The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund et al. v. Barrick Gold Corporation, et al.

[Indexed as: Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. Barrick Gold Corp.]

Ontario Reports

Ontario Superior Court of Justice

Belobaba J.

October 9, 2019

148 O.R. (3d) 755 | 2019 ONSC 4160

Case Summary

Civil procedure — Costs — Motions — No award of costs — Plaintiff seeking leave to commence securities class action — Plaintiff obtaining leave on one issue out of many — Plaintiff succeeding on core environmental allegation that took up about half the filed material and hearing time — Success almost evenly divided so no costs awarded. [page756]

Civil procedure — Class proceedings — Leave — Defendant halting mining project after four years — Plaintiff shareholder suffering significant losses and alleging secondary market misrepresentations — Plaintiff seeking leave under s. 138.8 of Securities Act to commence securities class action — Plaintiff granted leave on environmental allegation by establishing reasonable possibility of success at trial — Plaintiff denied leave on all other allegations for failing to meet public correction requirement — Securities Act, R.S.O. 1990, c. S.5, s. 138.8.

Securities regulation — Action — Leave — Defendant halting mining project after four years — Plaintiff shareholder suffering significant losses and alleging secondary market misrepresentations — Plaintiff seeking leave under s. 138.8 of Securities Act to commence securities class action — Plaintiff granted leave on environmental allegation by establishing reasonable possibility of success at trial — Plaintiff denied leave on all other allegations for failing to meet public correction requirement — Securities Act, R.S.O. 1990, c. S.5, s. 138.8.

Securities regulation — Misrepresentation — Statutory cause of action — Leave of court — Defendant halting mining project after four years — Plaintiff shareholder suffering significant losses and alleging secondary market misrepresentations — Plaintiff seeking leave under s. 138.8 of Securities Act to commence securities class action — Plaintiff granted leave on environmental allegation by establishing reasonable possibility of success at trial — Plaintiff denied leave on all other allegations for failing to meet public correction requirement — Securities Act, R.S.O. 1990, c. S.5, s. 138.8.

The defendant mining company began work on a mega-project in South America in 2009. The project came to a halt after four years. During that time, the defendant provided regular updates in its public disclosures. Almost every disclosure of negative news had a corresponding impact on the share price. The plaintiff pension fund, as a shareholder, sustained significant losses. The plaintiff concluded that the defendant's disclosures were not as accurate or truthful as they should have been. The plaintiff alleged three categories of secondary market misrepresentations: materially understating the capital expenditure budget and project completion schedule dates; failing to disclose material facts relating to serious environmental non-compliance; and failing to disclose serious accounting violations relating to the project. The plaintiff moved for leave under s. 138.8 of the Securities Act to commence a $3 billion securities class action.

Held, the motion should be allowed in part.

Leave under s. 138.8 required that the action be brought in good faith and that there be "a reasonable possibility that the action will be resolved at trial in favour of the plaintiff". There was no issue as to the plaintiff's good faith, leaving only the "reasonable possibility" hurdle. The secondary market cause of action itself had a public correction requirement. The public corrections alleged by the plaintiff were described as "partial corrections". The court assumed without deciding that such partial corrections were not simply continued misrepresentations but instead could satisfy the statutory public correction requirement.

The motion for leave to proceed with the allegations about capital expenditure and scheduling was dismissed. The plaintiff focused on a long list of alleged omissions and relied on four partial corrections regarding cost estimates, impairment charges and suspension of construction activities. However, nothing in any of those [page757] alleged corrections provided a linkage or connection to any of the alleged omissions and so the public correction requirement was not met.

The alleged misrepresentations regarding the environmental issue involved five representations, four of which were impugned on the basis of 11 alleged omissions. Several of those alleged omissions concerned events occurring after the impugned statements, but in any event the requirements for a public correction were not satisfied as there was no linkage or connection to any of the alleged omissions. The only representation that could be characterized as an assertion was dated July 26, 2012 and stated that the project had achieved critical milestones with completion of the first phase of the pioneering road and the water management system, allowing pre-stripping to commence. A June 28, 2013 press release indicated that a plan had been submitted to construct the project's water management system, strongly suggesting that the earlier disclosure from July 26 may not have been true. The news of a critical milestone being reached was material information that could reasonably be expected to have a significant effect on the market price of the defendant's securities. Nothing in the July 26 representation alerted the reader to the possibility that it was merely a statement of belief or opinion. There was more than a reasonable possibility that the plaintiff could establish at trial that the water management system was not completed or even operational in May 2012 when pre-stripping began and that the July 26 representation was therefore untrue. There was a sufficient evidentiary basis to establish a reasonable possibility of success at trial, so the motion for leave to proceed with respect to the July 26 representation was granted.

The motion for leave to proceed with the accounting allegations was dismissed. The plaintiff alleged that the defendant misrepresented the effectiveness of its internal controls over financial reporting and its disclosure controls and procedures. The plaintiff further alleged that the defendant recorded a $5 billion impairment write-down long after it should have done so and failed altogether to record contingent liabilities. However, none of the five partial corrections relied on by the plaintiff were reasonably capable of revealing to the market the existence of any of the alleged omissions, so again the public correction requirement was not met.

No costs were awarded. About half of the filed material and hearing time related to the environmental issue, and almost all of that was rooted in the July 26 representation, on which the plaintiff prevailed. Accordingly, success on the entire motion was almost evenly divided.

Canadian Imperial Bank of Commerce v. Green (2015), 135 O.R. (3d) 334, [2015] 3 S.C.R. 801, [2015] S.C.J. No. 60, 2015 SCC 60, 391 D.L.R. (4th) 567, 478 N.R. 202, J.E. 2015-1921, 346 O.A.C. 204, 44 B.L.R. (5th) 1, 77 C.P.C. (7th) 1, 260 A.C.W.S. (3d) 25, EYB 2015-259361, 2015 SOACQ para. 10,054, 2016 CCSG para. 51,536, 2016 BCLG para. 79,099, 2016 OCLG para. 51,912, 2016 CCLR para. 201,256, 2015EXP-3510, 2016 CSLR para. 900-621, 2016 ACLG para. 79,675, varg (2014), 118 O.R. (3d) 641, [2014] O.J. No. 419, 2014 ONCA 90, 370 D.L.R. (4th) 402, 314 O.A.C. 315, 50 C.P.C. (7th) 113, 237 A.C.W.S. (3d) 313, 2014 CSLR para. 900-531, varg [2012] O.J. No. 3072, 2012 ONSC 3637, 29 C.P.C. (7th) 225, 219 A.C.W.S. (3d) 692 (S.C.J.), apld

Other cases referred to

Cappelli v. Nobilis Health Corp., [2019] O.J. No. 1804, 2019 ONSC 2266, 2019 CSLR para. 900-784 (S.C.J.); Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., [2016] O.J. No. 4918, 2016 ONSC 5784 (S.C.J.); Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., [2015] O.J. No. 5631, 2015 ONCA 718, 340 O.A.C. 271, 260 A.C.W.S. (3d) 49, 81 C.P.C. (7th) 91; Dugal v. Manulife Financial Corp., [2011] O.J. No. 327, 2011 ONSC 387, 198 A.C.W.S. (3d) 25 (S.C.J.); [page758] In re Barrick Gold Securities Litigation, 33 N.Y. J.V.R.A. 8:19 (2016); Kauf v. Colt Resources, Inc. (2019), 145 O.R. (3d) 100, [2019] O.J. No. 1722, 2019 ONSC 2179 (S.C.J.); Mancinelli v. Barrick Gold Corp. (2014), 124 O.R. (3d) 145, [2014] O.J. No. 5925, 2014 ONSC 6516 (S.C.J.); Mask v. Silvercorp Metals Inc. (2016), 132 O.R. (3d) 161, [2016] O.J. No. 4436, 2016 ONCA 641, 408 D.L.R. (4th) 706, 352 O.A.C. 380, 269 A.C.W.S. (3d) 579, 2016 SOACQ para. 10,036, 2016 CCSG para. 51,595, 2016 BCLG para. 79,158, 2016 OCLG para. 51,971, 2016 CCLR para. 201,315, 2016 ACLG para. 79,734, affg [2015] O.J. No. 5471, 2015 ONSC 5348, 2015 CSLR para. 900-613 (S.C.J.); Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 135 S. Ct. 1318, 575 U.S. 175, 191 L. Ed. 2d 253 (2015); Rahimi v. SouthGobi Resources Ltd. (2017), 137 O.R. (3d) 241, [2017] O.J. No. 4829, 2017 ONCA 719, 417 D.L.R. (4th) 97, 283 A.C.W.S. (3d) 209; Swisscanto Fondsleitung AG v. BlackBerry Ltd., [2015] O.J. No. 5979, 2015 ONSC 6434, 2016 CSLR para. 900-617 (S.C.J.); Theratechnologies inc. v. 121851 Canada inc., [2015] 2 S.C.R. 106, [2015] S.C.J. No. 18, 2015 SCC 18, 382 D.L.R. (4th) 600, 470 N.R. 123, J.E. 2015-678, 34 B.L.R. (5th) 173, 251 A.C.W.S. (3d) 343, EYB 2015-250782, 2015 SOACQ para. 10,053, 2015 CCSG para. 51,496, 2015 BCLG para. 79,059, 2015 OCLG para. 51,872, 2015 CCLR para. 201,216, 2015EXP-1230, 2015 CSLR para. 900-589, 2015 ACLG para. 79,635

