Kaynes v. BP, P.L.C., 2017 ONSC 5172
CITATION: Kaynes v. BP, P.L.C., 2017 ONSC 5172
COURT FILE NO.: CV-12-467836CP
DATE: 20170901
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PETER KAYNES
Plaintiff
– and –
BP, P.L.C.
Defendant
COUNSEL:
Andrew J. Morganti, Bonnie Roberts Jones and Hadi Davarinia for the Plaintiff
Laura K. Fric, Kevin O’Brien and Karin Sachar for the Defendant
HEARD: August 23, 2017
PERELL, J.
REASONS FOR DECISION
"Just when you thought it was safe to go back in the water”: Jaws II (1978)
A. Introduction
[1] Pursuant to rule 21.01(1)(a) of the Rules of Civil Procedure, the Defendant BP, P.L.C., moves for a declaration that the Plaintiff Peter Kaynes’ claims for a remedy under Part XXIII.1 of the Ontario Securities Act, R.S.O. 1990, c. S.5 for the Class Period, May 9, 2007 to April 23, 2010 (1080 days), are statute-barred pursuant to s. 138.14 of the Act.
[2] For the reasons that follow, I grant BP’s motion, in part, and I declare that Mr. Kaynes’ claims for all but a Class Period of February 27, 2010 to April 23, 2010 (55 days) are statute-barred.
[3] Mr. Kaynes’ proposed class action pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6 is based on 14 alleged misrepresentations, of which 11 occurred more than three years before his action was commenced. As the discussion below will reveal, notwithstanding his argument to the contrary, it is plain and obvious that: (a) Mr. Kaynes’ claims based on 11 misrepresentations are statute-barred by s. 138.14 of the Ontario Securities Act, and (b) these 11 misrepresentation claims are not brought back from the dead by s. 138.3(6) (multiple misrepresentations) of the Act.
[4] As the discussion below will also reveal, it is also plain and obvious that: (a) Mr. Kaynes’ remaining three misrepresentation claims are not necessarily statute-barred; and (b) notwithstanding BP’s argument to the contrary, the claims based on the remaining three misrepresentations are not foreclosed by the Tolling Agreements signed by the parties.
[5] The outcome of BP’s motion is that it is plain and obvious that: (a) Mr. Kaynes’ and the Class Members’ claims for all but a Class Period of February 27, 2010 to April 23, 2010 are statute-barred by s. 138.14 of the Ontario Securities Act; and (b) should leave be granted nunc pro tunc to assert them, then Mr. Kaynes’ Part XXIII.1 claims for this 55-day Class Period would not be statute-barred.
B. Overview and Methodology
[6] The case at bar about the operation of the limitation periods set out in s. 138.14 of Part XXIII.1 of the Ontario Securities Act is the latest sequel or prequel in what has turned out to be the case law equivalent of a horror-movie franchise.
[7] The franchise began with: (I) Sharma v. Timminco Ltd., 2011 ONSC 2040, 2012 ONCA 107, which was followed by the equally terrifying: (II) Green v. C.I.B.C., 2012 ONSC 3637, 2014 ONCA 90, 2015 SCC 60; (III) Silver v. IMAX Corp., 2012 ONSC 4881, 2014 ONCA 90, 2015 SCC 60; (IV) Trustees of the Millwright Regional Council v. Celestica Inc., 2012 ONSC 6083, 2014 ONCA 90, 2015 SCC; and (V) Pennyfeather v. Timminco Ltd., 2016 ONSC 3124, 2017 ONCA 369.
[8] Mr. Kaynes (like Mr. Sharma, Mr. Silver, Millwright Regional Council, and Mr. Pennyfeather, who was Mr. Sharma’s successor) is confronted with a motion by a defendant who asserts that the claims are statute-barred pursuant to s. 138.14 of the Ontario Securities Act. Mr. Kaynes repeats some of the unsuccessful arguments of his terrified comrades in the sequels to Sharma v. Timminco Ltd., supra, who tried to persuade the court about the interpretation and operation of the limitation periods in Part XXIII.1 of the Ontario Securities Act and who attempted to shelter behind the doctrine of nunc pro tunc to avoid the statute-bar monster. Mr. Kaynes makes several new arguments including an attempt to ward off the monster by relying on s. 138.3(6) (multiple misrepresentations) of the Act.
[9] To understand why Mr. Kaynes’ arguments fail, save for three misrepresentation claims, which I find not necessarily statute-barred, it is necessary to describe in some detail how Mr. Kaynes’ case found itself lost in the litigation backwoods. See Kaynes v. BP, PLC, 2013 ONSC 5802, 2014 ONCA 580, leave to appeal to S.C.C. refused, [2014] S.C.C.A. No. 452, 2016 ONCA 601, leave to appeal to S.C.C. dismissed 2017 CanLII 1347 (SCC).
