Mask v. Silvercorp Metals Inc. et al.

• Jurisdiction: Ontario
• Judge: Strathy, C.J.O., D. Brown and Huscroft, JJ.A.
• Date: 24 August 2016
• Citation: 2016 ONCA 641,(2016), 352 O.A.C. 380 (CA)
• Court: Court of Appeal (Ontario)

Mask v. Silvercorp Metals Inc. (2016), 352 O.A.C. 380 (CA)

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Temp. Cite: [2016] O.A.C. TBEd. AU.023

John Mask (plaintiffs/appellant) v. Silvercorp Metals Inc., Rui Feng and Meng Tang (defendants/respondents)

(C61313; 2016 ONCA 641)

Indexed As: Mask v. Silvercorp Metals Inc. et al.

Ontario Court of Appeal

Strathy, C.J.O., D. Brown and Huscroft, JJ.A.

August 24, 2016.

Summary:

In August and September 2011, Silvercorp Metals Inc. was targeted by investors who "shorted" its shares, expecting to profit when the price fell. To make sure of this, one of the short sellers anonymously released false reports on the internet. The share price fell and he made a quick profit of $2.8 million. Silvercorp's shareholders, on the other hand, lost $288 million in equity. Twenty months later, the plaintiff commenced a proposed class action against Silvercorp., two executives and a mining engineering firm. He claimed that Silvercorp's share price was inflated by misrepresentations in its public disclosures in 2010 and 2011 and that he and other shareholders lost money when the price fell after "corrective disclosures" in September 2011.

The Ontario Superior Court (class action judge), in a decision with neutral citation 2015 ONSC 5348, dismissed the plaintiff's motion for leave to bring a class action for secondary market misrepresentation under s. 138.3 of the Securities Act (Ont.). He also dismissed a motion to certify the action under the Class Proceedings Act. The plaintiff appealed, arguing that the class action judge erred in applying the leave test and misapprehended the evidence.

The Ontario Court of Appeal dismissed the appeal.

Securities Regulation - Topic 5364

Trading in securities - Civil liability (incl. secondary market disclosure) - Leave to commence action - See paragraphs 34 to 69.

Counsel:

Joseph Groia and Matthew M.A. Stroh, for the appellant;

Dana M. Peebles, Miranda Lam and Paul Davis, for the respondents.

This appeal was heard on June 28 and 29, 2016, before Strathy, C.J.O., D. Brown and Huscroft, JJ.A., of the Ontario Court of Appeal. The following decision was released for the court by Strathy, C.J.O., on August 24, 2016.