Leavin’ it to the limit: Supreme Court of Canada to address nunc pro tunc relief in derivative actions

On May 28, 2026, the Supreme Court of Canada granted leave to appeal from the British Columbia Court of Appeal’s decision in Hougen Co. Ltd. v. Ming Su et al. The BCCA held that nunc pro tunc orders (i.e., backdating orders) should not be used to grant leave in derivative actions where the limitation period has expired. The SCC previously addressed the use of nunc pro tunc orders in the securities context with leave to commence statutory claims for secondary market misrepresentation. We expect the SCC will provide guidance on how to navigate limitations issues when seeking leave to bring derivative actions, including where leave was sought before a limitation period expired but the reasons were rendered after. The SCC’s guidance may extend to other types of actions that require statutory leave.

What you need to know

• The SCC may provide additional guidance. The SCC’s decision to grant leave signals a willingness to revisit the nunc pro tunc framework. The SCC may use this case to provide guidance to address the inherent unfairness to litigants of losing the ability to bring claims that require leave because of the slowness of the judicial process.
• Don't sit on your rights. The BCCA’s decision is a warning to litigants to act quickly where leave to commence a claim is required. Parties must account for the time it takes to obtain leave when calculating limitation periods, which is especially important given the current backlog in many courts. Decisions on leave applications may remain under reserve for months while the limitation period continues to run. Litigants that require leave to commence a claim should expressly communicate any limitation period issues directly to the court.
• The availability of nunc pro tunc orders depends on the statutory context. When commencing a claim that requires statutory leave, litigants cannot expect to rely on backdated orders to protect them from limitation period issues. While courts have inherent jurisdiction to grant nunc pro tunc orders, this jurisdiction is circumscribed by legislative intent. A court should not exercise its inherent jurisdiction to backdate a grant of leave if doing so would undermine the legislation at issue. The BCCA drew a distinction between the statutory purpose for requiring leave in secondary market misrepresentation claims versus derivative actions, holding that nunc pro tunc orders may be available for the former but not the latter.

Background

Hougen, the majority shareholder of Toyomoto, sought leave to bring a derivative action in Toyomoto’s name against several parties, including Toyomoto’s former director and CEO, Ming Su. Under section 232 of British Columbia’s Business Corporations Act (BCBCA), a complainant must obtain leave of the court to “prosecute a legal proceeding in the name and on behalf of a company”¹.

Hougen filed its petition for leave in August 2022. After two adjournments (one because no judge was available, and the other at the defendant Su’s request), the petition was finally heard in June 2023. During the hearing, Hougen’s counsel raised possible “limitation issues.” The Court reserved judgment².

On September 6, 2023, while the judgment was still under reserve, Hougen filed a Notice of Civil Claim (the Claim) in Toyomoto’s name. Hougen did so to avoid a potential limitations defence that would arise if the Claim was not filed before September 8, 2023. Hougen advised Su that it would not take further steps unless and until leave was granted.

Approximately one month after Hougen filed the Claim, the Court released its leave decision. The Court granted leave to bring an action in Toyomoto’s name for most but not all of the allegations in the leave application.

After the leave decision was released, Hougen cross-applied for a nunc pro tunc order (meaning “now as then”) backdating the leave order to September 6, which would have had the effect of validating and preserving the Claim filed on that date. The Court refused to grant a nunc pro tunc order and struck the Claim as a nullity.

BCCA decision: nunc pro tunc was not available

The BCCA dismissed Hougen’s appeal and refused to backdate the order.

It found no error in the holding of the lower court that the BCBCA's leave provisions reflect a clear legislative intent that judicial oversight is required before a derivative action may be brought, and that a complainant has no capacity to commence such a claim without first obtaining leave. Any order validating the Claim (which was brought without leave) would be contrary to the judicial oversight required by the legislature.

The BCCA considered how this decision aligned with the SCC’s 2015 decision in CIBC v. Green³, which is the leading authority on nunc pro tunc in the context of leave to bring a secondary market misrepresentation claim under the Securities Act. The SCC backdated an order in that case. However, in Hougen, the BCCA held that the statutory context was different.

A key difference between the two cases is the nature of a derivative claim: a person bringing a secondary market misrepresentation claim does so in their own name—and at their own risk—to recover personal loss. These same factors do not exist when bringing a derivative action, which binds a corporation to undertake the risks and expense of a proceeding to which its directors have not consented. In short, the reasons for requiring leave in secondary market misrepresentation claims are different than the reasons for requiring leave in derivative claims.

Accordingly, the BCCA held that courts should not grant orders that would “effectively circumvent or defeat the express will of the legislature”⁴.

Hougen argued that the absence of nunc pro tunc leads to an untenable situation where the availability of a derivative claim is wholly dependent on the speed at which the motion judge renders reasons for judgment—and that as such, only those applicants who are granted leave before a limitation period expires can continue their claims. For example, here, if the motion judge had taken less than three months to render a decision, it could have proceeded. But because the motion judge took four months, it was statute-barred.

The BCCA rejected this argument. It acknowledged that it is “difficult to obtain chamber [motion] dates” and that “demands on judicial resources mean that decisions are often delayed beyond what is required for the expeditious prosecution of a claim”. But limitation periods are “part of the legal landscape” and that their harsh effects can be mitigated through timely filings, requests for expedited hearings, and clearly advising courts of relevant deadlines. It is incumbent on counsel to draw potential limitation periods to the judge’s attention “in no uncertain terms”⁵.

While the BCCA cautioned that “nunc pro tunc orders are to be used sparingly and cannot be assumed to be available to remedy delay in meeting statutory requirements”⁶, it left open the possibility that “facts could arise” that would make a nunc pro tunc order appropriate in the context of a derivative action⁷.

Leave to the SCC is granted

On May 28, 2026, the SCC granted leave to appeal from the BCCA’s decision. In seeking leave, Hougen argued that the BCCA’s decision creates an inequitable “catch-22” for complainants facing a limitation period while a leave decision is under reserve. It is the filing of the derivative action—not the leave application—that stops the limitation clock. Complainants must either (a) file a protective claim, which according to the BCCA will be struck as a nullity, or (b) refrain from filing until the court renders a decision and risk the claim becoming time-barred⁸.

We expect the SCC will provide guidance on nunc pro tunc orders in the context of seeking leave to commence derivative actions. While this will assist both courts and litigants when navigating limitation issues in this context, it remains to be seen whether the SCC will take this opportunity to modify its decision in Green and extend its guidance on nunc pro tunc orders to other types of actions that require statutory leave.