[10] As it happens, the factual history of the case at bar is intertwined with the history of the ravages of the statute-bar monster, and Mr. Kaynes’ proposed class action has its own perilous legal history involving private international law, jurisdiction simpliciter, and forum conveniens. The legal history of Mr. Kaynes’ case was perilous because, like the history of the limitation periods in Part XXIII.1 of the Act, there is a chronicle of motions where the developing law was uncertain and the developing law flipflopped backward, forward, and backward again.
[11] Because the history of the statute-bar monster is intertwined with the forum conveniens adventures of Mr. Kaynes and BP, in the discussion that follows, it is, therefore, necessary to combine together the arguments of the parties and the factual and legal analysis and it is necessary to do the analysis chronologically.
[12] The sequential fact, law, and argument analysis that follows reveals that: (a) at the time when Mr. Kaynes commenced his proposed class action, 11 of the 14 misrepresentations were already impotent; (b) Mr. Kaynes’ impotent claims could not be made fertile by s. 138.3(6) of the Ontario Securities Act; (c) shortly after Mr. Kaynes commenced his proposed class action, he unwittingly but propitiously immunized the three remaining misrepresentation claims by serving his notice of motion for leave to assert his claims under Part XXIII.1 of the Act; and (d) neither Mr. Kaynes nor BP were aware that the intermittent series of Tolling Agreements that followed during the forum conveniens motions were, practically speaking, mostly unnecessary. With hindsight, the Tolling Agreements were unnecessary because, years later, the Supreme Court of Canada in Green v. C.I.B.C., supra would hold that service of the notice of motion for leave to assert a claim under Part XXIII.1 was a potential means to avoid the expiry of the limitation period found in s. 138.14 of the Act.
[13] Thus, by way of methodology to explain my Reasons for Decision, after the Introduction and the Overview and Methodology sections, I shall next set out the Procedural Background and the Relevant Statutory Provisions, to be followed by the combined Factual and Legal Analysis and the Conclusion.
C. Procedural Background
[14] The case at bar is an appropriate case to employ rule 21.01(1)(a) to determine, as a question of law, whether the putative Class Members’ claims are, in whole or in part, statute-barred. Rule 21.01(1)(a) provides that a party may move before a judge for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs.
[15] The test on a motion for the determination of an issue before trial under Rule 21.01(1)(a) is whether the determination of the issue is plain and obvious: MacDonald v. Ontario Hydro (1994), 1994 CanLII 7294 (ON SC), 19 O.R. (3d) 529 (Gen. Div.) at paras. 9-11, aff’d (1995), 1995 CanLII 10628 (ON SC), 26 O.R. (3d) 401 (Div. Ct.); Rennie v. Kelsey’s Restaurants Inc., 2011 ONSC 4027 at para. 21. For the purposes of the motion, allegations in the statement of claim are taken to be true: Friedmann Equity Developments Inc. v. Final Note Ltd. (1998), 1998 CanLII 6025 (ON CA), 41 O.R. (3d) 712 (C.A.) at para. 16; Ontario (Ministry of the Attorney General) v. John, 2016 ONSC 2529 at para. 16.
[16] Courts may determine whether a claim is statute-barred on rule 21.01(1)(a) motions, where the determination of the issue does not depend on findings of fact: Charlton v. Beamish (2004), 2004 CanLII 35934 (ON SC), 73 O.R. (3d) 119 (S.C.J.) at paras. 18, 48-49; Whittaker v. Great-West Life Assurance Co. (2008), 2008 CanLII 13376 (ON SC), 63 CCLI (4th) 100 (Ont. S.C.J.) at paras. 2, 36, 48; Waschkowski v. Hopkinson Estate (2000), 2000 CanLII 5646 (ON CA), 47 O.R. (3d) 370 (C.A.); Cascone v. Rodney (1981), 1981 CanLII 1748 (ON SC), 34 O.R. (2d) 618 (H.C.) at para. 2.
[17] On a rule 21.01(1)(a) motion, the court may determine a limitations issue before a statement of defence is filed, where discoverability is not in issue and no additional facts could be pleaded that would alter the conclusion that a limitation period has expired: Beardsley v. Ontario (2001), 2001 CanLII 8621 (ON CA), 57 O.R. (3d) 1 (C.A.) at para. 21; Salewski v Lalonde, 2017 ONCA 515 at paras. 43-46; Amrane v. York University, 2016 ONSC 7847 (Div. Ct.) at paras. 14-15; Maynards Industries Ltd v. Cincinnati Industrial Auctioneers Inc, 2011 ONSC 2656 at para. 34.
D. Relevant Statutory Provisions
[18] Mr. Kaynes’ action is brought pursuant to s. 138.3 of the Ontario Securities Act. It is based on alleged misrepresentations made by BP in documents and in an oral statement.
