CITATION: Markowich v. Lundin Mining Corporation, 2022 ONSC 81  
COURT FILE NO.: CV-17-00588044-00CP  
DATE: 20220106  
SUPERIOR COURT OF JUSTICE - ONTARIO  
RE:  
DOV MARKOWICH, Plaintiff  
AND:  
LUNDIN MINING CORPORATION, PAUL K. CONIBEAR, MARIE  
INKSTER, PAUL MCRAE, LUKAS H. LUNDIN, and STEPHEN GATLEY,  
Defendants  
BEFORE:  
Glustein J.  
COUNSEL: Joseph Groia, Scott Robinson, Jay Strosberg, Bethanie Pascutto, and Steven  
Chadwick, for the Plaintiff  
Lara Jackson, John Picone, and Anna Tombs, for the Defendants  
HEARD:  
December 8 and 9, 2021  
REASONS FOR DECISION  
TABLE OF CONTENTS  
NATURE OF THE MOTION AND OVERVIEW ........................................................................ 1  
Background................................................................................................................................. 1  
Nature of the claims and the motions ......................................................................................... 2  
Overview of Markowich’s position ............................................................................................ 2  
Overview of the defendants’ position......................................................................................... 3  
Summary of conclusions on the leave motion for the Statutory Claim ...................................... 6  
Summary of conclusions on the certification motion for the Common Law Claim................... 8  
Summary of conclusions on the Apology Act ............................................................................ 8  
FACTS............................................................................................................................................ 9  
The parties................................................................................................................................... 9  
The Candelaria mine................................................................................................................... 9  
The inherent risks of pit wall instability and rock slides .......................................................... 10  
Detection of Pit Wall Instability ............................................................................................... 10  
The Rock Slide and its effects on mining at Candelaria........................................................... 11  
The News Release..................................................................................................................... 13  
Effect on share price after the News Release............................................................................ 15  
The Conference Call ................................................................................................................. 15  
Analysts reports and public news coverage.............................................................................. 17  
Review of the expert mining evidence on the effect of the Pit Wall Instability and the Rock  
Slide .......................................................................................................................................... 17  
Review of the expert evidence on economic materiality of the Pit Wall Instability and Rock  
Slide .......................................................................................................................................... 18  
ANALYSIS................................................................................................................................... 21  
The issues arising out of the leave motion................................................................................ 21  
- Page 2 -  
The test to grant leave to bring the Part XXIII.1 claim.............................................................22  
Objection 1: The admissibility of Thomas’ evidence and the weight of such evidence ......24  
(i)  
The applicable law as to considerations of admissibility and weight of expert  
evidence on a leave motion............................................................................ 24  
(ii)  
Application of the law to the present case ..................................................... 25  
Objection 2: Does either the Pit Wall Instability or Rock Slide constitute a “change” to  
Lundin’s business, operations, or capital? ......................................................26  
(i)  
The statutory framework................................................................................ 27  
Principles from the applicable case law......................................................... 28  
(ii)  
(a) The distinction between material change and fact is deliberate and policy-  
based.................................................................................................................. 28  
(b) There is no bright-line test for a change it is fact-specific................................. 29  
(c) The definition of change requires establishing a different position, course, or  
direction................................................................................................................. 30  
(d) The definition of business, operations or capital................................................... 31  
(e) Market impact is not determinative of change (or materiality)............................. 31  
(f) General principles in determining whether a change has occurred....................... 32  
(g) Cases which have considered whether a material change took place ................... 33  
(iii)  
Application to the present case ...................................................................... 34  
Objection 3: The admissibility of Edwards’ evidence and the weight of such evidence ....37  
(i)  
The applicable law as to considerations of admissibility and weight of expert  
evidence on a leave motion............................................................................ 38  
(ii)  
Application of the law to the defendants’ submissions.................................. 38  
(a) Objections as to admissibility ............................................................................... 38  
(b) Objections as to the weight of Edwards’ evidence ............................................... 38  
Objection 4: Materiality of the Pit Wall Instability and Rock Slide.....................................39  
- Page 3 -  
Conclusion on leave motion......................................................................................................40  
Issues arising out of the certification motion............................................................................ 41  
Objection 5: Deemed reliance is not available for the common law misrepresentation  
claims in the present action.............................................................................42  
(i)  
The applicable law ......................................................................................... 42  
Application of the law to the present case ..................................................... 46  
(ii)  
Objection 6: PCI 13 cannot be certified as a common issue since there is no basis in  
fact to establish a punitive damages claim......................................................49  
Objection 7: If leave is denied on the Statutory Claim, certification of the Common  
Law Claim “must be denied under s. 5(1)(d)” ................................................50  
Objection 8: In the alternative to Objection 7, since deemed reliance cannot be  
certified as a common issue in the present action, certification of the  
Common Law Claim cannot be granted since a class action would not be  
the preferable procedure..................................................................................51  
ORDER AND COSTS.................................................................................................................. 53  
REASONS FOR DECISION  
NATURE OF THE MOTION AND OVERVIEW  
Background  
[1]  
The plaintiff, Dov Markowich (Markowich), and the proposed class acquired shares of  
the defendant, Lundin Mining Corporation (Lundin) in the period between October 25, 2017 and  
November 29, 2017 (the Class Period).  
[2]  
On or about October 25, 2017, Lundin detected pit wall instability, arising from an  
unstable wedge, in a localized area of its open pit operations at its Candelaria copper mine  
located in Chile (the Pit Wall Instability).  
[3]  
On or about October 31, 2017, the unstable wedge failed and an estimated 600,000 to  
700,000 tonnes of waste material from Phase 10of the Candelaria mine moved down slope,  
restricting access to Phase 9 (the Rock Slide).  
[4]  
On November 29, 2017, Lundin issued a news release entitled Lundin Mining Provides  
Operational Outlook & Update(the News Release), consistent with its practice of releasing  
operational updates in late November or early December each year. In the News Release, Lundin  
(i) advised investors about the Pit Wall Instability which resulted in the Rock Slide, and (ii)  
provided a detailed operational update which addressed all of its mining operations including (a)  
revised expectations for production, cash costs and capital expenditures, and (b) a 10-year  
forecast for the Candelaria mine.  
[5]  
On November 30, 2017, the price of Lundins shares on the Toronto Stock Exchange  
(TSX) closed at $7.52, a decline of $1.44, or 16%, from the closing price of $8.96 on November  
29, 2017. This one-day drop represented a loss of over $1 billion of market capitalization.  
[6]  
As required under National Instrument 43-101, Lundin delivered its Technical Report  
for the Candelaria Copper Mining Complex, Atacama Region, Region III, Chiledated and  
released on November 30, 2017 (the Technical Report), prepared by SRK Consulting (Canada)  
Inc. (SRK). In that report, SRK reviewed the Pit Wall Instability and the Rock Slide, and  
discussed planned resequencing for the mining operations.  
[7]  
On December 1, 2017, Lundin provided an operational update to investors by a  
conference call (the Conference Call) during which the defendant Paul Conibear (Conibear), then  
President and Chief Executive Officer of Lundin, and Philip Brumit (Brumit), then President and  
Managing Director of the Candelaria mine, discussed the operational update set out in the News  
Release, and answered questions from analysts. In that Conference Call, both Brumit and  
Conibear discussed the Pit Wall Instability and the Rock Slide, as well as other information  
disclosed in the News Release.  
   
- Page 2 -  
Nature of the claims and the motions  
[8] Markowich and the proposed class claim damages based on (i) the statutory cause of  
action in Part XXIII.1 of the Securities Act, R.S.O. 1990, c. S.5 (Securities Act) (the Statutory  
Claim) and (ii) common law negligent misrepresentation (the Common Law Claim).  
[9]  
The Statutory Claim is based on s. 75 of the Securities Act. Markowich submits that both  
the Pit Wall Instability and Rock Slide were material changesto Lundins business,  
operations or capital(as defined under s. 1(1) of the Securities Act) and, as such, Lundin failed  
to (i) disclose them immediately by a news release on or about October 25 and 31, 2017  
respectively, and (ii) file a material change report within 10 days.  
[10] Under s. 138.8(1) of the Securities Act, Markowich requires leave from the court to assert  
the Statutory Claim. Markowich seeks an order granting such leave. If leave is granted,  
Markowich seeks an order certifying the Statutory Claim as a class action under s. 5 of the Class  
Proceedings Act, 1992, S.O. 1992, c. 6 (CPA).  
[11] The Common Law Claim is based on the same alleged failure to promptly disclose the Pit  
Wall Instability and the Rock Slide, with the class asserting that (i) the defendants owed the class  
a duty of care to make timely disclosure of both events; (ii) the defendants breached that duty by  
not disclosing either event until the News Release; and (iii) the class relied on the alleged  
omissions in making their investments during the Class Period.  
[12] Markowich seeks an order certifying the Common Law Claim under s. 5 of the CPA,  
regardless of whether leave is granted to assert the Statutory Claim.  
Overview of Markowichs position  
[13] Markowich position on the Statutory Claim can be summarized as follows:  
(i)  
Leave under Part XXIII.1 should be granted since:  
(a)  
there is a reasonable possibility, based on credible evidence and a  
plausible interpretation of the Securities Act, that Markowich can establish  
at trial that under s. 75(1) of the Securities Act, Lundin was required to  
immediately disclose the Pit Wall Instability and Rock Slide on or about  
October 25 and 31, 2017 respectively,1 since those events were changes”  
to Lundins business, operations or capital; and  
1
(and, under s. 75(2) of the Securities Act, file a material change report as soon as practicable and in any event  
within ten days of the date on which the change occurs)  
   
- Page 3 -  
(b)  
there is a reasonable possibility, based on credible evidence and a  
plausible interpretation of the Securities Act, that Markowich can establish  
at trial that under s. 75(1) of the Securities Act, the alleged changes were  
materialsince they would reasonably be expected to have a significant  
effect on the market price or valueof Lundins shares; and  
(ii)  
If leave is granted to bring the Statutory Claim, then the Statutory Claim should  
be certified as a class action under s. 5 of the CPA, since all requirements under s.  
5 would be met.  
[14] Markowichs position on the Common Law Claim is that certification should be granted  
because:  
(i)  
The Common Law Claim discloses a cause of action under s. 5(1)(a) of the CPA;  
(ii)  
There is some basis in fact to establish an identifiable class under s. 5(1)(b) of the  
CPA;  
(iii)  
There is some basis in fact that the proposed common issues (PCIs)2 for the  
Common Law Claim can be determined without individual assessment and  
significantly advance the claim and, as such, can be certified under s. 5(1)(c) of  
the CPA;  
(iv)  
(v)  
There is some basis in fact that a class action is the preferable procedure under s.  
5(1)(d) of the CPA; and  
There is some basis in fact that Markowich is a proper representative plaintiff  
under s. 5(1)(e) of the CPA.  
Overview of the defendantsposition  
[15] The defendants oppose leave for the Statutory Claim, and on that basis, oppose  
certification of that claim.3 The defendants raise four objections.  
2 The PCIs are attached as Schedule A to these reasons.  
3
While the heading of the defendantswritten submission is If Leave is Granted, Certification should Still Be  
Denied, the defendants only submit that the Common Law Claim should not be certified if leave is granted on the  
Statutory Claim. The defendants do not oppose certification of the Statutory Clam if leave is granted, and do not  
oppose certification of PCIs 1-4 related to the Statutory Claim, if leave is granted.  
It is settled law that “[t]here can be no doubt, however, that a class action is the preferable procedure for pursuing a  
claim under Part XXIII.1 of the Securities Act. The statutory remedy is tailor-made for a class action: Green v.  
 
