In Middleton v. TELUS International (Cda) Inc., 2025 BCSC 1611, released on Aug. 22, Justice Kevin Loo held that the potential inefficiencies and wasted cost and work that may result from a combined hearing were outweighed by the need to achieve a timely resolution of the dispute.
“Relative timeliness and those efficiencies may be gained by avoiding two separate appeal processes,” the judge wrote.
The proposed class action alleged that Telus and several of its senior executives and directors misled investors about the expected profitability of its artificial intelligence services.
The plaintiff, Kayne Middleton, filed a proposed class action against the defendants, advancing a secondary market liability claim under section 140.3 of the Securities Act, a claim for shareholder oppression under the Business Corporations Act, and a claim for negligent misrepresentation.
Section 140.8 of Securities Act provides that no action may be commenced under s. 140.3 without leave.
The plaintiff filed a petition seeking leave under s. 140.8 concurrent with a notice of civil claim.
The defendants argued that the practice in B.C. is for leave to be determined in advance of certification.
Justice Loo noted, however, that the defendants had not proffered any evidence in support of this proposition.
He noted that the defendants had only pointed to one decision in which sequencing of leave petitions and certification motions has been considered and observed that one decision does not constitute a practice.
Justic Loo cited British Columbia v. The Jean Coutu Group (PJC) Inc., 2021 BCCA 219, in which the B.C. Court of Appeal set out factors to be considered in resolving sequencing issues in proposed class proceedings.
In Jean Coutu, the court noted that such factors include any delay by the plaintiff in proceeding to certification, the fair and efficient determination of the proceeding, and the extent to which a preliminary application may dispose of the whole proceeding or narrow the issues to be determined.
Justice Loo noted that the consideration that weighed most heavily in favour of the plaintiff’s position was the potential for delay arising from separate appeals.
The plaintiff cited Labourers’ Pension Fund of Central and Eastern Canada v. Sino-Forest Corporation, 2012 ONSC 1924, in which the Ontario Superior Court ordered a combined hearing for a leave application under a securities statute and a certification motion.
In Sino-Forest, the Ontario Superior Court raised concerns about delays that would be caused by separate appeals if the leave and certification motions were scheduled sequentially.
Justice Loo found that such concerns were also relevant in the case at bar.
The judge noted that the potential that the outcome of the leave petition may significantly narrow or change the nature of the certification hearing weighed in favour of the defendants’ position.
The defendants submitted that the determination of the leave petitions would have a substantial impact on any consideration of the procedural question of certification, including the identification of any common issues to be tried in a class proceeding.
The judge found that neither a combined hearing nor separate hearings was “a perfect choice.”
“If a combined hearing is ordered, the parties will have to prepare materials and make arguments contemplating different alternative scenarios, depending on whether leave is granted and in respect of what claims,” the judge wrote.
He added that if the leave application is refused, much of the work on the certification motion would have been incurred unnecessarily.
However, he also noted that hearing the leave petition and certification motion separately gives rise to the concerns regarding separate appeals and long delays.
The court found that in the circumstances of the case, the inefficiencies and wasted cost and work that may result from a joint hearing were outweighed by the need to achieve a timely resolution of the dispute and the efficiencies to be achieved by a combined hearing.
The judge observed that those efficiencies may be gained by avoiding two separate appeal processes, by the overlap between the submissions and evidence during the combined hearing, as well as by avoiding “two separate hearings, potentially years apart from each other.”
Justice Loo ordered that the leave petition and the certification motion be heard and determined in a combined hearing.
Counsel for the parties were not immediately available for comment.
Counsel for the plaintiff were Sam Jaworski and Charlotte Harman of Slater Vecchio LLP.
Counsel for the defendants were Katherine Kay and Maryam Shahid of Stikeman Elliott LLP.
If you have any information, story ideas, or news tips for Law360 Canada on business-related law and litigation, including class actions, please contact Karunjit Singh at karunjit.singh@lexisnexis.ca or 905-415-5859.