the “Outside Directors”), to strike paragraphs from the Plaintiffs’ Amended Reply; (2) a motion by the Plaintiffs to deliver a Fresh as Amended Reply; (3) a motion by the Outside Directors to strike paragraphs from the Statement of Defence of the Defendant Riadh Ben Aïssa, who was an Executive Vice-President of SNC-Lavalin; (4) a motion by the Defendant Michael Novak, who was Chairman and an Executive Vice-President of SNC-Lavalin, to strike Mr. Ben Aïssa’s Statement of Defence; (5) a motion by the Defendant Pierre Duhaime, a former Chief Executive Officer and a Director of SNC-Lavalin, who is an accused in criminal proceedings, for protective terms for his examination for discovery; (6) a motion by the Defendant Stéphane Roy, a former Vice-President Controller of SNC-Lavalin, who is an accused in criminal proceedings, for protective terms for his examination for discovery; (7) a motion by Mr. Ben Aïssa, who is an accused in criminal proceedings, for protective terms for his examination for discovery; and (8) a motion by Mr. Ben Aïssa for a stay or postponement of the examinations for discovery until the status of the pleadings is resolved. This relief is also sought by the Outside Directors and Messrs. Novak, Duhaime, and Roy, as an ancillary order in their respective motions.

2. Positions of the Parties

[2] The Outside Directors and SNC-Lavalin request that the court strike paragraphs 15(e) and 16 of the Plaintiffs’ Amended Reply and that the court not allow a Fresh as Amended Reply as requested by the Plaintiffs in their motion. The Outside Directors also request that paragraphs 20 to 41 of Mr. Ben Aïssa’s Statement of Defence be struck. Further, the Outside Directors and SNC-Lavalin request that the examinations for discovery be postponed if the evidentiary scope of the action is changed by the Plaintiffs’ or Mr. Ben Aïssa’s pleadings. The Outside Directors oppose some of the protective measures sought by Messrs. Ben Aïssa, Duhaime, and Roy, as being excessive and prejudicial.

[3] The Plaintiffs resist the attack on their Amended Reply, which, in any event, they seek leave to amend by delivering a Fresh as Amended Reply. In their Amended Reply and in their proposed Fresh as Amended Reply, the Plaintiffs plead that the Outside Directors had knowledge of the alleged misrepresentations that are the subject matter of the action. The Plaintiffs support Mr. Ben Aïssa’s position with respect to his Statement of Defence; i.e., that his allegations about knowledge of the misrepresentation and about Libya should not be struck as requested by Mr. Novak, SNC-Lavalin and the Outside Directors. The Plaintiffs oppose some of the protective measures sought by Messrs. Roy, Duhaime, and Ben Aïssa as excessive and prejudicial. The Plaintiffs are adamant that there should not be any postponement or rescheduling of the examinations for discovery.

[4] Mr. Novak requests that the court strike paragraphs 20 to 41 of Mr. Ben Aïssa’s Statement of Defence, and Mr. Novak also supports the Outside Directors’ motion to strike paragraphs in the Plaintiffs’ Reply and to not allow replacement amendments. Mr. Novak supports the Outside Directors’ request that the discoveries be postponed if the evidentiary scope of the action is changed by the Plaintiffs’ and by Mr. Ben Aïssa’s pleadings.

[5] Mr. Ben Aïssa resists the attacks on his Statement of Defence brought by the Outside Directors and by Mr. Novak, all of whom oppose his allegations associated with SNC-Lavalin’s alleged bribery activities in Libya. For his own motion, Mr. Ben Aïssa requests protective terms for his examination for discovery, and he asks that all the discoveries be postponed or rescheduled until the status of the pleadings is resolved.

[6] Mr. Duhaime takes no position with respect to the Plaintiffs’ Fresh as Amended Reply and Mr. Ben Aïssa’s Statement of Defence, but supports SNC-Lavalin's and Mr. Novak’s submissions that all discoveries should be stayed pending resolution of any additional documentary productions that may follow from the court’s Order about the pleadings. In his own motion, Mr. Duhaime requests protective terms for his examination for discovery.

3. Synopsis of the Outcome

[7] For the reasons that follow, I shall: (a) grant the Outside Directors’ motion to strike paragraphs 15(e) and 16 from the Plaintiffs’ Amended Reply without leave to amend; (b) dismiss the Plaintiffs’ motion to deliver a Fresh as Amended Reply; (c) grant the Outside Directors and Mr. Novak’s respective motions to strike paragraphs 20 to 41 from Mr. Ben Aïssa’s Statement of Defence without leave to amend; (d) make protective orders with respect to the examinations for discovery of Messrs. Ben Aïssa, Duhaime, and Roy; and (e) make no orders to stay or postpone the examinations for discovery.

B. Factual and Civil and Criminal Procedural Background

(a) Background to the Pleadings Motions

[8] In this part of my reasons, I shall describe the factual and procedural background to the motions and foreshadow some of the legal analysis that will come later.

[9] The Plaintiffs, The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund and 0793094 B.C. Ltd., bring statutory causes of action under Part XXIII.1 of the Ontario Securities Act, R.S.O. 1990, c. S.5 for misrepresentations in the secondary market.

[10] Leave has been granted to commence the statutory causes of action, and the action has been certified as a class action under the Class Proceedings Act, 1992, S.O. 1992, c. 6. See: The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2012 ONSC 5288. The relevant provisions of the Ontario Securities Act are set out in Schedule “A” attached.

[11] A synopsis of the Plaintiffs’ and the Class Members’ statutory causes of action, is that in its “core documents,” SNC-Lavalin made misrepresentations or failed to disclose the information that it was required to disclose under the Ontario Securities Act. The documents alleged to contain misrepresentations were released between November 2009 and November 2011. The Plaintiffs allege that the Defendants’ representations were false because, among other reasons, in contravention of its own standards and policies for conducting business, employees of SNC-Lavalin bribed government officials with respect to three projects and covered up the bribes by manipulating the corporation’s financial records. The three projects were: (1) the Padma Bridge Project in Bangladesh, South Asia; (2) the McGill University Health Centre Project in Montréal, Québec; and (3) the Canadian National Resources Limited Froth Treatment Plant Project in Fort McMurray, Alberta.

[12] The original Statement of Claim did not include allegations about bribes by SNC-Lavalin employees in relation to contracts in Libya. Revelations about events in Libya came after the action had been launched.

[13] The Plaintiffs allege that the Defendants’ representations were revealed to be false; i.e., publicly corrected, when media reports and press releases revealed police investigations of the alleged criminal activities. The original media reports did not mention bribery in Libya. The Plaintiffs allege that with the revelation of the falsity of the information in SNC-Lavalin’s core documents, the stock prices of SNC-Lavalin’s shares, which traded in the secondary market, plummeted causing over a billion-dollar loss to the Plaintiffs and to the Class Members.

[14] The Plaintiffs’ action relies on Part XXIII.1 of the Ontario Securities Act, and the analogous provisions of the securities legislation of the other Canadian provinces and territories. The Plaintiffs accused all the Defendants of breaching the continuous disclosure provisions of the Act and of being liable for the statutory causes of action found the Act.

[15] In the Statement of Claim, the Plaintiffs allege that the Defendants, Messrs. Ben Aïssa, Duhaime, Laramée, and Roy, knew that the disclosure documents contained misrepresentations. Although if this allegation were proven to be true, it would expose Messrs. Ben Aïssa, Duhaime, Laramée, and Roy, to an uncapped liability of one billion dollars, the Plaintiffs submit that this pleading of knowledge of the misrepresentations was unnecessary to impose an uncapped liability.

[16] The Plaintiffs submit that it is not necessary to plead knowledge notwithstanding the critical importance knowledge plays in the scheme of the Ontario Securities Act. Section 138.6 (2) of the Ontario Securities Act renders a defendant (other than the responsible issuer) responsible for the whole amount of damages assessed where a court determines that person had knowledge of the misrepresentation; (b) section 138.6 (3) provides for joint liability among defendants found to have had such knowledge; (c) section 138.6 (4) provides for contribution and indemnity among the defendants found liable; and (d) section 138.7 (2) lifts the liability caps under the Securities Act where the plaintiff proves that a defendant authorized, permitted or acquiesced in the making of the misrepresentation while knowing that it was a misrepresentation.

[17] The Plaintiffs, nevertheless, submit that knowledge is not a constituent element of the statutory cause of action set out in s. 138.3(1) of the Act and thus they submit it is not a material fact that needs to be pleaded.

[18] This point is key. In my opinion, there is more than one type of statutory cause of action under Part XXIII.1 and the causes of action for an uncapped liability require proof of knowledge of the misrepresentation as a constituent element of the cause of action.

