CITATION: Abdula v. Canadian Solar, 2011 ONSC 5105 COURT FILE NO.: C-710-10

DATE: 2011-08-29

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Tajdin Abdula, Plaintiff

AND:

Canadian Solar Inc., Shawn Xiaohua Qu and Arthur Chen, Defendants

BEFORE: The Honourable Mr. Justice G. E. Taylor

COUNSEL: A. D. Lascaris and A. O’Brien, Counsel, for the Plaintiff

B. Finlay, Q.C., M. Statham and R. Ogden, Counsel, for the Defenadats

HEARD: May 10, 11, June 22 and 23, 2011

ENDORSEMENT

RULING RE JURISDICTION Introduction

[1] The plaintiff has commenced this action against the corporate defendant and two of its

officers and directors seeking:

a) damages for negligent misrepresentation;

b) leave to assert a statutory cause of action pursuant to section 138.3 of the Ontario Securities Act; and,

c) an oppression remedy pursuant to the Canada Business Corporations Act.

[2] The defendants have been served with the Statement of Claim but have not yet delivered

a Statement of Defence. The defendants have brought this motion seeking a dismissal of the

claims for negligent misrepresentation and the statutory cause of action based on the alleged lack

of jurisdiction of the Ontario Superior Court to entertain those claims. The defendants, in this

motion, are not seeking a dismissal of the plaintiff's claim for an oppression remedy.

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[3] The plaintiff has commenced this action in which he seeks to represent a class of persons

who suffered similar losses to the losses that he alleges he sustained. The parties are agreed,

however, that for the purpose of the present motion, the action should be considered as a claim

by the plaintiff in his personal capacity and not as a plaintiff seeking to represent a number of

persons in a class action.

Facts

[4] The plaintiff resides in Markham, Ontario. Canadian Solar Inc. is incorporated under the

Canada Business Corporations Act. Originally, Canadian Solar was incorporated as an Ontario

company but it became a federally incorporated company effective June 1, 2006. Canadian Solar

has an office in Kitchener, Ontario which it describes as its "principal executive offices".

However, Canadian Solar's principal place of business is in the People's Republic of China where

the majority of its senior executive officers reside and where the majority of its manufacturing

operations occur. Shawn Xiaohua Qu is the Chief Executive Officer and Chairman of the Board

of Directors of Canadian Solar. He does not reside in Canada and did not reside in Canada

during the period when the alleged misrepresentations were said to have been made. Arthur

Chien is the Chief Financial Officer and a member of the Board of Directors of Canadian Solar.

He also does not reside in Canada and did not reside in Canada during the period when the

alleged misrepresentations were said to have been made.

[5] The plaintiff purchased a total of 2000 shares of Canadian Solar between January 21 and

May 4, 2010. These purchases were conducted by the plaintiff logging into an account with

BMO InvestorLine using his home computer. The shares of Canadian Solar are traded only on

the NASDAQ Exchange. Each of the plaintiff's purchases resulted in the issue of Confirmation

Notice by BMO InvestorLine from an office in Toronto. Each of the Confirmation Notices

contained the following wording: AS AGENTS, WE CONFIRM THE FOLLOWING BUY FOR

YOUR ACCOUNT OVER THE COUNTER– U.S.A.".

[6] The Statement of Claim alleges that misrepresentations were contained in press releases

issued on May 26, 2009, August 6, 2009, September 25, 2009, November 17, 2009 and March 3,

2010. Each of these press releases indicates that they were issued in Toronto or Ontario. Each

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of these press releases was also filed with the United States Securities and Exchange

Commission as required as a result of the shares of Canadian Solar being traded on the

NASDAQ Exchange. The press releases were followed by conference calls in which the

individual defendants participated. They were physically present in the People's Republic of

China at the time of the conference calls. Canadian Solar held its annual meeting in Toronto on

June 29, 2009. One of the purposes of that meeting that was to receive the audited financial

statements for the fiscal year ended December 31, 2008. The Statement of Claim alleges that the

2008 Fiscal Year Annual Report contained misrepresentations. The Annual Report was also

filed with the Securities and Exchange Commission. The Statement of Claim also alleges that on

October 19, 2009 Canadian Solar issued a Prospectus Supplement which contained

misrepresentations. The Prospectus Supplement was also filed with the Securities and Exchange

Commission.

