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The Final Chapter of the Danier Case

October-17-2007

Lawyer Neill May
Area Corporate Finance and Securities, Litigation

Summary

The release on Friday of the Supreme Court of Canada’s decision in Kerr v. Danier Leather Inc. closed  the book on the high profile securities case, much discussed and followed by investors, issuers and securities professionals across Canada. Though the litigation is done, the decision itself may well have enduring impact.

In particular:

  • in upholding the Ontario Court of Appeal’s determination that an issuer should not have civil liability  for misrepresentation for not providing updates to a prospectus which are not required under applicable securities laws, the Supreme Court provided clarity and direction for the conduct of public offering processes, and related disclosure issues; and
  • in requiring the (ultimately unsuccessful) class action plaintiff to bear the costs of the litigation, the Supreme Court decision may have a significant effect on the conduct of class action litigation, in which plaintiffs have often been insulated from cost awards.

The Danier decision also provides useful guidance as to the use of financial forecasts in  prospectuses, and as to the application of the “business judgment” rule to the statutory obligations of issuers and their executives.

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