Executive Summary: Key Legal and Evidentiary Issues

• Leave sought under s. 140.8 of the BC Securities Act to commence a secondary market misrepresentation claim against PGM ResidualCo Holdings Inc. arising from Pure Gold Mining Inc.'s disclosures.

• Petitioner failed to file supporting affidavits in the leave proceeding, instead improperly relying on affidavits filed in a separate class action proceeding.

• Much of the tendered evidence was held inadmissible, including double hearsay in press releases, a YouTube interview, and an officer's affidavit from CCAA proceedings.

• Proposed pleadings lacked material facts to support allegations of "severe mining planning and operational challenges" and an "existential liquidity crisis," with several asserted misrepresentations being opinion rather than fact.

• A three-year limitation period under s. 140.94 barred claims tied to five of the six impugned documents, as s. 38.1 of the Class Proceedings Act does not suspend limitations for claims that were a nullity.

• Retroactive (nunc pro tunc) relief was refused, as the delay arose from counsel's flawed litigation strategy rather than court-caused delay.

Background and procedural history

Linda Larouche, as proposed representative plaintiff, sought leave under Part 16.1 of the BC Securities Act to advance a secondary market claim against PGM ResidualCo Holdings Inc. ("PGM"), into which liabilities for claims against Pure Gold Mining Inc. ("Pure Gold"), operator of an Ontario gold mine, were vested pursuant to a reverse vesting order. The claim alleged that disclosure documents issued between March 31, 2021 and March 28, 2022 (the "Class Period") contained misrepresentations that PureGold's sole material project, PureGold Mine, was capable and on track to achieve full production capacity and sustainable production, while omitting disclosure that the mine suffered from severe mining planning and operational challenges and that PureGold faced an existential liquidity crisis. An earlier class action pleading asserting these same claims had been declared a nullity by Justice Walker in October 2024 because leave had not been sought or granted as required by the Sec. Act and the Supreme Court Civil Rules. The petitioner filed the leave petition on November 6, 2024, and filed an amended petition on November 27, 2025 seeking leave to file the secondary market claim against only PGM. PGM opposed the leave application on both procedural and substantive grounds, including that there was no admissible (or inadequate) evidence, pleading deficiencies, and limitation issues.

The evidentiary problem

Section 140.8(3) of the Sec. Act requires the petitioner to serve and file affidavits setting forth the material facts upon which she intends to rely. Instead, petitioner's counsel filed only three affidavits in the petition proceeding, including Affidavit #1 of Taek Soo Shin affirmed March 14, 2025, in which Mr. Shin simply states that the petitioner "shall rely" on affidavits filed in the Class Action Proceeding. The Court held that simply referring to affidavits in another proceeding is impermissible, citing Ecoasis Developments LLP v. Sanovest Holdings Ltd. and Dang v. Canada (Attorney General), which confirm there is "no independent rule or jurisprudence which allows a party to wholesale import evidence from one action to another." Even had they been attached to a proper affidavit, the class action materials contained inadmissible double, if not triple, hearsay—including WRLG press releases, Gwen Preston's YouTube presentation, and Chris Haubrich's affidavit filed in the CCAA proceedings—without any explanation justifying admission on a principled basis. Accordingly, only the publications issued by Pure Gold (the "Documents") attached to the Petrakis Affidavit were admitted.

Pleading deficiencies and the leave standard

Applying the test from Theratechnologies Inc. v. 121851 Canada Inc. and Lundin Mining Corp. v. Markowich, the Court emphasized that leave requires a plausible analysis of the applicable legislative provisions and credible evidence in support of the claim, sufficient to show a reasonable possibility the action will be resolved in the claimant's favour at trial. The proposed pleading failed to identify specific material facts allegedly omitted from the disclosure, when they should have been disclosed, or why. Allegations of an "existential" liquidity crisis and "severe mining planning and operational challenges" were characterized as opinion or judgment rather than statements of material fact. Document-by-document analysis revealed the pleading misrepresented what the disclosures actually said: the March 2021 Annual Disclosure, May 2021 Disclosure, August 2021 Disclosure, and November 2021 Disclosure had already referred to shortfalls in gold production, dilution issues, accessing low-grade stockpiles, and short-term liquidity issues.

The corrective disclosure and "backward reasoning"

The petitioner pointed to Pure Gold's March 28, 2022 news release titled "PureGold Mine Operations Update and 2022 Corporate Outlook" as the corrective disclosure, together with the ensuing drop in Pure Gold's share price. Relying on MM Fund v. Americas Gold and Silver Corp., the Court held that evidence must allow the Court to reason forward, not backward; a drop in share price alone does not establish that a misrepresentation occurred, and a plaintiff must lead evidence tying the decline in share price to the misrepresentation or omission in question. Because the production shortfalls and liquidity concerns had already been reported throughout 2021 in the Documents, no common-sense connection arose with respect to the market drop in late March 2022, and expert mining evidence would have been required to explain technical terminology such as "stopes" and to link the Documents to the alleged corrective disclosure. The Affidavit of Teresa Closs, a former remote scoop operator (aka "remote mucker") at Pure Gold, was found insufficient: her statements about whether Pure Gold had a "proper" plan and "operational and managerial shortcomings" were specialized and technical issues that would normally be supported by expert evidence, and there was no evidence she had the experiential capacity to make such sweeping statements.

The limitation bar

Section 140.94 of the Sec. Act provides a three-year limitation period running from the date on which the document containing the misrepresentation was first released. Because the earlier pleading in the Class Action Proceeding had been declared a nullity, the limitation clock was not stopped until the leave petition was filed on November 6, 2024, meaning no cause of action arises in the period before November 6, 2021, which captured Documents #1–5. The Court rejected the petitioner's argument that s. 38.1 of the Class Proceedings Act suspended the limitation period, holding that s. 38.1 does not suspend the limitation period for claims that are not "asserted" in a class proceeding, such as the petitioner's secondary market claim in the NOCC/ANOCC, which was filed without leave and was found to be a nullity. Only Document #6, the November 2021 Disclosure issued on November 12, 2021, fell within the limitation period.

Nunc pro tunc relief and ruling

Relying on Canadian Imperial Bank of Commerce v. Green and Su v. Hougen Co. Ltd., the Court refused to grant leave nunc pro tunc, noting that limitation periods cannot be retroactively defeated where the delay stemmed from counsel's own litigation strategy rather than court delay. The defendants had specifically brought the procedural issue to plaintiff's counsel's attention in early March 2024, yet counsel persisted with an improper notice of application within the Class Action Proceeding rather than filing a petition as required by the SCCR. Madam Justice Fitzpatrick dismissed the petitioner's application for leave, ruling in favour of PGM ResidualCo Holdings Inc., which was entitled to its costs on Scale B, payable after assessment or otherwise as may be agreed by the parties; no specific monetary amount was determined in the decision.