COURT OF APPEAL FOR ONTARIO DATE: 20210219 DOCKET: C67681

Hoy, Brown and Thorburn JJ.A.

BETWEEN

The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund and Royce Lee Plaintiffs (Appellants)

and

Barrick Gold Corporation, Aaron W. Regent, Jamie C. Sokalsky, Ammar Al-Joundi and Peter Kinver Defendants (Respondents)

Counsel: Joel P. Rochon, Peter R. Jervis and Golnaz Nayerahmadi, for the appellants Kent E. Thomson, Luis Sarabia and Steven G. Frankel, for the respondents

Heard: November 9 and 10, 2020 by video conference, with further written submissions filed on November 23, 2020.

On appeal from the order of Justice Edward P. Belobaba of the Superior Court of Justice, dated October 9, 2019, with reasons reported at 2019 ONSC 4160, 148 O.R. (3d) 755.

Hoy J.A.:

I. Overview

[1] This appeal arises out of secondary market misrepresentations allegedly made by Barrick Gold Corporation during the construction of Pascua-Lama, a multi-billion-dollar gold mining project in the high Andes of Chile and Argentina.

[2] The appellants – the proposed representative plaintiffs in a putative securities class action – appeal the order of the motion judge, granting them leave to proceed under s. 138.3 of the Ontario Securities Act, R.S.O. 1990, c. S.5 (“OSA”) with one proposed misrepresentation claim against Barrick and the individual respondents, but denying them leave to proceed with all other claims they proposed to assert under Part XXIII.1 of the OSA.

[3] Under s. 138.3(1) of the OSA, a person or company who acquires or disposes of securities during the period between the time when a document containing a misrepresentation is released and the time when the misrepresentation is publicly corrected has a right of action for damages against the responsible issuer, each director of the responsible issuer at the time the document was released, and each officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document, among others. However, pursuant to s. 138.8(1) of the OSA, an action may not be commenced without leave of the court, which must be satisfied that the action is being brought in good faith and that there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.

[4] The motion judge denied leave to proceed with most of the alleged misrepresentations because, even if they were misrepresentations, they were not publicly corrected.

[5] The primary issues on appeal are whether the motion judge erred in principle (i) by effectively assuming the falsity of most of the alleged misrepresentations and determining whether leave to proceed should be granted by focusing on whether the misrepresentations had been publicly corrected or (ii) by taking an impermissibly narrow approach to determining whether the alleged misrepresentations were publicly corrected.

[6] A secondary issue is whether this court should interfere with his conclusion that four alleged environmental misrepresentations by omission were not even arguably misrepresentations.

[7] For the following reasons, I would allow the appeal in part and return the issue of whether leave should be granted in respect of the categories of alleged misrepresentations – described below as the capital expense (or, “capex”) and scheduling misrepresentations, and the accounting and financial reporting misrepresentations – to the court below.

II. Background

[8] In brief, Pascua-Lama, straddling the border of Chile and Argentina at the headwaters of the Estrecho river system, was a complex and environmentally sensitive project. The motion judge described the Estrecho as “a life force for the thousands of people, including indigenous communities, that lived downstream from the mining site.” Barrick began work on the project in October 2009. The estimated cost of the project escalated, and environmental issues arose. In October 2013, Barrick concluded that the project was no longer financially viable and decided to shut it down. Barrick recorded a write-off of around $5 billion.

[9] Over the proposed two-year class period, there were five negative disclosures of information that resulted in significant declines in Barrick’s share price. In total, shareholders lost billions of dollars.

[10] The list of alleged misrepresentations and public corrections appended to the motion judge’s reasons is similarly appended to these reasons. The alleged misrepresentations were made in annual financial statements, interim financial statements, management’s discussion and analysis, or in an annual information form (“AIF”). Some of the alleged misrepresentations are alleged untrue statements of material fact. Others are alleged misrepresentations by omission; that is, alleged omissions to state a material fact that was required to be stated or that was necessary to make a statement not misleading in the light of the circumstances in which it was made. [1]

[11] The subject matter of these alleged misrepresentations, set out in full in the Appendix, essentially falls into three categories.

[12] First, misrepresentations by omission relating to when Barrick expected initial gold production to commence at Pascua-Lama and to the estimated capital expense budget for Pascua-Lama.

[13] Between October 27, 2011 and October 31, 2013, the date for first gold production moved from mid-2013, to mid-2014, and then to the second half of 2014. In the same period, Barrick increased its estimated capex budget for Pascua-Lama from $5.0 billion to $8.0 billion to $8.5 billion. Barrick argued that each of these changes reflected unanticipated increases in construction costs, including skyrocketing labour and commodity prices in the aftermath of an earthquake, unexpected currency fluctuations, government-imposed tariffs, and falling gold and silver prices.

[14] The appellants allege that Barrick knew that its scheduling and capex estimates were unreliable and misleading. The appellants argue that each of the statements Barrick issued about its scheduled date for initial gold production and its estimated capex budget omitted to state a material fact that was either required to be stated or that was necessary to make a statement not misleading in the light of the circumstances in which it was made.

[15] Second, the appellants allege that Barrick made a series of misrepresentations relating to environmental compliance at the Pascua-Lama project.

[16] The motion judge granted the appellants leave to proceed with what he described as their core environmental claim, namely that on July 26, 2012 the respondents misrepresented that Barrick had completed the comprehensive water management system, required by the Resolución de Calificación Ambiental 024/2006 (“the RCA”), the primary Chilean environmental permit, and was therefore able to commence the mining activity described as “pre-stripping”. The appellants allege that this was an untrue statement of a material fact. The motion judge’s grant of leave to proceed with this core environmental claim is not at issue on this appeal.

[17] What is at issue are four alleged misrepresentations by omission with respect to environmental compliance set out in the Appendix and discussed later in these reasons. The motion judge denied leave in respect of those alleged misrepresentations on the basis that there was no reasonable possibility of success.

[18] Third, the appellants allege that Barrick made misrepresentations by omission relating to accounting and financial reporting. Essentially, the appellants claim that Barrick’s internal controls were ineffective, it should have written the project down more than a year before it did, and that it failed to record contingent liabilities.

[19] The materials on the leave motion were voluminous. The total body of evidence exceeds 50,000 pages of materials. The motion was argued over seven days.

III. The Motion Judge’s Reasons on Public Corrections

[20] Section 138.3(1) of the OSA provides that:

Where a responsible issuer or a person or company with actual, implied or apparent authority to act on behalf of a responsible issuer releases a document that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released and the time when the misrepresentation contained in the document was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against [the issuer and various related parties]. [Emphasis added.]

[21] The motion judge explained that the public correction serves as a time-post for the purposes of the proposed class period and any eventual damages calculation. He indicated that it is also a constituent element of the secondary market misrepresentation cause of action:

In the absence of a discrete and identifiable public correction (whether provided by the defendant company or a third party) there is no basis for a s. 138.3 misrepresentation action – the absence of a public correction is “dispositive” and there is no need to proceed further and consider whether leave should be granted under s. 138.8. [Citations omitted.]

[22] The interpretation of ‘public correction’ under s. 138.3(1) has not received significant consideration at this court. However, a body of jurisprudence has developed in the courts below. The trial judge cited his prior decisions, and the decisions of other class action judges in the Toronto region, at para. 17 of his reasons. [2] He summarized the criteria for a proper public correction as follows:

(i) There must be some linkage or connection between the alleged misrepresentation and the alleged public correction; (ii) The public correction must share the same subject matter and, in some way, relate back to the misrepresentation; and, (iii) The public correction must be reasonably capable of revealing to the market the existence of an untrue statement of material fact or an omission to state a material fact.

[23] Expanding on the third criterion, he wrote:

If the alleged correction, on a fair reading, does not arguably reveal to the market the existence of the alleged misrepresentation – that is, the existence of the allegedly untrue assertion or the alleged omission in the impugned representation – then there is no public correction and no basis for the proposed s. 138.3 action.

