COURT FILE NO.: CV-23- 91507 DATE: 20231016

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

FREDERICK G. SPRENGER Plaintiff

– and –

AURELIAN RESOURCES INC., KINROSS GOLD CORPORATION, COMPUTERSHARE CANADA INC., AND LUNDIN GOLD INC. Defendants/Moving Parties

Counsel: Self-represented Robert Carson, Elie Farkas, Andrea Korajlija, for the Defendants/Moving Parties Kinross Gold Corporation and Computershare Canada Inc. Sahil Kesar, for the Defendants/Moving Parties Aurelian Resources Inc. and Lundin Gold Inc.

HEARD: July 13, 2023

REASONS FOR DECISION

REES J.

I. Overview

[1] The plaintiff Frederick Sprenger sues the defendants for alleged events arising from the acquisition of Aurelian Resources Inc. by Kinross Gold Corporation in 2008.

[2] The defendants bring motions to strike Mr. Sprenger’s statement of claim (Claim), without leave to amend. The defendants argue that the Claim discloses no reasonable cause of action. They also argue that the Claim should be struck on the grounds that it is scandalous, frivolous, vexatious, or an abuse of process. Finally, they argue that the Claim is time-barred.

[3] Mr. Sprenger, who is self-represented, conceded at the hearing that there are several deficiencies in his Claim because he misunderstood the rules applicable to pleadings. He argues, however, that he can address the deficiencies and that he should be granted leave to amend. Finally, he says his Claim is not time-barred.

II. The Allegations

[4] The Claim is difficult to parse. These are its principal allegations, generously construed.

[5] The Claim arises mainly from alleged events in or around 2008. Mr. Sprenger alleges that in April 2008 he beneficially owned or beneficially controlled shares of Aurelian through various investment accounts. Mr. Sprenger alleges that in 2008 Aurelian conspired with Kinross to depress the share price of Aurelian so that Kinross could take over Aurelian at a lower share price. He alleges that Kinross wrongfully acquired his shares in Aurelian. After the takeover, Mr. Sprenger alleges that Aurelian and Kinross changed or deleted SEDAR filings to conceal what they had done. Mr. Sprenger also alleges that they misrepresented and concealed the true nature of the acquisition and that, in fact, Mr. Sprenger remains the beneficial owner of Aurelian shares.

[6] Mr. Sprenger alleges that the defendant Computershare Canada Inc. conspired with the other defendants to hide Mr. Sprenger’s continuing ownership in Aurelian’s common shares. He alleges that Computershare omitted and misrepresented information in response to questions from him, and that Computershare refused to answer his questions. He alleges that Computershare enabled the unlawful transfer of his shares in Aurelian, among other things.

[7] Finally, Mr. Sprenger alleges that the defendant Lundin Gold Inc. was part of this conspiracy in some unspecified way, and that Lundin did not respond to his correspondence seeking information about Aurelian.

[8] Based on these allegations, Mr. Sprenger seeks, among other relief, $1 billion in punitive damages, $150 million for “irreparable harm to [his] family and social relationships”, $30 million for pain and suffering, an “[i]ndeterminate amount” for “lost financial opportunity”, $143,960,340 in interest payments, and the return of his Aurelian shares.

[9] The defendants brought their motions to strike the Claim before filing statements of defence, as they have a right to do.

III. Issues

[10] The motions raise the following issues:

a. Should the Claim be struck because it does not disclose a reasonable cause of action? b. Should the Claim be struck because it is scandalous, frivolous, vexatious, or an abuse of process? c. Should the Claim be struck because it is time- barred? d. Should Mr. Sprenger be denied leave to amend the Claim?

IV. Analysis

A. Should the Claim be struck because it does not disclose a reasonable cause of action?

[11] The defendants ask me to strike the Claim under Rule 21.01(1)(b) for not disclosing a reasonable cause of action: Rules of Civil Procedure, R.R.O 1990, Reg. 194. A claim will be struck if it is “plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action”: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 17. In other words, “the claim has no reasonable prospect of success”: ibid.