[19] Subsection 138.3(1) sets out the elements of the statutory cause of action for secondary market misrepresentations. Subsection 138.3(1) states:
LIABILITY
Liability for secondary market disclosure
Documents released by responsible issuer
138.3 (1) Where a responsible issuer or a person or company with actual, implied or apparent authority to act on behalf of a responsible issuer releases a document that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released and the time when the misrepresentation contained in the document was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against,
(a) the responsible issuer;
(b) each director of the responsible issuer at the time the document was released;
(c) each officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document;
(d) each influential person, and each director and officer of an influential person, who knowingly influenced,
(i) the responsible issuer or any person or company acting on behalf of the responsible issuer to release the document, or
(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the release of the document; and
(e) each expert where,
(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,
(ii) the document includes, summarizes or quotes from the report, statement or opinion of the expert, and
(iii) if the document was released by a person or company other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document.
[20] Subsection 138.3(6) grants the court the discretion, in an action under s. 138.3, to treat multiple misrepresentations that have a common subject matter or content, as a single misrepresentation. Subsection 138.3(6) states:
Multiple misrepresentations
(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.
[21] Section 138.14 of the Ontario Securities Act governs the limitation period applicable to claims brought under s. 138.3. Section 138.14(1) states:
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.
E. Factual Background, Arguments, and Legal Analysis
1. Background to the Proposed Class Action
[22] BP is a U.K. company headquartered in London, England. Its securities are traded on the London Stock Exchange, Frankfurt Stock Exchange, and the New York Stock Exchange (“NYSE”). BP’s securities were at one time traded on the Toronto Stock Exchange (“TSX”) until BP voluntarily delisted them in August 2008.
[23] BP is a petroleum company and, as part of its business, it operated deepwater semi-submersible offshore drilling rigs in the Gulf of Mexico, including a rig known as the Deepwater Horizon.
[24] Mr. Kaynes is an Ontario resident. On or before August 12, 2008, he purchased 1,000 BP shares over the NYSE. In making his purchases, he relied on representations made by BP in its core and other documents about BP’s operating management system and about its preparedness for and ability to respond to an oil spill in the Gulf of Mexico.
[25] On April 20, 2010, the Deepwater Horizon exploded. It burned for days and then sank. Property was destroyed, lives were lost, and the disaster continued with a massive oil spill causing enormous environmental damage.
[26] After the disaster, actions and class actions were brought in the United States against BP with respect to the representations made in its core and other documents. In December 2010, lead plaintiffs were appointed in the U.S. proceedings.
[27] On April 20, 2012, approximately two years after the Deepwater Horizon exploded, Mr. Kaynes, in association with another investor, Vern Krishna, Q.C., commenced litigation against BP in Alberta, pursuant to the Alberta Class Proceedings Act. Messrs. Kaynes and Krishna advanced a statutory secondary market misrepresentation claim and a common law negligent misrepresentation claim relating to alleged misrepresentations in BP’s core and other documents.
[28] On November 14, 2012, the Alberta court declined to assume jurisdiction over the matter.
[29] The next day, on November 15, 2012, in Ontario, Mr. Kaynes commenced a clone of the proposed class action that had been commenced in Alberta. Mr. Kaynes relied on the Ontario Securities Act and equivalent other provincial securities legislation. His proposed class action is based on the statutory cause of action for secondary market misrepresentations provided for in Part XXIII.1, s. 138.3 of the Ontario Securities Act. In his Statement of Claim, Mr. Kaynes alleged that BP released documents containing two continuous misrepresentations. He asserted his intention to advance a claim under Part XXIII.1 of the Act and to seek an order for leave to assert the statutory cause of action nunc pro tunc. He also alleged a common law negligent misrepresentation claim, which was subsequently abandoned.
[30] Mr. Kaynes’ proposed class action was brought on behalf of a class of Canadian residents who acquired equity securities in BP from May 9, 2007 to and including April 23, 2010 (the “class period’). Mr. Kaynes alleges that the continuous misrepresentations began on May 9, 2007 and were publicly corrected between April 21, 2010 and May 28, 2010.
[31] Mr. Kaynes pleaded 14 occurrences of alleged misrepresentations. He pleaded that 13 separate documents released by BP and one oral statement made by BP’s CEO during the class period contained misrepresentations. The dates of the pleaded misrepresentations are as follows:
a. May 8, 2007 (Statement of Claim, para. 32)
b. February 22, 2008 (Statement of Claim, para. 34)
c. February 27, 2008 (Statement of Claim, para. 36)
d. March 4, 2008 (Statement of Claim, para. 38)
e. April 17, 2008 (Statement of Claim, para. 40)
f. May 20, 2008 (Statement of Claim, para. 42)
g. February 24, 2009 ((Statement of Claim, para. 44)
h. March 4, 2009 (Statement of Claim, para. 47)
i. March 10, 2009 (Statement of Claim, para. 50)
j. April 16, 2009 (Statement of Claim, para. 56)
k. June 30, 2009 (Statement of Claim, para. 59)
l. February 26, 2010 (Statement of Claim, para. 67)
m. March 5, 2010 (Statement of Claim, para. 70)
n. April 15, 2010 (Statement of Claim, para. 73)
[32] Of the 14 misrepresentations, 11 were made more than three years before the action was commenced on November 15, 2012.