For example, if the plaintiff alleges that Capex disclosure X was misleading because of omission Y, the alleged public correction Z must reasonably be capable of revealing the existence of Y. If all the plaintiff can do is point to X and allege even an arguable Y but cannot identify a Z that reveals the existence of Y, then there is no public correction. [Emphasis added.]

[24] He stated that this makes sense in terms of public policy. If the assertion or the omission in the disclosure was never corrected, then the reason for the drop in the stock price will have to be found elsewhere. In his view, a meaningful public correction requirement provides an additional safeguard against unfair and unmeritorious misrepresentation claims.

[25] The motion judge addressed each of the three categories of alleged misrepresentations in turn.

The alleged capex and scheduling misrepresentations

[26] The motion judge concluded that he did not need to examine any of the extensive documentary and affidavit evidence, including expert reports filed by the appellants, explaining and supporting the alleged omissions, and by Barrick, explaining that the disclosures were timely and accurate. The motion judge stated that he could assume Barrick had made a misrepresentation, and focus his analysis on whether that assumed misrepresentation was publicly corrected:

I do not have to examine any of this evidence or even explain its meaning or context. Even if the evidence filed by the plaintiff provides some support for the proposition that one or more of the alleged omissions were needed to make one or more of the alleged misrepresentations not misleading, any further analysis of this proposition is not required. I can decide the Capex and scheduling representations by focusing on the proposed public corrections and asking whether the requirements for a public correction have been satisfied.

[27] He concluded that the requirements for a public correction had not been satisfied:

There is nothing in any of these alleged corrections that suggests that the earlier estimate was inaccurate or unreliable. There is nothing in any of these alleged corrections that reveals the existence of an alleged omission….

… there is nothing in any of the four “partial corrections” that provides a linkage or connection to any of the alleged omissions. And there is certainly nothing that is reasonably capable of revealing the existence of any of the alleged omissions.

[28] He stated that, on the facts before him, the determination of what constitutes a proper public correction was not a matter that could be “improved” by further or better evidence at trial.

The alleged environmental misrepresentations at issue on this appeal

[29] As indicated above, the motion judge denied leave to proceed with four claims arising from the alleged environmental misrepresentations by omission on the basis that that the appellants had no reasonable possibility of establishing that they are misrepresentations. I review his reasons for so concluding later in these reasons.

[30] However, the motion judge went on to find that, even if wrong in that analysis, claims based on the alleged omissions would also fail for lack of any public correction. He wrote that, as with the alleged capex and scheduling misrepresentations, he did not have to weigh the evidence and assess every allegation of misrepresentation by omission. He could decide the “omission” allegations by assuming Barrick made a misrepresentation and asking whether the requirements for a public correction have been satisfied.

[31] He concluded that the requirements for a public correction had not been satisfied: there was nothing in the proposed corrections that could “fairly be said to reveal the existence of any of the 11 alleged environmental omissions.” He observed that

there is nothing in the four suggested “partial corrections” that provides a linkage or connection to any of the alleged omissions. There is nothing that reveals the existence of any of the alleged omissions.

The alleged accounting and financial reporting misrepresentations

[32] The motion judge wrote that there was, “nothing in any of the five supposed corrections about the ineffectiveness of any of [Barrick’s] internal controls; nothing about any failure to take a timely impairment write-down; and nothing about any failure to record a contingent liability”.

[33] Again, he wrote, the determination of what constitutes a proper public correction, on the facts before him, was not a matter that could be affected by further or better evidence at trial. He could therefore conclude that there was no reasonable possibility that the plaintiff can show at trial that any of the suggested public corrections was connected to and revealed the existence of the alleged omission.

IV. An Overview of the Issues Regarding Public Corrections Raised on Appeal

[34] The appellants make two main arguments.

[35] First, they argue that the motion judge erred in principle by determining the public correction issue without first examining all the evidence and determining whether there was a reasonable possibility that Barrick made a misrepresentation. They say that only after ascertaining the nature, subject matter and falsity of the alleged misrepresentation can the court appreciate and analyze the extent to which a pleaded public correction “relates to” and “corrects” the misrepresented facts. They argue that the motion judge’s failure to engage in this process tainted his analysis of whether there was a public correction.

[36] Second, while they do not take issue with the three criteria for a public correction summarized by the motion judge, they argue the motion judge erred in principle (i) by applying a narrow, purely textual, analysis of the alleged public corrections and (ii) by failing to consider evidence, including expert economic evidence, about the context in which the alleged public corrections were made and how the alleged public corrections would be understood in the secondary market.

[37] In response to the first argument, Barrick advises that it did not suggest to the motion judge that he determine the leave motion based on whether the requirement for a public correction was met. It fully argued the issue of whether there was reasonable possibility that the appellants’ claim that it had made misrepresentations could succeed and candidly admits that it would have preferred that the motion judge decide the issue. However, it submits that that the motion judge was entitled to effectively assume that the alleged misrepresentations had been made out and proceed as he did.

[38] As to the appellants’ second argument, Barrick submits that the motion judge, having heard seven days of argument, was fully alive to the context in which the alleged public corrections were made and to the appellants’ expert evidence. For example, at the beginning of his reasons, he referred to the fact that, during the proposed class period, five negative disclosures resulted in significant declines in the share price. This, Barrick says, was in the report of the appellants’ expert, Cynthia Jones. Barrick argues that the motion judge did not refer to the appellants’ experts’ evidence because it was not probative of whether there was a public correction. Rather, the motion judge properly considered the criteria for a proper public correction.

[39] Barrick characterizes the appellants as seeking to interfere with a determination of mixed fact and law to which deference is owed.

V. Analysis of the Assumed Misrepresentations Issue

[40] I reject the appellants’ argument that a motion judge cannot assume that the alleged misrepresentations are made out and deny leave to proceed under s. 138.3 of the OSA on the basis there is no reasonable possibility that a trial court would find there has been a public correction of those misrepresentations.

[41] As Barrick argues, in several different contexts and different areas of the law, the court has assumed that one constituent element of a cause of action or legal test has been satisfied and disposed of the case on the basis that a different constituent element has not been established. For example, in the context of a claim in unjust enrichment, courts have assumed that there has been enrichment and determined the case on the issue of whether there is an absence of juristic reason for the enrichment: Bank of Montreal v. i Trade Finance Inc., 2009 ONCA 615, 96 O.R. (3d) 561 at para. 36, aff’d on other grounds, 2011 SCC 26, [2011] 2 S.C.R. 360. Whether or not a public correction is properly characterized as an element of the statutory cause of action of secondary market misrepresentation, as I discuss below, it is a necessary part of the statutory scheme.

[42] I note that the motion judge in this case is not the only motion judge to have accepted that this approach is available. In Drywall Acoustic Lathing and Insulation, Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc, 2016 ONSC 5784 (“SNC-Lavalin”), at para. 48, Perell J. accepted, albeit in the context of a summary judgment motion, that it is possible to assume the falsity of the alleged misrepresentations for the purpose of determining whether a corrective disclosure or public correction exists. [3]

[43] The appellants offer no authority for their position. Contrary to their assertion, Mask v. Silvercorp Metals Inc., 2015 ONSC 5348, aff’d 2016 ONCA 641 does not stand for the proposition that justices deciding motions for leave to proceed under s. 138.8 of the OSA are required to determine whether the plaintiff has a reasonable possibility of establishing that impugned disclosures were misrepresentations, and only then consider whether the plaintiff also has a reasonable possibility of demonstrating the alleged misrepresentations were publicly corrected. Mask – a decision of the motion judge in this case – simply sets out the pleading requirements applicable to claims brought under s. 138.3(1) of the OSA.

