



COURT OF APPEAL FOR ONTARIO

CITATION: Kaynes v. BP p.l.c., 2021 ONCA 36

DATE: 20210120

DOCKET: C67782

Feldman, van Rensburg and
    Thorburn JJ.A.

BETWEEN

Peter Kaynes

Appellant (Plaintiff)

and

BP p.l.c.

Respondent (Defendant)

Eli Karp and Hadi Davarinia, for the
    appellant

Laura K. Fric, Kevin OBrien and Karin
    Sachar, for the respondent

Heard: July 16, 2020, by video conference

On appeal from the order of Justice Paul
    M. Perell of the Superior Court of Justice, dated November 8, 2019, with
    reasons reported at 2019 ONSC 6464.

Feldman J.A.:

[1]

The appellant has been attempting to bring a
    Canadian class action against the respondent BP p.l.c. (BP) on behalf of Canadian
    shareholders, based on securities misrepresentations BP made about the safety
    of its drilling operations in the Gulf of Mexico prior to the Deepwater Horizon
    explosion in 2010. The appellant has faced numerous procedural and
    jurisdictional roadblocks. This appeal is from an order that strikes out the
    latest amendment to his statement of claim and essentially ends the litigation.

[2]

The appellants 2019 amendment, which claims
    fraudulent misrepresentation for the first time, was struck out as statute-barred
    pursuant to the
Limitations Act, 2002
, S.O. 2002, c. 24, Sched. B, on
    a motion by BP under r. 21.01(1)(a) of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194. As a consequence, the appellant became disqualified as a
    representative plaintiff for the class, because the claims that remained extant
    and that were allowed to proceed covered a time period that did not include his
    claim.

[3]

This appeal raises two key issues: 1) what are
    the elements of a claim for fraudulent misrepresentation, within the meaning
    of the
Limitations Act,
that must be discoverable in order to commence
    the two-year limitation period? and 2) are there circumstances where an
    amendment to a statement of claim can be dismissed as statute-barred on a
    motion brought under r. 21.01(1)(a)?

[4]

For the reasons discussed below, I agree that it
    is plain and obvious that the appellants new claim for fraudulent
    misrepresentation is statute-barred and that it was appropriate to determine that
    issue on a r. 21.01(1)(a) motion, given the particular pleadings in this case.
    Accordingly, I would dismiss the appeal.

Factual Background and Judicial History

A.

The
Parties

[5]

BP is a U.K. petroleum company whose securities trade on international
    stock exchanges.

[6]

The appellant is a resident of Ontario. On or before August 12, 2008,
    while he was a resident of Alberta, he purchased BP shares over the New York
    Stock Exchange.

B.

The Proposed Class
    Action

[7]

This action emerged from BPs Deepwater Horizon explosion on April 20,
    2010. In broad terms, the appellant alleges that in its securities filings, BP
    made 14 misrepresentations about its operational safety and ability to respond
    to an oil disaster, which had the effect of artificially inflating its share
    price. Following the Deepwater Horizon explosion on April 20, 2010, BP publicly
    corrected these misrepresentations between April 21, 2010 and May 29, 2010,
    leading to a significant drop in BPs share price. In his current statement of
    claim, the appellant seeks to certify a class action on behalf of Canadian
    residents who acquired equity securities in BP on the secondary market from
    February 22, 2008 to April 23, 2010.

[8]

The appellant has filed five different statements of claim in Canada during
    the life of this action: a 2012 Alberta Claim, a 2012 Ontario Claim, a 2013
    Ontario Claim, a 2017 Ontario Claim and, most recently, a 2019 Ontario Claim.
    The important features of each Claim are discussed below.

C.

2012 Alberta Claim

[9]

On April 20, 2012, the first iteration of this proposed class action was
    filed in Alberta. The appellant was a member of the proposed class and was
    added as a plaintiff on May 25, 2012. That claim advanced two causes of action:
    (1) statutory secondary market misrepresentation under Albertas
Securities Act
and (2) common law negligent
    misrepresentation.

[10]

The 2012 Alberta Claim never got off the ground. Under Albertas
Rules
    of Court
, leave is required to serve a defendant outside of Canada. Leave
    was denied on two separate occasions,
September 18, 2012 and November
    14, 2012,
on the basis that the plaintiffs had failed to establish
    that the claim had a real and substantial connection to Alberta.

D.

2012 Ontario Claim

[11]

The
    appellant did not appeal the November 14, 2012 Alberta court decision denying leave
    for service
ex juris
. Instead, on November 15,
    2012, he commenced a similar action in Ontario that advanced two causes of
    action: (1) the statutory cause of action for secondary market
    misrepresentation provided for in Part XXIII.1, s. 138.3 of Ontarios
Securities Act
, R.S.O. 1990, c. S.5, and other equivalent
    provincial securities legislation and (2) common law negligent
    misrepresentation.

[12]

BP
    challenged Ontarios jurisdiction over this matter.

E.

2013 Ontario Claim

[13]

On
    August 9, 2013, while BPs jurisdiction challenge was pending, the appellant
    filed a fresh as amended statement of claim that effectively withdrew the
    common law negligent misrepresentation cause of action.

[14]

On
    October 9, 2013, BPs jurisdictional challenge was initially dismissed.
    However, on appeal, on August 14, 2014, this court in
Kaynes
    v. BP, PLC,
2014 ONCA 580, 122 O.R. (3d), leave to appeal refused,
    [2014] S.C.C.A. No. 452, allowed BPs appeal on the basis of
forum non conveniens

and stayed
    the claim of Canadians who had purchased BP shares on foreign exchanges. Only a
    truncated proposed class action on behalf of shareholders who had purchased
    their shares on the Toronto Stock Exchange was allowed to proceed.

F.

Related U.S.
    Litigation

[15]

While
    the Ontario jurisdiction battle was ongoing, other litigation against BP was
    progressing in the U.S. Most significantly for the purposes of this appeal, on
    September 4, 2014, the District Court for the Eastern District of Louisiana
    held that BP had acted with conscious disregard of known risks and was
    primarily responsible for the oil spill and guilty of gross negligence and
    willful misconduct.

