Reliability is Relevant to Materiality: Wong v Pretium Resources Inc.

  • October 05, 2022
  • Stacey Reisman & Colette Koopman

The Court of Appeal’s decision in Wong v Pretium Resources Inc., 2022 ONCA 549, confirms that the reliability of information can be relevant to determining the materiality of information under the Ontario Securities Act (“OSA”). The much-anticipated appeal from the first merits decision of a class action under the secondary market liability provisions of the OSA provides important insights for issuers and class action litigants alike.

The Lower Court’s Decisions

The plaintiff commenced a common law and statutory secondary market misrepresentation class action against Pretium Resources Inc. (“Pretium”), in which it alleged that Pretium made misrepresentations by omission in its continuous disclosure. The alleged omission was the failure to disclose as a material fact “concerns” raised by Pretium’s consultant about its mining project, concerns Pretium believed were premature and unfounded.

In 2017, the motion judge granted leave to proceed[1] under s. 138.8 of the OSA, after concluding that there was a “reasonable possibility that the action would be resolved in favour of the plaintiff” at trial. The action was certified on consent in 2019, and it proceeded to summary judgment in 2020.

Despite having concluded at the leave stage that the plaintiff “established a reasonable possibility of success at trial,” the motion judge ultimately granted summary judgment in favour of Pretium and dismissed the action.[2] The “key determinant” on summary judgment was his finding, on a balance of probabilities, that there was no omission of a material fact in the issuer’s continuous disclosure because “unreliable information is not a material fact that must be disclosed.” In the motion judge’s view, the defendants were not obliged to disclose the “negative opinion” – there was no omission of any material fact – and the defendants were not obliged to disclose information that they reasonably and objectively believed was “premature, unreliable and incorrect, indeed ‘dead wrong’.”