- Page 4 -  
[16] The defendants submit that there is no reasonable possibility of success that Markowich  
could establish at trial that either the Pit Wall Instability or the Rock Slide constituted a “change”  
to Lundin’s “business, operations or capital”, as required under s. 1(1) of the Securities Act. For  
this submission, the defendants assert that:  
(i)  
The report of Markowichs expert on mining issues, Mr. David Thomas  
(Thomas), is inadmissibleor should be given no weight, due to advocacy  
and lack of expertiseor due to flawed factual assumptions(Objection 1); and  
(ii)  
Even if the court considers Thomasevidence, there is no reasonable possibility  
of success that Markowich could establish at trial that either the Pit Wall  
Instability or Rock Slide were changesto Lundins business, operations, or  
capital(Objection 2).  
[17] The defendants submit, in the alternative, that even if the Pit Wall Instability or the Rock  
Slide constituted a “changeto Lundin’s “business, operations or capitalunder s. 1(1), there is  
no reasonable possibility of success that Markowich could establish at trial that such a change  
was material. For this submission, the defendants assert that:  
(i)  
The report of Mr. Gregg Edwards (Edwards), Markowichs expert on economic  
materiality, is inadmissible opinion on the ultimate issueand if admitted, should  
be given no weight due to flawed methodologiesor flawed factual  
assumptions(Objection 3); and  
(ii)  
Even if the court considers Edwardsevidence, there is no reasonable possibility  
of success that Markowich could establish at trial that either the detection of the  
Pit Wall Instability or the Rock Slide was material (Objection 4).  
[18] The defendants also do not challenge that PCIs 1-4 raise common issues for the Statutory  
Claim (if leave is granted).4  
Canadian Imperial Bank of Commerce, 2012 ONSC 3637, at paras. 595 and 611 (Green (SC)). As such, if leave is  
granted, certification is suitable for the statutory claims and their attendant PCIs in this case.  
4
These PCIs address (i) whether either the Pit Wall Instability (PCI 1) or the Rock Slide (PCI 2) was a change in  
the business, operations or capital of Lundin Mining that could reasonably be expected to have a significant effect  
on the market price or value of Lundin Mining securities, and thus constitute a Material Changewithin the  
meaning of [the Securities Act]; (ii) if either was a material change, did the Defendants, or any one of them, fail to  
make timely disclosure of the Pit Wall Change and/or the Rock Slide Change within the meaning of the [Securities  
Act], if necessary the Equivalent Securities Acts, and any other applicable securities regulations(PCI 3); and (iv) if  
so, did the failure to make timely disclosure of the Pit Wall Change and/or the Rock Slide Change constitute a  
misrepresentation, if leave is granted, within the meaning of Part XXIII.1 of the [Securities Act] and, if necessary,  
the Equivalent Securities Acts? (PCI 4)  
- Page 5 -  
[19] With respect to the Common Law Claim, the defendants do not challenge that (i) a cause  
of action is disclosed (under s. 5(1)(a) of the CPA) and (ii) there is some basis in fact to meet the  
requirements of (a) an identifiable class (under s. 5(1)(b) of the CPA) and (b) a suitable  
representative plaintiff (under s. 5(1)(e) of the CPA).  
[20] The defendants do not object to certification of PCIs 5-7, PCI 10, or PCI 12,5 but only if  
the court finds that the Common Law Claim can be certified under s. 5(1)(d) as the preferable  
procedure (which the defendants oppose). There is no dispute that these PCIs raise common  
issues which advance the claim.6  
[21] The defendants take no position on whether PCI 14 should be certified.7  
[22] The defendantsobjections to the Common Law Claim are based only on the  
requirements under s. 5(1)(c) and (d) of the CPA.  
[23] The defendants raise two objections to certification of the PCIs as common issues under  
s. 5(1)(c) of the CPA.  
[24] The defendants submit that PCIs 8, 9 and 118 cannot be certified because deemed reliance  
is not available for the Common Law Claim (Objection 5).9  
5
The defendants objected to PCI 12 in their factum but acknowledged at the hearing that this PCI, which seeks a  
common determination of whether the defendants are precluded from obtaining a reduction in damages” because of  
issuing additional information in the News Release (described by Markowich as “Confounding Information), is a  
common issue affecting all class members and could be certified if the Statutory Claim was certified (if leave were  
granted) or if the Common Law Claim was certified.  
6
These PCIs address the following elements of the Common Law Claim: (i) whether the alleged failure to make  
timely disclosure of the Pit Wall Instability or Rock Slide was an omission that constitutes a misrepresentation at  
common law(PCI 5); (ii) whether the Defendants, or any one of them, owe a duty of care to the Class Members”  
(PCI 6); (iii) if so, did the Defendants, or any of them, fail to meet the standard of conduct required in the  
circumstances?(PCI 7); (iv) whether Lundin is vicariously liable or otherwise responsible for the acts and/or  
omissions of the Individual Defendants and its other officers, directors, employees, agents and representatives(PCI  
10), and (v) whether the defendants are precluded from obtaining a reduction in damagesbecause of issuing  
additional information in the News Release (PCI 12).  
7
PCI 14 asks Should the Defendants, or any of them, pay the costs of administering and distributing any amount  
awarded under sections 24 and 25 of the CPA? If so, who should pay it and in what amount?. If certification is  
ordered for either the Statutory Claim or the Common Law Claim (which I do not find for the reasons I discuss  
below), I would certify this PCI as was done in Cassano v. The Toronto-Dominion Bank, 2007 ONCA 781, at para.  
72 and in Charmley v. Deltera Construction Limited, 2010 ONSC 7153, at para. 34.  
8
These PCIs address the deemed reliance theory. PCI 8 asks Was the market for Lundin Mining securities  
efficient?PCI 9 asks whether each Class Member’s reliance on the misrepresentation [can] be inferred from the  
fact that each Class Member decided to and did acquire Lundin Mining securities in an efficient market?. PCI 11  
- Page 6 -  
[25] The defendants also submit that PCI 13 should not be certified (Objection 6). PCI 13 asks  
the court to determine whether the Defendants, or any of them, [are] liable to pay punitive  
damages to the Class Members, and [i]f so, who should pay it and in what amount?. The  
defendants submit that there is no basis in fact before the court to certify a punitive damages  
claim.  
[26] The defendants also object to certification of the Common Law Claim on the basis that a  
class proceeding would not be the preferable procedure under s. 5(1)(d) of the CPA. The  
defendants submit that:  
(i)  
If leave is denied on the Statutory Claim, certification of the Common Law Claim  
must be denied under s. 5(1)(d)(Objection 7); and  
(ii)  
In any event, since deemed reliance cannot be certified as a common issue,  
certification of the Common Law Claim cannot be granted since the action would  
devolve into unmanageable individual actions in which each investor would be  
required to establish reliance, causation, and damages (Objection 8).  
[27] Finally, the defendants submit that the references to an alleged apologyby Conibear  
during the Conference Call must be struck from the pleadings, affidavit evidence, and a  
newspaper article attached as an exhibit (which describes comments by Conibear as an apology)  
(Objection 9). The defendants rely on (i) ss. 2(1) and 2(3) of the Apology Act, S.O. 2009, c. 3  
(Apology Act), which provide that evidence of an apology is not admissible as evidence of fault  
or liability and (ii) Rule 25.06(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which  
requires pleading of material facts, but not evidence.  
Summary of conclusions on the leave motion for the Statutory Claim  
[28] For the reasons that follow, I dismiss the motion for leave to bring the Statutory Claim. I  
agree with the defendantsposition on Objection 2 and find that there is no reasonable possibility  
of success that Markowich could establish at trial that either the Pit Wall Instability or the Rock  
Slide constituted a “change” to Lundin’s “business, operations or capital”, as required under s.  
1(1) of the Securities Act.  
asks whether damages under the Statutory Claim or the Common Law Claim can be determined on an aggregate  
basis pursuant to section 24 of the CPA [and] [i]f so, who should pay it and in what amount?.  
9
The defendants acknowledge that if leave is granted for the Statutory Claim then a claim for aggregate damages  
under PCI 11 would be available for that claim since reliance is not required, but submit that it is not available for  
the Common Law Claim.  
 
- Page 7 -  
[29] The uncontested evidence is that pit wall instability is a common issue in open pit  
mining, which Lundin detected by 24/7ground radar technology as part of its business  
operations. There is no evidence that the Pit Wall Instability changed Lundins lines of business,  
how it conducted its operations, or its capital structure.  
[30] With respect to the Rock Slide, I find that there is no reasonable possibility that  
Markowich could establish at trial that the event constituted a changeto Lundins business,  
operations, or capital.  
[31] The evidence is that as a result of the Rock Slide, (i) approximately 20% of the copper  
Lundin planned on mining in 2018 from Phase 9of the Candelaria mine would be deferred  
until 2020 or 2021, and (ii) the deferred production constituted approximately 5% of Lundins  
worldwide mining operations. Neither that evidence, nor Thomasevidence as to the potential  
scope of a shutdown after the Rock Slide, could reasonably support a finding based on a  
plausible interpretation of the Securities Act that the Rock Slide resulted in a change to Lundins  
business, operations, or capital.  
[32] I do not accept Objections 1 and 3. Based on the settled law and the facts of this case, I do  
not find that the evidence of either Thomas or Edwards is inadmissible on the leave motion,  
since this case does not raise the rare circumstance in which the court should make such an order.  
Consequently, I consider Markowichs expert evidence on (i) the effect of the Pit Wall Instability  
and Rock Slide on Candelarias mining operations (from Thomas) and (ii) the economic  
materiality of that information (from Edwards). However, that evidence does not establish a  
changeto Lundins business, capital or operations.  
[33] Based on my review of Edwardsexpert evidence and that provided by the defendants’  
expert on economic materiality, Mr. Bradley Heys (Heys), as well as other relevant evidence  
including the comments of Conibear during the Conference Call and the reports of numerous  
analysts, I find that there is a reasonable possibility that Markowich could establish that the Pit  
Wall Instability and Rock Slide were materialevents, which would reasonably be expected to  
have a significant effect on the market price or valueof the Lundin shares. Consequently, I do  
not accept Objection 4.  
[34] For the above reasons, I deny leave to bring the Statutory Claim. However, if it were  
found that there is a reasonable possibility that Markowich could establish that either the Pit  
Wall Instability of Rock Slide were changesto Lundins business, operations or capital”  
(which I do not accept), then I would grant leave to Markowich to bring the Statutory Claim.10  
10  
As I note at footnote 3 above, had I granted leave to bring the Statutory Claim, I would have certified the  
Statutory Claim under the Green (SC) analysis, as adopted in MusiciansPension Fund of Canada (Trustee of) v.  
Kinross Gold Corp., 2014 ONCA 901, at para. 136.  
- Page 8 -  
Summary of conclusions on the certification motion for the Common Law Claim  
[35] For the reasons that follow, I do not certify the Common Law Claim.  
[36] I accept Objection 5 and find that the efficient market theory cannot be applied to deem  
reliance in the present case, regardless of whether the misrepresentation is affirmative or by  
omission.  
[37] Markowich seeks to distinguish the cases relied upon by the defendants on the basis that  
they arise from affirmative misrepresentations, which require determination of individual  
reliance. However, the same individualized context to determine the reasons for investing applies  
in the present case when the omission is alleged each investor would need a trial to determine  
whether the investor would have relied on the information if disclosed on October 25 and 31,  
2017, just as an investor in an affirmative misrepresentation case is required to lead evidence as  
to whether that investor relied on the misrepresentation. There is no distinction in principle  
between the two scenarios.  
[38] Consequently, I do not certify PCIs 8 and 9 related to the efficient market or deemed  
reliance, nor PCI 11 seeking aggregate damages for the Common Law Claim.  
[39] I also accept Objection 6. Even if the action could be certified for either the Statutory  
Claim or the Common Law Claim, I would not certify PCI 13 as there is no basis in fact to  
establish egregious or high-handed conduct by Lundin. Further, it is settled law that a claim for  
punitive damages cannot stand on its own if there is no other cause of action certified.  
[40] I do not agree with Objection 7 that if leave is denied on the Statutory Claim, then  
certification of the Common Law Claim must automatically fail. That position was rejected in  
Kinross, at paras. 96-99.  
[41] However, I accept Objection 8 and find that, as the court held in Kinross, a class action is  
not the preferable procedure in the present case since the common law misrepresentation claim  
will require tens of thousands of idiosyncratic trials. The Securities Act misrepresentation  
remedies, which do not require reliance, were established to provide a common cause of action  
when it was not available under the common law. Given my finding that deemed reliance is not  
available in the present case, I would follow the approach in Kinross that generally, common  
law negligent misrepresentation claims in securities cases are not suitable for certification: at  
para. 136.  
Summary of conclusions on the Apology Act  
[42] At the hearing, the parties reached an agreement to (i) redact all references to the  
purported apologyin the pleadings and affidavits, while maintaining the references to any  
underlying recitation of the statements and (ii) maintain as exhibits any newspaper articles which  
might use the word apologyin unredacted form, as the articles cannot be used for the purposes  
of establishing an apology. Consequently, I do not address Objection 9 in these reasons.  
   
- Page 9 -  
FACTS  
The parties  
[43] Lundin is incorporated pursuant to the laws of Canada. Its corporate head office is in  
Toronto and it maintains offices around the world. It describes itself as a “diversified Canadian  
base metals mining company with operations in Chile, the USA, Portugal, and Sweden, primarily  
producing copper, nickel and zinc.”  
[44] During the Class Period, the individual defendants were officers and/or directors of  
Lundin.  
[45] Markowich is a businessman residing in Toronto. Between November 15, 2017 and  
November 27, 2017, he purchased 10,000 securities of Lundin at an average price of $9.156 per  
security, for gross proceeds of $91,560 plus commissions. He did not sell any Lundin securities  
during that period and continues to own them.  
[46] The proposed class includes all persons, other than excluded persons,11 who acquired  
Lundin’s securities during the Class Period (October 25 to November 29, 2017 inclusive) and  
held some or all of those securities as of the close of trading on November 29, 2017.  
The Candelaria mine  
[47] The Candelaria mining complex is located in Chile’s Atacama Province and is composed  
of an open pit mine and three underground mines which provide copper ore to an on-site  
concentrator and a processing plant. Candelaria is owned jointly by Lundin (80%) and Sumitomo  
Corporation (20%).  
[48] At all material times, Candelaria’s mine plan contemplated that the open pit operation  
would be mined in several phases over the anticipated remaining 19-year lifespan of the mine. In  
2017, there were five remaining phases of the life of mineplan (LOM Plan), known as Phases  
9 through 13. As of October 2017, Lundin was scheduled to mine Phase 9 and parts of Phase 10.  
[49] Lundin removed 87 million tonnes of material in 2017 at the Candelaria open pit mine  
(excluding the underground mines and Lundins mining operations in other countries), with daily  
average production of 227,000 tonnes per day.  
11  
Excluded from the class are Lundins subsidiaries, affiliates, officers, directors, senior employees, legal  
representatives, heirs, predecessors, successors and assigns, and any member of the individual defendants’ families  
and any entity in which any of them has or had during the Class Period any legal or de facto controlling interest.  
     
- Page 10 -  
[50] As of October 2017, the three underground mines operated with collective overall mining  
production of 13,750 tonnes per day.  
[51] In 2016 and 2017, Candelaria made up between 55% and 60% of Lundin’s sales revenue.  
The balance came from Lundin’s other mining operations: the Eagle mine (nickel), located in the  
USA, the Neves-Corvo mine (copper), located in Portugal, and the Zinkgruvan mine (zinc),  
located in Sweden.  
The inherent risks of pit wall instability and rock slides  
[52] Mining is an inherently risky and unpredictable industry. The rock masses that make up  
underground and open-pit mines are composed of complicated material that varies in strength  
and makeup over short distances. Unusual geological formations and rock slides are routine.  
Given the constant presence of these challenges, the mining industry makes every attempt to  
reduce risk from these hazards.  
[53] One of the most common risks associated with open pit mines is slope instability.  
[54] Lundin regularly warned investors of the risks of pit wall instability and rock slides. By  
way of example:  
(i)  
In its 2016 annual information form published on March 24, 2017, Lundin  
advised that its business operations are subject to risks and hazards inherent in  
the mining industry, including but not limited to […] the occurrence of rock wall  
or ramp collapses; and  
(ii)  
In a November 30, 2016 news release, Lundin advised that its statements about  
future performance, including statements about copper production and capital and  
operating costs, were forward looking information that were subject to risks  
inherent in mining including environmental hazards, industrial accidents, unusual  
or unexpected geological formations, ground control problems …”.  
[55] Similar warnings were included in Lundin’s news release dated October 25, 2017, its  
third quarter management discussion and analysis dated October 25, 2017, and in the Technical  
Report.  
Detection of Pit Wall Instability  
[56] Lundin continuously monitored slopes using advanced ground radar equipment. This  
equipment alerts a mining operation of the increased risk of slope instability and possible slope  
failure.  
[57] In 2012, prior to Lundin acquiring its ownership interest in Candelaria, potential pit wall  
instability was detected during the mining of Phase 8. This was believed to be associated with  
the interaction of two intersecting geological structures, forming a wedge of waste material in the  
open pit wall. In order to manage the unstable wedge, the affected area of the open pit wall was  
   
- Page 11 -  
redesigned while mining of Phase 8 continued. This revised mine plan included a step-inof the  
open pit wall to mitigate the risk of further pit wall instability.  
[58] Further mining revealed a third geological structure below the wedge, which had a flat-  
lying geological fault that daylightedin the redesigned pit wall. Candelaria personnel were not  
aware of the structure until it was exposed by mining, after which it could be mapped, and  
potential ramifications could be assessed. The exposure of the third geological structure resulted  
in further pit wall instability, which was detected on or about October 25, 2017 by real-time  
slope monitoring radar equipment.  
[59] The Pit Wall Instability was localized and resulted in the evacuation of Lundin personnel  
from that area of the mine. However, neither party led evidence as to whether any of the  
remaining area of the open pit mine, or the underground mine, was shut down as a result of the  
detection of the Pit Wall Instability.  
[60] Thomas, on behalf of Markowich, describes the suspension of operations as major”  
because he concludes that (i) there would have been a shutdown of at least the open pit mine and  
(ii) best practices would have resulted in the closing of the underground mines as well. He opines  
that a shutdown and evacuation would have been considered a crisisand would have engaged  
Lundins crisis management procedures.  
[61] Mr. Julian Watson (Watson), on behalf of the defendants, opines that there would be no  
reason to shut down either the remaining open pit mine or the underground mines, as they were  
either located far away from the localized area or could be protected through measures to ensure  
the safety of Lundin personnel.  
The Rock Slide and its effects on mining at Candelaria  
[62] On October 31, 2017, the unstable wedge failed and an estimated 600,000 to 700,000  
tonnes of waste material from Phase 10 moved down slope, restricting full access to Phase 9. The  
Rock Slide was a localized slope failure and did not cause any fatalities, any injuries, or any  
damage to equipment.  
[63] Again, there is no evidence as to the effect of the Rock Slide on shutting down other  
mining activities at the Candelaria mine.  
[64] Thomas asserts that the Rock Slide would have caused a major disruption of mine  
operations and production because the mine would have effectively ceased to operatebut  
acknowledges that there is no evidence to support such a hypothesis.  
[65] Thomas further asserts that the economic viabilityof the Candelaria mine was at risk as  
a result of the Rock Slide. However, he acknowledges on cross-examination that he conducted  
no study of Candelarias economic viability nor provided an opinion on the issue.  
 
