Barrick Gold Corporation: A New Source of Instability for the Secondary Market Liability Regime?

Abstract

The secondary market statutory liability regime was integrated over fifteen years ago in provincial securities legislation after a long a winding road that can be traced back to the1980s. Enacted as Part XXIII.1 of the Ontario Securities Act (OSA), the regime creates a statutory cause of action for investors who suffer losses in the secondary market in connection with continuous disclosure violations. The enactment of the regime purported to correct an anomaly in securities laws that did not provide such a remedy. Indeed, the absence of a civil liability regime raised serious concerns about investor confidence in Canadian capital markets, the degree of non-compliance with disclosure obligations, and the risk that Canadian markets would thus be “cast into disrepute”. The statutory liability regime has proved elusive. From a doctrinal perspective, the arcane drafting of the provisions governing the regime have raised a host of questions with respect to its procedural and substantive dimensions. Further compounding the interpretative challenges, case law concerning the statutory regime has essentially resulted from decisions at the leave stage, with the first merits decision rendered in early 2021. From a policy perspective, the effectiveness of the regime remains debated in light of the low volume of cases filed over the last fifteen years, as well as the conservative stances taken by courts in their interpretation of the regime.

Against this backdrop, the recent decision of the Ontario Court of Appeal in Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund v. Barrick Gold Corporation deserves particular attention. Indeed, the decision is significant as it proposes a novel interpretation of the conditions to establish a cause of action under the regime that does away with the public correction requirement found in s. 138.3(1) OSA. As this comment argues, the Court of Appeal’s position does not accord with the statutory scheme and is susceptible of raising new difficulties at the leave stage. Also noteworthy in the decision is the Court of Appeal’s approach for assessing the existence of a public correction.