Mountainstar Gold Inc. and Brent Hugo Johnson

Decision

I.          Introduction

1. This is the sanctions portion of a hearing under sections 161(1) and 162 of the Securities Act, RSBC 1996, c. 418.  The Findings of this panel on liability made on October 12, 2018 (2018 BCSECCOM 317) are part of this decision.
   
   
2. We found that:
   
   a) Mountainstar Gold Inc. repeatedly contravened section 168.1(1)(b) of the Act by making disclosure in its required public filings concerning certain Chilean mining claims and related legal proceedings (the Villar Proceedings) that was false or misleading in a material respect and at the time and in light of the circumstances in which the disclosure was made, or omitted facts necessary to make the disclosure not false or misleading; and
   
   b) Brent Hugo Johnson authorized, permitted or acquiesced in Mountainstar’s repeated contraventions of section 168.1(1)(b) and therefore Johnson repeatedly contravened the same provision.
   
   
3. The disclosure in issue was contained in management discussion and analysis (MD&A) filed by Mountainstar from December 2012 to December 2015.
   
   
4. The executive director provided written and oral submissions on the appropriate sanctions in this case.
   
   
5. The respondents did not make any submissions regarding appropriate sanctions. Instead, the respondents disputed our Findings on liability.
   
   
6. At the sanctions hearing, Johnson read a statement that appeared to relate to legal proceedings commenced by L in Chile against the executive director of the Commission, the Commission, Barrick Gold Corporation and others relating to the Chilean mining claims that are the subject matter of this case.
   
   
7. In written submissions made after the sanctions hearing, the respondents asked that our proceedings be stayed until the Chilean legal proceedings are concluded.  Although they did not articulate their argument, we assume that the basis for the respondents’ application is that these Chilean legal proceedings could have a determinative or substantial impact on our proceedings.
   
   
8. The respondents’ submissions require us to consider the appropriate balance between the potential prejudice to the respondents if we issue our sanctions decision and the outcome of the Chilean legal proceedings has a determinative or substantial impact on that decision versus the public interest in issuing timely orders to protect the public.
   
   
9. This Commission’s decision in Starflick.com (Re), 2014 BCSECCOM 25, took note of the Supreme Court of Canada’s views on the appropriate manner in which to view this balance in the regulatory context as set out in RJR-MacDonald Inc. v. Canada (Attorney General) [1994] 1 SCR 311: 

71…In the case of a public authority, the onus of demonstrating irreparable harm to the public interest is less than that of a private applicant…. The test will nearly always be satisfied simply upon proof that the authority is charged with the duty of promoting and protecting the public interest and upon some indication that the impugned legislation, regulation, or activity is undertaken pursuant to that responsibility.  Once these minimal requirements have been met, the court should in most cases assume that irreparable harm to the public interest would result from the restraint of that action.



10. The respondents have not demonstrated that the Chilean legal proceedings are relevant to our Findings or that their outcome could have a determinative or substantial impact on our sanctions decision.  Even if we were to accept that these proceedings are relevant and there may be potential prejudice to the respondents if we issue our sanctions decision and the Chilean legal proceedings are decided in L’s favour, we do not consider a stay of our sanctions decision to be in the public interest.
    
    
11. As discussed in more detail below, the contraventions of the Act for which the respondents have been found liable constitute serious misconduct.  The time required to conclude the Chilean legal proceedings could result in an indeterminate and potentially substantial delay in our decision relating to sanctions for the respondents’ misconduct.  The respondents’ continued participation in our capital markets pending the outcome of the Chilean legal proceedings poses a serious risk to investors and those markets. We do not consider that to be in the public interest.
    
    
12. Weighing these factors, we believe it to be in the public interest to deny the respondents’ stay application and proceed with the issuance of sanctions.  Accordingly, we dismiss the respondents’ stay application.

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