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ARTICLE · 30 OCTOBER 2017

Court Of Appeal Comments On Reasonable Investigation Defence

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The Court of Appeal's decision in Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719 ("SouthGobi ") provides guidance with respect to the evidentiary burden on defendants who...

CanadaLitigation, Mediation & Arbitration
Max Muñoz
Max Muñoz
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The Court of Appeal's decision in Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719 ("SouthGobi  ") provides guidance with respect to the evidentiary burden on defendants who are relying on the reasonable investigation defence to defeat a leave motion.

SouthGobi involved exceptionally unusual facts. The story starts in a very usual way: SouthGobi announced that its financial statements were being restated, that it had weaknesses in its internal controls over financial reporting ("ICFR"), and that its previous financial statements should not be relied upon. The stock price plummeted and a class action was commenced under s. 138 of the Securities Act against the company and several individual directors and officers (collectively, the "defendants").

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