Statutes referred to

Securities Act,R.S.O. 1990, c. S.5, ss. 1(1) [as am.], 122(1) [as am.], 122.1(1), Part XXIII.1 [as am.], ss. 138.3 [as am.], (1) [as am.], 138.4(6) [as am.], (9)2., 138.5(3), 138.8 [as am.], (1) [as am.]

Securities Act, C.Q.L.R. c. V-1.1, s. 225.4 [as am.]

MOTION for leave to commence a securities class action.

Peter Jervis, Joel Rochon and Golnaz Nayerahmadi,for plaintiffs/moving parties.

Kent Thomson, Luis Sarabia, Steven Frankel and Kristine Spence, for defendants/responding parties.

[1] BELOBABA J.: — The plaintiffs seek leave under s. 138.8 of the Securities Act[^1] to commence a $3 billion securities class action. The action relates to secondary market misrepresentations allegedly made by the defendant during the construction of a multi-billion-dollar gold mining project in the High Andes of Chile and Argentina.

Brief Overview

[2] In October 2009, Barrick Gold, then the largest gold mining company in the world, began work on the Pascua Lama mega-project. The mining project straddled the border of Chile and Argentina in an environmentally sensitive area high in the Andes Mountains. The open-pit mine and primary crushing facility would be in Chile and the processing operation, via a five-kilometre conveyor tunnel, would be in Argentina. Despite the formidable [page759] engineering and regulatory challenges, Barrick was confident that Pascua Lama would soon become "one of the largest and lowest cost gold mines in the world".

[3] Unfortunately, the challenges proved to be insurmountable. After four years of effort, the project came to a halt. Burdened by mounting problems -- budget estimates that ballooned from an initial $3 billion to more than $8 billion; delays in "first gold" production that stretched from months into years; two massive mudslides that triggered environmental investigations and regulatory and judicial findings of environmental non-compliance; and falling gold and silver prices -- the defendant concluded in October 2013 that the project was no longer financially viable. Barrick recorded a write-off of just under $6 billion.

[4] Over the four years of construction, Barrick provided regular updates in their public disclosures. Barrick's position is that the disclosures were timely and accurate. The plaintiff says many of the defendant's disclosures were inadequate and misleading.

[5] Both sides agree, however, that almost every disclosure of negative news had a corresponding impact on the share price. Whenever Barrick announced a significant increase in the capital expenditure ("Capex") budget, or delays in first gold production or potential problems with environmental compliance, the share price dropped. Over the course of the proposed two-year class period,[^2] there were five negative disclosures that resulted in significant declines in the share price:

(May 2009 -- Initial Capex budget of $2.8-$3.0 billion, first gold production early 2011)

(July 2011 -- Initial Capex increase to $4.7-$5.0 billion, first gold production early 2013)

(i) July 26, 2012 -- Capex increased to $7.5-$8.0 billion, first gold production mid-2014 -- share price drops $1.21;

(ii) November 1, 2012 -- Capex increased to $8.0-$8.5 billion, first gold production second half of 2014 -- environmental lawsuit -- share price drops $2.06; [page760]

(iii) April 10, 2013 -- Disclosure of environmental problems, court-ordered injunction, construction on Chilean side suspended -- share price drops $2.34;

(iv) June 28, 2013 -- Disclosure that impairment write-down may be $4.5-$5.5 billion, first gold production mid-2016, environmental problems -- share price drops $1.28;

(v) October 31, 2013 -- Disclosure that the construction of entire project suspended; further $800 million write-down -- share price drops $1.25.

[6] Shareholder losses, in total, were in the billions of dollars. Some of the shareholders (including the plaintiff pension fund herein) concluded that the defendant's disclosures were not nearly as accurate or truthful as they should have been. Class actions quickly materialized in both the U.S. and Canada. The U.S. action has settled.[^3] The Canadian action, now before me, is still at the starting gate with this motion for leave to proceed.

[7] In this action, the alleged misrepresentations fall within the three categories set out below. (I have added the plaintiff's language in italics, changing only the start date of the proposed class period):

(1) Capital expenditure ("Capex") costs and "first gold" disclosures. Barrick materially understated the Capex budget from September 22, 2011 by several billion dollars and misrepresented the project completion schedule dates from September 22, 2011 through to November 1, 2013;

(2) Environmental compliance disclosures. Barrick failed to disclose material facts relating to serious environmental non-compliance at Pascua Lama beginning in 2011 and through January 2013, which resulted in the indefinite suspension and definitive closure of the project by the Chilean courts and environmental regulators on the basis of the serious environmental violations in that period; and

(3) Accounting and financial reporting issues. Barrick failed to disclose serious accounting violations relating to Pascua Lama, including material weaknesses in its financial controls (ICFR), and disclosure controls (DC&P) including failure to take material accounting impairment write-downs of the project's value in its financial reports by at least Q2 2012 or to disclose contingent liabilities relating to the project by that date. [page761]

[8] For easier readability, I will refer to the two plaintiffs (whose actions were consolidated following an earlier carriage motion decision[^4]) as simply "the plaintiff". I will generally refer to the defendants as "Barrick" or "the defendant". I will also refer to CMN, Barrick's Chilean subsidiary, as "Barrick", "CMN" or "the defendant". The individual defendants are not involved in my core analysis. I will have more to say about them later in this decision.

[9] I have attached the plaintiff's list of alleged misrepresentations and public corrections in the appendix for easy reference. I should note that the counsel for the defendant (to their credit) put aside their legitimate concerns about the imprecision of the pleadings and agreed to work from the attached list as a de facto amended statement of claim.

Applicable Law

[10] The key statutory prerequisites for a secondary market securities action are set out in ss. 138.3 and 138.8 of the OSA.

[11] Section 138.3(1) provides that a shareholder who acquired or disposed of securities between the date of the misrepresentation in a corporate disclosure and the date that the misrepresentation was publicly corrected has a right of action for damages without having to show reliance.

[12] "Misrepresentation" is defined in s. 1(1) as an untrue statement of material fact or an omission to state a material fact that is necessary to make a statement not misleading. A "material fact" is defined as any fact that would reasonably be expected to have a significant effect on the market price or value of the securities.

[13] The other key provision, s. 138.8, sets out the so-called "leave hurdle". The action authorized in s. 138.3 cannot proceed without leave of the court. Leave will only be granted under s. 138.8 if the court is satisfied that the action is brought in good faith and "there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff".

[14] In this leave motion, as I will explain shortly, the important focal points are first, the public correction requirement and second, the "reasonable possibility" hurdle.

(1) The importance of the public correction

[15] The case law is clear that the public correction requirement serves several important purposes. It identifies the nature [page762] and extent of the misrepresentation allegation and gives fair notice to the defendant of the case it has to meet. It acts as a time-post for the purposes of a proposed class period and any eventual damages calculation.[^5]

[16] The public correction requirement is also a constituent element of the secondary market cause of action.[^6] 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"[^7] and there is no need to proceed further and consider whether leave should be granted under s. 138.8.

[17] Several decisions of this court have attempted to give meaning to the public correction requirement. The judicially-defined criteria for a proper public correction as set out in Mask,[^8] BlackBerry,[^9] SNC-Lavalin,[^10] Cappelli[^11] and Kauf[^12] can be summarized 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;

(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.

