





CITATION:
Carom v.
Bre
-X Minerals Ltd., 2011 ONCA 392





DATE:
          20110520



DOCKET: C53140



COURT OF APPEAL FOR ONTARIO



MacPherson, Armstrong and Karakatsanis JJ.A.



BETWEEN



Donald Carom, 3218520 Canada Inc., 662492 Ontario
          Limited and Osamu Shimizu



Plaintiffs/Moving Parties (Appellants)



and



Bre
-X Minerals Ltd.,
Bresea
Resources Ltd., now known as
Sasamat
Capital Corporation, John B.
Felderhof
, Jeanette
          Walsh, Estate Trustee of the Estate of David G. Walsh, deceased, Jeanette
          Walsh, personally, T. Stephen
McAnulty
, Nancy Jane
McAnulty
, John B. Thorpe, Rolando C. Francisco, Hugh C.
          Lyons and Paul M.
Kavanagh



Defendants/Respondents (Respondents)



Proceeding under the
Class Proceedings Act, 1992



Paul J.
Pape
and
Shantona

Chaudhury
, for the appellants



Alan J.
Lenczner
, Q.C., for the
          respondents



John B.
Felderhof
, acting in person
          by factum only and not appearing



Heard:
May 17, 2011



On appeal from the decision of Justice Paul M. Perell of the
          Superior Court of Justice, dated November 17, 2010.



ENDORSEMENT



[1]

The appellants, the representative plaintiffs in a
    certified class action, sought to amend the list of common issues, by adding
    two questions to the 15 common issues already certified:

·

Are T. Stephen
McAnulty
,
    Nancy Jane
McAnulty
, John B.
Felderhof
,
    Jeanette Walsh, Estate Trustee of the Estate of David G. Walsh, deceased and
    Jeanette Walsh, personally or any of them, liable to account and disgorge to
    all or any of the Class Members, on a
restitutionary
basis, all or any part of the proceeds of the sale of their
Bre
-X
    shares and
Bresea
shares? If so, in what amount and
    for whose benefit is the accounting and disgorgement to be made?

·

Are T. Stephen
McAnulty
,
    Nancy Jane
McAnulty
, John B.
Felderhof
,
    Jeanette Walsh, Estate Trustee of the Estate of David G. Walsh, deceased and
    Jeanette Walsh, personally, or any of them, constructive trustees for all, or
    any, of the Class Members for all, or any part of, the proceeds of the sale of
    their
Bre
-X shares and
Bresea
shares? If so, in what amount and for whose
benefit are
the proceeds held?

[2]

In a decision dated November 17, 2010, the motion
    judge, Perell J., dismissed the motion. He concluded that, against the backdrop
    of common issues that had been settled since 1999, it would not be fair in 2010
    to add these two questions to the common issues at trial. The appellants appeal
    this decision, except as it relates to Nancy Jane
McAnulty
.

[3]

The starting point is recognition that the original
    certification order by Winkler J. contemplated a two-stage process in the class
    action. At the first stage, a common
issues  trial
would determine questions of
    liability. At the second stage, with the agreement of all parties including the
    plaintiffs, individual trials will be necessary for a final determination of
    the claims of each class member, in particular to determine issues of
    causation, reliance and damages arising from the claims: see
Carom v.
Bre
-X
    Minerals Ltd.
(1999), 44 O.R. (3d) 173 (S.C.), at
para
.
    88.

[4]

As the years went by, the class proceedings stalled,
    principally because the parties were waiting for the result of the defendant
    John B.
Felderhofs
criminal trial (he was
    acquitted). By the time the appellants had restarted the engine in the class
    proceedings, they had reformulated their thinking in two respects  first, they
    thought that, potentially, the remedies of constructive trust and disgorgement
    might be more effective than the remedy of damages; and second, they thought
    that it would be more efficient to deal with these remedies in the common
    issues trial rather than later in the second stage remedy-focused part of the
    trial. Hence their motion, which Perell J. dismissed.

[5]

At the oral hearing of the appeal, two separate but
    related issues were in play. It soon became clear that on one of those issues 
    the more important one  the parties present were in fact in agreement.

[6]

The first issue is whether the remedies of constructive
    trust and disgorgement are potentially available to the appellants if they are
    successful in the common issues trial in establishing some wrongful conduct
    (conspiracy, fraudulent misrepresentation,
negligent
misrepresentation) on the part of the respondents.

[7]

As the oral hearing proceeded, it became clear that
    there is no dispute on this issue. The remedies of constructive trust and disgorgement
    are asserted in the Amended Fresh Statement of Claim. Counsel for the
    respondents explicitly acknowledged that it would be open to the appellants to
    seek these remedies after liability is determined at the common issues trial
    (if it is reached). There is nothing in the motion judges reasons that
    suggests otherwise. These remedies, and the potential application of s. 24 of
    the
Class Proceedings Act
, S.O. 1992,
    c.6, are live issues in these proceedings.

[8]

The second issue relates to whether the proposed common
    issues should have been permitted in order to create another basis of liability
    by adding waiver of tort as
an
a cause of action.

[9]

Again, as the oral hearing unfolded, it became clear
    that the key concern of the appellants was to preserve the availability of
    constructive trust and disgorgement as alternative remedies without the need to
    resort to individual trials if they choose to forego damages. However, counsel
    also sought to preserve the ability to argue waiver of tort as an independent
    cause of action. Counsel for the respondents, relying on the fact that
    questions of remedy had been postponed, on consent since 1999, to after the
    result in the liability-focused common issues trial is known, submitted that it
    was unfair to add a potential new basis of liability at this late stage.

[10]

In the end, we see no reason to interfere with the
    motion judges decision that it was unfair to add a common issue for a
    potential new cause of action at this late stage of these class proceedings. His
    decision permits the appellants to seek remedies that are expressly sought in
    their statement of claim, but it keeps that issue where it has always been, in
    the second stage of the proceedings where it can be addressed through legal
    argument and, possibly but not necessarily, additional evidence.

[11]

The appeal is dismissed. No costs.

J. C. MacPherson J.A.

Rob P. Armstrong J.A.

Karakatsanis J.A.


