The Court of Appeal upheld the decision in Kaynes v. BP, P.L.C., which I wrote about here, holding that the limitation period in s. 138.14 of the Securities Act is event-based, and doesn’t commence until a public correction of a misrepresentation occurs.
[14] The limitation period in s. 138.14 reads as follows:
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; and
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[15] This is an event triggered limitation period, which commences on the making of the oral statement or the release of the impugned document. It is designed to run without regard to the plaintiff’s knowledge of the facts giving rise to the cause of action: Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60 (CanLII), at paras. 66 and 180. The motion judge correctly found that for the eleven alleged misrepresentations made more than three years before the issuance of the appellant’s statement of claim the limitation period had expired.
[16] The appellant’s primary submission on appeal is that s. 138.3(6) of the Act operates to extend the limitation period in the case of multiple misrepresentations. That subsection provides as follows:
(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. 2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s.12(7).
[17] The appellant argues that treating the allege misrepresentations as a single misrepresentation would have the effect of extending the three-year limitation period for claims arising from the eleven out-of-time statements. In our view, the motion judge did not err in rejecting this argument. We reach this conclusion for the following reasons.
[18] First, there is nothing in the language of s. 138.3(6) that suggests that it is intended to modify the clear event triggered limitation period provided in s. 138.14.
[19] Second, the appellant submits that the motion judge erred in failing to take into consideration the “twin goals of investor protection and the deterrence of corporate misconduct” in his interpretation the Act. That view of the policy objectives of the Act is too narrow. As Cote J. noted in CIBC, at para. 69, the policy considerations are more nuanced, “Part XXIII.1 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.”
[20] Part of the balance struck by the three year event driven limitation period was to protect subsequent shareholders from claims based on alleged misrepresentations made to previous shareholders.
[21] Third, we agree with the motion judge’s conclusion that the legislative history of s. 138.3(6) demonstrates that it was enacted at as a consequence of an Ontario Securities Commission response to a Request for Comments. It is plain from that submission that the section was designed to protect issuers from multiple rights of action or multiple liability for essentially the same misrepresentation repeated on a number of occasions.
[22] Finally, we note that even if the appellant is correct and s. 138.3(6) was intended to modify the limitation period analysis, it is arguable that in the case of multiple misrepresentations treated as a single misrepresentation the limitation period would run from the date the misrepresentation was first made. Subsection 138.14 mandates that the running of the limitation period commences when the document is first released. Applied literally in this case, the result would be that the limitation period for all fourteen misrepresentations commenced in 2007 and the claims based on all of the documents would be statute-barred.