[12] No evidence is admissible under Rule 21.01(1)(b); the material facts pleaded are accepted as true: Imperial Tobacco Canada, at para. 22; Best v. Ranking, 2015 ONSC 6269, at para. 63. But bare allegations and conclusory legal statements based on assumption and speculation are not: Best, at para. 60.

[13] A cause of action may not simply be alleged as if it were a material fact. If a plaintiff asserts a recognized cause of action, but fails to plead all its essential elements, the claim should be struck: McCreight v. Canada (Attorney General), 2013 ONCA 483, 116 O.R. (3d) 429, at para. 39.

[14] As discussed, Mr. Sprenger acknowledged that his pleadings are deficient. He says he misunderstood the rules of pleading. He admitted that after reviewing the written submissions of the defendants, he now better understands what is required for his pleadings.

[15] I strike the Claim as a whole for four reasons.

[16] First, the Claim refers to several causes of action but does not properly plead the elements or supporting material facts of any of them.

[17] Second, Mr. Sprenger baldly alleges various breaches of the Criminal Code, R.S.C. 1985, c. C-46, and other statutes. He does not plead any material facts in relation to these alleged offences and statutory breaches. There is no nominate tort for statutory breach: Allan Etherington v. National Hockey League, 2020 ONSC 5789, at para. 25; R. v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205, at p. 229. This includes alleged breaches of the Criminal Code: Etherington, at para. 27. Although proof of a statutory breach that causes damage may be evidence of negligence and statutory requirements may inform a common law standard of care, there is no cause of action in tort for breach of a statute: Saskatchewan Wheat Pool, at p. 228-29; Boulanger v. Johnson & Johnson Corp. (2003), 174 O.A.C. 44 (C.A.), at para. 10. Here, the various statutory breaches are not pleaded for any permissible purpose.

[18] Third, a pleading must adequately identify the role of each defendant in relation to each cause of action, must state how each defendant has harmed the plaintiff, and the nature of the harm: CIT Financial Ltd./Services Financiers CIT Ltée v. Sharpless, 2006 CarswellOnt 3325 (S.C.), at para. 7. A plaintiff’s pleading cannot simply lump defendants together without pleading the allegations against each: Martin v. Astrazeneca Pharmaceuticals PLC, 2012 ONSC 2744, at para. 109. At various points in the Claim, Mr. Sprenger has lumped together various defendants. This makes it impossible for them to know who is alleged to have done what, how each of them is said to have harmed Mr. Sprenger, and the nature of that harm.

[19] Finally, I considered whether the Claim should be struck in whole or in part. The lack of material facts is pervasive for each cause of action. Once each deficient portion of the Claim is considered, nothing salvageable remains. Curing the defects in the Claim is not simple surgery; it requires a complete overhaul. Mr. Sprenger has not pleaded sufficient material facts capable of grounding any tenable claim against the defendants. Thus, the Claim must be struck in its entirety.

B. Should the Claim be struck because it is scandalous, frivolous, vexatious, or an abuse of process?

[20] The defendants also argue that the Claim must be struck because it is scandalous, frivolous, vexatious, or an abuse of process. Given my conclusion above, I need not decide this issue.

C. Should the Claim be struck because it is time- barred?

[21] The defendants also bring motions under Rule 21.01(1)(a) to strike the Claim as a whole because they say it is time-barred. That is, they argue that the Claim exceeds the basic limitation period found in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. Section 4 provides as follows: “[u]nless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.”

[22] Mr. Sprenger disagrees and says that he only learned of some allegations during the pandemic, when he had more time to research them online. (There is no evidence of this; Mr. Sprenger stated it in oral submissions.)

[23] Rule 21.01(1)(a) provides that a party may move for the determination, before trial, of a question of law raised by a pleading where the determination of the question may dispose of all or part of the action, substantially shorten the trial, or result in a substantial saving of costs.

[24] The test on a Rule 21.01(1)(a) motion is whether the determination of the issue of law is “plain and obvious”. On a Rule 21.01(1)(a) motion, the facts pleaded are assumed to be true, unless they are patently ridiculous or manifestly incapable of proof. The claim should be read as generously as possible to accommodate any drafting inadequacies in the pleading. If the claim has some chance of success, it should be permitted to proceed: see Beaudoin Estates v. Campbellford Memorial Hospital, 2021 ONCA 57, 154 O.R. (3d) 587, at para. 14.