- Page 12 -  
[66] Watson asserts that the Rock Slide only resulted in a temporary suspension of mining  
activities in a small area of the open pit, with all other mining procedures being unaffected and  
continuing as usual. However, as with Thomas, there is no direct evidence to support Watsons  
opinion that since the Rock Slide was localized, the remainder of the mine would have operated  
as usual.  
[67] Lundin delivered the Technical Report on November 30, 2017. SRK set out the following  
information about the Rock Slide:  
(i)  
Following a localized failure in the east wall of the Phase 9 pit on October 31,  
2017 modifications were made to the Phase 9 design;  
(ii)  
The LOM schedule was modified to reflect the changes in the design;  
(iii)  
The Mineral Reserves were not affected by the change in design as matter now  
excluded from the original Phase 9 will be captured in Phase 10 in 2020 and  
2021; and  
(iv)  
However, the forecast for 2018 now shows a reduction in contained copper of  
approximately 20 percent over the previous production plan, as additional low  
grade stockpile material will be processed in place of higher grade ore previously  
scheduled from Phase 9.  
[68] Further, the uncontested evidence about the Rock Slide was that:  
(i)  
Lundin removed 87 million tonnes of material in 2017 at the Candelaria open pit  
mine alone, with daily average production of 227,000 tonnes per day.  
Consequently, the amount of material in the Rock Slide was 0.8% of 2017 annual  
production (or the equivalent of approximately three days of mining);12 and  
(ii)  
Revisions made to Candelaria’s 2018 production guidance resulted in a deferral of  
approximately 19,000 tonnes of copper (of which Lundin’s 80% share is about  
15,200 tonnes). Given that Lundin’s global production outlook for 2018 was  
between 317,000 and 344,000 tonnes of base metals, the amount of deferred  
copper production represented less than a 5% change.  
12  
Thomas disputes that it would have been practical or cost-effective to devote all of Candelarias resources to  
removing the Rock Slide material in three days, but the reference is relied upon by the defendants as a scale-based  
comparator, not as evidence that the Rock Slide material would have been removed in three days.  
- Page 13 -  
The News Release  
[69] Lundin’s practice was to provide its investors with an operational update in late  
November or early December of each year. Consistent with that practice, Lundin published the  
News Release containing its Operational Outlook & Updateon November 29, 2017.  
[70] Lundin described the key highlightsof the update (cited verbatim):  
(i)  
The Company will make significant investments in both the mine and mill at  
Candelaria to increase the copper production profile over the life-of-mine. A  
particular focus is on improvements in years 2021 and beyond. Forecasts for 2018  
and 2019 have been lowered under the new re-phased open pit life-of-mine plan  
and to address localized pit wall instability, reflecting the short-term impact on  
production from a recent slide;  
(ii)  
Zinc production guidance has increased from 2019 incorporating the Zinc  
Expansion Project (ZEP) at Neves-Corvo, though lowered for 2018. Total zinc  
production is on-track to increase in 2020 by a forecast 60% over 2018 levels with  
the ZEP to be contributing at full production rates;  
(iii)  
(iv)  
Nickel production forecasts remain in line with previous guidance. Final approval  
of permit amendments to develop and mine Eagle East were received November  
20, 2017; and  
Eagle and Zinkgruvan are to remain first-quartile producers, and Candelaria and  
Neves-Corvo well positioned on global cash operating cost curves in 2018.  
[71] The News Release set out disclosure of facts including the Pit Wall Instability and the  
Rock Slide, information in respect of production guidance, cash costs and capital expenditures,  
and a 10-year forecast for Candelaria.  
[72] With respect to the Pit Wall Instability and Rock Slide, Lundin advised that:  
(i)  
Forecasts for 2018 and 2019 have been lowered from the previous outlook under  
the new re‐phased open pit life‐of‐mine plan and to address localized pit wall  
instability, reflecting the short‐term impact on production from a recent slide;  
and  
(ii)  
The latest open pit plan considers new phase designs, production sequences and  
a change in pit ore excavation and truck loading methodology. It also addresses  
recent instability in a localized area of the pit’s east wall and a slide which  
occurred October 31, 2017. Both have impacted 2018 and 2019 production  
forecasts. Production guidance for 2017 remains unchanged. Candelaria  
attributable copper production guidance of 104,000 to 109,000 tonnes in 2018 is  
less (20%) than the previous outlook for the year. As a result of the recent slide  
 
- Page 14 -  
and to take a more conservative approach in mining this area of the pit, the  
near‐term plans have been altered to focus on waste push backs above the area  
prior to mining where the slide occurred. In the meantime, low grade stockpile ore  
will make up the difference in mill feed.”  
[73] The production guidance indicated an improved copper production profile at Candelaria  
over the life-of-mine and over the next 10 years. Production guidance for 2017, which was  
increased in July 2017, remained the same.13 Production guidance for 2018 was 20% less than  
the previous outlook for the year.  
[74] The cash cost guidance indicated an increase at Candeleria (copper), Neves-Corvo  
(copper), and Zinkgruvan (zinc), and a decrease for Eagle (nickel). Following Lundin’s public  
disclosure of this updated guidance, equity analysts increased their estimates of 2018 cash costs  
for each of Candelaria, Neves-Corvo, and Zinkgruvan, and reduced their estimate of 2018 cash  
costs for Eagle.  
[75] The capital expenditures guidance indicated that Lundin planned to make significant  
additional capital investments at Candelaria on equipment (US $220 million), mill improvements  
(US $75 million), and infrastructure (US $47 million).  
[76] Candeleria’s 10-year forecast reflected a revised mine plan, which included a  
resequencing of Phases 9 and 10 of the open pit and a redesign of Phases 11, 12, and 13. The  
resequencing had been planned before the Rock Slide.  
[77] Lundin had previously advised its investors about the upcoming expansions to Candelaria  
by way of its continuous disclosure, including in its (i) 2016 annual information form, (ii)  
management discussion and analysis for the three and six months ended June 30, 2017 (dated  
July 26, 2017), and (iii) management discussion and analysis for the three and nine months  
ended September 30, 2017 (dated October 25, 2017).  
[78] The resequencing required Lundin to transition out of Phase 9 earlier than under the  
previous plan and accelerate the start of mining in Phase 10. Phase 9 involved mining under the  
area originally planned to be mined in Phase 10 and, consequently, operating one phase above  
another resulted in technical “line of fire issues”.  
[79] Under the revised plan, waste-stripping in Phase 10 was to begin in 2018. As a result,  
Lundin would mine more waste material in the short-term and have correspondingly lower  
expectations for the volume of copper production, as reflected in Lundin’s 2018 and 2019 copper  
production and cash cost guidance for Candelaria.  
13 This fact does not mean that production for 2017 was not impacted by the Pit Wall Instability or the Rock Slide as  
there is no evidence as to whether production until the date of the events was ahead of scheduled production.  
- Page 15 -  
Effect on share price after the News Release  
[80] On November 30, 2017, the price of Lundins securities on the TSX closed at $7.52, a  
decline of $1.44, or 16% from the closing price of $8.96 on November 29, 2017. This one-day  
drop represented a loss of over $1 billion of market capitalization.  
The Conference Call  
[81] On November 30, 2017, Lundin issued a news release, titled “Lundin Mining Operational  
Outlook Conference Call”. The purpose of the call was to “discuss the details of its Operational  
Outlook News Release disseminated on November 29, 2017”.  
[82] Before the TSX opened, on December 1, 2017, Lundin held the Conference Call with  
various stock analysts. During the call, Conibear stated:  
(i)  
“And now as we take a look at a summary of our 2018 production and cash cost  
guidance, you will see, obviously, for those that know the company and know our  
previous projections, that we are down on copper for next year, which is  
obviously a concern to a lot of investors and one of the key elements as a result --  
resulting in our significant stock decline yesterday”;  
(ii)  
“Candelaria has had a localized pit instability, which has been the primary reason  
for the copper production profile for next year and 2019, and then it recovers up  
significantly. That's also affected the C1 cost, which is now up to $1.70 for next  
year”;  
(iii)  
More specifically, at Candelaria, which, you see, is responsible for more than  
50% of our revenue, 50% of our profits, if you take a look at the 5-year plan, 7-  
year, 10-year and life-of-mine, we've made improvements on that year-upon-year,  
and once again, what we're publishing now is we're taking a medium- and long-  
term view of that very important asset, reinvesting in it to ensure that we have  
outstanding cash flows, better than what were projected before on that”;  
(iv)  
(v)  
“Now it's obvious in the release that we came out and the feedback that we got,  
the #1 questions that are being raised and the concerns are around Candelaria and,  
in particular, on the localized instability that we had. We had a slide at the end of  
October; and  
“Okay. I would like to thank everybody for attending today's call. Obviously, our  
stock price took a big hit yesterday, that's a black eye for us.”  
[83] During the Conference Call, Brumit stated:  
(i)  
“When we look at where we're at, we also needed then to take into account the  
slide that took place on October 31 of this year in Phase 9”;  
   
- Page 16 -  
(ii)  
So as a result, looking at the rephasing of the pit, I will draw your attention to the  
slide on the right side. If you look at Phase 9 and Phase 10, you'll notice that the  
south end of Phase 9 is basically mining underneath what is Phase 10. This is  
what we call a line-of-fire issue”;  
(iii)  
“Next slide, please. I want to spend a few minutes and talk about the localized  
failure there in Phase 9. This wedge basically started back in Phase 8, back in  
2012. The phase was basically modified in 2012, step-in away from this wedge  
failure. The wedge was formed by 2 structures that intersect, creating basically a  
pie wedge of waste material. As we continued to mine down this area that was  
naturally unstable, and we encountered an unseen or unmapped, relatively  
flatlining structure that when we daylighted that, it released this past October;  
(iv)  
We actually had indications that this was going to happen about 5 days prior to  
it. We used the latest technology to constantly scan our walls with radars 24/7, so  
that we can actually see if there's any movement. On October 31, the slope  
sloughed down, creating a tail of slope of about 600,000 to 700,000 tonnes of  
waste material from Phase 10. Basically the impact of this was to delay ore that  
was currently being mined out of Phase 9 until it can be mined when Phase 10  
comes back through and mines out the failure area as well as this ore that's been  
delayed. We expect that to happen between 2020 and 2021. The impacts in 2018  
are, basically, twofold. About 55% of the impact in 2018 or about 19,000 tonnes  
of copper was the result of the slide, which delayed that, like I said before, out to  
2020, 2021. The other, of course, was the rephasing and the fact that we needed to  
actually be mining more waste in 2018, thereby shipping lower grade material to  
the mill;  
(v)  
Mark, next slide. This is the copper production profile over the life of the mine.  
As you can see, 2018 and 2019 are less than what we projected in the gray line,  
which is the 2016 plan. Each phase is represented here. So as you can see, our  
Phase 9 represented by the blue will basically be mined out in 2019”; and  
(vi)  
“Yes. No, I've got it, Paul. No basically, when we look at that current conditions  
that set up the slide, we look for those same type of structural conditions  
throughout the pit. … So we're constantly reviewing and updating our procedures,  
doing back analysis going forward, and of course, we monitor our pit slopes on a  
24-hour, 7-day a week basis, with the latest technology -- GroundProbe  
penetration radars, that type of stuff. So we actually saw this movement begin  
about 5 days before it actually sloughed. So we've -- we were able to evacuate all  
men and personnel from that area. And again, it's part about managing your slopes  
and working through those.”  
- Page 17 -  
Analysts reports and public news coverage  
[84] Markowich set out in detail the immediate and extensive treatment by stock analysts and  
media outletsof the News Release and the Conference Call.  
[85] The majority of analysts emphasized the negative 2018 and 2019 production revisions for  
copper mining at Candelaria, while also commenting on the phase redesign and increased long-  
term production. Some analysts stated that Lundin ought to have disclosed the Rock Slide earlier  
than the News Release, and commented that Lundins credibility had been affected by the lack of  
earlier disclosure.  
Review of the expert mining evidence on the effect of the Pit Wall Instability and the Rock Slide  
[86] Markowich relies on the evidence of Thomas, who was retained to provide his opinion as  
a mining expert on the effect of the Pit Wall Instability and the Rock Slide. He has open pit  
mining experience and is the Vice President and General Manager of a resource development  
company that provides engineering support, pre-project planning and construction solutions for  
open pit mining.  
[87] Thomas was asked to provide an opinion relating to issues including (i) whether either  
the Pit Wall Instability or Rock Slide should have been reported to management, (ii) steps  
management ought to have taken and (iii) whether either event would interfere with mine  
production, and if so to what extent.  
[88] Thomaskey conclusions are that:  
(i)  
A major pit wall instability event occurred at the Candelaria Mine causing an  
immediate evacuation and shut down of mining operationswhich resulted in a  
significant disruption to mine production and economic viability of Lundin  
Minings operations at the Candelaria Mine;  
(ii)  
(iii)  
Upon detecting the pit wall instabilityit is reported that mine management  
immediately shut down and evacuated the Candelaria Mine, and for safety and  
operational reasons, it is reasonable to assumethat the underground complex at  
Candelaria Mine also shut down during this same time;  
A major rock slide then occurred at the Candelaria Minewhich posed a  
significant disruption to mine production and economic viability of Lundin  
Minings operations at the Candelaria Mine;  
(iv)  
(v)  
The rock slide would have caused a major disruption of mine operations and  
production because the mine would have effectively ceased to operate; and  
[U]pper management at Lundin Mining knew or should have known these facts  
immediately when they occurred.  
   
