1. Following the collapse of the Bre-X stock in March 1997, Sutts Strosberg LLP commenced actions on behalf of Bre-X shareholders who are residents of Canada and who lost money investing in Bre-X against: Bre-X, its directors and officers and Bresea; the SNC-Lavalin group of companies; and, the brokers Nesbitt Burns, First Marathon, Midland Walwyn, Levesque Beaubien, CIBC Wood Gundy, TD Securities and ScotiaMcLeod, and their respective analysts. The fresh statement of claim may be reviewed.
2. On May 13th, 1999, Mr. Justice Winkler certified a class proceeding against Bre-X, its officers and directors and Bresea. He did not certify a class proceeding against the brokers or against SNC-Lavalin. Mr. Justice Winkler’s reasons and the order dated June 23, 1999 may be reviewed.
3. Accordingly, there is no class action pending in Ontario against any broker or against SNC-Lavalin.
4. The plaintiffs’ appeal to expand the class definition and to certify an additional common issue was dismissed by the Divisional Court on December 6, 1999. The reasons of the Divisional Court may be reviewed.
5. On October 31, 2000, the Ontario Court of Appeal allowed the plaintiffs’ appeal to expand the common issues in the class proceeding to include a claim for negligent misrepresentation. The reasons of the Ontario Court of Appeal may be reviewed.
6. On November 13, 2001, Mr. Justice Winkler set a timetable for the class action, including dates for the production of documents, examinations for discovery and the trial of the common issues. His order dated November 13, 2001 may be reviewed. As a result of the November 13, 2001 order, the fresh statement of claim was amended on November 26, 2001 to change the title of proceedings only. The body of the fresh statement of claim remains unchanged. The first page of the amended fresh statement of claim may be reviewed.
7. Notice of certification of the Bre-X class action was published. The notice of certification may be reviewed. The opt-out date for those who did not wish to participate in the Bre-X class action was December 17, 2001. All persons who did not opt out by December 17, 2001 will be bound by any settlement or the court’s judgment against the defendants whether favourable or not.
8. A settlement conference was held before Mr. Justice Winkler commencing on March 11, 2002. As a result of documentary production and the information which was produced at the OSC hearing, plaintiffs’ counsel concluded that there was no reasonable basis to proceed with the action against John B. Thorpe, Rolando C. Francisco, Hugh C. Lyons and Paul M. Kavanagh. A motion was made before Mr. Justice Winkler who dismissed the action against these defendants without costs. The order dated April 4, 2002 dismissing the action against these defendants may be reviewed.
|9. The individual defendants remaining in the Bre-X Class Action are the David Walsh Estate, Jeannette Walsh, Stephen McAnulty and John Felderhof. The statements of defence and other pleadings delivered by these defendants may be reviewed:|
10. On June 28, 2002, Mr. Justice Winkler held a case management conference which resulted in amendment of the timetable for the continuing action. His order dated June 28, 2002 may be reviewed. Mr. Justice Winkler concluded that it would not be fair to the parties in the Bre-X action to proceed with examinations for discovery until it is determined whether Bresea remains a defendant in the action.
11. Plaintiffs’ counsel are continuing to review the documents produced by the defendants and by Bre-X’s Trustee in Bankruptcy and intend to proceed with a motion before Mr. Justice Cairns in Alberta to determine additional issues concerning documentary production which affect the class action.
The Bresea Settlement
12. A settlement has been negotiated only with the defendant Bresea. The settlement is subject to court approval in Texas, Ontario and Alberta. The notice of the proposed settlement with Bresea which was published may be reviewed. The Bresea settlement agreement may be reviewed.
13. The Alberta Court and the Ontario Court approved the Bresea settlement. The October 29, 2001 order of Mr. Justice Winkler approving the Bresea settlement may be reviewed.
14. Notice of the Ontario approval of the settlement with Bresea has been published. The notice of approval of settlement may be reviewed.
15. On January 15, 2002, Judge David Folsom of the U.S. District Court for the Eastern District of Texas denied the U.S. plaintiffs’ and Bresea’s joint motion for approval to advertise the Bresea settlement. Judge Folsom did so on the basis that the proposed class definition in the Texas action did not meet the requirements for certification; without first certifying the class, he could not approve a settlement on behalf of that class. Judge Folsom did not make any finding with respect to the fairness of the proposed settlement. Moreover, he invited the plaintiffs in the Texas action and Bresea to reorganize the class and resubmit the settlement proposal. Judge Folsom’s order may be reviewed.