General Observation

[7] It is appropriate at the outset for me to observe that this motion was extensively argued

by both parties over number of days. The thrust of the arguments made by the defendants relate

to the fact that the shares of Canadian Solar are traded exclusively on the NASDAQ Exchange.

As a corollary of that submission, the defendants approach this motion on the basis that the

disclosure obligations of Canadian Solar were governed by the requirements of the NASDAQ. I

take a different view.

[8] While it is clear from reading the Statement of Claim that the plaintiff relies on the

content of filings on EDGAR, which is the acronym for the Electronic Data Gathering Analysis

and Retrieval system operated by the Securities and Exchange Commission in the United States,

that is not the sole basis on which the action is framed. The Statement of Claim alleges

misrepresentations in press releases and financial documents generally. At paragraph 16 of the

Statement of Claim it is alleged that, "Canadian Solar was required, at all material times, to make

timely disclosure of all material information". This is a general pleading not limited to filings on

EDGAR.

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[9] In my view, it is significant that this is a motion to dismiss the plaintiff’s claim for a lack

of jurisdiction before a Statement of Defence has been delivered. This is not a motion for

certification nor a motion for leave to proceed with the statutory cause of action.

Claim for Negligent Misrepresentation

The Position of the Defendants

[10] The defendants concede that Canadian Solar is closely connected to Ontario but submit

that there is no connection between Ontario and the plaintiff’s claim. The defendants also

concede that Canadian Solar and the individual defendants stand together on this issue. It is not

suggested, even if it is found that this court has jurisdiction over the negligent misrepresentation

claim against Canadian Solar, there should nevertheless be a finding that the court does not have

jurisdiction with respect to the claim against the individual defendants by reason of their non-

residency in Ontario.

Analysis

[11] Incorporated Broadcasters Limited v. Canwest Global Communications Corp., [2003]

O.J. No. 560 (Ont. C.A.) was a case in which the plaintiffs brought an action in Ontario against

CanWest Global Communications Corp., a federally incorporated company with its head office

in Winnipeg, Global Television Network Inc., a federally incorporated company with its

registered office in Ontario and two wholly owned subsidiaries of Global Television which were

both federal corporations. The plaintiffs also sued Israel Asper who directly or indirectly was a

shareholder, officer and director of the defendants and who resided in Manitoba. The motion

judge found that there was no real and substantial connection between the subject matter of the

plaintiffs’ claims and Ontario and therefore concluded that the court in Ontario did not have

jurisdiction. Speaking for the Court, Rosenberg J.A. stated at paragraph 29 and 30:

In my view, the motions judge erred in applying the real and substantial connection test to determine jurisdiction in this case, except jurisdiction over Mr. Asper. The real and substantial connection test applies where a court seeks to assume jurisdiction over defendants that have no presence in the jurisdiction. The real and substantial connection test serves to extend jurisdiction of the domestic courts over out-of-province defendants. It is not a pre-requisite for the assertion of jurisdiction over defendants, even out-of-province defendants, that are present in

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the jurisdiction. That test is concerned with what Sharpe J.A. referred to in Muscutt v. Courcelles (2002), 213 D.L.R. (4th) 577 (Ont. C.A.) as "assumed jurisdiction" not "presence-based jurisdiction". In Muscutt, Sharpe J.A. speaking for the court at para. 19 explained that there are "three ways in which jurisdiction may be asserted against an out-of-province defendant: (1) presence-based jurisdiction; (2) consent-based jurisdiction; and (3) assumed jurisdiction. Presence-based jurisdiction permits jurisdiction over an extra-provincial defendant who is physically present within the territory of the court."