[19] The Plaintiffs, in their Statement of Claim, do not plead that Mr. Novak or the Outside Directors had knowledge of the falsity of the representations in the core documents, but, as already noted, the Plaintiffs submit that pleading knowledge is unnecessary. However, to foreshadow the analysis below, it is my opinion that if the Plaintiffs wished to commence a claim under Part XXIII.1 of the Ontario Securities Act for an uncapped liability against a defendant, then it was necessary to plead knowledge as a constituent element of the statutory cause of action against that defendant.

[20] As I shall explain below, there are more than one statutory causes of action in Part XXIII.1 of the Act and the constituent elements of the statutory cause of action are found throughout Part XXIII.1 and are not confined, as the Plaintiffs would have it, to just s. 138.3. This interpretation of the Act as prescribing more than one type of statutory action is critically important because unlike the pleaded allegations of knowledge against Messrs. Ben Aïssa, Duhaime, Laramée, and Roy, there is no comparable allegation by the Plaintiffs that the Outside Directors or Mr. Novak had knowledge of the alleged misrepresentations. Thus, I disagree with the Plaintiffs that it was not necessary to plead knowledge to expose Messrs. Ben Aïssa, Duhaime, Laramée, and Roy to an uncapped liability; it was a necessary material fact and not superfluous to a claim for an uncapped liability. Further, as I shall explain below, the absence of the constituent element of knowledge is significant because this means that Mr. Novak and the Outside Directors are exposed to a liability for misrepresentation capped at the greater of $25,000 or 50% of their respective compensation from SNC-Lavalin for one year.

[21] Returning to the factual and procedural background, in September 2012, the Defendants did not oppose leave being granted for the Plaintiffs to commence statutory causes of action under Part XXIII.1 of the Ontario Securities Act, and the analogous provisions of the securities legislation of the other Canadian provinces and territories. The Defendants also consented to the certification of a class action under the Class Proceedings Act, 1992 and the Plaintiffs then discontinued their common law negligence and oppression claims. See The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2012 ONSC 5288.

[22] It would appear that with the discontinuance of the common law negligence and oppression claims, the Outside Directors consented to leave being granted under Part XXIII.1 of the Ontario Securities Act precisely because they understood that their alleged liability was a capped liability.

[23] Pursuant to the leave and certification order, on September 20, 2012, the Plaintiffs delivered their Fresh as Amended Consolidated Statement of Claim, and they delivered their Second Fresh as Amended Consolidated Statement of Claim on November 1, 2012. Again, these pleadings allege that only Messrs. Ben Aïssa, Duhaime, Laramée, and Roy had knowledge of the misrepresentations. There was no allegation that Mr. Novak or the Outside Directors had knowledge that the statements in the core documents were false statements.

[24] Mr. Ben Aïssa did not deliver a defence, and he was noted in default.

[25] To foreshadow an important event in the factual background, four years later, Mr. Ben Aïssa delivered a Statement of Defence; procedural chaos ensued.

[26] In November 2012, SNC-Lavalin and the Outside Directors, delivered their Statement of Defence.

[27] On November 30, 2012, Messrs. Laramée, Novak, and Roy, respectively, delivered a Statement of Defence.

[28] On December 3, 2012, Mr. Duhaime delivered his Statement of Defence.

[29] In their respective Statements of Defence, all the Defendants relied on the Reasonable Investigation Defence (s. 138.4(6)) of the Ontario Securities Act (and the equivalent provisions under other provincial securities statutes). This provision provides a complete defence in relation to the alleged misrepresentation, if that person or company proves that: (a) before the release of the document containing the misrepresentation, the person or company conducted or caused to be conducted a reasonable investigation, and (b) at the time of the release of the document, the person or company had no reasonable grounds to believe that the document contained the misrepresentation.

[30] The Reasonable Investigation Defence is one of several statutory defences or limitation of liability provisions for defendants that are set out in Part XXIII.1 of the Act. In their respective Statements of Defence, the Defendants pleaded limits on damages, i.e., the damage caps, under s. 138.7 and proportionate liability under s. 138.6 of the Act, of which I shall have more to say below.

[31] On January 4, 2013, the Plaintiffs delivered Replies respectively to: SNC-Lavalin and the Outside Directors, Messrs. Duhaime, Laramée, Novak, and Roy. In the 2013-Replies, the Plaintiffs denied that SNC-Lavalin and the Outside Directors and Mr. Novak were entitled to rely on the Reasonable Investigation Defence. Like the Statement of Claim, the 2013-Replies did not plead any actual knowledge of the misrepresentations against the Outside Directors or Mr. Novak.

[32] After the close of pleadings, numerous media reports reported criminal and regulatory proceedings against SNC-Lavalin. The Plaintiffs gathered information about these proceedings from court filings made by the RCMP in Montreal and in November 2013, based on the new information, the Plaintiffs delivered a proposed Third Fresh as Amended Consolidated Statement of Claim that sought to add: (1) allegations regarding the jurisdictions in which SNC-Lavalin had engaged in bribery, including Libya; (2) allegations that the core documents during the Class Period contained actionable misrepresentations because they omitted to disclose the bribes which SNC-Lavalin was alleged to have paid in these various jurisdictions, including Libya; and (3) allegations about additional corrective disclosures.

[33] In November 2013, the Plaintiffs also proposed to amend their Replies to allege that the Defendants could not rely on the Reasonable Investigation Defence because they knew or ought to have known that SNC-Lavalin offered, paid or authorized bribes to government officials in several countries, including Libya.

[34] On January 20, 2014, I dismissed the Plaintiffs’ motion to amend their Second Consolidated Fresh as Amended Statement of Claim, with the exception of the amendments to add corrective disclosures. I ruled that to permit the amendments would be to extend the misrepresentation claim to include a vague and non-exclusive pre-Class Period of bribes all over the world.

[35] With respect to the proposed amendments to the Replies, I ruled that the amendments offended the rule against departures. I said that the current Replies were adequate to meet the Defendants’ defences, and it was not fair to slip new allegations into a Reply for which the Defendants had no opportunity to respond. See Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2014 ONSC 660, leave to appeal to the Div. Ct. denied 2014 ONSC 3438 (Div. Ct.).

[36] The Plaintiffs sought leave to deliver a proposed Fourth Fresh as Amended Consolidated Statement of Claim. The proposed amendments included amendments about the alleged bribes paid in Bangladesh for the Padma Bridge Project. However, the Plaintiffs also sought – again - to add allegations of bribes during the Class Period in relation to Libya, as follows:

7. Further, during the Class Period, SNC directly or indirectly made very substantial payments to Duvel and Dinova, companies beneficially owned and/or controlled by Ben Aïssa. The payments to Duvel and Dinova were made pursuant to agency agreements with those companies purportedly related to various projects in Libya…The funds transferred to Duvel and Dinova were also used to pay bribes to foreign public officials of Libya and Tunisia for the purpose of securing business for SNC in those countries, as particularized herein.

8. Further, during the Class Period, SNC, acting through its employees and agents, directly or indirectly offered or paid or authorized the offering or payment of bribes to foreign public officials of Libya, Tunisia and Bangladesh for the purpose of securing business for SNC in those countries, which bribes were in addition to the payments totaling US $56 million discussed above.

[37] In Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v SNC-Lavalin Group Inc., 2015 ONSC 256 at paras. 35 and 44, I ruled that the proposed Fourth Fresh as Amended Consolidated Statement of Claim was not a permissible pleading. I said the amendments went beyond the allegations for which leave to commence a claim had been granted. I also concluded that the new misrepresentation allegations were barred by the limitation period under s. 138 of the Securities Act. See Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2015 ONSC 256, affd. 2015 ONCA 718.

[38] In affirming my decision, the Court of Appeal explained that s. 138.8 of the Ontario Securities Act was intended to be a robust deterrent screening mechanism, and when a plaintiff seeks to amend its misrepresentation, it cannot be to advance a different misrepresentation claim because to find otherwise would permit a plaintiff to significantly expand the scope of its action and frustrate the objective of the legislation’s leave requirement.

[39] In January 2016, following these unsuccessful attempts to deliver an amended claim, the Plaintiffs delivered a Fourth Fresh as Amended Consolidated Statement of Claim that added just the allegations of misrepresentation with respect to the alleged bribes paid in Bangladesh. The amended claim, made no allegation that the Outside Directors or Mr. Novak had knowledge of the alleged misrepresentations.

[40] In February 2016, Messrs. Novak, Duhaime, Laramée, Roy, and SNC-Lavalin and the Outside Directors, respectively, delivered Fresh as Amended Statements of Defence. As they did in their original Statements of Defence, all the Defendants pleaded: (a) the Reasonable Investigation Defence; (b) statutory limits on damages; and (c) proportionate liability.

[41] In March 2016, the Plaintiffs delivered an Amended Reply to SNC-Lavalin and the Outside Directors’ Statement of Defence. The Amended Reply again sought to include allegations about Libyan bribes and now also added, for the first time, express allegations of knowledge of the misrepresentations by the Outside Directors and also allegations that the senior executives of SNC-Lavalin, Messrs. Duhaime and Laramée, engaged in, condoned or were aware of illegal conduct and transactions before and during the Class Period, as follows:

15. Furthermore…the Plaintiffs deny that SNC and the Outside Directors are not liable by reason of the “reasonable investigation” defence...