16. As a result of Judge Folsom’s finding, counsel amended the Bresea settlement agreement by an agreement made as of May 1, 2002 to address his comments. The May 1, 2002 amended Bresea settlement agreement may be reviewed.
17. The Alberta court and the Ontario court approved the amended Bresea settlement agreement in June 2002. The June 20, 2002 order of the Ontario Court approving the amended Bresea settlement agreement and the motion record filed in support of its approval may be reviewed.
18. A hearing for approval of the amended Bresea settlement agreement proceeded before the Texas Court in September 2002. Judge Folsom of the U.S. District Court for the Eastern District of Texas has not yet released his decision on this issue.
19. The amended Bresea settlement agreement provides for Bresea, among other things, to pay $9,000,000. The sum of $2,000,000 will be paid to the Trustee of Bre-X in exchange for the Bresea shares. These monies will permit it to administer the bankruptcy and to pursue litigation offshore against some of the defendants. If the offshore litigation is successful, it will benefit the class because any monies recovered will be distributed to the class and others. The sum of $1,950,000 will be set aside to pay legal costs in the Bresea class action and in this class action and the action in Texas, if and when ordered by the courts. The remaining monies will be held for settlement of investor actions pending in Canada and the U.S. against Bresea and will ultimately be distributed to eligible class members.
20. On September 16, 2002, the Alberta court discharged Bresea’s Interim Receiver and Manager thereby releasing most of its assets back to management, subject to certain terms. The Interim Receiver continues to hold the $9,000,000 which may be required to be paid pursuant to the amended Bresea settlement agreement if approval of the Texas court is forthcoming. The September 16, 2002 Alberta court order may be reviewed.
21. As of July 30, 2003, Judge Folsom of Texas has still not decided whether to approve the Bresea Settlement Agreement which has been before him since June 6, 2002.
22. Unfortunately, because of Judge Folsom’s delay, the date for closing of the Bresea Settlement Agreement passed. Bresea has refused to extend the Settlement Agreement and now asserts that it has no obligation under the Bresea Settlement Agreement. Plaintiffs’ counsel believe that Bresea is obliged to extend the Settlement Agreement because of an undertaking it made to the Alberta Court. Therefore, an application to the Alberta Court will be necessary to determine whether Bresea is obliged to extend the Settlement Agreement.
23. If the Alberta Court requires Bresea to extend the Settlement Agreement, the parties will still need the decision of Judge Folsom in order to proceed with the prosecution of the Bre-X action.
24. If the Alberta Court concludes that Bresea is not required to extend the Settlement Agreement, the Bresea Settlement Agreement will have expired because of Judge Folsom’s delay. Bresea, therefore, will be a defendant in the Bre-X action and plaintiffs’ counsel will proceed to schedule examinations for discovery.
The Derivative Action
25. In 1997, plaintiffs’ counsel commenced a derivative action in the name of Bre-X against several defendants, including David and Jeannette Walsh for breach of fiduciary duty. The Trustee in Bankruptcy of Bre-X took over the derivative action once appointed.
26. In April 1998, the Trustee commenced proceedings against David Walsh and Jeannette Walsh in the Bahamas where they had relocated in 1996. The Trustee obtained a Mareva injunction against the Walshes restraining them from dealing with their assets worldwide, and an order compelling the Walshes to disclose the value, location and other particulars of those assets. The Estate of David Walsh appealed the Mareva injunction to the Privy Council. On December 17, 2001, the Privy Council released its decision dismissing the appeal. The continuing injunction is significant to the class action since the Walsh Estate assets will be a source of funds for the payment of damages if Walsh is found liable. The Privy Council decision may be reviewed.
27. The Trustee also obtained a Mareva injunction against John Felderhof, Ingrid Felderhof and their companies in the Cayman Islands.
28. A Mareva injunction restrains a person from spending any money or moving assets out of a jurisdiction without a court order.
29. All Bre-X shareholders are to register with Deloitte & Touche, the Trustee in Bankruptcy of Bre-X. This is important so that all shareholders receive information from Deloitte & Touche and so that Deloitte & Touche can ensure the accuracy of their catalogue of losses.