[18] The "linkage", "connection" and "same subject matter" criteria are helpful to a degree but are admittedly elastic. Much more rigorous and thus more useful, particularly in this case, is the third criterion: the public correction must be reasonably [page763] capable of revealing to the market the existence of an untrue statement of material fact or an omission to state a material fact. In other words, there must be some indication in the alleged public correction that an earlier material disclosure contained a misstatement or was misleadingly incomplete. This is not an onerous expectation: recall that the common definition of "cor-rection" is "to mark the error" or "to put right".[^13]

[19] If the alleged public 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.

[20] For example, if the plaintiff alleges that Capex disclosure X was misleading because of omission Y, the alleged public cor-rection 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.

[21] This makes good sense in terms of public policy. If the assertion or omission in disclosure X was never corrected, then the reason for the drop in the stock price on the day of the alleged correction will have to be found elsewhere. That is, the reason for the drop in the share price may be completely benign -- for example, the materialization of a previously disclosed risk, such as high local inflation resulting in an unexpected increase in construction costs or the filing of a lawsuit alleging environmental violations, wholly unrelated to any deceit or obfuscation on the part of the defendant company in an earlier assertion or omission.

[22] If an unhappy shareholder believes nonetheless that an impugned representation is inaccurate and misleading, but the impugned representation is never publicly corrected either by the company or by a third party, and a loss has been sustained (unlikely but possible), the damages remedy provided under Part XXIII.1 of the OSA is not available. The shareholder must find her remedy elsewhere in the OSA -- for example, under s. 122(1) a misrepresentation by assertion or omission in a core document can attract criminal prosecution; if the defendant company is convicted, then under s. 122.1(1) the court can award com-pensation to an "aggrieved person or company".

[23] The need for a meaningful public correction requirement is particularly important in the class action context. Absent such [page764] a requirement, American-style "strike suits" would re-materialize. Secondary market securities actions could be commenced by simply pointing to an alleged public correction that was loosely "connected to" or had the same "subject matter" as the impugned representation and filing one or two plaintiff-friendly expert reports to clear the "reasonable possibility" hurdle.

[24] The requirement that the public correction must be reasonably capable of revealing the existence of the alleged misrepresentation adds an important protection. Put simply, a meaningful public correction requirement provides an additional safeguard against unfair and unmeritorious misrepresentation claims.

[25] There is a further issue that should be noted. The alleged public corrections in the Capex, Environmental and Accounting sections are all described by the plaintiff as "partial corrections". However, as Strathy J., as he then was, noted in Dugal v. Manulife Financial Corp.,[^14] a public correction is a one-time event and "any so-called 'partial correction' is nothing more than a continued misrepresentation".[^15]

[26] In other words, if Strathy J. is right, this motion for leave could end here. If the plaintiff is only alleging "partial corrections" and these are nothing more than continued misrepresentations (and not public corrections) then the plaintiff has failed to establish one of the constituent elements of a s. 138.3 action and the leave motion can be dismissed at this point without any further analysis.

[27] For my part, however, I will assume without deciding that the partial corrections alleged by the plaintiff (and listed in the appendix) can potentially satisfy the "public correction" requirement in s. 138.3 if the criteria discussed above are otherwise satisfied.

[28] I now turn to the leave hurdle.

(2) The s. 138.8 leave hurdle

[29] As already noted, an action for secondary market misrepresentation under s. 138.3 of the OSA requires leave of the court. Leave will be granted if the court is satisfied that the action is brought in good faith and "there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff".[^16] [page765]

[30] There is no suggestion here that the action is not brought in good faith. The only issue is whether there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.

[31] Assuming the plaintiff has established the alleged misrepresentation (by assertion or omission) and the related public correction, the court must then decide whether there is a reasonable possibility that the action will succeed at trial.

[32] In Theratechnologies,[^17] a case involving the analogous leave provision in the Quebec Securities Act,[^18] the Supreme Court made clear that the leave test was more than a "speed bump" and that judges should undertake "a reasoned consideration of the evidence to ensure that the action has some merit".[^19] The "reasonable possibility" threshold, said the court, requires that there be a "reasonable or realistic chance that the action will succeed".[^20]

[33] In Canadian Imperial Bank of Commerce v. Green,[^21] the Supreme Court confirmed that the leave test under s. 225.4 of the Quebec Securities Act as set out in Theratechnologies also applies in the context of s. 138.8 of the OSA.[^22] One can distill the guidance provided by the Supreme Court, and more recently, by the Court of Appeal as follows:

-- the leave test is a "robust deterrent screening mechanism" intended to prevent unmeritorious cases from proceeding. It requires "significant merit-based analysis" and a "robust, meaningful examination and critical evaluation of the evidence (or the absence of evidence");[^23] [page766]

-- for an action to have a reasonable possibility of success [under s. 138.8] there must be a "reasonable or realistic chance that [it] will succeed";[^24]

-- the claimants must offer "a plausible analysis of the applicable legislative provisions, and some credible evidence in support of the claim";[^25]

-- a "full analysis of the evidence" is "unnecessary . . . [w]hat is required is sufficient evidence to persuade the court that there is a reasonable possibility that the action will be resolved in the claimant's favour".[^26]

[34] The Supreme Court's suggestion that a "full analysis of the evidence" is "unnecessary" does not fit easily with the "robust examination of the evidence" guideline and over the years the former admonition has been effectively ignored by lower court judges. Most judges proceed on the basis that they must review all the evidence presented by both sides and decide, in the end, if the plaintiff has established a reasonable possibility of success at trial.

[35] The "reasonable possibility" test means that in many cases the defendant may have persuaded the leave judge on the evidence before the court that the defendant will probably prevail at trial. This doesn't mean that the judge is obliged to dismiss the motion for leave. The judge may still conclude that the plaintiff has a "reasonable possibility of success" at trial. For example, if the judge thinks in terms of percentages, the judge may say to herself that the chances of the defendant succeeding at trial are excellent -- 80 or even 90 per cent. This still leaves a 10 to 20 per cent chance of success for the plaintiff, enough to clear the "reasonable possibility" hurdle.

[36] The point of this discussion is to recognize, as Mr. Jervis put it for the plaintiff, that even though the s. 138.8 leave hurdle is more than a speed-bump, it is not the Matterhorn. When advancing a specific misrepresentation that was publicly corrected, the plaintiff only has to establish a reasonable possibility that it will succeed at trial.

[37] I can now turn to the alleged misrepresentations and public corrections. [page767]

Analysis

(1) Capex and "first gold" scheduling

(i) Context

[38] The plaintiff alleges numerous misrepresentations by omission in the Capex and scheduling disclosures between October 27, 2011 and October 31, 2013. During this time period, Barrick increased its Capex budget from $5.0 billion to $8.0 billion to $8.5 billion and changed its first gold forecasts from mid-2013 to mid-2014 to "the second half of 2014". These were obviously significant changes in the budget and scheduling estimates.

[39] Barrick, in response, says each of these changes reflected unanticipated increases in construction costs, including labour and commodity prices that sky-rocketed because of an unexpected earthquake, unexpected currency fluctuations, government-imposed tariffs and falling gold and silver prices. Barrick says that all the changes in these estimates are protected as forward-looking information and, in any event, were fully and fairly disclosed.

[40] The plaintiff submits that none of these disclosures were accurate or reliable. Indeed, at every such juncture, says the plaintiff, Barrick knew that the Capex and first gold forecasts were unreliable and misleading -- that Barrick knew that the reality was much worse and was not being disclosed.

[41] The plaintiff attacks the Capex and scheduling misrepresentations by focusing on a long list of alleged omissions.

(ii) Alleged misrepresentations

[42] The plaintiff lists numerous omissions that should have been disclosed to make the impugned representations not misleading.[^27] The list of the alleged representations and omissions (set out in full in the appendix) can be distilled as follows: [page768]

The $4.7 to $5.0 billion Capex estimate and schedule

Representation. 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."

[The other three representations in the attached Appendix dated February 16, March 28 and May 2, 2012 say essentially the same thing.]

Omissions. The plaintiff says the following were material facts that should have been disclosed to make the above statement about the $4.7 to $5 billion Capex budget and first gold production by mid-2013 not misleading:

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

The critical comments in the Turner & Townsend report;[^28] The unreliability and high-risk nature of the $650 million contingency; The unreliability of the Fluor-Techint estimates;

The higher costs of moving from EPC to EPCM;[^29]

The significant delay in commencing pre-stripping because of the delay in completing the water management system;

The internal estimates that by January 2012 Capex was already at $6.4 billion and increasing inflation trends were likely to cause further increases to the estimate.

The $7.5 to $8.0 billion Capex estimate and schedule

Representation. 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."