(e) The Defendant, former SNC Executive Vice President Ben Aïssa has admitted, in his “Plea of the Defendant” filed on August 31, 2015 in the Québec Superior Court, Court File Number 500-17-078018-135 (the “Ben Aïssa Pleading”), at the suit of SNC, that prior to and during the Class Period when the purported reasonable investigation took place, in fact, SNC engaged in unlawful acts as particularized in the Ben Aïssa Pleading which were contrary to Code of Ethics and the Agents Policy, and that “Most of SNC’s Senior Executives” were aware of this. Had SNC’s disclosure compliance system, as contemplated by section 138.4(7) of the OSA, been effective, this unlawful conduct would have been detected and prevented.

16. SNC and the Outside Directors knew that Duhaime and Laramée, who were responsible for the design of ICFR and DC&P during the Class Period, themselves engaged in, condoned and/or were aware of illegal conduct and transactions prior to and during the Class Period. Therefore, SNC and the Outside Directors cannot rely on the “reasonable investigation” defence under section 138.4(6) of the OSA (and the equivalent provisions of the Other Canadian Securities Legislation).

[42] The Québec proceeding referred to in paragraph 15(e) of the Reply is an action brought by SNC-Lavalin against the Defendant, Mr. Ben Aïssa, among others, in relation to the payment of fees for a condominium in Toronto owned by Saadi Gadhafi of Libya and payments to fund a plan to extract him and his family from Libya to Mexico. (In the Québec proceedings, the allegation that most of SNC-Lavalin’s Senior Executives had knowledge of Libyan contracts was struck out.)

[43] SNC-Lavalin and the Outside Directors protested but the attention of the parties turned to an abortive attempt by both sides to have the action resolved by way of motions for summary judgment. On September 15, 2016, I dismissed the motion for directions and decided that the action would have to proceed to a trial in the normal course. See The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2016 ONSC 5784.

[44] After the dismissal of the motion for directions, the pleadings dispute resumed, and on January 4, 2017, SNC-Lavalin and the Outside Directors brought a motion to strike paragraphs 15(e) and 16 from the Amended Reply.

[45] On January 19, 2017, the Plaintiffs brought a counter-motion to amend the Amended Reply; i.e., to deliver a Fresh as Amended Reply. The proposed Fresh as Amended Reply no longer pleads paragraph 15(e) nor adopts the pleading by the Defendant, Mr. Ben Aïssa, in the Québec proceeding, but the Plaintiffs plead in paragraphs 22, 22(b), 22(i), 24 and 31 of the proposed Fresh as Amended Reply that the Outside Directors had knowledge of the misrepresentations, as follows:

22. SNC and the Outside Directors knew that Duhaime and Laramée, who were responsible for the design of ICFR and DC&P during the Class Period, themselves engaged in, condoned and/or were aware of illegal conduct and transactions prior to and during the Class Period. In addition to particulars which are pleaded elsewhere in the Statement of Claim and this Reply, the Plaintiffs plead:

(b) Duhaime, Laramée and each Outside Director knew that agents were retained by SNC to secure government contracts in Canada. The only purpose for which agents would be retained in Canada was an unlawful or otherwise improper purpose.

(i) Starting in Q1 of 2010, and until the end of the proposed Class Period, Duhaime, Laramée and each Outside Director knew that the Certifications in respect of DC&P and ICFR were false at the time they were made.

24. The Plaintiffs plead that the Outside Directors, or any one of them, authorized, permitted, or acquiesced in the making of the pleaded misrepresentations, or any one of them, while knowing them to be misrepresentations. The Plaintiffs plead and rely on OSA sections 138.6(2) and 138.6(3) and plead that the Defendants to which section 138.6(2) applies are jointly and severally liable to the Plaintiffs and the Class for damages awarded pursuant to section 138.3.

25. In reply to paragraph 127 of the Statement of Defence, the Plaintiffs plead that (b) in addition, rely on section 138.7(2) of the OSA (and the equivalent provisions of the Other Canadian Securities Legislation) to the extent that liability limits do not apply to any or all of the Outside Directors.

[46] On January 24, 2017, while the Defendants’ motion to strike the Amended Reply was pending and the Plaintiffs’ Motion to amend the Amended Reply was pending, the Plaintiffs consented to the reopening of the pleadings to allow Mr. Ben Aïssa to deliver a Statement of Defence. His pleading, at paragraphs 18 to 41, stated:

Apportionment of Liability

18. In the alternative, Ben Aïssa relies upon the apportionment of liability provisions set out in section 138.6 of the Securities Act and the comparable parts of other provincial legislation.

19. Ben Aïssa is not liable for that portion of any aggregate damages that are determined to be the responsibility of another defendant, including any conduct of SNC or any of its directors, officers or employees other than himself, that was contrary to SNC's Code of Ethics, its Agency Policy or any other company policy, procedure or control.

20. To the extent that any of the payments at issue in this action are found to be improper or to give rise to actionable misrepresentations for which Ben Aïssa is liable (which is denied), all of the other defendants share in that responsibility. Each of the individual defendants knew about, or was willfully blind or reckless to, and authorized, permitted or acquiesced in the making of any such misrepresentation or failure to make timely disclosure.

SNC's Use of Agent Payments in Libya

21. At all material times, each of the individual defendants was aware of, or was willfully blind or reckless to, the fact that for many years preceding the Class Period, and into the Class Period, SNC paid millions of dollars in agent payments that were used to bribe officials in Libya to procure significant contracts for SNC in Libya.

22. These arrangements were originally put in place at the direction of Sami Bebawi, Ben Aïssa 's predecessor, with the full approval of Jacques Laramée, Duhaime's predecessor as CEO.

23. Ben Aïssa was encouraged and instructed by Duhaime and Laramée to continue the practice of using agents to facilitate the payment of bribes to officials in Libya.

24. The payments made to Libyan officials were carried out through the use of agent contracts. The individual defendants were aware of, or were willfully blind or reckless to, the fact that the relevant agent contracts in reality involved facilitating improper payments to Libyan officials.

25. In particular, SNC entered into a series of agreements with two agents, Duval Securities Inc. ("Duval") and Dinova International Inc. ("Dinova").

26. Duval and Dinova were controlled and beneficially owned by Ben Aïssa.

27. SNC made agent payments to Duval and Dinova, which in turn made payments or offered benefits to Saadi Gaddafi ("Gaddafi"), a Libyan public official, who would then arrange for SNC to obtain the award of contracts, often on a sole-source basis and without any competitive tender.

28. The payments to Gaddafi were facilitated through: (1) Dorion Business Ltd. ("Dorion"), a company that Gaddafi owned; (2) Horntown Management Ltd. ("Horntown"), a company that Gaddafi owned for the purpose of holding a yacht; and (3) Palmer Johnson Int. Ltd. ("Palmer Johnson"), a company engaged to manufacture the yacht that was to be delivered to Horntown.

29. As a result of these practices, SNC, directly or in connection with LIGAN, a joint venture between SNC and the Great Man Made River Authority ("GMMRA"), a Libyan government agency, obtained numerous lucrative Libyan contracts, the particulars of which are set out below:

…. [chart omitted]

30. The facts set out in the chart above have been admitted by both Ben Aïssa and SNC in connection with the Swiss criminal proceeding Ministere public de la confederation et SNC-Lavalin Inc. v. Ben Aïssa (SK.2014.24), which commenced in May 2011.

31. SNC was a party to the Swiss criminal proceeding.

32. Further, SNC admitted the following facts and relied upon them to obtain forfeiture of Ben Aïssa assets in connection with the Swiss criminal proceeding:

(a) agency contracts were entered into with respect to Libyan projects;

(b) portions of the payments made by SNC under these agent contracts were directed to Libyan officials; and

(c) the purpose of these payments was to procure business in Libya for SNC, which they did.

33. Although SNC denies that it knew about the nature of these transactions at the time, it continues to rely upon these facts as the basis for its ongoing action commenced in Quebec against Ben Aïssa, SNC-Lavalin Group Inc. v. Ben Aïssa (500-17-087639-152). In that action, SNC is seeking to recover certain agent payments made by SNC to Duval and Dinova.

SNC Should Bear Primary Responsibility for Any Damages

34. SNC's long-standing practice of paying bribes to procure business in Libya must be considered by the court in:

(a) determining whether each of the defendants conducted a reasonable investigation under section 138.4(6) of the Securities Act in connection with the alleged misrepresentations and agent payments at issue in this action; and

(b) apportioning liability between the defendants under section 138.6 of the Securities Act.

35. If any liability arises from the agent payments impugned here, it is SNC, as the company, which must bear the primary responsibility. The use of agent payments to procure business for SNC was a long-standing practice. SNC's officers and staff, including Ben Aïssa, were encouraged and instructed to carry on this practice.