[44] The appellants also rely on Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, [2015] 2 S.C.R. 106 and Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, 137 O.R. (3d) 241, leave to appeal refused, [2017] S.C.C.A. No. 443. As the appellants note, in Theratechnologies, at para 38, Abella J., for the Supreme Court, wrote that the leave requirement is more than a “speed bump” and that, at the leave stage, the court must undertake “a reasoned consideration of the evidence to ensure that the action has some merit”. This, as Hourigan J.A. wrote for this court in SouthGobi, “must include some weighing of the evidence that both parties are required to proffer under ss. 138.8(2) and (3) [i.e. affidavit evidence setting forth the material facts on which the parties intend to rely] and scrutiny of the entire body of evidence, not just the evidence of the plaintiff viewed in isolation.” Further, given the fact that at the leave stage full production has not been made, the motion judge must be cognizant of the fact that the defendant may have relevant evidence that has not been produced or tendered: SouthGobi, at para. 48.

[45] Through this reasoned consideration of the evidence, a motion judge discharges the competing duties of protecting issuers from unmeritorious claims and frivolous strike suits and ensuring that the secondary market remedy is not rendered illusory through the elimination of potentially meritorious claims: SouthGobi, at para. 45. However, in my view, read in context, Theratechnolgies and SouthGobi do not prevent a motion judge from taking a plaintiff’s case at its highest by assuming the falsity of the impugned misrepresentation, and denying leave to advance that misrepresentation claim on the basis that there is no reasonable possibility that a trial court would find that there has been a public correction of the misrepresentation. In a proper case, a motion judge could discharge the “competing duties” in this manner.

[46] But it is an approach that should be used rarely. The existence of a misrepresentation is at the heart of the statutory cause of action. When an issuer’s disclosures are impugned, both the issuer and the shareholders have an interest in a finding that restores confidence in the issuer’s ongoing disclosure. Assuming a misrepresentation – that is, assuming a wrong – and then finding a second wrong – a failure to correct the misrepresentation – would generally do little to restore market confidence. As I discuss below, it is also an approach that should be used with great caution.

VI. Analysis of the Approach to Determining Whether There Was a Public Correction

[47] This leads to the appellants’ second argument on the corrections issue.

[48] As I will explain, assuming the falsity of the alleged misrepresentation does not relieve a motion judge of the obligation to engage in a reasoned consideration of evidence of the context in which the alleged public correction was made and how the alleged public correction would be understood in the secondary market if the alleged public correction does not, on its face, reveal the existence of the alleged misrepresentation. In some cases, that may require the motion judge to consider evidence which also goes to the issue of whether there is a reasonable possibility that a trial court will find that there was a misrepresentation. Thus, caution is required. In some cases, assuming the falsity of the alleged misrepresentations – an approach driven by concerns of judicial economy – may prove a false economy. Judicial economy likely only outweighs the interests of an issuer and its shareholders in a finding as to whether there is a reasonable possibility that the trial court would find a misrepresentation and the risks entailed in assuming a misrepresentation when: the motion judge is faced with an overwhelming record; and the motion judge is confident that there is no material overlap between the evidence relevant to whether there is a misrepresentation, and the evidence of the context in which the alleged public correction was made and how the alleged public correction would be understood in the secondary market.

[49] Moreover, where the motion judge must engage in an analysis of the evidence of context, it cannot be said (as the motion judge did in this case) that there is no possibility that the matter could be “improved” by further and better evidence at trial.

[50] In SNC-Lavalin, Perell J. correctly rejected a purely semantic and mechanical approach to the determination of a public correction (referred to, here, as a corrective disclosure). He reasoned, at para. 45:

[T]he determination of whether a corrective disclosure is corrective depends not only on a semantic analysis of what the public correction means but also on an analysis of how the words would be understood in an efficient market and also a statistical analysis of the effect of those words on the market’s evaluation of the value of the securities that had been misrepresented to the marketplace. Put somewhat differently, a semantic analysis of whether a corrective disclosure was made is necessary, but it is not sufficient to determine the existence or non-existence of a corrective disclosure. What is required is an analysis of the literal meaning of the words, which is in any event not a purely mechanical exercise but one that involves, evidence, opinion, and argument, and also an analysis of the perceived or effective meaning of the words in the secondary market, which once again is not a mechanical exercise, but rather one that involves evidence.

[51] Perell J. wrote this in reasons concluding that whether there had been a public correction could not be determined on a summary judgment. But the principle – that, where the alleged public correction does not, on its face, clearly reveal the existence of the alleged misrepresentation, the judge must engage in a reasoned consideration of evidence of the context in which the alleged public corrections were made and how the alleged public corrections would be understood in the secondary market – applies equally on a leave motion.

[52] In a similar vein, in Kauf v. Colt Resources Inc., 2019 ONSC 2179, 145 O.R. (3d) 100, at para. 121, Glustein J. wrote of the need for a “robust analysis of the evidence”:

If there is a reasonable possibility based on a robust analysis of the evidence that a trial court could find that the purported public correction could serve as “time-post” for damages, leave ought to be granted.

[53] I turn to the determinative question: Did the motion judge in this case err in principle by determining that there was no reasonable possibility that the trial court would find that there has been a public correction of the misrepresentation based on a purely textual analysis, without the requisite reasoned consideration of the evidence?

[54] In my respectful view, the answer to that question is “yes”. His reasons disclose that his analysis of the proposed public corrections was a purely textual one, limited to a “fair reading” of the proposed correction. As Perell J. wrote in SNC-Lavalin, this is a necessary step. But the analysis cannot end there.

[55] By way of example, the appellants allege that Barrick’s representation that total construction capital for Pascua-Lama was estimated at $4.7-$5 billion, made in the third-quarter interim financial statement dated October 27, 2011, is a misrepresentation because, among other things, Barrick did not disclose that it had material information indicating that this estimate was neither reasonable nor accurate. They allege that Barrick’s disclosure of a 50-60 percent increase in capital costs from this estimate, contained in its interim financial statements for the second quarter of 2012, dated July 26, 2012, constitutes a public correction.

[56] In his analysis, the motion judge effectively assumed that, as the appellants allege, Barrick had material information on October 27, 2011 indicating that its estimate was neither reasonable nor accurate. As stated above, the motion judge found that there was nothing in this (or any other) alleged public correction relating to capex that suggests that the earlier estimate was inaccurate or unreliable and reveals the existence of the omission. He did not consider whether, in the context in which the July 26, 2012 statement was made, there was a reasonable possibility that the trial court would find that the market would consider a budget increase of that magnitude, at that time, as casting doubt on the reasonableness or accuracy of the earlier budget. Nor did he consider the evidence of the appellants’ economic expert, Cynthia Jones, that the alleged corrective disclosures “clearly informed the market that prior misstatements should no longer be relied upon”.

[57] Barrick argues that no weight should be given to what it says is a bald assertion by Ms. Jones. It may be right. But that is an issue that remains to be determined, possibly only at trial.

[58] This court cannot engage in the necessary “reasoned consideration of the evidence”: Theratechnologies, at para. 38. It is not clear that the 50,000 pages of evidence before the motion judge are before this court. Moreover, it is not the role of this court to engage in such a review. Regrettably, the question of whether leave should be granted in respect of those alleged misrepresentations must be remitted to the court below.

[59] I will add this. The motion judge’s narrow approach to determining whether a public correction was made out may have been driven by his view that the public correction is an “additional safeguard against unfair and unmeritorious misrepresentation claims”. Respectfully, the legislative history of the statutory scheme does not support his view that the public correction serves as an “additional safeguard”.

The role of public corrections within the statutory scheme

[60] Part XXIII.1 of the OSA was enacted in 2002, following careful consideration by committees of the Toronto Stock Exchange (“TSE”) and the Canadian Securities Administrators (“CSA”). [4]

[61] In the mid-1990s, the TSE established the Committee on Corporate Disclosure, chaired by Thomas I.A. Allen, Q.C., to address perceived problems in the quality of continuous disclosure from market participants (“the Allen Committee”). In 1995, the Committee published its interim report (“the Allen Report”). [5] The CSA supported the recommendations made by the Allen Committee in its final report and established its own Civil Remedies Committee (“the CSA Committee”) which, in 1998, adopted in large part – with one notable exception discussed below – the recommendations of the Allen Committee. [6] Both the Allen Committee and the CSA Committee carefully considered the risk of unmeritorious or extortionate ‘strike suits’ in making their recommendations.