Omissions. The plaintiff says the following were material facts that should have been disclosed to make the above statement about the $7.5 to $8.0 billion Capex budget and first gold production by mid-2014 not misleading:

Barrick was abandoning its failed EPC approach and was hiring Fluor to take over full EPCM management at a much higher cost;

Barrick knew that the project costs were likely to materially increase as a result of Fluor's analysis of the budget; and [page769]

Barrick had commenced pre-stripping in May 2012 in serious violation of the primary environmental permit, the RCA, 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

Representation. 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."

Representation. 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 completion of the project in line with this estimate and schedule."

Omissions. The plaintiff says the following were material facts that should have been disclosed to make the above statement about the $8.0 to $8.5 billion Capex budget and first gold production in the second half of 2014 not misleading:

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

Barrick had decided in 2009 through 2012 to use EPC, rather than "traditional" EPCM, 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.

[43] The plaintiff filed extensive documentary and affidavit evidence, including expert reports, explaining and supporting each of the alleged omissions. Barrick, in turn, took issue with every one of the alleged omissions set out above and filed even more evidence in support of their core submission that all dis-closure was timely and accurate.

[44] 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 representations not misleading, any further analysis of this proposition is not required. I can decide the Capex and scheduling representations by focusing on the proposed [page770] public corrections and asking whether the requirements for a public correction have been satisfied.

[45] In my view, the requirements for a public correction have not been satisfied.

(iii) No public corrections

[46] The plaintiff points to four "partial corrections" that in its submission are connected to and are reasonably capable of revealing the existence of the alleged omissions:

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.

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."

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."

[47] In my view, none of these suggested partial corrections are proper corrections. 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 -- for example, there is nothing about the Turner & Townsend report or the $650 million contingency, the Fluor-Techint estimates, the change-over from EPC to EPCM and so on.

[48] To repeat, 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 reason-ably capable of revealing the existence of any of the alleged omissions. As already noted, this alone can be "dispositive" of the leave motion, at least as it pertains to the Capex and scheduling misrepresentations.

[49] I also add this further point. The determination of what constitutes a proper public correction, on the facts herein, is not a matter that can be affected or otherwise "improved" by further or better evidence at trial. I can therefore conclude, tracking the [page771] language in s. 138.8 that there is no reasonable possibility that the plaintiff can show at trial that any of the "partial corrections" were connected to and revealed the existence of any of the alleged omissions.

[50] The motion for leave to proceed with the allegations about Capex and scheduling is therefore dismissed. The public correction requirement has not been satisfied.

[51] I now turn to the environmental misrepresentations.

(2) Environmental compliance

[52] The core environmental allegation is that Barrick commenced pre-stripping in May 2012 in violation of the project's primary Chilean environmental permit, the RCA, and failed to disclose that this breach put the project at risk.

[53] About half of the material filed and the time spent at the hearing were devoted to this core allegation. I appreciate the detailed evidence that counsel on both sides provided about the environmental narrative but, in the end, much of the detail was unnecessary. Given my focus on the public correction requirement under s. 138.3 and the "reasonable possibility" hurdle under s. 138.8, I can write my reasons in this section by simply summarizing the key points of evidence without the minutia that was presented at the hearing. This is, after all, a motion for leave to proceed and not a trial on the merits.

[54] To make this part of the decision more readable, I will use the Spanish-language initials for the relevant Chilean documents and regulatory agencies. For example, I will refer to the primary Chilean environmental permit that authorized and detailed the construction of the water management system at Pascua Lama as the RCA. I will refer to the Directorate General of Water, the primary water resources agency, as the DGA, and to the Super-intendence of the Environment, the primary environmental agency as of December 2012, as the SMA.

(i) Context

[55] Barrick understood that Pascua Lama was environmentally sensitive. The mining project was located high in the Andes, at the head waters of the Estrecho River system. It was imperative that the toxic by-products of the mining process, such as acid rain drainage, did not contaminate the river system. The river was a life force for the thousands of people, including indigenous communities, that lived down-stream from the mining site. The river water was used for drinking, washing and agricultural irrigation. [page772]

[56] The risk of water pollution would materialize as soon as mining began. To access the ore bodies in the open-pit mine, Barrick had to first strip away about 85 million tons of over-burden. The pre-stripped overburden would be hauled to a waste dump away from the mine itself. When the water that came down from the mountains (from the glaciers and melting snow) combined with the waste in the waste dump, it produced acid rain drainage, a toxic pollutant.

[57] The carefully negotiated RCA required Barrick to build a comprehensive water management system ("WMS") consisting of two main components -- a "non-contact" portion and a "contact" portion. The non-contact WMS would collect and carry the descending mountain water around the waste dump and on to the river system; the contact WMS would collect and de-contaminate the polluted water (the water that came into contact with the waste dump) by running it through various treatment facilities before it was returned to the natural water course.

[58] To redirect the non-contact water, Barrick had to build horizontal channels and make use of the natural ravines. An upper-level concrete-lined channel would capture and carry the descending glacial and snow melt horizontally across the mountain-face to the first ravine. The redirected water would then flow down the first ravine to a lower-level channel that would continue to carry the water horizontally across the mountain to a second ravine called Q-9, and then down Q-9 to the sedimentation ponds and on to the river system.

[59] The key provision in the RCA, and the main source of dispute on this motion, is section 4.3.1(a) which made clear that pre-stripping could not begin until "the construction of the works and facilities for the management and treatment of acid drainage . . . are operational" (emphasis added). According to the English translation of the Spanish-language RCA, both the non-contact and contact WMS had to be "operational" before pre-stripping could begin.

[60] Two other provisions are also important. One required that the non-contact channels be able "to receive water flows equivalent to a 1000-year flood". The other addressed the problem of "colluvial and alluvial deposits" in the water flow system -- that is, the presence of loose rock, soil and silt. If the terrain carrying the descending mountain water wasn't carved in rock and these loose deposits were present, the terrain had to be lined with an appropriate covering (concrete, rockfill, geotextile or some other material) to prevent erosion or worse, mudslides.

[61] When Barrick began pre-stripping on May 4, 2012, neither the non-contact nor the contact portions of the WMS had been [page773] completed. The non-contact portion was 75 per cent complete and, in the contact portion, at least three of the water-treatment facilities (the reverse osmosis unit, the forced evaporation system and the hydrogen peroxide unit) had not yet been built.

[62] Barrick's position, in a nutshell, is that even though the WMS was not yet fully constructed there was no breach of the RCA when pre-stripping began because by May 2012 the WMS was "operational" in terms of "hydraulic conductivity" -- that is, even if more work still had to be done, when the non-contact channels were connected together, the descending mountain water could flow through the channel and ravine system down to the river. The contact portion of the WMS was also "operational" because Barrick had concluded that the three water-treatment facilities just noted and not yet built (the "Three Works") would not be needed for water-treatment purposes for several more years (by which time they would be built.) The plaintiff, of course, presents evidence to the contrary.

[63] The non-contact channel and ravine system, as already noted, were physically connected and pre-stripping began in May 2012. Several months later, in September and October, local indigenous groups filed two "constitutional rights" lawsuits in a Chilean court to stop the pre-stripping and other alleged environmental violations. I will say more about this litigation shortly. In brief, the court refused to grant the requested preliminary injunction. As it turned out, because of excessive road dust and other related problems, the pre-stripping operation was stopped by government order in October 2012.

[64] Two additional points are important to my analysis. First, one can infer from the evidence that after pre-stripping was temporarily halted by government order in October 2012, the non-contact channel and ravine system that was built to capture and redirect the descending water remained connected and in place. Thus, as summer approached (December and January) and the mountain glaciers and the snow began to melt, the descending water continued to be channelled across the mountain to the Q-9 ravine.

[65] The second important point is that unlike the lined horizontal channels, the opening to the Q-9 ravine and the ravine itself had not been lined in concrete or other material. Without a protective lining, the loose rock, soil and silt present at the outlet work that directed the water into Q-9, and also present in Q-9 itself, could easily materialize into a significant mudslide that could damage this part of the WMS and the surrounding area.

[66] That's exactly what happened. [page774]

[67] On December 22, 2012 and again on January 16, 2013 (during the Chilean summer), large volumes of descending water caused by glacial and snow melt were captured and carried across the mountain by the concrete-lined channels to the Q-9 ravine at which point the rushing water hit the loose rock, soil and silt and resulted in two massive mudslides damaging the outlet work and surrounding area. Obviously, the non-contact WMS had not been designed or built to weather a significant water event, let alone a "1000-year flood" as required by the RCA.