36. SNC was aware that there was a risk that agent contracts could cause improper payments to be made. If the agent contracts In this case gave rise to violations of securities law (which is denied), it was SNC that organized them, benefited from them, and was ultimately responsible for making any required disclosures to investors.

37. Duhaime, Laramée, and Michael Novak ("Novak"), all senior officers of the company, were at the centre of SNC's relationship with its agents.

38. Duhaime and Laramée were fully aware of and provided their approval for any significant arrangements that were put in place with agents, including the agent contracts at issue.

39. Novak was the Chairman of SNC-Lavalin International Inc., the SNC entity through which all agent payments were made. As such, Novak had ultimate responsibility for and was aware of all of SNC's significant relationships with its agents.

40. If the directors of SNC did not know about the agent contracts at issue in this action, they were willfully blind or reckless with respect to them and ought to have known about them.

41. SNC and the individual defendants were well aware that there was a risk that agent contracts could give rise to improper payments. They nevertheless chose to continue this practice, rather than to investigate it or put in place further controls.

[47] By way of summary, in his Statement of Defence, Mr. Ben Aïssa alleges that each of the individual Defendants had knowledge of the misrepresentations for which leave to proceed had been granted. In paragraphs 21-33, he alleges that agent payments made by SNC-Lavalin to Duval Securities Inc. in relation to contracts in Libya between 2001 and 2008 were bribes. He particularizes eight bribes alleged to have been paid by SNC-Lavalin to Libyan officials between 2001 and 2011. With the exception of the bribe alleged to have been paid in 2011, all of the alleged bribes fall outside of the Class Period. Mr. Ben Aïssa alleges that the individual Defendants were aware of, or were willfully blind or reckless to the fact that the agent contracts were facilitating improper payments to Libyan officials. He claims that SNC-Lavalin’s long-standing practice of paying bribes to procure business in Libya must be considered by the court in determining whether each of the Defendants conducted a reasonable investigation and in determining the apportionment of liability between the Defendants. Mr. Ben Aïssa pleads that liability should be apportioned between all of the individual Defendants to the extent that any of the payments at issue in the action are found to be improper or to give rise to actionable misrepresentations for which he is liable.

[48] To put it mildly, the delivery of Mr. Ben Aïssa’s Statement of Defence created a fine mess. Now, in addition to the Outside Directors having a dispute with the Plaintiffs about their Amended Reply and the proposed Fresh as Amended Reply, the Outside Directors and Mr. Novak wished to attack Mr. Ben Aïssa’s cut-throat defence, which the Plaintiffs were delighted to see because it seemed to cut the throat of the Outside Directors’ Reasonable Investigation Defence. The defence also arguably exposed Mr. Novak and the Outside Directors to an uncapped liability of a one billion dollars and it brought the twice-exiled allegations of bribery in Libya back into the litigation.

[49] On February 10, 2017, SNC-Lavalin and the Outside Directors, and on February 13, 2017, Mr. Novak, brought motions to strike out paragraphs 20-41 of the Statement of Defence of Mr. Ben Aïssa.

(b) The Protective Orders Motions

[50] SNC-Lavalin is charged with bribery ($47.6 million) and fraud ($129.8 million) with respect to activities in Libya between 2001 and 2011.

[51] Mr. Ben Aïssa is charged with fraud, conspiracy, and other offences in connection with SNC-Lavalin’s bid on the McGill University Health Centre Project.

[52] In two criminal proceedings, Mr. Duhaime is charged with fraud, conspiracy and other offences in connection with SNC-Lavalin’s bid on the McGill University Health Centre Project.

[53] In two criminal proceedings, Mr. Roy is charged with bribery in connection with SNC-Lavalin’s activities in Libya between 2008 and 2010 and with fraud, conspiracy, and other offences in connection with SNC-Lavalin’s bid on the McGill University Health Centre Project.

[54] In March 21, 2016, I made what is known as a Wagg Order, with respect to the disclosure of documents in the Crown’s disclosure brief in the criminal proceedings. This Order was amended by order dated February 7, 2017.

[55] In November 2016, Mr. Duhaime’s criminal proceedings with respect to, among other things, the McGill University Health Centre Project was completed. His trial is scheduled for September 2018 at the earliest. Some Defendants in the civil proceedings were called to testify at the preliminary inquiry as were former employees of SNC-Lavalin. There was an order excluding witnesses and a publication ban. Witness credibility is expected to be a critical factor at the trial with respect to an alleged meeting involving Mr. Duhaime where the McGill University Health Centre Project was discussed. The different positions relating to that meeting are set out in the Amended Statements of Defence of Mr. Duhaime and Mr. Laramée.

[56] In the civil class action, examinations for discovery are scheduled to proceed on various dates from April through September 2017.

[57] In March 2017, Messrs. Ben Aïssa, Duhaime, and Roy brought motions for protective orders with respect to their examinations for discovery.

[58] Mr. Roy seeks protections similar to the Wagg Restrictions, as follows:

(a) [He] shall not be examined until a reasonable period after the issues relating to the scope of the pleadings have been finally resolved and all related documentary production is completed; (b) He shall be examined after all other parties to the proceeding except Pierre Duhaime; (c) The examination transcript from Mr. Roy’s Examination (“Roy’s Transcript”) shall be subject to the same restrictions as apply to the Crown Disclosure Documents in the Wagg Order; (d) No one shall be permitted to file Mr. Roy’s Transcript or otherwise disclose any of the evidence given during Mr. Roy’s Examination in any way or to any person (including the Crown, any law enforcement official or any regulator whether in Canada or elsewhere) until the completion of Roy's Criminal Proceedings or further order of the Court on reasonable notice to Mr. Roy; (e) He shall be deemed to have claimed the protections of section 13 of the Charter, s.5(2) of the Canada Evidence Act, s.9(2) of the Ontario Evidence Act and Article 285 of the Quebec Civil Code of Procedure, on all questions answered at Roy’s Examination; and (f) Any additional protective provisions granted to any other defendant in this proceeding who has been criminally charged shall also be granted to Mr. Roy.

[59] Mr. Duhaime seeks protections similar to the Wagg Restrictions, as follows:

(a) He be examined last; (b) He have the right to be asked questions and to answer in French; (c) He not be examined until a reasonable period after the pleadings are closed and document discovery completed; (d) None of the other [D]efendants be permitted to attend at [his] examination, although their counsel may attend; (e) No other [D]efendant will be provided with the transcript of, a summary of, or any disclosure whatsoever of, the evidence given by Mr. Duhaime on his examination until the completion of the criminal proceedings, or final order of the Court on reasonable notice to him (including any appeals of such order); (f) The restrictions set out in the order of this Court dated February 7, 2017 (the "WAGG Order'') apply to any examination transcript of Mr. Duhaime; (g) No one be permitted to file the transcript of the evidence given by Mr. Duhaime on his examination or otherwise disclose any of the evidence given by him on his examination in any way or to any person (including the Crown, any law enforcement official or any regulator whether in Canada or elsewhere) until the completion of the criminal proceedings or final order of the Court on reasonable notice to Mr. Duhaime (including any appeals of such order); and (h) He be deemed to have claimed the protections of s. 13 of the Charter and s.5(2) of Canada Evidence Act and s.9(2) of the Ontario Evidence Act on all questions answered at his examination.

[60] The parties agree to or do not oppose the relief requested by Mr. Duhaime with the exception of paragraphs (d), (e) and (g).

C. Analysis and Discussion

1. Introduction

[61] As noted at the outset, I shall be: (a) granting the Outside Directors’ motion to strike paragraphs 15(e) and 16 from the Plaintiffs’ Amended Reply without leave to amend; (b) dismissing the Plaintiffs’ motion to deliver a Fresh as Amended Reply; (c) granting the Outside Directors’ and Mr. Novak’s respective motions to strike paragraphs 20 to 41 from Mr. Ben Aïssa’s Statement of Defence without leave to amend; (d) making protective orders with respect to the examinations for discovery of Messrs. Ben Aïssa, Duhaime, and Roy, and (e) making no orders to stay or postpone the examinations for discovery.

[62] To explain the rationale for my order I shall, in the sections below, first briefly describe some rules about pleading. Then, I shall discuss the Plaintiffs’ Amended Reply and their proposed Fresh as Amended Reply. This discussion, and the discussion in the section that immediately follows, will involve a consideration of the causes of action, defences, and claims by the Defendants under Part XXIII.1 of the Ontario Securities Act. Next, I will discuss Mr. Ben Aïssa’s Statement of Defence and, finally, I shall discuss the requests for a stay and for protective orders.

2. The Rules of Pleading

[63] For the purposes of the various motions before the court, the following pleadings rules from the Rules of Civil Procedure are relevant:

Material Facts

25.06 (1) Every pleading shall contain a concise statement of the material facts on which the party relies for the claim or defence, but not the evidence by which those facts are to be proved.

