Carom et al. v. Bre-X Minerals Ltd. et al., (1999) 98 O.T.C. 1 (SC)

• Judge: Winkler, J.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: May 13, 1999
• Jurisdiction: Ontario
• Citations: (1999), 98 O.T.C. 1 (SC);44 OR (3d) 173;[1999] OJ No 1662 (QL)

Carom v. Bre-X Minerals Ltd. (1999), 98 O.T.C. 1 (SC)

MLB headnote and full text

Temp. Cite: [1999] O.T.C. TBEd. MY.115

Donald Carom, 3218520 Canada Inc., 662492 Ontario Limited, Osamu Shimizu and Eugene Schonberger (plaintiffs) v. Bre-X Minerals Ltd., Bresea Resources Ltd., John B. Felderhof, David G. Walsh, Jeanette Walsh, T. Stephen McAnulty, Nancy Jane McAnulty, John B. Thorpe, Rolando C. Francisco, Hugh C. Lyons, Paul M. Kavanagh, Nesbitt Burns Inc., Egizio Bianchini, First Marathon Securities Limited and Kerry Smith (defendants)

(Court File No. 97-GD-39574)

Donald Carom and 662492 Ontario Limited (plaintiffs) v. SNC-Lavalin Group Inc., SNC-Lavalin Inc., Kilborn Engineering Pacific Ltd., Kilborn SNC- Lavalin Inc. and P.T. Kilborn Paka Rekayasa (defendants)

(Court File No. 97-GD-41854)

Kanta Menta (plaintiff) v. TD Securities Inc. and Ken Gillis (defendants)

(Court File No. 97-GD-42031)

Adenat Corp. (plaintiff) v. Scotia McLeod Inc. and Ted Reeve (defendants)

(Court File No. 97-GD-42033)

Ronald Parent (plaintiff) v. Midland Walwyn Capital Inc. and Michael Jalonen (defendants)

(Court File No. 97-GD-42036)

Fred Hines (plaintiff) v. Levesque Beaubien Geoffrion Inc. and Michael Fowler (defendants)

(Court File No. 97-GD-42034)

Celtic Mortgage Corp., Marisue Gardonio and Larry Freeman (plaintiffs) v. CIBC Wood Gundy Securities Inc. and Bruno Kaiser (defendants)

(Court File No. 97-GD-42037)

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

Court of Ontario

Superior Court of Justice

Winkler, J.

May 13, 1999.

Summary:

Bre-X's share prices plummeted when sources indicated that Bre-X's gold resources claim in the Busang area of Indonesia was unsubstantiated. The plaintiffs sought certification of intended class proceedings (Class Proceedings Act, 1992 (CPA)). The representative plaintiffs were Bre-X's shareholders or former shareholders on behalf of proposed classes of purchasers of Bre-X shares who suffered a net loss. The actions were brought against (1) Bre-X, its officers and directors, related parties, two securities houses which allegedly promoted selling Bre-X shares and their stock analysts, (2) engineering companies which independently analyzed Bre-X's gold resources, and (3) brokerage firms and their analysts. The statements of claims asserted negligence, negligent and fraudulent misrepresentation, conspiracy, breach of contract, breach of fiduciary duty and breach of the Competition Act. At issue was whether the issues could be certified as class actions under s. 5(1)(a) of the CPA (the pleadings disclosed a cause of action).

The Ontario Superior Court ordered that (1) regarding the Bre-X claim, a class proceeding action for (a) conspiracy, fraudulent misrepresentation and breach of the Competition Act was allowed if a satisfactory litigation plan was provided, and (b) the negligent misrepresentation claim was not allowed, and (2) the class proceeding actions against the brokers, analysts and engineers were dismissed.

Practice - Topic 209

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - General principles - See paragraphs 1 to 286.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Certification - Considerations (incl. when class action appropriate) - See paragraphs 1 to 286.

Cases Noticed:

Bywater v. Toronto Transit Commission (1998), 83 O.T.C. 1 (Gen. Div.), refd to. [para. 17].

Rosedale Motors Inc. v. Petro-Canada Inc. (1998), 87 O.T.C. 180 (Gen. Div.), refd to. [para. 63].

Canada Cement Lafarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191; 145 D.L.R.(3d) 385, refd to. [para. 67].

Parna v. G. & S. Properties Ltd. (1970), 15 D.L.R.(2d) 336 (S.C.C.), refd to. [para. 71].

Derry v. Peek (1889), 14 A.C. 337 (H.L.), refd to. [para. 71].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1; 99 D.L.R.(4th) 626; 45 C.C.E.L. 153; 14 C.C.L.T.(2d) 113, refd to. [para. 72].

Abdool v. Anaheim Management Ltd. (1995), 78 O.A.C. 377; 21 O.R.(3d) 453 (Div. Ct.), refd to. [para. 86].

Controltech Engineering Inc. v. Ontario Hydro (1998), 72 O.T.C. 35 (Gen. Div.), consd. [para. 89].

Mouhteros v. DeVry Canada Inc. et al. (1998), 70 O.T.C. 138; 41 O.R.(3d) 63 (Gen. Div.), refd to. [para. 89].

