B.C. Supreme Court Takes First Look At New Secondary Market Liability Provisions

The Issue

How will the courts interpret the test for leave in relation to the new secondary market liability provisions of the B.C. Securities Act?

The Case

On October 21, 2011, the Supreme Court of British Columbia released its decision in Round v MacDonald, Dettwiler and Associates Ltd.¹ The Round decision is the first in British Columbia to examine the secondary market liability leave provision.

The Applicant in Round argued that, in order to meet the threshold required for leave, all she needed to do was demonstrate that her proposed action was not an abuse of process, not purely speculative, and that some evidentiary basis of wrongdoing existed. The Applicant also argued that the fact that she obtained her shares from treasury and not on the secondary market was not fatal to her application. Mr. Justice Harris of the Supreme Court disagreed, dismissing the case of the would-be plaintiff and refusing to grant leave to bring an action.