2017 QCCA 1893, 2017 QCCA 1893

Pearson c. Catucci 2017 QCCA 1893 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-027094-176 (500-06-000783-163) DATE: November 30, 2017 IN THE PRESENCE OF THE HONOURABLE ROBERT M. MAINVILLE, J.A. J. MICHAEL PEARSON APPLICANT — Respondent v. CELSO CATUCCI NICOLE AUBIN, ès qualités trustee of the Aubin trust RESPONDENTS — Applicants and GOLDMAN, SACHS & CO. GOLDMAN SACHS CANADA INC. DEUTSCHE BANK SECURITIES INC. BARCLAYS CAPITAL INC. HSBC SECURITIES (USA) INC. MITSUBISHI UFJ SECURITIES (USA) INC. DNB MARKETS INC. RBC CAPITAL MARKETS LLC MORGAN STANLEY & CO.

LLC SUNTRUST ROBINSON HUMPHREY INC. CITIGROUP GLOBAL MARKETS INC. CIBC WORLD MARKETS CORP. SMBC NIKKO SECURITIES AMERICA INC. TD SECURITIES (USA) LLC J.P. MORGAN SECURITIES LLC MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BMO CAPITAL MARKETS CORP. VALEANT PHARMACEUTICALS INTERNATIONAL INC. PRICEWATERHOUSECOOPERS LLP HOWARD B. SCHILLER ROBERT L. ROSIELLO ROBERT A. INGRAM RONALD H. FARMER THEO MELAS-KYRIAZI G. MASON MORFIT LAURENCE PAUL ROBERT N. POWER NORMA A. PROVENCIO LLOYD M. SEGAL KATHARINE B. STEVENSON FRED HASSAN COLLEEN GOGGINS ANDERS O. LONNER JEFFREY W.

UBBEN IMPLEADED PARTIES — Respondents JUDGMENT [ 1 ] J. Michael Pearson (“ Pearson ”) is the former CEO and Chairman of the Board of Valeant Pharmaceutical International Inc. (“ Valeant ”). He seeks leave to appeal a judgment of the Honourable Madam Justice Chantal Chatelain of the Superior Court, District of Montreal (the “ Judge ”), rendered on August 29, 2017 ( 2017 QCCS 3870 ), granting Celso Catucci and Nicole Aubin (the “ Respondents ”) authorisations pursuant to

section 225.4 of the Quebec Securities Act , CQLR, c. V-1.1 (the “ QSA ”) and under articles 574 to 577 of the Quebec Code of civil procedure (“ CPP ”) for instituting a class action against Valeant, its directors and officers, its

auditor and its underwriters. [ 2 ] Pearson’s leave application was heard at the same time as similar applications seeking leave to appeal the same judgment submitted respectively by Valeant and Valeant’s underwriters, its auditor, another of its former directors, Howard B. Schiller, as well as Valeant itself and the other individual defendants. [ 3 ] The description of the classes and sub-classes to the class action, the issues identified by the judge to be dealt with collectively in the class action, the conclusions sought by the class action, the claims of the Respondents under (

a) Division I of

Chapter II of Title VIII of the QSA , (

b) Division II of

Chapter II of Title VIII of the QSA , and (

c) under general civil liability principles set out in

article 1457 of the Quebec Civil Code , as well as the test for granting leave to appeal pursuant to

article 578 CPP are all set out in the judgment dismissing Valeant’s underwriters application for leave to appeal and released at the same time as this judgment, and need not be reiterated here. [ 4 ] Pearson raises two grounds of appeal which are described as follows in his application for leave to appeal: 5. The Appellant respectfully submits that the learned Judge erred in the application of the criteria for authorization set out in Article 572(2) CCP, by deferring to the trial of the common issues the resolution of threshold questions of law that were ripe to be decided.

The Respondents have no appearance of right on these questions, which are dispositive of their claims against the Appellant for the Primary Market Sub-Class. In particular:

a) No possible statutory liability for misrepresentation in an offering memorandum or prospectus : As a matter of law, the Appellant can have no liability under the QSA for misrepresentation in an offering memorandum or a prospectus because the offering memoranda at issue were not “prescribed by regulation”, and there was no “distribution effected with a prospectus”, both required conditions to liability; and

b) No personal cause of action: Neither Respondent has a personal cause of action or a sufficient interest against the Appellant for the primary market-based causes of action because neither purchased securities on the primary market in any of the offerings at issues, and indeed never owned any of the notes at issue. [ 5 ] These grounds of appeal are basically the same as those raised by Valeant’s underwriters and which were rejected by the undersigned in the judgment dismissing the underwriters’ application for leave to appeal. As a result, these grounds of appeal will also be rejected with respect to Pearson.

The reasons for rejecting those grounds are set out in the judgment respecting the underwriters’ application for leave to appeal and are incorporated herein by reference. They need not be reiterated here. FOR THESE REASONS, THE UNDERSIGNED JUDGE: [ 6 ] DISMISSES the Application for leave to appeal brought by J. Michael Pearson, with legal costs. ROBERT M. MAINVILLE, J.A. Mtre Robert Torralbo Mtre Simon Jun Seida BLAKE, CASSELS & GRAYDON For Applicant Mtre Shawn Faguy Mtre Vincent Doré FAGUY & CIE, AVOCATS INC.

Mtre Michael George Robb SISKINDS Mtre Garth Fraser Myers Mtre Jonathan Elliot Ptak KOSKIE MINSKY For Respondents Mtre William McNamara Mtre Marie-Eve Gingras SOCIÉTÉ D’AVOCATS TORYS For Goldman, Sachs & Co., Goldman Sachs Canada Inc., Deutsche Bank Securities Inc., Barclays Capital Inc., HSBC Securities (USA) Inc., Mitsubishi UFJ Securities (USA) Inc., DNB Markets Inc., RBC Capital Markets LLC, Morgan Stanley & Co. LLC, Suntrust Robinson Humphrey Inc., Citigroup Global Markets Inc., CIBC World Markets Corp., SMBC Nikko Securities America Inc., TD Securities (USA) LLC, J.P.

Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and BMO Capital Markets Corp. Mtre Éric Préfontaine Mtre Allan David Coleman OSLER, HOSKIN & HARCOURT

For Valeant Pharmaceuticals International Inc., Robert L. Rosiello, Robert A. Ingram, Ronald H. Farmer, Theo Melas-Kyriazi, G. Mason Morfit, Laurence Paul, Robert N. Power, Norma A. Provencio, Lloyd M. Segal, Katharine B. Stevenson, Fred Hassan, Colleen Goggins, Anders O. Lonner et Jeffrey W. Ubben. Mtre Pierre Y. Lefebvre LANGLOIS AVOCATS Mtre Noah Michael Boudreau FASKEN MARTINEAU DuMOULIN For Pricewaterhousecoopers LLP Mtre André Ryan Mtre Shaun E. Finn BCF Mtre Jessica M. Starck BENNETT JONES For Howard B. Schiller Date of hearing: November 22, 2017