Earlier decisions of the Supreme Court concerning jurisdiction also indicate that the real and substantial connection test is limited to cases where the courts seek to assert jurisdiction over out-of-province defendants. In Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 the court considered when a court in one province should recognize the judgment of another province. The court held that provinces should recognize each other's judgments when it was appropriate for the court that gave the judgment to have assumed jurisdiction. At pages 1103-4 La Forest J. explained the traditional limits of jurisdiction. As he said, the question of appropriate jurisdiction "poses no difficulty where the court has acted on the basis of some ground traditionally accepted by courts as permitting the recognition and enforcement of foreign judgments - in the case of judgments in personam where the defendant was within the jurisdiction at the time of the action or when he submitted to its judgment whether by agreement or attornment". Where the defendant is within the jurisdiction, the court has jurisdiction over the person. The difficulty arises where the defendant is outside the jurisdiction of the court. The question then is to what extent a court of one province may properly exercise jurisdiction over a defendant in another province?" In Morguard, La Forest J. answered that question by adopting the real and substantial test for assuming jurisdiction over extra-provincial defendants.

[12] In the subsequent case of Beals v. Saldanha, [2003] 3 S.C.R. 416, Major J, speaking for

the majority of the Supreme Court of Canada stated at paragraph 37:

There are conditions to be met before a domestic court will enforce a judgment from a foreign jurisdiction. The enforcing court, in this case Ontario, must determine whether the foreign court had a real and substantial connection to the action or the parties, at least to the level established in Morguard, supra. A real and substantial connection is the overriding factor in the determination of jurisdiction. The presence of more of the traditional indicia of jurisdiction (attornment, agreement to submit, residence and presence in the foreign jurisdiction) will serve to bolster the real and substantial connection to the action or parties. Although such a connection is an important factor, parties to an action continue to be free to select or accept the jurisdiction in which their dispute is to be resolved by attorning or agreeing to the jurisdiction of a foreign court. [Emphasis added]

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[13] In Newton v. Larco Hospitality Management Inc., [2004] O.J. No. 1408, Brennan J. of

the Ontario Superior Court expressed concern about whether the mere presence of a defendant in

Ontario was sufficient, in light of Beals, to confer jurisdiction on an Ontario court. He went on

to conclude however that on either test, jurisdiction had been established.

[14] The decision of the Brennan J. in Newton was appealed the Court of Appeal. The appeal

was dismissed. Although the Court of Appeal did not refer to CanWest it did state at paragraph

3:

The cause of action raised by the respondent (which will have to be adjudicated at trial) is breach of a contract alleged to be formed in Ontario. The respondent resided in Ontario when the claim was issued and intends to return here. The appellant is present here. That is more than enough to constitute a real and substantial connection with Ontario.

[15] In Gleeson v. Brascan Corp., [2005] O.J. No. 6254, Herman J., of the Ontario Superior

Court, relying on the decision of the Brennan J. in Newton held that the presence of a defendant

in a jurisdiction does not alone confer jurisdiction. Rather, it bolsters the real and substantial

connection to the action or parties. She held that even where the defendant is present in the

jurisdiction, the "real and substantial connection" test must be met (paragraph 21).

[16] Conversely, Hambly J., in Straus v. Decaire, [2007] O.J. No. 1660, applied CanWest to

come to the conclusion that the Ontario Superior Court had jurisdiction on the basis that the

defendants had a presence in Ontario. Hambly J. did not refer to the decisions in Newton or

Gleeson.

[17] In Momentous.ca Corp. v. Canadian American Assn. of Professional Baseball Ltd.,

[2010] O.J. No. 4595, the Ontario Court of Appeal stated at paragraph 35:

Questions about the jurisdiction of an Ontario court over a claim typically raise two separate issues. The first issue is whether an Ontario court has or can assume jurisdiction. Attornment is relevant to this issue. An Ontario court has jurisdiction if the defendant consents to its jurisdiction or is present in Ontario, and can assume jurisdiction on being satisfied of "a real and substantial connection" to Ontario: see Muscutt v. Courcelles (2002), 60 O.R. (3d) 20 (C.A.), at para. 19. [Emphasis added]

The above passage from Momentous.ca is consistent with the approach taken in CanWest.