[62] As this court observed in Kerr v. Danier Leather Inc., 77 OR (3d) 321, at paras. 119-120, aff’d 2007 SCC 44, the Allen Committee and the CSA Committee’s reports may provide persuasive evidence as to the legislature’s intent in enacting s. 138.3.

[63] The function of a public correction within the statutory scheme was not discussed by the Allen Committee in detail. It is referred to, obliquely, in the Allen Committee’s discussion of the persons who ought to have a cause of action for secondary market misrepresentations or non-disclosure: Allen Report, at paras. 6.11-18. In summarizing its position, at para. 6.13, the Committee noted:

[W]e recommend that a cause of action for damages resulting from misleading or untimely disclosure be available … to any person who acquires or disposes of a security of the issuer in question in a secondary market between the date when the misleading disclosure was made and the date when it was corrected, or in the case of untimely disclosure or non-disclosure, between the date when the disclosure ought to have been made and the date when it was in fact made. [Emphasis added; emphasis in original omitted.]

[64] The function of a public correction was also discussed with reference to the scope and calculation of damages: Allen Report, at paras. 6.58, 6.63, fn. 12.

[65] I draw several observations from these limited comments, taken in the context of the entire Allen Report.

[66] First and foremost, the Committee appears to have viewed a public correction simply as part of the statutory scheme – a necessary time-post for the proposed class period and any eventual damages calculation. The public correction delimits who may bring a claim for secondary market misrepresentation and makes damage calculations for secondary market claims standardized and predictable. [7]

[67] Second, throughout, the Committee appears to have assumed the misrepresentation would be corrected or that the necessary disclosure would be made. If the Committee intended to limit the proposed statute’s applicability only to those misrepresentations later explicitly corrected, it is surprising that it did not so indicate in its otherwise extensively canvassed report.

[68] Third, the Committee did not list a ‘public corrections requirement’ among the safeguards against “open[ing] the floodgates to U.S. type securities litigation”: Allen Report, at para. 6.72; see also paras. 4.18-4.20. The Committee considered sufficient the significant differences in class action procedures, the limitations on liability recommended (including the limited class of plaintiff, several liability, and monetary limits on liability); and other differences between US and Canadian legal culture and courts (including the comparative rarity of civil jury trials and the “loser pays” rule).

[69] In addition to the safeguards against unmeritorious litigation considered or proposed by the Allen Committee, the CSA Committee proposed requirements for leave to proceed and court approval of settlements. The regime subsequently enacted by Ontario as Part XXIII.1 of the OSA – and other Canadian provinces’ securities acts – closely followed the CSA’s proposal.

[70] Not treating the public correction as an additional safeguard against unfair and unmeritorious misrepresentation claims makes sense.

[71] First, recall that, at the leave stage, a consideration of whether there has been a public correction of a misrepresentation follows a finding that there is a reasonable possibility that it will be found at trial that the defendant has released a document or made a public oral statement containing a misrepresentation (or, in rare cases, the making of an assumption that there was a misrepresentation). When that threshold has been cleared (or the misrepresentation assumed), the plaintiff’s claim is potentially meritorious. Where there is a reasonable possibility of a misrepresentation, the plaintiff’s claim can hardly be characterized as a strike suit. Furthermore, the clearing of the misrepresentation threshold, combined with the fact that the plaintiff brought an action, suggests that there was a public correction. The plaintiff must have learned of the misrepresentation somewhere. [8]

[72] Second, the supposed public policy rationale identified at para. 21 of the motion judge’s reasons – that, in the absence of a strict public correction requirement, the cause of any decline in the market value of the security may be properly attributed to factors other than the correction of the alleged misrepresentation – is anticipated and addressed elsewhere in Part XXIII.1. Section 138.5(3) provides that “assessed damages shall not include any amount that the defendant proves is attributable to a change in the market price of securities that is unrelated to the misrepresentation or the failure to make timely disclosure.” The motion judge properly averted to the role of s. 138.5(3) in his discussion of the core environmental misrepresentation claim for which he granted leave.

Public correction of a misrepresentation by omission

[73] Finally, the fact the alleged misrepresentations are misrepresentations by omission does not change the need for reasoned consideration of the evidence in the context of a motion for leave.

[74] In expanding on the third of the criteria for a proper public correction, articulated at para. 19 of his reasons, the motion judge stated that the alleged public correction, on a fair reading, must arguably reveal to the market the alleged omission of the material fact that was necessary to make the statement at issue not misleading in light of the circumstances in which it was made.

[75] In my view, this sets the bar too high.

[76] The public correction need not specifically identify the omitted material fact or specifically relate the information in the correction to the omitted material fact. As stated earlier, if the alleged public correction does not, on its face, reveal the existence of the alleged misrepresentation, the motion judge must engage in a reasoned consideration of evidence concerning the context in which the alleged public corrections were made and how the alleged public corrections would be understood in the secondary market. The critical question for the motion judge is whether the alleged public correction was reasonably capable of being understood in the secondary market as correcting what was misleading in the impugned statement. [9]

[77] What the motion judge outlined as the other criteria for a proper public correction were not at issue on this appeal. Whether they are better described as “characteristics” rather than “criteria”, and their precise wording, are issues for another day.

[78] I turn now to the alleged environmental misrepresentations which the motion judge did not permit to proceed.

VII. The Alleged Environmental Misrepresentations Which the Motion Judge Did Not Permit to Proceed

[79] The motion judge reviewed the evidence with respect to the allegations of environmental misrepresentations. He granted the appellants leave to proceed with their “core environmental claim”. However, as indicated above, the motion judge concluded that leave to proceed with the four alleged environmental misrepresentations by omission should not be granted.

[80] The first three alleged environmental misrepresentations suffered from fatal “chronology issues”. In short, he concluded that the material facts that the appellants allege should have been disclosed to make the three representations at issue not misleading arose after the representations were made. Since they arose after the representations were made, Barrick could not have been required to state them at the time it made the representations.

[81] The fourth alleged environmental misrepresentation by omission failed because the motion judge found that the material facts that Barrick allegedly omitted to disclose were not “even arguably required” to make the representation at issue not misleading.

[82] As I will explain, I would not interfere with the motion judge’s decision to deny the appellants leave to proceed with the four alleged misrepresentations by omission with respect to environmental compliance.

[83] In their 50-page factum, the appellants concentrated solely on the motion judge’s approach to determining whether the public correction was made out and made no reference to the motion judge having erred in concluding that their allegations of environmental misrepresentations by omission could not arguably constitute misrepresentations.

[84] In its responding factum, Barrick noted that the appellants did not take issue with the motion judge’s conclusion that the alleged environmental misrepresentations by omission could not arguably constitute misrepresentations and concentrated solely on the public corrections issue. However, it argued that the motion judge’s conclusion was amply supported by the evidence and was open to him.

[85] In oral submissions, in their outline of the errors they alleged that the motion judge had made, the appellants did not refer to his having erred in concluding that the alleged environmental misrepresentations by omission could arguably constitute misrepresentations. They again focused on the public corrections issue. However, in response to questions from the panel, the appellants indicated that they take issue with the motion judge’s findings with respect to the alleged environmental representations by omission.

[86] In their Notice of Appeal, the appellants refer to only two of the four alleged environmental misrepresentations for which the motion judge denied leave: those made November 1, 2012 and March 28, 2013. With respect to those two alleged misrepresentations, the appellants state at para. 10(b) of their Notice of Appeal that the motion judge “failed to properly consider the applicable principles to determine the existence of misrepresentation by omission”. Their other articulated grounds of appeal in relation to those alleged misrepresentations relate to the public correction issue.