[16]

BP
    appealed this decision. However, on July 2, 2015, BP reached an agreement with
    the U.S. Department of Justice and five U.S. states to resolve nearly all
    claims outstanding against BP from the oil spill. Significantly, this
    settlement resulted in BP abandoning its appeal of the September 4, 2014
    Louisiana District Court decision, which had found that BP engaged in willful
    misconduct.

G.


The Appellant Unsuccessfully Pursues Claims in the U.S.

[17]

In March 2015, after the Supreme Court of Canada
    denied the appellants application for leave to appeal this courts
    jurisdiction decision, he commenced a proposed class action against BP in the
    United States District Court for the Southern District of Texas. He asserted a
    claim for pre-explosion misrepresentations based on Ontarios
Securities
    Act
.

[18]

In response, BP moved to dismiss the appellants
    U.S. action. On September 25, 2015, the Texas Court granted BPs motion and
    dismissed the appellants action, in part because the claim was time-barred by
    the three-year limitation period under Ontarios
Securities Act.

[19]

The
    appellant did not appeal that decision. Instead, on February 26, 2016, he
    brought a motion to lift the stay of his Canadian proceedings in Ontario.

H.

Ontario Stay Lifted

[20]

On
    July 29, 2016, this court in
Kaynes v. BP, P.L.C.
,
    2016 ONCA 601, 133 O.R. (3d) 29, leave to appeal to S.C.C. refused, 36127
    (January 19, 2017), granted the motion to lift the stay, expressing no view on
    the limitations issues.

I.

2017
    Ontario Claim

[21]

On
    June 7, 2017, with the stay lifted, the appellant delivered his second fresh as
    amended statement of claim. The 2017 Claim advanced statutory misrepresentation
    claims solely on the basis of Ontarios
Securities Act
.
    While it added new misrepresentation allegations not referred to in the 2012 or
    2013 Claims, it did not revive the abandoned common law negligent misrepresentation
    cause of action. It also added for the first time, allegations that BP knew that
    its misrepresentations were false when it made them. For example, the 2017
    Claim reads in part (emphasis added throughout):

On May 8, 2007, BP
    released its 2006 Sustainability Report, in which it represented that the OMS
    was a comprehensive Process Safety system that covered all aspects of its
    operations, and that it would apply to all of its operations because the OMS
    was the foundation for a safe, effective, and high-performing operation.

BP and its executive
    officers, including its then-CEO,
knew
that these representations
    (i.e., the OMS Misrepresentation)
were false when made

because BP

had no intention of applying the OMS to all of its North American
    operations, and therefore the OMS did not cover all aspects of BP's operations.
    This representation supported BP's investment quality and share price.

On February 22, 2008, BP
    released its 2007 Annual Review, which is a core document. In the 2007 Annual
    Review, BP represented that with its new CEO, it was focused on three
    priorities: safety, people, and performance. BP further represented that it
    would implement the Process Safety recommendations from the Baker Report.

This core document
    contained the OMS Misrepresentation. At the time this statement was made, BP
    and its new CEO
knew
or ought to have known that BP did not
    intend to implement all of the Baker Reports recommendations, including that
    its integrated and comprehensive process safety management system (i.e. the
    OMS) would not be implemented at all of BPs U.S. operations.



On April 16, 2009, BP
    released its 2008 Sustainability Review and represented that the OMS was
    introduced and completed in the North America Gas, Gulf of Mexico, Columbia and
    the Endicott Field in Alaska.

This core document
    contained the OMS Misrepresentation. At the time it was made, BP
knew
that the OMS would not apply to every BP project site and that BP had migrated
    only one of seven sites in the Gulf of Mexico to the OMS.

This core document also
    contained the Omission. At the time the 2008 Sustainability Review, which
    touted BP's commitment to Process Safety, was released, BP and its management
were
    well aware
that a December 2008 internal strategy document had
    specifically identified numerous Process Safety priority gaps which increased
    the potential for and severity of Process Safety related incidents, but omitted
    to disclose this material fact.



On February 26, 2010, BP released its 2009
    Annual Review, in which it represented that its OMS provided a common framework
    for all of its operations and set out formatted procedures on how to manage
    risks at each BP site.

This core document contained the OMS
    Misrepresentation. At the time this representation was made, BP
knew
that the OMS did not apply to each of BPs sites, that the OMS did not provide
    a group-wide framework to identify and manage operational risks, that the OMS
    was not yet implemented in the Gulf of Mexico



At different times during the Class Period,
    material facts about BP's Process Safety at the Deepwater Horizon and Macondo
    Well, OMS, and OSRP emerged within BP and were made known to its senior
    executives. BP, however, negligently
or intentionally
omitted
    these material facts from its disclosure documents.

[22]

In
    response, BP challenged the timeliness of the statutory misrepresentation
    claims. On September 1, 2017, Perell J. in
Kaynes v. BP, P.L.C.
,
    2017 ONSC 5172, 74 B.L.R. (5th) 49, declared most of the misrepresentation
    claims statute-barred pursuant to s. 138.14 of Ontarios
Securities
    Act
. That section creates an events-based limitation period and
    provides that no action for a misrepresentation shall be commenced later than
    three years after the date on which the misrepresentation was made.

[23]

On
    April 5, 2018, this court in
Kaynes v. BP, P.L.C.
,
    2018 ONCA 337, 81 B.L.R. (5th) 6, dismissed the appeal from Perell J.s
    decision.

[24]

These
    decisions significantly reduced the scope of the proposed class action.
    Originally, the appellant had sought to advance statutory claims based on
    misrepresentations occurring from May 9, 2007 to April 23, 2010 (1,080 days).
    As a result of the s. 138.14 limitation decisions, however, the appellants proposed
    class period was reduced to February 27, 2010 to April 23, 2010 (55 days). Since
    the appellant acquired his BP shares on or before August 12, 2008, his personal
    statutory claims were all statute-barred.

J.

