Canada: Mining @ Gowlings - March 7, 2012 - Volume 1, Number 1

Last Updated: March 14 2012

Edited by David McIntyre

In this issue:

  • Bringing the Fight to Canada

Bringing the Fight to Canada

By: Kyle Magee and Janet Howard


The recent decision of the Ontario Court of Appeal in the case of Piedra v. Copper Mesa Mining Corporation1 is of interest to Canadian mining companies with foreign operations, their boards of directors and the Canadian stock exchanges on which their securities are listed. Among other issues, the case raises an interesting question as to whether Canada is the proper forum to address wrongs in foreign jurisdictions by agents of Canadian corporations.

In the case of Piedra, the Court considered whether a duty of care was owed to local residents in a community neighbouring an Ecuadorian mine operated by Copper Mesa Mining Corporation ("Copper Mesa"), a junior mining company incorporated in British Columbia with its shares listed on the Toronto Stock Exchange. 

Residents in the local community had actively opposed the initial exploration work, concerned that it would lead to the construction of a large-scale open pit copper mine on a site adjacent to the communities where they lived.   The Plaintiffs claim they were subjected to a "campaign of intimidation, harassment, threats and violence" allegedly carried out by security forces controlled by Copper Mesa and its agents in response to "widespread and sustained local opposition" to the Ecuadorian project.  The allegations included a shooting and repeated threats of death and physical assaults.

The decision of the Court leaves open the possibility that, in the right circumstances, where there are sufficient facts and advance notice to establish that harm to local residents is a foreseeable result of company conduct, the corporate directors may owe a duty to prevent such harm.

The Claims

In the case of Piedra, three Ecuadorian resident Plaintiffs commenced actions in Ontario against each of Copper Mesa, two of the corporation's Ontario resident directors (collectively, the "Copper Mesa Defendants") and the TSX Inc. and the TSX Group Inc. (collectively, the "TSX Defendants").  The Plaintiffs alleged they had been victimized by assaults committed in Ecuador in connection with the company's Ecuadorian mining project. 

The total damages sought by the Plaintiffs amounted to approximately $1.6 billion.  Following a motion by the defendants, the Ontario Superior Court of Justice dismissed the claims, without leave to amend, on the ground that they disclosed no reasonable cause of action. 

It is unclear from the decision itself why the action was commenced in Ontario as opposed to Ecuador. However, internet research suggests that the Plaintiffs were disillusioned by the Ecuadorian judicial system and frustrated that their appeals to local authorities for protection had gone unanswered. Another possible explanation is that the Plaintiffs were attracted to their Toronto based counsel, a firm with a reputation for pursuing similar social justice based claims.

The Appeal

The Plaintiffs appealed the decision to strike the claims to the Ontario Court of Appeal.  The Plaintiffs argued that the lower court had erred in holding that neither the Copper Mesa Defendants or the TSX Defendants owed a duty of care to the Plaintiffs for the alleged harms suffered in Ecuador. 

On appeal, the Plaintiffs took the position that the three elements needed to establish a duty of care had been met, specifically that: (i) the alleged tortious acts were reasonably foreseeable; (ii) there was sufficient proximity between the Plaintiffs and the Copper Mesa Defendants and the TSX Defendants to ground a duty of care; and (iii) policy considerations supported the imposition of a duty of care in these circumstances.

While the Ontario Court of Appeal ultimately decided there was no duty owed to the Plaintiffs by the Copper Mesa Defendants or the TSX Defendants in the particular circumstances, comments made by the Court in rendering its decision leave open the possibility of similar claims being pursued in Ontario.

As against the TSX defendants, the Plaintiffs argued that the TSX had a duty to refuse listing Copper Mesa's shares since the exchange was aware of the mounting conflict in Ecuador relating to the project.  In the alternative the Plaintiffs argued that the TSX had a duty to institute precautionary measures before listing the shares to prevent the risk that the funds raised would be used in connection with the commission of allegedly tortious acts.

The Plaintiffs argued the alleged assaults were reasonably foreseeable on the basis that letters had been written to the exchange forewarning of a "serious risk of future violence" and references in Copper Mesa's prospectus described confrontations that had occurred at the mine site involving the company's security forces. 