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[18] The more recent decision of the Ontario Court of Appeal in Van Breda v. Village Resorts

Ltd. (2010), 98 O.R. (3d) 721 dealt with the issue of the jurisdiction of the court in Ontario over

defendants who were not resident in and did not carry on business in Ontario. At paragraph 64,

the court stated:

The real and substantial connection test remains the basic governing principle for the assertion of jurisdiction against parties who have not submitted or agreed to the jurisdiction and who do not reside within the jurisdiction.

[19] The defendants submit that as result of Beals, the only test currently available to

determine the issue of jurisdiction is the real and substantial connection test. I disagree. Beals

dealt with a request by a foreign litigant to enforce a foreign judgment against an Ontario

resident. It was not dealing with a situation, like the present case, and like CanWest, and

Momentous.ca in which an Ontario resident sought to sue an entity with connections to another

jurisdiction but which also carried on business in Ontario. The Court of Appeal in CanWest and

Momentous.ca makes it clear that the real and substantial connection test has no application to

defendants who have a presence in the jurisdiction.

[20] The Court of Appeal decision in CanWest was released in February 2003. Leave to

appeal to the Supreme Court of Canada was denied on December 11, 2003. The Supreme Court

of Canada released its decision in Beals on December 18, 2003 without reference to the Court of

Appeal decision in CanWest. In my view, Beals does not effectively overturn or modify the

principle enunciated in CanWest because Beals was dealing with a different factual situation than

in CanWest. I therefore find that CanWest remains the binding authority.

[21] Canadian Solar is a federally incorporated company with executive offices in Kitchener

and which carries on business in Ontario. It has held its annual meeting in Ontario. The press

releases which the plaintiff alleges contained misrepresentations were issued in Ontario. As the

defendants concede in their Factum, "Canadian Solar has Canada written all over it".

[22] Accordingly, I find it unnecessary to analyze issues such as where the alleged

misrepresentation was made or received or where reliance on the alleged misrepresentation

occurred. Canadian Solar has significant connections to Ontario. Therefore, as stated by

Rosenberg J.A. in CanWest "Where the defendant is within the jurisdiction, the court has

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jurisdiction over the person." On this basis I find that this court has jurisdiction over the claim

for negligent misrepresentation.

Claim Based on the Statutory Cause of Action

The Position of the Defendants

[23] The defendants submit the purpose of the statutory cause of action contained in section

138.3 of the Ontario Securities Act is to ensure proper compliance with the continuous disclosure

obligations imposed upon a corporation by the Ontario Securities Act. The defendants submit

that those obligations do not apply to companies whose shares are traded only on the NASDAQ

Exchange. The defendants say that because Canadian Solar is not, and never has been, subject to

the continuous disclosure regime of the Ontario Securities Act the Ontario Superior Court has no

jurisdiction to entertain this claim.

Analysis

[24] Section 138.3 (1) of the Ontario Securities Act reads as follows:

Where a responsible issuer or a person or company with actual, implied or apparent authority to act on behalf of a responsible issuer releases a document that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released and the time when the misrepresentation contained in the document was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against,

a) the responsible issuer;

b) each director of the responsible issuer at the time the document was released;

c) each officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document;...

Subsection (2), in similar language, imposes liability on a representative of a responsible issuer

for misrepresentations contained in an oral statement.

[25] "Responsible issuer" is defined in section 138.1 of the Ontario Securities Act as follows:

“responsible issuer” means,

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a) a reporting issuer, or

b) any other issuer with a real and substantial connection to Ontario, any securities of which are publicly traded;

[26] The term "reporting issuer" is defined in section 1 of the Ontario Securities Act. The

plaintiff does not suggest that Canadian Solar was a reporting issuer.

[27] At the heart of this issue is the definition of "responsible issuer" in section 138.3 of the

Ontario Securities Act.

[28] In Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559 the Supreme Court of

Canada approved of the following approach to statutory interpretation as formulated by

Driedger:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

[29] On the motion, the defendants filed a comprehensive Legislative History Brief dealing

with the genesis of section 138.3 of the Ontario Securities Act. A summary of the legislative

history of the section can be found in Silver v. IMAX Corp. [2009] O.J. No. 5573 beginning at

paragraph 223 and continuing through until paragraph 238. This decision dealt with the leave

application to permit plaintiff to proceed with its claim based on the statutory cause of action.