2019 Ontario
    Claim

[25]

The
    appellant delivered another amended statement of claim on September 4, 2019.
    This 2019 Claim is the first Claim to expressly advance a cause of action for
    fraudulent misrepresentation. The 2019 Claim repeats the 14 alleged
    misrepresentations made by BP between May 2007 and April 2010, but further
    pleads that some of the misrepresentations were made by BP with
knowledge of the falsities contained therein or with a reckless
    disregard to learning the accuracy of the representation
. It also added
    an Appendix A with particulars of the fraudulent misrepresentation allegations.

K.

BP
    Challenges the Timeliness of the Fraudulent Misrepresentation Claim

[26]

The
    order under appeal was made on BPs motion under r. 21.01(1)(a) for an order
    declaring the fraudulent misrepresentation claims statute-barred pursuant to
    the
Limitations Act
. In the alternative, BP
    requested that the pleadings be struck as an abuse of process. BP also sought
    to dismiss the balance of the appellants action because his claims fell
    outside the class period and no suitable representative plaintiff had been proposed.

[27]

The
    appellant resisted the motion on two bases. Procedurally, he argued that a
    limitations issue cannot be determined on a r. 21.01(1)(a) motion when
    discoverability is in issue. Substantively, he submitted that it was not plain
    and obvious that his claim was statute-barred.

L.

Motion Judges
    Decision

[28]

The
    motion judge granted BPs motion and dismissed the action. He held that all
    common law misrepresentation claims, whether negligent or fraudulent, were
    discovered when BP made corrective disclosures between March and June 2010. By
    that time, the appellant had discovered that he had suffered a loss due to an
    act of misrepresentation by BP and that a proceeding was an appropriate way to
    seek a remedy. Therefore, the Ontario action that was brought in November 2012
    was commenced too late to advance those claims.

[29]

Alternatively,
    the motion judge found that the appellant would have discovered BPs fraudulent
    intent in 2010 when Canadians and Americans in the U.S. were advancing claims
    based on
scienter
 that is, that BP had fraudulently
    misrepresented its securities to secondary market purchasers.
Scienter
was a necessary component of such claims and
    had to be asserted in order to bring them.
[1]
The motion judge concluded from the existence of such actions in the U.S.
    courts that [b]y 2010,
a reasonable person with the abilities
    and in the circumstances of Mr. Kaynes would have discovered that his cause of
    action in fraudulent misrepresentation had accrued and that having regard to
    the nature of the injury, loss or damage, a proceeding would be [] appropriate.

[30]

The
    motion judge rejected the appellants position that the fraudulent
    misrepresentation claim in the 2019 amended statement of claim was an alternative
    theory of liability arising from facts he had asserted in his prior pleadings,
    including the 2017 amended statement of claim, rather than a new cause of
    action. The motion judge found that 
the essential material
    facts of the fraudulent misrepresentation claim were not pleaded in the earlier
    pleadings.

[31]

Finally,
    the motion judge was satisfied that in the circumstances of this case, it was
    appropriate to determine the limitation issue on a r. 21.01(1)(a) motion. He
    agreed with the appellant that only in the rarest of cases should a court rule
    on a limitation issue before a statement of defence is filed, since it is
    possible that the plaintiff could assert additional facts in the statement of
    claim or reply that would alter the conclusion that a limitation period had
    expired. Nevertheless, he held that he could determine the limitation issue in
    this case under the exception articulated by this court in
Beardsley v. Ontario
(2001), 57 O.R. (3d) 1 (C.A.) which
    held, at para. 21, that a limitation issue can be decided under r. 21.01(1)(a)
    before a statement of defence is filed where it is plain and obvious from a
    review of a statement of claim that no additional facts could be asserted that
    would alter the conclusion that a limitation period had expired.

Issues

[32]

This
    appeal raises four issues:

1.

Did the motion judge err by finding that the common law claims for
    negligent and fraudulent misrepresentation were discoverable by June 2010, once
    BP effectively acknowledged through its corrective disclosure that its statements
    contained misrepresentations? Or, is one of the factual elements of a claim for
    fraudulent misrepresentation that a plaintiff must have discovered under s.
    5(1)(a) of the
Limitations Act
, the fact that
    the defendant knew that the misrepresentation was false?

2.

Did the motion judge err by finding that because of allegations of
scienter

in the U.S.
    actions, it was plain and obvious that the appellant knew or ought reasonably
    to have known that he had a claim in fraudulent misrepresentation more than two
    years before the 2019 amendment?

3.

Did the motion judge err by failing to find that the effect of pleading
    in 2017 that BP knew its representations were false when it made them, was to make
    the appellants pleading of fraudulent misrepresentation in the 2019 amendment
    merely a request for a new remedy but not a new claim that was statute-barred?

4.

Did the motion judge err by proceeding on a motion under r. 21.01(1)(a)
    to decide a limitation issue?

[33]

As
    I will expand on below, I would answer these questions as follows:

1.

The motion
judge erred in his discovery analysis. A claim for fraudulent
    misrepresentation is only discovered under s. 5 of the
Limitations Act
if the plaintiff knows, or ought to have known, that the defendant knew that
    the misrepresentation was false.

2.

In the context of this motion, the motion judge improperly relied on
    U.S.
scienter

pleadings
    to make a factual finding about discoverability.

3.

The fraudulent misrepresentation claim in the 2019 amended statement of
    claim is a new, statute-barred claim.

4.

The motion judge did not err in deciding the limitations issue in this
    case under a r. 21.01(1)(a) motion because, due to the particular pleadings of
    this case, there were no disputed material facts at issue.

Analysis

A.

Standard of Review

[34]

As
    this is an appeal from an order on a r. 21.01(1)(a) motion, I agree with both
    parties positions that the standard of review requires this court to determine
    whether the motion judge was correct to find that the appellants claim for
    fraudulent misrepresentation in its 2019 amended statement of claim is statute-barred.

Issue 1:
    Is one of the elements of a claim for fraudulent misrepresentation that a
    plaintiff must have discovered under s. 5(1)(a) of the
Limitations
    Act
, the fact that the defendant knew that the misrepresentation
    was false?


I.

The Limitation Period Runs From the Date a Claim is Discovered

[35]

Under s. 4 of the
Limitations Act
, a
    proceeding may not be commenced more than two years after the claim is
    discovered. A claim is defined in s. 1 as:

a claim to remedy an injury, loss or damage
    that occurred as a result of an act or omission.