- Page 18 -  
[89] The defendants rely on the evidence of Watson, who was retained to provide his opinion  
as a mining expert on the effect of the Pit Wall Instability and the Rock Slide. He is a  
geotechnical engineer with 21 years of operational and consulting mining rock mechanics  
experience, with proficiency in mine design, decision-making, and senior corporate management.  
[90] Watson was asked to respond to Thomas’ report. Watson’s key conclusions are that:  
(i)  
Thomasreport fails to address mine planning and scheduling activities required  
to assess immediate to long-term effects on mine productivity and overall asset  
value after the slope failure;  
(ii)  
(iii)  
The 2017 event at Candelaria was one of many ordinary course large-scale mine  
slope failures that have occurred since 2000 in modern open pit mines and was  
very modest in scale by comparison; and  
The slope failure was very localized and consequently resulted in a temporary  
suspension of mining activities in a small area of the open pit. All other mining  
and processing activities appear to have been unaffected and continued as usual.  
Review of the expert evidence on economic materiality of the Pit Wall Instability and Rock Slide  
[91] The partiesexperts provide opposing views on the economic materiality of the Pit Wall  
Instability and Rock Slide.  
[92] Edwards was retained by Markowich to provide his opinion on (i) the efficiency of the  
market for trading in Lundin, (ii) the economic materiality of the Pit Wall Instability and the  
Rock Slide, (iii) a computation of per-share damages suffered by the class members, and (iv) a  
methodology that can be used to estimate potential aggregate damages.  
[93] Edwards has extensive experience in providing and supporting expert witness testimony  
in business dispute matters, including securities class action litigation. He has an MBA in  
Finance and is an Accredited Senior Appraiser in Business Valuation.  
[94] The key conclusions in Edwardsinitial report are:  
(i)  
During the Class Period, Lundins common stock traded in an informationally  
efficient market;  
(ii)  
[T]he pit wall instability and subsequent rockslide at Candelaria were  
economically material to investors as evidenced by the highly statistically  
significant decline in Lundins stock price on November 30, 2017;  
(iii)  
Based on Edwardsassumption that Lundin should have immediately known that  
it would experience significant production delays and increased cash costs as a  
result of the Pit Wall Instability and the Rock Slide, Edwards states that it is  
further my opinion that there is a high degree of economic correspondence  
 
- Page 19 -  
between the failure to disclose these events, and the information disclosed in the  
[News Release] and [Conference Call]. As such, in my opinion, the disclosures of  
the pit wall instability and subsequent rockslide at Candelaria would have been  
economically material to investors had they been made earlier in the Class  
Period;  
(iv)  
[T]he predominate cause of the statistically significant stock-price decline and  
heavy trading volume on November 30, 2017, was the Companys disclosure of  
significantly reduced near-term copper production and higher C1 cash costs  
which, according to the Company, were due primarily to the pit wall instability  
and subsequent rockslide at Candelaria, as well as the numerous downgrades to  
investment recommendations and/or price targets from research analysts due in  
part to this same information”; and  
(v)  
[L]osses to Class Members who purchased common shares of Lundin during the  
Class Period can be calculated based on the formulas set out in Section 138.5(1)  
of the [Securities Act]and potential aggregate damages under Section 138.5(1)  
can be estimated using a mathematical model or algorithm called a trading  
model.  
[95] The defendants rely on the evidence of Heys, who was retained to provide his opinion on  
the economic materiality of the Pit Wall Instability and Rock Slide.  
[96] Heys calculated the effect of a delay in production and sale of 15,200 tonnes of copper14  
from 2018 until 2020 to 2021 to be $0.02 per share, based on a discounted cash flow analysis.  
Heys concluded that $0.02 per share was not economically material.  
[97] Heys further calculated per-share effects of the other information contained in the News  
Release, including (i) revised production/cash costs for Candelaria in 2018 to 2020 ($0.51 per  
share), (ii) increase in capital expenditures at Candelaria in 2018 ($0.57 per share), (iii) revised  
production/cash costs at remaining mines from 2018 until 2020 ($0.47 per share), and (iv)  
increase in capital expenditures at other mines in 2018 ($0.13 per share), with a total effect of  
$1.68 per share, more than the $1.44 per share stock price decline of Lundin on November 30,  
2017.  
[98] Finally, with respect to Edwardsproposed methodology to calculate aggregate damages,  
Heys comments that Edwards does not addressthe following issues affecting his ability to use  
a multi-trader model: (i) it is typically not possible to testassumptions used in trading  
models with any actual empirical data and which could potentially have a material effect on the  
14 As set out at para. 68(ii) above, Lundin owned 80% of the Candelaria mine, its share of the 19,000 total tonnes of  
deferred production was 15,200 tonnes.  
- Page 20 -  
resulting damages estimate, and (ii) trading models are generally proprietary, making it  
difficult or impossible to determine if they have been properly and consistently applied or to test  
the sensitivity of the resulting estimates to changes in parameter assumptions.  
[99] In his reply report, Edwards challenges the methodology used by Heys, both to assess the  
per share effect of the Pit Wall Instability and Rock Slide and to calculate alleged other effects  
on share price from information disclosed in the News Release.  
[100] In particular, Edwardsopinion is that:  
(i)  
Heys errs by ignoring the financial benefits expected to be received based on the  
increased capital expenditures associated with the [LOM] Plan. By way of  
example, while Heys calculated the per share value of decreased short-term  
production and increased capital expenditures at Candelaria at $1.08 per share  
($0.51 plus $0.57 per share, as set out at para. 97 above ), he misleadingly  
ignores the significant expected increase in future production and decrease in  
future production costs that Lundin management and other market participants  
expected over the life of the mine as a direct result of the same capital  
expenditures, which translated to over $2 billion of incremental revenue and  
$800 million of incremental cash flow, and which translates to a benefit of  
approximately $1.61 per sharebetween 2018 to 2027 and $2.22 per share over  
the life of the mine (2018-2035), which exceeds the purported per share cost from  
increased capital expenditures;  
(ii)  
The long-term financial benefits associated with the capital expenditures  
contemplated under the [LOM] Plan were also widely reported on by research  
analysts following the November News Releaseand were discussed extensively  
during the December 1 call;  
(iii)  
(iv)  
Heysanalysis based on expected cash flows for these other factors fails to take  
into account the expected reduction in income taxes which would result ($0.26  
per share); and  
Heysanalysis of the $0.02 per share decrease based on expected cash flows fails  
to take into account (a) direct costs of the Rock Slide through incremental costs of  
modifications to the [LOM] Plan, (b) the financial implications of the evacuation  
of personnel and suspension of operations at Candelaria following the detection of  
the pit wall instability, as well as continued production interruption while Lundin  
assessed the extent of the failure, (c) additional incremental costs such as geo-  
technical drilling to identify other potential failure areas within the mine, and (d)  
indirect costs of the Rock Slide which result when investors are asked to bear the  
additional risk associated with increased variability in future earnings, given the  
perceived riskiness of Lundins future earnings when the Pit Wall Instability and  
Rock Slide were disclosed.  
- Page 21 -  
[101] Further, Edwards notes that Heysanalysis is contrary to statements made by Conibear  
during the Conference Call that one of the key elements resulting in our significant price  
declinewas that Lundin was down on copper for next year, which he described as the  
number oneconcern following the News Release, and was relied upon by numerous analysts  
as a reason to reduce target share prices of Lundin.  
[102] Edwards defends his initial opinion that the share decline was predominately due to  
disclosure of the Pit Wall Instability and Rock Slide. Edwards refers to statements by Conibear  
that the Pit Wall Instability was the primary reason for the copper production profile for next  
year and 2019, and notes that Brumits statement identified the rockslide as being responsible  
for 55% of the reduction in copper production guidance for Candelaria in 2018.  
[103] Further, since Lundin management made clear in the News Release that the LOM Plan  
would provide an overall value-enhancingeffect, Edwards states that it is reasonable to  
conclude that the disclosure of the Pit Wall Instability and Rock Slide were predominately the  
cause of the decline in Lundins share value. Edwards concludes that this view was shared  
contemporaneously by analysts, some of whom stated that the information should have been  
disclosed earlier.  
[104] With respect to Heyscriticisms of Edwardsapproach to a trading model methodology  
to determine aggregate damages, Edwards cites Heysown article in which he states that trading  
models are commonly usedin U.S. shareholder class actions.  
[105] Edwards asserts that based on Heys’ “written work, Heys agrees that i) trading models  
are reasonable and appropriate tools for estimating aggregate damages in the absence of trading  
records; ii) the proprietary nature of some trading models do not affect their suitability for  
determining aggregate damages; and iii) there are a wide range of tools available to financial  
economists for dealing with any case-specific issues that may arise when attempting to estimate  
aggregate damages using trading models.  
ANALYSIS  
[106] I first review the issues arising out of the leave motion, and then consider the certification  
issues.  
The issues arising out of the leave motion  
[107] I first consider the applicable test to grant leave to assert the statutory cause of action  
under Part XXIII.1 of the Securities Act.  
[108] I then consider the objections raised by the defendants on the leave motion. In particular,  
I review the objections as to:  
(i)  
the admissibility or weight to be attached to the Thomas expert evidence on  
mining operations (Objection 1),  
   
- Page 22 -  
(ii)  
whether, on the evidence before the court (including the expert evidence), the  
leave test has been met to establish a changeto Lundins business, operations  
or capitalunder s. 1(1) of the Securities Act (Objection 2),  
(iii)  
(iv)  
the admissibility or weight to be attached to the Edwards expert evidence on  
economic materiality (Objection 3), and  
whether, on the evidence before the court (including the expert evidence), the  
leave test has been met to establish that the Pit Wall Instability or Rock Slide is  
materialunder s. 1(1) of the Securities Act, i.e., whether it would reasonably  
be expected to have a significant effect on the market price or value ofLundins  
shares (Objection 4).15  
The test to grant leave to bring the Part XXIII.1 claim  
[109] Leave shall be granted under s. 138.8(1) of the Securities Act if the court is satisfied that  
(i) the action is brought in good faith; and (ii) there is a reasonable possibility that the action will  
be resolved in the plaintiff’s favour at trial.  
[110] The defendants do not challenge Markowichs good faith. Consequently, the only issue  
for leave in the present case is whether Markowich has a reasonable possibility of success at  
trial.  
[111] The court reviewed the applicable law for the reasonable possibilitytest in Dyck v.  
Tahoe Resources Inc., 2021 ONSC 5712, at paras. 91-95:  
Under settled law in Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC  
18, [2015] 2 S.C.R. 106, the court is required to engage in a robust screening  
mechanismto ensure that cases without merit are prevented from proceeding.  
The threshold is more than a speed bump’”: at para. 38.  
However, the screening mechanism is not intended to become a mini-trial. The  
plaintiff must only establish a reasonable or realistic chance that the action will  
succeed: Theratechnologies, at para. 38. Consequently, the requirement for a  
reasonable possibility of success is satisfied if the plaintiff can establish both a  
plausible analysis of the applicable legislative provisions, and some credible  
evidence in support of the claim. In Theratechnologies, the Court held, at para.  
39:  
15  
I address Objections 3 and 4 on the assumption that the leave test has been met to establish that the Pit Wall  
Instability or Rock Slide is a “change” to Lundin’s “business, operations or capitalunder s. 1(1) of the Securities  
Act (which I do not accept).  
 
- Page 23 -  
A case with a reasonable possibility of success requires the  
claimant to offer both a plausible analysis of the applicable  
legislative provisions, and some credible evidence in support of the  
claim. This approach, in my view, best realizes the legislative  
intent of the screening mechanism: to ensure that cases with little  
chance of success - and the time and expense they impose - are  
avoided. I agree with the Court of Appeal, however, that the  
authorization stage under s. 225.4 should not be treated as a mini-  
trial. A full analysis of the evidence is unnecessary. If the goal of  
the screening mechanism is to prevent costly strike suits and  
litigation with little chance of success, it follows that the  
evidentiary requirements should not be so onerous as to essentially  
replicate the demands of a trial. To impose such a requirement  
would undermine the objective of the screening mechanism, which  
is to protect reporting issuers from unsubstantiated strike suits and  
costly unmeritorious litigation. What 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. [Italics in  
original.]  
Consequently, in assessing the evidentiary record, the court should not engage in  
a finely calibrated weighing process, and it should keep in mind the relatively low  
threshold and limits of the record: Kauf v. Colt Resources, Inc., 2019 ONSC 2179,  
145 O.R. (3d) 100, at para. 69.  
The leave motion is also not the forum in which to resolve conflicts in the expert  
evidence, unless it can be established that there is no reasonable possibility that an  
experts opinion would be accepted by a trial judge: Green v. Canadian Imperial  
Bank of Commerce, 2012 ONSC 3637, at para. 315; Swisscanto Fondsleitung AG  
v. Blackberry Ltd., 2015 ONSC 6434, at para. 48.  
Morgan J. summarized the applicable test in the recent decision of Gowanlock v.  
Auxly Cannabis Group Inc., 2021 ONSC 4205 by stating that the leave test is  
very much stacked in the moving partys favour. Even if the motion judge  
believes that the defendant has a strong chance of success at trial, the court can  
conclude that the plaintiff has a reasonable possibility of success at trial if the  
plaintiff meets such lower threshold: Drywall Acoustic Lathing and Insulation  
Local 675 Pension Fund (Trustees) v. Barrick Gold, 2019 ONSC 4160, 148 O.R.  
(3d) 755, at paras. 32-35, revd on other grounds 2021 ONCA 104.  
[112] Further, as discussed in Dyck, at para. 218, the court on a leave motion must consider  
what evidence is not before the court. In Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719,  
137 O.R. (3d) 241, leave to appeal refused, [2017] S.C.C.A. No. 443, the court held, at para. 48:  
- Page 24 -  
[T]he motion judge’s duty to scrutinize the entire record is not restricted to a  
review of the evidence filed on the motion. The motion judge is also obligated to  
consider what evidence is not before her. She must be cognizant of the fact that, at  
the leave stage, full production has not been made and the defendant may have  
relevant documentation that has not been produced or relevant evidence that has  
not been tendered. Consideration of these evidential limitations of the leave stage  
is important because they can work to the prejudice of plaintiffs who have  
potentially meritorious claims. [Emphasis in original text.]  
[113] The court further held in Rahimi that where “contentious issues of credibility that impact  
on the decision whether to grant leave” arise, the motion judge must ask herself whether they  
can be resolved on the existing record: at para. 49. The court also concluded that the motion  
judge must vigilantly implement the screening mechanism of the leave requirement under s.  
138.8 while at the same ensuring that the secondary market remedy is not rendered illusory  
through the elimination of potentially meritorious claims: at para. 45.  
[114] I now consider the particular objections raised by the defendants.  
Objection 1: The admissibility of Thomasevidence and the weight of such evidence  
[115] The defendants submit that Thomasevidence on mining operations at the Candelaria  
mine should not be admitted due to advocacy and lack of expertise, or given little weight due  
to flawed factual assumptions. I do not agree.  
[116] I first review the applicable law as to the courts analysis of expert evidence on a leave  
motion under s. 138.8(1). I then apply that test to the submissions raised by the defendants about  
the Thomas evidence.  
(i)  
The applicable law as to considerations of admissibility and weight of expert  
evidence on a leave motion  
[117] In Dyck, the court reviewed the law on admissibility of expert evidence in the context of a  
leave motion, at paras. 278-81:  
The court in White Burgess adopted a two-stage test for determining the  
admissibility of expert evidence: at paras. 23-24. The first stage involves a  
threshold requirement where the expert must be properly qualified by being  
willing and able to fulfil the duty to the court to provide evidence that is unbiased:  
at paras. 26, 32.  
The court in White Burgess stated that as a “matter of fact and degree” an expert is  
“clearly unwilling and/or unable to carry out the primary duty to the court” if the  
expert, “in his or her proposed evidence or otherwise, assumes the role of an  
advocate for a party”: at paras. 49-50. If this is proven, then “the evidence, or  
   