[25] On a pleadings motion, a statement of claim is deemed to include documents incorporated by reference: McCreight, at para. 32. The court may consider documents referred to in the statement of claim, and need not accept as true allegations that are inconsistent with the documents: Del Giudice v. Thompson, 2021 ONSC 5379, 71 E.T.R. (4th) 23, at para. 126; Das v. George Weston Limited, 2017 ONSC 4129, at paras. 27, 79-80, aff’d 2018 ONCA 1053, 43 E.T.R. (4th) 173, at paras. 73-77.

[26] Limitations issues can be determined on a Rule 21.01(1)(a) motion where there are no material facts in dispute: Das; Kaynes v. BP p.l.c., 2021 ONCA 36, 456 D.L.R. (4th) 247, at para. 13; Davidoff v. Sobeys Ontario, 2019 ONCA 684, at para. 14. Where a plaintiff’s pleadings establish when they discovered the claim, it may be appropriate to strike out claims that have no chance of success: Kaynes, at para. 81.

[27] In analyzing the limitations issue, Mr. Sprenger’s pleadings can be grouped together into four categories. The first are the claims arising from the acquisition of Aurelian by Kinross in 2008. The second are the claims relating to the concealment and misrepresentation about the true nature of the transaction. The third are the claims relating to share price manipulation and misrepresentation before the acquisition in 2008. The fourth are assorted claims without dates or information. I consider each category of claims in turn.

Claims arising from the acquisition of Aurelian by Kinross

[28] The Claim alleges wrongdoing by the defendants arising from the acquisition of Aurelian by Kinross in 2008 (at paras. 13, 19, 25, 35, and 39). Although the causes of action are variously pleaded against the defendants, they are all rooted in the 2008 acquisition. The plaintiff alleges that Kinross, Aurelian, and Computershare wrongfully caused the removal of Aurelian shares from his brokerage account and failed to return them to him.

[29] The Claim incorporates by reference the offering memorandum, news releases, and SEDAR filings relating to the acquisition (at para. 18). Those documents describe the transaction:

a. On July 24, 2008, Kinross and Aurelian announced that their boards had approved a friendly offer by Kinross to acquire 100 percent of the outstanding common shares of Aurelian: Kinross Press Release, dated July 24, 2008. b. On July 28, 2008, Kinross’s takeover bid circular made it clear that, if it did not acquire 100 percent of Aurelian’s common shares through its takeover offer, it intended to acquire the balance through a second transaction, including through a compulsory acquisition under s. 206 of the Canadian Business Corporations Act, R.S.C. 1985, c. C-44 (CBCA). [^1] c. On September 30, 2008, Kinross announced that it had acquired over 90 percent of the common shares of Aurelian and would exercise its rights of compulsory purchase under s. 206: Kinross Press Release, dated September 30, 2008. d. That same day, Kinross issued an offeror’s notice under s. 206. The notice stated that, under s. 206(5) of the CBCA, regardless of the election made by the dissenting shareholders, the shareholders had to deliver their Aurelian share certificates to an agent for Aurelian. The notice also stated that Kinross had paid the required consideration to the agent for Aurelian in accordance with s. 206. Any shareholder who failed to return its shares in Aurelian would have those shares cancelled: Section 206 Offeror’s Notice, dated September 30, 2008.

[^1]: Under s. 206 of the CBCA, “if within one hundred and twenty days after the date of a take-over bid the bid is accepted by the holders of not less than ninety per cent of the shares of any class of shares to which the take-over bid relates […] the offeror is entitled […] to acquire the shares held by the dissenting offerees.”

e. Effective September 30, 2008, Kinross acquired the remaining shares of Aurelian further to a compulsory acquisition under s. 206: Notice of Result of Take-Over Bid, dated October 3, 2008. f. On October 8, 2008, Aurelian issued a Notice of Change of Corporate Structure, reflecting the acquisition of all of its shares by Kinross, and that it had applied or given notice that it was ceasing to be a reporting issuer.

