Kaynes v. BP, PLC, 2019 ONSC 6464

COURT FILE NO.: CV-12-00467836CP

DATE: 2019/11/08

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

PETER KAYNES

Plaintiff

• and -

BP, PLC

Defendant

Counsel:

Eli Karp and Hadi Davarinia for the Plaintiff

Laura K. Fric, Kevin O’Brien, and Karin Sachar for the Defendant

Proceeding under the Class Proceedings Act, 1992

HEARD: October 25, 2019

PERELL, J.

REASONS FOR DECISION

A. Introduction

1Pursuant to the Class Proceedings Act, 1992,¹ Peter Kaynes brings a proposed class action for misrepresentations in the secondary market for securities. Pursuant to rule 21.01 (1)(a) of the Rules of Civil Procedure,² the Defendant, BP, PLC, brings a motion for an order declaring that the claims for fraudulent misrepresentation in Mr. Kaynes 2019 Amended Second Fresh as Amended Statement of Claim are statute barred pursuant to the Limitations Act, 2002.³ BP also seeks an order striking the amendments to the pleading as an abuse of process. Finally, pursuant to rule 21.01 (1)(b), BP seeks the dismissal of the balance of Mr. Kaynes’ action for disclosing no cause of action because Mr. Kaynes himself is disqualified from being a representative plaintiff and no substitute plaintiff has come forward.

2For the reasons that follow, I grant BP’s motion, on the grounds that the pleading of a claim or cause of action for fraudulent misrepresentation is indeed statute barred and Mr. Kaynes is disqualified as a representative plaintiff.

B. Facts

3BP 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”). At one time, BP’s securities were traded on the Toronto Stock Exchange (“TSX”), but BP voluntarily delisted them in August 2008. It continued to report to the Alberta Stock Exchange.

4BP 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.

5Mr. Kaynes is a resident of Ontario. On or before August 12, 2008, while he was a resident of Alberta, 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.

6After several accidents in the early 2000s, including an explosion at BP’s refinery in Texas City, Texas, which killed 15 workers and injured 180, BP commissioned an independent panel led by former U.S. Secretary of State, James Baker III to investigate BP’s safety culture and management systems in North America. On January 16, 2007, the Baker Report was released.

7After the release of the Barker Report, BP made representations to the public regarding the safety of its operating management system (“OMS”) and regarding its ability to respond to an oil rig explosion under its oil spill response plan for the Gulf of Mexico, which plan was published June 30, 2009 (“OSRP”).

8On 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. Mr. Kaynes alleges that BP failed to properly respond to the explosion and failed to contain the spill that led to over 200 million gallons of oil gushing into the Gulf of Mexico.

9After 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. For reasons that will become apparent below, it is significant to note that in the U.S., a constituent element of the claim for misrepresentation in the secondary market of securities is scienter or an intent to defraud.

10On January 11, 2011, in the United States, the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling released its final report. The Commissioners reported that the accident of April 20, 2010 was avoidable and that it had been caused by mistakes, including BP’s mistakes.

11On September 14, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement and the U.S. Coast Guard Joint Investigation Team released their final investigative report on the Deepwater Horizon explosion and resulting oil spill. Once again, BP, amongst others, was blamed for the disaster.

12On April 20, 2012, approximately two years after the Deepwater Horizon exploded, Vern Krishna, Q.C. commenced litigation against BP in Alberta, pursuant to the Alberta Class Proceedings Act.

13On May 25, 2012, Mr. Kaynes was added as a plaintiff, and he and Mr. Krishna filed an Amended Statement of Claim in the Alberta action. They advanced a statutory secondary market misrepresentation action, which requires leave to be asserted, and a common law negligent misrepresentation cause of action relating to alleged misrepresentations in BP’s core and other documents. They did not manifestly advance a common law fraudulent misrepresentation cause of action.

14Alberta’s Rules of Court require leave to serve a defendant residing outside of Canada, and Messrs. Kaynes and Krishna brought a motion for service ex juris on BP, which, as noted above, is headquartered in London, United Kingdom. On September 18, 2012, Messrs Kaynes and Krishna applied before Master Prowse of the Court of Queen’s Bench of Alberta for an order for service ex juris. The motion was dismissed with leave to file further and better materials.

15Further materials were filed but on November 14, 2012, Master Laycock of the Alberta court declined to assume jurisdiction over the matter and refused to approve service ex juris. The next day, on November 15, 2012, in Ontario, pursuant to the Class Proceedings Act, 1992, Mr. Kaynes commenced a clone of the proposed class action that had been commenced in Alberta.

16Also, on November 15, 2012, the U.S. Department of Justice announced that it had reached an agreement with BP about the Deepwater Horizon incident. A subsidiary of BP agreed to plead guilty to felony manslaughter, environmental crimes, and obstruction of congress.

17Mr. 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 alleged that the misrepresentations began on May 9, 2007 and were publicly corrected between April 21, 2010 and May 28, 2010.

18Mr. Kaynes relied on the Ontario Securities Act⁴ and equivalent provincial securities legislation. His proposed class action was 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 2012 Statement of Claim, Mr. Kaynes alleged that BP released documents containing three misrepresentations. He asserted his intention to advance an action under Part XXIII.1 of the Act and to seek an order for leave to assert the statutory cause of action nunc pro tunc.

19The major constituent elements of the statutory cause of action are: (1) the making of a misrepresentation or the failure to disclose a material fact; (2) a public correction of the false information; and (3) the trading of a security between the time of the misrepresentation or the failure to disclose a material fact. Thus, to plead the statutory causes of action, the plaintiff should: (1) identify the inculpatory statement or omission and when it was made or ought to have been made; (2) specify the falseness of the inculpatory statement; and (3) identify the public correction and when it was made.⁵

20In his 2012 Statement of Claim, Mr. Kaynes also alleged a common law negligent misrepresentation cause of action. He made no manifest allegation of fraudulent misrepresentation, and whether the fraudulent misrepresentation cause of action was implicit in the pleading is a matter of controversy between the parties.

21The elements of a claim of negligent misrepresentation are: (1) duty of care based on a special relationship between the plaintiff and the defendant; (2) an untrue, inaccurate, or misleading representation; (3) the defendant making the representation negligently; (4) the plaintiff having reasonably relied on the misrepresentation; and, (5) the plaintiff suffering damages as a consequence of relying on the misrepresentation.⁶

22The constituent elements of a common law fraud, deceit, or fraudulent misrepresentation cause of action, as the tort is variously called, are: (1) a false statement by the defendant; (2) the defendant knowing that the statement is false or being indifferent to its truth or falsity; (3) the defendant having an intent to deceive the plaintiff; (4) the false statement being material and the plaintiff having been induced to act; and, (5) the plaintiff suffering damages.⁷

23Fraud is a serious allegation, and it must be pleaded with particularity.⁸ Deceit or fraudulent misrepresentation requires that the defendant have "a wicked mind”.⁹ Fraud involves intentional dishonesty, the intent being to deceive. If the plaintiff fails to prove this mental element, then, as was the case in the seminal case of Derry v. Peek,¹⁰ the claim is dismissed. To succeed in an action for deceit or for fraudulent misrepresentation, the plaintiff must show not only that the defendant spoke falsely and contrary to belief but that the defendant had the intent to deceive, which is to say he or she had the aim of inducing the plaintiff to act mistakenly.¹¹ The defendant's reason for deceiving the plaintiff, however, need not be evil. A person may have a benign reason for defrauding another person, but the fraud remains because of the discordance between words and belief combined with the intent to mislead the plaintiff.

24At the fundamental core of fraud, deceit, or fraudulent misrepresentation is the moral turpitude for the defendant.¹² The moral turpitude of fraud, deceit, or fraudulent misrepresentation are found in the constituent elements that: (1) the defendant knows that his or her statement is false or the defendant is indifferent to the statements truth or falsity; and (2) the defendant having an intent to deceive the plaintiff.

25In his 2012 Statement of Claim (and in all its subsequent iterations), Mr. Kaynes pleaded three misrepresentations: (1) the “OMS Misrepresentation”; (2) the “OSRP Misrepresentation”; and (3) the “Omission”.