- Page 25 -  
those parts of it that are tainted by a lack of independence or impartiality, should  
be excluded”: at para. 48.  
Exclusion of an expert’s evidence at this stage is “quite rare” and would occur  
“only in very clear cases”: at para. 49. There is a high bar for exclusion.  
The second “gatekeeper” stage permits the court to balance the benefits of  
admitting evidence against its potential risks, considering such factors as bias: at  
para. 54.  
[118] In Dyck, the court relied on the following principles with respect to the treatment of  
expert evidence on a Part XXIII.1 leave motion:  
(i)  
“The leave motion is also not the forum in which to resolve conflicts in the expert  
evidence, unless it can be established that there is no reasonable possibility that an  
expert’s opinion would be accepted by a trial judge”: at para. 94;  
(ii)  
“For the purposes of the leave application, it is not appropriate to determine which  
expert’s evidence will be accepted at trial. As long as Dyck can establish that  
there is a reasonable possibility of success at trial based on credible evidence from  
Dr. Escobar and a plausible interpretation of the Securities Act, the issue as to the  
specific level of risk posed by the CALAS amparo petition is not to be resolved  
on this leave motion: at para. 253;  
(iii)  
(iv)  
“It is not the role of the court on a leave motion under s. 138.8(1) to determine  
which expert evidence will be accepted at trial. I review the expert evidence  
above in some detail only to conclude that Dyck has led credible evidence to  
establish a reasonable possibility, based on a plausible interpretation of the  
legislation, that Dr. Hartzmark’s evidence on materiality would be accepted at  
trial”: at para. 275; and  
“[T]he conflicting expert evidence sends a strong signal that there is a reasonable  
possibility that Dyck can establish the economic materiality of the Omissions: at  
para. 263.  
[119] I now apply the above principles to the issues of (i) advocacy, (ii) lack of expertise,  
and (iii) factually flawed assumptionssubmitted by the defendants.  
(ii) Application of the law to the present case  
[120] For the reasons that follow, I do not find that Thomasexpert evidence is inadmissible on  
this motion due to advocacy or lack of expertise, nor do I make a finding that his evidence is of  
little or no weight due to alleged factually flawed assumptions.  
[121] The defendants submit that Thomasreport is inadmissible because (i) Thomas “does not  
have the education, expertise, or experience to be qualified to opine on any matters related to an  
 
- Page 26 -  
open-pit copper mine”, (ii) he is not a professional engineer”, and (iii) he purposefully misled  
the court on his credentials. I do not agree.  
[122] First, Thomas does have the necessary experience. His open pit experience mining gold,  
silver, lead, zinc, and coal properly qualifies him to opine on mining issues. Further, he has  
direct experience with various pit wall instabilities.  
[123] Second, Thomas was not retained to provide evidence as a professional engineer, but  
instead to provide his opinion as a mining expert. He did not claim to be a professional engineer,  
and he immediately corrected any confusion from a CV reference to an undergraduate degree in  
civil engineering by stating that he had a BA or a BSRA in construction management with a  
minor in civil engineering. In any event, it is Thomasmining experience which is relevant.  
[124] Third, the defendants submit that Thomas assumed an advocacy role by acknowledging  
in his cross-examination that a mine manager or Lundin management would need some time to  
assess and respond to the Pit Wall Instability, when Thomas stated in his report that the  
technical, operational and economic impacts to the long term viability of the Candelaria Mine”  
would have been immediately recognizedby the mine manager upon detection of the Pit Wall  
Instability.  
[125] Even if there is any inconsistency in these statements (someone can still immediately  
recognize a threat to long-term viability but still need time to conduct a proper assessment), any  
alleged acknowledgement or clarification by Thomas in his evidence would not be sufficient for  
the rarecircumstance of finding expert evidence to be inadmissible under the White Burgess  
test.  
[126] Fourth, the defendants submit that Thomas relies on the flawed factual assumptionthat  
following the pit wall instability and rock slide, Candelaria ceased to operate. However, as I  
discuss above, neither Thomas nor Watson have direct evidence as to whether (and to what  
extent) the Candelaria mine shut down after the Pit Wall Instability or Rock Slide. Both experts  
base their conclusions as to what likely took place on (i) public documents, (ii) their experience,  
and (iii) what they consider to be industry practice.  
[127] For the above reasons, I find that Thomasevidence is admissible and I do not give it  
little or no weight as submitted by the defendants. Consequently, I reject this objection.  
Objection 2: Does either the Pit Wall Instability or Rock Slide constitute a “changeto  
Lundins business, operations, or capital?  
[128] I first consider the applicable statutory framework. I then review the principles from the  
applicable case law governing the determination of whether a changehas occurred. Finally, I  
apply the statutory definitions and case law to the facts before the court.  
 
- Page 27 -  
(i)  
The statutory framework  
[129] Lundin is a reporting issuer” as defined under s. 1(1) of the Securities Act, and as such  
has the statutory obligation to make timely disclosureof material changesunder ss. 75(1)  
and 138.1.  
[130] Lundin is also a responsible issuerunder s. 138.1 of the Securities Act (as a reporting  
issuer). Consequently, the individual defendants, by virtue of their positions, are statutorily  
liable for a failure to make timely disclosure under s. 138.3(4) of the Securities Act.  
[131] Under s. 1(1) of the Securities Act, a “material change” in relation to an issuer other than  
an investment fund is defined as:  
(i)  
a change in the business, operations or capital of the issuer that would reasonably  
be expected to have a significant effect on the market price or value of any of the  
securities of the issuer, or  
(ii)  
a decision to implement a change referred to in subclause (i) made by the board of  
directors or other persons acting in a similar capacity or by senior management of  
the issuer who believe that confirmation of the decision by the board of directors  
or such other persons acting in a similar capacity is probable.  
[132] Under s. 75(1) of the Securities Act:  
Subject to subsection (3),16 where a material change occurs in the affairs of a  
reporting issuer, it shall forthwith issue and file a news release authorized by a  
senior officer disclosing the nature and substance of the change.  
[133] Under s. 75(2) of the Securities Act:  
Subject to subsection (3), the reporting issuer shall file a report of such material  
change in accordance with the regulations as soon as practicable and in any event  
within ten days of the date on which the change occurs.  
[134] Consequently, under the Securities Act a material changeto an issuers business,  
operations or capitalmust be reported immediately by a news release and followed as soon as  
practicable by a material change report. In contrast, a material factmust be disclosed to  
investors in the course of an issuers periodic disclosure, when the issuer collects and discloses  
matters that affect the issuers business, operations and capital, but do not constitute a change.  
16  
Section 75(3) of the Securities Act does not apply in the present case as there are no confidentiality concerns  
raised by the Pit Wall Instability or the Rock Slide.  
 
- Page 28 -  
[135] Section 1(1) is clear that there are two components to a material change. First, there must  
be a change to the issuers business, capital or operations. Second, the change must be material,  
i.e. a fact that would reasonably be expected to have a significant effect on the market price or  
value of any of the securities of the issuer(see also Cornish v. Ontario (Securities Commission),  
2013 ONSC 1310 (Div. Ct.), at para. 46).  
[136] There is no statutory definition of changeunder the Securities Act. The only assistance  
provided under the Securities Act is that the changemust be to the business, operations or  
capitalof the issuer.  
[137] There is no statutory definition of either business, operations, or capitalunder the  
Securities Act.  
(ii) Principles from the applicable case law  
[138] I set out the applicable principles from the case law below.  
(a)  
The distinction between material change and fact is deliberate and policy-  
based  
[139] The courts must not conflate the concepts of material change and material fact. The  
distinction is deliberate and policy-based.  
[140] In Kerr v. Danier Leather Inc., 2007 SCC 44, [2007] 2 S.C.R. 331, Binnie J. discussed  
the difference between material change and material fact, at para. 38:  
The distinction between "material change" and "material fact" is deliberate and  
policy-based, as explained by a former chairman of the O.S.C.:  
The term "material fact" is necessary when an issuer is publishing  
a disclosure document, such as a prospectus or a take-over bid  
circular, where all material information concerning the issuer at a  
point in time is published in one document which is convenient to  
the investor. The term "material change" is limited to a change in  
the business, operations or capital of the issuer.  
[141] Similarly, Strathy J. (as he then was) held in Green (SC), at para. 28:  
The requirement to make timely disclosure of a material change is not an  
obligation to provide a running commentary on the company’s progress during the  
quarter or to comment on internal or external events that may impact its  
performance.  
[142] In his recent decision in Peters v. SNC-Lavalin Group Inc., 2021 ONSC 5021, Perell J.  
summarized the distinction, at paras. 150-51:  
   
- Page 29 -  
The definition of material fact is broader than that of material change because it  
encompasses any fact that reasonably would be expected to have a significant  
effect on the market price or value of the securities of an issuer and thus  
encompasses more than facts that affect the business, operations, or capital (assets  
or ownership) of the issuer or facts that would be expected to have such an effect.  
The distinction between material change and material fact was a deliberate and  
policy-based legislative decision to relieve reporting issuers of the obligation to  
continually interpret external political, economic, and social developments as they  
affect the affairs of the issuer, unless the external17 change will result in a change  
in the business, operations or capital of the issuer, in which case, timely disclosure  
of the change must be made. [Footnotes omitted.]  
[143] Consequently, if a development is material and causes a change in the business,  
operations or capital, it must be disclosed immediately. If the development is material and affects  
a companys business, operations or capital without resulting in a change, it is a material fact to  
be disclosed in the ordinary course of periodic disclosure.  
(b)  
There is no bright-line test for a change it is fact-specific  
[144] In Peters, at para. 153, Perell J. adopted the following passage from the decision of the  
Ontario Securities Commission (OSC) in AiT Advanced Information Technologies Corporation,  
2008 ONSEC 3, 40 B.L.R. (4th) 242, at para. 215:  
We agree that there is no "bright-line test". Instead, the assessment of whether a  
material change has taken place will depend on the circumstances and series of  
events that took place. This is because the determination of a material change is a  
question of mixed fact and law (Re YBM Magnex et al., supra at para. 94). This  
determination requires ascertaining whether the existing facts fulfill the legal test.  
Each case will be unique, and the specific facts and circumstances will vary case  
by case. Since the fact scenarios will differ in all cases, it is impossible to  
articulate a bright-line test that will apply in all circumstances.  
[145] As Perell J. noted in Peters, at para. 186:  
17  
I note that Perell J. refers to externalchange while Strathy J. in the above passage from Green (SC) refers to  
internal or external events that may impact performance. I do not take Perell J. to be limiting a material change  
obligation to the disclosure only of events outside of a companys control (if that meaning were to apply to  
external), as a companys internaldecision to cease or change its business would, under the Green (SC) test,  
also be subject to the obligation to disclose a material change. Such an interpretation is consistent with a broad and  
purposive interpretation of s. 75 to protect the interests of investors.  
 
- Page 30 -  
[D]eterminations of materiality, and determinations of what counts for a material  
fact or for a material change are intensely fact-specific and depend on the  
circumstances of the particular case. There is no bright-line test for change.  
(See also Cornish, at para. 53)  
[146] Consequently, the courts must consider the evidence in every case to determine if there  
has been a change. By way of example, a regulatory prohibition resulting in the inability to sell  
one product line may not be a material change to the business or operations of a global  
household and consumer products company that sells thousands of products, but could be a  
material change to a small company that sells only that product.  
(c)  
The definition of change requires establishing a different position, course,  
or direction  
[147] As Perell J. noted in Peters, [t]he Ontario Securities Act does not define what counts for  
a change’”: at para. 153.  
[148] The defendants rely on case law in which the courts held that a material change only  
arises upon important and substantial changesin key aspects of the business, operations or  
capital of the issuer: Green (SC), at para. 28, or a significant disruption or interference in the  
ongoing operation of the business itself: Mask v. Silvercorp Metals Inc., 2015 ONSC 5348, at  
paras. 57-58, affd 2016 ONCA 641.  
[149] Markowich submits that the above comments were either obiter and/or impose too high  
and too rigid, while at the same time too abstract, of a standard for changegenerally, let alone  
for consideration on the lower credible evidence/plausible analysis test.  
[150] Applying the grammatical definition of change, a change will occur in the context of s.  
1(1) and the disclosure obligations under s. 75(1) upon a different position, course, or  
direction”.18 Such an approach maintains the distinction between a material change and material  
fact, without requiring a running commentary on the company’s progress during the quarter or  
to comment on internal or external events that may impact performance: Green (SC), at para.  
28.  
[151] Consequently, regardless of the adjective used to describe the nature of the change, the  
requirement for a changeremains under s. 1(1). Whether or not the change is considered to be  
substantialor important, the key conclusion from both Green (SC) and Mask is that a change  
occurs when the event results in a different position, course, or direction to a companys  
18 Merriam-Webster Dictionary, sub verbo “change”, <www.merriam-webster.com/dictionary/change>.  
 
- Page 31 -  
business, operations, or capital. Otherwise, the distinction between material change and material  
fact would be lost.  
[152] For the same reasons, if there are events which affect the company, but do not amount to  
a change in business, operations or capital, those events cannot be a material change requiring  
immediate disclosure.  
(d)  
The definition of business, operations or capital  
[153] The “business” of an issuer has been broadly described by the OSC as the lines or  
activities in which the issuer engages to generate revenues: Coventree Inc., 2011 ONSEC 25, at  
para. 76, affd 2013 ONSC 1310 (Div. Ct.); Rex Diamond Mining Corporation et al., 2008  
ONSEC 18, at paras. 10-11, 222 (Rex Diamond (OSC)), affd 2010 ONSC 3926 (Div. Ct.).  
[154] Put differently, the term businessis used to describe what the company does.  
[155] The operationsof an issuer were reviewed by the OSC in Rex Diamond as wherethe  
company conducted business. The OSC referred to the companys mining operationslocated  
in various countries: at paras. 8 and 11.  
[156] Put differently, the term operationsis used to refer to the activities conducted by the  
company to engage in its lines of business. If a company changes its position, course or  
direction as to how or where it conducts business, it may be considered a change to operations.  
[157] Capitalis also undefined. Markowich relies on Pezim v. British Columbia  
(Superintendent of Brokers), [1994] 2 S.C.R. 557, in which the applicable statute defined a  
material change as including a change to business, operations, assets or ownership of the  
issuer. Markowich submits that capitalshould be defined to include both assets and  
ownership. However, the court in Pezim was not considering the definition of capital, but was  
instead interpreting a different statute which did not include the term capital.  
[158] Further, such a broad interpretation of “capital” is inconsistent with the ordinary meaning  
of the “capital” of a corporation, which refers to its share structure and rights of shareholders.  
[159] Consequently, I would not accept Markowichs submissions that increased costs could be  
part of the definition of capital. However, the distinction is of little import as a change to costs  
that results in a change of business or operations would still be considered a changeunder s.  
1(1).  
(e)  
Market impact is not determinative of change (or materiality)  
[160] In Peters, at para. 190, Perell J. noted that the Supreme Court in Theratechnologies held  
that there was no material change even though the defendants share price decreased by 58  
percent after disclosure of the impugned information. Perell J. held, at paras. 195 and 197:  
   
- Page 32 -  
A third and for present purposes very important lesson from Theratechnologies  
inc. is that it is a mistake to reason backwards, as Mr. Peters and his expert  
witness Dr. McCann appear to do in the immediate case, from a precipitous  
decline in the market value of the issuer's shares to the conclusion that there has  
been a material change in the issuer's business operations or capital of SNC. In  
Theratechnologies inc. v. 121851 Canada inc. there was a 58 percent whack to the  
share price, but there was no evidence of a material change to the business,  
operations, or capital of Thera.  
Cornish and Theratechnologies inc. demonstrate that while market impact is  
relevant to the question of materiality and share value is relevant to the question  
of whether there has been a change, value volatility is not determinate as to  
whether a change has occurred. A single factor such as share price movement will  
not conclusively determine whether a material change has occurred. [Emphasis in  
original text.]  
(f)  
General principles in determining whether a change has occurred  
[161] The court in Cornish set out some general principles which I adopt. In particular:  
(i)  
[A] supercritical interpretation of the meaning of material change does not  
support the goal of promoting disclosure or protecting the investing public: at  
para. 48;  
(ii)  
(iii)  
(iv)  
(v)  
[A] technical interpretation of the language of the [Securities Act] should not be  
relied upon to justify non-disclosure of material changes: at para. 48;  
[I]f the decision is borderline, then the information should be considered material  
and disclosed: at para. 48;  
No single factor will be determinative of whether a material change occurred: at  
para. 51;  
Management’s subjectively optimistic hopes or attempts to mitigate the issue do  
not alleviate the requirement for immediate disclosure of an otherwise  
objectively-determined material change: at para. 55;  
(vi)  
It is important “to recognize the dangers of hindsight in coming to this conclusion  
and to be careful not to look at the situation based on what subsequently  
happened”: at para. 49; and  
(vii) If a business managed to continue its operations in a lesser form, despite these  
changesit does not detract fromthe reality that a material changestill  
occurred: at para. 116.  
 
