Ontario Court Upholds Section 1.1(a) of the Securities Act: “To provide protection to investors from unfair, improper or fraudulent practices”

(Toronto – April 24, 2025). Berger Montague (Canada) PC represents investors that purchased shares of Guyana Goldfields Inc. (“GUY GOLD”) between December 2017 and March 2019. The investors allege that GUY GOLD published investor records on SEDAR containing misrepresentations.

During 2019, GUY GOLD was engulfed in a proxy contest and threatened litigation from Patrick Sheridan Jr., its founder and former director and executive chairman. Prior to him going public with his evidence of wrong-doing at GUY GOLD, he entered into a settlement that forbid him from releasing his evidence without a court order.

Vincent DeMarco and Edwina Mayama, counsel for the investors, made submissions to the Court seeking an order to permit him, a former director, to share records with the investors’ lawyers for the pending Shareholder Class Proceeding because it would be consistent with section 1.1 of the Securities Act.

The Court agreed with the investors; the decision is linked here with the important quote being:

[21]           The communications in issue would be public documents revealed by Sheridan’s own website had the confidentiality provisions of his settlement with Guyana not kicked in. The request for production from Sheridan does not expand the upcoming leave motion by opening up a broad area of discovery; it is designed to do no more than to ensure that the relevant evidence, which is known to exist and defined to be of relevance, be before the court so that the gatekeeping function can take place with a record that is cogent and complete.  

This ruling is a significant development for all shareholder litigation in Canada; if there is third-party, that has credibility as being an influential person to the corporate defendant that publishes statements that influence a securities’ price or value and has the records to support the public statements, corporate defendants should not be able to stymie investors from knowing the truth about the material facts that were published to the market by paying a less costly settlement (e.g., as what happened here).