Inconsistent Pleading

(4) A party may make inconsistent allegations in a pleading where the pleading makes it clear that they are being pleaded in the alternative.

(5) An allegation that is inconsistent with an allegation made in a party’s previous pleading or that raises a new ground of claim shall not be made in a subsequent pleading but by way of amendment to the previous pleading.

WHERE A REPLY IS NECESSARY

Different Version of Facts

25.08 (1) A party who intends to prove a version of the facts different from that pleaded in the opposite party’s defence shall deliver a reply setting out the different version, unless it has already been pleaded in the claim.

Affirmative Reply

(2) A party who intends to reply in response to a defence on any matter that might, if not specifically pleaded, take the opposite party by surprise or raise an issue that has not been raised by a previous pleading shall deliver a reply setting out that matter, subject to subrule 25.06 (5) (inconsistent claims or new claims). R.R.O. 1990, Reg. 194, r. 25.08 (2).

Reply Only Where Required

(3) A party shall not deliver a reply except where required to do so by subrule (1) or (2).

Deemed Denial of Allegations Where No Reply

(4) A party who does not deliver a reply within the prescribed time shall be deemed to deny the allegations of fact made in the defence of the opposite party.

RULES OF PLEADING — APPLICABLE TO REPLIES

Admissions

25.09 (1) A party who delivers a reply shall admit every allegation of fact in the opposite party’s defence that the party does not dispute.

STRIKING OUT A PLEADING OR OTHER DOCUMENT

25.11 The court may strike out or expunge all or part of a pleading or other document, with or without leave to amend, on the ground that the pleading or other document,

(a) may prejudice or delay the fair trial of the action;

(b) is scandalous, frivolous or vexatious; or

(c) is an abuse of the process of the court.

[64] As a matter of the rules of pleading, an allegation that is inconsistent with an allegation made in a party’s previous pleading, or that raises a new ground of claim, shall not be made in a subsequent pleading but by way of amendment to the previous pleading: Rule 25.06(5) of the Rules of Civil Procedure; Ross v. Coseco Insurance Co. (2003), 67 O.R. (3d) 463 (S.C.J.).

[65] A plaintiff, rather than taking an inconsistent or alternative position in a reply, must amend his or her statement of claim to plead the inconsistent position in the alternative: McComb v. American Canada Inc., [1986] O.J. No. 2616 (H.C.J.); Levinson v. Levinson, [1943] O.J. No. 514 (H.C. J.); Burford v. Cosa Corp. of Canada Ltd., [1955] O.W.N. 8 (H.C.J.).

3. The Plaintiffs’ Reply Pleadings

[66] The Outside Directors object to and argue that the challenged paragraphs in the Plaintiffs’ Amended Reply and the allegations in their proposed Fresh as Amended Reply plead the material fact of knowledge and thus plead a new cause of action. The Outside Directors contend that this is not permissible because leave under the Ontario Securities Act to commence the new knowledge-based (and hence uncapped) claim has not been obtained and is no longer available.

[67] In other words, the Outside Directors object that the Plaintiffs, in their Statement of Claim, pleaded a claim of capped liability, but they are now departing from that pleading and alleging an uncapped liability.

[68] Further, the Outside Directors argue that the challenged paragraphs in the Plaintiffs’ Amended Reply and in their proposed Fresh as Amended Reply attempt again to infuse the class action with the allegations of bribery in Libya, which the Court of Appeal has already held are outside the scope of the Plaintiffs’ claim for which leave was granted under the Ontario Securities Act.

[69] In response, the Plaintiffs submit that knowledge is not a constituent element of a claim under s.138.3 of the Ontario Securities Act, which, they submit, is a rebuttable strict liability regime in which the individual defendant’s knowledge comes into play only by way of defence to the claim. The Plaintiffs argue further that they can plead knowledge in response to the Outside Directors’ reliance on the Reasonable Investigation Defence. Finally, the Plaintiffs argue that the proposed Fresh as Amended Reply does not reintroduce the prohibited allegations about bribery in Libya.

[70] Put simply, I essentially agree with the Outside Directors’ argument, and I disagree with the Plaintiffs’ argument.

[71] It is my opinion that the Ontario Securities Act is a complete code for several statutory causes of action for plaintiffs against defined defendants. In the case at bar, with leave to commence the action, the Plaintiffs made a statutory claim with a capped liability against the Outside Directors and Mr. Novak and it would indeed be a departure to change that claim against the Outside Directors and Mr. Novak into an uncapped liability, which is a different cause of action.

[72] As for pleading knowledge to rebut the Reasonable Investigation Defence, this is not necessary because a general denial will suffice. Here, it may be noted that in the original round of Replies, the Plaintiffs disputed the Reasonable Investigation Defence without pleading knowledge as a material fact. Further, it is not necessary to plead knowledge because under the statutory scheme knowledge is not a material fact that needs to be pleaded to rebut the Reasonable Investigation Defence. Rather, knowledge is a factor that the court must consider in any event when ruling on the merits of the Reasonable Investigation Defence. Hence, it is already part of the scheme of the Act and does not need to be pleaded. Visualize, s. 138.4 (7) directs that in determining whether an investigation was reasonable, “the court shall consider all relevant circumstances, including … the knowledge, experience and function of the person or company …”

[73] In this analysis, it needs also to be noted that the Reasonable Investigation Defence is a complete defence exculpating a defendant from liability, but under the statutory scheme, if the Reasonable Investigation Defence fails because of the court’s assessment of the various factors, including knowledge, the defendant’s exposure to liability would be as originally pleaded against him or her. In other words, if a plaintiff pleads an uncapped claim and the defendant’s Reasonable Investigation Defence fails, the defendant is exposed to an uncapped claim, and if the plaintiff pleads a capped claim and the defendant’s Reasonable Investigation Defence fails, the defendant is exposed to a capped claim.

[74] I appreciate that Part XXIII.1 of the Ontario Securities Act is frequently said to create a cause of action, but, upon analysis, the more correct statement is that it creates more than one cause of action for misrepresentations in the secondary market. The statutory causes of action have some constant or common elements, but the causes of action can be differentiated by particular constituent elements that impose a burden of proof on the plaintiff for some claims but not for others.

[75] In A.C. Pritchard and Janis P. Sarra, “Securities Class Actions Move North: A Doctrinal and Empirical Analysis of Securities Class Actions in Canada,” (2010) 47 Alta. L. Rev. 881, the authors note how the provisions of the Ontario Securities Act distinguish various types of claims. The authors note, among other things, that for non-core documents, the plaintiff must prove that the person or company knew that the document or public oral statement contained a misrepresentation, deliberately avoided acquiring the knowledge, or acted with gross misconduct in connection with release of the document or public oral statement containing the misrepresentation. The authors note that a higher burden of proof is also required where outside directors are being sued for failure to make timely disclosure and knew the change was material, but the higher onus of proof is not required in relation to the issuer and its officers. The authors state:

The Canadian secondary market civil liability provisions distinguish core and non-core documents. Core documents include a prospectus, takeover-bid circular, issuer circular, directors' circular, rights offering circular, management discussion and analysis, annual information form, interim and annual financial statements when used in relation to an outside director, an influential person who is not an officer, or a director or officer of such an influential person. Core documents for issuers, their officers, or investment fund managers includes the same list of documents, plus material change reports and any other document prescribed by regulation. Non-core documents require a higher burden of proof; specifically, the plaintiff must prove that the person or company knew that the document or public oral statement contained a misrepresentation, deliberately avoided acquiring the knowledge, or acted with gross misconduct in connection with release of the document or public oral statement containing the misrepresentation. This higher burden of proof is also required where outside directors and influential persons are being sued for failure to make timely disclosure and knew the change was material, but it is not required in relation to the issuer and its officers, or investment fund manager. [footnotes omitted]

[76] In Mary Condon, “Rethinking Enforcement and Litigation in Ontario Securities Regulation” (2006), 32 Queen's L.J. 1, Professor Mary Condon notes that the Ontario Securities Act creates several causes of action. She states:

Several causes of action are being created. These include actions in relation to: (i) documents released by a responsible issuer that contain a misrepresentation; (ii) public oral statements containing misrepresentations, if they are made by a person "with actual, implied or apparent authority to speak on behalf of a responsible issuer"; and (iii) failure to make timely disclosure. …. Similarly, the class of defendants to these new causes of action is broader than the equivalent liability provisions for misrepresentations in offering documents (in provisions such as section 130 of the OSA). The class includes not only the responsible issuer, its directors and officers, but also "influential persons" and, in the case of written or oral statements, experts. The definition of "influential person" includes, with respect to responsible issuers, control persons, promoters and insiders who are not directors or senior officers. The expansion of possible defendants to a section 138.1 action is potentially revolutionary, though it has attracted little published commentary to date. It derogates from long held assumptions about the relationship of shareholders qua shareholders to a corporation, and may impose additional monitoring duties on key corporate shareholders. However, unless the influential person released the impugned document or made the public oral statement, "knowing influence" on the responsible issuer will be required to ground an action. Finally, if the person who made the public oral statement is not already captured in the above list, he or she may also be liable. Furthermore, the new provisions make a distinction between core and non-core documents, and require a higher burden of proof to be discharged by plaintiffs where non-officer directors and influential persons are being sued with respect to such non-core documents. A similarly elevated burden of proof is also required where directors and influential persons are being sued for failure to make timely disclosure. [footnotes omitted]

[77] During argument, the Plaintiffs confirmed that their intention was to pursue a claim for uncapped liability against Mr. Novak and the Outside Directors notwithstanding that this allegation is not found in their Statement of Claim. The Reply thus offends the rule against departures and is a manifestly unfair and unauthorized approach since no leave has been given for the Plaintiffs to commence this particular cause of action against the Outside Directors and Mr. Novak. Moreover, the Plaintiffs cannot take cover by submitting that they are just pleading to rebut the Reasonable Investigation Defence because such a plea is unnecessary. Therefore, I dismiss the Plaintiffs’ motion to deliver a Fresh as Amended Reply.