[87] After the appeal was heard, the court asked the parties for written submissions, limited to five pages on this issue.

[88] In their written submissions, the appellants argue that the motion judge erred in concluding that the alleged environmental misrepresentations by omission could not arguably constitute misrepresentations. Barrick submits that it would be unfair to permit the appellants to challenge those findings at this juncture. Among other reasons, Barrick has not had the opportunity to respond to what the appellants now argue are errors. In any event, Barrick argues, the motion judge’s findings are not tainted by reversible legal error or palpable and overriding errors of fact.

Some additional context

[89] Unlike the portions of his reasons addressing the alleged capex and scheduling misrepresentations and the alleged accounting and financial reporting misrepresentations, in his reasons addressing the alleged environmental compliance misrepresentations the motion judge summarized what he characterized as the key points of evidence relating to those alleged misrepresentations. Some additional background, drawn from that summary, will help understand his reasons for denying leave to proceed with the four alleged environmental misrepresentations by omission and the parties’ arguments.

[90] As noted above, Pascua-Lama, located at the headwaters of the Estrecho river system, was environmentally sensitive. In the motion judge’s words, “[i]t was imperative that toxic by-products of the mining process, such as acid rain drainage, did not contaminate that river system.” To this end, Chilean authorities required that Barrick construct a comprehensive water management system (“WMS”) as part of the RCA.

[91] Barrick began pre-stripping at Pascua-Lama on May 4, 2012. Although the WMS was not fully constructed, Barrick considered itself entitled to do so as, in its view, the WMS was “operational” within the meaning of that term in the RCA.

[92] In September and October 2012, local indigenous groups filed two “constitutional rights” lawsuits in a Chilean court to stop the pre-stripping and other alleged environmental violations. The court refused to grant the requested preliminary injunction.

[93] Because of excessive road dust and other related problems, the pre-stripping operation was temporarily halted by government order in October 2012.

[94] Among other things, the WMS collected descending mountain water, using a system of horizontal channels and natural ravines, and carried that water around Pascua-Lama’s waste dump and onward to the river system. The RCA required that the WMS be capable of receiving “water flows equivalent to a 1000-year flood.” If the terrain carrying descending mountain water was not carved in rock, the RCA required that terrain to be lined with an appropriate material to prevent erosion and mudslides.

[95] Unlike the horizontal channels, one of the ravines – the Q-9 ravine – was not lined in concrete or other material. Several months following the pause of pre-stripping operations, in December 2012 and January 2013, two massive mudslides occurred after large volumes of descending water hit the loose rock, soil and silt present at the outlet work that directed the water into Q-9 and in Q-9 itself.

[96] Barrick’s Chilean subsidiary filed a self-report with the primary environmental agency, referred to as the “SMA” in the motion judge’s reasons, admitting that it had breached the RCA by not building the outlet work at the opening of Q-9 according to the RCA’s specifications. The SMA rejected the self-report because it was incomplete and conducted its own investigation. It laid environmental charges against Barrick. In its charging document, released in March 2013, the SMA accused Barrick of 23 environmental violations. In a letter to the SMA in April 2013, Barrick acknowledged and “accepted” 13 of the 14 violations relating to the WMS. The SMA fined Barrick $16 million, which was reduced to $12 million for early payment.

[97] The two “constitutional lawsuits” made their way back to the Chilean court soon after the SMA released its charging document. On April 9, 2013, the Chilean court, ex parte, suspended all construction work on the Chilean side of the Pascua-Lama project.

[98] In June 2013, Barrick announced that it would try to rebuild the WMS “in compliance with permit conditions” and then resume pre-stripping. However, four months later, in October 2013, it decided to shut the project down.

The March 28, 2012 alleged misrepresentations by omission

[99] The motion judge explained that two of the four representations at issue, dated March 28, 2012 (contained in Barrick’s 2011 AIF and Annual Report and set out in the Appendix), “contain broad language intended to reassure the interested reader that Barrick takes environmental compliance seriously and that Barrick believes that it is in substantial compliance with all applicable environmental laws and regulations at its mining sites.”

[100] He set out the seven material facts that the appellants allege Barrick was required to state to make those two March 28, 2012 representations not misleading:

1. Barrick’s environmental permits required it to complete all elements of its WMS and have it fully operational prior to the commencement of pre-stripping;
2. Contrary to Barrick’s misstatement that its WMS was complete, enabling pre-stripping to commence, Barrick was aware that its WMS was not complete and was not fully operational;
3. Barrick commenced pre-stripping in violation of its RCA permits in May 2012;
4. By committing this act, Barrick was in violation of Article 24 of Law 20,417 enacted on January 28, 2010 that required strict compliance with the RCA;
5. Barrick’s RCA violations would be considered serious under Chilean law, and Barrick knew that under the new strict compliance legal regime, it specifically risked suspension or permit revocation;
6. Barrick knew that a suspension of pre-stripping until the WMS was complete in accordance with the RCA could delay the project by at least an additional year or more beyond the one-year delay in completion until mid-2014 announced on July 26, 2012; and,
7. Barrick had decided to follow a highly risky strategy of commencing pre-stripping in violation of its permit to maintain its schedule and risk the consequent sanctions.

[101] He concluded that the alleged omissions are precluded by “obvious chronology problems”:

The alleged omissions that pertain to the two March 28, 2012 representations relate to a pre-stripping event that actually took place several weeks later in May 2012. Therefore, there is zero chance that any of these alleged omissions (in a March disclosure about an event that did not occur until May) can even arguably be described as omissions “that should have been disclosed to make the [March] representations not misleading.”

[102] I agree with Barrick that there is no basis to interfere with this conclusion.

[103] First, to the extent that the appellants’ Notice of Appeal could be argued as having opened the door to the appellants making arguments that the motion judge erred in concluding that some of the alleged environmental misrepresentations by omission did not arguably constitute misrepresentations, the Notice of Appeal makes no reference to these alleged environmental misrepresentations by omission. The appellants at no point sought leave to rely on an error in concluding that the alleged March 28, 2012 misrepresentations did not arguably constitute misrepresentations as a ground of appeal.

[104] Second, and in any event, I reject the appellants’ argument that there is no “chronology problem” because, effectively, an issuer is deemed to make the impugned representation anew when related material facts requiring disclosure subsequently arise. This is contrary to s. 1(1) of the OSA, which defines a misrepresentation by omission as “an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made” (emphasis added). The definition is clear. The “circumstances in which it was made” do not include circumstances which arose after the statement was made. The appellants framed their claim as one based solely on misrepresentation. Their argument confounds liability for failure to make timely disclosure under s. 138.3(4) of the OSA with liability for misrepresentation under ss. 138.3(1) and (2) of the OSA.

[105] Finally, while alleged omission 1 – and possibly 2, 5, 6 and 7 – might appear to relate to Barrick’s alleged intention prior to the May 2012 pre-stripping event to act in violation of environmental law by commencing pre-stripping in breach of the RCA, knowing of the risks of doing so, Barrick points to evidence that the decision to begin pre-stripping was not made until the day before pre-stripping began and the appellants do not point to any evidence to the contrary.

The November 1, 2012 and March 28, 2013 misrepresentations by omission

[106] The motion judge explained that the other two alleged misrepresentations are the disclosures of November 1, 2012 in Barrick’s interim financial statements for the third quarter of 2012 and of March 28, 2013 in Barrick’s 2012 AIF, set out in the Appendix and below. They report on the two “constitutional rights” lawsuits brought in Chile by indigenous communities affected by the Pascua-Lama project:

November 1, 2012: “In September and October 2012, two constitutional rights protections actions were filed in Chile by representatives of an indigenous community and certain other individuals, seeking the suspension of the construction of the Chilean portion of the Pascua-Lama project due to alleged non-compliance with the requirements of the Project’s Chilean environmental approval. The Court declined to issue an immediate injunction suspending pre-stripping activities, but both cases have been admitted for review by the Court. We intend to vigorously defend these actions.”