2. The 11 Statute-Barred Misrepresentation Claims
[33] Unlike the general limitation periods found in the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 138.14 of the Ontario Securities Act is an event-triggered limitation period. Under s. 138.14, the statutory cause of action does not have to exist, and if it does exist, it does not have to have been discovered to trigger the running of the limitation period. The Ontario Securities Act plainly states that no action for a misrepresentation shall be commenced later than three years after the date on which the misrepresentation was made.
[34] There is a difference between event-triggered and cause-of-action or claim-based limitation provisions. When the legislature specifies that the commencement of a statutory limitation period is linked to an event and not to the accrual of a cause of action, the court cannot impose a discoverability requirement. In Ryan v. Moore, 2005 SCC 38 at para. 24, the Supreme Court stated:
- [T]he [discoverability] rule is ‘generally’ applicable where the commencement of the limitation period is related by the legislation to the arising or accrual of the cause of action. The law does not permit resort to the judge-made discoverability rule when the limitation period is explicitly linked by the governing legislation to a fixed event unrelated to the injured party’s knowledge or the basis of the cause of action.
[35] Unlike other general and special limitation periods, the limitation period found in s. 138.14 continues to run even after the notice of action or statement of claim is issued. This feature of s. 138.14 is the source of the horror movie franchise of cases beginning with Sharma v. Timminco Ltd., supra.
[36] The legal narrative of those cases is that:
a. In Sharma v. Timminco Ltd., the Ontario Court of Appeal held that the limitation period found in s. 138.14 of the Ontario Securities Act did not stop running until the court granted leave to pursue the s. 138.3 claim.
b. But in Green v. C.I.B.C., Silver v. IMAX Corp. and Trustees of the Millwright Regional Council v. Celestica Inc., a five-member panel of the Court of Appeal overturned Sharma v. Timminco and held that s. 28 of the Class Proceedings Act, 1992 suspended the running of the limitation period with the issuance of the notice of action or statement of claim.
c. However, on further appeal, the Court of Appeal was reversed, and in Green v. C.I.B.C., the Supreme Court of Canada restored Sharma v. Timminco, but the Court held that pursuant to the nunc pro tunc doctrine, the running of the statutory limitation period could, in effect, be suspended if the notice of motion for leave under s. 138.8 was delivered before the limitation period had tolled.
[37] It may be parenthetically noted that in 2014, s. 138.14 of the Ontario Securities Act was amended to add s. 138.14 (2), which provides that the limitation period is automatically suspended when the notice of motion for leave under s. 138.8 is filed with the court. The amendment to s. 138.14 is not retroactive, and the Supreme Court of Canada in Green v. C.I.B.C. did not rely on it in formulating its rule about how the running of the limitation period could be suspended.
[38] Notwithstanding the line of authorities that have discussed the operation of s. 183.14 of the Ontario Securities Act, Mr. Kaynes argues that the constituent elements of the statutory cause of action found in s. 138.3 did not crystallize until there was a public correction, which is a constituent element of the claim, and that this did not occur until, at the earliest, April 21, 2010, and therefore, the three-year limitation period could not have begun to run until April 21, 2010. Based on this argument, Mr. Kaynes asserts that since he commenced his action within three years of April 21, 2010, none of the 14 misrepresentation claims were untimely.
[39] With respect, this argument ignores the plain language of s. 138.14, transmutes to the point of mutation an event-driven limitation period into a discoverability-claim-driven limitation period, obliterates the legislative policy for introducing a limitation period into Part XXIII.1 of the Ontario Securities Act, and is contrary to how s. 138.14 has been discussed, interpreted, and applied in numerous cases including the Sharma v. Timminco line of cases. In Green v. CIBC, supra at paras. 66, 180 the Supreme Court noted that the statutory limitation period was designed to run without regard for the plaintiff’s knowledge of the facts giving rise to the cause of action.
[40] It is plain and obvious that the action based on the 11 misrepresentations is statute-barred.
[41] Mr. Kaynes, however, attempts to save the 11 statute-barred claims by relying on s. 138.3(6) of the Ontario Securities Act. He submits that all the misrepresentations are a continuous misrepresentation that began on May 8, 2007 and continued until May 24, 2010, and, therefore, he argues that the limitation period for all of the misrepresentations started to to run on May 24, 2010, making his November 15, 2012 Statement of Claim timely for all claims, subject to leave being obtained under Part XXIII.1 of the Act.
