



COURT OF APPEAL FOR ONTARIO

CITATION: Mancinelli v. Royal Bank of Canada, 2018 ONCA 544

DATE: 20180613

DOCKET: C64775

Hoy A.C.J.O., Brown and Trotter JJ.A.

BETWEEN

JOSEPH S. MANCINELLI, CARMEN PRINCIPATO, DOUGLAS
    SERROUL, LUIGI CARROZZI, MANUEL BASTOS and JACK OLIVEIRA in their capacity as
    THE TRUSTEES OF THE LABOURERS PENSION FUND OF CENTRAL AND EASTERN CANADA, and
    CHRISTOPHER STAINES

Plaintiffs (Appellants)

and

ROYAL BANK OF CANADA, RBC CAPITAL MARKETS LLC, BANK OF
    AMERICA CORPORATION, BANK OF AMERICA, N.A., BANK OF AMERICA CANADA, BANK OF
    AMERICA NATIONAL ASSOCIATION, THE BANK OF TOKYO MITSUBISHI UFJ LTD., BANK OF
    TOKYO-MITSUBISHI UFJ (CANADA), BARCLAYS BANK PLC, BARCLAYS CAPITAL INC.,
    BARCLAYS CAPITAL CANADA INC., BNP PARIBAS GROUP, BNP PARIBAS NORTH AMERICA
    INC., BNP PARIBAS (CANADA), BNP PARIBAS, CITIGROUP, INC., CITIBANK, N.A.,
    CITIBANK CANADA, CITIGROUP GLOBAL MARKETS CANADA INC., CREDIT SUISSE GROUP AG,
    CREDIT SUISSE SECURITIES (USA) LLC, CREDIT SUISSE AG, CREDIT SUISSE SECURITIES
    (CANADA), INC., DEUTSCHE BANK AG, THE GOLDMAN SACHS GROUP, INC., GOLDMAN, SACHS
    & CO., GOLDMAN SACHS CANADA INC., HSBC HOLDINGS PLC, HSBC BANK PLC, HSBC
    NORTH AMERICA HOLDINGS INC., HSBC BANK USA, N.A., HSBC BANK CANADA, JPMORGAN
    CHASE & CO., J.P.MORGAN BANK CANADA, J.P.MORGAN CANADA, JPMORGAN CHASE BANK
    NATIONAL ASSOCIATION, MORGAN STANLEY, MORGAN STANLEY CANADA LIMITED, ROYAL BANK
    OF SCOTLAND GROUP PLC, RBS SECURITIES, INC., ROYAL BANK OF SCOTLAND N.V., ROYAL
    BANK OF SCOTLAND PLC, SOCIÉTÉ GÉNÉRALE S.A., SOCIÉTÉ GÉNÉRALE (CANADA), SOCIÉTÉ
    GÉNÉRALE, STANDARD CHARTERED PLC, UBS AG, UBS SECURITIES LLC
and
UBS BANK (CANADA)

Defendants (Appellants)

Kirk M. Baert, Celeste Poltak and Louis Sokolov, for the
    appellants

Lara Jackson, Wendy Berman and Christopher Horkins, for
    the respondents, the Bank of Montreal, BMO Financial Corp., BMO Harris Bank
    N.A., BMO Capital Markets Limited

Paul Le Vay, Brendan van Niejenhuis and Benjamin Kates,
    for the respondents, Toronto Dominion Bank, TD Bank, N.A., TD Group Holdings,
    LLC, TD Bank USA, N.A. and TD Securities Limited

Heard: May 14, 2018

On appeal from the order of Justice Paul Perell of the Superior
    Court of Justice, dated December 11, 2017.

Hoy A.C.J.O.:

[1]

The appellants appeal the motion judges order,
    dismissing their motion to add the respondents, Toronto Dominion Bank, TD
    Securities, TD Bank USA, N.A., T.D. Group Holdings, and TD Bank N.A.
    (collectively TD) and Bank of Montreal, BMO Financial Corp. BMO Harris Bank
    N.A. and BMO Capital Markets Limited (collectively BMO), as defendants in an
    existing class action alleging a secret conspiracy to manipulate the foreign
    exchange market.

[2]

For the following reasons, I agree with the appellants
    that the motion judge erred in dismissing their motion on the basis that their
    claim against the respondents was statute-barred.

Background

[3]

The appellant
[1]
,
    Christopher Staines, commenced a class action against sixteen groups of
    financial institutions on September 11, 2015, alleging a price-fixing
    conspiracy in the foreign exchange or foreign currency market between January
    1, 2003 and December 31, 2013. The statement of claim includes allegations that
    the defendants (including the proposed defendants) took active steps to conceal
    their participation in the conspiracy by, among other things, engaging in
    secret communications.