26The “OMS Misrepresentation” was pleaded as follow:

a. “Baker Report” means a report published by BP concerning safety management and systems across U.S. operations, in which BP represents how operational safety would be improved by adopting 10 recommendations made by the Baker Panel, which was chaired by former U.S. Secretary of State James Baker, III, and was disseminated to the public on January 16, 2007;

b. “OMS” means BP’s operating management system, which is published in its annual Sustainability Reviews and elsewhere, as the primary framework that is alleged to have served as the foundation for processes designed to increase BP’s Process Safety procedures and a blueprint for safety and all aspects of operations throughout BP and how every BP project, site, operation and facility is managed following OMS Group Essentials;

c. “OMS Group Essentials” means the core aspects of the OMS as defined by BP in a letter to the SEC dated October 8, 2010, which includes each of BP’s operating entities and creates its own local OMS, tailored to its operations, including crisis plans;

d. “OMS Misrepresentation” means BP’s representation regarding the scope and timing of the implementation of the OMS at BP’s operations, and specifically:

i. that BP would carry out all recommendations made in the Baker Report, including implementing “an integrated and comprehensive process safety management system” at all of its operations;

ii. that the OMS would be implemented across all of BP’s operations (including leased vessels, and not just vessels that were fully owned by BP); and

iii. regarding the timing/schedule of the OMS migration, the number of BP sites that had been migrated to OMS, and when OMS migration would be complete.

27The “OSRP Misrepresentation” was pleaded as follows:

a. “OSRP Misrepresentation” means BP’s representation regarding BP’s preparedness for and ability to respond to an oil spill in the Gulf of Mexico, and specifically:

i. what the worst-case scenario discharge would be in case of a leak and how much BP could recover in the event of an oil spill (i.e. that BP had the capability to recover in excess of the worse-case scenario discharge);

ii. that BP had in place specific (and functioning) safety equipment and trained personnel to respond in case of an oil spill; and

iii. that BP would not be required to utilize new technologies and could respond to a worst-case oil spill in the Gulf of Mexico with proven equipment and technologies.

28The Omission was pleaded as follows:

a. “Omission” means BP’s misrepresentation released in core and non-core documents by omitting to disclose material facts that an internal BP strategy document dated December 2008 specifically warned BP executives of serious Process Safety “priority gaps” in its operations within the Gulf of Mexico, until revealed on January 24, 2011 by Fortune Magazine;

b. “Process Safety” means, as described in BP’s Sustainability Review, applying good design principles, engineering and operating and maintenance practices to manage operations safely;

c. “Sustainability Review” means the annual report that BP published that detailed its Process Safety and operational risk guide and risk management systems, including the OMS.

29Mr. Kaynes pleaded 14 occurrences of the alleged three misrepresentations. He pleaded that 13 separate documents released by BP and one oral statement made by BP’s CEO during the class period contained the misrepresentations. Of the 14 occurrences, 11 were made more than three years before November 15, 2012, when Mr. Kayne’s action was commenced in Ontario.

30The date of the occurrence of the misrepresentation is significant because of the limitation period that applies to the statutory cause of action under Ontario’s Securities Act. Section 138.14 of the Ontario Securities Act governs the limitation period applicable to action brought under s. 138.3. The Act states that no action for a misrepresentation shall be commenced later than three years after the date on which the misrepresentation was made.

31Section 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.

32In his 2012 Statement of Claim (and in the Statements of Claim that followed in 2013, 2017, and 2019), Mr. Kaynes pleaded that BP corrected its misrepresentations to the public by corrective disclosures in statements released on April 21, 2010, April 28, 2010, April 29, 2010, May 4, 2010, and May 29, 2010.

33After the 2012 action was commenced, BP brought a motion for an order declaring that an Ontario court did not have jurisdiction simpliciter over the claims of individuals who purchased BP securities over foreign exchanges or, alternatively, staying those claims on grounds of forum non conveniens. For the jurisdiction motion, BP served its Motion Record on March 13, 2013 and its factum and Supplementary Motion Record on August 2, 2013.

34On August 9, 2013, while BP’s jurisdiction motion was pending, Mr. Kaynes filed his Fresh as Amended Statement of Claim. In his 2013 Statement of Claim, he withdrew the common law negligent misrepresentation cause of action. In this pleading, he made no manifest allegation of fraudulent misrepresentation, and whether the fraudulent misrepresentation cause of action was implicit in the pleading is a matter of controversy between the parties.

35On October 9, 2013, Justice Conway dismissed BP’s jurisdiction motion.¹³ She concluded that the Ontario court had jurisdiction over the action. BP appealed.

36On August 14, 2014, the Court of Appeal for Ontario allowed BP’s appeal in part and stayed the foreign exchange purchasers’ claims on grounds of forum non conveniens.¹⁴ The foreign jurisdiction in which the Canadians had purchased securities was the proper forum for the action. There were more than 100 individual BP shareholders, some of whom are Canadian, asserting fraud claims in the U.S. District Court for the Southern District of Texas arising from the Deepwater Horizon explosion.

37On September 4, 2014, in the United States, the District Court for the Eastern District of Louisiana held that BP had acted with conscious disregard of known risks and was primarily responsible for the oil spill because it was guilty of gross negligence and willful misconduct. BP appealed.

38On March 27, 2015, the Supreme Court of Canada denied Mr. Kaynes’ application for leave to appeal from the decision of the Court of Appeal that had stayed his action in Canada.¹⁵

39The 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. BP responded by bringing a motion to dismiss Mr. Kaynes’ U.S. action.

40On July 2, 2015, BP reached an agreement with the U.S. Department of Justice and five U.S. states to resolve nearly all claims, including nearly all the class action claims, against the Company outstanding from the oil spill, including ending the pending appeal by BP in the U.S of the September 4, 2014 decision of the District Court for the Eastern District of Louisiana.

41On September 25, 2015, Judge Ellison of the Texas court granted BP’s motion that challenged Mr. Kaynes’ American class action. 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.

42Mr. Kaynes did not appeal Judge Ellison’s decision to the U.S. Court of Appeals for the Fifth Circuit. Rather, on February 26, 2016, after the dismissal of his U.S. action, he brought a motion to lift the stay of his Canadian proceedings in Ontario. On July 29, 2016, the Court of Appeal granted Mr. Kaynes’ motion.¹⁶ BP sought leave to appeal to the Supreme Court of Canada.

43On January 19, 2017, the Supreme Court of Canada denied BP’s application for leave to appeal the lifting of the stay.¹⁷

44On June 7, 2017, Mr. Kaynes delivered a Second Fresh as Amended Statement of Claim. The 2017 Statement of Claim added new alleged statutory misrepresentations that were not referred to in the 2012 or the 2013 Statements of Claim. The 2017 Statement of Claim did not revive the abandoned common law negligent misrepresentation cause of action. In this pleading, Mr. Kaynes made no manifest allegation of fraudulent misrepresentation and whether the fraudulent misrepresentation cause of action was implicit in the pleading is a matter of controversy between the parties.

45After the delivery of the 2017 Statement of Claim, BP brought a motion challenging the pleading, and on September 1, 2017, I declared all but three of the 14 occurrences of the misrepresentation allegations to be statute barred pursuant to section 138.14 of the Securities Act. The only claims not statute barred were those for a two-month class period of February 27, 2010 to April 23, 2010.¹⁸

46Mr. Kaynes, however, acquired his shares of BP on or before August 12, 2008 - a year and a half before the commencement of the Class Period. As such, his personal statutory claims were all statute barred. And, it follows that he was disqualified from being the representative plaintiff for the Class Members that purchased BP’s equity securities between November 16, 2009 and April 23, 2010. No other Canadian-resident investors have been recruited to replace Mr. Kaynes.

47Mr. Kaynes appealed my decision about limitation periods barring almost all of the statutory misrepresentation actions. While that decision was under appeal, Mr. Kaynes filed an Application on December 15, 2017 for advice and direction in the Court of Queen’s Bench of Alberta. He sought advice and directions regarding the procedure for resumption of the Alberta action. In his application, Mr. Kaynes stated that the limitation periods under the Alberta Limitation Act are not event-triggered limitation periods, such as is the case with the Ontario Securities Act. In his application, he argued that all 14 occurrences of the common law misrepresentation claim in the Alberta action, (which unlike the situation in Ontario had not been abandoned) were timely and are not statute barred.

48On April 3, 2018, the Court of Appeal for Ontario dismissed the appeal from the decision striking all but three occurrences of Mr. Kaynes’ statutory misrepresentation claims.¹⁹

49Mr. Kaynes did not bring on his Application in Alberta, and a year passed, until on May 27, 2019, Mr. Kaynes served a motion seeking leave to amend the 2017 Statement of Claim in the Ontario action manifestly to add a cause of action for fraudulent misrepresentation. BP brought a cross-motion to strike the new pleading.

50The motions were scheduled to be heard on September 11, 2019, but on August 20, 2019, counsel for the parties attended a case conference. Since BP had never pleaded a Statement of Defence to the 2012, 2013, or 2017 Statements of Claim delivered by Mr. Kaynes, under the Rules of Civil Procedure, he did not need leave to amend his pleading.