[42] Mr. Kaynes’ argument about how s. 138.3(6) operates fails for three reasons.
[43] First, Mr. Kaynes interpretation of s. 138.3(6) offends the principles of statutory interpretation that a statute should be interpreted coherently, harmoniously, and without internal contradictions.
[44] To interpret a statute, the court should look at the Act as a whole and attempt to find an interpretation that is in harmony with the entire legislative scheme, including the regulations and forms: Verdun v. Toronto-Dominion Bank, 1996 CanLII 186 (SCC), [1996] 3 S.C.R. 550 at p. 559; Mavi v. Canada (Attorney General) (2009), 2009 ONCA 794, 98 O.R. (3d) 1 (C.A.) at paras. 92-96. In interpreting a statute, it is presumed that the constituent elements of a legislative scheme are meant to work together logically and teleologically, each contributing to the achievement of the legislator's goal without contradictions or inconsistencies among the constituent elements: Peel (Police) v. Ontario (Special Investigations Unit), 2012 ONCA 536 at paras. 26, 60; R. v. Morgentaler, 1975 CanLII 8 (SCC), [1976] 1 S.C.R. 616 at p. 676.
[45] In Green v. C.I.B.C., supra at para. 55, Justice Côté rejected interpretations of the statutory scheme of Part XXIII.1 of the Ontario Securities Act that undermine the s. 138.14 limitation period; she stated:
Even if we were to assume that there is an ambiguity in the wording of the relevant provisions — which there is not — the legislative purpose and structure of those provisions would nonetheless support my conclusion. In other words, “the scheme of the Act, the object of the Act, and the intention of Parliament” are consistent with the ordinary and grammatical meaning of the words, which is another reason not to depart from that meaning […] To hold that s. 28 CPA operates to suspend a limitation period for a statutory claim under s. 138.3 OSA before leave is obtained would be to circumvent the carefully calibrated purposive balance struck by the limits to the statutory action provided for in Part XXIII.1 OSA. Such an interpretation would render s. 138.8 OSA ineffective, since the suspension of the limitation period, although not permanent, could nevertheless delay the decision on the merits of leave for several months or even for years, as the cases at bar demonstrate.
[46] As demonstrated by the case at bar, Mr. Kaynes’ interpretation and argument about the application of s. 138.3(6) of the Ontario Securities Act essentially obliterates the operation of s. 138.14 and the clear policy of the Legislature that no action shall be commenced under s. 138.3 after three years from the first release of the misrepresentation. As demonstrated by the case at bar, Mr. Kaynes’ action is brought based on misrepresentations that, at the commencement of the action in 2012, were over five years old.
[47] Second, Mr. Kaynes’ interpretation is contrary to the scheme of Part XXIII.1 of the Ontario Securities Act, which carefully calibrates the regulation of the securities marketplace balancing a myriad of factors including the rights of plaintiffs and defendants and the reality that where damages are awarded against a corporation, it is their innocent long-term shareholders who ultimately pay the price for corporate misconduct. As Justice Côté noted in Green v. C.I.B.C., supra at para. 69:
- Part XXIII.1 [of the] 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. The legislative history reveals a long, meticulous development of this balance, one that found expression in all the limits built into the scheme.
[48] Third, Mr. Kaynes’ interpretation of s. 138.3(6) of the Ontario Securities Act is contrary to the legislative history that explains the Legislature’s purpose for including s. 138.3 as part of the legislative scheme. The legislative history reveals that s. 138.3(6) was added based on a suggestion from the Ontario Securities Commission in response to a Request for Comments. The Commission suggested that s. 138.3(6) would enable the court to deem repeated common misrepresentations to be a single misrepresentation and thus prevent multiple liability for disclosure violations that were so interconnected to be considered a single disclosure violation. In other words, s. 138.3(6) was designed to protect defendants and the provision was not intended to affect the limitation provisions of the Ontario Securities Act.
[49] I conclude that it is plain and obvious that s. 138.3(6) does not bring back from the dead the 11 statute-barred misrepresentation claims.
[50] There are two cases that have considered s. 138.3(6); namely: Dobbie v. Arctic Glacier Income Fund, 2011 ONSC 25 and Mask v. Silvercorp, 2015 ONSC 5348. Neither case analyzes the issue of the interaction between s. 138.3(6) and s. 138.14 and, for present purposes, neither case is helpful.
3. The Three Remaining Misrepresentation Claims: 2012 – Fall 2015
[51] Subject to leave being obtained, the remaining three of Mr. Kaynes’ misrepresentation claims were timely when he commenced his action on November 15, 2012. The following day, on November 16, 2012, Mr. Kaynes served his motion record seeking leave to assert a claim under Part XXIII.1 of the Ontario Securities Act.