[4]

The first group of defendants to settle
    consisted of UBS AG, UBS Securities LLC and UBS Bank (Canada) (collectively
    UBS). The settlement required UBS to cooperate with the appellants. In
    fulfilling that obligation, UBS gave an evidentiary proffer on May 24, 2016.

[5]

On July 20, 2016, Mr. Staines brought a motion
    under r. 5.04(2) and r. 26.01 of the
Rules of Civil
    Procedure
to add the respondents to the action.
    The respondents opposed the motion on the basis that the claim against them was
    barred by the
Limitations Act, 2002
, S.O. 2002, c. 24, Sched B. (the Act) and the
Competition Act
, RSC 1985, c. C-34. No
    defendant had filed a statement of
defence
and no
    discovery had taken place at the time that the motion was heard.

[6]

Class counsels evidence on the motion was that
    they learned of BMO and TDs involvement in the alleged conspiracy for the
    first time at the UBS proffer. UBS advised class counsel that it reviewed
    approximately 2000 collusive chats dating as far back as 2008 and that FX
    traders at TD and BMO were among the persons participating in such chats.

[7]

Class counsels further evidence was that from
    the time prior to commencement of the action to the date of UBSs evidentiary
    proffer on May 24, 2016, they conducted their own investigations into the
    alleged conspiracy. Their investigations included a review of public documents
    and none of the public documents referred to or mentioned BMO or TD as being
    involved in the alleged conspiracy.

[8]

In his reasons, the motion judge acknowledged
    that there was no evidence that any public documents identified BMO or TD as
    being involved in the alleged conspiracy. He accepted that the appellants did
    not know they had a conspiracy claim against the respondents until they
    obtained the UBS evidentiary proffer.

[9]

However, at para. 61 of his reasons, the motion
    judge found as a fact that the appellants evidence on the motion was
    insufficient to establish that they behaved as reasonable person[s] in the
    same or similar circumstances to identify [the respondents] as conspirators and
    the evidence rather establishes that their identity could have been established
    with reasonable diligence before the expiry of the limitation period.

[10]

As to what other steps the appellants should have taken, the motion
    judge wrote, at para. 49:

The Plaintiffs, through their counsel,
    testified that the Plaintiffs were investigating, but there is scant evidence
    about how they were investigating, and there is no evidence about any efforts
    to hire a private investor [sic], efforts to contact potential witnesses or
    whistleblowers, efforts to obtain information from Plaintiffs counsel in the
    U.S. litigation, or efforts to contact regulatory or law enforcement agencies.
    It also appears that the Plaintiffs before or after commencing their action did
    not bring a motion for an
Anton Pillar
Order,
    a civil search warrant, or a
Norwich
Order,
    under which a plaintiff may obtain discovery from a person including a person
    against whom there is no cause of action in order to identify a wrongdoer and
    to obtain information about wrongdoing so that the plaintiff may bring
    proceedings or at least consider whether to bring proceedings against the
    wrongdoer.

[11]

At para. 51, the motion judge reasoned that the
    fact that UBS was able to identify BMO and TD as participants in the chat room
    shenanigans by reviewing the collusive chats demonstrated that it was
    possible to identify other alleged co-conspirators.

[12]

He wrote, at para. 57, that if the plaintiffs
    were to take on the mantle of representative plaintiff to achieve access to
    justice and behaviour modification, they should have acted more like the
    investigation arm of a regulator and [conducted] a meaningful investigation.

[13]

The motion judge dismissed the appellants
    motion.

The Framework

[14]

The framework in the Act informs the necessary
    analysis.

[15]

In most Ontario cases, including this one, an
    action must be started on or before the second anniversary of the day on which
    the claim was discovered. If it is not, the claim is barred by s. 4 of the
    Act.

[16]

Here, the appellants sought to amend their claim
    to include the respondents on July 20, 2016. Working backwards, the appellants
    claim against the respondents is statute-barred if they discovered it before
    July 20, 2014.

[17]

Section 5 of the Act sets out the scheme for
    determining when a claim is discovered. It provides in relevant part as
    follows:

5 (1) A claim is discovered on the earlier of,

(a)  the day on which the person with the
    claim first knew,

(i)      that the injury, loss or
    damage had occurred,

(ii)      that the injury, loss or
    damage was caused by or contributed to by an act or omission,

(iii)     that the act or omission
    was that of the person against whom the claim is made, and

(iv)     that, having regard to the
    nature of the injury, loss or damage, a proceeding would be an appropriate
    means to seek to remedy it; and

(b) the day on which a reasonable person with
    the abilities and in the circumstances of the person with the claim first ought
    to have known of the matters referred to in clause (a).  2002, c. 24, Sched. B,
    s. 5 (1).