[68] The mudslides prompted the following, all in relatively quick succession: Barrick (that is, its Chilean subsidiary CMN) filed a "self-report" with the SMA admitting that it had breached the RCA by not building the outlet work at the opening to the Q-9 ravine "according to the RCA's specifications"; the SMA rejected the self-report because it was incomplete, conducted its own investigation and laid environmental charges; in a charging document released in March 2013, the SMA accused Barrick of 23 environmental violations, 14 of which related to the WMS; in a letter that to the SMA in April 2013, Barrick acknowledged and "accepted" 13 of the 14 violations relating to the WMS; in May 2013, the SMA imposed some $16 million in fines, an amount that was reduced to $12 million for early payment.

[69] The two "constitutional rights" lawsuits, filed in September and October 2012, made their way back to the Chilean court soon after the release of the SMA's charging document. On April 9, 2013, the court, ex parte, suspended all "construction work" on the Chilean side of the Pascua Lama project.

[70] Barrick announced in June 2013 that it would try to rebuild the WMS "in compliance with permit conditions" and then resume pre-stripping. Four months later, however, at the end of October 2013, Barrick decided to shut the project down.

[71] Although largely irrelevant to the proposed class action, the Chilean legal process continued to grind on. In March 2014, the Environmental Court partially vacated the sanctions that had been imposed by the SMA and remanded the matter back to the SMA for reconsideration. In January 2018, the SMA issued a new sanctioning decision that imposed definitive closure orders on the Pascua Lama project. Following further appeals and judicial direction, the closure orders are back before the Environmental Court for further review.

[72] Meanwhile, Pascua Lama remains shut down.

(ii) Alleged misrepresentations

[73] The alleged misrepresentations in the environmental section involve five representations, 11 omissions and five partial [page775] corrections. Only the first representation, that of July 26, 2012, can be characterized as a misrepresentation by assertion:

Representation. 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."

[74] It is this "critical milestone" representation about the completion of the WMS and the commencement of pre-stripping that is not only the core environmental allegation but potentially the only misrepresentation allegation that has a reasonable possibility of success at trial. I will return to this alleged mis-representation and the correlated correction after I dispense with the other representations and omissions that are being advanced by the plaintiff.

[75] The other representations. The other four representations (two on March 28, 2012; and one each on November 1, 2012 and March 28, 2013) are impugned on the basis of 11 alleged omissions. The two representations dated March 28, 2012 (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.

[76] The disclosures of November 1, 2012 and March 28, 2013 (set out below) report on the two "constitutional rights" lawsuits that were filed in Chile by the indigenous communities affected by the Pascua Lama project:

Representation. 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."

Representation. 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."

[77] The plaintiff points to 11 alleged omissions that Barrick should have disclosed to make the above four statements not [page776] misleading. Seven relate to the two representations of March 28, 2012; four relate to the November 1, 2012 and March 28, 2013 representations.

Omissions. The plaintiff says the following were material facts that should have been disclosed to make the two March 28, 2012 representations not misleading:

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 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.

[78] I pause here to note the following. 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] represent-ations not misleading".

[79] It is possible that the plaintiff intended to relate the "pre-stripping" omissions, set out above, to the July 26, 2012 "pre-stripping" representation -- perhaps to augment its 'misrepresentation by assertion' submission with a parallel 'misrepresentation by omission' argument. In any event, the alleged omissions that pertain to the two March 28, 2012 representations are precluded by the obvious chronology problem.

[80] I now turn to the next category of alleged omissions.

Omissions. The plaintiff says the following were material facts that should have been disclosed to make the November 1, 2012 and March 28, 2013 representations not misleading: [page777]

Barrick had commenced pre-stripping in violation of the 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;

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 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.

[81] The November 1, 2012 and March 28, 2013 statements in the quarterly report and AIF summarize the status of the two "constitutional rights" action and add that Barrick intends to vigorously defend the actions. Here again, there are 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. 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.

[82] If I am wrong in this analysis, the alleged omissions argument fails for yet another reason -- the lack of any public correction. As it did with the Capex allegations, Barrick takes issue with every one of the 11 alleged environmental omissions set out above. Barrick presents compelling evidence that when it started pre-stripping in May 2012, it reasonably believed, based on internal and external determinations, that once the WMS was "operational" (that is once the system was connected and water-flow was achieved) pre-stripping could begin even if some components of the WMS were not yet completed.

[83] Here again, as was the case in the Capex section, I do not have to weigh the evidence and assess every allegation of misrepresentation by omission. I can decide the "omission" allegations by asking whether the requirements for a public correction have been satisfied.

[84] In my view, as I explain below, the requirements for a public correction have not been satisfied with respect to any of the alleged omissions. [page778]

(iii) No public corrections

[85] Here are the five "partial corrections" that the plaintiff says are connected to and reveal the existence of the alleged omissions:

April 10, 2013 (Press Release) "Pascua-Lama preliminary injunction in Chile; major construction of works in Argentina unaffected . . . Barrick Gold Corp-oration (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 . . ."

April 10, 2013 (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 . . . It is too early to assess the impact, if any, on the overall capital budget and schedule of the project."

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 (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." [page779]

[86] Let me put to one side the June 28, 2013 press release and deal with the other four proposed corrections.

[87] There is nothing in the two Barrick press releases of April 10, 2013, the Dow Jones Newswire of the same date, or the press release of October 31, 2013 that can fairly be said to reveal the existence of any of the 11 alleged omissions. That is, there is nothing in these four alleged "partial corrections" that even suggest that Barrick may have commenced pre-stripping before the WMS was completed in violation of the RCA.

[88] The two press releases dated April 10, 2013 advised the reader that "construction activities" on the Chilean side of the Pascua Lama project had been halted by order of a Chilean court and were therefore being suspended while "environmental and other regulatory requirements" are being addressed. In earlier disclosures, however, Barrick had made clear that (1) pre-stripping was halted in October 2012 because of dust issues, and (2) the construction activities that were continuing (and were judicially enjoined on April 9, 2013) related to work that was being done on the primary crusher and on the Chilean-side of the conveyor tunnel.

[89] The Dow Jones Newswire advised that the Chilean court order "suspends construction of the open-pit mine while the court studies the broader environmental issues". The October 31, 2103 press release announced Barrick's decision to temporarily suspend "construction activities" at Pascua Lama and discussed the possibilities of a "re-start" decision.

[90] Thus, on the four "partial corrections" just noted I come to the same conclusion as I did with Capex and scheduling. Here again, 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. This alone is "dispositive" of the leave motion, at least with respect to the environmental allegations that are based on alleged omissions -- that is, all the allegations of misrepresentation other than that of July 26, 2012.

[91] As I noted in the Capex and scheduling analysis, the determination of what constitutes a proper public correction, on the facts herein, is not a matter that can be affected or "improved" by further or better evidence at trial. I can therefore conclude, tracking the language in s. 138.8, that there is no reasonable possibility that the plaintiff can show at trial that any of the proposed "partial corrections" were connected to and revealed to the market the existence of any of the 11 alleged omissions.

[92] The motion for leave to proceed with the environmental allegations that are based on the 11 alleged omissions must be dismissed for the reasons set out above. This leaves the July 26, [page780] 2012 assertion. As already noted, this is the representation that is at the heart of the environmental compliance complaint.

(iv) The July 26, 2012 representation

[93] Here, again, is the July 26, 2012 representation as set out in the MD&A portion of the Q2 2012 Report:

Representation. 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."

[94] As already noted, about half of the written submissions and time spent at the oral hearing were devoted to this representation and its various permutations.

[95] I will first explain how, in my view, the misstatement in the July 26, 2012 MD&A (that the WMS has been completed and pre-stripping could begin) was arguably corrected in the June 28, 2013 press release. I will then turn to the leave hurdle and the "reasonable possibility" analysis. First, the public correction analysis.

(v) The June 28, 2013 public correction

[96] The gist of the alleged misrepresentation of July 26, 2012 is that the WMS has been completed and thus pre-stripping has begun. The key question for the public correction analysis is this: Do any of the alleged public corrections arguably suggest or reveal that this representation may have been untrue? Do any of the alleged public corrections suggest in any way that the WMS had not been completed and pre-stripping should not have begun? In my view, the information disclosed in the defendant's press release of June 28, 2013 provides such indications. Therefore, this press release can arguably satisfy the public correction requirement.

[97] Here is the June 28, 2013 press release. I have underlined the relevant language:

June 28, 2013 (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)."