[52] On November 16, 2012, neither BP nor Mr. Kaynes would have appreciated how potentially significant was the delivery of the motion record. They would not and could not have known at that time that in 2015, in Green v. C.I.B.C., supra, the Supreme Court of Canada would hold that pursuant to the nunc pro tunc doctrine, the running of the statutory limitation period found in s. 138.14 of the Ontario Securities Act could, in effect, be suspended if the notice of motion for leave under s. 138.8 of the Act was delivered before the limitation period had tolled.
[53] In November 2012, Mr. Kaynes, however, would have been under the impression that unless the running of the limitation period was tolled by agreement, he needed to have his leave motion heard within about three months.
[54] Within about a month, the parties entered into a Tolling Agreement to suspend the running of all limitation periods while the leave motion was being pursued. The Tolling Agreement was effective as of December 22, 2012. For Mr. Kaynes, this Agreement was necessary because in 2012, as already noted above, the statutory limitation period did not otherwise stop running until he had obtained leave to commence his action pursuant to s. 138.8 of the Ontario Securities Act. The Tolling Agreement had an expiry date of December 20, 2013, and the Agreement stated that it shall not operate to revive any claim that was barred by any limitation period or time requirement before its effective date.
[55] On March 13, 2013, BP brought a motion for an order declaring that an Ontario court did not have jurisdiction to hear the foreign exchange purchasers’ claims, or, alternatively, staying those claims on grounds of forum non conveniens. It is notable that BP did not challenge that the Ontario court had jurisdiction with respect to Canadian putative Class Members who had purchased BP shares in Ontario during the period that BP was a reporting issuer in Ontario.
[56] It is worth noting that the situation as of the spring of 2013 was that there was, at least, going to be a leave motion for the Canadian Class Members but whether the court had jurisdiction with respect to the balance of the Class Members was being litigated, and, in any event, there was no immediate peril from the limitation period because of the December Tolling Agreement.
[57] While BP’s jurisdiction motion was pending, on August 9, 2013, Mr. Kaynes delivered an Amended Statement of Claim. During August 2013, Mr. Kaynes amended his claim to shorten the class period and to abandon the common law negligent misrepresentation claim.
[58] BP’s jurisdiction motion was argued, and on October 9, 2013, Justice Conway dismissed the motion. See Kaynes v. BP, PLC, 2013 ONSC 5802. Justice Conway concluded that the Ontario court had jurisdiction simpliciter with respect to Canadian residents who had purchased shares on foreign exchanges and she held that Ontario was a forum conveniens.
[59] BP appealed to the Court of Appeal for Ontario.
[60] In November 2013, the parties entered into an addendum to the Tolling Agreement extending the expiration date until 180 days after the release of the decision of the Court of Appeal. The addendum to the Tolling Agreement maintained the status quo and, at this juncture, Mr. Kaynes’ three misrepresentation claims were not imperiled by s. 138.14 of the Ontario Securities Act.
[61] BP’s appeal was argued, and on August 14, 2014, the Court of Appeal allowed the appeal, in part. The Court of Appeal agreed with Justice Conway that the Ontario court had jurisdiction simpliciter, but the Court of Appeal stayed the claims of the Canadian residents who had purchased shares on foreign exchanges on the grounds of forum non conveniens. See Kaynes v. BP, PLC, 2014 ONCA 580.
[62] Mr. Kaynes sought leave to appeal the Court of Appeal’s decision to the Supreme Court of Canada and, on October 3, 2014, the parties executed a second addendum to the Tolling Agreement, extending the expiration date to 180 days after either: (a) the release of a decision of the Supreme Court of Canada denying Mr. Kaynes’ application for leave to appeal, or (b) if his application for leave to appeal was granted, the release of the Supreme Court of Canada’s decision on the merits of the appeal.
[63] This addendum to the Tolling Agreement again maintained the status quo, and at this juncture Mr. Kaynes’ three misrepresentation claims continued to not be imperiled by s. 138.14 of the Ontario Securities Act.
[64] On March 27, 2015, the Supreme Court of Canada denied Mr. Kaynes’ application for leave to appeal. See Kaynes v. BP, PLC, [2014] S.C.C.A No. 452.
[65] The next day, Mr. Kaynes commenced a new class action against BP in the United States District Court for the Southern District of Texas. He asserted a claim based on the statutory cause of action under Part XXIII.1 of the Ontario Securities Act. Around this time, Mr. Kaynes also began the process of seeking representation in London, England, and of determining how to advance a group action in the English courts.
[66] In the U.S., BP responded by bringing a motion to dismiss Mr. Kaynes’ U.S. action.
[67] While BP’s motion in the U.S. was pending, on September 22, 2015, the Tolling Agreement that was protecting the proposed class action in Ontario expired, and having regard to the state of knowledge at the time, Mr. Kaynes knew or might have thought that any extant limitation periods under Part XXIII.1 of the Ontario Securities Act started running again.
