Ontario Court Slaps Junior Miner $80K for Novel $25M Claim

Now the costs ruling. Trillion argued the amounts sought were excessive and that the brokers were last-minute participants. The court disagreed. “When one advances a claim of $25 million on a new and complex basis in law, that is not a minor matter in which immaterial costs can be expected,” the judge wrote. The cost requests from Ernst & Young Inc., the receiver, and from Jones Trading Canada Inc., National Bank Financial Inc., Ventum Financial Corp. and Virtu Canada Corp. were deemed reasonable.

The judge added that Trillion should have expected a “full-throated response” from the stockbroker creditors. The $25 million claim represented the bulk of the funds available for recovery, meaning the brokers had a direct stake in opposing it. “I am not sure if Trillion failed to realize the scope of the endeavour it undertook in advancing a huge claim on such a complicated basis,” the judge said.

For junior resource companies, the ruling draws a line. Shareholders do not owe duties to an issuer for buying and selling shares on the secondary market. Pursuing such a claim carries real cost risk, especially when the target is a receivership with multiple creditors. Brokers gain some protection from being dragged into novel liability theories that could affect their own recoveries.

The $80,000 cost award is modest relative to the $25 million claim. The message is not. Novel legal theories come with expensive consequences when they fail.