Canada: Bear Lake Gold Ltd. Decision - Ontario Court Supports Existing Practice Regarding The Use Of Fairness Opinions In Plans Of Arrangement

Last Updated: June 9 2014
Article by Paul D. Davis and Brett G. Harrison

In a decision issued on June 5, 2014,1 Justice Wilton-Siegel of the Toronto Commercial List Court held that a fairness opinion does not need to qualify as an expert report to assist the Court in approving an arrangement. This decision appears to limit the applicability of the March 28, 2014 decision of Justice Brown of the Toronto Commercial List Court in Champion Iron Mines Limited.2

It is standard practice for the board of directors of a target company to obtain a fairness opinion stating that the transaction is fair from a financial perspective. This was reinforced by the decision in BCE Inc. v. 1976 Debentureholders,3 where the Supreme Court of Canada noted that in conducting an analysis as to whether a plan of arrangement is fair and reasonable, courts may consider "the presence of a fairness opinion from a reputable expert".4

As noted in a previous bulletin of this firm,5 in Champion Iron, Justice Brown placed no weight on the fairness opinion that was included in that case in a management proxy circular. He pointed out that the fairness opinion did not disclose the specifics of the actual analysis performed by the financial advisor, which could "inform a reader on the issue of whether the offered consideration was within a minimum range that otherwise could have been obtained in a market-based transaction process."6 Justice Brown observed that "opinion evidence may only be received by a court if adduced through a qualified expert witness (subject to certain exceptions which have no application to this case)".7 He concluded that the fairness opinion did not comply with many of the content requirements of an expert report pursuant to Rule 53.03(2.1) of the Rules of Civil Procedure,8 specifically with respect to the requirement that an expert's report contains such expert's reasons for his or her opinion. Justice Brown found that the fairness opinion simply asserted an opinion without disclosing the reasons for it and, accordingly, was inadmissible for purposes of the application.9

In Bear Lake, Justice Wilton-Siegel specifically addressed the issue of whether a fairness opinion is of relevance to a Court in circumstances where the underlying financial analyses is not disclosed in a proxy circular. He noted that, in such circumstances, a fairness opinion was relevant for two reasons: (a) the use of a fairness opinion by a special committee of a board is evidence that the committee considered the fairness and reasonableness of a transaction "on the basis of objective criteria to the extent possible;"10 and (b) the publication of a fairness opinion in a circular (even without the detailed analysis underlying the fairness opinion) allows the shareholders to assess for themselves the "integrity of the directors' recommendations and ... the fairness of the transaction to them from a market perspective".11

This decision supports the current practice of using fairness opinions to provide assistance to boards of directors in reaching an informed decision on a proposed arrangement, as part of the proper exercise of their fiduciary duty. This decision-making process should include a presentation to the board by the financial advisor rendering the fairness opinion, where further details and financial analyses underlying the opinion are presented to supplement the board's understanding. We continue to emphasize that affidavits supporting an application for a final order approving a plan of arrangement should make reference to the fact that financial analyses underlying the opinion was presented to a board.

We would caution, however, that Justice Wilton-Siegel noted that this current practice may not be appropriate for contested transactions. He observed that:

as in previous contested situations, particularly involving a reorganization of the interests of the existing securityholders of a corporation rather than an acquisition of outstanding securities by a third party, if a party proposes to qualify a fairness opinion as expert evidence under the Rules of Civil Procedure the detailed analysis that grounds the fairness opinion must be available if required by any objecting securityholders.12

Accordingly, in plans of arrangement, which may be or are contested, issuers should consider including in proxy circulars summaries of the underlying financial analyses performed by the investment bankers and presented to boards.


1 Bear Lake Gold Ltd. (Re), 2014 ONSC 3428 [Bear Lake]. McMillan LLP represented the Applicant in this matter.

2 Champion Iron Mines Limited (Re), 2014 ONSC 1988 [Champion Iron].

3 BCE Inc v 1976 Debentureholders, 2008 SCC 69, [2008] 3 SCR 560.

4 Ibid at para 152.

5 Paul D. Davis, Brett G. Harrison & Sandra Zhao, Ontario Court Makes Observations On Purpose Of Fairness Opinions In The Context Of Plans Of Arrangement.

6 Champion Iron, supra note 2 at para 11.

7 Ibid at para 16.

8 Rules of Civil Procedure, RRO 1990, Reg 194, r 53.03 (2.1).

9 Champion Iron, supra note 2 at para 18.

10 Bear Lake, supra note 1 at para 15.

11 Ibid.

12 Ibid at para 16.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2014

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.

Paul D. Davis
Brett G. Harrison
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.