[98] This press release reveals that the WMS had not been constructed in compliance with the environmental permit and when [page781] it is properly completed, pre-stripping will resume. To the informed reader, and certainly to any stock analyst that was following Barrick, this information strongly suggests that the earlier disclosure of July 26, 2012 (that the WMS had indeed been completed and pre-stripping could begin) may not have been true. Indeed, when the June 28, 2013 press release hit the street, the share price dropped $1.28. Granted, this same press release announced that Barrick was conducting impairment testing and a $5 billion impairment charge may be forthcoming. And the news of this impairment charge may have prompted much if not all of the drop in the share price. However, the "attribution" analysis that the defendant may in due course pursue under s. 138.5(3) of the OSA to establish proportionate causation is not before the court on this leave motion.

[99] In short, for the purposes of this leave motion, I am satisfied the June 28, 2013 press release arguably satisfies the requirements of a proper public correction.

[100] I note, however, that Barrick makes the following alternative submission should I find that the June 28, 2013 press release is arguably a proper public correction of the July 26, 2012 MD&A statement (as I have now done.) Barrick submits that the possible illegality of starting pre-stripping in May 2012 or at all was brought to the public's attention eight months earlier in the November 1, 2012 press release about the "con-stitutional rights" lawsuits.

[101] Barrick says that to the extent that the July 26, 2012 disclosure can be considered a misrepresentation, it was publicly corrected by the November 1, 2012 disclosure. Barrick says the market was put on notice that litigation had been commenced in Chile alleging that pre-stripping had begun prematurely before the water management system had been completed.

[102] I do not have to decide the "time-post" question on this motion. I can leave the determination of the second "time-post" to the upcoming certification motion when the question of class period will be squarely before me. For now, I am content to find that the June 28, 2013 press release is an arguably sufficient public correction for the purposes of the s. 138.3 analysis.

[103] I can now turn to the main event on this leave motion -- whether on the evidence filed the plaintiff has established a reasonable possibility of showing at trial that the July 26, 2012 representation about the WMS and pre-stripping was a misrepresentation -- that is "an untrue statement of material fact". For the reasons that follow, I conclude that the July 26, 2012 represent-ation clears the leave hurdle. [page782]

(vi) Why the July 26, 2012 representation clears the leave hurdle

[104] The defendant raised two preliminary issues -- the materiality of the July 26, 2012 representation and whether it was more of an opinion about the interpretation of foreign (that is Chilean) law than a statement of fact. I can quickly dispose of both issues.

[105] Materiality. I am satisfied that the July 26, 2012 assertion that a "critical milestone" had been achieved -- the WMS had been completed and thus pre-stripping could begin -- was a material public announcement. As earlier disclosures indicated, pre-stripping had already been postponed several times because the WMS was not yet complete. Every delay in pre-stripping resulted in a costly delay in revenue-generation and an ever-increasing pressure to get to "first gold" production as quickly as possible. The announcement of July 26, 2012 that a "critical milestone" had been achieved was, to put it bluntly, a big deal.

[106] Indeed, all of the events that followed in quick succession thereafter -- the mudslides, the defendant's self-report that triggered the SMA investigations, the environmental charges and convictions, the defendant's decision to "improve" the WMS and the added costs of doing so, and ultimately the decision to shut down the project altogether -- can be traced back to Barrick's decision in early May 2012 that the WMS was "operational" once connected and pre-stripping could begin, a decision that was publicly announced in the July 26, 2012 MD&A. I also note that when this alleged misrepresentation was publicly corrected on June 28, 2013 the share price dropped by $1.28.

[107] I therefore have no difficulty concluding that the news of a "critical milestone" (Barrick's language) that the WMS had been completed and pre-stripping had begun (impliedly in compliance with Chilean law) was material information that could reasonably be expected to have a significant effect on the market price of the defendant's securities and that an informed investor would reasonably want to know.

[108] Fact or opinion. Barrick submits that the July 26, 2012 representation was at best a statement of legal opinion. I find this submission to be overly metaphysical. The first portion of the statement, that the WMS has been completed is, on any fair reading, a statement of fact. And the second portion, that the completion of the WMS meant that pre-stripping could begin, is not qualified in any way by words indicating mere belief or a reliance on a legal opinion. Barrick did not state, "We have been advised by Chilean counsel that pre-stripping can begin." Instead, [page783] it used non-specific language ("which enabled the commencement of pre-stripping activities") that could reasonably be understood as saying nothing more than the WMS has been completed and pre-stripping has begun. Again, there is nothing in the July 26, 2012 representation that alerts the reader to the possibility that this was simply Barrick's belief or opinion.

[109] The fact/opinion distinction in the context of a securities misrepresentation such as the one herein has not been fully addressed or resolved in Canada. In the U.S. however, in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund,[^30] the U.S. Supreme Court was asked to rule on this very question. The court held that that an expression of opinion is capable of conveying a material fact, and can therefore constitute a "misrepresentation" if, among other things, the statement contains an embedded statement of fact that was untrue at the time it was made.[^31] Here, the plaintiff can reasonably argue that the impugned representation contained an embedded statement of fact that was untrue at the time it was made, namely the statement that the WMS had been completed. In any event, it cannot be denied that the plaintiff has at least a reasonable possibility of prevailing on the same point before a Canadian court.

[110] This brings me to the main point of dispute between the parties -- whether the plaintiff has established a reasonable possibility of showing at trial that Barrick's representation of July 26, 2012 was untrue.

[111] The plaintiff proceeds on two fronts. First, he submits that because the representation was made in a "core document", an MD&A, what the defendant knew or even reasonably believed is not relevant.[^32] Second, even if the defendant's "reasonable belief" is relevant, the plaintiff still clears the leave hurdle on the evidence presented.

[112] I agree with the plaintiff on both points.

[113] Untrue statement -- strict liability. The case law is clear that there is no "knowledge" requirement when the alleged misrepresentation is made in a core document such as an MD&A.[^33] [page784] What Barrick reasonably believed at the time in question is not relevant.

[114] The plaintiff has presented uncontroverted evidence that the WMS was not completed when pre-stripping began. The non-contact portion was at most 75 per cent complete and in the contact portion the Three Works were not yet constructed. The defendant's statement in an MD&A that the WMS had been completed in early May 2012 (and this enabled pre-stripping to begin) was on its face not true.

[115] Even if "completion" meant simply that the WMS was "operational" this also was not true. The evidence shows that the WMS, when it was connected to allow water-flow, failed to operate on its first test. The summer melt in December 2012 and January 2013 overwhelmed the non-contact WMS, especially at the outlet to the Q-9 ravine and resulted in the two mudslides. The WMS had obviously not been built to withstand the first glacial and snow melt, let alone a 1,000-year flood.

[116] I am satisfied that there is more than a reasonable possibility that the plaintiff can establish at trial that the WMS was not completed or even operational in May 2012 when pre-stripping began and that the July 26, 2012 representation was therefore untrue. The defendant's "reasonable belief" to the contrary is not relevant in this determination.

[117] Untrue statement -- defendant's reasonable belief. If I am wrong in the strict liability analysis set out above and I am obliged to examine all the evidence relating to Barrick's "reasonable belief" submission, I would still conclude that the plaintiff has cleared the leave hurdle with respect to the July 26, 2012 representation -- that he has established a reasonable possibility of showing at trial that Barrick's belief about the completion of the WMS and the right to start pre-stripping was not objectively reasonable. This is not to say that Barrick will not prevail at trial on this point with more or better evidence, only that Barrick has not eliminated all reasonable possibility to the contrary on this leave motion.

[118] Almost all the defendant's environmental evidence was directed to its reasonable belief submission. The defendant presented an impressive array of evidence that by any measure was compelling and potentially persuasive: affidavits from the senior executives and project managers who were directly involved in the Pascua Lama project at the time in question, contemporaneous documents such as e-mails, minutes of key meetings and third-party reports from government agencies or hired consultants, and non-contemporaneous expert evidence from Chilean professors and engineers. [page785]

[119] Barrick marshalled all this evidence to one end: to show that at the time when pre-stripping began, in early May 2012, it had good reason to believe that its interpretation of the word "operational" in s. 4.3.1 of the RCA was correct, namely, that the WMS was "operational" as soon as it was fully connected and hydraulic conductivity or water-flow could be achieved. Pre-stripping could therefore begin even though certain parts of the WMS were not yet built.