[36]

Under s. 5(1)(a) of the
Limitations Act,
a claim is discovered when the person first knew (or reasonably ought to have
    known) the following four elements: (i) the occurrence of the injury, loss or
    damage, (ii) that it was caused by or contributed to by an act or omission,
    (iii) that the act or omission was by the defendant, and (iv) based on the
    nature of the injury, loss or damage, a proceeding would be an appropriate
    means to seek a remedy. Under s. 2(1), the
Limitations Act
applies to
    claims pursued in court proceedings.

[37]

As a number of commentators and judges have
    discussed, unlike the former
Limitations Act
, R.S.O. 1990, c. L.15, the
    current
Limitations Act
does not refer to a cause of action as the
    starting point for the commencement of the limitation period. Rather, the commencement
    of the limitation period is based on the discoverability of a claim, and a
    claim is discovered when the plaintiff discovers the generic elements of a
    claim that are set out in s. 5(1)(a), or reasonably ought to have discovered
    them (s. 5(1)(b)): see, for example:
Hare v. Hare
(2006)
,
83
    O.R. (3d) 766 (C.A.), at para. 29,
per
Gillese J.A., and paras. 61,
    75,
per
Juriansz J.A., dissenting;
Placzek v. Green,
2009
    ONCA 83, 307 D.L.R. (4th) 441, at para. 25;
Apotex Inc. v. Nordion
    (Canada) Inc.
, 2019 ONCA 23, 431 D.L.R. (4th) 262, at paras. 84-86;

Daniel
    Zacks, Claims, Not Causes of Action: The Misapprehension of Limitations
    Principles (2018) 48 Adv. Q. 168; Stephen Cavanagh, Appropriate means in s.
    5(1)(a)(iv) of the
Limitations Act, 2002
 (2019) 39th Annual Civil
    Litigation Conference.

[38]

Nevertheless, numerous Ontario judgments that have
    considered when a claim is discovered under the
Limitations Act
have done
    so with reference to when the cause of action arose. See, for example:
Hamilton
    (City) v. Metcalfe & Mansfield Capital Corp.
, 2012 ONCA 156, 290
    O.A.C. 42, at paras. 14, 35;
Liu v. Wong
, 2016 ONCA 366, at paras. 7-8,
    leave to appeal refused, [2016] S.C.C.A. No. 264;
Colin v. Tan
, 2016
    ONSC 1187, 81 C.P.C. (7th) 130, at para. 63;
Unicorr Limited v. Minuk
    Construction & Engineering Limited
, 2016 ONSC 7350, 82 R.P.R. (5th)
    47, at para. 69, affd 2017 ONCA 757;
T.W. Marsh Well Drilling &
    Service Inc. v. Ashburn
, 2017 ONSC 2531 (Div. Ct.), at para. 14. Academic
    treatises have done the same. For example, in the authoritative text,
The
    Law of Limitations
, the authors treat claim as encompassing a cause of
    action: Justice Graeme Mew, Debra Rolph & Daniel Zacks,
The Law of
    Limitations
, 3rd ed. (Toronto: LexisNexis, 2016). At
§
3.2-3.3 they state:

Traditionally, a cause of action accrued and
    hence, a limitation period started to run, when all of the elements of a wrong
    existed, such that an action could be brought.

The commencement was expressed in terms of the
    accrual of the cause of action, but has recently been modified in many cases to
    instead reflect the time when a claim was first discovered by the person with
    the claim,
i.e.
, when a plaintiff became aware of the cause of action
and
remedy available.

[39]

Additionally, in the discussion of
    discoverability principles under s. 5 of the
Limitations Act
, at
§
3.107, the authors state: Another
    issue that arises is whether section 5 applies to all causes of action, or just
    to those governed by the basic limitation period.

[40]

I agree that the
Limitation Act
s
    introduction of discovery of a claim as the triggering mechanism for the
    commencement of the limitation period has not done away with any role for causes
    of action. As I will explain, under s. 5(1)(a)(ii) of the
Limitations Act
,
    one of the matters that is required for the discovery of a claim is: that
    the injury, loss or damage was caused by or contributed to by
an act or
    omission
 (emphasis added). Because a claim necessarily involves seeking a
    legal remedy in a court proceeding, the act or omission that must be discovered
    is one that will give rise to a legal remedy,
i.e.
, a cause of action.
    In the case of a fraudulent misrepresentation, the act or omission is a knowing
    misrepresentation.


II.

The Significance of the Removal of Cause of Action

[41]

The Supreme Court of Canada introduced the general
    applicability of discoverability for limitation purposes into the
    interpretation and application of limitation statutes in its decisions in
Kamloops
    (City) v. Nielsen,
[1984] 2 S.C.R. 2 and
Central & Eastern Trust
    Co. v. Rafuse
, [1986] 2 S.C.R. 147. The common law discoverability rule
    provided that a plaintiffs
cause of
    action would be discovered for the purposes of a limitation period when 
the material facts on which it is based
    have been discovered or ought to have been discovered by the plaintiff by the
    exercise of reasonable diligence:
Rafuse
, at p. 224.
The
    rule was developed to avoid the injustice of precluding an action before a
    person is able to raise it:
Peixeiro v. Haberman
, [1997] 3 S.C.R. 549,
    at para. 36.
[2]

[42]

Ontarios new
Limitations Act
makes discoverability
    a statutory requirement. It incorporates discoverability into the date for
    commencement of the limitation period, but refers to the discoverability of a
    claim rather than a cause of action, based on the recommendation of the
    Limitations Act Consultation Group to the Attorney General contained in
Recommendations
    for a New Limitations Act
(Toronto: Ministry of the Attorney General of
    Ontario, 1991). The report explains the proposed change as follows, at p. 17:

The term claim is used throughout the
    recommendations in place of cause of action primarily to mark the departure
    from a limitations system where different causes of action are subject to
    different starting points and periods of different duration. Otherwise, claim
    is not substantially different from cause of action.

