Carom v. Bre-X Minerals Ltd., (2000) 138 O.A.C. 55 (CA)

• Judge: Finlayson, Feldman and MacPherson, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: September 19, 2000
• Jurisdiction: Ontario
• Citations: (2000), 138 O.A.C. 55 (CA);2000 CanLII 16886 (ON CA);2000 CanLII 16886 (NS CA);51 OR (3d) 236;196 DLR (4th) 344;11 BLR (3d) 1;[2000] CarswellOnt 3838;[2000] OJ No 4014 (QL);138 OAC 55;1 CPC (4th) 62

Carom v. Bre-X Minerals Ltd. (2000), 138 O.A.C. 55 (CA)

MLB headnote and full text

Temp. Cite: [2000] O.A.C. TBEd. NO.003

Donald Carom (plaintiff/moving party), 3218520 Canada Inc., 662492 Ontario Limited, Osamu Shimizu (plaintiffs/moving parties/appellants) and Eugene Schonberger (plaintiff/moving party) v. Bre-X Minerals Ltd., Bresea Resources Ltd., John B. Felderhof, Jeannette Walsh, Estate Trustee of the Estate of David G. Walsh, deceased, Jeannette Walsh, personally, T. Stephen McAnulty (defendants/responding parties/respondents), Nancy Jane McAnulty (defendant/responding party), John B. Thorpe, Rolando C. Francisco, Hugh C. Lyons, Paul M. Kavanagh (defendants/responding parties/respondents), Nesbitt Burns Inc., Egizio Bianchini, First Marathon Securities Limited and Kerry Smith (defendants/responding parties)

(C33905)

Indexed As: Carom et al. v. Bre-X Minerals Ltd. et al.

Ontario Court of Appeal

Finlayson, Feldman and MacPherson, JJ.A.

October 31, 2000.

Summary:

Bre-X Minerals released various press releases and statements indicating substantial gold deposits at its gold mine in Indonesia. Bre-X's stocks greatly increased in value. However, when it was discovered that the claims were unsubstantiated, Bre-X's stock value plummeted. Shareholders (the plain­tiffs) sued Bre-X and its senior officers, among others, for negligent misrepresenta­tion, fraudulent misrepresentation, conspiracy and breach of the Competition Act. The plaintiffs applied to certify a class action.

The Ontario Superior Court, in a decision reported 98 O.T.C. 1, certified a class action with respect to the claims for fraudulent misrepresentation, conspiracy and breach of the Competition Act. However, the court refused to certify a class action for negligent misrepresentation. The plaintiffs appealed.

The Ontario Divisional Court, in a decision not reported in this series of reports, dis­missed the appeal. The plaintiffs appealed.

The Ontario Court of Appeal allowed the appeal and certified a class action for negli­gent misrepresentation.

Practice - Topic 209.3

Persons who can sue and be sued - In­dividuals and corporations - Status or standing - Class actions - Certification - Considerations - When class action ap­propriate - Bre-X's share value plummeted when it was determined that its claims about a major gold find were unsubstan­tiated - Shareholders (the plain­tiffs) sued Bre-X and its senior officers for negligent misrepresentation, fraudulent misrepresen­tation, conspiracy and breach of the Com­petition Act - The plaintiffs applied to certify a class action - The trial judge certified a class action for fraudulent mis­representation, conspiracy and breach of the Competition Act, but refused to certify a class action for negligent misrepresen­tation - The Ontario Court of Appeal held that the negligent misrepresentation claim raised common issues and should have also been certified - There was an insufficient difference between the fraudulent mis­representation claim and the negligent misrepresentation claim to justify certifying the former but not the latter - A class action was the preferable procedure for dealing with the negligent misrepresenta­tion claim.

Cases Noticed:

Bendall v. McGhan Medical Corp. (1993), 14 O.R.(3d) 734 (Gen. Div.), refd to. [para. 6].

Nantais v. Telectronics Proprietary (Cana­da) Ltd. (1995), 25 O.R.(3d) 331 (Gen. Div.), refd to. [para. 6].

Bywater v. Toronto Transit Commission (1998), 83 O.T.C. 1; 27 C.P.C.(4th) 172 (Gen. Div.), refd to. [para. 6].

Robertson v. Thomson Corp. et al. (1999), 86 O.T.C. 226; 43 O.R.(3d) 161 (Gen. Div.), refd to. [para. 7].

Chadha v. Bayer Inc. et al. (1999), 107 O.T.C. 36; 45 O.R.(3d) 29 (Sup. Ct.), refd to. [para. 7].

Rosedale Motors Inc. v. Petro-Canada Inc. (1998), 87 O.T.C. 180; 42 O.R.(3d) 776 (Gen. Div.), refd to. [para. 8].

Controltech Engineering Inc. v. Ontario Hydro et al. (1998), 72 O.T.C. 351 (Gen. Div.), affd. (2000), 130 O.A.C. 367 (Div. Ct.), refd to. [para. 8].

Anderson et al. v. Wilson et al. (1999), 122 O.A.C. 69; 44 O.R.(3d) 673 (C.A.), refd to. [para. 36].

Campbell et al. v. Flexwatt Corp. et al. (1997), 98 B.C.A.C. 22; 161 W.A.C. 22; 15 C.P.C.(4th) 1 (C.A.), refd to. [para. 41].

Dabbs v. Sun Life Assurance Co. of Cana­da, [1998] O.T.C. Uned. 269; 40 O.R.(3d) 429 (Gen. Div.), refd to. [para. 55].

Maxwell v. MLG Ventures Ltd., [1995] O.J. No. 1136 (Gen. Div.), refd to. [para. 55].

Peppiatt v. Nicol (1993), 16 O.R.(3d) 133 (Gen. Div.), refd to. [para. 55].

Hollick v. Metropolitan Toronto (Munici­pality) et al. (1999), 127 O.A.C. 369; 46 O.R.(3d) 257 (C.A.), leave to appeal granted [2000] S.C.C.A. No. 41, refd to. [para. 55, footnote 2].

Mouhteros v. DeVry Canada Inc. (1998), 70 O.T.C. 138; 41 O.R.(3d) 63 (Gen. Div.), refd to. [para. 55].

Abdool et al. v. Anaheim Management Ltd. et al. (1995), 78 O.A.C. 377; 21 O.R.(3d) 453 (Div. Ct.), refd to. [para. 55].

Authors and Works Noticed:

Ontario, Law Reform Commission, Report on Class Actions (1982), p. 139 [para. 5].

Ontario, Report of the Attorney General's Committee on Class Action Reform (1990), p. 15 [para. 3].

Counsel:

Paul J. Pape, for the appellants;

H. Douglas Stewart, Q.C., for Bresea Resources Ltd.;

Joseph Groia and Kevin Richard, for John Felderhof;

Alan Lenczner, Q.C., and Lawrence Thacker, for Jeannette Walsh, personally and as estate trustee for David Walsh and for T. Stephen McAnulty;

Robert Potts and Robert Muir, for John Thorpe;

Brian Bellmore and K. Mitchell, for Rolando Francisco;

Paul LeVay and Johanna Braden, for Paul Kavanagh.

This appeal was heard on September 19, 2000, by Finlayson, Feldman and MacPher­son, JJ.A., of the Ontario Court of Appeal. MacPherson, J.A., released the following judgment for the Court of Appeal on Octo­ber 31, 2000.