[120] Compelling as it was, I find that the defendant's evidence did not demolish or fully rebut the plaintiff's evidentiary submissions. In my view, the plaintiff has established a reasonable possibility of showing at trial that Barrick was not reasonable in its interpretation of the RCA and in its decision that pre-stripping could begin.

[121] My finding that the leave hurdle is cleared with respect to the July 26, 2012 representation is rooted in five areas of evidence:

(i) One. There is some evidence that Barrick knew or should have known about the deficiencies at Q-9 in May 2012 when the WMS was physically connected and pre-stripping began. The DGA in its report of April 24, 2012 reminded Barrick to provide "a treatment for the slopes which have been shown to be at higher risk of erosion in weather events". Given that the reminder was in the context of the "lower channel" it is reasonable to conclude that the "slopes" in question were the Q-9 ravine. The DGA's requirement in late April 2012 about lining or otherwise "treating" Q-9 "to prevent erosion and the carrying of an excess of sediments" arguably undermines or at least destabilizes Barrick's submission that in early May 2012 its belief about the WMS was objectively reasonable.

(ii) Two. Just days after the two mudslides, Barrick admitted in its self-report to the SMA that "the place chosen for construction of the Outlet Works was not the most suitable one since given the type of terrain found downstream from this site [i.e. in the Q-9 Ravine] which consists of colluvial and alluvial deposits, an extension of the lower . . . canal should have been built over this terrain".[^34] In other words, Barrick appears to be admitting that it should have continued with a properly lined canal "over this terrain", meaning down the Q-9 ravine. [page786]

It does not assist the defendant that the validity of the admission about the Q-9 ravine in its self-report was explicitly confirmed by the SMA and provided the basis for one of SMA's environmental charges in March 2013. Nor does it assist Barrick that in its April 2013 letter it "accepted" the RCA violation alleged by the SMA in point 23.2 of its charging document:

23.2 In Quebrada 9 [Q-9] the place where the Lower . . . Channel . . . Outlet Works discharges, it was verified that it is covered by a layer of colluvial material which was eroded due to the drop in flows (sic) occurring in this sector. In view of the above, it became evident that the watercourse was not naturally carved in rock and therefore it was necessary to protect it through the use of rockfill and geotextile as set forth in the RCA, a matter that the project holder did not carry out.

Several questions arise. If the DGA had prescribed the need for a "treatment for the slopes" why wasn't this done? Absent a properly functioning outlet at the Q-9 ravine and an appropriate lining down the slopes of this ravine, how could the defendant reasonably have concluded that the non-contact WMS was even "operational"?

More evidence will no doubt be presented at trial about the DGA's "treatment for the slopes" comment and about what Barrick/CMN knew or should have known about the terrain at the Q-9 ravine but on this leave motion it is enough for the plaintiff to suggest that this as a reasonably arguable area of evidence that could possibly go his way at trial.

(iii) Three. The many cautions in the internal Flash Reports and Monthly Reports in which the defendant's Permitting Department in Chile expressed continuing concern about the need to complete the WMS as required by the RCA. These internal reports reminded the reader (which potentially included all senior executives and project managers involved in Pascua Lama) that the RCA required the "entire" WMS to be "totally built" and "fully operational" before Barrick could commence pre-stripping.

The defendant accuses the plaintiff of "cherry-picking" and points to other passages in the Monthly Reports that suggest that there was no concern that the Three Works in the contact portion of the WMS had not yet been built. True enough. But the defendant is unable to point to any passage that reassures the reader that the non-contact portion had been sufficiently completed by May 2012. Indeed, the excerpts identified by the plaintiff suggest the contrary. [page787]

(iv) Four. The expert evidence filed by the parties about the scope and content of the RCA, and, in particular, the meaning of "operational" is diametrically conflicting. The plaintiff's environmental, water resource and engineering experts are of the view that "operational", as the word is understood in Spanish, required the WMS to be "completely constructed and fully functioning" and not just sufficiently connected to permit water flow. One of the experts noted that in the Spanish language the state of "being complete" precedes the state of "being operational".

Also, it does not assist the defendant that the SMA's environmental charges in March 2013 fully support the plaintiff's interpretation of the RCA and Chilean law. The plaintiff's point -- that there is at least a reasonable possibility that the opinions of his experts will prevail at trial -- cannot be denied. In any event, the resolution of a battle of the experts is "best left to be made on an assessment of all the evidence at trial".[^35]

(v) Five. The fifth area of evidence questions the reasonableness of Barrick's belief by pointing to what Barrick did not do and should have done: (1) Barrick never asked the environmental regulator for clarification of its obligations under the RCA and never obtained a Chilean legal opinion about its interpretation of "operational";[^36] and (2) Barrick never mentioned its supposedly good faith interpretation of "operational" to the SMA in either its self-report in January 2013 or in its letter in April 2013 "accepting" 13 of the 14 environmental violations that related to the WMS.

The defendant's evidence is that it decided to "accept" the SMA's findings of violation and the consequent monetary sanctions without further protest "to buy peace" and "get on with the project". This may well be true. However, the plaintiff is not wrong to ask why Barrick did not even mention its interpretation of the word "operational" or the fact that it had relied primarily on a third party (Golder) to design the WMS -- even by way of explanation. [page788]

[122] In my view, these five areas of evidence in combination provide ample support for the plaintiff's submission that the defendant's "reasonable belief" may not have been so reasonable.

[123] The plaintiff made several other submissions that were intended to provide additional support and help clear the leave hurdle. One related to the DGA's written approval requirement and the defendant's apparent attempts to obtain such approval and then its decision to proceed without it. Another involved the "gaps in the evidence" on key points that the plaintiff says can be attributed to the defendant and should favour the granting of leave. The defendant, of course, took issue with each of these matters and provided a detailed and compelling response.

[124] I do not have to resolve the DGA written approval issue. Nor do I have to wade into the interesting discussion about "gaps in the evidence" and what use, if any, can be made of such evidentiary gaps on a leave motion.[^37] I am satisfied that the five areas of evidence as set out above provide a sufficient evidentiary basis to establish a "reasonable possibility" of success at trial. Put differently, I am unable to conclude that these five areas of evidence are so weak or were so successfully rebutted by the defendants that they have no reasonable possibility of success at trial. It is important to remember, again, that the leave to proceed hurdle, although more than a speed-bump, is not the Matterhorn.

[125] The motion for leave to proceed with respect to the July 26, 2012 representation is granted.

(3) Accounting and financial reporting

(i) Context

[126] The third and final section of alleged misrepresentations relates to accounting and financial reporting issues. The plain- tiff alleges that Barrick misrepresented the effectiveness of its Internal Controls over Financial Reporting ("ICFR") and its Disclosure Controls and Procedures ("DC&P"). The plaintiff further alleges that Barrick recorded the $5 billion impairment write-down long after it should have done so and failed altogether to record contingent liabilities. [page789]

(ii) Alleged misrepresentations

[127] I will track the actual language used by the plaintiff as set out in the attached appendix. The plaintiff alleges that in all disclosures during the class period, Barrick misrepresented that its financial reporting during the class period 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:

Representation. "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."

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

Omissions. Barrick failed to disclose that the following were material facts that were necessary to be disclosed to make the above statements not misleading:

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

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

That Barrick 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.

[128] As with the Capex and scheduling and the environmental allegations, Barrick defended against the alleged accounting misrepresentations (set out above) with detailed evidence explaining the proper scope and content of the ICFR and DC&P control requirements, why they were indeed effective, and in any event, why they did not apply on the facts herein. Barrick argued that its impairment testing and related disclosures were "impeccable" and the contingent liability allegation was fundamentally misguided and, in any case, was time-barred.

[129] Here again, I do not have to assess or weigh the parties' evidence on any of these issues. As was the case in the Capex section and most of the environmental section discussed above, I can decide the accounting allegations by asking whether the requirements for a public correction have been satisfied. [page790]

[130] In my view, as I explain below, the requirements for a public correction have not been satisfied with respect to the three alleged omissions.

(iii) No public corrections

[131] Here are the five "partial corrections" that the plaintiff says are connected to and reveal the existence of the alleged omissions relating to the accounting representations:

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."

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 . . ."

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 . . . It is too early to assess the impact, if any, on the overall capital budget and schedule of the project."

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 (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." [page791]

[132] Are any of the "partial corrections" reasonably capable of revealing to the market the existence of any of the alleged omissions? In my view, they are not. There is nothing in any of the five supposed corrections about the ineffectiveness of any of the defendant's internal controls; nothing about any failure to take a timely impairment write-down; and nothing about any failure to record a contingent liability. As already noted, this alone can be "dispositive" of this part of the leave motion that relates to the accounting allegations.