[43]

Accordingly, there is nothing in the
    Consultation Groups report that demands treating claim for limitations
    purposes as unconnected to a plaintiffs particular cause of action. Indeed, attempting
    to do so would fit uncomfortably with basic civil procedure, as causes of
    action have not become extinct for pleading purposes. A pleading may be struck
    out if it discloses no reasonable cause of action: r. 21.01(1)(b).

[44]

It seems to me therefore, that the first issue
    is what is the relationship between discovering a claim for the purposes of the
Limitations Act
, and having the factual information necessary to
    assert a cause of action in an originating pleading? Does a person who seeks to
    commence a timely proceeding for a claim to obtain a remedy based on a legal
    right to seek that remedy,
i.e.
a cause of action, need to have
    discovered facts to substantiate each element of the particular cause of action
    in order to have discovered their claim to a remedy, within the meaning of the
Limitations
    Act
? In my view, the answer is yes.

[45]

An examination of the language used in r. 25.06,
    the rule that governs the contents of a pleading, is instructive. Instead of
    using cause of action as in r. 21.01(1)(b), r. 25.06 uses claim, a term
    not defined in the
Rules of Civil Procedure
, and defence. Rule
    25.06(1) requires a pleading to contain the material facts on which the party
    relies for the claim or defence. And, where conditions of mind such as fraud
    and misrepresentation are alleged, r. 25.06(8) requires that full particulars
    must be pleaded except that knowledge may be alleged as a fact.

[46]

Therefore, while the rule uses the term claim,
    the contents of a proper initiating pleading asserting a claim for a remedy contemplated
    by the rule will include the legal elements to support a claim,
i.e.
,
    a cause of action.

[47]

Similarly, while the
Limitations Act
no
    longer uses the term cause of action, for the reason explained by the Attorney
    Generals Consultation Group, both the definition of claim and the components listed
    in s. 5(1)(a) that have to be discovered before the limitation period commences
    to run in respect of a claim, still require the discovery of the elements of a
    cause of action that will give rise to a legal remedy.

[48]

I refer, in particular, to the definition of
    claim, which is defined to mean a claim to remedy an injury, loss or damage resulting
    from
an act or omission
, and the requirement in s. 5(1)(a)(ii) to
    discover
the act or omission
as one of the discoverability elements. Because
    only a wrongful act or omission gives the affected person the right to a remedy
    in a court proceeding, discovery of the act or omission must include discovery
    of the wrongful aspect of it that gives rise to the legal right to the particular
    remedy being claimed. And under s. 5(1)(a)(iv), for the limitation period to
    commence, a proceeding must be an appropriate means to seek a remedy. That will
    only be the case when the claimant is able to plead a cause of action that
    gives rise to a remedy.

[49]

The fact that the act or omission must be
    wrongful is confirmed by the language of s. 18(1) that deals with contribution
    and indemnity, where the defendant of a claim is referred to as an alleged
    wrongdoer. That section provides:

For the purposes of subsection 5 (2) and
    section 15, in the case of a claim by one alleged wrongdoer against another for
    contribution and indemnity, the day on which the first alleged wrongdoer was
    served with the claim in respect of which contribution and indemnity is sought
    shall be deemed to be the day the act or omission on which that alleged
    wrongdoers claim is based took place.

[50]

All of the above indicates that, although the
Limitations
    Act
no longer uses the term cause of action, the purpose of removing
    that language was to signal a departure from establishing different limitation
    periods for different causes of action, but not to undermine the basic
    structure of the civil procedure process, where a proceeding to obtain a remedy
    at law must include all of the components of the cause of action that would
    entitle the claimant to that remedy. The
Limitations Act
and the
Rules
    of Civil Procedure
must work harmoniously together. It would have taken
    clear and explicit language to indicate that the Legislature intended otherwise.
    There is no such language in the
Limitations Act
, nor would there be
    any purpose in doing so.

[51]

In my view, the focus of the analysis should not
    be on the removal of the specific reference to a cause of action, but instead,
    on the purpose of introducing the claim concept. That concept includes the
    definition of claim as well as the four discoverability components. The
    Legislature introduced the concept of a claim in the
Limitations Act
to
    provide a universal framework for discoverability that transcends the
    requirements for particular causes of action. The introduction of this concept,
    however, did not make the particular causes of action pursued in a legal
    proceeding irrelevant for the s. 5 discovery analysis.

[52]

To that end, in addition to an act or omission
    that will give rise to a remedy, for limitations purposes, the
Limitations
    Act
also requires that certain common factors must be discovered before
    the limitation period will begin to run, even though all of those factors may
    not be required to establish any particular cause of action and the right to a
    remedy for that cause of action.

[53]

For example, the most significant common factor for
    a claim is loss or damage. Consequently, for causes of action such as breach of
    contract where loss or damage is not required, no claim arises for limitation purposes
    and the limitation period does not commence until loss or damage is suffered
    and the person discovers that they suffered loss or damage: see, for example,
Apotex
    Inc.
, at paras. 84-86. That does not mean, however, that a plaintiff is
    precluded from issuing a statement of claim for breach of contract before
    suffering damage, because for pleading purposes, the cause of action does not
    require damage.

[54]

The other new significant common factor for
    discovery of a claim is in s. 5(1)(a)(iv), which states:

that, having regard to the nature of the
    injury, loss or damage, a proceeding would be an appropriate means to seek to
    remedy it.

[55]

This is another extra component for the
    discovery of a claim that is not part of any cause of action.

[56]

Of course, it is always a question of fact at
    what point a claimant had or ought to have had sufficient knowledge of each of
    the factors to trigger the commencement of the limitation period. The claimant
    need not know to a certainty that the defendant will be found liable  that is
    the issue to be determined by the trier of fact. As this court stated in
Lawless
    v. Anderson,
2011 ONCA 102, 276 O.A.C. 75, at para. 23:

Determining whether a person
    has discovered a claim is a fact-based analysis. The question to be posed is
    whether the prospective plaintiff knows enough facts on which to base an
    allegation of negligence against the defendant. If the plaintiff does, then the
    claim has been discovered, and the limitation begins to run
: see
Soper v. Southcott
(1998), 39 O.R. (3d) 737 (C.A.)
    and
McSween v. Louis
(2000), 132 O.A.C. 304 (C.A.).
[3]

[57]

In summary, the
Limitations

Act
uses the discovery of a claim as the triggering mechanism for the commencement
    of the limitation period. Discovery of a claim includes components that may not
    be requirements of any particular cause of action, such as injury, loss or
    damage (s. 5(1)(a)(i)), and that having regard to the nature of the injury loss
    or damage, a proceeding would be an appropriate means to remedy it (s.
    5(1)(a)(iv)).