51At the case conference, Mr. Kaynes’ motion for leave to amend was deemed to be withdrawn. Mr. Kaynes was simply directed to deliver the Amended Second Fresh as Amended Statement of Claim, which he did on September 4, 2019.

52The 2019 Statement of Claim repeats the 14 alleged occurrences of the misrepresentations between May 2007 and April 2010 as grounding the fraudulent misrepresentation cause of action. Mr. Kaynes alleges, for the first time, that the representations made between 2007 and 2010 were false when made and that BP knew that the representations were false when made. The alleged misrepresentations asserted in the 2019 Statement of Claim are those pleaded in the 2012, 2013, and 2017 iterations of Mr. Kaynes’ Statement of Claim. He adds an “Appendix A” with particulars of the fraud allegations that BP made misrepresentations with knowledge of their falsities or with a reckless disregard to learning the accuracy of the representations.

53Although BP has to date not pleaded a Statement of Defence to any of Mr. Kaynes’ Statements of Claim, in his responding materials to BP’s motion to strike, Mr. Kaynes has included in his factum a draft Reply pleading. He submits that the Reply pleading demonstrates that there are mixed questions of fact and law about the discoverability of the fraudulent misrepresentation cause of action and about whether there has been fraudulent concealment.

C. Submissions of the Parties

54BP argues that the 2012, 2013, and 2017 iterations of Mr. Kaynes’ Statement of Claim do not expressly or implicitly plead a cause of action for fraudulent misrepresentation. Pursuant to rule 21.01 (1)(a), it submits that it is plain and obvious that the limitation period for a claim in fraudulent misrepresentation began to run by no later than June 1, 2010 because BP publicly corrected its misrepresentations by no later than May 29, 2010 and the alleged trading losses occurred between April 20, 2010 and June 1, 2010. BP submits that it follows, therefore, that a action for fraudulent misrepresentation became statute barred under the Limitations Act, 2002 on June 1, 2012, and, therefore, it is plain and obvious that Mr. Kaynes’ fraudulent misrepresentation cause of action in his 2019 Statement of Claim is statute barred and it should be struck without leave to amend. BP pleads that it is plain and obvious that there are no issues of discoverability or of fraudulent concealment that would extend the tolling of the limitation period in June 2012 and that would keep the limitation period suspended until 2019.

55It should be noted that BP’s argument entails that even if Mr. Kaynes had included a fraudulent misrepresentation claim in his November 2012 Statement of Claim, the claim was already statute barred having been tolled around June 2012, the second anniversary of the Deepwater Horizon explosion, the corrective notices, and the suffering of harm. The same argument could also be made with respect to the negligent misrepresentation cause of action included in the November 2012 Statement of Claim.

56As an alternative to its argument based on rule 21.01 (1)(a), pursuant to rule 51.06 (2), BP submits that in the proceedings to date, Mr. Kaynes has admitted that his action for fraudulent misrepresentation is statute barred by the two-year limitation period of the Limitations Act, 2002 and, accordingly, BP moves pursuant to rule 51.06 (2) for an order based on the admission.

57As an alternative argument, BP submits that in the circumstances of the immediate case, even if BP’s fraudulent misrepresentation cause of action is not statute barred or even if it cannot be determined at this juncture whether Mr. Kaynes’ fraudulent misrepresentation action is statute barred, the cause of action was not pleaded in the 2012, 2013, or 2017 iterations of Mr. Kaynes’ Statement of Claim, and BP submits, therefore, that it would be an abuse of process to allow a fraudulent misrepresentation cause of action to be added for the first time in 2019. BP submits that Mr. Kaynes is attempting to litigate by installments, and this is contrary to the principle of judicial economy, manifestly unfair to BP, and would bring the administration of justice into disrepute.

58Finally, BP submits that the result of striking the fraudulent misrepresentation cause of action would be that Mr. Kaynes is left only with an action under Part XXIII.1 of the Ontario Securities Act (and under the analogous statutes across Canada) for a truncated two-month class period. However, Mr. Kaynes is not a Class Member for that period, and, therefore, he is disqualified as a potential representative plaintiff and, therefore, with no replacement having been recruited, Mr. Kaynes’ proposed class action should be dismissed in its entirety.

59In response to BP’s submissions, Mr. Kaynes submits that his 2012 Statement of Claim in Alberta and his 2012, 2013, and especially his 2017 iterations of his Statement of Claim in Ontario include a cause of action for fraudulent misrepresentation and, therefore, it is not plain and obvious that the fraudulent misrepresentation action is statute barred. He submits that the fraudulent misrepresentation cause of action was and is a complimentary or alternative theory of liability and thus the 2019 Statement of Claim in Ontario does not add a new claim that is statute barred.

60Alternatively, Mr. Kaynes submits that if his 2012, 2013, and 2017 iterations of his Statement of Claim do not include a cause of action for fraudulent misrepresentation, it is not plain and obvious that the fraudulent misrepresentation action in the 2019 Statement of Claim is statute barred because it is not plain and obvious when the fraudulent misrepresentation action was discovered. He submits that based on the principles associated with discoverability and fraudulent concealment, it is not plain and obvious that the fraudulent misrepresentation action is statute barred.

61Further, Mr. Kaynes submits that the contemporary rule 21.01 (1)(a) jurisprudence and the contemporary jurisprudence about amending a statement of claim to add a claim posit that where issues of discoverability or fraudulent concealment are engaged, then save in rare and extraordinarily clear cases, the appropriate response for the court is to allow the claim to be pleaded and to not strike the claim but rather to allow the new claim to be prosecuted without prejudice to the defendant pleading a limitation period defence, the merits of which will remain to be determined by a summary judgment motion or at trial.

62Thus, Mr. Kaynes submits that there are issues of mixed fact and law to be determined and that it is not plain and obvious that discoverability and or fraudulent concealment are not engaged and, therefore, BP’s motion should be dismissed without prejudice to it pleading its limitation period defence.

63As another reason to dismiss the Rule 21 motion, Mr. Kaynes submits that BPs delay in challenging the timeliness of the common law claims, which could have been made as early as challenging the 2012 Statement of Claim is a free-standing discretionary reason to dismiss the motion.²⁰

64Mr. Kaynes submits that in the circumstances of this case it is not an abuse of process to allow him to prosecute his fraudulent misrepresentation action, again without prejudice to BP pleading a limitation period defence and a defence on the merits, both of which can be tested by a motion for summary judgment or trial. He submits that there certainly has not been any re-litigation of the fraudulent misrepresentation claim.

D. Discussion and Analysis

1. Introduction, Overview, and the Dismissal of Mr. Kaynes’ Action

65As I shall explain below, while I do not agree with the articulation of the argument, which I shall not digress to detail, I agree with BP that for the purposes of the running of limitation periods under Ontario’s Limitations Act, 2002, Mr. Kaynes’ negligent misrepresentation cause of action and his fraudulent misrepresentation cause of action were discovered around the time of the corrective disclosures that BP made between March and June 2010 after the Deepwater Horizon disaster. The limitation periods would toll in June 2012.

66Thus, the November 2012 Statement of Claim in Ontario came too late to advance anything other than the statutory misrepresentation claims that had a three-year limitation period from the date of the misrepresentations. This legal truth may explain why Mr. Kaynes made a correct decision to abandon the negligent misrepresentation action in August 2013. The action was not viable in Ontario.

67As I shall explain below, I disagree with Mr. Kaynes’ arguments that the fraudulent misrepresentation action was not statute barred because it was a complimentary or alternative theory of liability to the common law negligent misrepresentation claim made in the 2012 Statement of Claim. A fraudulent misrepresentation cause of action is a discrete tort claim that would become statute barred around June 1, 2012, unless an action was commenced before that date, which it was not. In any event, even if the fraudulent misrepresentation claim was a complimentary or alternative theory of liability to the negligent misrepresentation claim, both claims were complementarily statute barred around June 1, 2012.

68In my opinion, as explained below, there are no material facts that could be pleaded or any discoverability issues that could or would postpone the running of the limitation period for the fraudulent misrepresentation cause of action. It is plain and obvious that all of the possible claims arising from the Deepwater Horizon disaster were discovered by June 1, 2012. In my opinion, as explained below, the case at bar is one of those cases where pursuant to rule 21.01 (1)(a), the court can and should strike a claim as statute barred.

