Case in Brief

A Case in Brief is a short summary of a written decision of the Court, drafted in plain language. These summaries are prepared by staff of the Supreme Court of Canada. They do not form part of the Court’s reasons for judgment and are not for use in legal proceedings.

Lundin Mining Corp. v. Markowich

Case summary

The Supreme Court of Canada says an investor can sue a company if it does not immediately disclose changes in its operations.

Public companies must inform investors about important information that can affect the value of their shares. Ontario’s Securities Act distinguishes between facts, which can wait to be shared as part of regular updates, and changes, which must be disclosed immediately. These changes are those that affect the company’s business, operations or capital. When a company does not disclose a change right away, an investor can sue. If they want to do so, the Act requires them to get permission from a judge beforehand. This is to ensure the investor’s claim has some basis and is not abusive. If the investor wants to include others, they must also ask the court to certify the action as a class proceeding. Certification means the court agrees the case is suitable to be heard as a group claim.

This case was about the legal test an investor must meet to get permission to sue a company for not immediately disclosing events the investor considered to be changes. The company Lundin Mining detected instability in the walls around the mine. A few days later, there was a rockslide. The mine had to slow down its operations, and the company lowered its production forecast for the next year. The company did not share this information immediately. It revealed it only a month later in a scheduled update. The day after the disclosure, the company’s share price fell by 16 percent.

An investor who bought shares after the instability appeared but before the disclosure started a proposed class action. He argued that the company failed to make timely disclosure of the change. He asked the court for permission to begin the lawsuit and also sought certification of the class proceeding.

The judge dismissed the motion to start the lawsuit and refused to give permission for the class proceeding. He found no reasonable possibility that the investor could show that either the instability or the rockslide amounted to a change that required immediate disclosure. The Court of Appeal disagreed. It gave permission to begin the action and sent the certification issues back to the Superior Court of Justice. Lundin Mining appealed to the Supreme Court of Canada.

The Supreme Court dismissed the appeal.

The investor met the test to proceed with the lawsuit.

Writing for a majority of the Supreme Court, Justice Jamal said that the motion judge interpreted the Act too narrowly. It does not define words like “change”, “business”, “operations” or “capital”. This ensures the law applies to many different industries. For permission or leave to sue, the investor only needed to show that the Act was likely violated and that there is evidence in support. This leave test is meant to screen out weak cases, not to decide who would win at trial.

Justice Jamal added that the instability and rockslide affected the company’s operations and influenced its planning and production forecast. This supported the investor’s claim that a change had occurred. He therefore met the leave test and should have been given permission to proceed with the lawsuit.