Murray Wood: Who's hot... and who's not
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OTTAWA — The Supreme Court of Canada says an investor can pursue legal action against a mining company on the basis that it did not immediately publicize information about a production setback.
In its 8-1 decision Friday, the top court provided guidance on determination of a “material change” in a firm’s operations that must be disclosed in a timely way under Ontario’s securities law.
Just days after Canadian firm Lundin Mining Corp. detected wall instability at its open-pit mine in Chile in October 2017, a rock slide prompted the company to shut down part of the mine.
Lundin did not publicly disclose the events at the time but advised investors in a scheduled update about a month later.
The news release described the events and said the company was lowering its copper production forecasts at the mine for 2018 and 2019. The new 2018 forecast was for production of between 104,000 and 109,000 tonnes, down 20 per cent from an earlier outlook.
Lundin also noted plans to push back waste from the rock slide area and use ore from a low-grade stockpile to make up for lost copper production.
The day after the update was issued, the price of Lundin’s securities on the Toronto Stock Exchange fell 16 per cent.
Investor Dov Markowich — who bought Lundin shares after the rock slide, but before it became public — sought a judge’s permission to bring a case against the company for allegedly breaching its timely disclosure obligations under the Ontario Securities Act.
The act defines a material change as one affecting the business, operations or capital of a securities issuer that reasonably would be expected to have a significant effect on the market price of securities. Material changes must be publicly disclosed without delay.
A court may grant leave to begin an action for breach of a company’s disclosure obligations if it is satisfied the case is being brought in good faith and there is a reasonable possibility of success.
Markowich brought a motion under the provincial securities law for leave to pursue the action, and also moved for certification of a proposed class proceeding that would include other investors.
The motion judge refused to grant leave and dismissed the motion for class certification. He found no reasonable possibility the investor could show that either the pit wall instability or the rock slide resulted in a material change requiring immediate disclosure.
The Ontario Court of Appeal overturned the decision, granting Markowich leave to proceed with the case and referring the matter of certification of the class proceeding back to the lower court.
In writing for a majority of the Supreme Court, Justice Mahmud Jamal said disclosure of company information promotes the efficiency of capital markets by helping investors identify and direct capital to the most deserving public firms.
“Armed with appropriate information, investors are more confident and participate more actively in securities markets, thereby enhancing the efficiency and competitiveness of capital markets more generally,” Jamal wrote.
He said the motion judge erred by relying on restrictive definitions of “change,” “business,” “operations” and “capital,” and then applying those definitions to determine whether there was a reasonable possibility that there had been a material change.
“The Ontario legislature intentionally left these terms undefined to allow the legislation to be applied flexibly and contextually to a wide range of industries and corporate structures,” Jamal wrote.
“Here, the uncontested evidence on the motion was that the pit wall instability and rock slide impacted the company’s operations at its mine. Hence, the evidence showed that these events could have resulted in a ‘change.'”
This report by The Canadian Press was first published Nov. 28, 2025.
Jim Bronskill, The Canadian Press