Presumption

(2)  A person with a claim shall be presumed
    to have known of the matters referred to in clause (1) (a) on the day the act
    or omission on which the claim is based took place, unless the contrary is
    proved.  2002, c. 24, Sched. B, s. 5 (2).

[18]

For the purposes of the motion, the presumption
    in s. 5(2) of the Act was displaced: the motion judge accepted that the
    appellants subjectively did not know they had a conspiracy claim against BMO
    and TD until the UBS proffer. Thus, the date for the purposes of s. 5(1)(a) of
    the Act was May 24, 2016.

[19]

The respondents effectively asserted that the
    appellants first ought to have known that they had a claim against the
    respondents before July 20, 2014. In other words, the respondents assert that
    the s. 5(1)(b) date was both before May 24, 2016 and before July 20, 2014. If
    the s. 5(1)(b) date were not before July 20, 2014, the appellants claim would
    not be statute barred.

[20]

Having accepted that the appellants did not
    subjectively know they had a conspiracy claim against BMO and TD until May 24,
    2016, the issue to be determined by the motion judge under s. 5(1)(b) was
    whether the appellants had a reasonable explanation on proper evidence as to
    why they could not have discovered their claim against the respondents before
    July 20, 2014 through the exercise of reasonable diligence.

[21]

While the common law discoverability principle
    is expressly enshrined in ss. 4 and 5 of the Act, the statutory limitation
    period in s. 36(4)(a)(i) of the
Competition Act
is also subject to the
    discoverability principle:
Fanshawe College of Applied Arts and Technology
    v. AU Optronics Corporation
, 2016 ONCA 621, 132 O.R. (3d) 81, at para. 18.

Analysis

[22]

As I will explain, the motion judge erred in
    principle by establishing too high an evidentiary threshold on the motion
    before him. He further erred by finding that the appellants could have
    identified the respondents with due diligence in the absence of any evidentiary
    foundation and failing to determine with sufficient precision when they ought
    to have discovered their claim.

1. Too high an evidentiary threshold

[23]

When a person opposes a plaintiffs motion to
    add it as a defendant on the basis of the apparent expiry of a limitation
    period, the motion judge is entitled to assess the record to determine whether,
    as a question of fact, there is a reasonable explanation on proper evidence as
    to why the plaintiff could not have discovered its claim through the exercise
    of reasonable diligence. If the plaintiff does not raise any credibility issue
    or issue of fact about when its claim was discovered that would merit
    consideration on a summary judgment motion or a trial and there is no
    reasonable explanation on the evidence as to why the plaintiff could not have
    discovered the claim by exercising reasonable diligence, the motion judge may
    deny the plaintiffs motion:
Arcari v. Dawson
, 2016 ONCA 715, 134 O.R.
    (3d) 36, at para. 10.

[24]

However, the evidentiary threshold that must be
    met by a plaintiff on such a motion is low:
Pepper v. Zellers Inc.
(2006), 83 O.R. (3d) 648 (C.A.), at para. 14;
Burtch v. Barnes
    Estate

(2006), 80 O.R. (3d) 365, at paras. 26-27.
    The plaintiffs explanation should be given a generous reading:
Wakelin
    v. Gourley
(2005),

76 O.R.
    (3d) 272, at para.15, affd 2006 CarswellOnt 286 (Div. Ct.). Whether the
    plaintiff and its counsel acted with reasonable diligence must be considered in
    context:
Fanshawe College of Applied Arts and Technology v. Sony Optiarc
    Inc.
, 2014 ONSC 2856, at para. 45 (the Fanshawe Pleadings Motion.)

[25]

While
Arcari
,
Pepper
and
Wakelin
dealt with motions to add defendants that were opposed based on the apparent
    expiry of the limitation period under the Act, the same approach, and the same
    low threshold, is warranted where the motion is opposed or also opposed based
    on the apparent expiry of any statutory limitation period subject to the
    discoverability principle: see, for example, Fanshawe Pleadings Motion.

[26]

In the context of a motion to add defendants in
    a class action alleging a secret conspiracy brought before any statements of
    defence had been filed or any discoveries had taken place, the motion judge
    required the appellants to meet too high an evidentiary threshold.

[27]

Giving the requisite generous, contextual
    reading to the appellants explanation, the appellants provided a reasonable
    explanation why they could not have identified the respondents as
    co-conspirators before July 20, 2014. I note that in the Fanshawe Pleadings
    Motion, the motion judge permitted plaintiffs alleging a price-fixing
    conspiracy to amend their statement of claim to add defendants on evidence as
    to due diligence that essentially consisted of reviewing publically available
    documents, albeit a more detailed list of those documents was provided.