[68] On September 25, 2015, Judge Ellison of the Texas court granted BP’s motion. Judge Ellison held that the court-appointed lead plaintiffs in the U.S. proceedings had been granted the sole authority to determine what claims to pursue on behalf of the class that included Mr. Kaynes and his proposed Canadian class, and, therefore, Mr. Kaynes was not entitled to assert a separate class action based on a claim that the lead plaintiffs had decided not to pursue. Further, Judge Ellison held that Mr. Kaynes’ U.S. action, which was advancing an Ontario Part XXIII.1 claim, was time-barred pursuant to Ontario’s three-year limitation period. Judge Ellison held that, since Mr. Kaynes purchased his BP securities in 2008, he was required to file his claim by no later than 2011, but that he had not commenced his action in Ontario until 2012.
[69] In the motion in the U.S., Mr. Kaynes had argued that the alleged misrepresentations should be treated as a single continuous misrepresentation under s. 138.3(6) of the Ontario Securities Act, and that this would protect the timeliness of his claim. Judge Ellison, however, held that even assuming that s. 138.3(6) granted the court discretion to save Mr. Kaynes’ claim, which he doubted, he would not exercise the discretion.
[70] Mr. Kaynes did not appeal Judge Ellison’s decision to the U.S. Court of Appeals for the Fifth Circuit.
4. BP’s Estoppel Argument
[71] As may be noted, Judge Ellison, in effect, decided that under Ontario law, Mr. Kaynes’ claims were statute-barred and that the claims were not saved by s. 138.3(6) of the Ontario Securities Act. In the motion now before the court, BP relies on Judge Ellison’s decision as raising a res judicata or issue estoppel. Mr. Kaynes responded with a technical argument about res judicata and an argument about the merits of Judge Ellison’s decision on the merits.
[72] For the purposes of my own decision, I shall not engage in this debate between the parties. In deciding the motion before the court, I do not rely on an issue estoppel or res judicata for two reasons.
[73] First, I have already decided the substantive issues about the interpretation of the Ontario Securities Act, and I do not need to rely on Justice Ellison’s analysis.
[74] Second, even when a party establishes the pre-conditions for an issue estoppel, a court must still determine whether, as a matter of discretion, issue estoppel ought to be applied, and the court should stand back and, taking into account the entirety of the circumstances, consider whether an issue estoppel in the particular case would work an injustice: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44; Penner v. Niagara (Regional Police Services Board), 2013 SCC 19; Amtim Capital Inc. v. Appliance Recycling Centres of America, 2014 ONCA 62. In my opinion, it is neither necessary nor fair and it is not in the interests of justice to decide this case based on issue estoppel.
5. The Three Remaining Misrepresentation Claims: Fall 2015 - 2016
[75] On December 4, 2015, the Supreme Court of Canada released its decision in Green v. C.I.B.C., supra. The Supreme Court reversed the Court of Appeal’s overturning of Sharma v. Timminco Inc. The Supreme Court demarcated the availability of the nunc pro tunc doctrine and held that in certain circumstances, the court could grant leave nunc pro tunc to assert a Part XXIII.1 claim making a statutory misrepresentation claim timely if the claim was yet statute-barred at the time when the motion for leave was delivered.
[76] Meanwhile, on February 26, 2016, after the dismissal of his U.S. action, Mr. Kaynes brought a motion to lift the stay granted by the Court of Appeal.
[77] On July 29, 2016, the Court of Appeal granted Mr. Kaynes’ motion. See Kaynes v. BP, PLC, 2016 ONCA 601.
[78] BP sought leave to appeal to the Supreme Court of Canada.
[79] While BP’s application for leave was pending, Mr. Kaynes sought a third addendum to the Tolling Agreement. The parties agreed to a further addendum effective September 29, 2016.
[80] The third addendum extended the expiration date of the Tolling Agreement from September 29, 2016 to 180 days after either: (a) the release of a decision of the Supreme Court of Canada denying BP’s application for leave to appeal, or (b) if BP’s application for leave was granted, the release of a decision of the Supreme Court of Canada on the merits of the appeal.
[81] With respect to the third addendum, it should be noted that at this juncture, it was arguable that the limitation periods for the remaining three misrepresentation claims, which had resumed running 12 months earlier in September 2015, had expired. Thus, the third addendum expressly stated that it did not revive any claim barred by any limitation period as a result of the running of the limitation period between September 22, 2015 and September 29, 2016.
