Negligent Misrepresentation Added to Bre-X Class Action

On October 31, 2000, the Ontario Court of Appeal released its decision in 3218520 Canada Inc. v. Bre-X Minerals Ltd., in which it certifies a class action against Bre-X Minerals Ltd. for negligent misrepresentation, overruling both the Divisional Court and the motions judge. The appeal followed from a December, 1999, decision of the Division Court, upholding the Superior Court of Justice’s certification of a class action with respect to the plaintiff’s claims of fraudulent misrepresentation, but refusing to certify the claim for negligent misrepresentation.

Justice MacPherson says in his reasons that the appeal raised two questions: Is it appropriate to certify part of an action as a class proceeding?, and, Is there a sufficient distinction between the torts of fraudulent misrepresentation and negligent misrepresentation to justify routing them onto separate tracks in the litigation process? In answering “No” to both questions, five reasons are provided, the essence of which are that there is a sufficient degree of commonality between the issues of law and fact in these claims that certification of one and not the other is unjustifiable.

This important decision serves to restore the broad purpose of the Class Proceedings Act—that class actions function as a procedural mechanism to achieve efficiency of litigation and to increase access to the courts. It also suggests that insiders will now be held accountable to investors en masse when they disseminate information which they ought to know is false, inaccurate or misleading.

Paul J. Pape acted for the appellants (plaintiffs). The following acted for the various defendants: H. Douglas Stewart, Q.C., of Chappell, Bushell, Stewart LLP; Joseph Groia and Kevin Richard of Groia and Company; Alan Lenczner, Q.C. and Lawrence Thacker of Lenczner Slaght Royce Smith Griffin; Robert Potts and Robert Muir of Blaney McMurtry LLP; Brian Bellmore and K. Mitchell of Bellmore & Moore; and Paul LeVay and Johanna Braden of Stockwood, Spies.