[30] All this was discovered by Mr. Sprenger in 2008. Mr. Sprenger complained of the acquisition in a letter to Computershare, dated November 10, 2008. The letter is also incorporated by reference in the Claim (at para. 30). He complained that the Aurelian shares in his investment accounts were replaced by Kinross shares and warrants. Mr. Sprenger alleged that he was not provided with proper notice of the compulsory acquisition and demanded the immediate return of his shares.

[31] By reply letter dated November 24, 2008 – also incorporated by reference in the Claim (at para. 30) – Kinross stated that the acquisition complied with s. 206 of the CBCA, including the requirement to provide notice to registered shareholders of Aurelian. But since Mr. Sprenger held a beneficial interest through his brokerage account, notice would properly have been provided to the registered owner of those shares. Kinross stated that neither Kinross nor Computershare would reverse any portion of the acquisition, including for any Aurelian shares previously held by Mr. Sprenger.

[32] Section 5 of the Limitations Act, 2002 provides the rules for when a claim is discovered for the purpose of the basic limitation period: [^2]

Discovery

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew, (i) that the injury, loss or damage had occurred, (ii) that the injury, loss or damage was caused by or contributed to by an act or omission, (iii) that the act or omission was that of the person against whom the claim is made, and (iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

[^2]: I omit the provisions relating to demand obligations because they are not relevant here.

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[33] Applying s. 5 of the Limitations Act, 2002 to the Claim and incorporated documents, I conclude that Mr. Sprenger discovered his claims arising from the transaction by November 24, 2008, at the latest. By that time, Mr. Sprenger was aware of: (i) the alleged loss arising from the acquisition; (ii) that it was caused by or contributed to by the compulsory acquisition under s. 206 of the CBCA; (iii) that the acts or omissions were those of Kinross, Aurelian, and Computershare; and (iv) that a proceeding would be an appropriate means to remedy the loss, given he would not otherwise obtain satisfaction from the defendants. By that time, Mr. Sprenger knew all the material facts on which he could draw a plausible inference of liability against Kinross, Aurelian, and Computershare arising from the acquisition.

[34] Over fourteen years elapsed from November 24, 2008, until Mr. Sprenger commenced the Claim. The claims against Kinross, Aurelian, and Computershare arising from the acquisition of Aurelian by Kinross are time-barred. These claims are struck without leave to amend. It is plain and obvious on the face of the Claim and by reference to the incorporated documents that no additional facts could be asserted that would alter the conclusion that the limitation period has expired.

[35] Nor can Mr. Sprenger rescue from the limitation period the claims arising from the acquisition of Aurelian by Kinross by baldly pleading that the defendants’ unspecified actions are ongoing (Claim, at para. 35).

[36] What is called a “continuing cause of action” is “a cause of action which arises from the repetition of acts or omissions of the same kind as that for which the action was brought”: Hole v. Chard Union, [1894] Ch. 293 (C.A.), at p. 295, per Lindley, L.J.; applied in Sunset Inns Inc. v. Sioux Lookout (Municipality), 2012 ONSC 437; and Tyszko v. St. Catharines (City), 2023 ONSC 2892, at para. 43. To be a continuing cause of action, there must be a succession or repetition of acts of the same character, but each must constitute separate causes of action. It is not enough that there be one act that has continuing effects or consequences: Manitoba v. Manitoba (Human Rights Commission) (1983), 25 Man. R. (2d) 117 (C.A.), at para. 19.

[37] Here, the causes of action are not ongoing. The alleged acts at paragraph 35 of the Claim arise from or relate to the acquisition. The alleged failure of the defendants to rectify or remedy wrongful acts occurring in 2008 does not create a continuing cause of action or series of wrongful acts: Tyszko, at para. 44.

Claims relating to the concealment and misrepresentation about the true nature of the transaction

[38] Mr. Sprenger alleges that the defendants – singly and in various combinations – concealed and misrepresented the true nature of the 2008 acquisition (Claim, at paras. 17-18, 21, 29-34, and 37-38). This allegation is variously pleaded as different causes of action. Mr. Sprenger does not say what the concealment and misrepresentations were. Yet the claims commonly allege that the reality of the transaction was deliberately hidden and that, in fact, Mr. Sprenger remains the beneficial owner of Aurelian shares.

