For Thursday, February 11, 1999
Let all Canadian Bre-X
shareholders in
class-action suit, court
urged
By SANDRA RUBIN
The Financial Post
All Canadians who invested in failed
Bre-X Minerals Ltd. should be allowed into
an Ontario class-action lawsuit no matter
where they live, an Ontario Court judge was
told yesterday in an important round of
certification arguments.
At stake is the right of shareholders from
anywhere in Canada to decide whether and
where to go after those they hold responsible
for the massive gold fraud.
Options are narrowing. A federal court
judge in Texas ruled last month that
Canadians caught in the swindle will not be
able to participate in a U.S. class-action suit.
In Canada, only three provinces have
class-action legislation -- meaning the
thousands of former Bre-X shareholders
outside Ontario, Quebec and British
Columbia could be forced to spend
substantially more to sue individually on
their home turf.
Having a national class in the Ontario suit is
the most reasonable solution, and doesn't tie
anyone's hands, said lead lawyer Harvey
Strosberg.
"A non-resident can avoid being subjected
to the jurisdiction of this court by simply
opting out," he argued. "This is easy to do
and it's not expensive."
Mr. Strosberg said his bid to form a single
Canadawide class has the backing of lawyers
who have filed suits in B.C. and Quebec. He
also argued that, in any event, many investors
outside Ontario have legitimate claim to the
province's courts.
"On the evidence that's before this court, on
average about 50% of shares from
non-residents were traded in Ontario, on the
Toronto Stock Exchange."
Tiny Calgary-based Bre-X was catapulted
into stock market stardom on claims it had
stumbled on one of the biggest gold strikes
ever, deep beneath the Indonesian jungle. It
amassed a market value of about $6-billion
before imploding on news that someone had
been adding outside gold to core samples to
give the impression of a huge find.
Judge Warren Winkler of Ontario Court,
general division, said he is concerned that,
should he throw open Ontario's doors to all
comers, and the lawsuit fails, they could turn
around and file a new suit in their home
province.
"A hypothetical Alberta resident could say:
'I didn't ask to be in this Ontario case. I didn't
authorize Mr. Strosberg to act on my behalf.
On whose authority did he represent me?' At
the end of the day, fairness would dictate that
you don't get two swings at the cat.."
The judge also said he suspected some
Canadians from outside Ontario might feel
they were not receiving real justice with the
case being prosecuted so far away.
Thomas Heintzman, the lawyer for
SNC-Lavalin Inc., said it would be a mess if
people were allowed to file damage suits in
multiple jurisdictions.
"There cannot be a national class where the
members are not bound by the judgment,"
said Mr. Heintzman. "People would file
starting in the smallest province, say Prince
Edward Island, and wait to see if they like
the judgment. If not, they'd file in the next
province." He also said many Canadian
investors outside Ontario have already
started suits.
Arguments continue today. |