69Since, I am striking Mr. Kaynes’ fraudulent misrepresentation cause of action as statute barred pursuant to rule 21.01 (1)(a), I need not, and I shall not, address BP’s argument that is based on admissions and on rule 51.06 (2). I also need not, and I shall not, address BP’s alternative argument that the fraudulent misrepresentation cause of action is an abuse of process.²¹

70During argument, Mr. Kaynes conceded that if his fraudulent misrepresentation claim was struck, he did not qualify as a representative plaintiff for the truncated statutory misrepresentation action and that there was no plaintiff to substitute for him. It follows that Mr. Kaynes does not have standing to seek leave to assert the statutory action and certification of the proposed class action for the statutory claim is not possible.²² In these circumstances, I shall, as requested, dismiss Mr. Kaynes’ proposed class action.

2. Is the Fraudulent Misrepresentation Claim Statute Barred?

71With respect to the negligent misrepresentation claim and with respect to the fraudulent misrepresentation claim, the relevant provisions of the Limitations Act, 2002 are sections 1, 4, and 5, which are set out below:

Definitions

1. In this Act,

“claim” means a claim to remedy an injury, loss or damage that occurred as a result of an act or omission;

BASIC LIMITATION PERIOD

Basic limitation period

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

Discovery

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).

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.

72Limitation periods exist for three purposes: (1) to promote accuracy and certainty in the adjudication of claims; (2) to provide fairness to persons who might be required to defend against claims based on stale evidence; and (3) to prompt persons who might wish to commence claims to be diligent in pursuing them in a timely fashion.²³ These purposes are described as the certainty, evidentiary, and diligence rationales.

73Before the enactment of the current Limitations Act, 2002, a limitation period commenced when a cause of action accrued and when the cause of action was discovered.

74There are over a hundred causes of action and there were rules for when a cause of action accrued and rules about when an accrued cause of action was discovered. Prior to the enactment of s. 5(1)(a)(iv) of the current Limitations Act, 2002, the judge-made discoverability principle governed the commencement of a limitation period. The discoverability principle stipulated that a limitation period begins to run only after the plaintiff has the knowledge, or the means of acquiring the knowledge, of the existence of the material facts that would support a claim for relief; i.e. knowledge of the factual constituent elements of a cause of action.²⁴ The discoverability principle conforms with the idea of a cause of action being the fact or facts which give a person a right to judicial redress or relief against another.²⁵

75A cause of action is a set of facts that entitles a person to obtain a judgment in his or her favour from a court exercising its common law, equitable or statutory jurisdiction.²⁶ In Ivany v. Financiere Telco Inc.,²⁷ and 1309489 Ontario Inc. v. BMO Bank of Montreal,²⁸ Justice Lauwers observed that the idea of cause of action is used in two related senses: (1) it identifies a factual matrix from which claims or complaints arise; and (2) it identifies the legal nature of those claims, which is the nominal or technical meaning of cause of action.

76With the enactment of the Limitations Act, 2002, a limitation period commences when a “claim” is discovered”. The words “cause of action” do not appear in the Act, and the goal of the legislators was that for the purpose of determining when a limitation period began to run, “claim” and “claim” discovery would replace cause of action accrual and cause of action discovery.²⁹ This goal, however, was not achieved and the case law continues to use the idea of a cause of action in association with the idea of a “claim” under the Act. Under the Act, a claim is discovered on the earlier of two dates: the day on which a plaintiff either knew or ought to have known the constitutive elements of the claim and that a proceeding in Superior Court would be an appropriate means to seek a remedy.³⁰

77This continued connection between the ideas of claims as defined by the Limitations Act, 2002 and causes of action as understood under statutes and in law and equity is understandable, because civil procedure requires a plaintiff to plead the material facts of a viable cause of action and just pleading that the defendant’s conduct harmed the plaintiff does not provide the plaintiff with a remedy for his or her legal grievance or give the defendant notice of the cause of action that he or she must defend.

78Section 1 of the Limitations Act, 2002 defines "claim" to mean: "a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”. A claim is a function of cause of action, which is the fact or facts which give a person a right to judicial redress or relief against another.³¹ In Lawless v. Anderson,³² the Court of Appeal stated at paras. 22-23:

22. The principle of discoverability provides that "a cause of action arises for the purposes of a limitation period when the material facts on which it is based have been discovered, or ought to have been discovered, by the plaintiff by the exercise of reasonable diligence. This principle conforms with the generally accepted definition of the term “cause of action” -- the fact or facts which give a person a right to judicial redress or relief against another"....

23. Determining whether a person has discovered a claim is a fact-based analysis. The question to be posed is whether the prospective plaintiff knows enough facts on which to base an allegation of negligence against the defendant. If the plaintiff does, then the claim has been "discovered", and the limitation period begins to run: see Soper v. Southcott (1998), 1998 5359 (ON CA), 39 OR (3d) 737 (C.A.) and McSween v. Louis (2000), 2000 5744 (ON CA), 132 OAC 304 (C.A.).

79Although functionally closely related to causes of action, a claim as defined under the Limitations Act, 2002 is somewhat different from a cause of action. A cause of action has discrete constituent elements. For example, as noted above, negligent misrepresentation has five specific constituent elements, but a claim under the Limitations Act, 2002 has just two generic elements; namely: (1) and act or omission of misconduct; and (2) injury, loss or damage caused by the misconduct. Strictly speaking, the application of the Limitations Act, 2002 does not require identifying the cause of action, it requires only determining whether the plaintiff has discovered wrongful conduct and harm for which a lawsuit would be appropriate to remedy the harm. Another difference between claims and causes of action is that all claims have the element of damages, but some causes of action are actionable without damages having occurred. The cause of action for contract, for instance, requires a contract and a breach of the contract; damages, which typically do occur when a contract is breached, are, however, not a constituent element of the cause of action for breach of contract. Another difference is that no causes of action have appropriateness of a lawsuit as a constituent element, which is a factor in what counts for a discovered claim under the Limitations Act, 2002. A subtle deviation between claim and cause of action is that discovery of a claim under the Limitations Act, 2002 requires the plaintiff to have knowledge of an occurrence of injury caused by the defendant’s misconduct for which a law suit would be an appropriate means to seek a remedy, but discovery of a cause of action under the common law requires the plaintiff to have knowledge that the defendant’s conduct occasioned the material facts of the constituent elements of a particular cause of action.

80All of the above reveals that the relationship between claim and cause of action is subtle and sometimes confusing. When a proceeding would be an appropriate means to seek to remedy, it is not enough for the plaintiff to just plead a claim as defined under the Limitations Act, 2002, he or she must still plead a reasonable cause of action. To assert a cause of action so as to interrupt a limitation period, the pleading must allege the facts necessary to identify the constituent elements of the cause of action.³³

81With some statutory adjustment, the discoverability principle continues to operate for claims, and the principle has been codified by the Limitations Act, 2002. Discoverability has been adjusted by s. 5(1)(a)(iv), and thus subject to s. 5(1)(a)(iv), a limitation period commences at its earliest when the plaintiff discovers the underlying material facts or, alternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence, but because of s. 5(1)(a)(iv), discoverability may be postponed.

82Under the Limitations Act, 2002, the discoverability of a claim for relief involves the identification of the wrongdoer, and also, the discovery of his or her acts or omissions that constitute liability.³⁴ It is not enough that the plaintiff has suffered a loss and has knowledge that someone might be responsible; the identity and culpable acts of the wrongdoer must be known or knowable with reasonable diligence.³⁵

83For the limitation period to begin to run, it is not necessary that the plaintiff know the full extent or quantification of his or her damages; rather, the period begins to run with the plaintiff’s subjective or objective appreciation of being damaged, i.e., of being worse off than before the defendant’s conduct.³⁶

84Section 5(1) of the Limitations Act, 2002 adjusts the operation of the discoverability principle, and s. 5(1)(a)(iv) can have the effect of delaying the commencement of the running of limitation period. Where a person knows that he or she has suffered harm; i.e., when the plaintiff knows the elements of ss. 5(1)(a)(i),(ii), and (iii), the delay lasts until the day when a proceeding would be an “appropriate” means to remedy the harm having regard to the nature of the injury, loss or damage.

85The appropriateness factor of 5(1)(a)(iv) introduces some uncertainty in the operation of the Limitations Act, 2002 but it also introduces some flexibility and fairness in the application of the discovery principle, which presumptively operates against the claimant as soon as a cause of action becomes objectively apparent.³⁷ In Markel Insurance Co. of Canada v. ING Insurance Co. of Canada,³⁸ the Court of Appeal held that for s. 5(1)(a)(iv) to have a delaying effect, there must be a juridical reason for the person to wait; i.e., there must be an explanation rooted in law as to why commencing a proceeding was not yet appropriate. Appropriateness must be assessed on the facts of each particular case, including taking into account the particular interests and circumstances of the plaintiff.³⁹

86Subject to the adjustment made by s. 5(1)(a)(iv), with respect to the basic limitation period of two years under the Limitations Act, 2002, a claim is “discovered” on the earlier of the date the claimant knew - a subjective criterion - or ought to have known - an objective criterion - about the claim.⁴⁰ Pursuant to s. 5(2) of the Act, the discovery of a claim presumptively occurs for the plaintiff on the date of the act or omission, but the plaintiff may rebut the presumption by demonstrating that he or she could only have reasonably discovered the underlying material facts after the date of the act or omission.