[30] As explained in Silver (the leave motion), one of the early developments was the

publishing of report of the Toronto Stock Exchange Committee on Corporate Disclosure in

March 1997 under the chairmanship of Thomas I. A. Allen, Q.C. The Allen Committee report

at chapter 6 section 25 recommended that issuers, directors of issuers, certain officers of issuers

and other persons related to issuers be liable for continuous disclosure pursuant to the statutory

cause of action. In its Proposed Draft Legislation, the Allen Committee proposed that liability be

imposed on reporting issuers, directors of reporting issuers, certain officers of reporting issuers

and other persons related to reporting issuers.

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[31] In November 2000, The Canadian Securities Administrators (CSA) published draft

legislation which was based at least partially on the Allen Committee report. The legislative

wording proposed by the CSA included a definition for "responsible issuer" which is almost

identical to the definition of "responsible issuer" in the current section 138.3 of the Ontario

Securities Act. The CSA report also included a section containing comments to its 1998 draft

legislation and its responses to those comments. One of the comments by the Canadian Bankers

Association was to include a specific exemption for mutual funds from the definition of

"responsible issuer". The CSA's response was that it, "intended no automatic exemption for

mutual funds or any other type of issuer." [Emphasis added]

[32] In October, 2002, Bill 198 was introduced in the the Ontario Legislature which contained

proposed amendments to the Ontario Securities Act including civil liability for secondary market

disclosure. That Bill contained a definition of "responsible issuer" as contained in the CSA draft

legislation as follows:

“responsible issuer” means,

a) a reporting issuer, or

b) any other issuer with a substantial connection to Ontario, any securities of which are publicly traded;

Bill 198 was never proclaimed.

[33] In December, 2003, the CSA released in draft form a proposal for a Uniform Securities

Act. The purpose behind the draft Uniform Securities Act was to develop uniform legislation

that would apply in each province in Canada. In the draft Uniform Securities Act, the term

"responsible issuer" was defined as follows:

“responsible issuer” means,

a) a reporting issuer or a reporting issuer under extra provincial securities laws, or

b) any other issuer with a real and substantial connection to [insert local jurisdiction] whose securities are publicly traded;

[34] Footnote 29 to the CSA commentary which accompanied the release of the draft Uniform

Securities Act reads as follows:

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The definition of "responsible issuer" in Bill 198 differs from that proposed in the USA. Bill 198 defines "responsible issuer" to mean a reporting issuer or any other issuer with a real and substantial connection to Ontario, any securities of which are publicly traded. Part 9 of the USA defines "responsible issuer" to mean a reporting issuer in that particular jurisdiction or any other jurisdiction of Canada. This departure from Bill 198 wording ensures that security holders in a province where the issuer is not a reporting issuer will have the same rights as security holders in jurisdictions where the issuer is a reporting issuer. Ontario intends to maintain the Bill 198 definition of "responsible issuer". In the OSC’s view, the Bill 198 definition of "responsible issuer" is sufficiently broad to provide a right of action against an issuer who is not a reporting issuer in the investor’s resident province.

[35] In November 2004, Bill 149 was introduced in the Ontario Legislature. That Bill

introduced the definition of "responsible issuer" as it appears in the Ontario Securities Act today.

The only difference in the wording as between Bill 198 and the present definition is that the

words "real and" appear before the word "substantial".

[36] As I appreciate this aspect of the submission on behalf of Canadian Solar, the central

theme is that the plaintiff seeks to have the statutory civil liability provisions for secondary

market disclosure which are contained in the Ontario Securities Act applied to statements

contained in filings required pursuant to the requirements of the NASDAQ. Although the

Statement of Claim makes extensive reference to filings with EDGAR, that is not the sole basis

of the plaintiff’s claim. The plaintiff also claims that misrepresentations were made in press

releases, financial statements and telephone conference calls.