- Page 33 -  
[162] Further, the “business judgment rule” and related issuer-focused principles are irrelevant  
to whether a “material change” has occurred: Kerr, at paras. 54-55, 58.  
(g)  
Cases which have considered whether a material change took place  
[163] At the hearing, counsel relied on numerous cases in which the courts or securities  
commissions found that a material change had taken place or had not taken place. Applying the  
above principles assists in finding a common thread between these cases.  
[164] The court in Kerr found that a decline due to unseasonably warm weather did not  
constitute a material change, at paras. 47-48:  
It almost goes without saying that poor intra-quarterly results may reflect a  
material change in business operations. A company that has, for example,  
restructured its operations may experience poor intra-quarterly results because of  
this restructuring, but it is the restructuring and not the results themselves that  
would amount to a material change and thus trigger the disclosure obligation.  
Additionally, poor intra-quarterly results may motivate a company to implement a  
change in its business, operations or capital in an effort to improve performance.  
Again, though, the disclosure obligation would be triggered by the change in the  
business, operations or capital, and not by the results themselves.  
In the present case, there is no evidence that Danier made a change in its business,  
operations or capital during the period of distribution. It is not disputed that the  
revenue shortfall as of May 16 was caused by the unusually hot weather, a factor  
external to the issuer. Consequently, Danier experienced no material change that  
required disclosure and did not breach s. 57(1). [Emphasis in original text.]  
[165] In Rex Diamond, the OSC held that a material change took place no later than when a  
final notice was provided to a mining company indicating that its leases for diamond mines in  
Sierra Leone were going to be cancelled if it failed to comply with certain terms within 90 days.  
The OSC, as affirmed by the Divisional Court, also concluded it was “likely that there was a  
material change” when the issuer received two previous warning letters. The OSC found that  
these prior warning letters warned the issuer that “there was a very possible risk that the Leases  
would be cancelled by the Government of Sierra Leone: Rex Diamond (OSC), at paras. 211 and  
285.  
[166] However, regardless of which letter constituted a change in the companys business,  
operations, or capital, all of the letters made clear that the Minerals Advisory Board  
recommended to the Minister of Mineral Resources that Rex's leases be cancelled because Rex  
did not comply with the conditions set out in the Leases: Rex Diamond (OSC), at para. 8.  
Consequently, such a result would be a change to the companys business (what it did) and its  
operations (where and how it operated the business).  
 
- Page 34 -  
[167] Similarly, in Cornish the company (Coventree) could no longer issue asset-backed  
commercial paper, which was its primary source of revenue and a crucial aspect of its business.  
Coventree’s securitization activities comprised 90% of its total revenue and, accordingly, when it  
became unable to carry on this aspect of its business, the court held that a material change had  
occurred: at para. 109. The loss of the ability to carry on 90% of a companys business would  
constitute a change to its business or operations.  
[168] In Mask, the court held that a downward trend in the performance of a business, without  
more, did not amount to a material change because there was no suggestion that the defendant  
company was no longer able to carry on its principal business: at para. 58.  
[169] The above decisions are all consistent with the approach that if there are events which  
affect a companys business, operations or capital but do not constitute a change, those events are  
not material changes requiring immediate disclosure. A changeis required in position, course  
or direction otherwise the running commentary” concerns raised by Strathy J. in Green (SC)  
would be imposed for every fact that would reasonably be expected to have a significant effect  
on the market price or value of the securities” of a responsible issuer.  
[170] I now apply the principles from the above case law to the facts of the present case.  
(iii) Application to the present case  
[171] On the present motion, Markowich must satisfy the court that he has a reasonable  
possibility of success at trial to establish that a changeoccurred to Lundins business,  
operations, or capital as a result of the Pit Wall Instability and the Rock Slide, based on credible  
evidence and a plausible interpretation of the Securities Act.  
[172] For the reasons that follow, I find that Markowich has not met his burden on the evidence  
before the court.  
[173] There is no evidence of any change to Lundins business, operations, or capital arising  
from the events. The only effect was that 15,200 tonnes of copper mining was deferred until  
2020 or 2021, with some increased costs and decreased revenues arising from milling lower  
quality copper. The deferred copper represented less than 5% of Lundins annual production,  
which was already scheduled to be reduced (by a lower amount) due to previously planned  
resequencing.  
[174] There was no evidence that either the Pit Wall Instability or the Rock Slide raised any  
threat to Lundins economic viability, as acknowledged by Thomas on cross-examination. At all  
times, Lundin was able to continue its business, operations and capital as a worldwide mining  
corporation.  
[175] At the hearing, the expert evidence between Thomas and Watson differed on what each  
thought would have been the immediate consequences of the Pit Wall Instability or the Rock  
Slide. Thomas assumed that at a minimum, the open pit mining was suspended. He also  
 
- Page 35 -  
concluded that best practices would have been to shut down the entire mine, including all of the  
open pit operations and the underground mine operations.  
[176] Watson did not believe that such a shutdown took place, nor that it would have been  
required. Watson opined that mining operations could have continued both in the underground  
mine and in the open pit mine, with proper protective measures put into place.  
[177] Markowich asks the court to draw an adverse inference from (i) the uncertainty as to the  
scope of any shutdown after the Pit Wall Instability or Rock Slide, and (ii) the lack of evidence  
from Lundin as to (a) how the events were managed, or (b) whether the events were considered a  
crisis. Markowich relies on Rahimi, and on the decision in Dyck, in which the courts considered  
the evidence which was not in the record in assessing whether the plaintiff had a reasonable  
possibility of success at trial.  
[178] However, unlike in Rahimi, the alleged missinginformation in the present case would  
not support the plaintiffs success at trial. Even if there was a shutdown or if the events were  
considered a crisis, there remains no evidence that any such shutdown or crisis resulted in, or  
threatened to result in, a change to Lundins business, operations or capital.  
[179] The evidence is that the Pit Wall Instability and the Rock Slide were inherent risks in  
open pit mining operation, and that Lundin managed those risks with advanced ground radar  
technology and operated its business under those risks. When such a risk occurred, it may have  
been a material fact which would reasonably be expected to have a significant effect on Lundins  
shares,19 but there is no evidence to support that either of the events was a material change to  
Lundins business, operations, or capital. It did not constitute a different position, course, or  
direction.  
[180] Similarly, the present case is unlike Dyck, in which there was evidence before the court  
that the defendant company knew of the presence of Xinka people (as set out by an admission in  
February 2018). The defendant in Dyck chose to file no evidence to explain how that state of  
knowledge was any different in May 2017 when the impugned news release was issued: at paras.  
214-21. In Dyck, the missing evidence was relevant to the plaintiffs success at trial.  
[181] Consequently, Thomasevidence does not assist the court in finding that there was a  
change to Lundins operations, even if his factual assumptions as to a shutdown are established  
at trial.  
19  
(and was disclosed on November 29, 2017 in the Operational Outlook & Updatecontained in the News  
Release)  
- Page 36 -  
[182] It is not the shutdown which causes a change in Lundins business, operations, or capital.  
It is only if the shutdown arises from a change of business, operations or capital that the  
obligation to disclose a material change is triggered.  
[183] Similarly, the court in Kerr held that it was not the change in the sales forecast which  
constituted a change in operations or business, but instead the reason for the change in forecast  
which had to be considered. On that basis, the unseasonably warm weather was not a change to  
the business, unlike a situation in which restructuring caused the change in the forecast: at paras.  
47-48.  
[184] The present case can be contrasted with Rex Diamond, in which the corporation risked  
being unable to conduct its business of mining diamonds, and Cornish, in which Coventree was  
unable to conduct 90% of its busines in asset-backed commercial paper.  
[185] Further, the court cannot reason backwardsfrom a share price decline to find that there  
was a change in business. Changes to an LOM Plan to address resequencing are part of the  
ordinary business and operation of a copper mining company. Such resequencing was already  
planned before the Pit Wall Instability and the Rock Slide. Some additional resequencing which  
is done to address the ordinary occurrence of pit wall instability and a rock slide does not  
transform resequencing into a material change.  
[186] I agree with Markowich that the routine disclosure of the generic risk of pit wall  
instability or rock slides in annual information forms or other corporate disclosure does not  
inoculate Lundin from disclosure of a particular rock slide or pit wall instability if those events  
constitute a material change or a material fact when they occur. However, as I discuss above, in  
the present case there is no evidence that the Pit Wall Instability or Rock Slide caused a change  
to Lundins business, operations, or capital.  
[187] Unlike Rex Diamond or Cornish, there is no evidence that either the Pit Wall Instability  
or the Rock Slide had any effect on Lundins line of business. Lundin continued to engage in  
copper mining by making some additional changes to its resequencing plan. Lundin did not lose  
the ability to conduct its business.  
[188] Further, there is no evidence that such a change to Lundins lines of business was, or  
could have been, contemplated at the time of either the Pit Wall Instability or the Rock Slide,  
contrary to the unsupported economic viabilityconcerns raised by Thomas.  
[189] The evidence before the court is that Lundin engaged in the same operations at the  
Candelaria mine after the events, but on the basis of some additional modifications to the  
resequencing plan, the purpose of which was to address the best sequencing method in light of  
all relevant factors at that time. The evidence is that resequencing is a usual component of  
Lundins operations, and there is no evidence that the Pit Wall Instability or Rock Slide ever  
raised any concerns that Lundin could not carry out its operations at the Candelaria mine.  
- Page 37 -  
[190] There is no evidence of any change to Lundins capital as a result of the Pit Wall  
Instability or Rock Slide, nor any evidence that such ought to have been identified upon the  
occurrence of the events. While Markowich submits that increased costs associated with mining  
the Rock Slide are a capitalexpenditure, as I discuss above, it cannot be the case that every  
event that occurs which requires additional expenditures constitutes a material change to capital  
and requires a running commentary to investors.  
[191] Consequently, I do not accept Markowichs submissions that the defendants ask the court  
in the present case to conduct a mini-trial, engage in a battle of the experts, or take a hyper  
technicalapproach during the leave process. In the present case, there is no evidentiary basis for  
a finding of change to Lundins business, operations or capital, and as such, the low threshold of  
reasonable possibilityis not met. There was no different position, course, or direction taken as  
a result of the Pit Wall Instability or the Rock Slide.  
[192] For the above reasons, I find that it is not reasonably possible that Markowich could  
establish at trial, based on any credible evidence and a plausible interpretation of the Securities  
Act, that either the Pit Wall Instability or the Rock Slide resulted in a material change which  
required immediate disclosure and delivery of a material change report.  
[193] On this basis I accept Objection 2 and dismiss the leave motion.  
[194] I have concluded in my analysis above that Markowich has not established a reasonable  
possibility of success that either the Pit Wall Instability or Rock Slide constituted a changeto  
Lundins business, operations or capital. Consequently, the materiality of either event is  
irrelevant to the dismissal of the leave motion.  
[195] However, if it were found that Markowich has established a reasonable possibility of  
success that either the Pit Wall Instability or Rock Slide constituted a changeto Lundins  
business, operations or capital, I address the issue of materiality on the evidence led before the  
court.  
Objection 3: The admissibility of Edwardsevidence and the weight of such evidence  
[196] The defendants submit that Edwardsevidence on economic materiality is (i)  
inadmissible opinion on the ultimate issueor (ii) in the alternative, should be given no  
weightdue to flawed methodologiesor flawed factual assumptions. I do not agree.  
[197] I first review the applicable law as to the courts analysis of expert evidence on a leave  
motion under s. 138.8(1). I then apply that test to the admissibility and weight submissions raised  
by the defendants about Edwardsevidence.  
 