[78] Further, I grant the Defendants’ motion to strike the challenged paragraphs 15(e) and 16 in the Amended Reply without leave to amend. In this regard, my reasons for striking out the allegation of knowledge are set out above.

[79] And, as for striking out the allegations about Libya, I leave it to the Plaintiffs to re-read Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2014 ONSC 660, leave to appeal to the Div. Ct. denied 2014 ONSC 3438 (Div. Ct.) and Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v SNC-Lavalin Group Inc., 2015 ONSC 256, affd. 2015 ONCA 718.

4. Mr. Ben Aïssa’s Statement of Defence

[80] I turn now to SNC-Lavalin’s and the Outside Directors’ motion to strike paragraphs from Mr. Ben Aïssa’s Statement of Defence. I shall grant this motion but not precisely for the reasons argued by the Outside Directors. I agree with their argument only in part, and I have my own explanation for striking the impugned paragraphs from Mr. Ben Aïssa’s Statement of Defence.

[81] As I understand the Outside Directors’ argument, it is that Mr. Ben Aïssa is attempting to assert what amounts to a statutory cross-claim for which no leave to commence was granted under the Ontario Securities Act and it is now too late for leave to be obtained.

[82] However, in my opinion, the Ontario Securities Act does not envision that defendants must obtain leave to assert their rights against co-defendants and it is not necessary to assert cross-claims. The rights of the defendants, such as they are, are entailed or are corollaries of the plaintiff having already been granted leave and the defendants’ rights arise automatically by virtue of the statutory scheme.

[83] For present purposes, what is critical is that the rights between co-defendants arise automatically but are constrained by the parameters of the causes of action for which leave has already been granted. Metaphorically, like Rule 13 of the Rules of Golf, the defendant must play the ball (plead the action) where it lies.

[84] I, thus, agree with the argument of the Outside Directors that Part XXIII.1 of the Ontario Securities Act does not provide for a co-defendant to raise different allegations from those raised by a plaintiff and from which leave has been granted. In this regard, the Outside Directors note that s. 138.7(2) of the Act expressly provides that the liability limits under s. 138.7(1) can only be negated by the plaintiff. The Act, which I repeat is a complete code, does not provide for a co-defendant to be able to separately raise an allegation of knowledge against another co-defendant. Section 138.7(1) states:

Subsection (1) [limits on damages] does not apply to a person or company, other than the responsible issuer, if the plaintiff proves that the person or company authorized, permitted or acquiesced in the making of the misrepresentation … while knowing that it was a misrepresentation … [emphasis added]

[85] I also agree with the Outside Directors’ submission that Mr. Ben Aïssa cannot re-introduce the twice-rejected allegations about bribery in Libya in the guise of his attack on his co-Defendants’ Reasonable Investigation Defence or to bolster his entitlements, such as they are, in the apportionment of liability under s. 138.6 of the Act.

[86] Once again, Mr. Ben Aïssa is bound by the parameters of the action for which leave has been granted. The Reasonable Investigation Defence and any apportionment of liability is determined in relation to the misrepresentations for which leave has been granted (i.e., $56 million in purported agent payments for the two Canadian projects and a bridge project in Bangladesh) and for the time period in issue (November 2009 to November 2011). I agree with the Defendants that the relevant inquiry into the Reasonable Investigation Defence must be grounded both in terms of the $56 million agent payments and Padma Bridge and, further, the time period of November 2009 and November 2011, when the impugned documents were released.

[87] I also agree that it would be wrong for the trial judge to rely upon allegations related to Libya in apportioning liability. Liability under s. 138.6(1) can only be apportioned based on the misrepresentations that have been pleaded, namely the $56 million agent payments and Padma Bridge, not in respect of other matters relating to Libya. Likewise, the liability caps applicable to the Outside Directors set out in s. 138.7(1) can only be set aside under s. 138.6(2) where it is proven that he/she had knowledge of bribes in relation to the $56 million agent payments for the two Canadian projects or in relation to offers of bribes for Padma Bridge.

[88] Finally, I also agree that to allow the impugned allegations in Mr. Ben Aïssa’s Statement of Defence to stand would divert discoveries and the trial into factual inquiries that ultimately have no connection to the real issue the trial judge must decide.

[89] I, therefore, conclude that the Outside Directors’ motion to strike paragraphs 20 to 41 from Mr. Ben Aïssa’s Statement of Defence without leave to amend should be granted.

5. The Requests for a Stay and for Protective Orders

[90] The requests for a stay of the examinations for discovery were made in the circumstance that the status of the pleadings was uncertain and it appeared that the extent of documentary discovery would be significantly expanded. In light of my decision to strike paragraphs 15(e) and 16 from the Plaintiffs’ Reply and paragraphs 20 to 41 from Mr. Ben Aïssa’s Statement of Defence, that state of affairs is no longer extant. There is no longer any doubt about the scope of the pleadings and the pleadings are closed. This action is ready to proceed to examinations for discovery. I see no reason to stay the scheduled examinations for discovery.

[91] I, however, do need to address Messrs. Ben Aïssa’s, Duhaime’s, and Roy’s motions for protective orders, and in this regard, I make the following orders:

• Messrs. Ben Aïssa, Duhaime, and Roy shall be examined last for discovery in the following order: Ben Aïssa, Roy, Duhaime.
• For his examination for discovery, Mr. Duhaime has the right to be questioned and to answer in French.
• On their examinations for discovery, Messrs. Ben Aïssa, Duhaime, and Roy shall be deemed to have claimed the protections of s. 13 of the Charter, s. 5(2) of the Canada Evidence Act, s. 9 (2) of the Ontario Evidence Act, and Article 285 of the Québec Civil Code of Procedure.
• The transcripts of Messrs. Ben Aïssa’s, Duhaime’s, and Roy’s examinations shall be subject to the same restrictions as apply to the Crown Disclosure Documents set out in the Amended Wagg Order dated March 21, 2016.
• The transcripts of Messrs. Ben Aïssa’s, Duhaime’s, and Roy’s examinations for discovery shall not be filed without further order of this court to be obtained on notice to all parties.
• All other parties shall be excluded from the examinations for discovery of Messrs. Ben Aïssa, Duhaime, and Roy, respectively.
• With exceptions for: (a) the lawyers and law firms of record, (b) the insurers of the parties to this action and the lawyers of the insurers, and (c) expert witnesses retained for the purposes of this action, and subject to the evidence being deemed to be confidential and subject to a duty of confidence, the parties shall not communicate the evidence from the examination for discovery of Messrs. Ben Aïssa, Duhaime, and Roy to any person, including their respective clients or to the other parties or third parties, including potential witnesses in the civil or criminal proceedings, until the earlier of the completion of the criminal proceedings or further order of this court to be obtained on notice to all parties.

[92] The motions for protective orders were framed in terms of Messrs. Ben Aïssa’s, Duhaime’s and Roy’s rights, pursuant to sections 7 and 13 of the Canadian Charter of Rights and Freedoms, to a fair trial including the right against self-incrimination.

[93] For present purposes, I need not explore the jurisprudence about the intersection and integration the due process of a civil proceeding and the due process of a criminal proceeding where the liberty and security of the accused may be imperilled and where the accused has a variety or rights designed to ensure a fair trial in accordance with the principles of fundamental justice. I need not do so in the immediate case because there is no dispute between the parties that some protective orders should be made in the civil proceedings.

[94] In the immediate case, the need for protective orders is as much, if not more, to protect the fairness and forensic integrity of the criminal proceedings as it is to protect Messrs. Ben Aïssa’s, Duhaime’s, and Roy’s rights against self-incrimination and this is especially so because it is inevitable that the credibility of the witnesses at the criminal trials will be much in issue and some of the co-Defendants in the civil proceedings will be witnesses in the criminal proceedings.