[58]

However, the second component, that the injury
    loss or damage was caused by an act or omission (s. 5(1)(a)(ii)), read together
    with the definition of claim, which is a claim to remedy the injury, loss or
    damage that occurred as a result of the act or omission (s. 1), and with the
    requirement that the claim must be pursued in a court proceeding (s. 2(1)),
    incorporates the requirement for a legally recognized basis to make the claim,
    known as a cause of action.


III.

Application of Principles

[59]

For fraudulent misrepresentation, the act or
    omission that the claimant must discover is that the misstatement that caused
    the damage was made with knowledge that the representation was false, an
    absence of belief in its truth or recklessness as to its truth:
Midland
    Resources Holding Limited

v. Shtaif,
2017 ONCA 320, 135 O.R. (3d)
    481, at para. 162, leave to appeal refused, [2017] S.C.C.A. No. 246.
[4]

[60]

In this case, the amended pleading in 2019 added
    a claim for fraudulent misrepresentation. Relying on the same 14 misstatements by
    BP that formed the basis of the original negligent misrepresentation claim and
    the statutory misrepresentation claim, the 2019 amendment claimed that documents
    were released by BP with knowledge of the falsities contained therein or with
    a reckless disregard to learning the accuracy of the representation. For the
    first time the appellant claimed damages based on fraud.

[61]

The motion judge found that the claim for
    fraudulent misrepresentation was statute-barred. He based his conclusion on the
    following analysis:

[A]round June 1, 2010, presumptively and also
    subjectively and objectively factually, Mr. Kaynes discovered he had a claim
    against BP. He subjectively knew that [BPs] misconduct had caused him harm and
    he knew that court proceedings would be appropriate. For the purpose of the
    commencement of limitation periods, it was not necessary for Mr. Kaynes to put
    a cause of action name to his claim. Whatever way the statement of claim was
    later framed to name a cause of action, the claim to which the cause of action
    was connected had been discovered in 2010 and the limitation period clock was
    running.

In other words, having discovered a claim in
    2010, Mr. Kaynes had two years to plead the misconduct connected to the claim
    by pleading the material facts of negligence, negligent misrepresentation,
    fraudulent, misrepresentation, an oppression remedy, nuisance, or whatever. For
    the purpose of commencing a proceeding, however he might label his claim as a
    cause of action in a statement of claim, the limitation period for the claim
    was running by June 1, 2010. As it happened, albeit late, in November 2012, Mr.
    Kaynes pleaded a cause of action for negligent misrepresentation in Ontario,
    and he gave his claim a cause of action name, but regardless of its name in
    accordance with the principles of the
Limitations Act, 2002
, the
    negligent misrepresentation claim was already statute barred. A fraudulent
    misrepresentation claim had it been pleaded in November 2012 in Ontario would
    also have been statute barred.

[62]

From this passage, it appears that the motion
    judges analysis is that by 2010 the appellant had discovered all of his
    misrepresentation claims for the purposes of the
Limitations Act
, because
    he knew then that BP had made false statements. He characterized fraudulent and
    negligent misrepresentation claims as merely different labels that would apply
    to the appellants claim based on the same material facts.

[63]

I would reject this analysis of the operation of
    the
Limitations Act
in respect of a claim for fraudulent
    misrepresentation as an error of law. In my view, the defendants knowledge
    that the misrepresentation was false, or at a minimum, its recklessness as to
    whether the misrepresentation was false, is a relevant material fact underlying
    any claim for fraudulent misrepresentation. If the motion judges approach were
    correct, it would mean in the case of a misrepresentation, that the claimant
    would be required to commence an action alleging fraud within two years of the
    misrepresentation, whether or not he knew or ought reasonably to have known of
    the defendants fraudulent intent, in order to preserve the limitation period
    for fraudulent misrepresentation. Of course, as well as being non-compliant
    with the pleadings rule, such a requirement would fly in the face of the well-established
    common law principle that a party must only plead fraud when they can
    substantiate the claim, or risk an award of substantial indemnity costs:
Unisys
    Canada Inc.

v. York Three Associates Inc.
(2001), 150 O.A.C. 49
    (C.A.), at para. 15;
Catford v. Catford
, 2013 ONCA 58, at para. 4.


IV.

Conclusion: Issue 1

[64]

In summary, under s. 5(1)(a)(ii) of the
Limitations
    Act
, one of the matters that is required for the discovery of a claim
    is: that the injury, loss or damage was caused by or contributed to by
an
    act or omission
 (emphasis added). Because a claim necessarily involves a
    legal remedy, the act or omission that must be discovered is one that will give
    rise to a legal remedy,
i.e.
, a cause of action.

[65]

Therefore, in the case of a fraudulent
    misrepresentation, the act or omission is a knowing misrepresentation. It would
    make no sense to require a person to commence an action for fraudulent
    misrepresentation without the legal basis for doing so, in order to preserve
    the limitation period. That is neither the intent nor the effect of the
Limitations
    Act
. The motion judge erred by concluding otherwise.

Issue 2: Did the motion judge err by finding that because of
    allegations of
scienter
in the U.S. actions it was plain and obvious that the appellant
    knew or ought reasonably to have known that he had a claim in fraudulent
    misrepresentation more than two years before the 2019 amendment?

[66]

The motion judge found, effectively in the
    alternative, that in any event, the appellant had discovered that BP knew its misstatements
    were false by 2010. The motion judge reasoned that because of related
    litigation in the U.S., where an action for misstatements in the securities
    disclosure context requires a pleading of 
scienter
,
i.e.,
knowing falsehood, that based on the pleading of 
scienter
, the
    appellant ought to have known that BP knew its misrepresentations were false.