[37] I have reviewed the Legislative History Brief dealing with the genesis of the definition of

"responsible issuer" contained in the Ontario Securities Act. I have been unable to find any

specific reference showing an intent to restrict the definition of "responsible issuer" to companies

whose shares are traded only on other Canadian exchanges. In my view the history of the

legislation indicates to the contrary.

[38] The commentary by the CSA when it first issued its draft legislation indicates that the

definition of "responsible issuer" is meant to include "any other type of issuer". I take into

consideration that this comment was made in response to a suggestion that there be an exemption

for mutual funds but it is an indication that no limitation was intended.

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[39] Mr. Finlay, counsel for Canadian Solar, submits that from the definition of "responsible

issuer" contained in the draft Uniform Securities Act, it is clear that part (a) of the definition is

meant to apply to provinces which pass the Uniform Securities Act and that part (b) targets

companies whose shares are traded on another Canadian exchange in a province that does not

adopt the Uniform Securities Act. In my view, if that were the intent, part (b) of the definition

would have included words to the effect "whose shares are traded on any other exchange in

Canada" at the end of the definition. In addition, Mr. Finlay submits that in part (a) of the

definition, "extra provincial securities laws" is a defined term in the draft Uniform Securities

Act. He therefore says that the second part of the definition must apply to those jurisdictions that

do not adopt the Uniform Securities Act. In my view, the first part of the definition of

"responsible issuer" in the draft Uniform Securities Act is broad enough to apply to reporting

issuers in Canadian jurisdictions that do not adopt the Uniform Securities Act. I therefore

conclude that the second part of the definition must apply to other companies.

[40] Even if Mr. Finlay's submission is correct and the drafters of the Uniform Securities Act

intended that the statutory cause of action for misrepresentations made in the course of secondary

market disclosure was only meant to apply to companies whose shares are traded on Canadian

stock exchanges, it is clear that the Ontario Legislature chose a different definition of

"responsible issuer" than that contained in the draft Uniform Securities Act. It seems to me that

the intent of the Ontario Securities Commission is expressed in the last sentence of footnote 29

of the CSA commentary to the draft Uniform Securities Act which says that the Ontario

definition "is sufficiently broad to provide a right of action against an issuer who is not a

reporting issuer in the investor’s resident province". I do not interpret this statement as being

restricted to companies whose shares are traded on another Canadian exchange.

[41] The thrust of the defendants’submission is that Canadian Solar’s disclosure obligations

arise only in New York State as result of its shares only being traded on the NASDAQ.

However, a company which chooses to be incorporated in Canada, have its principal office in

Ontario and carry on business in Ontario must also expect to be required comply with Canadian

and Ontario laws. The disclosure obligation on a company whose shares are publicly traded is

not restricted to filings with a stock exchange. The disclosure obligations apply to any material

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misrepresentation. Therefore, it should come as no surprise to Canadian Solar that it is

potentially subject to the Ontario Securities Act for misrepresentations that it makes in its public

disclosure in Ontario.

[42] As the Supreme Court of Canada in Tolofson v. Jensen, [1994] 3 S.C.R. 1022 stated at

page 1050:

Ordinarily people expect their activities to be governed by the law of the place where they happen to be and expect that concomitant legal benefits and responsibilities will be defined accordingly.

[43] The defendants place special emphasis on the Supreme Court of Canada's decision in

Unifund Assurance Co. v. Insurance Corp. of British Columbia, [2003] 2 S.C.R. 63. The issue

in Unifund was whether the provisions of the Ontario Insurance Act applied to the Insurance

Corporation of British Columbia in respect of a motor vehicle accident that occurred in British

Columbia involving a British Columbia defendant and Ontario plaintiffs. Unifund involved an

attempt by the plaintiff to have Ontario law apply to a British Columbia defendant arising out of

a motor vehicle accident that occurred in British Columbia. In the present case, an Ontario

plaintiff seeks to have Ontario law apply to a defendant which carries on business in Ontario.

