For over a decade courts have grappled with the question of what amounts to a ‘public correction’ for a Part XXIII.1 secondary market securities misrepresentation claim under the Securities Act. One issue that has repeatedly arisen but has not been resolved is whether there can be a ‘partial public correction’ of a misrepresentation.
At first instance, judges have divided on this issue.
In Dugal v. Manulife, 2011 ONSC 387 at para. 33 Strathy J. (as he then was) held that a public correction must be a one-time event and “any so-called ‘partial correction’ is nothing more than a continued misrepresentation.” Justice Belobaba adopted this reasoning in DALI v. Barrick, 2019 ONSC 4160 at para. 25. On appeal, the Court of Appeal described the question of whether a partial correction of a misrepresentation can constitute a public correction for the purposes of the statutory scheme was “an issue for another day” at footnote 9 of the reasons reported at 2021 ONCA 104. Upon rehearing parts of the motion before Belobaba J., Justice Akbarali in DALI v. Barrick, 2022 ONSC 4216 at para. 9 determined that the issue is not one “that ought to be decided on a leave motion, nor does it need to be decided on this motion.”
Conversely, both Justices Glustein and Morgan have accepted that partial corrections are possible at the leave stage. In Kauf v. Colt Resources, 2019 ONSC 2179 Justice Glustein disagreed with the defendants’ submissions that “a statement cannot be both a misrepresentation and a partial correction related to the same alleged undisclosed material fact.” Similarly, in Miller v. FSD Pharma, 2020 ONSC 4054 Justice Morgan granted leave to a plaintiff alleging a multiple correction theory based on a “news release [that] contained a public correction” that “was only a partial [correction], and was followed up with a series of news releases… that completed the correction.” This reasoning appears to be irreconcilable with Justice Strathy’s holding in Dugal quoted above.