87If a plaintiff seeks to amend his or her statement of claim to plead what may appear to be a new cause of action, the defendant may object that the amended statement of claim is statute barred by the expiry of a limitation period. The plaintiff, however, may argue that the amendment does not assert a new claim or a new cause of action but rather the cause of action is within the material facts as originally pleaded.⁴¹ The plaintiff may also argue that no new cause of action is being pleaded, but rather that he or she is simply pleading new or alternative remedies based on the same facts and already pleaded causes of actions.⁴² An amendment of a statement of claim to assert an alternative theory of liability or an additional remedy based on facts that have already been pleaded in the statement of claim does not assert a new claim for purposes of section 4 of the Limitations Act.⁴³ The key is whether substantially all of the material facts of the tendered cause of action have already been pleaded, in which case, the amendment will be allowed, or whether new material facts are sought to be added to support the cause of action, in which case, the amendment will not be allowed or if already pleaded, it will be struck.⁴⁴

88Applying these principles to the circumstances of the immediate case, pursuant to the Limitations Act, 2002 around June 1, 2010, presumptively and also subjectively and objectively factually, Mr. Kaynes discovered he had a “claim” against BP. He subjectively knew that BPs misconduct had caused him harm and he knew that court proceedings would be appropriate. For the purpose of the commencement of limitation periods, it was not necessary for Mr. Kaynes to put a cause of action name to his “claim”. Whatever way the statement of claim was later framed to name a cause of action, the “claim” to which the cause of action was connected had been discovered in 2010 and the limitation period clock was running.

89In other words, having discovered a “claim” in 2010, Mr. Kaynes had two years to plead the misconduct connected to the claim by pleading the material facts of negligence, negligent misrepresentation, fraudulent, misrepresentation, an oppression remedy, nuisance, or whatever. For the purpose of commencing a proceeding, however he might label his claim as a cause of action in a statement of claim, the limitation period for the “claim” was running by June 1, 2010. As it happened, albeit late, in November 2012, Mr. Kaynes pleaded a cause of action for negligent misrepresentation in Ontario, and he gave his claim a cause of action name, but regardless of its name in accordance with the principles of the Limitations Act, 2002, the negligent misrepresentation claim was already statute barred. A fraudulent misrepresentation claim had it been pleaded in November 2012 in Ontario would also have been statute barred.

90In a creative argument, Mr. Kaynes, however, argues that his April 2012 action in Alberta was a timely claim in Alberta, with which I would agree, and until the Alberta court declined to take jurisdiction with respect to that claim, which did not occur until November 2012, it could not be said that a claim in Ontario had been discovered until November 2012. In this regard, he submits that under s. 5 (1)(a)(iv) of Ontario’s Limitation Act, 2002, it was only after Alberta declined to take jurisdiction that it could be said that proceedings in Ontario were appropriate and thus until the November decision in Alberta, the claim in Ontario had not been discovered.

91This argument, however, does not work because the appropriateness of a proceeding in Ontario is not determined by the inappropriateness of a proceeding somewhere else. If any, the decision in Alberta, confirmed that Ontario was the appropriate forum for proceedings against BP.

92Moreover, with respect to the particular claim of fraudulent misrepresentation, as I shall explain again below, there never was asserted a timely cause of action for fraudulent misrepresentation in either Alberta or Ontario.⁴⁵ Even if the pleading of negligent misrepresentation was timely in Alberta and based on the appropriateness factor timely in Ontario, a pleading of negligent misrepresentation does not incorporate a pleading of fraudulent misrepresentation as an alternative basis for liability.

93In his 2012 Statement of Claim, Mr. Kaynes did not plead a cause of action of fraudulent misrepresentation. He, rather, pleaded a claim for negligent misrepresentation. These causes of action have different names and different constituent elements. While the cause of action or claim of fraudulent misrepresentation may be an alternative theory of liability to the negligent misrepresentation claim, by pleading the material facts of a cause of action in negligent misrepresentation, the pleader does not necessarily plead the constituent elements and material facts of the alternative theory of liability. Notwithstanding Mr. Kaynes arguments to the contrary, in the immediate case, Mr. Kaynes did not plead the material facts of any alternative theory of liability until his 2019 Statement of Claim. By then, that cause of action for fraudulent misrepresentation was statute barred.

94It sometimes happens that a pleader, while pleading the material facts of a labelled or unlabeled cause of action, will plead the material facts for a different labelled or unlabeled cause of action. A common example is a professional negligence case where the pleaded material facts may sound in negligence, breach of contract, and breach of fiduciary duty. But by pleading the material facts of one theory of liability it does not automatically follow that alternative theories of liability are pleaded.

95In the immediate case, negligent misrepresentation and fraudulent misrepresentation share the constituent element of a misrepresentation, but they are not alternative theories of liability arising from the same material facts. The constituent elements of the cause of action for fraudulent misrepresentation of the defendant knowing that the statement is false or being indifferent to its truth or falsity and the defendant having an intent to deceive the plaintiff, differentiates a cause of action of fraudulent misrepresentation from a cause of action of negligent misrepresentation. The material facts of the constituent elements of the respective causes of action are not the same. Negligent misrepresentation is based on inadvertent misconduct while fraudulent misrepresentation is based on advertent misconduct. Negligent misrepresentation is not an intentional tort; fraudulent misrepresentation is an intentional tort.

96In the immediate case, all the material facts for a fraudulent misrepresentation claim were not pleaded or incorporated in the negligent misrepresentation claim. The factual matrix of a claim for fraudulent misrepresentation may have elements that overlap with the factual matrix of a claim for negligent misrepresentation, but the factual matrices are not the same. In the immediate case, the 2019 Statement of Claim adds a new and different cause of action that is not based of the factual matrix of the 2012, 2013, or 2017 Statements of Claim. Having reviewed the pleadings, in my opinion, the essential material facts of the fraudulent misrepresentation claim were not pleaded in the earlier pleadings.

97In the immediate case, a cause of action in fraudulent misrepresentation had been discovered by 2010, and Mr. Kaynes could have been pleaded this cause of action in 2012 as a companion to his statutory cause of action and to his negligent misrepresentation cause of action. This is easily revealed. As early as 2010, Canadians and Americans suing in the United States’ courts were advancing claims or causes of action based on scienter, which is to say causes of action based on BP fraudulently misrepresenting its securities to secondary market purchasers of its securities. By 2010, a reasonable person with the abilities and in the circumstances of Mr. Kaynes would have discovered that his cause of action in fraudulent misrepresentation had accrued and that having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate.

98The fraudulent misrepresentation claim had been discovered by 2010 or by 2012 at the latest. Mr. Kaynes’ draft Reply contains just a bald and unparticularized pleading of fraudulent concealment. There cannot be fraudulent concealment of a claim that has already been discovered. In the Reply, there is no material facts of any conduct by BP that would obscure that it could be sued for fraudulent misrepresentation. In the immediate case, Mr. Kaynes was not unable to discover that he had a claim for fraudulent misrepresentation because of any conduct by BP. He discovered the claim for fraudulent misrepresentation, and he chose not to pursue it.

99The various reports by commissions and investigators in 2011 in the United States and the guilty plea of BP in criminal proceedings, which by the way came after, Mr. Kaynes had already commenced his negligent misrepresentation action do not negate the demonstrable fact that a claim against BP for fraudulent misrepresentation had been subjectively and objectively discovered by him before he commenced actions in Alberta or Ontario.

100In 2012, although aware of the cause of action for fraudulent misrepresentation, Mr. Kaynes apparently decided not to plead a claim in fraudulent misrepresentation in Alberta or Ontario, because he did not need it.

101In 2012 and until recently, fraudulent misrepresentation was not a useful alternative theory of liability for Mr. Kaynes because if he failed on the merits to prove his statutory claim or if he failed on the merits to prove his negligent misrepresentation claim, he would not snatch victory from defeat by a fraudulent misrepresentation cause of action. It now turns out in 2019 that a fraudulent misrepresentation would be useful because as matters have developed, Mr. Kaynes abandoned his negligent misrepresentation claim and now has only a truncated period for a statutory cause of action. Necessity may be the mother of invention, but necessity is not the mother of a suspension of a limitation period of a cause of action that had accrued and been discovered and never pleaded.