- Page 38 -  
(i)  
The applicable law as to considerations of admissibility and weight of expert  
evidence on a leave motion  
[198] I rely on the law I review with respect to Objection 1, as set out at paras. 117-18 above,  
which sets out the general principles on the approach to be taken by the court with respect to  
expert evidence on a leave motion.  
[199] Further, the ultimate issue before the court is whether there is a material change. An  
expert cannot opine on whether a news release/material change report should have been issued  
per ss. 75(1)-(2) upon the advent of a “material change”, as “[t]his is precisely the issue to be  
decided at trial, if leave is granted: Bradley v. Eastern Platinum Ltd., 2014 ONSC 4284, at  
paras. 12, 22-24.  
(ii)  
Application of the law to the defendantssubmissions  
(a)  
Objections as to admissibility  
[200] Both Edwards and Heys provided an opinion as to whether the Pit Wall Instability and  
Rock Slide could reasonably be expected to have an effect on the value of Lundins shares, i.e.,  
“materiality”. The scope of Edwardsinitial report was summarized in its first paragraph, in  
which he stated that he was asked to provide his opinion on the economic materiality of the  
misrepresentations and omissions alleged in the Claim. Both experts sought to assist the court in  
understanding whether the Pit Wall Instability and Rock Slide could have been economically  
material events, i.e., events that had the market impact required under the Securities Act.  
[201] The defendants cross-examined Edwards on the scope of the questions put to him in his  
instruction letter from Markowichs counsel, which did ask Edwards to opine on whether the Pit  
Wall Instability or Rock Slide constituted a change in the business, operations or capital of  
Lundin Mining that could reasonably be expected to have a significant effect on the market price  
or value of Lundin Mining securities. However, it is clear from his reports that Edwards (like  
Heys) did not address whether the events constituted a changeand instead restricted his  
opinion to the issue of economic materiality, a subject matter on which Edwardsqualifications  
were not challenged.  
[202] Materiality is ultimately an issue for the court to decide. However, both the Edwards and  
Heys opinions can be of assistance to the court. Edwards was not qualified to opine on “change”  
and did not do so. Equally, he was not qualified to opine on the conjunctive legal concept of  
“material change”, nor the concordant legal obligation of timely disclosure”, and did not do so.  
[203] Consequently, I dismiss the objections as to the admissibility of the Edwards reports.  
(b)  
Objections as to the weight of Edwardsevidence  
[204] As I set out below in my analysis of the materiality of the Pit Wall Instability and the  
Rock Slide (Objection 4), I find that Markowich has established a reasonable possibility of  
       
- Page 39 -  
success at trial, based on the evidence before the court and the expert evidence of Edwards, that  
the Pit Wall Instability or Rock Slide were economically material events which would  
reasonably be expected to have a significant effect on the value of Lundins shares.  
[205] Consequently, I do not review each criticism of Edwardsmethodologies as raised by the  
defendants. Those issues could be addressed at trial, as there is competing evidence on  
materiality and it is not the role of the court on a leave motion to determine which expert  
evidence will be accepted at trial. As I discuss below, Edwardsevidence is credible, even if not  
ultimately accepted by a trial court.  
[206] Given my analysis of the expert evidence on economic materiality below, I reject the  
defendantsposition that the Edwardsreport should be given little or no weight on the leave  
motion.  
[207] For the above reasons, I dismiss Objection 3.  
Objection 4: Materiality of the Pit Wall Instability and Rock Slide  
[208] A materialfact or change is one that would reasonably be expected to have a  
significant effect on the market price or value of the securities: Securities Act, s. 1(1).  
[209] It is settled law that "the applicable standard is defined in strictly economic terms"  
because "the market impact definition is the one that the statute embraces": Miller v. FSD  
Pharma, Inc., 2020 ONSC 4054, at paras. 63-64; Kerr v. Danier Leather Inc. (2005), 77 O.R.  
(3d) 321 (C.A.), at para. 53, aff'd 2007 SCC 44, [2007] 3 S.C.R. 331, at para. 18; Cornish, at  
paras. 65-66, 72.  
[210] In the present case, the issue before the court is whether there is a reasonable possibility,  
based on credible evidence and a plausible interpretation of the Securities Act, that Markowich  
could establish that the Pit Wall Instability or Rock Slide was material. For the reasons that  
follow, I agree that this threshold has been met.  
[211] It is not the role of the court on a leave motion to determine whether a plaintiff will  
succeed on establishing materiality at trial. The only issue is whether it is reasonably possible for  
the plaintiff to establish materiality at trial.  
[212] In the present case, there is a credible battle of the experts” on the issue of economic  
materiality. As I set out in more detail at paras. 91-105 above, while Heys asserts that the loss is  
limited to $0.02 per share, Edwards raises issues related to the alleged failure of Heys to take  
into account:  
(i)  
the overall positive effect of changes to the LOM Plan,  
income tax considerations associated with the alleged deferral of production,  
increased costs of production, and  
(ii)  
(iii)  
 
- Page 40 -  
(iv)  
the effect on share price of reduced corporate credibility.  
[213] In essence, Edwards’ position is that based on the other information in the News Release  
an investor could conclude that the LOM Plan would provide an overall value-enhancing”  
effect. Consequently, Edwardsposition is that given the good newsfrom the LOM Plan, it is  
reasonable to conclude that the predominate” cause of the market share decline was because of  
the Pit Wall Instability and Rock Slide disclosed in the News Release. Such a position is not  
unreasonable, even if ultimately not accepted at trial.  
[214] Further, given the numerous analysts who raised concerns about the effect of the Pit Wall  
Instability and Rock Slide after the News Release, it may be less likely that a court would accept  
Heysevidence that the Pit Wall Instability and Rock Slide only accounted for $0.02 (or  
approximately 1.4%) of the $1.44 decline in share price value on November 30, 2017.  
[215] Statements made by Conibear and Brumit during the Conference Call establish that the  
Pit Wall Instability and Rock Slide were the number oneconcern of investors, supporting a  
conclusion that the events could reasonably be expected to have a significant effect on the  
market price or value of the securities. Conibear stated that one of the key elements resulting  
in our significant price declinewas that Lundin was down on copper for next year, which he  
described as the number oneconcern following the News Release.  
[216] Similarly, Conibear stated during the Conference Call that the Pit Wall Instability was  
the primary reason for the copper production profile for next year and 2019. Brumit identified  
the rockslide as being responsible for 55% of the reduction in copper production guidance for  
Candelaria in 2018.  
[217] Given all of the above evidence, I find that if Markowich can establish a reasonable  
possibility of success that the Pit Wall Instability and Rock Slide were changesto Lundins  
business, operations or capital (which I do not accept), then Markowich would meet the test to  
establish a reasonable possibility of success that the events were material to investors, based on  
credible expert and other evidence, and a plausible interpretation of the Securities Act.  
Conclusion on leave motion  
[218] For the above reasons, I accept Objection 2 and find that Markowich has not established a  
reasonable possibility of success that the Pit Wall Instability and Rock Slide were changesto  
Lundins business, operations or capital.  
[219] I dismiss Objections 1, 3, and 4, and find that Markowich established a reasonable  
possibility of success that the events were material to investors, based on credible expert and  
other evidence, and a plausible interpretation of the Securities Act.  
 
- Page 41 -  
Issues arising out of the certification motion  
[220] With respect to the Statutory Claim, the defendants do not submit that certification is not  
available if leave is granted under s. 138.8(1) of the Securities Act. Further, the defendants do not  
oppose certification of PCIs 1-4 as common issues if leave is granted under s. 138.8(1). The  
defendantsposition is consistent with settled law in Green (SC) that “[t]here can be no doubt,  
however, that a class action is the preferable procedure for pursuing a claim under Part XXIII.1  
of the Securities Act. The statutory remedy is tailor-made for a class action”: at para. 611.  
[221] Consequently, if leave is granted, certification is suitable for the Statutory Claim and their  
attendant PCIs in this case.  
[222] Conversely, Markowich does not assert that the Statutory Claim should be certified if  
leave is not granted under s. 138.8(1).  
[223] With respect to the Common Law Claim, the defendants do not challenge that a cause of  
action is disclosed (under s. 5(1)(a) of the CPA). The defendants also agree there is some basis in  
fact to meet the requirements of (i) an identifiable class (under s. 5(1)(b) of the CPA) and (ii) a  
suitable representative plaintiff (under s. 5(1)(e) of the CPA).  
[224] The defendants do not dispute that PCIs 5, 6, and 7 are appropriate for certification for  
the Common Law Claim, if leave is granted for the Statutory Claim.20  
[225] Consequently, the defendantsobjections to certification are limited to the Common Law  
Claim.21 The defendants raise four objections to the certification motion, which are:  
(i)  
Objection 5: PCIs 8, 9 and 11 cannot be certified as common issues for the  
Common Law Claim since deemed reliance is not available for the common law  
misrepresentation claims in the present action;  
(ii)  
Objection 6: PCI 13 cannot be certified as a common issue since there is no  
basis in fact to establish a punitive damages claim;  
(iii)  
Objection 7: If leave is denied on the Statutory Claim, certification of the  
Common Law Claim “must be denied under s. 5(1)(d); and  
20 Such an approach is consistent with the settled law as discussed in Green v. CIBC, 2014 ONCA 90, at paras. 103-  
05 (Green (CA)). Similarly, the court in Peters held that if it had granted leave for the statutory claim, the court  
would have certified the statutory claim in its entirety and certified the first three elements of the negligent  
misrepresentation claim (similar to PCIs 5-7 in the present case) as common issues: at para. 231.  
21 (subject to the defendantsoverriding objection to certification of the Statutory Claim based on the alleged failure  
of Markowich to satisfy the leave requirement)  
 
- Page 42 -  
(iv)  
Objection 8: In the alternative to Objection 7, since deemed reliance cannot be  
certified as a common issue in the present action, certification of the Common  
Law Claim should not be granted since the action would not be the preferable  
procedure.22  
[226] For the reasons I discuss below, I accept Objections 5, 6, and 8, but I reject Objection 7.  
[227] I now review each of the objections.  
Objection 5: Deemed reliance is not available for the common law misrepresentation claims in  
the present action  
[228] Markowich asks the court to determine, as a common issue, whether (i) the market for  
Lundin Mining securities [is] efficient(PCI 8), and (ii) if so, can each Class Members reliance  
on the misrepresentation be inferred from the fact that each Class Member decided to and did  
acquire Lundin Mining securities in an efficient market?(PCI 9). The aggregate damages PCI  
11, with respect to the Common Law Claim, is also based on deemed reliance.  
[229] Markowich submits that the present case is sui generissince it is based on an omission  
as opposed to an affirmative misrepresentation, and, as such, the efficient market theory can be  
applied so that PCIs 8, 9 and 1123 can be certified for the Common Law Claim. I do not agree.  
[230] I first consider the applicable law and then apply the law to the facts of the present case.  
(i)  
The applicable law  
[231] It is settled law that reliance issues in a common law securities misrepresentation claim  
cannot be certified on the basis of deemed reliance arising from a fraud on the marketor  
efficient markettheory.  
[232] Reliance is an essential element of a common law misrepresentation claim. The court  
held in Queen v. Cognos Inc., [1993] 1 S.C.R. 87, at p. 110:  
The required elements for a successful Hedley Byrne claim have been stated in  
many authorities, sometimes in varying forms. The decisions of this Court cited  
above suggest five general requirements: (1) there must be a duty of care based on  
22  
As I discuss at para. 42 above, I do not address Objection 9 with respect to the scope of the Apology Act as the  
parties reached an agreement on this issue which is consistent with the Act.  
23  
The defendantsobjection to the aggregate damages claim raised by PCI 11 is based on the alleged inability to  
establish deemed reliance and, as such, relates only to the Common Law Claim. The defendants do not challenge  
certification of an aggregate damages claim based on the Statutory Claim, if leave is granted under s. 138.8(1).  
   
- Page 43 -  
a "special relationship" between the representor and the representee; (2) the  
representation in question must be untrue, inaccurate, or misleading; (3) the  
representor must have acted negligently in making said misrepresentation; (4) the  
representee must have relied, in a reasonable manner, on said negligent  
misrepresentation; and (5) the reliance must have been detrimental to the  
representee in the sense that damages resulted.  
[233] In Green (SC), Strathy J. held that the purpose of the statutory remedy for secondary  
market misrepresentation was to provide a remedy which, unlike a common law securities  
misrepresentation claim, was not reliance-based. He held, at paras. 595 and 600:  
[T]he statutory remedy for a secondary market misrepresentation under s. 138.3 of  
the Securities Act was enacted, in part, due to the difficulty in proving reliance-  
based common law claims and the rejection in Ontario of the "fraud on the  
market" theory. The statutory provisions contain checks, such as the leave  
procedure, to ensure that the remedy is not abused and balances, such as the  
liability cap, to protect the corporation and its continuing shareholders from  
crippling exposures.  
The decision of the Supreme Court of Canada in Sharbern Holdings Inc. v.  
Vancouver Airport Centre Ltd., [2011] 2 S.C.R. 175, above, has re-affirmed the  
need to establish reliance in a common law misrepresentation claim. This is not an  
issue that is capable of resolution on a common basis. In my view, there is no  
authority to support the proposition that "fraud on the market" or the "efficient  
market" theory can supplant the need to prove individual reliance.  
[234] The Court of Appeal approved the above analysis: Green (CA), at paras. 101-03:  
In Green v. CIBC, Strathy J. concluded that the issues of individual reliance were  
not suitable for certification on any basis. Nor could the issues of individual  
reliance be supplanted by an inference of group reliance in the secondary market  
context. He supported that conclusion by observing that there was no authority for  
the use of the "fraud on the market" theory to supplant the inquiry into individual  
reliance in the secondary market context.  
Finally, Strathy J. also based his decision on the fact that the introduction of the  
statutory remedy for secondary market misrepresentation under s. 138.3 of the  
Securities Act "was enacted, in part, due to the difficulty in proving reliance-based  
common law claims and the rejection in Ontario of the 'fraud on the market'  
theory" (para. 595). The remedy includes provisions that prevent abuse and  
protect continuing shareholders from damaging exposure to such claims. He  
observed that to allow common law claims where the corporate and shareholder  
- Page 44 -  
protections are not available would render the new remedy and the protective  
leave process redundant.  
I see no error in the motion judge's analysis and no basis to interfere with his  
conclusion that the reliance issues should not be certified.  
[235] In Kinross, the motion judge denied leave to assert a statutory claim and denied  
certification of common law negligent misrepresentation claims. The Court of Appeal upheld the  
decision and concluded, at para. 117, that [r]eliance is a claimant-specific issue, requiring  
individualized evaluation and fact-finding. The Court of Appeal further stated that reliance  
could only be determined on an individual basis, at para. 128:  
First, proof of reliance, causation and damages poses particular difficulties in this  
case. To establish these elements of the common law tort, individualized inquiries  
and fact-finding will be both necessary and unavoidable. For example, to establish  
reliance on Kinross' alleged misrepresentations regarding the goodwill associated  
with the Tasiast mine and consequential damages, numerous investor-specific  
questions arise. These include: 1) what representations were communicated or  
made known to each investor, and when; 2) what was the comparative experience  
level and degree of investment sophistication of each investor at the relevant  
times; 3) what investment recommendations were made to each investor; 4) what  
connection, if any, exists between Kinross' alleged misrepresentations and each  
investor's acquisition of Kinross shares; 5) how many Kinross shares were held,  
and when, by each investor; and 6) what was the date of acquisition, the  
acquisition price and the sale price for each investor's shares?  
[236] In Coffin v. Atlantic Power Corp., 2015 ONSC 3686, 127 O.R. (3d) 199, the court took  
the same approach. Belobaba J. reviewed the relevant case law and held, at paras. 135-39:  
Class counsel have tried to side-step the 'proof of individual reliance' problem  
(and in doing so, the manageability problem) by building on the accepted  
proposition that individual reliance can be "inferred" from the surrounding facts or  
circumstances. Thus, in securities class actions, class counsel have presented  
expert evidence that the securities in question were trading in an "efficient  
market" and then used this evidence to certify a common issue that asked whether  
individual reliance could be inferred from these (efficient market) circumstances.  
In the past, some class action judges, myself included, accepted this approach and  
certified the question about the efficient market and inferred reliance as a common  
issue. Class counsel were thus able to avoid both the s. 5(1)(c) pitfall (individual  
assessments) and the s. 5(1)(d) pitfall (manageability).  
However, as I was soon to discover, this approach (inferring reliance via evidence  
of an efficient market) is not available in Ontario. Justice Strathy explained why  
in Green v. CIBC:  
- Page 45 -  
[T]he statutory remedy for a secondary market misrepresentation  
under s. 138.3 of the Securities Act was enacted, in part, due to the  
difficulty in proving reliance-based common law claims and the  
rejection in Ontario of the "fraud on the market" theory. The  
statutory provisions contain checks, such as the leave procedure, to  
ensure that the remedy is not abused and balances, such as the  
liability cap, to protect the corporation and its continuing  
shareholders from crippling exposures ... In my view, there is no  
authority to support the proposition that "fraud on the market" or  
the "efficient market" theory can supplant the need to prove  
individual reliance.  
The Court of Appeal agreed. To allow common law claims where the corporate  
and shareholder protections set out in the [Securities Act] leave provision are not  
available "would render the [statutory] remedy and the protective leave provision  
redundant."  
A few months later in Kinross, the Court of Appeal revisited the leave provision  
and reaffirmed that "reliance is a claimant-specific issue requiring individualized  
evaluation and fact-finding." The Court of Appeal also noted that "the statutory  
action under s. 138.3 ... was enacted in part due to the difficulty in proving  
reliance-based common law claims" and, quoting Justice Strathy, agreed that it  
was "tailor-made for a class action." In short, the Court of Appeal has closed the  
door (in my view correctly) to any further use of the American-based efficient  
market/fraud on the market theory to establish inferred reliance in a common law  
negligent misrepresentation claim.  
Thus, the plaintiffs' attempt herein -- presenting expert evidence that the ATP  
shares were trading in an efficient market during the proposed Class Period and  
asking that an "inferred reliance" common issue be certified -- must be rejected.  
If, having lost the leave motion, the plaintiffs intend to proceed with the negligent  
misrepresentation claim they may do so, but they will be required to prove  
individual reliance. [Footnotes omitted.]  
[237] In Peters, Perell J. reviewed the relevant case law and summarized the principles at paras.  
232 and 234-36:  
From a class action perspective, the problematic constituent element of the  
misrepresentation torts is the reliance element. Reliance is an essential component  
of a common law cause of action for negligent misrepresentation, and to establish  
a cause of action in negligent misrepresentation, a plaintiff must prove both that  
he or she relied, in a reasonable manner, on the misrepresentation and that his or  
her reliance was detrimental in the sense that damage resulted.77 Reliance  
constitutes the causal link between the misrepresentation and the loss suffered by  
the plaintiff.  
- Page 46 -  
As demonstrated by Mr. Peters himself, reliance is an idiosyncratic not a class-  
wide phenomenon. Reliance is a question of fact as to the plaintiff's state of mind,  
and the plaintiff advancing a negligent misrepresentation claim must prove that  
the misrepresentation was at least one factor that induced him or her to act to his  
or her detriment.  
While it is possible that all or some members of a group might commonly  
experience the human psychological experience of reliance, more typically their  
respective experiences would be idiosyncratic. Some purchasers of stocks and  
bonds undertake rigorous due diligence before making an investment decision.  
Some purchasers of stocks and bonds rely on investment advisers to undertake  
rigorous due diligence before making an investment decision. Some purchasers of  
stocks and bonds undertake no due diligence and make purely emotional or  
hopping on the bandwagon or hopping off the bandwagon decisions. Some  
purchasers of stocks and bonds purchase stocks and bonds capriciously without  
studying or informing themselves about material facts and material changes.  
In the context of securities misrepresentation class actions, the Canadian  
jurisprudence has rejected the American fraud on the market theory that would  
displace the reliance requirement in securities misrepresentation claims. Thus, in  
the context of securities misrepresentation class actions, the reliance element is  
typically an individual issue, and this means the Class Members' common law  
misrepresentations claims will not be capable of resolution at the common issues  
trial. [Footnotes omitted.]  
(ii) Application of the law to the present case  
[238] Markowich submits that the above cases can be distinguished because they are material  
factcases in which the plaintiff relied on affirmative misrepresentations.24 However, I do not  
agree that such a distinction modifies the principles set out in the above cases.  
[239] The need to establish individual reliance is no different for an omission. Applying the  
investor-specific questionsset out in Kinross, each investor would need to lead evidence on  
the following questions:  
24  
In Peters, the court applied the above principles to a material change case based on an omission. Markowich  
submits that the case is wrongly decided on this issue and advises the court that the decision is under appeal.  
 
