Kaynes v. BP, P.L.C. considers the application of the limitation periods set out in s. 138.14 of Part XXIII.1 of the Ontario Securities Act. As Justice Perell described it, the case 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 (CanLII), which was followed by the equally terrifying: (II) Green v. C.I.B.C., 2012 ONSC 3637 (CanLII), 2014 ONCA 90, 2015 SCC 60; (III) Silver v.IMAX Corp., 2012 ONSC 4881 (CanLII), 2014 ONCA 90, 2015 SCC 60; (IV) Trustees of the Millwright Regional Council v. Celestica Inc.,2012 ONSC 6083 (CanLII), 2014 ONCA 90, 2015 SCC; and (V) Pennyfeather v. Timminco Ltd., 2016 ONSC 3124, 2017 ONCA 369 (CanLII).
The plaintiff ventured a novel argument to “attempt to ward off the monster by relying on s. 138.3(6) (multiple misrepresentations) of the Act.” He argued that the constituent elements of the cause of action in s. 128.3 did not crystallize until a public correction of the misrepresentation occurred. Justice Perell had none of it:
[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 (CanLII) 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:
- 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.
- 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.
- 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 (CanLII), 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 (CanLII)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 Actthat 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 Actessentially 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.
