Supreme Court Of Canada Denies Authorization In First Quebec Secondary Market Securities Class Action

On April 17, 2015, the Supreme Court of Canada released its decision in Theratechnologies inc. v. 121851 Canada inc., the first case to consider the authorization of a secondary market class action under the provisions of the Quebec Securities Act that came into force in 2007. These provisions created a new statutory cause of action that enabled investors to bring claims against reporting issuers who breach their obligations to disclose material facts and changes; however, investors must obtain court authorization to commence such claims.

In a unanimous judgment, the Supreme Court held that the threshold for authorization to commence a secondary market action under the Quebec legislation requires showing "a reasonable or realistic chance that the action will succeed." The Court allowed the appeal, concluding that the evidence did not credibly point to any material change that could have triggered timely disclosure obligations for the reporting issuer; accordingly,