- Page 47 -  
(i)  
if the alleged omissions relating to the Pit Wall Instability and the Rock Slide had  
been disclosed in a news release and a material change report as submitted by  
Markowich, would the investor have become aware of the representation;  
(ii)  
what was the comparative experience level and degree of investment  
sophistication of each investor at the relevant times;  
(iii) what investment recommendations were made to each investor;  
(iv)  
what connection, if any, exists between the alleged omission and each investor's  
acquisition of the shares;  
(v)  
how many Lundin shares were held, and when, by each investor; and  
(vi)  
what was the date of acquisition, the acquisition price and the sale price for each  
investor's shares.  
[240] In the present case, each investor would have to lead evidence as to whether they would  
have seen the representation if made, as many investors would not even follow a press release or  
material change report. Under a common law misrepresentation by omission claim, it cannot be  
deemedor inferredthat each investor would have been aware of the impugned omission if it  
had been disclosed, in the same way that reliance on an affirmative misrepresentation cannot be  
deemedunder the efficient markettheory.  
[241] Further, even if an investor could establish that they would have become aware of the  
omitted information if disclosed, each investor would still have to lead evidence as to whether, if  
they had known about the Pit Wall Instability or Rock Slide, it would have affected the price  
they paid for the securities.  
[242] Further, Markowich seeks to distinguish the above cases on the basis that they arise in the  
context of material factcases rather than material changecases. However, I find no basis for  
such a factual distinction altering the settled law.  
[243] Regardless of whether the misrepresentation is based on the failure to disclose a material  
fact, or a failure to make timely disclosure of a material change, there remains a  
misrepresentation by omission which requires proof of reliance under the Cognos factors.  
Reliance on a misrepresentation by omission does not become discarded as a requirement only  
because the claim is based on a material change instead of a material fact.  
[244] Consequently, reliance remains an individual issue under the Kinross and Green analysis  
regardless of whether the claim arises from non-disclosure of a material fact or a material  
change.  
[245] Markowich relies on his evidence that when he purchased his Lundin shares, (i) he  
believed that the price reflected all information in Lundins own possession that could have a  
significant effect on the market price or value of its securities and (ii) he relied on that belief  
- Page 48 -  
when he purchased his shares. He also testified that had he known that Lundin had such  
information in its possession but had omitted it from the market at the time he purchased, he  
would not have purchased his shares in the manner he did.  
[246] However, Markowichs evidence reflects the idiosyncratic nature of reliance as set out in  
the case law. A purchaser who acquired shares based on an affirmative representation, which was  
alleged to be untrue, could also lead evidence that the purchaser believed that (i) the price  
reflected the markets knowledge of that representation and (ii) the investor would not have  
purchased the shares if the investor had known that the representation was not true. However, it  
is that same evidence which settled law has found to be idiosyncratic and requires individual  
evidence from each investor.  
[247] In the same way, Markowichs idiosyncratic evidence that he would not have purchased  
his shares in the manner he did, if he had known about the Pit Wall Instability and Rock Slide,  
would also have to be determined on an individual basis for each investor.  
[248] Markowich also relies on the principle that deemed reliance may be appropriate in some  
common law securities misrepresentation cases. By way of example, he relies on the comments  
of the Court of Appeal in Green (CA), at para. 100:  
Dealing first with whether the issue of reliance should be certified, in other cases  
of negligent misrepresentation, such as Strathy J.'s recent decision in Cannon v.  
Funds for Canada Foundation, 2012 ONSC 3009, 218 A.C.W.S. (3d) 264, the  
facts allowed the court to certify certain common issues, including inferred  
reliance. In that case, investors had invested in a tax shelter which was promoted,  
in part, based on an opinion letter and a comfort letter from a defendant lawyer.  
Strathy J. was prepared to certify common issues relating to reliance on the basis  
that there were only two documents investors looked at, and the entire tax shelter  
was premised on those documents being true. In those circumstances, inferred  
group reliance could be certified as a common issue.  
[249] In Cannon, the court certified a common issue on inferred reliance since there was a basis  
in fact for a trial court to find that the only reason for an investor to acquire the security was to  
obtain the charitable tax deduction, based on only two documents provided to investors, a  
distinction relied upon in Green (CA), at para. 100.  
[250] Markowich contends that deemed reliance can similarly be found here, because the  
alleged omissions affected each investor equally, and investors would not have invested in the  
manner they did during that relevant time periodif they had been aware of the omissions.  
However, no such inference can be made in the present case.  
[251] As in Green, Kinross, Mask, and Peters, there is no basis to deem reliance by an investor  
on the alleged omissions. There is no basis to find that any particular investor would have even  
been aware of the Pit Wall Instability or Rock Slide if the representation had been made, or that  
it would have affected the decision to purchase. For the reasons I discuss above, the investor-  
- Page 49 -  
specific questionsraised by the court in Kinross apply to the present case and as such, there is  
no basis to apply the efficient market theory to deem reliance on the alleged omission.  
[252] For the above reasons, I accept Objection 5, and I would not certify PCIs 8, 9, and 11 as  
common issues.  
Objection 6: PCI 13 cannot be certified as a common issue since there is no basis in fact to  
establish a punitive damages claim  
[253] Markowich submits that:  
The November News Release, which contained the Confounding Information, is  
itself sufficient basis in fact for the certification of [PCI 13]. Viewed in light of  
the plaintiff’s pleadings noted above, whether the defendants issued the  
Confounding Information in the manner alleged, and if by doing so, their conduct  
to the class warrants punitive damages, are merits questions for trial, not for  
certification.  
[254] It is settled law that punitive damages can be certified as a common issue, since it is an  
issue which does not require individual trials and will advance the litigation.  
[255] However, the plaintiff must still establish some basis in fact for such a submission, even  
though the court on a certification motion does not consider the merits of a claim.  
[256] In the present case, the only evidence relied upon by Markowich to assert a punitive  
damages claim is that in the News Release, Lundin disclosed additional information about its  
operations, relating to its revised operational plans (which included revisions to the LOM Plan  
due to the Pit Wall Instability and the Rock Slide).  
[257] The only evidence before the court is that the News Release (i) was a scheduled aspect of  
Lundins periodic disclosure, and (ii) disclosed information relevant to its business and  
operations, i.e., matters relevant to its shareholders. There is no basis in fact to support  
Markowichs claim that such an approach was taken for the purpose of confoundingthe  
information available to investors, as an intentional, high-handed tactic to avoid the  
consequences of allegedly failing to make timely disclosure of the Pit Wall Instability and Rock  
Slide. While the some basis in factthreshold is low, it is not meaningless. Mere speculation  
will not meet the test.  
[258] Further, the punitive damages claim could not be certified as a common issue if no other  
claims remained: Batten v. Boehringer Ingelheim (Canada) Ltd., 2017 ONSC 53, at para. 206,  
affirmed 2017 ONSC 6098, at para. 27 (Div. Ct.), leave to appeal refused, 2018 CarswellOnt  
8466 (C.A.); Kaplan v. Casino Rama, 2019 ONSC 2025, 145 O.R. (3d) 736, at para. 83; and  
G.C. v. Jugenburg, 2021 ONSC 3119, 155 O.R. (3d) 634, at para. 178. Given my conclusion that  
neither the Statutory Claim nor the Common Law Claim can be certified, a stand-alone punitive  
damages claim could not be certified.  
 
- Page 50 -  
[259] Consequently, I accept Objection 6. While I dismiss certification of the Common Law  
Claim in any event due to a failure to satisfy the preferable procedure requirement under s.  
5(1)(d) of the CPA (as set out in my analysis of Objection 8 below), I would not certify PCI 13  
even if the Common Law Claim could be certified, based on the above reasons.  
Objection 7: If leave is denied on the Statutory Claim, certification of the Common Law Claim  
“must be denied under s. 5(1)(d)”  
[260] I address this objection briefly, as I find that certification of the Common Law Claim  
depends on the facts of this case and not on a general principle which would preclude  
certification of any common law misrepresentation claim if leave on the statutory securities  
misrepresentation claim is denied.  
[261] In Kinross, the Court of Appeal rejected the submission that it was axiomatic that a  
common law misrepresentation claim cannot be certified if leave is denied to the statutory  
misrepresentation claim. The Court of Appeal reversed the decision of the motion judge who had  
held that it would and should naturally follow that if leave is denied that there would be no basis  
in fact for the certification claim: at para. 95. The Court of Appeal held, at paras. 96-99:  
Thus, on the motion judge's approach, when statutory and common law  
misrepresentation claims are combined, the "evidentiary footprint" for the two  
types of claims "will essentially be the same", except for the issue of reliance. On  
this basis, the motion judge concluded that if leave to proceed with the statutory  
claims is denied, the refusal of certification for the common law claims is  
effectively axiomatic.  
In my opinion, this approach to certification of the common law claims reflects an  
error in principle. It does not automatically follow from the denial of leave for the  
statutory claims that there will be no basis in fact for all of the class definition,  
common issues and preferable procedure certification criteria.  
The focus on a certification motion is on the form of the action and whether the  
asserted claims are suitable to proceed as a class proceeding. All that is required to  
succeed on a certification motion is that the plaintiff show some basis in fact for  
each of the CPA certification requirements, other than the requirement under s.  
5(1)(a) that the pleadings disclose a cause of action.  
The fact that the court, on a leave motion, has determined that the statutory claims  
have no reasonable possibility of success and that the evidence supporting the  
statutory and common law actions would essentially be the same does not mean  
that there is not some basis in fact: 1) that "there is an identifiable class of two or  
more persons that would be represented by the representative plaintiff or  
defendant" (the class definition criterion at s. 5.1(b)); or 2) that the "claims or  
defences of the class members raise common issues" (the common issues criterion  
at s. 5.1(c)). The court's determination of the merits of the statutory claims has no  
 
- Page 51 -  
place in the analysis of these certification criteria. However, as I discuss later in  
these reasons, in cases like this one, the denial of leave for the statutory claims is a  
relevant factor in the preferability analysis. [Citations omitted.]  
[262] I adopt the above reasons and, as such, dismiss this objection. Statutory and common law  
claims are not identical. Different tests are required for each claim. The threshold for leave  
requires the plaintiff to establish a reasonable possibility of success. A certification motion does  
not address the merits of the claim since the plaintiff must only establish that (i) the pleadings  
disclose a cause of action under s. 5(1)(a) of the CPA and (ii) there is some basis in fact to satisfy  
the requirements of ss. 5(1)(b)-(e) of the CPA.  
[263] Further, securities and common law misrepresentation claims may not share the same  
legal basis, even if the factual bases are the same or similar. In the present case, a trial court on  
the Statutory Claim would have to find that the Pit Wall Instability and Rock Slide were  
changesto Lundins business, operations or capitalin order for the claim to succeed. A  
common law misrepresentation claim, on the other hand, does not require such a determination.  
A court must only find that there was a misrepresentation by omission made in circumstances  
when it was reasonable for the plaintiff to rely on it, and that such reliance caused damage to the  
plaintiff.  
[264] Consequently, I dismiss Objection 7 on an axiomaticbasis.  
[265] However, the seminal issue is whether, based on the facts of the present case and similar  
cases which have considered the issue, it is appropriate to certify the Common Law Claim as a  
stand-alone claim (without certification of any reliance issues) on the basis of the preferable  
procedure requirement, given the nature of the common law misrepresentations at issue in the  
present case. I now address that issue, raised as Objection 8 by the defendants.  
Objection 8: In the alternative to Objection 7, since deemed reliance cannot be certified as a  
common issue in the present action, certification of the Common Law Claim  
cannot be granted since a class action would not be the preferable procedure  
[266] The issue before the court is whether there is some basis in fact that the Common Law  
Claim can satisfy the preferable procedure requirement. For the reasons that follow, I find that  
Markowich has failed to satisfy this criterion under s. 5(1)(d) of the CPA.  
[267] In