[133] And here again, the determination of what constitutes a proper public correction, on the facts herein, is not a matter that can be affected by further or better evidence at trial. I can therefore conclude, tracking the language in s. 138.8, that there is no reasonable possibility that the plaintiff can show at trial that any of the suggested "partial corrections" were connected to and revealed to the market the existence of any of the three alleged omissions in the accounting section.

[134] The motion for leave to proceed with the accounting allegations that are based on the three alleged omissions must be dismissed. The public correction requirement has not been satisfied.

(4) Other matters

(i) The individual defendants

[135] The defendant Aaron Regent was Barrick's CEO until June 2012. Jamie Sokalsky was CEO from June 2012 to September 2014. Ammar Al-Joundi was Barrick's CFO from June 2012 until after the end of the proposed class period. The defendants Regent, Sokalsky and Al-Joundi were certifying officers or directors during the proposed class period.

[136] The defendant Peter Kinver, however, although a COO until May 2012, was never a director or a certifying officer. The secondary market claims against Mr. Kinver cannot succeed unless the plaintiff can establish that he authorized, permitted or acquiesced in the release of the Q2 2012 Report containing the alleged misrepresentation of July 26, 2012. The plaintiff has presented no such evidence. I therefore agree with counsel for the defendant that the action as against Mr. Kinver must be dismissed.

[137] The action relating to the July 26, 2012 representation shall proceed as against Messrs. Regent, Sokalsky and Al-Joundi. No credible evidence has been presented by the defendant to support a reasonable investigation defense on behalf of these individual defendants under s. 138.4(6) of the OSA. There is [page792] therefore at least a reasonably possibility that any reasonable investigation defence will fail at trial.

(ii) The scope of the claim

[138] Finally, a quick housekeeping point about the scope of the proposed class action.

[139] The plaintiff intends to represent a class of persons who acquired Barrick securities during the proposed class period -- not just persons who acquired common shares. However, the plaintiff has presented no evidence of materiality in relation to Barrick's debt securities. In cross-examination, the plaintiff's event study expert conceded that (i) the market price or value of debt securities may well be unchanged even if the price of the issuer's common shares declines; and (ii) in order to determine whether the market price of a publicly traded debt security has reacted to a certain disclosure, she would have had to perform a separate event study with respect to that debt security. In this case, however, no such separate event study was performed.

[140] I therefore conclude that the plaintiff's secondary market claim can only proceed in relation to the common shares.

Disposition

[141] The motion for leave as it pertains to the alleged environmental misrepresentation in the MD&A portion of the Q2 2012 Report dated July 26, 2012 is granted. The proposed class action is confined to this single representation:

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."

[142] The motion for leave as it pertains to all remaining "misrepresentations" in the Capex, Environmental and Accounting sections is dismissed.

[143] The costs incurred by both sides on this mega-motion are undoubtedly significant. In my opinion, however, that no costs should be awarded because success was almost evenly divided. My reasoning is this: about half of the filed material and hearing time related to the Capex and Accounting sections and half to the Environmental section. Almost the entirety of the Environmental section was rooted in the July 26, 2012 representation or its various permutations. The defendant prevailed in the Capex and Accounting sections; the plaintiff [page793] prevailed on the core representation in the Environmental section. Success being divided, this is not a case for costs.

[144] Order to go accordingly.

[145] I am grateful for the assistance of counsel on both sides. I very much appreciate their elegant use of technology and the high quality of their oral and written advocacy.

Motion allowed in part.

APPENDIX

Plaintiff's Allegations of Misrepresentation (by Assertion or Omission)[^38]

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 billion10 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: [page794]

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 unreason-able 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: [page795]

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 completion 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 [page796] 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. [page797]

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;

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 [page798] 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) [page799]

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) [page800]

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, pre-liminary 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]: Securities Act, R.S.O. 1990, c. S.5 ("OSA"). [^2]: The plaintiff initially proposed a class period from July 28, 2011 to November 1, 2013. After debating the applicable limitations period, the parties agreed that the class period would commence on September 22, 2011. The parties, however, have not agreed on the end-point. The plaintiff proposes November 1, 2013. If leave is granted herein, the defendant suggests a much earlier end-point determined by a much earlier public correction. More on this later in these reasons. [^3]: In re Barrick Gold Securities Litigation, 33 N.Y. J.V.R.A. 8:19 (2016). [^4]: Mancinelli v. Barrick Gold Corp. (2014), 124 O.R. (3d) 145, 2014 ONSC 6516 (S.C.J.). [^5]: Swisscanto Fondsleitung AG v. BlackBerry Ltd., 2015 ONSC 6434 (S.C.J.). [^6]: Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2016 ONSC 5784 (S.C.J.). [^7]: Ibid., at para. 154. Also see Cappelli v. Nobilis Health Corp., 2019 ONSC 2266 (S.C.J.), at para. 189. [^8]: Mask v. Silvercorp Metals Inc., 2015 ONSC 5348 (S.C.J.). [^9]: Supra, note 5. [^10]: Supra, note 6. [^11]: Cappelli, supra, note 7. [^12]: Kauf v. Colt Resources, Inc. (2019), 2019 ONSC 2179, 145 O.R. (3d) 100 (S.C.J.). [^13]: See any edition of the Concise Oxford English Dictionary. [^14]: Dugal v. Manulife Financial Corp., 2011 ONSC 387 (S.C.J.). [^15]: Ibid., at para. 33. [^16]: OSA, supra, note 1, s. 138.8(1). [^17]: Theratechnologies inc. v. 121851 Canada inc., [2015] 2 S.C.R. 106, 2015 SCC 18. [^18]: Securities Act, C.Q.L.R. c. V-1.1, s. 225.4. [^19]: Theratechnologies, supra, note 17, at para. 38. [^20]: Ibid. [^21]: Canadian Imperial Bank of Commerce v. Green (2015), 135 O.R. (3d) 334, [2015] 3 S.C.R. 801, 2015 SCC 60. [^22]: Ibid., at paras. 118-122. [^23]: Theratechnologies, supra, note 17, at para. 38; Mask v. Silvercorp Metals Inc. (2016), 132 O.R. (3d) 161, 2016 ONCA 641, at paras. 42 and 67. [^24]: Theratechnologies, supra, note 17, at para. 38. [^25]: Ibid., at para. 39. [^26]: Ibid., at para. 39 [emphasis in original]. [^27]: I pause here to note that the plaintiff tried to characterize the misrepresentations as assertions rather than omissions by suggesting (see the appendix) that Barrick represented "as a matter of present fact" in its "Cautionary Statements on Forward Information" that the Capex and first-gold scheduling estimates were "considered reasonable by management". In my view, this adds nothing to the analysis: one would assume that all disclosed estimates are considered reasonable by management; and if not, this assumption is effectively codified by the language of s. 138.4(9).2, the provision that deals with "forward looking information". In any event, like the alleged omissions, this "assertion" will stand or fall on the quality of the alleged public correction. [^28]: The content of the Turner & Townsend report and the other items in this list are further detailed in the Appendix. However, these details, as I explain further below, are not germane given my approach in this decision. [^29]: Barrick began the project using the EPC (Engineering, Procurement, Construction) model and provided overall Management using its own in-house experts. In 2012, Barrick changed over to the EPCM model, retaining Fluor to assume all the responsibilities including overall management. [^30]: Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 135 S. Ct. 1318, 575 U.S. 175 (2015). [^31]: Ibid., at 1327 S. Ct. [^32]: Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2015 ONCA 718, at paras. 65-66. [^33]: Ibid. [^34]: The bracketed words "[i.e. in the Q-9 Ravine]" were added by Barrick when quoting this excerpt in its factum, confirming that the terrain being discussed was indeed the Q-9 ravine. [^35]: Green v. Canadian Imperial Bank of Commerce, 2012 ONSC 3637 (S.C.J.), per Strathy J. as he then was, at para. 414. [^36]: Or if it did, the plaintiff could not get this information. The plaintiff's questions on these points were refused. [^37]: The dispute between the parties stems from what was said by the Court of Appeal about "gaps in the evidence" in Rahimi v. SouthGobi Resources Ltd. (2017), 137 O.R. (3d) 241, 2017 ONCA 719, at para. 48. [^38]: This listing is based on the plaintiff's "Revised Schedule C" as amended August 15, 2019.