Hercules Managements Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241; 146 D.L.R.(4th) 577, refd to. [para. 122].

Ryan v. Victoria (City) et al. (1999), 234 N.R. 201; 117 B.C.A.C. 103; 191 W.A.C. 103; 168 D.L.R.(4th) 513 (S.C.C.), refd to. [para. 122].

Nantais v. Telectronics Proprietary (Canada) Ltd. (1995), 25 O.R.(3d) 331 (Gen. Div.), refd to. [para. 130].

Chace et al. v. Crane Canada Inc. (1997), 101 B.C.A.C. 32; 164 W.A.C. 32; 44 B.C.L.R.(3d) 264 (C.A.), refd to. [para. 130].

Peppiatt v. Nicol (1993), 16 O.R.(3d) 133 (Gen. Div.), refd to. [para. 130].

Campbell et al. v. Flexwatt Corp. et al. (1997), 98 B.C.A.C. 22; 161 W.A.C. 22; 15 C.P.C. 1 (C.A.), refd to. [para. 132].

Anns v. Merton London Borough Council, [1978] A.C. 728; [1977] 2 W.L.R. 1024; [1977] 2 All E.R. 492 (H.L.), refd to. [para. 134].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1; [1984] 5 W.W.R. 1; 29 C.C.L.T. 97; 8 C.L.R. 1; 10 D.L.R.(4th) 641, refd to. [para. 134].

Caparo Industries v. Dickman et al., [1990] 1 All E.R. 568; 108 N.R. 81 (H.L.), refd to. [para. 138].

Dorman Timber Ltd. v. British Columbia (1997), 97 B.C.A.C. 178; 157 W.A.C. 178; 152 D.L.R.(4th) 271 (C.A.), refd to. [para. 147].

Black v. Lakefield (Village) (1998), 113 O.A.C. 74; 166 D.L.R.(4th) 96 (C.A.), refd to. [para. 147].

McGauley v. British Columbia (1990), 44 B.C.L.R.(2d) 217 (S.C.), refd to. [para. 231].

Reed v. McDermid St. Lawrence Ltd. (1990), 52 B.C.L.R.(2d) 265 (C.A.), refd to. [para. 232].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1; [1994] 9 W.W.R. 609; 22 C.C.L.T.(2d) 1; 117 D.L.R.(4th) 161, refd to. [para. 239].

Deacon (R.H.) & Co. v. Varga, [1973] 1 O.R. 233 (C.A.), affd. [1975] 1 S.C.R. 39; 1 N.R. 79, refd to. [para. 239].

Statutes Noticed:

Class Proceedings Act, S.O. 1992, c. 6, sect. 5(1) [para. 6].

Authors and Works:

Linden, Allan M., Canadian Tort Law (6th Ed. 1997), p. 271 [para. 121].

Ontario, Attorney General's Advisory Committee on Class Action Reform Report (February 1990), pp. 6 [para. 167]; 32 [para. 168, 271].

United States, Federal Judicial Center, Manual for Complex Litigation (3rd Ed. 1995), p. 221 [para. 186].

Waddams, Stephen M., The Law of Damages (Rev. 2nd Ed. 1995) (Looseleaf Ed.), pp. 11-1, 11-2 [para. 83].

Counsel:

Harvey Strosberg, Q.C., D.H. Jack, Heather Rumble Peterson and Paul J. Pape, Q.C., for the plaintiffs, Donald Carom, 3218520 Canada Inc, 662492 Ontario Ltd, Osamu Shimizu, Eugene Schonberger, Kanta Menta, Adenat Corp., Michael Parent, Fred Hines, Celtic Mortgage Corp., Marisue Gardonio and Larry Freeman;

Larry Thacker, for the estate of David Walsh, Stephen McAnulty, Jeannete Walsh and Nancy McAnulty;

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

Robert J. Potts and Rob Muir, for John B. Thorpe;

B. Bellmore, for Rolando Franscisco;

P. Levay, for Paul M. Kavanagh;

Joseph Groia, for John B. Felderhof;

John A. Campion, William Hourigan and Ward Branch, for Nesbitt Burns Inc. and Egizio Bianchini;

Joel Wiesenfeld, Jane Ratchford and Laura Paglia, for first Marathon Securities Ltd. and Kerry Smith;

Thomas G. Heintzman, J. Thomas Curry and J.V. O'Donnell, Q.C., for the defendants, SNC-Lavalin Group Inc., SNC-Lavalin Inc. Kilborn Engineering Pacific Ltd., Kilborn SNC-Lavalin Inc. and P.T. Kilborn Paka Rekayasa;

Benjamin Zarnett and Jessica Kimmel, for TD Securities Inc., Ken Gillis, Midland Walwyn Capital Inc., Michael Jalonen, Levesque Beaubien Geoffrion Inc. and Michael Fowler;

Robert L. Armstrong and Dana B. Fuller, for Scotia McLeod Inc. and Ted Reeve;

Michal Birley and J. Maron, for CIBC Wood Gundy Securities Inc. and Bruno Kaiser.

This motion was heard on March 8 to 11, 29 to 31, and April 1, 9, 12 and 13, 1999, before Winkler, J., of the Ontario Superior Court, who released the following judgment on May 13, 1999.