



COURT OF APPEAL FOR ONTARIO

CITATION: Kaynes v. BP, P.L.C., 2018 ONCA 337

DATE: 20180405

DOCKET: C64363

Hourigan, Pardu and Huscroft JJ.A.

BETWEEN

Peter Kaynes

Plaintiff (Appellant)

and

BP, P.L.C.

Defendant (Respondent)

Bonnie Roberts Jones and Andrew Morganti, for the
    appellant

Laura K. Fric, Kevin O'Brien and Karin Sachar, for the
    respondent

Heard: April 3, 2018

On appeal from the judgment of Justice Paul Perell of the
    Superior Court of Justice, dated September 1, 2017.

REASONS FOR DECISION

Introduction

[1]

This appeal turns upon a consideration of the interaction between the
    limitation period found in s. 138.14 of the
Securities Act
, R.S.O.
    1990, c. S.5 (the 
Act
), and s. 138.3(6) of the
Act
, which
    provides that multiple misrepresentations may be considered, at the discretion
    of the court, to constitute a single misrepresentation.

[2]

The appellant, a putative representative plaintiff in a class proceeding
    against the respondent BP, P.L.C. (BP), sued on fourteen alleged
    misrepresentations. Eleven of the misrepresentations were made more than three
    years before the action was commenced. He argued below that the claims based on
    those misrepresentations should not be ruled statuebarred on a r. 21.01(1)(a)
    motion because it is within the discretion of the judge hearing the leave
    application to treat them as a single misrepresentation.

[3]

The motion judge rejected that argument. He ruled that the claims based
    on the eleven misrepresentations were statute-barred pursuant to s.138.14.
    Further, he found that the statutory discretion to treat multiple
    misrepresentations as a single misrepresentation did not impact the limitation
    period analysis.

[4]

On appeal, the appellant advances the same statutory interpretation
    arguments made below and submits that the motion judge erred in law in his
    analysis. At the conclusion of the appellants counsels submissions we
    dismissed the appeal with reasons to follow. These are those reasons.

Background Facts

[5]

This proceeding has a lengthy and complex history. For present purposes,
    the following brief factual summary will suffice.

[6]

The appellant alleges that he acquired shares of BPs securities on
    January 28, 2008, April 29, 2008, and August 12, 2008, after reviewing BPs
    core documents that contained an alleged misrepresentation about BPs operating
    management system and its ability to respond to an oil spill in the Gulf of
    Mexico.  Deepwater Horizon, an oil rig operated by BP in the Gulf of Mexico,
    exploded on April 20, 2010 causing massive environmental damage. The disaster
    negatively impacted the value of BPs securities.

[7]

The appellant seeks to bring a class action on behalf of all Canadian
    residents who acquired BP equity securities during the period May 9, 2007 to
    April 23, 2010. The proposed class action is based solely on the statutory
    cause of action for secondary market misrepresentation provided for in s. 138.3
    of Part XXIII.1 of the
Act
.

[8]

The action was commenced on November 15, 2012 in Ontario. The next day,
    the appellant served his motion record seeking leave to proceed with his
    action. There followed a motion challenging the jurisdiction of the Ontario
    courts. This court eventually stayed the proceeding. An action was then commenced
    in Texas but the U.S. Federal Court dismissed it.  The stay was eventually
    lifted by order of this court.

[9]

The order that is the subject of this appeal is from a motion brought by
    BP under r. 21.01(1)(a) for a declaration that the appellants claim is
    statute-barred pursuant to s. 138.14 of the
Act
.

Motion Judges Decision

[10]

The
    motion judge found that it was plain and obvious that eleven of the
    misrepresentation claims that were based on documents released between May 8,
    2007 and February 26, 2010 were statutebarred. He further found that claims
    based on documents released between February 27, 2010 and April 23, 2010 were
    not statutebarred, as it was not plain and obvious that the class members will
    be denied leave
nunc pro tunc
to assert those claims.

[11]

The
    motion judge rejected the appellants submission that all of the
    misrepresentations should be treated as a single misrepresentation for purposes
    of calculating when the limitation period should begin to run. He found that
    such an interpretation would negative the policy choice made by the legislature
    in enacting the limitation period, would conflict with the scheme of the
Act
,
    and would be contrary to the legislative history of the
Act
because
    the provision regarding multiple misrepresentations was enacted to limit
    liability not expand it.