[28]

In the face of the appellants evidence of their
    search for other potential defendants, the respondents led no evidence of
    further reasonable steps that the appellants could have taken to ascertain
    their identities before July 20, 2014. Rather, the motion judge suggested that
    the appellants should have taken further steps to investigate whether the
    respondents were co-conspirators. At least some of the steps he suggested go
    beyond those a reasonable plaintiff would have taken in the circumstances,
    indicating that he held the appellants to too high an evidentiary standard. By
    way of example, it is not apparent how a plaintiff alleging a conspiracy that
    the defendants took active steps to conceal and that was conducted through
    secret chats could have possibly obtained the suggested
Anton Pillar
and
Norwich
orders. The evidentiary foundation required to obtain such
    orders is high.

[29]

Further, a representative plaintiff is not akin
    to the investigative arm of a regulator. Regulators often have investigative
    powers that civil plaintiffs do not. There was no evidence that any of the
    sophisticated regulators investigating the alleged conspiracy had identified
    any of the respondents as co-conspirators before the UBS proffer.

2. Lack of evidentiary foundation

[30]

A plaintiffs failure to take reasonable steps
    to investigate a claim is not a stand-alone or independent ground to find a
    claim out of time. Instead, the reasonable steps a plaintiff ought to take is a
    relevant consideration in deciding when a claim is discoverable under s.
    5(1)(b):
Galota v. Festival Hall Developments Ltd.
, 2016 ONCA 585, 133
    O.R. (3d) (C.A.), at para. 23;
Fennel v. Deol
, 2016 ONCA 249, 265
    A.C.W.S. (3d) 1029, at paras. 18, 24.

[31]

Where the issue on a motion to add a defendant
    is due diligence, the motion judge will not be in a position to dismiss the plaintiffs
    motion in the absence of evidence that the plaintiff could have obtained the
    requisite information with due diligence, and by when the plaintiff could have
    obtained such information, such that there is no issue of credibility or fact
    warranting a trial or summary judgment motion:
Wong v. Adler
(2004), 70
    O.R. (3d) 460 (Ont Master), at para. 45;
Pepper
, at para. 18.

[32]

As the respondents appropriately conceded, there
    was no evidentiary foundation for the motion judges finding that the
    respondents identities as co-conspirators could have been established with
    reasonable diligence. The fact that UBS  one of the co-conspirators and a
    participant in the collusive chats  was able to identify other participants
    in the secret chats is no indication that the appellants, who were not
    co-conspirators, could have done so.

[33]

Nor did the motion judge determine with
    sufficient precision by when the appellants ought to have discovered that they
    had a claim. As noted above, the appellants claim would be statute barred only
    if the s. 5(1)(b) date were before July 20, 2014. The motion judge found the
    identity of BMO and TD could have been established before the expiry of the
    limitation period. It is not clear what the motion judge meant by the expiry
    of the limitation period. The respondents submitted that the limitation period
    expired on December 31, 2015 (two years after the end of the alleged conspiracy
    period). If the motion judges intended finding were that the appellants could
    have established the identities of BMO and TD by December 31, 2015, then the
    appellants claim against them would not have been statute-barred.

[34]

The issue of whether the appellants could have
    discovered the identities of the respondents with due diligence and, if so,
    when the appellants could have done so, are issues that require consideration
    on a summary judgment motion or at trial. The motion judge should have
    permitted the appellants to add the respondents as defendants, and reserved the
    respondents right to plead a limitation defence.

Disposition

[35]

I would allow the appeal. I would set aside the
    motion judges order and order that the appellants be permitted to amend their
    statement of claim to add the respondents as defendants to the action and that
    the respondents be at liberty to plead their limitation defence when they
    deliver their statements of defence.

[36]

As agreed by the parties, I would: order that
    the appellants be entitled to their costs of the appeal, fixed in the all-inclusive
    amount of $50,000, payable as to $25,000 by TD, and as to $25,000 by BMO; set
    aside the costs award below; and order that BMO pay the appellants $99,724.96
    and TD pay the appellants $95, 908.69 as costs of the motion below.

Released: AH JUN 13 2018

Alexandra Hoy A.C.J.O.

I agree D.M. Brown J.A.

I agree Gary Trotter J.A.





[1]

On October 6, 2016, the Statement of Claim was amended to add
    the Trustees of the Labourers Pension Fund of Central and Eastern Canada as
    plaintiffs.


