Why Is It So Hard To Sue Trustees Of A REIT?

Owners of units in a REIT or income trust, if they think about it all, think of themselves as being like shareholders of a public corporation. This is so even though REITs and income trusts generally say in their public disclosure that they are not like corporations and corporate remedies may not be available to unitholders. A recent court decision, Locking v. McCowan¹, highlights the truth of this.

At issue in the Locking case was whether certain claims constituted viable causes of action which could form the basis of a class action against the CEO and trustees of Partners REIT (as well as certain other parties). A further certification motion is scheduled for October 2015 in relation to those claims determined to be viable. The discussion below focuses on two of the potential causes of action considered.