Executive Summary: Key Legal and Evidentiary Issues

• The plaintiff sought to advance a class action based on securities law, corporate law, and common law misrepresentation.

• A statutory requirement under the Securities Act mandated court leave before the claim could proceed.

• The main procedural dispute was whether the leave application and class certification motion should be heard together or separately.

• Defendants argued for sequential hearings, citing legal nullity without prior leave and risk of inefficiency.

• Plaintiff emphasized risks of delay and duplication if the matters were heard in separate stages.

• The court prioritized judicial efficiency and access to justice, ruling in favor of a combined hearing.

Facts and outcome of the case

Background and nature of the claims

The plaintiff, Kayne Michael Middleton, filed a proposed class action on December 12, 2024, against TELUS International (Cda) Inc. and multiple individual defendants associated with the company. The action alleges three causes of action: (1) secondary market liability under section 140.3 of the Securities Act (British Columbia), (2) breach of statutory duties under section 227 of the Business Corporations Act, and (3) negligent misrepresentation at common law. The claims relate to representations made in core and non-core disclosure documents and public oral statements issued by TELUS International.

Under section 140.8 of the Securities Act, the plaintiff was required to obtain leave of the court before commencing the secondary market liability claim. A leave application was therefore filed concurrently with the notice of civil claim.

Procedural issue before the court

The sole issue addressed in this judgment was whether the leave application under the Securities Act and the motion for certification of the class proceeding should be heard together in a single hearing or in two separate stages. The plaintiff requested a combined hearing to avoid duplication and delay, while the defendants opposed this, arguing that no action could be certified before leave was granted and that combining the hearings would be inefficient and burdensome.

Arguments of the parties

The defendants relied on statutory interpretation and past case law, arguing that without leave, the secondary market claim was a nullity and could not be part of a certification hearing. They emphasized potential inefficiencies and the evidentiary burden of preparing for both matters simultaneously. In contrast, the plaintiff relied on the approach taken in Ontario and warned that sequential hearings could lead to separate appeals, increased costs, and multi-year delays, undermining access to justice and judicial economy.

Court's analysis and ruling

The court assessed the arguments through the lens of the Jean Coutu factors—considerations commonly used to decide sequencing in class proceedings. It acknowledged that combining the hearings could cause some inefficiencies, particularly if leave were ultimately denied. However, the court found that the risk of delay from multiple, potentially lengthy appeal processes outweighed these concerns.

Drawing on Ontario precedents such as Sino-Forest and Browne, the court agreed that a combined hearing would better serve the goals of access to justice, judicial efficiency, and fairness. It noted that overlapping evidence and legal arguments supported combining the proceedings, and that the procedural history of other cases, such as Tietz, illustrated the downside of separate hearings.

Final outcome

The court ruled in favor of the plaintiff. It ordered that the leave petition and the certification motion be heard together in a combined hearing. No damages were awarded at this stage, as the ruling pertained solely to a procedural matter. Costs of the application were left to be determined later in the course of proceedings, as they were ordered to be “in the cause.”