102In my opinion, Mr. Kaynes never pleaded a fraudulent misrepresentation cause of action until his 2019 Statement of Claim, and by then, the claim or cause of action was statute barred.

103However, Mr. Kaynes submits that this conclusion is outside the jurisdictional ambit of a motion that relies of rule 21.01 (1)(a). He submits, therefore, that I ought to dismiss BP’s motion but allow it to plead its technical limitation period defence to which he says he will deliver a reply (as noted above, he actually included a draft Reply in his responding motion materials) that will raise issues of discoverability and fraudulent concealment. He says that the merits of BPs limitation period defence can be decided later on a motion for summary judgment under Rule 20 or at trial.

104In the next part of these Reasons for Decision, I shall address the merits of Mr. Kaynes’ argument about the court’s jurisdiction under rule 21.01 (1)(a), and, in particular, I shall address his argument that the determination of whether the fraudulent misrepresentation claim is statute barred should not be made before a summary judgment motion or a trial of BP’s as not yet formally pleaded limitation period defence.

3. Rule 21.01(1)(a) and the Determination of whether a Claim is Statute Barred

105BP, which has not delivered a Statement of Defence, relies of rule 21.01 (1)(a) and seeks an order that the fraudulent misrepresentation claim be struck as statute barred. Here, it may be noted that the explanation for why BP has not yet pleaded a Statement of Defence is that it is not required to do so until leave is granted to Mr. Kaynes to assert the statutory claim under Part XXIII.1 of the Ontario Securities Act.

106Rule 21 authorizes the court to decide a legal issue before trial. It states:

WHERE AVAILABLE

To Any Party on a Question of Law

21.01 (1) A party may move before a judge,

(a) 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; or

(b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence,

and the judge may make an order or grant judgment accordingly.

(2) No evidence is admissible on a motion,

(a) under clause (1) (a), except with leave of a judge or on consent of the parties;

(b) under clause (1) (b).

107The court applies the same test for the determination of an issue of law under rule 21.01 (1)(a) as it does to determine under rule 21.01 (1)(b) whether a pleading discloses no reasonable cause of action. The test is whether the determination of the issue is plain and obvious.⁴⁶ For the purposes of a motion under either rule, allegations in the statement of claim are taken to be true.⁴⁷

108For a motion under rule 21.01(1)(a), the issue to be determined must be an issue of law raised by the pleading.⁴⁸ An issue of fact or of mixed fact and law cannot be determined on a motion made under this rule.⁴⁹ If there is a factual dispute or if a full factual record is necessary to decide the issue of law, the court should decline to hear the motion under rule 21.01(1)(a).⁵⁰

109Courts 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.⁵¹ Where the availability of a limitation period defence depends upon findings of fact, it is a question of mixed fact and law and not a question of law that can be decided on a motion under Rule 21.⁵² A plaintiff’s claim should not be struck under rule 21.01 (1)(a) based on the expiry of a limitation period, where there is a factual controversy about when the claim was discovered.⁵³

110Where a statement of defence is delivered and the pleadings reveal that discoverability is not an issue, the court may determine whether the plaintiff’s claim is statute barred under rule 21.01 (1)(a).⁵⁴ Except in the very rare case where it is obvious that no additional facts could be asserted by the plaintiff in his or her statement of claim or reply, where a motion is brought to decide a point of law based on the expiry of a limitation period, the defendant must deliver a statement of defence before moving to challenge the plaintiff’s pleading.⁵⁵ The court, however, may determine a limitations issue on a rule 21.01(1)(a) motion 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.⁵⁶

111In the immediate case, BP has not delivered its statement of defence. For the reasons discussed earlier in these Reasons for Decision, it is, however, plain and obvious that discoverability of the fraudulent misrepresentation claim is not in issue and no additional facts could be pleaded that would alter the conclusion that pursuant to the scheme of the Limitations Act, 2002, the fraudulent misrepresentation cause of action asserted in the 2019 Statement of Claim was an untimely claim, which is to say it was statute barred. This plain and obvious conclusion is based on the material facts of any or all of the 2012, 2013, 2017, and 2019 Statements of Claim taken individually or taken as a combination or permutation of material being assumed to be true.

112I, therefore, conclude that it is appropriate in the immediate case to use rule 21.01 (1)(a) to strike the fraudulent misrepresentation claim from the 2019 Statement of Claim.

113I appreciate that BP has delayed making its limitation period challenges and has done so sporadically and only after its efforts to stay the action in Ontario on jurisdictional grounds ultimately failed. Of course, BP did not need to challenge the timeliness of the negligent misrepresentation action after it was abandoned, and it did not appreciate until 2019 that it needed to challenge the timeliness of fraudulent misrepresentation cause of action. I, however, see no purpose in dismissing BP’s rule 21.01 (1)(a) motion on discretionary grounds. If I were to dismiss the motion, there is the prospect of another jurisdictional motion about the proper forum for the fraudulent misrepresentation action and even if that motion was not brought, there is no reason to punt the issue of whether the fraudulent misrepresentation claim is statute barred when it is plain and obvious that this cause of action for a remedy for a disaster that occurred in 2010 was not pleaded until 2019.

E. Legal Autopsy

114For the purposes of BP’s Rule 21 motion, the following legal autopsy confirms the above analysis, and I offer it only as comfort, perhaps cold comfort, to Mr. Kaynes, who has valiantly and diligently attempted to advance a class action on behalf of Canadians aggrieved by the alleged misconduct of BP.

115Class actions, including most especially international secondary market securities class actions, are high litigation risk endeavors, and there are lessons to be learned from what Mr. Kaynes began as a proposed class action in Alberta.

116In my opinion, one lesson to be learned is that it was never wrong for Mr. Kaynes not to have included a manifest claim for fraudulent misrepresentation.

117In Canada, the statutory causes of action for the secondary market for securities are designed to be the route to access to justice for the group of securities holders injured by market misrepresentations. The statutory claim is preferable to the alternative of common law tort claims. The tort claims are ill designed for class actions and the tort claims are more or less redundant if leave is granted to pursue the statutory secondary market misrepresentation claim.

118In my opinion, Mr. Kaynes was correct in not pleading fraudulent misrepresentation at the outset in Alberta and he was correct in abandoning the negligent misrepresentation claim in Ontario. In my opinion, the optimum route to access to justice for market misrepresentation class actions is to put all the legal eggs in the basket of the statutory claim.

119Another lesson to be learned is that it is only with the wisdom of hindsight that Mr. Kaynes ought to have chosen Ontario and not Alberta as the forum for his statutory cause of action.

120At the time of making that choice to sue in Alberta, BP’s subsidiaries were operating in Alberta, which unlike Ontario is a known as a place for the petroleum industry. BP still had reporting obligations in Alberta. Mr. Kaynes had been a resident of Alberta when he had purchased his shares in BP. Had the Alberta court not declined jurisdiction, then the history of Mr. Kaynes’ class action would likely have been much different. His statutory claims certainly would not have been statute barred, and he would not have needed to resort to his pleaded negligent misrepresentation cause of action or to an unpleaded fraudulent misrepresentation cause of action.

121For future cases, the lesson to be learned from Mr. Kaynes’ experience in Alberta and Ontario is that the initial choice of forum is a critically important problem to solve as it may be too late, as it was in Mr. Kaynes’ case to switch to another forum.

122In my opinion, the answer to the problem of the initial choice of forum is to make the correct forum choice at the outset, and the answer to the problem does not lie in hedging the choice by starting multiple class actions in multiple forums. Multiple class actions would be an abuse of process,⁵⁷ and, in any event and more to the point, the hedging might be futile.

123Using Mr. Kaynes case as an example, as it happened, there was a period of time when by virtue of the Court of Appeal’s decision on forum conveniens, the Ontario Superior Court of Justice, just like the Alberta Court of Queen’s Bench, declined to take jurisdiction of the statutory claims. The lesson remains that in cases involving multiple possible forums, getting the initial choice correct is critically important and getting it wrong may be irreparable.

124Here, it should be observed that in the immediate case this important lesson about choice of forum concerns the statutory claim. As I have already explained, the lesson to be learned about the fraudulent misrepresentation claim is that Mr. Kaynes made no mistake in not pleading it at the outset in Alberta or Ontario. He resorted to the fraudulent misrepresentation cause of action only because of what happened to the statutory claim, most of which turned out to be statute barred by the time it was brought in Ontario.

125Generally speaking, it is not a pleasurable experience for anyone other than the defendant when a possibly meritorious claim class action is dismissed by a court on technical grounds, but substantive, procedural, jurisdictional, and limitations law are meant to be applied in class actions.