[82] Indeed, in the case at bar, BP relies on the lapse of the Tolling Agreement and the arguable expiry of the limitation period to argue that the remaining three misrepresentation claims are statute-barred. More precisely, BP relies on the Tolling Agreement as foreclosing Mr. Kaynes from asserting that the three misrepresentation claims are not statute-barred. BP argues that the three-year limitation period in this case would have expired on February 29, 2016, as a result of the expiry of the Tolling Agreement on September 22, 2015 and because of the Tolling Agreement, Mr. Kaynes is foreclosed from relying on the nunc pro tunc doctrine. Thus, in its Reply Factum at paragraph 11, BP argues:
- …. Post-Issuance Claims: There is no basis for the court to resort to considering whether it is appropriate to grant nunc pro tunc relief with respect to the Post-Issuance Claims. Unlike the cases in the CIBC v. Green trilogy, where the parties did not enter into tolling agreements, the parties in this case entered into a Tolling Agreement that sets out their agreement on the suspension of the limitation period. The Tolling Agreement is clear that the limitation period would start to run as soon as the Tolling Agreement expired, and that no claims could be revived that: (i) had expired prior to the execution of the Tolling Agreement, or (ii) subsequently expired during the period between the expiry of the Tolling Agreement in September 2015 and the execution of the Third Addendum to the Tolling Agreement effective September 2016. Based on the terms of that agreement, the Post-Issuance Claims are out of time.
[83] I do not agree with BP’s submission, which would purport to include promises or acknowledgements by Mr. Kaynes that are not to be found in the Tolling Agreement.
[84] For BP’s argument to succeed, Mr. Kaynes would have had to expressly agree that he could not rely on the nunc pro tunc doctrine. When the parties started signing the Tolling Agreement, they would not have been known that years later, the Supreme Court of Canada, (and also Legislatures across the country) would give significance to the delivery of the motion record for the leave motion. By the time of the third addendum, however, both parties would have been aware that Mr. Kaynes might attempt to avail himself of a nunc pro tunc order on the leave motion. In short, I do not interpret the Tolling Agreement as foreclosing Mr. Kaynes from relying on the nunc pro tunc order.
[85] If my conclusion is correct, the status of the Class Members’ three misrepresentation claims as of the signing of the third addendum is that Mr. Kaynes could rely only on the nunc pro tunc doctrine to sustain these claims because he had delivered his motion record while these claims were viable. It is true that the limitation periods subsequently began to run, but that would not disturb the nunc pro tunc doctrine, which precisely has the purpose of backdating the leave order to a point in time when viable claims were not statute-barred.
[86] For present purposes, I obviously cannot determine whether the court hearing the leave motion of the three misrepresentation claims will grant leave, and for present purposes, I need not determine the hypothetical question of assuming leave was granted whether the court would make its order nunc pro tunc. For present purposes, I simply decide that in Mr. Kaynes’ action, the claims based on 11 misrepresentations are statute-barred and that the claims based on three misrepresentation claims are not necessarily statute-barred because Mr. Kaynes is not foreclosed from relying on the nunc pro tunc doctrine.
[87] Put in other words, it is plain and obvious that: (a) Mr. Kaynes’ and the Class Members’ claims for all but a class period of February 27, 2010 to April 23, 2010 (the class period for the three misrepresentation claims) are statute-barred by s. 138.14 of the Ontario Securities Act; and (b) should leave be granted nunc pro tunc to assert the three misrepresentation claims, then Mr. Kaynes’ Part XXIII.1 claims for a class period of February 27, 2010 to April 23, 2010 would not be statute-barred.
6. The Three Remaining Misrepresentation Claims: Fall 2016 - 2017
[88] The above analysis is dispositive of BP’s motion, but to complete the factual background leading to the motion now before the court, on January 19, 2017, the Supreme Court of Canada denied BP’s application for leave to appeal the lifting of the stay. See Kaynes v. BP, PLC, 2017 CanLII 1347 (SCC).
[89] On May 31, 2017, Mr. Kaynes delivered a second Amended Statement of Claim. At paragraph 2(c) of the amended claim, Mr. Kaynes sought, for the first time, a declaration that the the misrepresentations be treated as a single misrepresentation with a common subject matter, pursuant to s. 138.3(6) of the Ontario Securities Act.
F. Conclusion
[90] For the above reasons, BP’s motion is allowed in substantial part and Mr. Kaynes’ claims for all but a Class Period of February 27, 2010 to April 23, 2010 are declared statute-barred by s. 138.14 of the Ontario Securities Act.
[91] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with BP’s submissions within 20 days of the release of these Reasons for Decision followed by Mr. Kaynes’ submissions with a further 20 days.
Perell, J.
Released: September 1, 2017
CITATION: Kaynes v. BP, P.L.C., 2017 ONSC 5172
COURT FILE NO.: CV-12-467836CP
DATE: 20170901
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PETER KAYNES
Plaintiff
– and –
BP, P.L.C.
Defendant
REASONS FOR DECISION
PERELL J.
Released: September 1, 2017