Kaynes v. BP, P.L.C.

[Indexed as: Kaynes v. BP plc]

Ontario Reports

Court of Appeal for Ontario,

Sharpe, Simmons and Benotto JJ.A.

July 29, 2016

133 O.R. (3d) 29 | 2016 ONCA 601

Case Summary

Conflict of laws — Forum conveniens — Plaintiff purchasing BP shares on New York Stock Exchange — Plaintiff bringing proposed class [page30 ]action in Ontario for damages for misrepresentations made by BP to shareholders before and after Deep Water Horizon explosion and oil spill — Plaintiff also included in pending class action in U.S. by investors who purchased BP shares on NYSE — Court of Appeal staying Ontario action on ground of forum non conveniens — U.S. court subsequently dismissing class proceeding commenced by plaintiff which asserted claim for pre-explosion misrepresentations based on Ontario Securities Act — Court of Appeal lifting stay based on that new development to permit plaintiff to proceed with claim in Ontario.

The plaintiff, who purchased BP shares on the New York Stock Exchange, brought a proposed action in Ontario for damages for misrepresentations allegedly made by BP to shareholders before and after the Deep Water Horizon explosion and oil spill in the Gulf of Mexico. The proposed class included worldwide purchasers of BP securities. The plaintiff was also a member of the class in a pending U.S. class action by investors who purchased BP securities on the NYSE. The U.S. class action judge certified claims relating to post-explosion misrepresentations, but refused to certify claims relating to pre-explosion misrepresentations. BP's motion to stay the Ontario action for want of jurisdiction, or on grounds of forum non conveniens, was dismissed. The Court of Appeal allowed BP's appeal and granted a stay on the ground that Ontario was not a convenient forum. The plaintiff commenced a class proceeding in the U.S. 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. The plaintiff brought a motion for an order lifting the stay of proceedings granted by the Court of Appeal.

Held, the motion should be granted.

When its appeal was argued before the Court of Appeal, BP took the position that the plaintiff's claim was governed by U.S. law, and emphasized that U.S. law asserted exclusive jurisdiction over the claim. The claim of exclusive jurisdiction was a significant factor in the court's assessment of comity and forum non conveniens. On the motion to dismiss the plaintiff's proposed U.S. class action, BP accepted the plaintiff's position that the pre-explosion claim was based upon Ontario law and took the position that the claim could not be advanced in the U.S. class action and did not fall within the exclusive jurisdiction of the U.S. courts. That was a very different situation than was presented on the stay motion. In the circumstances, the stay should be lifted to allow the plaintiff to proceed in Ontario.

Cases referred to

Kaynes v. BP, plc (2014), 122 O.R. (3d) 162, [2014] O.J. No. 3731, 2014 ONCA 580, 15 C.B.R. (6th) 108, 375 D.L.R. (4th) 415, 58 C.P.C. (7th) 1, 324 O.A.C. 207, 32 B.L.R. (5th) 1, 242 A.C.W.S. (3d) 796, revg (2013), 117 O.R. (3d) 685, [2013] O.J. No. 4566, 2013 ONSC 5802, 19 B.L.R. (5th) 328, 9 C.B.R. (6th) 130, 233 A.C.W.S. (3d) 362 (S.C.J.) [Leave to appeal to S.C.C. refused [2014] S.C.C.A. No. 452, 2015 CanLII 14728]; Quadrangle Holdings Ltd. v. Coady, [2015] N.S.J. No. 47, 2015 NSCA 13, 355 N.S.R. (2d) 324, 249 A.C.W.S. (3d) 322, affg [2013] N.S.J. No. 676, 2013 NSSC 416, 339 N.S.R. (2d) 85

Statutes referred to

Private Securities Litigation Reform Act of 1995, Pub. L. 104-67, 109 Stat. 737

Securities Act, R.S.O. 1990, c. S.5 [as am.] [page31 ]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 59.06(2) (a)

Authorities referred to

Black, Vaughan, "Conditional Forum Non Conveniens in Canadian Courts" (2013), 39 Queen's L.J. 41

Morden, J., and P. Perell, The Law of Civil Procedure in Ontario, 2nd ed. (Toronto: LexisNexis, 2014)

MOTION to lift the stay of an action ordered by this court (2014), 2014 ONCA 580, 122 O.R. (3d) 162, [2014] O.J. No. 3731 (C.A.).

Joseph Groia, Martin Mendelzon and Matthew Stroh, for moving party.

Laura K. Fric, Kevin O'Brien and Karin Sachar, for responding party.

[1] BY THE COURT: -- 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), 122 O.R. (3d) 162, [2014] O.J. No. 3731, 2014 ONCA 580, leave to appeal to S.C.C. refused [2014] S.C.C.A. No. 452, 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 worldwide purchasers of BP securities.

[3] BP's motion to stay the action for want of jurisdiction or on grounds of forum non conveniens was dismissed: (2013), 117 O.R. (3d) 685, [2013] O.J. No. 4566, 2013 ONSC 5802 (S.C.J.). 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 [page32 ]exchanges. In our August 14, 2014 decision, we allowed BP's 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 [page33 ]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 party's 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 party's 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) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194]. 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] N.S.J. No. 676, 2013 NSSC 416, 339 N.S.R. (2d) 85, at para. 49, affd [2015] N.S.J. No. 47, 2015 NSCA 13, 355 N.S.R. (2d) 324; Vaughan Black, "Conditional Forum Non Conveniens in Canadian Courts" (2013), 39 Queen's L.J. 41; Morden and Perell, The Law of Civil Procedure in Ontario, 2nd ed. (Toronto: LexisNexis, 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. [page34 ]

[14] BP also emphasized that U.S. law asserted exclusive jurisdiction over the moving party's claim. See BP's factum on the appeal, at para 101:

In addition, Ontario is not a convenientforum 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 party's proposed class action, BP accepted the moving party's position that the moving party's pre-explosion claim was based upon Ontario law. BP's 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 party's 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 party's 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 party's 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 [page35 ]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 BP's 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 Court's 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.

Motion granted.

End of Document