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CIVIL LIABILITY - Secondary market disclosure - Defences

Monday, May 07, 2018 @ 8:43 AM  


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Appeal by the plaintiff from the dismissal of some of his claims as statute-barred. The appellant was the proposed representative plaintiff in a proposed class action. He sued the respondent on 14 alleged secondary market misrepresentations. Eleven of the alleged misrepresentations occurred more than three years before the action was commenced. The respondent brought a motion for a declaration that the appellant's claim was statute-barred pursuant to s. 138.14 of the Securities Act. The appellant argued that the claims based on those misrepresentations should not be statute-barred because they could be considered a single continuous misrepresentation. The motion judge rejected that argument and ruled that the claims based on the 11 misrepresentations were statute-barred in accordance with s. 138.14 of the Securities Act. He further found that the statutory discretion to treat multiple representations as a single misrepresentation did not impact the limitation period analysis. He found that the interpretation advanced by the appellant would negative the policy choice made by the legislature in enacting the limitation period, would conflict with the scheme of the Act, and would be contrary to the legislative history of the Act. The appellant appealed, arguing that the motion judge erred in his analysis.

HELD: Appeal dismissed. The motion judge made no error. There was nothing in the language of s. 138.3(6) that indicated that it was intended to modify the limitation period provided in s. 138.14. The three-year limitation period struck a balance which included the protection of subsequent shareholders from claims based on alleged misrepresentations made to previous shareholders. The legislative history of the provision demonstrated that it was designed to protect issuers from multiple rights of action or multiple liability for the same misrepresentation repeated on numerous occasions. Even if s. 138.3(6) was intended to modify the limitation period, it was 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.

Kaynes v. BP P.L.C., [2018] O.J. No. 1766, Ontario Court of Appeal, C.W. Hourigan, G.I. Pardu and G. Huscroft JJ.A., April 5, 2018. Digest No. TLD-May72018002