Bre-X plaintiffs win right to sue for negligent misrepresentation

When the lawsuit was launched the plaintiffs’ lawyers included negligent misrepresentation as one of the grounds for the claim, but the defendants won a motion to have it struck from the claim.

In order for a lawsuit to be certified, the plaintiff must show an identifiable “class” of plaintiffs is bringing the suit and that they share “common issues.” The motions court judge, in this case, ruled that “negligent misrepresentation” was not one of the 15 issues common to all of the plaintiffs.

“The major common issue in this action is the knowledge and conduct of the Bre-X insiders. What did they know about gold in the Busang and when did they know about it? And, given their knowledge, what did they tell the public and what legal rubrics (innocent, false, careless, anti-competitive, conspiratorial) should be attached to their statements?,” states the Appeal Court decision, released today.

“The answers to some of these questions may become complicated. Moreover, different answers may be required for different defendants. However, the complications are offset by two overarching considerations,” the court ruled.

“First, the presence and the stories of the plaintiffs are not required for the first stage of the lawsuit. The focus is on the defendants, their knowledge and their conduct. The determination of these matters, although perhaps difficult, will move the litigation forward. Second, it is uncontroverted that there will be a class proceeding with respect to three of the plaintiffs’ claims. n that context, it seems sensible and desirable to place the claim of negligent misrepresentation on the same litigation track.”

The plaintiffs in this action originally brought eight separate actions against the mining companies, as well as brokerage firms and research analysts. But the Bre-X matter has been condensed into a class action suit against the two gold mine companies and their senior officers. It no longer involves the brokerage firms or engineering firms that were originally named as defendants in the plaintiffs’ claims.