Court File and Parties

Court File No.: CV-20-644524-00CP Date: 2023-09-26 Superior Court of Justice - Ontario

Re: Timothy Kwong, Plaintiff And: iAnthus Capital Holdings, Inc., Hadley Ford and Julius Kalcevich, Defendants

Before: J.T. Akbarali J.

Counsel: Manjit Singh, for the plaintiff Jeffrey Levine and Stephen Brown-Okruhlik, for the defendants iAnthus Capital Holdings, Inc. and Julius Kalcevich Corey Groper, for the defendant Hadley Ford Andrew Morganti and Josh Perell, for the proposed intervener Michael Bordeleau-Tassile

Heard: September 26, 2023

Proceeding under the Class Proceedings Act, 1992

Case Management Endorsement

Overview

[1] This putative class action has settled, subject to court approval. The certification motion and settlement approval motion have not yet been scheduled. In this context, counsel for the proposed intervener seeks a timetable to bring a motion to intervene and for their client to be appointed the representative plaintiff. The parties to the action seek a timetable for the certification and settlement approval motions, and jointly argue that any intervention motion ought not to be scheduled unless and until settlement approval is not granted.

Brief Background

[2] The history of the proceeding has some relevance to the proposed intervener’s motion. Initially, this action was commenced on July 23, 2020 with Blue Sky Realty Corporation as proposed representative plaintiff. At that time, Sajjad Nenatollahi, counsel with Morganti & Co., the firm of which proposed intervener’s counsel was then principal, was acting for Blue Sky Realty Corporation. Carriage of this action subsequently moved to Kim Spencer McPhee Barristers P.C. when Mr. Morganti moved to that firm, sometime before July 2021.

[3] Separately, a second putative class action was issued in September 2020, seeking similar relief. The representative plaintiff in that case, Sean Zaboroski, was represented by Mr. Singh, counsel to the representative plaintiff in this action.

[4] On an unopposed motion, in accordance with an agreement reached between Mr. Singh and Mr. Morganti, on September 27, 2021, I ordered that Mr. Kwong replace Blue Sky Realty Corporation as the representative plaintiff in this action, that the Zaboroski claim be discontinued, and that Mr. Singh have carriage of this action.

[5] In late June 2023, counsel in these proceedings wrote to me to advise that the matter had settled, subject to court approval. Plaintiff’s counsel indicates that he advised Mr. Morganti about the settlement around the same time.

[6] About a month later, Mr. Morganti’s office wrote to me to request dates for a motion. It took several tries to get information from the paralegal from Mr. Morganti’s office about the intended motion. Eventually, I was advised that the intended motion was for an intervention order and an order appointing the proposed intervener as the representative plaintiff. The basis of the motion was described to me as: “because it has been over 12 months since anything has happened” in the proceeding. Proposed intervener’s counsel did not advise me at that time that they were aware of the settlement, and have not explained why they failed to do so despite my asking the question at the case conference. Clearly, successful settlement negotiations are a thing that has happened in the proceeding.

[7] The question for me to determine on this case management conference is whether the intervention motion ought to be scheduled first, in parallel to, or after the proposed certification and settlement approval hearings.

[8] I note that the proposed intervener relies on ss. 12 and 14 of the Class Proceedings Act, 1992, S.O. 1992, c. 6 in its motion to intervene and be appointed representative plaintiff. Section 12 allows the court to make any order it considers appropriate respecting the conduct of a proceeding under the Act to ensure its fair and expeditious determination, and to impose such terms as it considers appropriate. Section 14 provides that the court may, at any time in a proceeding, permit one or more class members to participate in the proceeding, to ensure the fair and adequate representation of the interests of the class or any subclass, or for any other appropriate reason.

[9] The proposed intervener makes several arguments as to why it is appropriate to permit its motion to intervene and be appointed representative plaintiff ought to be heard first.

[10] First, counsel argues that the proposed intervener has a primary market claim and a secondary market claim, while the class proceeding is restricted to the secondary market claims. If this is the case, the intervener is free to bring his own proceeding to advance his primary market claim. Moreover, if the class proceeding is limited to secondary market claims, at least in part that is because that is how counsel for the proposed intervener originally drafted the claim that has now been settled (subject to settlement approval).

[11] Second, counsel argues that the parties have not disclosed details of the settlement to the proposed intervener, who has substantial losses as a result of the defendants’ alleged wrongdoing. That may be, but I see nothing about proceeding to a certification motion and settlement approval hearing that affects the proposed intervener’s rights. If the proposed intervener concludes that he would prefer to proceed with his own action, he can opt out. If he wants to remain part of the class and object to the settlement, he can do that too. If he successfully objects to the settlement, he can bring his motion to intervene and to replace the representative plaintiff.

[12] Third, the basis disclosed to me in written correspondence for the motion to intervene is, as I have noted, that nothing has happened in the proceeding. That is plainly incorrect. No other basis for the intervention motion has been explained to me, and I see no other basis for it that could not be raised in the context of objecting to the settlement, if that is what the proposed intervener chooses to do.

[13] The proposed intervener complains that he has not received details about the settlement. As a member of the class, he will be entitled to details as part of the notice plan and will have an appropriate opportunity to object if he wishes.

[14] I accept plaintiff’s counsel’s submission that the court ought not to encourage counsel to seek to bring motions to intervene, and replace the representative plaintiff (and presumably class counsel) once they have wind that a settlement has occurred. Defendants ought to be free to negotiate with class counsel without worrying that new class counsel will surface at the last minute.

[15] Nor is it appropriate, especially after an unopposed order was made granting Mr. Singh carriage of the proceeding, to permit a motion that, in effect, seeks to collaterally attack the carriage order to which Mr. Morganti agreed in discussions with Mr. Singh.

[16] I have thus determined that the certification motion and settlement approval motion shall be heard first. If settlement approval is not granted, the intervention motion can then be scheduled.

[17] I set the following schedule: a. The certification motion shall be heard in writing on November 14, 2023; b. The settlement approval hearing shall be heard via zoom on February 20, 2024, for one half day.

J.T. Akbarali J. Date: September 26, 2023