The Appealed Decision

The Court held that the letters were not sufficient in establishing a connection between the risk of violence and the listing of the company's shares.  The Court found that the letters failed to state or imply that the listing would lead to the use of publicly raised funds to finance the deliberate commission of wrongful acts and therefore did not establish the necessary connection to the future risk of violence.  Further, the Court found that the disclosure in the prospectus did not support the claim that the Plaintiffs stood to be closely and directly affected by the listing of the company's shares. 

Therefore, the Court determined, in the absence of establishing a close and direct connection between the Plaintiffs and the listing, the risk of harm alleged by the Plaintiffs was not reasonably foreseeable and the TSX Defendants did not owe a duty of care to the Plaintiffs in the circumstances.  

However, in writing the judgment for the Court of Appeal, Justice Cronk noted:

I do not rule out the possibility that, in a proper case, the risk of future tortious wrongdoings against third parties by a company whose shares are proposed to be listed on the TSE might be found to be reasonably foreseeable to entities like the TSX defendants where it is alleged, on the basis of sufficient material facts, that such entities received specific advance notice of the risk of specific harm attendant on a public securities offering.  But that is not this case.

It remains to be seen whether the Court's decision will encourage opposition groups in foreign jurisdictions to engage in campaigns resulting in the bombardment of Canadian stock exchanges with correspondence and materials attempting to establish a connection between funds raised in Canada and the potential commission of harmful acts abroad, in an effort to prevent or forestall a company from being listed.  It will also be interesting to consider if the Court's position on the prospectus disclosure might have an impact on the breadth of the description of risk factors relating to the impact of a mine's development on local communities.  

As against the two Ontario based directors of the company, the Plaintiffs argued that the directors owed them a duty of care because the directors knew of the climate of unrest surrounding the Ecuadorian project and the nature of violence said to have been perpetrated against community opponents.  As a result, the Plaintiffs argued that the directors were personally liable for the alleged assaults on the basis that the directors had a legal duty to "avoid acts or omissions that caused or materially contributed to" the alleged harm. 

In attempting to establish the knowledge possessed by the directors, the Plaintiffs pointed to a meeting that had occurred between the directors and a local community member in Toronto which had involved a discussion of the concerns associated with the project and the potential for conflict.  The Plaintiffs also referenced the disclosure in the prospectus and other publicly available information which described alleged instances of violence by Canadian mining companies against local opposition groups.

The Court focused on the Plaintiff's selection of the directors as defendants in relation to torts allegedly committed by Copper Mesa suggesting that the Plaintiff's choice "strongly underscores the weakness of any connection between the harms alleged and the directors".  The Court also noted the Plaintiffs "have not sued any of the actual perpetrators of the alleged torts, or the operating company involved with the proposed mine in Ecuador or its Barbadian parent company".  In concluding that neither the foreseeability or proximity requirements were met to establish a duty of care, the comments made by the Court could be taken to suggest its judgment may have been different had the Plaintiffs had focused their claim against alternate defendants. 

As against Copper Mesa, the Plaintiffs asserted that the company was vicariously liable for wrongs allegedly committed by the directors during the course of their duties with the company. The Court concluded that since "the Plaintiffs' claims against Copper Mesa were based solely on vicarious liability, it followed that those claims also failed to disclose a reasonable cause of action". 

However, given the decision of the Court in Piedra, it remains to be seen whether a direct claim of negligence against a company in similar circumstances might have more traction in the future and whether the possibility for such a claim might encourage opposition groups to wage aggressive campaigns against the officers of mining companies in an attempt to alert them to the potential for harm that may be caused abroad in connection with foreign mining operations. 

The Court's comments in Piedra highlight the Plaintiffs' choice not to pursue the claim through the Ecuadorian courts and implicitly recognizes the Plaintiffs' invitation that the Canadian courts assume an interventionist role in a localized foreign dispute. Should a more appropriate set of facts arise in the future, it will be interesting to see how the Canadian Courts tackle the question of whether Canada is the proper forum to address such claims or whether it will defer and hold that the judiciary where the wrong occurs is best positioned to resolve local disputes.


1. 2011 ONCA 191.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
8 Nov 2016, Seminar, Ottawa, Canada

The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.

22 Nov 2016, Seminar, Ottawa, Canada

From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.

7 Dec 2016, Seminar, Ottawa, Canada

Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.