[44] In Silver v. IMAX Corp. [2009] O.J. No. 5585, van Rensburg J. addressed the issue of

certification of the class action. IMAX was a Canadian company with its head office in Ontario.

The shares of IMAX were traded on both the TSX and the NASDAQ. The plaintiffs were

Ontario residents. The plaintiffs sought certification of a class consisting of persons who

acquired securities of IMAX on the TSX and on the NASDAQ. The defendants did not argue

that the statutory cause of action under the Ontario Securities Act was not available to class

members who purchased shares on the NASDAQ. Rather, the thrust of the defendants' argument

was that a global class action should not be certified. At paragraph 154, van Rensburg J. stated:

The defendants may well assert in their statement of defence that the laws of jurisdictions other than Ontario apply to the determination of the claims of various class members. At this stage however one can only speculate as to what arguments may be made and toward the claims of which class members they may be directed. For example, is the statutory cause of action restricted to Ontario shareholders? Does it apply to non-resident shareholders who purchased their

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shares on the TSX? Does it apply to Ontario shareholders who purchased their shares on NASDAQ? As for the common law claims, what law would apply to the misrepresentation claims of class members residing outside of Ontario, or Canada? Would this depend on where they purchased their shares, reside or suffered damages? What particular defences would the defendants rely upon that would not be available to them under Ontario law? Are there in fact substantial differences between the common law principles and defences applicable in the other jurisdictions?

[45] After posing the questions, van Rensburg J. in Silver (the certification motion) proceeded

to certify a global class. As I read the decision, she certified a class which included both Ontario

residents who purchased shares of IMAX on the NASDAQ as well as non-residents who

purchased their shares on the NASDAQ. Therefore, although I appreciate that the argument

made before me was not specifically addressed Silver (the certification motion), there is

outstanding in Ontario an action in which the Ontario Superior Court is asserting jurisdiction

with respect to the statutory cause of action contained in section 138.3 of the Ontario Securities

Act in connection with claims for damages on behalf of investors who purchased shares of a

Canadian corporation carrying on business in Ontario on the NASDAQ. In my view, it would be

inappropriate for me to express a contrary view.

[46] I am satisfied that Canadian Solar has a real and substantial connection to Ontario. As I

have stated elsewhere, Canadian Solar is incorporated in Canada with an executive office in

Ontario. Canadian Solar carries on business in Ontario and has held its annual meeting in

Ontario. The alleged misrepresentations were contained in press releases and other documents

such as financial statements that were released or presented in Ontario. I also conclude, for the

purpose of the present motion, that Canadian Solar is an issuer whose securities are publicly

traded. Therefore, Canadian Solar is a "responsible issuer" as that term is defined in section

138.1 of the Ontario Securities Act.

[47] I repeat for emphasis, that this decision is largely driven by the allegations contained in

the Statement of Claim to the effect that misrepresentations were made in Ontario. I also repeat

for emphasis that I am only deciding the issue of whether this court has jurisdiction over the

claims made by the plaintiff. As the facts of the case are developed, it may be that some of the

plaintiff's allegations will not be proved. I leave for another day the issue about whether the

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plaintiff ought to be granted leave to assert a statutory cause of action. Whether this action is

certified as a class action and the description of the class or classes are also issues to be decided

in the future.

[48] I therefore conclude that this court has jurisdiction to entertain the plaintiff’s claim for

leave to commence an action pursuant to section 138.3 of the Ontario Securities Act.

Conclusion

[49] For these reasons, the defendants’ motion to dismiss or stay the plaintiff’s claims based

on misrepresentation and for leave to commence a statutory claim pursuant to section 138.3 of

the Ontario Securities Act is dismissed.

[50] If the parties are unable to agree on the appropriate disposition as to costs, written

submissions may be submitted. The written submissions of the plaintiff, not to exceed three

pages in length, exclusive of a Bill of Costs and Costs Summary, are to be delivered to my office

in Kitchener on or before September 23, 2011. The written submissions of the defendants, not to

exceed three pages in length, are to be delivered to my office in Kitchener no later than October

14, 2011.

G. E. Taylor J.

Date: August 29, 2011

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