126Mr. Kaynes had a timely statutory claim in Alberta, but the Alberta court on jurisdictional grounds declined to assume jurisdiction. Mr. Kaynes did not appeal that decision. For a period of time, the Ontario court also declined to assume jurisdiction over the statutory claim. Now, a few class members in Mr. Kaynes proposed class action have a truncated statutory claim in Ontario, but he acknowledges that he cannot be their representative plaintiff.

127Mr. Kaynes never had a timely fraudulent misrepresentation claim in Alberta, where the claim was never made, and he does not have a timely fraudulent misrepresentation claim in Ontario because the claim was first made in 2019. Limitation periods are meant to be applied and Mr. Kaynes fraudulent misrepresentation claim is statute barred.

F. Conclusion

128For the above reasons, BP’s motion is granted.

129If the parties cannot agree about the matter of costs, they may make submissions in writing, beginning with BP’s submissions within twenty days from the release of these Reasons for Decision, followed by Mr. Kaynes’ submissions within a further twenty days.

130I alert the parties that my current assessment is that the case at bar is an appropriate one for me to exercise my discretion and make no order as to costs.

Perell, J.

Footnotes

1. 1S.O. 1992, c. 6.
2. 2R.R.O. 1990, Reg. 194.
3. 3S.O. 2002, c. 24, Sched. B.
4. 4R.S.O. 1990, c. S.5.
5. 5Mask v. Silvercorp Metals Inc., 2015 ONSC 5348 at paras. 22-23, aff’d 2016 ONCA 641; Drywall Acoustic Lathing and Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2015 ONSC 256 at paras. 27- 28.
6. 6Queen v. Cognos, 1993 146 (SCC), [1993] 1 S.C.R. 87.
7. 7Hryniak v. Mauldin, 2014 SCC 7 at para. 87; Bruno Appliance and Furniture Inc. v. Hryniak, 2014 SCC 8; Hughes v. Sunbeam Corp. (Canada), 2000 22685 (ON SC), [2000] O.J. No. 4595 (S.C.J.); TWT Enterprises Ltd. v. Westgreen Developments (North) Ltd. (1990), 1990 5599 (AB KB), 78 Alta. L.R. (2d) 62 (Q.B.), aff’d (1992), 1992 ABCA 211, 3 Alta. L.R. (3d) 124 (C.A.); Parna v. G. & S. Properties Ltd. (1970), 1970 25 (SCC), 15 D.L.R. (3d) 336 at p. 344 (S.C.C.); Derry v. Peek.
8. 8Rule 25.06(8) of the Rules of Civil Procedure, R.R.O. 1990, reg. 194; McKenna v. Gammon Gold Inc., 2010 ONSC 1591, varied 2010 ONSC 4068 (Div. Ct.); Rule 25.06(8) states: “Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.”
9. 9Le Lievre v. Gould, [1893] 1 Q.B. 491 at p. 498.
10. 10(1889), 14 App. Cas. 925 (H.L.).
11. 11Bradford Building Society v. Borders, [1941] 2 All E.R. 205 at p. 211; Beckman v. Wallace (1913), 1913 534 (ON CA), 29 O.L.R. 96 at p. 101 (C.A.). Smith v. Chadwick (1854), 9 App. Cas. 187 at p. 201.
12. 12Royal Bank of Canada v. Gentra Canada Investments Inc., 2001 6996 (ON CA), [2001] O.J. No. 2344 at para. 8 (C.A.); Cineplex Odeon Corp. v. 100 Bloor West Partner Inc., [1993] O.J. No. 112 at para. 30 (Gen. Div.); Washburn v. Wright (1913), 1914 525 (ON CA), 31 O.L.R. 138 (App. Div.).
13. 13Kaynes v. BP, PLC, 2013 ONSC 5802.
14. 14Kaynes v. BP, PLC, 2014 ONCA 580.
15. 15Kaynes v. BP, PLC, [2014] S.C.C.A No. 452.
16. 16Kaynes v. BP, PLC, 2016 ONCA 601.
17. 17Kaynes v. BP, PLC, 2017 1347 (SCC).
18. 18Kaynes v. BP, PLC, 2017 ONSC 5172.
19. 19Kaynes v BP PLC, 2018 ONCA 337
20. 20Fleet Street Financial Corp. v Levinson, [2003], O.J. No. 441 (S.C.J.); Colonna v. Bell Canada (1993), 15 C.P.C. (3d) 65 (Ont. Gen. Div.); MacKenzie v. Wood Gundy Inc. (1989), 35 C.P.C. (2d) 272 (Ont. H.C.J.).
21. 21See: The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354; Winter v. Sherman Estate, 2018 ONCA 703; Pennyfeather v. Timminco Limited, 2016 ONSC 3124; Mid-Bowline Group Corp, Re, 2016 ONSC 669; Phillion v. Ontario (Attorney General), 2014 ONCA 567; Johnson v. Futerman, 2012 ONSC 4092; Bear v. Merck Frosst Canada & Co., 2011 SKCA 152; Global Aerospace Inc v Insurance Co of State of Pennsylvania, 2010 SKCA 96; Lo Faso v. Kelton & Ferracuti Consultants Ltd, 2009 ONCA 513, affg. [2008] O.J. No. 2461 (S.C.J.); Gough v. Newfoundland & Labrador, 2006 NLCA 3, leave to appeal to the SCC refused, [2006] SCCA No. 71; Toronto (City) v. CUPE Local 79, 2003 SCC 63.
22. 22See: Hurst v. Armstrong & Quaile Associates Inc., [2007] O.J. No. 2310; Hughes v. Sunbeam Corp (Canada) Ltd. (2002), 2002 45051 (ON CA), 61 O.R. (3d) 433 (C.A.), leave to appeal to SCC refused [2002] S.C.C.A. No. 446; Ragoonanan Estate v. Imperial Tobacco Canada Ltd. (2000), 2000 22719 (ON SC), 51 O.R. (3d) 603 (S.C.J.); Stone v Wellington (County) Board of Education, 1999 1886 (ON CA), [1999] O.J. No. 1298 (C.A.).
23. 23Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44; Frohlick v. Pinkerton Canada Ltd. (2008), 2008 ONCA 3, 88 O.R. (3d) 401 (C.A.); Novak v. Bond, 1999 685 (SCC), [1999] 1 S.C.R. 808; M. (K.) v. M. (H.), 1992 31 (SCC), [1992] 3 S.C.R. 6.
24. 24Peixeiro v. Haberman, 1997 325 (SCC), [1997] 3 S.C.R. 549; Central Trust Co. v. Rafuse (1986), 1986 29 (SCC), 31 D.L.R. (4th) 481 (S.C.C.); Kamloops v. Nielson (1984), 1984 21 (SCC), 10 D.L.R. (4th) 641 (S.C.C.).
25. 25Lawless v. Anderson, 2011 ONCA 102 at para. 22; Aguonie v. Galion Solid Waste Material Inc. (1998), 1998 954 (ON CA), 38 O.R. (3d) 161 at p. 170 (C.A.).
26. 261309489 Ontario Inc. v. BMO Bank of Montreal, 2011 ONSC 5505 at paras. 18-28; Dumoulin v. Ontario (2004), 2004 848 (ON SC), 71 O.R. (3d) 556 (S.C.J.).
27. 272011 ONSC 2785 at paras. 26-33.
28. 282011 ONSC 5505 at paras. 18-28.
29. 29For an insightful and erudite discussion of the development of the principles of the running of limitation periods, see D. Zacks, “Claims, Not Causes of Action: The Misapprehension of Limitation Principles” (2018), 48 Adv. Q. 165.
30. 30Har Jo Management Services Canada Ltd. v. York (Regional Municipality), 2018 ONCA 469 at para. 20.
31. 31Lawless v. Anderson, 2011 ONCA 102 at para. 22; Aguonie v. Galion Solid Waste Material Inc., (1998), 1998 954 (ON CA), 38 OR (3d) 161 at p. 170 (C.A.).
32. 322011 ONCA 102.
33. 33Dugal v. Manulife Financial Corporation, 2011 ONSC 1764 at para. 53.
34. 34Aguonie v. Galion Solid Waste Material Inc., (1998), 1998 954 (ON CA), 38 O.R. (3d) 161 (C.A.); Ladd v. Brantford General Hospital (2007), 2007 45921 (ON SC), 88 O.R. (3d) 124 (S.C.J.).
35. 35Mark v. Guelph (City) (2011), 2010 ONSC 6034, 104 O.R. (3d) 471 (S.C.J.); Zurba v. Lakeridge Health Corp. (2010), 2010 ONSC 318, 99 O.R. (3d) 596 (S.C.J.); Greenway v. Ontario (Minister of Transportation) (1999), 1999 14797 (ON SC), 44 O.R. (3d) 296 (Gen. Div.).