[95] Moreover, the exclusion of the parties from the examinations for discovery in the civil proceedings is independently warranted because it is already apparent that there will be serious issues of credibility and differences of evidence between the parties about crucial events and thus no party should have an opportunity to tailor their evidence for their own examinations for discovery in light of having heard what their opponent may have said.

[96] There is substantial agreement about most of the terms of the protective orders. The major dispute is that the Plaintiffs and the Outside Directors object to orders that would prohibit their lawyers from disclosing to their clients what Messrs. Ben Aïssa, Duhaime and Roy, who will be the last to be examined, said on their respective examinations for discovery until after the completion of the criminal trials.

[97] There has been normal documentary disclosure and the sharing of the information from the Crown from the Wagg Order, and, of course, the parties have their own recollection of what they said and did and what they heard and saw Messrs. Ben Aïssa, Duhaime, and Roy respectively say and do, so there is little concern that any of the parties will be discomfited much less prejudiced by the exclusion of parties at the examinations for discovery and by the examinations of Messrs. Ben Aïssa, Duhaime, and Roy coming last. After the discoveries, it is doubtful that counsel will be unable to obtain instructions or be inhibited in any way by the inability to disclose Messrs. Ben Aïssa’s, Duhaime’s, and Roy’s discovery evidence until the completion of the trials, but if problems emerge, then they can be dealt with by motion in writing.

D. Conclusion

[98] Order to go in accordance with these Reasons for Decision.

[99] My current view is that the appropriate order is to make the costs of all the motions, costs in the cause. If any of the parties disagree, they may apply for costs within 20 days of the release of these Reasons for Decision. The responding parties shall have a further 20 days to make responding submissions. There shall be no reply submissions.

Perell, J.

Released: April 10, 2017

Schedule “A”

Excerpts from the Ontario Securities Act, R.S.O. 1990, c. S.5

PART XXIII.1 CIVIL LIABILITY FOR SECONDARY MARKET DISCLOSURE

Interpretation and Application

Definitions

138.1 In this Part,

“core document” means,

(a) a prospectus, a take-over bid circular, an issuer bid circular, a directors’ circular, a notice of change or variation in respect of a take-over bid circular, issuer bid circular or directors’ circular, a rights offering circular, management’s discussion and analysis, an annual information form, an information circular, annual financial statements and an interim financial report of the responsible issuer, where used in relation to,

(i) a director of a responsible issuer who is not also an officer of the responsible issuer,

(ii) an influential person, other than an officer of the responsible issuer or an investment fund manager where the responsible issuer is an investment fund, or

(iii) a director or officer of an influential person who is not also an officer of the responsible issuer, other than an officer of an investment fund manager,

(b) a prospectus, a take-over bid circular, an issuer bid circular, a directors’ circular, a notice of change or variation in respect of a take-over bid circular, issuer bid circular or directors’ circular, a rights offering circular, management’s discussion and analysis, an annual information form, an information circular, annual financial statements, an interim financial report and a material change report required by subsection 75 (2) or the regulations of the responsible issuer, where used in relation to,

(i) a responsible issuer or an officer of the responsible issuer,

(ii) an investment fund manager, where the responsible issuer is an investment fund, or

(iii) an officer of an investment fund manager, where the responsible issuer is an investment fund, or

(c) such other documents as may be prescribed by regulation for the purposes of this definition;

“document” means any written communication, including a communication prepared and transmitted only in electronic form,

(a) that is required to be filed with the Commission, or

(b) that is not required to be filed with the Commission and,

(i) that is filed with the Commission,

(ii) that is filed or required to be filed with a government or an agency of a government under applicable securities or corporate law or with any exchange or quotation and trade reporting system under its by-laws, rules or regulations, or

(iii) that is any other communication the content of which would reasonably be expected to affect the market price or value of a security of the responsible issuer;

“expert” means a person or company whose profession gives authority to a statement made in a professional capacity by the person or company, including, without limitation, an accountant, actuary, appraiser, auditor, engineer, financial analyst, geologist or lawyer, but not including a designated credit rating organization;

“failure to make timely disclosure” means a failure to disclose a material change in the manner and at the time required under this Act or the regulations;

“influential person” means, in respect of a responsible issuer,

(a) a control person,

(b) a promoter,

(c) an insider who is not a director or officer of the responsible issuer, or

(d) an investment fund manager, if the responsible issuer is an investment fund;

“liability limit” means,

(a) in the case of a responsible issuer, the greater of,

(i) 5 per cent of its market capitalization (as such term is defined in the regulations), and

(ii) $1 million,

(b) in the case of a director or officer of a responsible issuer, the greater of,

(i) $25,000, and

(ii) 50 per cent of the aggregate of the director’s or officer’s compensation from the responsible issuer and its affiliates,

“responsible issuer” means,

(a) a reporting issuer, or

(b) any other issuer with a real and substantial connection to Ontario, any securities of which are publicly traded;

(c) in the case of an influential person who is not an individual, the greater of,

(i) 5 per cent of its market capitalization (as defined in the regulations), and

(ii) $1 million,

(d) in the case of an influential person who is an individual, the greater of,

(i) $25,000, and

(ii) 50 per cent of the aggregate of the influential person’s compensation from the responsible issuer and its affiliates,

(e) in the case of a director or officer of an influential person, the greater of,

(i) $25,000, and

(ii) 50 per cent of the aggregate of the director’s or officer’s compensation from the influential person and its affiliates,

(f) in the case of an expert, the greater of,

(i) $1 million, and

(ii) the revenue that the expert and the affiliates of the expert have earned from the responsible issuer and its affiliates during the 12 months preceding the misrepresentation, and

(g) in the case of each person who made a public oral statement, other than an individual referred to in clause (d), (e) or (f), the greater of,

(i) $25,000, and

(ii) 50 per cent of the aggregate of the person’s compensation from the responsible issuer and its affiliates

“public oral statement” means an oral statement made in circumstances in which a reasonable person would believe that information contained in the statement will become generally disclosed;

“release” means, with respect to information or a document, to file with the Commission or any other securities regulatory authority in Canada or an exchange or to otherwise make available to the public;

“responsible issuer” means,

(a) a reporting issuer, or

(b) any other issuer with a real and substantial connection to Ontario, any securities of which are publicly traded;

Liability

Liability for secondary market disclosure

Documents released by responsible issuer

138.3 (1) Where a responsible issuer or a person or company with actual, implied or apparent authority to act on behalf of a responsible issuer releases a document that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released and the time when the

misrepresentation contained in the document was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against,

(a) the responsible issuer;

(b) each director of the responsible issuer at the time the document was released;

(c) each officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document;

(d) each influential person, and each director and officer of an influential person, who knowingly influenced,

(i) the responsible issuer or any person or company acting on behalf of the responsible issuer to release the document, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the release of the document; and

(e) each expert where,

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the document includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the document was released by a person or company other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document. 2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 12 (1, 2).

Public oral statements by responsible issuer

(2) Where a person with actual, implied or apparent authority to speak on behalf of a responsible issuer makes a public oral statement that relates to the business or affairs of the responsible issuer and that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the public oral statement was made and the time when the misrepresentation contained in the public oral statement was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against,

(a) the responsible issuer;

(b) the person who made the public oral statement;

(c) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the making of the public oral statement;

(d) each influential person, and each director and officer of the influential person, who knowingly influenced,

(i) the person who made the public oral statement to make the public oral statement, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the making of the public oral statement; and

(e) each expert where,

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the person making the public oral statement includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the public oral statement.

Influential persons

(3) Where an influential person or a person or company with actual, implied or apparent authority to act or speak on behalf of the influential person releases a document or makes a public oral statement that relates to a responsible issuer and that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released or the public oral statement was made and the time when the misrepresentation contained in the document or public oral statement was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against,

(a) the responsible issuer, if a director or officer of the responsible issuer, or where the responsible issuer is an investment fund, the investment fund manager, authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

(b) the person who made the public oral statement;

(c) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

(d) the influential person;

(e) each director and officer of the influential person who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement; and

(f) each expert where,

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the document or public oral statement includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the document was released or the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document or public oral statement.

Failure to make timely disclosure

(4) Where a responsible issuer fails to make a timely disclosure, a person or company who acquires or disposes of the issuer’s security between the time when the material change was required to be disclosed in the manner required under this Act or the regulations and the subsequent disclosure of the material change has, without regard to whether the person or company relied on the responsible issuer having complied with its disclosure requirements, a right of action for damages against,

(a) the responsible issuer;

(b) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the failure to make timely disclosure; and

(c) each influential person, and each director and officer of an influential person, who knowingly influenced,

(i) the responsible issuer or any person or company acting on behalf of the responsible issuer in the failure to make timely disclosure, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the failure to make timely disclosure.

Multiple roles

(5) In an action under this section, a person who is a director or officer of an influential person is not liable in that capacity if the person is liable as a director or officer of the responsible issuer.