March 28, 2013: “In September and October 2012, two constitutional rights protections actions were filed in Chile by representatives of an indigenous community and certain other individuals, seeking the suspension of the construction of the Chilean portion of the Pascua-Lama project due to alleged non-compliance with the requirements of the Project’s Chilean environmental approval. The Court declined to issue an immediate injunction suspending pre-stripping activities. The first action has been admitted for review by the court and the second action has been abandoned for lack of prosecution. We intend to vigorously defend these actions.”

[107] The motion judge set out the following four material facts that the appellants say should have been disclosed to make the above representations not misleading:

1. Barrick had commenced pre-stripping in violation of the RCA prior to the completion of the WMS;
2. Barrick admitted to the SMA in its self-report to serious RCA violations related to the WMS;
3. The self-report had been rejected for failing to provide “specific, truthful and demonstrable” information on January 31, 2013 after an SMA investigation uncovered other serious RCA violations beyond those admitted by Barrick; and,
4. Barrick had committed 13 of 14 of the RCA violations alleged by the SMA, which it admitted to on April 29, 2013.

[108] With respect to the November 1, 2012 statement, he concluded, again, that there were chronology issues:

The alleged omissions that deal with a supposed violation of the RCA, Barrick’s self-report about the WMS, the SMA’s rejection of the self-report, and Barrick’s April 29, 2013 letter of “acceptance” all post-date the November 1, 2012 statement and would not have been known to Barrick at that time.

[109] The alleged March 28, 2013 misrepresentation by omission failed for a different reason:

The alleged omissions that pre-date the March 28, 2013 AIF such as the self-report and its rejection by the SMA are not omissions that should have been disclosed to make the March 28, 2013 update about the “constitutional rights” litigation not misleading. There was nothing in this latter update that even arguably required information about the self-report or its rejection to make the “constitutional rights” update (that referred only to pre-stripping and not the WMS in any event) not misleading.

[110] In their written submissions, the appellants argue that Barrick’s statements on November 1, 2012 and March 28, 2013, in which it claimed that it would “vigorously defend” these actions, could only be interpreted by the market as a denial of the allegations in the constitutional litigation that it had violated the RCA, which Barrick, in fact, knew to be true. In addressing the motion judge’s conclusion with respect to the November 1, 2012 statement, they say that the motion judge misapprehended the substance of the pleaded omissions, which was that in May 2012 Barrick violated the RCA – including by carrying out pre-stripping activities prior to full completion of the WMS, as alleged in the constitutional litigation – and knew it had violated the RCA, not that Barrick admitted to those violations a year later. This misapprehension, they argue, resulted because the motion judge failed to consider their omission claims through the lens of all the relevant evidence.

[111] I reject the appellants’ argument that the motion judge failed to consider their allegations of environmental compliance misrepresentation by omission in the context of the relevant evidence. It is apparent from his reasons (including the portion of his reasons granting the appellants leave to proceed with their “core” environmental claim) that he carefully considered the significant body of evidence relevant to the alleged environmental misrepresentations, including Barrick’s belief about the completion of the WMS and the right to start pre-stripping. The appellants point to no evidence that Barrick did not, in fact, intend to “vigorously defend” the constitutional litigation. The impugned statements were made in documents which, elsewhere, cautioned that the outcome of the constitutional litigation was uncertain and that if Barrick were unable to resolve these disputes favourably, it may have a material adverse impact on its financial condition and results of operations. The argument that the appellants now advance about the “real” substance of the alleged omissions is inconsistent with their having plead alleged omissions 2 and 3 with respect to both the November 12, 2012 and March 28, 2013.

[112] I am not persuaded that there is any basis for this court to interfere with the motion judge’s conclusions with respect to the November 1, 2012 and March 28, 2013 disclosures.

VIII. Disposition

[113] I would allow the appeal in part and return the issue of whether leave should be granted in respect of the categories of alleged misrepresentations described above as the capex and scheduling misrepresentations and the accounting and financial reporting misrepresentations to the court below, to be determined by a judge selected by the administrative judge of the class actions team in Toronto.

[114] I would order that if the parties are unable to agree on costs of the appeal and the motion below, the appellants shall make written submissions not exceeding five pages within 14 days of release of these reasons, and the respondent shall make written submissions not exceeding five pages within 10 days after the appellants make their submissions.

Released: “AH” FEB 19 2021 “Alexandra Hoy J.A.” “I agree. David Brown J.A.” “I agree. Thorburn J.A.”

Appendix

Plaintiff’s Allegations of Misrepresentation (by Assertion or Omission) [10]

Part I: Capex and scheduling misrepresentations (by omission)

The $4.7 to $5.0 billion Capex estimate and schedule

October 27, 2011 (Q3 2011) – “Pascua-Lama is... expected to achieve first production in mid-2013... Total mine construction capital is estimated at $4.7-$5.0 billion, with approximately 50% of the capital committed at the end of the third quarter.” (p. 5)

February 16, 2012 (Q4 2011) – “At the Pascua-Lama project, approximately 55% of the previously announced pre-production capital of $4.7- $5.0 billion has been committed and first production is expected in mid-2013.” (p. 19)

March 28, 2012 (2011 AIF) – “Approximately 55% of the previously announced pre-production capital of $4.7-$5.0 billion has been committed and first production is expected in mid-2013.” (p. 88)

May 2, 2012 (Q1 2012) – “At the Pascua-Lama project, about 70 percent of the previously announced mine construction capital of $4.7-$5.0 billion has been committed. First production is anticipated in mid-2013... [T]he company intends to complete a detailed capital cost and schedule review in the second quarter of 2012.” (p. 14)

representing as a matter of present fact in its “Cautionary Statements on Forward-Looking Information” that these estimates were “considered reasonable by management” or “the company” (Q3 2011, p. 112; Q4 2011 and 2011 Annual, pp. 10, 167; 2011 AIF, p. 88; 2012 Annual, pp. 30 and 175).

omitting to disclose the following material facts necessary to make the above statements relating to the $4.7 to $5 billion Capex budget and first gold production by mid-2013 not misleading in light of the circumstances in which they were made:

Barrick had material information that indicated that the $4.7 to $5 billion budget estimate was neither reasonable nor accurate;

The estimate was at best preliminary, subject to further review and would increase materially based on the assessment of known information;

Turner & Townsend (T&T) had advised that the June estimate, used as the basis for the $4.7 to $5 billion estimate, had been prepared using an incorrect “straight line” methodology (from the original 2009 estimate) and was not even reliable up to a Class III feasibility level estimate;

T&T was unable to determine if the estimate was reasonable due to the lack of critical “benchmark data”;

The $650 million contingency in the budget reflected a high level of unreliability in the base estimate;

T&T-led risk workshops concluded that the project estimate was high risk and required a very high contingency to reflect that risk;

Internal information, which indicated that the Capex budget was unreasonable and unreliable:

The estimate was dependent on estimates prepared by the projects EPC contractors and Barrick considered the estimates received from its largest contractor, Fluor-Techint (amounting to 40% of the Capex cost), to be highly unreliable throughout the period until July 26, 2012;

The cost escalation related significantly to ongoing problems with Barrick's first ever attempt at total EPC management of the project, which continued to be a very serious problem until the approach was abandoned in July 2012;

The estimate was based on a project schedule which called for 18 months of pre-stripping to commence in mid-2011 in order to permit completion of construction and first production by mid-2013, while Barrick knew of the risk of significant schedule delay in the commencing of pre-stripping because of the significant delays in completion of the Water Management System (WMS), which was still not complete by Q2, 2012;

Barrick knew of undisclosed internal estimate increases by no later than January 2012 to $6.4 billion (plus contingency) and then $7.5 billion (plus contingency) by Q1 2012 and knew that increasing inflation trends were likely to cause a material increase to the estimate.