[67]

I agree with the appellant that this factual finding
    was not available to the motion judge on this r. 21.01(1)(a) motion. In the
    face of the 
scienter
 pleading, which was a requirement of the action
    in the U.S. actions, BP continued to deny knowledge until July 2015. The
scienter
pleading on its face was not determinative of the knowledge issue. A
    factual inquiry was required. It was not open to the motion judge to make that
    factual finding in the context of this motion, because there would be an issue whether
    a reasonable person in the appellants position ought to have known about BPs
    fraud more than two years before he pleaded fraud, based on the U.S. pleading
    or other available information that the US plaintiffs may have had when they
    pleaded
scienter
.

Issue 3: Was the fraudulent misrepresentation claim in the 2019
    amended statement of claim merely a claim for a new remedy based on facts already
    pleaded in the 2017 amended statement of claim and therefore not out of time?

[68]

The appellant only expressly sought a remedy for
    fraudulent misrepresentation in his 2019 amended statement of claim.
    Nevertheless, he submits that the fraud claim is timely because his 2019
    pleading of fraud is not a new claim but an alternative theory of liability
    based on facts pleaded in prior statements of claim, particularly in the 2017
    amendment, filed June 7, 2017.

[69]

In the 2017 amendment (which asserted only a
    claim for statutory misrepresentation), the appellant added some factual
    allegations, including that BP made the misrepresentations knowing they were
    false. He says that these additional allegations were timely in 2017 because they
    were pleaded within two years of his discovery of BPs fraud on July 2, 2015,
    the date BP settled a number of actions in the U.S. and abandoned an appeal
    from a decision which found that BP had acted with conscious disregard of
    known risks and was guilty of gross negligence and willful misconduct.

[70]

Even though the appellant did not add a claim of
    fraud or seek a remedy for fraudulent misrepresentation in the 2017 amended
    pleading, he submits that because he had already pleaded the element of
    knowledge of the fraud in the 2017 amendment in a timely fashion, the claim
    based on fraud in the 2019 amendment is not a new claim within the meaning of
    the
Limitations Act
, and it is not out of time.

[71]

I would not give effect to this argument. The
    2017 amended pleading states at para. 3 that the action seeks damages pursuant
    to ss. 138.3(1)(a) and 138.3(2)(a) of Ontarios
Securities Act.
While
    the 2017 amended statement of claim pleaded in various paragraphs that BP
    knew or was aware of certain facts, the pleading of knowledge was entirely
    in the context of the statutory claims that were asserted in that pleading. Moreover,
    the 2017 amended claim does not plead all of the necessary material facts for a
    common law fraudulent misrepresentation claim, including reliance.

[72]

The 2019 pleading claiming fraudulent
    misrepresentation is not simply an alternative theory of liability based on the
    same facts, or a claim for different relief based on the same factual matrix as
    what is pleaded in the 2017 amended claim. It is not a different or new legal
    characterization of the same wrong as the claim for statutory
    misrepresentation. This is underscored by his amendment to para. 3 which, after
    referring to the statutory claims asserted in the action states that the appellant
    also advances a claim for common law fraud. Rather, it asserts a fundamentally
    different claim: see
1100997 Ontario Ltd. v. North Elgin Centre Inc.
,
    2016 ONCA 848, 409 D.L.R. (4th) 382, at paras. 20-21, 36.

[73]

I would therefore reject this ground of appeal.

Issue 4: Did the motion judge err by proceeding on a motion under r.
    21.01(1)(a) of the
Rules of Civil Procedure

to determine whether a claim was statute-barred?

[74]

There are a number of decisions of this court, decided
    since the enactment of the
Limitations Act
, that suggest that discoverability
    issues should rarely, if ever, be decided on a motion under r. 21.01(1)(a)
    unless pleadings are closed and the facts are undisputed: see:
Beardsley
,
    at para. 21;
Tran v. University of Western Ontario,
2016 ONCA 978, 410
    D.L.R. (4th) 527, at paras. 18-21;
Salewski v. Lalonde
, 2017 ONCA 515,
    137 O.R. (3d) 762, at paras. 42-45;
Clark v. Ontario (Attorney General)
,
    2019 ONCA 311, 56 C.C.L.T. (4th) 1, at paras. 42, 46-48, leave to appeal to
    S.C.C. granted and appeal heard (on other issues) and reserved October 15, 2020,
    38687.

[75]

In this proposed class action proceeding, BP has
    not yet delivered a statement of defence because it is not required to do so
    until the appellant has obtained leave to assert his statutory claim under Part
    XXIII.1 of Ontarios
Securities Act
: see:
Vaeth v. North American
    Palladium Ltd.
, 2016 ONSC 5015, at paras. 13-15. Therefore, pleadings are
    not closed.

[76]

While r. 21.01(1)(a) refers to the determination
    of a question of law, where the facts regarding discovery of the claim are
    undisputed so that the determination of the issue is plain and obvious, then whether
    the action is statute-barred is considered a question of law that can be
    determined on a r. 21.01(1)(a) motion.

[77]

A recent example of this is an earlier appeal decision
    in this action,
Kaynes v. BP,

P.L.C.,
2018 ONCA 337, 81
    B.L.R. (5th) 6, where the court found that it was plain and obvious that some
    of the statutory claims, where the limitation period runs from the date the misrepresentation
    was made, were

statute-barred. One
    of the arguments on that appeal was the same one made here, that the issue
    should not be decided on a r. 21 motion before a defence is filed and the facts
    are ascertained. In rejecting that submission, the court stated at para. 13:

The appellant submits that
    this case was not appropriate for determination as a Rule 21 motion. We
    disagree. In a case such as this where the parties agree that there are no
    material facts in dispute, it is an efficient use of court resources to
    determine limitations defences on a Rule 21 motion.

[78]

Two other recent cases have discussed and
    applied the no facts in issue exception to the rule.
In
Davidoff v. Sobeys Ontario
,

2019 ONCA 684,
    leave to appeal to S.C.C. refused, 38953 (April 9, 2020), the plaintiff issued
    a statement of claim on November 1, 2017, seeking to sue Sobeys Ontario for
    wrongful dismissal. Both parties agreed that the claim was discoverable by the
    date of the plaintiffs termination of employment  October 6, 2015  which
    made the claim presumptively statute-barred. The plaintiff argued, however,
    that a letter he had mailed to Sobeys and its legal counsel on September 29,
    2017 was a notice of action, and therefore the action was timely.

