



COURT OF APPEAL FOR ONTARIO

CITATION: Kaynes v. BP P.L.C, 2016 ONCA 601

DATE: 20160729

DOCKET: M46202 (C57876)

Sharpe, Simmons and Benotto JJ.A.

BETWEEN

Peter Kaynes

Respondent (Moving Party)

and

BP, P.L.C.

Applicant (Responding Party)

Joseph Groia, Martin Mendelzon, and Matthew Stroh, for
    the Moving Party

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

Heard: June 22, 2016

Motion to lift the stay of an action ordered by this Court
    on August 14, 2014.

By the Court:

[1]

The moving party, Peter Kaynes, seeks an order lifting the stay of
    proceedings granted by this court on August 14, 2014: see
Kaynes v. BP,
    PLC,
2014 ONCA 580, 122 O.R. (3d) 162, leave to appeal to SCC dismissed,
    2015 CanLII 14728. That stay was based upon our conclusion that Ontario should
    decline to exercise jurisdiction over a claim relating to securities purchased
    on foreign stock exchanges on the ground of
forum non conveniens
. The
    moving party submits that new circumstances have arisen that make it unjust to
    maintain the stay and that accordingly, it should be lifted.

Background facts

[2]

The moving party is the named plaintiff in a proposed Ontario class
    action, claiming damages for alleged misrepresentations made to shareholders by
    the respondent BP, P.L.C. (BP). These alleged misrepresentations were made
    both before and after the April 2010 Deep Water Horizon explosion and oil spill
    that occurred in the Gulf of Mexico. The moving party purchased his BP
    securities on the New York Stock Exchange (NYSE) and the proposed Ontario class
    includes world-wide purchasers of BP securities.

[3]

BPs motion to stay the action for want of jurisdiction or on grounds of
forum non conveniens
was dismissed: 2013 ONSC 5802. On appeal from
    that decision to this court, BP conceded that Ontario could entertain claims
    relating to securities purchased on the Toronto Stock Exchange but resisted
    Ontario jurisdiction over claims relating to securities purchased on non-Canadian
    exchanges. In our August 14, 2014 decision, we allowed BPs appeal, having concluded
    that Ontario did have jurisdiction to entertain claims arising from securities
    purchased on non-Canadian exchanges, but that BP had shown that Ontario was not
    a convenient forum.

U.S. proceedings before the stay was granted

[4]

There is a pending class action in the U.S. District Court, Southern
    District of Texas (U.S. District Court). The class in that proceeding
    includes the moving party and other Canadian investors who purchased BP
    securities on the NYSE. Pursuant to an order made under the U.S.
Private
    Securities Litigation Reform Act of 1995
, Pub. L. 104-67, 109 Stat. 737
    (codified as amended in scattered sections of 15 U.S.C.), all litigation
    arising from the BP  Gulf of Mexico oil spill has been directed to the same
    judge in the U.S. District Court.

[5]

The U.S. class action claim, as originally framed, included both pre-
    and post-explosion claims. Claims for the period before November 8, 2007 were substantively
    dismissed. Prior to our stay decision, the U.S. class action judge had
    certified claims relating to post-explosion misrepresentations but refused to
    certify claims relating to pre-explosion misrepresentations. After we granted
    the stay, an appeal from the decision refusing to certify the pre-explosion
    claims was dismissed as was a
certiorari
application to the Supreme
    Court of the United States.

Post-stay order proceedings in the U.S. District Court

[6]

The moving party asks us to lift the stay to permit him to proceed with
    his proposed class action relating to pre-explosion claims on behalf of all
    Canadian investors. The moving party argues that we should lift the stay on
    account of the following post-stay developments.

[7]

After our stay decision, the moving party commenced a class proceeding
    in the U.S. District Court asserting a claim for pre-explosion representations
    based upon the
Ontario Securities Act
, R.S.O. 1990, c. S.5. BP
    successfully moved to have that proceeding dismissed on two grounds. First, the
    U.S. District Court judge ruled that pursuant to an order made in December
    2010, the Court had appointed lead plaintiffs to represent the class, thereby
    vesting the lead plaintiff[s] with authority to exercise control over the
    litigation as a whole and granting them sole authority to determine what
    claims to pursue on behalf of the class. The lead plaintiffs had not brought a
    pre-explosion claim based upon Ontario securities law. The U.S. District Court
    judge ruled that as the moving party and his proposed Canadian class were
    members of the class represented by the lead plaintiffs, he was not entitled to
    now assert a separate class action based upon a claim that the lead plaintiffs
    had not pursued. Second, the U.S. District Court judge ruled that the moving
    partys claim was time-barred under the
Ontario Securities Act
.

[8]

The U.S. District Court judge made it clear that the moving party and
    other members of his proposed class are free to pursue individual claims in the
    U.S. District Court based on Ontario securities law, subject to any defences BP
    may advance, including the limitations defence.

[9]

The moving party did not appeal the decision dismissing the class
    action.

Issue

[10]

The central issue on this motion is whether the facts surrounding the
    moving partys unsuccessful attempt to pursue a class action for pre-explosion
    misrepresentations in the U.S. District Court constitute facts arising after
    our stay decision that justify or require us to set it aside to avoid an
    injustice.

