Securities law case update: the SCC hears Lundin Mining Corporation, et al. v. Dov Markowich

Gillian Dingle (00:05): Hi everyone. I'm Gillian Dingle and this is my partner, John Fabello. We are co-leads of the Securities Litigation Defence Practice here at Torys.

John Fabello (00:15): After our appearance in the Supreme Court of Canada last week in the Lundin Mining class action appeal. We've been receiving a lot of inquiries and questions about the case, so we thought we’d provide this update. It was very unique to be before the Court on a securities case like this. They rarely come before the Supreme Court of Canada. I think the last time was the Theratechnologies case in 2015, and before that it was Danier in 2007. So, it certainly is a notable case and lots to talk about.

Gillian Dingle (00:47): So, what were the facts in the Lundin case? Why were we there? Lundin is a copper mining company, or a mining company, that operates an open-pit copper mine in Chile. In October 2017, Lundin experienced a rockslide on one of the walls of its open pit mine. It didn't disclose the rockslide immediately but did disclose it a month later in one of its operation updates.

The share price dropped following the operational update, and as night follows day, a securities class action was commenced alleging that Lundin had improperly failed to disclose the rockslide when it happened in October, and was delayed in its disclosure when it finally made the disclosure in November.

John Fabello (01:37): So, in a phrase, the important event here and concept under the Securities Act, that was before the Court is when a material change occurs. And that is a very important concept, as many of you will know, under the Securities Act. And the definition of what a material change means is important for issuers, so public companies who are making disclosure decisions every day, just as important for investors as well, who are receiving that information and who expect timely and robust disclosure by issuers and public companies.

Gillian Dingle (02:12): So, before we drill down on the question that the Court was grappling with last Wednesday, let's just refresh on the framework. As John has alluded to, there are two types of disclosure obligations under our securities regime. There are material facts which issuers are obliged to disclose in their continuous disclosure on a quarterly and annual basis, and there are material changes to the business operations or capital of an issuer, and material changes are obliged to be disclosed forthwith—that's the term used in the Act—with a material change report to follow within ten days. So, the issue in Lundin as the facts highlight and the question for the Court was: was the rockslide a material change? Lundin had disclosed that rockslides were a risk of its business in its continuous disclosure. And so, the Court had to assess was the rockslide, which was a manifestation of a previously disclosed risk, actually a change in the business operations or capital of Lundin.

John Fabello (03:24): Right. So that is the big issue in the case. I should clarify that we were there last week on behalf of one of the interveners, not the parties, so we didn't have a particular interest in the outcome of the specific case, but the concepts are really important. And we were gratified and relieved, I think, that each judge on the Supreme Court of Canada played an active role in the appeal.

I think all of the judges asked questions and good questions at that. So, we're hopeful that there will be a robust decision. We expect that there will be, and that that decision will give all of us guidance, issuers, investors the like when it comes out in a few months’ time. In a few months’ time, I expect that we will revisit this and do another session talking about the decision itself, but for now we hope that's informative and helpful. Thank you.

Gillian Dingle (04:15): Thank you.