36. 36Pickering Square Inc. v. Trillium College Inc., 2014 ONSC 2629, aff’d 2016 ONCA 179; Hamilton (City) v. Metcalfe & Mansfield Capital Corp., 2012 ONCA 156.
37. 37Pepper v. Sanmina-Sci Systems (Canada) Inc., 2017 ONSC 1516.
38. 382012 ONCA 218.
39. 39Winmill v. Woodstock Police Services, 2017 ONCA 962; Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44; 407 ETR Concession Co. v. Day, 2016 ONCA 709, rev’g 2014 ONSC 6409; Kadiri v. Southlake Regional Health Centre, 2015 ONSC 621 aff’d, 2015 ONCA 847; U-Pak Disposals (1989) Ltd. v. Durham (Regional Municipality), 2014 ONSC 1103.
40. 40Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851 at paras. 33 and 70.
41. 41Borrelli v. Chan, 2018 ONSC 1429; 1309489 Ontario Inc. v. BMO Bank of Montreal, 2011 ONSC 5505; Ivany v. Financiere Telco Inc., 2011 ONSC 2785.
42. 42Dee Ferraro Ltd. v. Pellizzari, 2012 ONCA 55; Canadian Industries Ltd. v. Canadian National Railway Co., 1940 346 (ON CA), [1940] O.J. No. 266 (C.A.), affd 1941 16 (SCC), [1941] S.C.R. 591 (S.C.C.).
43. 43United Food and Commercial Workers Canada, Local 175, Region 6 v. Quality Meat Packers Holdings Limited, 2018 ONCA 671; 1100997 Ontario Ltd. v. North Elgin Centre Inc., 2016 ONCA 848; A1 Pressure Sensitive Products Inc. v. Bostik, Inc., 2013 ONSC 4734 (Div. Ct.); Fuda v. Jim McIntosh Petroleum Engineering Ltd., 2013 ONSC 2122, affd 2014 ONCA 378; Dee Ferraro Ltd. v. Pellizzari, 2012 ONCA 55; Gladstone v. Canadian National Transportation Ltd., 2009 38789 (ON SCDC), [2009] O.J. No. 3118 (Div. Ct.)
44. 44Bank of Montreal v Morris, 2013 ONSC 2884; Timbers Estate v Bank of Nova Scotia, 2011 ONSC 3639; Dugal v. Manulife Financial Corporation, 2011 ONSC 1764; Ascent Inc. v. Fox 40 International Inc., [2009] O.J. No. 2964 (Master); Canadian Industries Ltd. v. Canadian National Railway Co., 1940 346 (ON CA), [1940] O.J. No. 266 (C.A.), affd 1941 16 (SCC), [1941] S.C.R. 591 (S.C.C.).
45. 45As Daniel Zacks notes in this article “Claims, Not Causes of Action: The Misapprehension of Limitation Principles” (2018), 48 Adv. Q. 165, the principles of common law discovery have re-emerged in the contemporary jurisprudence about the running of limitation periods. Mr. Zacks is critical of the re-emergence because it creates uncertainly and obscures the operative principles of the Limitations Act, 2002 and the common law approach impairs achieving the law reform goals of the legislation. In my opinion, while Mr. Zacks makes a strong argument, the answer to it is not legislative reform or for courts to ignore the principles associated with pleading a reasonable cause of action, which remain a necessity in civil proceedings, but rather when a limitation period problem presents itself, litigators and courts must approach the problem with the unobscured legal eye that for the purposes of the commencement of the running of limitation periods for causes of action (which still must be properly pleaded), the main, but not exclusive, focus is on “claim” as defined in the Act. In short, litigators and the courts need to keep in mind that for the purpose of the Limitation Act, 2002 “claim” and “cause of action” are not synonyms but rather are ideas that sometimes harmonize but in other instances the ideas deviate and must be rationalized.
46. 46Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959 (S.C.C.); Canada (Attorney General) v. Inuit Tapirisat of Canada, 1980 21 (SCC), [1980] 2 S.C.R. 735MacDonald v Ontario Hydro (1994), 1994 7294 (ON SC), 19 O.R. (3d) 529 at paras 9-11 (Ont. Gen. Div.), aff’d (1995), 1995 10628 (ON SC), 26 O.R. (3d) 401 (Div. Ct.); Rennie v Kelsey’s Restaurants Inc., 2011 ONSC 4027.
47. 47Ontario (Ministry of the Attorney General) v John, 2016 ONSC 2529 at para. 16; Friedmann Equity Developments Inc. v Final Note Ltd. (1998), 1998 6025 (ON CA), 41 O.R. (3d) 712 at para. 16 (C.A.).
48. 48McLean v. Vassel, [2001] O.J. No. 3212 (S.C.J.).
49. 49McLean v. Vassel, [2001] O.J. No. 3212 (S.C.J.); Gibson v. Cigna Life Insurance Co. of Canada, [1998] O.J. No. 5447 (Gen. Div.).
50. 50Portuguese Canadian Credit Union Ltd. (Liquidator of) v. CUMIS General Insurance Co., 2010 ONSC 6107, [2010] O.J. No. 4736, 2011 ONSC 6107; Rhône-Poulenc Canada Inc. v. Reichhold, [1998] O.J. No. 2531 at para. 15 (Gen. Div.).
51. 51Charlton v. Beamish (2004), 2004 35934 (ON SC), 73 O.R. (3d) 119 at paras 18, 48-49 (S.C.J.); Whittaker v. Great-West Life Assurance Co., 2008 13376 (ON SC), [2008] O.J. No. 1194 (S.C.J.); Waschkowski v. Hopkinson Estate (2000), 2000 5646 (ON CA), 47 O.R. (3d) 370 (C.A.); Cascone v. Rodney (1981), 1981 1748 (ON SC), 34 O.R. (2d) 618 at para. 2 (H.C.J).
52. 52Miano v. Campos, 2019 ONSC 1816; Golden Oaks Enterprises Inc. (Trustee of) v. Lalonde, 2017 ONCA 515 at para. 45; Boutin v. Co-Operators Life Insurance Co. (1999), 1999 2071 (ON CA), 42 O.R. (3d) 612 at paras. 20-22 (C.A.)
53. 53Clark v. Ontario (Attorney General), 2019 ONCA 311; Brozmanova v. Tarshis, 2018 ONCA 523; Kaynes v. BP, PLC, 2018 ONCA 337; Ridel v. Goldberg, 2017 ONCA 739; Salewski v. Lalonde, 2017 ONCA 515.
54. 541003280 Ontario Inc. v. Canac, A Kohler Co., 2013 ONCA 69; Whittaker v. Great-West Life Assurance Co., 2008 13376 (ON SC), [2008] O.J. No. 1194 (S.C.J.).
55. 55Tran v. University of Western Ontario, 2016 ONCA 978; Metropolitan Toronto Condominium Corp. No. 1352 v. Newport Beach Development Inc., 2012 ONCA 850; Greatrek Trust S.A./Inc. v. Aurelian Resources Inc., 2009 6095 (ON SC), [2009] O.J. No. 611 (S.C.J.); Janssen-Ortho Inc. v. Amgen Canada Inc., 2005 19660 (ON CA), [2005] O.J. No. 2265 (C.A.); Beardsley v. Ontario Provincial Police (2001), 2001 8621 (ON CA), 57 O.R. (3d) 1 (C.A.)
56. 56Davidoff v. Sobeys Ontario, 2019 ONCA 684; Salewski v. Lalonde, 2017 ONCA 515 at paras. 43-46; Amrane v. York University, 2016 ONSC 7847 at paras. 14-15 (Div. Ct.); Maynards Industries Ltd. v. Cincinnati Industrial Auctioneers Inc., 2011 ONSC 2656 at para. 34; Dugal v. Manulife Financial Corporation, 2011 ONSC 1764; Beardsley v. Ontario (2001), 2001 8621 (ON CA), 57 O.R. (3d) 1 at para. 21 (C.A.).
57. 57The practice of commencing actions solely for the purpose of tolling the limitation period has been characterized as an abuse of process: Turon v. Abbott Laboratories Ltd., 2011 ONSC 4334 at paras., 19, 27, leave to appeal refd (2011) ONSC 4676 (Div. Ct.); Giuliano v. Allstate Insurance Co. (2003), 2003 64297 (ON SC), 66 O.R. (3d) 238 at para. 22; (S.C.J.); Birrell v. Providence Health Care Society, 2007 BCSC 668at para. 62, rev'd on other grounds, 2009 BCCA 109.