[79]

After concluding that the letter did not constitute a notice of action,
    the court found that the limitation issue could be determined under r. 21.01(1)(a),
    since both parties agreed on the date that the claim became discoverable. Because
    the date of discovery was not in issue, the court applied the above-quoted
    reasoning from
Kaynes v. BP, P.L.C.
(2018).

[80]

The other recent decision is
Brozmanova v.
    Tarshis
, 2018 ONCA 523, 81 C.C.L.I. (5th) 1, where the plaintiffs
    claim pleaded the date when she learned about the fraudulent conduct of the
    defendant that was the subject of the claim. In that case, a statement of
    defence had been filed that challenged factual assertions in the statement of
    claim. The court suggested that a motion for summary judgment under r. 20 might
    have been the preferable procedure to use because the parties had joined issue
    on disputed facts. However, because the date of discovery of the claim was not one
    of the disputed facts, it was not improper for the defendant to have moved
    under r. 21.01(1)(a) to strike the claim as statute-barred.

[81]

In establishing the main rule that a claim should not normally be
    struck out as statute-barred using r. 21.01(1)(a), the courts have noted that
    discoverability issues are factual and that the rule is intended for legal
    issues only where the facts are undisputed. It would therefore be unfair to a
    plaintiff where the facts are not admitted, to use this rule, which does not
    allow evidence to be filed except with leave or on consent. But where a
    plaintiffs pleadings establish when the plaintiff discovered the claim, so
    that that issue is undisputed, then the courts have allowed r. 21.01(1)(a) to
    be used as an efficient method of striking out claims that have no chance of
    success, in accordance with the principle approved in
Knight
    v. Imperial Tobacco Canada Ltd.
, 2011 SCC 42, [2011] 3 S.C.R. 45,
    at para. 19.

[82]

Applying these principles to this case, the appellant pleaded in
    the 2019 draft reply document that it filed on the motion, a number of
    alternative dates which it says revealed that BPs misconduct was fraudulent.
    The latest event date that the draft reply identifies is July 2, 2015, when BP
    settled a number of actions in the U.S. and abandoned an appeal of a decision that
    found that it had acted with conscious disregard of known risks. The
    appellant pleaded that up until that date, BP had fraudulently concealed that
    its misstatements were made knowingly between 2008 and 2010. By pleading this
    fact, the appellant has conceded the latest date when it discovered or
    reasonably could have discovered BPs fraudulent conduct was July 2, 2015, more
    than two years before the 2019 amended statement of claim.

[83]

Finally, the appellants alternative pleading in
    his 2019 draft reply, that BP fraudulently concealed the fraudulent nature of
    the misrepresentation alleged until less than two years prior to the new
    amendments in September of 2019 does not alter this result. Nothing further is
    pleaded to support this conclusory statement. In
Das v. George Weston
    Limited
, 2018 ONCA 1053, 43 E.T.R. (4th), leave to appeal refused, [2019]
    S.C.C.A. No. 69, this court explained, at para. 74, that 
while the material facts that are pleaded
    in the statement of claim are assumed to be true for purposes of a motion to
    strike, bald conclusory statements of fact and allegations of legal conclusions
    unsupported by material facts are not. The motion judge was not bound to
    accept the appellants position that this fraud claim was only discovered in
    the preceding two years, since that position was pleaded without the support of
    any material facts.

[84]

Accordingly, as the July 2015 date is not in dispute, it is plain
    and obvious that the appellants claim for fraudulent misrepresentation in the 2019
    amended statement of claim is out of time and statute-barred. On that basis, I
    agree with the conclusion of the motion judge that the issue can be determined
    on a r. 21.01(1)(a) motion, and that the 2019 amended claim must be struck on
    that basis.

Result

[85]

For these reasons, I would dismiss the appeal
    with costs to BP fixed at $20,000, as agreed to by the parties.

Released: January 20, 2021 (K.F.)

K.
    Feldman J.A.

I
    agree. K. van Rensburg J.A.

I agree. Thorburn J.A.





[1]
In the
    U.S., investors rely on SEC Rule 10b-5, 17 C.F.R. s.240.10b-5, under s.10(b) of
    the
Securities Exchange Act of 1934
,
    to bring actions for misrepresentation in continuous disclosure. A plaintiff in
    a U.S. court must plead and prove
scienter
,
    namely an intent to deceive, manipulate or defraud:
Ernst & Ernst v. Hochfelder
, 425 U.S.
    185 (U.S. Sup. Ct. 1976). See:
Yip v. HSBC
    Holdings plc
, 2017 ONSC 5332, at para. 69.



[2]
Most
    recently, the Supreme Court of Canada discussed how the discoverability rule
    applies to extend the limitation period for causes of action granted by s.
    36(1)(a) of the
Competition Act
, R.S.C., 1985, c. C-34, in
Pioneer
    Corp. v. Godfrey
, 2019 SCC 42, 437 D.L.R. (4th) 383.



[3]

The
    Supreme Court of Canada has granted leave to appeal from the decision of the
    Court of Appeal of New Brunswick in
Province of New Brunswick v. Grant Thornton
,
2020
    NBCA 18, 54 C.P.C. (8th) 271, leave to appeal granted, 39182 (August 13, 2020)
    on the issue of the extent of a plaintiffs knowledge or discovery of the facts
    of negligent misstatement that will be sufficient to trigger the commencement
    of the limitation period.



[4]
Section 5(2) incorporates a presumption that the claimant knew all the
    discoverability components of a claim in s. 5(1)(a) on the day the act or
    omission took place, unless the contrary is proved, while s. 5(1)(b)
    incorporates into the discoverability analysis, when a reasonable person with
    the abilities and in the circumstances of the claimant ought to have known all
    of the s. 5(1)(a) discoverability components of a claim. For fraudulent
    misrepresentation, that would include the knowledge of falsity component.