Analysis

[11]

It is common ground that the court has jurisdiction to set aside or vary
    an order on the basis of facts arising or discovered after the order was
    made: see Rule 59.06(2)(a). A stay granted on grounds of
forum non
    conveniens
is not necessarily permanent and the court has inherent
    jurisdiction to lift the stay where circumstances later develop that make it
    unjust to continue the stay:
Quadrangle Holdings Ltd. v. Coady
, 2013
    NSSC 416, 339 N.S.R. (2d) 85, at para. 49, affd 2015 NSCA 13, 355 N.S.R. (2d)
    324; Vaughan Black, 
Conditional Forum Non Conveniens in Canadian Courts

    (2013), 39 Queens L.J. 41; Perell and Morden,
The Law of Civil Procedure
    in Ontario
, 2nd ed. (Toronto: Lexis Nexis, 2014), at para. 2.381.

[12]

It is now clear that the moving party cannot proceed with a class action
    claim in the U.S. District Court based upon alleged pre-explosion
    misrepresentations.

[13]

When the appeal was argued before us, BP took the position that the
    claim the moving party sought to advance was governed by U.S. law. BP argued
    that the tort was not committed in Ontario and that we should decline
    jurisdiction in order to have the claim adjudicated in a U.S. court under U.S.
    law.

[14]

BP also emphasized that U.S. law asserted exclusive jurisdiction over
    the moving partys claim. See BPs factum on the appeal, at para 101:

In addition, Ontario is not a
convenient
    forum
to try claims of NYSE purchasers, because if U.S. law is
    ultimately held to apply to those claims, an Ontario court would refuse to
    apply it. The relevant statutory cause of action in the U.S. is contained in
    Section 10b (and Rule 10b-5 promulgated thereunder) of the
Securities and
    Exchange Act of 1934
(the U.S. Act). The U.S. Act provides that U.S.
    federal courts have exclusive jurisdiction over claims under that
    legislation. Where legislation provides that a court of another province or
    country has exclusive jurisdiction to adjudicate claims arising under that
    legislation, an Ontario court will not take jurisdiction over those claims. [Footnote
    omitted.]

[15]

However, before the U.S. District Court on the motion to dismiss the
    moving partys proposed class action, BP accepted the moving partys position
    that the moving partys pre-explosion claim was based upon Ontario law. BPs
    position before the U.S. District Court was that as the claim was based on
    foreign law, it was not one over which U.S. law claimed exclusive jurisdiction.


[16]

In our view, these developments, taken as a whole, are sufficient to
    justify lifting the stay. It was certainly not brought to our attention or in
    our contemplation that the moving partys claim would be dismissed in the U.S. District
    Court simply because it had not been advanced by the lead plaintiffs in the
    U.S. class action. That is a purely procedural barrier that prevents the moving
    party from having his claim heard on the merits.

[17]

It is also significant that BP now accepts that the moving partys claim
    is governed by Ontario law and therefore does not assert that it falls within
    the exclusive jurisdiction of the U.S. courts. As is apparent from paras 41,
    42, 47 and 48 of our reasons, the claim of exclusive jurisdiction was a
    significant factor in our assessment of comity and
forum non conveniens
.

[18]

These developments leave the moving party in the following position. If
    the stay is not lifted, he is deprived of the right to have his claim asserted
    as part of a class action in the U.S. District Court and can only proceed with
    an individual claim in that court because of choices made by U.S. lead plaintiffs.

[19]

If, as BP argued before the U.S. District Court, the moving partys
    claim is based upon Ontario law, is not a claim that is or can be advanced in
    the U.S. class action, and does not fall within the exclusive jurisdiction of
    the U.S. courts, we have a very different situation than was presented to us on
    the stay motion. On the facts as presented by BP before the U.S. District Court,
    it is difficult to see why the stay should not be lifted to allow the moving
    party to proceed in Ontario.

[20]

We do not wish to be taken as suggesting in these reasons that BPs
    counsel misled the court. As we see it, any shift in position or inconsistency
    in approach was the result of litigation strategies being pursued by different
    counsel in different jurisdictions at different stages of the litigation.

[21]

We do not find it necessary to comment on the evidence relating to the
    difficulties the moving party would face if forced to litigate in the United
    Kingdom. If the moving party is permitted to litigate in Ontario claims based
    upon Ontario law related to securities purchased on the NYSE, it is difficult
    to see why he should not be permitted to include similar claims related to the
    relatively small number of securities purchased on other foreign exchanges.

[22]

We express no view as to the limitations issue raised by BP in the U.S. District
    Court or as to the effect of the U.S. District Courts ruling on that issue.
    Those issues were not fully argued before us on this motion and they are better
    left to be dealt with on a full record and after full argument in the Superior
    Court.

Disposition

[23]

Accordingly, the motion is granted and the stay is lifted to permit the
    moving party to proceed in Ontario with a claim based upon the alleged
    pre-explosion misrepresentations.

[24]

Costs to the moving party fixed, in accordance with the agreement of
    counsel, at $20,000, inclusive of disbursements and taxes.

Released: July 29, 2016 RJS

Robert J. Sharpe
    J.A.

Janet Simmons J.A.

M.L. Benotto J.A.


