Victoria Gold: the receivership stay does not reach the D&O defendants

At the end of argument on September 29, 2026, Justice Conway of the Ontario Superior Court of Justice (Commercial List) declared that the stay of proceedings in Victoria Gold Corp.'s receivership order does not apply to the company's former directors and officers who are defendants in a proposed securities class action in Ontario. In the alternative, if the stay does apply, the court lifted it so the action can proceed against them. The reasons, released October 1, give the same relief in a parallel proposed class action in British Columbia, on that plaintiff's request, which met no opposition apart from the submissions made in response to the Ontario action. The stay still protects the company: the Ontario plaintiff acknowledges that it applies to Victoria Gold and is not pursuing the action against the company "at this time," per the Endorsement of Justice Conway, Sept. 29, 2026 (released Oct. 1), paras. 5, 7, 20–21.

The Ontario claim was issued at 10:05 a.m. on August 14, 2024, the plaintiff's factum says, just before the first receivership order was made, per the Factum of the Ontario plaintiff, Apr. 28, 2026, para. 7. As the endorsement describes it, the claim advances causes of action against Victoria Gold and the former directors and officers for secondary market misrepresentation under s. 138.3 of the Ontario Securities Act and for negligent misrepresentation, with punitive damages. The plaintiff has served a motion record for leave to proceed under Part XXIII.1 of that Act and for certification, which Justice Morgan, the case management judge, will hear. A multi-party mediation among the two class plaintiffs and the individual defendants is scheduled for January 2027, and the receiver is responding to document requests for it, per the Endorsement of Justice Conway, Sept. 29, 2026 (released Oct. 1), paras. 1–3. None of the allegations has been tested. The former directors and officers say the stay over the company leaves them unable to reach "the very documents they can use to show they acted as reasonable and prudent directors and officers," per the Factum of the Individual Defendants, May 5, 2026, para. 52.

A stay to protect Victoria Gold

The stay is paragraph 11 of the receivership order, as amended: "no Proceeding against or in respect of the Respondent or the Property shall be commenced or continued except with the written consent of the Receiver or with leave of this Court," and proceedings already under way "are hereby stayed and suspended pending further Order of this Court," per the Endorsement of Justice Conway, Sept. 29, 2026 (released Oct. 1), para. 4. It was undisputed, the court said, that those words contain no express stay in favour of the individual defendants. Their case was that the breadth of "Proceeding" and "in respect of" carried the stay to them anyway, per the Endorsement of Justice Conway, Sept. 29, 2026 (released Oct. 1), para. 8. Their factum argued that Victoria Gold is the named lead defendant, and once the stay is triggered "it applies to the Proceeding as a whole; not selectively to one defendant, not to select components of the Proceeding, and not on terms dictated by the Ontario Plaintiff's litigation strategy," per the Factum of the Individual Defendants, May 5, 2026, paras. 2–3.

"I disagree," Justice Conway wrote. "This submission ignores the context in which the receivership was granted." That context was the court's own findings. When it appointed PricewaterhouseCoopers Inc. on the Government of Yukon's application in August 2024, it found that Yukon and the First Nation of Na-Cho Nyäk Dun "no longer have confidence in management of VGC to complete the necessary remediation work," and, refusing Victoria Gold a week's adjournment to prepare a CCAA filing, it said that since the two had lost confidence in management, "it made no sense to delay matters for VGC to seek relief under a company-led process," per the Endorsement of Justice Conway (reasons for Receivership Order), Aug. 15, 2024, paras. 12–14, 21. "In fact, the board resigned the next day and several days later the Receiver dismissed" the chief executive officer, the new endorsement records, and it goes on: "The purpose of the Stay was to protect Victoria Gold while it engaged in remediation and recovery efforts through the receivership. Given the limited (if any) anticipated involvement of the directors and officers, there was no basis for the court to grant a Stay protecting them and, as noted, none was requested." The defendants' reading, the court held, "indirectly seeks to obtain the benefit of the Stay that was not extended to them," per the Endorsement of Justice Conway, Sept. 29, 2026 (released Oct. 1), paras. 9–10.

The receiver read the order the same way. It submitted that on a plain reading the stay does not apply to the individual defendants, and it told the court that, in reviewing the proposed form of the original August 14, 2024 order, "which was prepared by the Government of Yukon prior to the Receiver's appointment, it was not contemplated that the order would include a direct stay of proceedings in favour of Victoria Gold's former directors and officers." If the court found that the stay did apply, the receiver consented to lifting it so the action could proceed against the individual defendants "(but not against Victoria Gold)," per the Endorsement of Justice Conway, Sept. 29, 2026 (released Oct. 1), para. 6.

Great Basin, and not Sutherland

The defendants relied on Sutherland v. Reeves, 2014 BCCA 222, in which, as the endorsement summarizes it, a broadly worded stay in a receivership order was held to stay a plaintiff's claim against the company's controlling shareholder over the cancellation of the plaintiff's shares and the termination of a management contract, per the Endorsement of Justice Conway, Sept. 29, 2026 (released Oct. 1), para. 11. In Sutherland, their factum stressed, the company in receivership was not even a named defendant; "If the stay applied in Sutherland, it applies here with even greater force," per the Factum of the Individual Defendants, May 5, 2026, paras. 39–41. The court found that case "highly distinguishable on its facts": among other things, it said, the plaintiff there "was deliberately trying to end run the receivership order, had brought multiple proceedings, and had previously breached a court order," per the Endorsement of Justice Conway, Sept. 29, 2026 (released Oct. 1), para. 11.

The court found the case "more akin" to Great Basin Gold Ltd. (Re), 2015 BCSC 1199, on which the Ontario plaintiff relied, where creditors sued former directors and officers for misrepresentation in public disclosure and the defendants invoked the receivership order's stay. Great Basin's CCAA order had carried a stay in their favour, whose rationale, as the endorsement quotes Justice Fitzpatrick, was that it "acts as an inducement to remain involved in the restructuring." Once the receiver took charge, Justice Fitzpatrick wrote, the directors and officers "were set to depart the scene in that their services were no longer required," and "the rationale behind continuing the stay of proceedings in favour of the directors and officers evaporated." The former directors and officers had not sought a stay in the receivership order, and Justice Fitzpatrick rejected the argument that the action was "in respect of" Great Basin, given pleadings that alleged their personal liability, per the Endorsement of Justice Conway, Sept. 29, 2026 (released Oct. 1), paras. 12–14. The defendants had distinguished Great Basin: the company there was not a named defendant, and its order defined "Property" narrowly, per the Factum of the Individual Defendants, May 5, 2026, para. 42.