Multiple misrepresentations

(6) In an action under this section,

(a) multiple misrepresentations having common subject matter or content may, in the discretion of the court, be treated as a single misrepresentation; and

(b) multiple instances of failure to make timely disclosure of a material change or material changes concerning common subject matter may, in the discretion of the court, be treated as a single failure to make timely disclosure.

No implied or actual authority

(7) In an action under subsection (2) or (3), if the person who made the public oral statement had apparent authority, but not implied or actual authority, to speak on behalf of the issuer, no other person is liable with respect to any of the responsible issuer’s securities that were acquired or disposed of before that other person became, or should reasonably have become, aware of the misrepresentation.

Burden of proof and defences

Non-core documents and public oral statements

138.4 (1) In an action under section 138.3 in relation to a misrepresentation in a document that is not a core document, or a misrepresentation in a public oral statement, a person or company is not liable, subject to subsection (2), unless the plaintiff proves that the person or company,

(a) knew, at the time that the document was released or public oral statement was made, that the document or public oral statement contained the misrepresentation;

(b) at or before the time that the document was released or public oral statement was made, deliberately avoided acquiring knowledge that the document or public oral statement contained the misrepresentation; or

(c) was, through action or failure to act, guilty of gross misconduct in connection with the release of the document or the making of the public oral statement that contained the misrepresentation.

Same

(2) A plaintiff is not required to prove any of the matters set out in subsection (1) in an action under section 138.3 in relation to an expert.

Failure to make timely disclosure

(3) In an action under section 138.3 in relation to a failure to make timely disclosure, a person or company is not liable, subject to subsection (4), unless the plaintiff proves that the person or company,

(a) knew, at the time that the failure to make timely disclosure first occurred, of the change and that the change was a material change;

(b) at the time or before the failure to make timely disclosure first occurred, deliberately avoided acquiring knowledge of the change or that the change was a material change; or

(c) was, through action or failure to act, guilty of gross misconduct in connection with the failure to make timely disclosure.

Same

(4) A plaintiff is not required to prove any of the matters set out in subsection (3) in an action under section 138.3 in relation to,

(a) a responsible issuer;

(b) an officer of a responsible issuer;

(c) an investment fund manager; or

(d) an officer of an investment fund manager.

Knowledge of the misrepresentation or material change

(5) A person or company is not liable in an action under section 138.3 in relation to a misrepresentation or a failure to make timely disclosure if that person or company proves that the plaintiff acquired or disposed of the issuer’s security,

(a) with knowledge that the document or public oral statement contained a misrepresentation; or

(b) with knowledge of the material change.

Reasonable investigation

138.4 (6) A person or company is not liable in an action under section 138.3 in relation to,

(a) a misrepresentation if that person or company proves that,

(i) before the release of the document or the making of the public oral statement containing the misrepresentation, the person or company conducted or caused to be conducted a reasonable investigation, and

(ii) at the time of the release of the document or the making of the public oral statement, the person or company had no reasonable grounds to believe that the document or public oral statement contained the misrepresentation; or

(b) a failure to make timely disclosure if that person or company proves that,

(i) before the failure to make timely disclosure first occurred, the person or company conducted or caused to be conducted a reasonable investigation, and

(ii) the person or company had no reasonable grounds to believe that the failure to make timely disclosure would occur.

Factors to be considered by court

(7) In determining whether an investigation was reasonable under subsection (6), or whether any person or company is guilty of gross misconduct under subsection (1) or (3), the court shall consider all relevant circumstances, including,

(a) the nature of the responsible issuer;

(b) the knowledge, experience and function of the person or company;

(c) the office held, if the person was an officer;

(d) the presence or absence of another relationship with the responsible issuer, if the person was a director;

(e) the existence, if any, and the nature of any system designed to ensure that the responsible issuer meets its continuous disclosure obligations;

(f) the reasonableness of reliance by the person or company on the responsible issuer’s disclosure compliance system and on the responsible issuer’s officers, employees and others whose duties would in the ordinary course have given them knowledge of the relevant facts;

(g) the period within which disclosure was required to be made under the applicable law;

(h) in respect of a report, statement or opinion of an expert, any professional standards applicable to the expert;

(i) the extent to which the person or company knew, or should reasonably have known, the content and medium of dissemination of the document or public oral statement;

(j) in the case of a misrepresentation, the role and responsibility of the person or company in the preparation and release of the document or the making of the public oral statement containing the misrepresentation or the ascertaining of the facts contained in that document or public oral statement; and

(k) in the case of a failure to make timely disclosure, the role and responsibility of the person or company involved in a decision not to disclose the material change.

Damages

Assessment of damages

138.5 (1) Damages shall be assessed in favour of a person or company that acquired an issuer’s securities after the release of a document or the making of a public oral statement containing a misrepresentation or after a failure to make timely disclosure as follows:

Same

(2) Damages shall be assessed in favour of a person or company that disposed of securities after a document was released or a public oral statement made containing a misrepresentation or after a failure to make timely disclosure as follows:

Same

(3) Despite subsections (1) and (2), assessed damages shall not include any amount that the defendant proves is attributable to a change in the market price of securities that is unrelated to the misrepresentation or the failure to make timely.

Proportionate liability

138.6 (1) In an action under section 138.3, the court shall determine, in respect of each defendant found liable in the action, the defendant’s responsibility for the damages assessed in favour of all plaintiffs in the action, and each such defendant shall be liable, subject to the limits set out in subsection 138.7 (1), to the plaintiffs for only that portion of the aggregate amount of damages assessed in favour of the plaintiffs that corresponds to that defendant’s responsibility for the damages.

Same

(2) Despite subsection (1), where, in an action under section 138.3 in respect of a misrepresentation or a failure to make timely disclosure, a court determines that a particular defendant, other than the responsible issuer, authorized, permitted or acquiesced in the making of the misrepresentation or the failure to make timely disclosure while knowing it to be a misrepresentation or a failure to make timely disclosure, the whole amount of the damages assessed in the action may be recovered from that defendant.

Same

(3) Each defendant in respect of whom the court has made a determination under subsection (2) is jointly and severally liable with each other defendant in respect of whom the court has made a determination under subsection (2).

Same

(4) Any defendant against whom recovery is obtained under subsection (2) is entitled to claim contribution from any other defendant who is found liable in the action.

Limits on damages

138.7 (1) Despite section 138.5, the damages payable by a person or company in an action under section 138.3 is the lesser of,

(a) the aggregate damages assessed against the person or company in the action; and

(b) the liability limit for the person or company less the aggregate of all damages assessed after appeals, if any, against the person or company in all other actions brought under section 138.3, and under comparable legislation in other provinces or territories in Canada in respect of that misrepresentation or failure to make timely disclosure, and less any amount paid in settlement of any such actions.

Same

(2) Subsection (1) does not apply to a person or company, other than the responsible issuer, if the plaintiff proves that the person or company authorized, permitted or acquiesced in the making of the misrepresentation or the failure to make timely disclosure while knowing that it was a misrepresentation or a failure to make timely disclosure, or influenced the making of the misrepresentation or the failure to make timely disclosure while knowing that it was a misrepresentation or a failure to make timely disclosure.

Procedural Matters

Leave to proceed

138.8 (1) No action may be commenced under section 138.3 without leave of the court granted upon motion with notice to each defendant. The court shall grant leave only where it is satisfied that,

(a) the action is being brought in good faith; and

(b) there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.

Same

(2) Upon an application under this section, the plaintiff and each defendant shall serve and file one or more affidavits setting forth the material facts upon which each intends to rely.

Same

(3) The maker of such an affidavit may be examined on it in accordance with the rules of court.

Limitation period

138.14 (1) No action shall be commenced under section 138.3,

(a) in the case of misrepresentation in a document, later than the earlier of,

(i) three years after the date on which the document containing the misrepresentation was first released, and

(ii) six months after the issuance of a news release disclosing that leave has been granted to commence an action under section 138.3 or under comparable legislation in the other provinces or territories in Canada in respect of the same misrepresentation;

(b) in the case of a misrepresentation in a public oral statement, later than the earlier of,

(i) three years after the date on which the public oral statement containing the misrepresentation was made, and

(ii) six months after the issuance of a news release disclosing that leave has been granted to commence an action under section 138.3 or under comparable legislation in another province or territory of Canada in respect of the same misrepresentation; and

(c) in the case of a failure to make timely disclosure, later than the earlier of,

(i) three years after the date on which the requisite disclosure was required to be made, and

(ii) six months after the issuance of a news release disclosing that leave has been granted to commence an action under section 138.3 or under comparable legislation in another province or territory of Canada in respect of the same failure to make timely disclosure.

Suspension of limitation period

(2) A limitation period established by subsection (1) in respect of an action is suspended on the date a notice of motion for leave under section 138.8 is filed with the court and resumes running on the date,

(a) the court grants leave or dismisses the motion and,

(i) all appeals have been exhausted, or

(ii) the time for an appeal has expired without an appeal being filed; or

(b) the motion is abandoned or discontinued.