[39] The absence of material facts and lack of clarity in the pleadings makes the limitation period analysis of the concealment and misrepresentations claims more difficult. I am, however, required to read the pleadings generously.

[40] Whereas the claims arising from the acquisition are based on the losses alleged to have been caused by the acquisition itself, the claims relating to the concealment and misrepresentation about the reality of the transaction allege that Mr. Sprenger remains the beneficial owner of Aurelian shares. The nature of the acts or omissions alleged appear to be different between these claims. The concealment and misrepresentation claims are connected to the claims arising from the transaction, but not entirely coincident with them. They appear to be inconsistent pleadings.

[41] To establish that these claims are time-barred, it is not enough for the defendants to simply show that Mr. Sprenger knew, by November 24, 2008, that he suffered a loss of shares because of the acquisition. They would need to point to pleadings or incorporated documents showing that Mr. Sprenger knew of the concealment and misrepresentation more than two years before commencing the action. This is because concealment by a defendant can extend the limitation period. And a misrepresentation may not be discovered until the statement is discovered to be untrue, inaccurate, or misleading.

[42] Based on the pleadings and incorporated documents alone, I cannot determine whether these claims are time-barred. Further, on a Rule 21.01(1)(a) motion, I cannot simply accept that Aurelian and Kinross’s news releases and regulatory filings, which describe the acquisition, are true and the allegations are false. There is no evidence before me either way.

Claims relating to share price manipulation and misrepresentations before the acquisition

[43] As currently pleaded in the Claim, I cannot determine whether the claims relating to alleged share price manipulation (at paras. 11-12, 14, 23, and 27-28) and misrepresentations before the acquisition (at paras. 10, 15-16) are time-barred. Neither the alleged facts in the Claim nor the incorporated documents indicate when they were discovered.

Other claims

[44] A number of the claims are pleaded without a date or timeframe (Claim, at paras. 24, 44) or are bereft of any facts (Claim, at paras. 20, 22, 26, 36, 40-41, and 42-43). Thus, I cannot determine whether they are time-barred based on the pleadings and the incorporated documents.

D. Should Mr. Sprenger be denied leave to amend the Claim?

[45] The defendants ask me to deny Mr. Sprenger leave to amend his Claim. In addition to the claims that are time-barred, they argue that leave to amend should not be granted because it is plain and obvious that no tenable cause of action is possible on the facts as alleged and there is no reason to suppose Mr. Sprenger could cure the deficiencies by an appropriate amendment: Mitchell v. Lewis, 2016 ONCA 903, 134 O.R. (3d) 524, at para. 21; South Holly Holdings Limited v. The Toronto-Dominion Bank, 2007 ONCA 456, at para. 6.

[46] I am not persuaded that leave to amend should be denied in the Claim’s totality. Mr. Sprenger is self-represented. He conceded that he misconstrued the rules applicable to pleadings. During oral submissions, he articulated some theory of his case, however tenuous. As a result, I am reluctant to entirely deny Mr. Sprenger leave to amend the Claim on his first attempt. Mr. Sprenger might be able to cure some deficiencies by an appropriate amendment.

[47] That said, I have considerable misgivings about the viability of an amended Claim. Before Mr. Sprenger embarks on further costly litigation, I urge him to seek legal advice.

V. Disposition

[48] I strike the Claim as a whole because it does not disclose a reasonable cause of action. In addition, the claims against the defendants arising from the acquisition of Aurelian by Kinross are time-barred. Except for the claims that I have determined to be time-barred, Mr. Sprenger has leave to amend the Claim.

[49] If the parties cannot agree on costs, the defendants may file written costs submissions (supported by cost outlines) of no more than 750 words within one week of the release of this decision. Mr. Sprenger may file responding costs submissions of no more than 750 words within one week of being served by the defendants. The costs submissions can be submitted by email to scj.assistants@ontario.ca to my attention.

Justice Owen Rees

Date: October 16, 2023