The $7.5 to $8.0 billion Capex estimate and schedule

July 26, 2012 (Q2 2012) – “Preliminary results [of the review] currently indicate that initial gold production is now expected in mid-2014, with an approximate 50-60 percent increase in capital costs from the top end of the previously announced estimate of $4.7-$5.0 billion.” (pp. 5 and 15).

representing as a matter of present fact in its cautionary statements that these estimates were "considered reasonable by management”;

omitting to disclose material information necessary to be disclosed to make their representations relating to the Capex budget and expected schedule to first gold, specifically:

Barrick was abandoning its failed EPC approach and hiring the international construction engineering consulting firm Fluor (to take over full EPCM management) and the engineering firm Bechtel (to supplement its Chilean Project Team). Barrick did not disclose that the fees for these two firms being hired would likely be more than $400 million that had not been included in the $7.5 to $8 billion budget estimate;

Barrick knew that the project costs were likely to materially increase as a result of Fluor's analysis of the budget; and

Barrick had commenced pre-stripping in May 2012 in serious violation of the RCA permit, exposing the project to a serious risk of suspension and significant increase to the Capex costs in the event of such suspension.

The $8.0 to $8.5 billion Capex estimate and schedule

November 1, 2012 (Q3 2012) – “As disclosed with Barrick's second quarter report, preliminary results of a review indicated an increase in capital costs to $7.5-$8.0 billion and a delay in first production to mid-2014. Since then, the company has been working with Fluor to carry out a more comprehensive top-to-bottom review. This review will be complete by our 2012 year-end results release; however, work to date suggests capital costs will be closer to $8.0 - $8.5 billion with first production in the second half of 2014.” (pp. 5 and 14)

March 28, 2013 (2012 Annual) – “During the fourth quarter, the cost estimate and schedule for the project was finalized. Expected total mine construction capital remains unchanged in the range of $8.0 to $8.5 billion and includes a contingency of 15- 20 percent of remaining capital. First gold production continues to be targeted for the second half of 2014. Incentives for both Fluor and Techint, our Engineering, Procurement, and Construction Management (“EPCM”) partners, are based on the competition of the project in line with this estimate and schedule.” (p. 37)

representing as a matter of present fact in its cautionary statements that these estimates were "considered reasonable by management”;

omitting to disclose known material information that the publicly disclosed Capex estimate and schedule were unreliable and materially understated:

Barrick had commenced pre-stripping in May 2012 in serious violation of the RCA permit and exposing the project to a serious risk of suspension, resulting delay and significant increase to the Capex costs in the event of such suspension;

Barrick had decided in 2009 through 2012 to utilize EPC rather than “traditional” EPCM construction management in order to save costs, that it had no previous experience or expertise in doing so and that Pascua-Lama was beyond the expertise of its in-house EPC capabilities.

Partial Corrections of Capex and Schedule Misrepresentations

July 26, 2012 (Q2 2012) – “[D]ue to lower than expected productivity and persistent inflationary and other cost pressures, the company initiated a detailed review of Pascua-Lama's schedule and cost estimate in the second quarter. While the review is not yet complete, preliminary results currently indicate that initial gold production is now expected in mid-2014, with an approximate 50-60 percent increase in capital costs from the top end of the previously announced estimate of $4.7-$5.0 billion. Approximately $3 billion has been spent to date.” (pp. 5 and 15)

November 1, 2012 (Q3 2012) – “Pascua-Lama Project Update... [C]apital costs will be closer to $8.0-$8.5 billion with first production in the second half of 2014.” (p. 1)

June 28, 2013 (Press Release) – “Impairment Charges ... As a result of recent and continued significant declines in gold and silver prices, and the delay in first gold production, Barrick is conducting impairment testing. Preliminary analysis indicates an after-tax asset impairment charge in the range of approximately $4.5-$5.5 billion in the second quarter for the Pascua-Lama project.”

October 31, 2013 (Q3 2013 Press Release and MD&A) – “Barrick has decided to temporarily suspend construction activities at Pascua-Lama, except those required for environmental protection and regulatory compliance.” (pp. 1 and 15)

Part II: Environmental Compliance Misrepresentations

July 26, 2012 (Q2 2012) – “During the second quarter, the project achieved critical milestones with completion of Phase 1 of the pioneering road and also the water management system in Chile, both of which enabled the commencement of pre-stripping activities.” (pp. 6 and 16)

Omitting to disclose material facts necessary to be stated to make the following statements not untrue:

March 28, 2012 (2011 AIF) – “The [Pascua-Lama] project has been designed to manage the handling of ore and rock to reduce the potential volume of acid rock drainage. Such considerations include diversion and containment systems for the collection, storage and treatment of drainage and closure and reclamation plans designed to minimize water infiltration.” (p. 91)

“Barrick has a policy of conducting environmental audits of its business activities, on a regular and scheduled basis, in order to evaluate compliance with: applicable laws and regulations; permit and license requirements; company policies and management standards including guidelines and procedures; and adopted codes of practice.” (p. 97)

"The Company's operating facilities have been designed to mitigate environmental impacts. The operations have processes, procedures or facilities in place to manage substances that have the potential to be harmful to the environment. In order to prevent and control spills and protect water quality, Barrick utilizes multiple levels of spill containment procedures and routine inspection and monitoring of its facilities." (p. 98)

"The Company believes that it is in substantial compliance with all current government controls and regulations at each of its material properties." (p. 105)

March 28, 2012 (2011 Annual Report) – “License to Operate ... Our license to operate is a critical asset and contributes directly to the achievement of our strategic objectives and value creation for our shareholders.

Risk Factor: In order to main our license to operate, it is essential that we: Protect the environment [and] Comply with all regulatory standards” (p. 51)

“In order to mitigate risks associated with our license to operate, Barrick places a strong focus on CSR and safety and environmental performance...

Responsible environmental management is central to our success as a leading gold mining company. Environmental Management Systems have been fully implemented at twenty of our mines with full implementation at the remaining six mines to be completed in 2012.” (p. 52)

In particular, omitting to disclose the following material facts necessary to be stated to make the above statements not untrue:

Barrick's environmental permits required it to complete all elements of its WMS and have it fully operational prior to the commencement of pre-stripping;

Contrary to Barrick's misstatement that its WMS was complete, enabling pre-stripping to commence, Barrick was aware that its WMS was not complete and was not fully operational;

Barrick commenced pre-stripping in violation of its RCA permits in May 2012;

By committing this act, Barrick was in violation of Article 24 of Law 20,417 enacted on January 28, 2010 that required strict compliance with RCA compliance;

Barrick's RCA violations would be considered serious under Chilean law, and Barrick knew that under the new strict compliance legal regime, it specifically risked suspension or permit revocation;

Barrick knew that a suspension of pre-stripping until the WMS was complete in accordance with the RCA could delay the project by at least an additional year or more beyond the one-year delay in completion until mid- 2014 announced on July 26, 2012; and

Barrick decided to follow a highly risky strategy of commencing pre-stripping in violation of its permit in order to maintain its schedule and risk the consequent sanctions.

Omitting to disclose the following material facts necessary to be stated in order to make its statements in its Q3 2012 and 2012 AIF relating to the two constitutional rights actions commenced in September and October 2012 not inaccurate or misleading:

November 1, 2012 (Q3 2012) – “In September and October 2012, two constitutional rights protection actions were filed in Chile by representatives of an indigenous community and certain other individuals, seeking the suspension of construction of the Chilean portion of the Pascua-Lama project due to alleged non-compliance with the requirements of the Project's Chilean environmental approval. The Court declined to issue an immediate injunction suspending pre-stripping activities, but both cases have been admitted for review by the Court. We intend to vigorously defend these actions.” (pp. 14 and 15)

2012 Annual Information Form (March 28, 2013) – “In September and October 2012, two constitutional rights protection actions were filed in Chile by representatives of an indigenous community and certain other individuals, seeking the suspension of construction of the Chilean portion of the project due to alleged non-compliance with the requirements of the project's Chilean environmental approval. The court declined to issue an immediate injunction suspending pre-stripping activities. The first action has been admitted for review by the court and the second action has been abandoned for lack of prosecution. Barrick intends to vigorously defend these actions.” (p. 82)

In particular, omitting to disclose the following material facts required to be disclosed to make the above statements not misleading:

Barrick had commenced pre-stripping in violation of Pascua Lama's RCA prior to the completion of the WMS;

Barrick admitted to the SMA in its Self-Report to serious RCA violations related to the WMS;

Barrick's Self-Report had been rejected for failing to provide "specific, truthful, and demonstrable" information on January 31, 2013 after an SMA investigation uncovered other serious RCA violations beyond those admitted to by Barrick; and

Barrick had committed 13 of 14 of the RCA violations alleged by the SMA, which it admitted to on April 29, 2013.

