Kaynes v. BP plc

Ontario Reports

Ontario Superior Court of Justice,

Conway J.

October 9, 2013

117 O.R. (3d) 685 | 2013 ONSC 5802

Case Summary

Conflict of laws — Forum non conveniens — Ontario-resident plaintiff bringing proposed class action against U.K. company for secondary market misrepresentation under Part XXIII.1 of the Securities Act — Proposed class including all Canadians who purchased defendant's shares on Toronto Stock Exchange and on other exchanges — Defendant failing to establish that U.S. and U.K. courts were clearly more convenient forums to adjudicate claims of non-TSX purchasers.

Conflict of laws — Jurisdiction — Real and substantial connection — Ontario-resident plaintiff bringing proposed class action against U.K. company for secondary market misrepresentation under Part XXIII.1 of the Securities Act — Proposed class including all Canadians who purchased defendant's shares on Toronto Stock Exchange and on other exchanges — Ontario court having jurisdiction to hear action with respect to claims of non-TSX purchasers as well as TSX purchasers — Statutory claim under s. 138.3 of Securities Act being statutory tort committed in Ontario — Act not restricting cause of action to investors who purchased shares on Ontario exchanges — Defendant not rebutting presumptive connecting factor — Securities Act, R.S.O. 1990, c. S.5, s. 138.3.

The defendant was a U.K. company which owned no real or personal property in Ontario and had no offices or employees there. Its equity securities consisted of common shares and American depositary shares ("ADS"). The ADS were listed on the Toronto Stock Exchange until 2008. The defendant was a reporting issuer in Ontario until 2009. The plaintiff, an Ontario resident, purchased ADS over the New York Stock Exchange. He brought a proposed class action against the defendant alleging that it made various misrepresentations in its investor [page686] documents before and after an oil spill in the Gulf of Mexico in 2010. He sought to bring a statutory action for secondary market misrepresentation under Part XXIII.1 of the Securities Act, and also made a claim for common law negligent misrepresentation. The proposed class included all Canadians who purchased common shares and ADS, whether on the TSX, NYSE or European exchanges, between May 2007 and May 2010. The defendant brought a motion for an order staying the action in part on the basis that the court did not have jurisdiction over the dispute or, alternatively, on the basis of forum non conveniens. It argued that the court could only assume jurisdiction over the action with respect to the claims of proposed class members who purchased shares on the TSX.

Held, the motion should be dismissed.

There was a real and substantial connection between the claim and Ontario. The plaintiff's statutory claim under s. 138.3 of the Act was a statutory tort committed in Ontario, regardless of where the investors purchased their shares. There is nothing in the wording of the Act that restricts the cause of action to investors who purchased their shares on an Ontario exchange. If a responsible issuer makes a misrepresentation and the Act deems the Ontario investor to have relied on the misrepresentation when he purchased shares of that issuer, the statutory tort must be considered to have been committed in Ontario. The defendant did not rebut the presumptive connecting factor.

The defendant failed to establish that the U.S. and U.K. courts were clearly more appropriate forums in which to adjudicate the claims of non-TSX purchasers. To accept the defendant's submission that those courts were clearly more appropriate would result in this potential claim against an alleged Ontario responsible issuer being litigated in three different jurisdictions. That was not convenient, cost-effective or efficient.

Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, [2012] S.C.J. No. 17, 2012 SCC 17, 291 O.A.C. 201, 2012EXP-1452, J.E. 2012-788, EYB 2012-205198, 429 N.R. 217, 343 D.L.R. (4th) 577, 91 C.C.L.T. (3d) 1, 10 R.F.L. (7th) 1, 17 C.P.C. (7th) 223, 212 A.C.W.S. (3d) 712; Ontario v. Rothmans Inc. (2013), 115 O.R. (3d) 561, [2013] O.J. No. 2367, 2013 ONCA 353, 305 O.A.C. 261, apld

Abdula v. Canadian Solar Inc. (2012), 110 O.R. (3d) 256, [2012] O.J. No. 1381, 2012 ONCA 211, 289 O.A.C. 226, 98 B.L.R. (4th) 199, 348 D.L.R. (4th) 597, 214 A.C.W.S. (3d) 1006, affg [2011] O.J. No. 4067, 2011 ONSC 5105, 92 B.L.R. (4th) 324, 206 A.C.W.S. (3d) 736 (S.C.J.) [Leave to appeal to S.C.C. refused [2012] S.C.C.A. No. 246], consd

Other cases referred to

2249659 Ontario Ltd. v. Siegen (2013), 115 O.R. (3d) 241, [2013] O.J. No. 2496, 2013 ONCA 354, 306 O.A.C. 288; Central Sun Mining Inc. v. Vector Engineering Inc., [2013] O.J. No. 4506, 2013 ONCA 601, 310 O.A.C. 391, 24 C.L.R. (4th) 27; McKenna v. Gammon Gold Inc., [2010] O.J. No. 1057, 2010 ONSC 1591, 88 C.P.C. (6th) 27 (S.C.J.); Morrison v. National Australia Bank, 130 S. Ct. 2869, 177 L. Ed. 2d 535 (2010); Silver v. Imax Corp., [2009] O.J. No. 5573, 66 B.L.R. (4th) 222, 2009 72342 (S.C.J.); Silver v. Imax Corp., 2009 72334 (ON SC), [2009] O.J. No. 5585, 86 C.P.C. (6th) 273 (S.C.J.)

Statutes referred to

Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1 [as am.], ss. 138.1 [as am.], (a), (b), 138.3 [as am.]

Securities and Exchange Act of 1934, 15 U.S.C.S., s. 10(b) [page687]

MOTION for an order staying an action in part.

Larry Lowenstein, Laura K. Fric and Kevin O'Brien, for BP, moving party.

Andrew Morganti and Arie Gaertner, for plaintiff, responding party.

Reasons for Decision

[1] CONWAY J.: — Mr. Kaynes, the plaintiff, brings this proposed class action against BP. He alleges that BP made various misrepresentations in its investor documents before and after the Deepwater Horizon oil spill in the Gulf of Mexico in April 2010 (the "oil spill"). He seeks leave to bring a statutory action for secondary market misrepresentation under Part XXIII.1 of the Securities Act, R.S.O. 1990, c. S.5 (the "Act"). He makes a further claim for common law negligent misrepresentation.

[2] BP brings this jurisdiction motion in advance of the leave and certification motions. It seeks an order staying this proceeding (in part) on the basis that this court does not have jurisdiction over the dispute or, alternatively, on the basis of forum non conveniens.

(Complete judgment text continues exactly as in the source through paragraph [54], notes, and "End of Document".)