[12]

The
    sole issue on this appeal is whether the motion judge was correct in dismissing
    the claims based on documents released between May 8, 2007 and February 26,
    2010.

Analysis

[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.

[14]

The
    limitation period in s. 138.14 reads as follows:

138.14 (1) No action shall be commenced under section
    138.3,

(a)     in the case of misrepresentation in a
    document, later than the earlier of,

(i)      three years after the date on which the
    document containing the misrepresentation was first released, and

(ii)      six months after the issuance of a news
    release disclosing that leave           has been granted to commence an action
    under section 138.3 or under comparable legislation in the other provinces or
    territories in Canada in respect of the same misrepresentation;

(b)     in the case of a misrepresentation in a
    public oral statement, later than the earlier of,

(i)      three years after the date on which the
    public oral statement containing the misrepresentation was made, and

(ii)      six months after the issuance of a news
    release disclosing that leave           has been granted to commence an action
    under section 138.3 or under comparable legislation in another province or
    territory of Canada in respect of the same misrepresentation; and

***

[15]

This
    is an event triggered limitation period, which commences on the making of the
    oral statement or the release of the impugned document. It is designed to run
    without regard to the plaintiffs knowledge of the facts giving rise to the
    cause of action:
Canadian Imperial Bank of Commerce v. Green
, 2015 SCC
    60, at paras. 66 and 180. The motion judge correctly found that for the eleven
    alleged misrepresentations made more than three years before the issuance of
    the appellants statement of claim the limitation period had expired.

[16]

The
    appellants primary submission on appeal is that s. 138.3(6) of the
Act
operates to extend the limitation period in the case of multiple
    misrepresentations. That subsection provides as follows:

(6) In an action under this section,

(a) multiple misrepresentations having common
    subject matter or content may, in the discretion of the court, be treated as a
    single misrepresentation; and

(b) multiple instances of failure to make timely
    disclosure of a material change or material changes concerning common subject
    matter may, in the discretion of the court, be treated as a single failure to
    make timely disclosure. 2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s.12(7).

[17]

The
    appellant argues that treating the allege misrepresentations as a single
    misrepresentation would have the effect of extending the three-year limitation
    period for claims arising from the eleven out-of-time statements. In our view,
    the motion judge did not err in rejecting this argument. We reach this conclusion
    for the following reasons.

[18]

First,
    there is nothing in the language of s. 138.3(6) that suggests that it is
    intended to modify the clear event triggered limitation period provided in s.
    138.14.

[19]

Second,
    the appellant submits that the motion judge erred in failing to take into
    consideration the twin goals of investor protection and the deterrence of
    corporate misconduct in his interpretation the
Act
.  That view of the
    policy objectives of the
Act
is too narrow.  As Cote J. noted in
CIBC
,
    at para. 69, the policy considerations are more nuanced, Part
    XXIII.1 OSA strikes a delicate balance between various market
    participants. The interests of potential plaintiffs and defendants and of
    affected long-term shareholders have been weighed conscientiously and deliberately
    in light of a desired precise balance between deterrence and compensation.

[20]

Part
    of the balance struck by the three year event driven limitation period was to
    protect subsequent shareholders from claims based on alleged misrepresentations
    made to previous shareholders.

[21]

Third,
    we agree with the motion judges conclusion that the legislative history of s.
    138.3(6) demonstrates that it was enacted at as a consequence of an Ontario
    Securities Commission response to a Request for Comments. It is plain from that
    submission that the section was designed to protect issuers from multiple
    rights of action or multiple liability for essentially the same
    misrepresentation repeated on a number of occasions.

[22]

Finally,
    we note that even if the appellant is correct and s. 138.3(6) was intended to
    modify the limitation period analysis, it is arguable that in the case of
    multiple misrepresentations treated as a single misrepresentation the
    limitation period would run from the date the misrepresentation was first made. 
    Subsection 138.14 mandates that the running of the limitation period commences
    when the document is
first
released. Applied literally in this case,
    the result would be that the limitation period for all fourteen
    misrepresentations commenced in 2007 and the claims based on all of the
    documents would be statute-barred.

Disposition

[23]

The
    appeal is dismissed. Costs of the appeal are payable by the appellant to the
    respondent in the agreed upon all-inclusive amount of $20,000.

C.W. Hourigan J.A.

G. Pardu J.A.

Grant Huscroft J.A.