Partial Correction of Environmental Misrepresentation

April 10, 2013 Barrick First Press Release – “Pascua-Lama preliminary injunction in Chile; major construction of works in Argentina unaffected . .. Barrick Gold Corporation (NYSE:ABX) (TSX:ABX) (Barrick or the "company") is aware of media reports indicating that a Chilean court has issued a preliminary injunction pending a full hearing halting construction activities on the Chilean side of the Pascua-Lama project. The company has not yet been formally notified of the court order and will assess the potential implications once it has received official notification. Construction activities in Argentina, where the majority of Pascua-Lama's critical infrastructure is located, including the process plant and tailings storage facility, are not affected.”

April 10, 2013 Barrick Second Press Release – “Barrick to suspend construction on Chilean side of Pascua-Lama ... Barrick Gold Corporation (NYSE:ABX) (TSX:ABX) (Barrick or the "company") today announced that the company is suspending construction work on the Chilean side of the Pascua-Lama project while working to address environmental and other regulatory requirements to the satisfaction of Chilean authorities. In the interim, activities deemed necessary for environmental protection will continue as authorized.

Construction activities in Argentina, where the majority of Pascua-Lama's critical infrastructure is located, including the process plant and tailings storage facility, are not affected. It is too early to assess the impact, if any, on the overall capital budget and schedule of the project.” (p. 1)

April 10, 2013 Dow Jones Newswire – “The complaint against the project launched in 2009 by Canadian mining company Barrick Gold Corp., the world's largest gold producer, cited concerns over possible damage to a river, according to the ruling by the Santiago Appeals Court, which was seen by AFP and issued Tuesday night.

The unfinished Pascua Lama gold mine straddles the Chilean-Argentine border. The project has seen stiff resistance from environmental groups and local communities. Barrick had expected production to begin in the first six months of 2014. The order suspends construction of the open-pit mine while the court studies the broader environmental issues. The complaint was filed by the Diaguita Indians, a small community based in northern Chile. It said that the construction work “has generated a situation of imminent environmental danger” for the Estrecho River.

June 28, 2013 Barrick Press Release – “Schedule Re-sequencing and Reduction of 2013-2014 Capital Spending ... The company has submitted a plan, subject to review by Chilean regulatory authorities, to construct the project's water management system in compliance with permit conditions for completion by the end of 2014, after which Barrick expects to complete remaining construction works in Chile, including pre-stripping. Under this scenario, ore from Chile is expected to be available for processing by mid-2016.

In line with this timeframe and in light of challenging market conditions and materially lower metal prices, the company intends to re-sequence construction of the process plant and other facilities in Argentina in order to target first production by mid-2016 (compared to the previous schedule of the second half of 2014)."

October 31, 2013 (Q3 2013) – “Barrick has decided to temporarily suspend construction activities at Pascua-Lama, except those required for environmental protection and regulatory compliance. This decision will postpone and reduce near term cash outlays and allows the company to proceed with development at the appropriate time under a more effective, phased approach. The decision to re-start will depend on improved project economics such as go-forward costs, the outlook for metal prices, and reduced uncertainty associated with legal and other regulatory requirements.” (pp. 1 and 15)

Part III: Accounting Misrepresentations

Plaintiff alleges that in all disclosures during the class period, Barrick misrepresented that its financial reporting complied with applicable accounting standards and fairly and accurately represented the financial situation of the company. The annual financial reports released during the class period contained the following statements:

“Management's Responsibility for Financial Statements ... The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and reflect Management's best estimates and judgments based on currently available information. The company has developed and maintains a system for internal controls in order to ensure, on a reasonable cost-effective basis, the reliability of its financial information.” (p. 81)

Barrick and its CEO and CFO certified in each financial report that the company's ICFR and DC&P were “effective”

Barrick omitted to disclose material facts necessary to be disclosed to make these statements not misleading. Specifically, Barrick omitted to disclose:

That its ICFR and DC&P were ineffective with respect to the Pascua-Lama project;

That it had failed to take necessary and timely impairment writedowns no later than Q2 2012 on the carrying value of its Pascua-Lama asset in its financial statements;

That it failed to record contingent liabilities relating to the risk of serious regulatory sanctions against Pascua-Lama which could include lengthy suspension, permit revocation and closure and the associated cost implications from Q2 2012 through to Q2 2013.

Partial Correction of Accounting Misrepresentations

July 26, (2012 Q2 2012) – “While the review was not yet complete, preliminary results currently indicate that initial gold production is now expected in mid-2014, with an approximate 50-60 percent increase in capital costs from the top end of the previously announced estimate of $4.7-$5.0 billion.” (pp. 5 and 15);

April 10, 2013 (Press Releases and Dow Jones Newswire) – [See above in the Environmental misrepresentations section.]

June 28, 2013 (Press Release) – [See above in the Capex misrepresentations section.]

[1] See the definition of “misrepresentation” in s. 1(1) of the OSA. [2] See Mask v. Silvercorp Metals Inc., 2015 ONSC 5348; Swiss Canto v. Blackberry, 2015 ONSC 6434; DALI Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2016 ONSC 5784; Cappelli v. Nobilis Health Corp., 2019 ONSC 2266; and Kauf v. Colt Resources Inc., 2019 ONSC 2179. [3] A public correction has sometimes been referred to as a “corrective disclosure.” Corrective disclosure is a term imported from the United States, not found in the OSA. As the motion judge remarked in Swisscanto, at para. 59, “[t]here is no harm in [referring to a public correction as a ‘corrective disclosure’], provided that both court and counsel understand that ‘corrective disclosure’ as used in American case law carries additional (causation) baggage and for this reason this American usage should be handled with care.” [4] At the time, the CSA was composed of members of the securities commissions of Alberta, British Columbia, Ontario, and Quebec, all Canadian provinces and territories. [5] See Committee on Corporate Disclosure, Towards Improved Disclosure: A Search for Balance in Corporate Disclosure, interim report (Toronto: Toronto Stock Exchange, 1995). [6] The CSA Committee was comprised of staff from the securities commissions of Alberta, British Columbia, Ontario, Quebec, and Saskatchewan. [7] As enacted, the price following the public correction is integral to the statutory damages formula for secondary market misrepresentation in all situations except where there is no published market for the shares: OSA, s. 138.5. This is in contrast to damages in cases for prospectus misrepresentation or damages for insider trading, where there is either no formula or alternative modes of calculation outside a statutory formula are contemplated: see OSA, ss. 130 and 134(6). [8] See Adil Abdulla, “Correcting Corrections: Resolving Confusion over the Public Corrections Requirement in the Ontario Securities Act” (2019) 62:3 Can. Bus. L.J. 310, at p. 315, n. 16. [9] In his reasons, the motion judge suggested that a “partial correction” of a misrepresentation cannot constitute a public correction for the purposes of the statutory scheme. That issue was not argued on appeal and I should not be taken as endorsing his view. It remains an issue for another day. [10] This appendix reproduces the appendix to the motion judge’s reasons. The motion judge’s appendix was based on the plaintiff’s “Revised Schedule C” as amended August 15, 2019.