Executive Summary: Key Legal and Evidentiary Issues

• Herbert Drasnin sought authorization to pursue a class action against Turquoise Hill Resources Ltd. and related defendants for settlement purposes only.
   
• Allegations centered on disclosures concerning development of an underground mine project made between July 31, 2018 and July 31, 2019.
   
• Section 225.4 of the Quebec Securities Act required the Court to find a reasonable possibility of success before granting leave.
   
• Defendants consented to authorization for settlement purposes without admitting liability.
   
• Two proposed conclusions — automatic nullity of the judgment upon termination of the settlement, and a leave requirement for suits against the Claims Administrator — were rejected for lack of legislative support.
   
• Concilia was appointed as Claims Administrator to publish notices, manage opt-outs, and administer the escrow account.

Facts of the case

Herbert Drasnin brought an application against Turquoise Hill Resources Ltd. ("TRQ"), several of its individual officers and directors, and Rio Tinto plc and related Rio Tinto entities, alleging that certain disclosures made by the defendants contained false or misleading information about the development of an underground mine project. The original application for authorization was filed on December 22, 2020 on behalf of Canadian shareholders who acquired TRQ securities on the secondary market between July 31, 2018 and July 31, 2019, and who held those securities until corrective information was published. The application was amended several times, most recently on September 16, 2025. On December 2, 2025, the parties reached a settlement agreement covering a proposed class of persons who purchased or acquired TRQ securities outside the United States during the same period and retained them until after the publication of one of two corrective disclosures issued by TRQ on July 15, 2019, and July 31, 2019. In January 2026, Drasnin filed an application to have the class action authorized for settlement purposes and to obtain preliminary orders, later amending it on June 3, 2026, in response to comments from the Court.

Policy and legislative provisions at issue

The application relied on section 225.4 of the Quebec Securities Act, which permits a court to grant leave to bring an action for damages where it is satisfied the action is brought in good faith and there is a reasonable possibility the applicant will succeed. The application also had to satisfy the general class-action authorization criteria under article 575 of the Code of Civil Procedure, and the notice requirements of articles 579 and 590 C.C.P., which specify the information that must be included in notices to class members, including the class description, the issues raised, representative and counsel information, the settlement approval process, opt-out procedures and deadlines, and members' rights to be heard on the settlement. The Settlement Agreement itself defined the proposed class, the class period, and the categories of persons excluded from the class, including the defendants, their immediate family members, and related corporate affiliates.

Reasoning and analysis

The Court held that the statutory test under section 225.4 exists to screen out costly, unmeritorious claims, not to impose a burden approaching that of a trial, and found the applicant satisfied that reasonable-possibility-of-success standard. It further found the authorization criteria under both the Securities Act and the Code of Civil Procedure should be applied flexibly in the settlement context, given the general judicial preference for resolving disputes by settlement. On that basis, the Court concluded the application raised common issues of law and fact, that the composition of the class made individual proceedings impractical, and that Drasnin could adequately represent the class members. The defendants did not oppose authorization for settlement purposes, though their consent was given without any admission of wrongdoing. The Court also reviewed and approved the proposed notice plan, the Opt-Out Form, and the selection of Concilia as Claims Administrator, noting counsel's prior positive experience working with that administrator on other securities settlements. However, the Court declined to grant two conclusions sought by the applicant: a provision automatically nullifying the judgment if the settlement were later terminated or not approved, and a provision requiring leave of the Court before anyone could sue the Claims Administrator. The Court found neither had legislative or jurisprudential support, and emphasized particular caution before restricting a party's right to bring legal proceedings.

Ruling and overall outcome

The Court granted Drasnin's application to authorize the class action for settlement purposes only, appointing him Representative Plaintiff and appointing Concilia as Claims Administrator to oversee notice publication, manage class member opt-outs, and administer the escrow account holding the settlement proceeds. The Court approved the form and content of the First Notice, the short-form Notice, and the Opt-Out Form, and set the deadline for members to opt out at September 1, 2026, with objections to the settlement due by October 2, 2026. A hearing to approve the Settlement Agreement and Class Counsel's fees and disbursements was scheduled for October 20, 2026. The judgment does not identify a specific monetary amount awarded, ordered, or granted, as its scope was limited to authorizing the class action and settlement notice process rather than approving or quantifying the settlement itself. The whole was ordered without legal costs.