In "the latest sequel or prequel in what has turned out to be the case law equivalent of a horror-movie franchise", Justice Perell struck 11 of 14 statutory claims for secondary market misrepresentation in Kaynes v. BP PLC. This decision follows numerous other significant decisions considering the limitation period in the since-amended Part XXIII.1 of the Ontario Securities Act, which culminated in the Supreme Court's decision in a trilogy of cases, that we summarized here. In that trilogy, the Supreme Court held that under the previous version of the statute, leave must have been obtained to pursue the cause of action prior to the expiry of the three-year limitation period, but that leave could be granted nunc pro tunc in certain cases (e.g. where a notice of motion for leave had been served in time). The statute was subsequently amended to provide that the limitation is suspended on the filing of a notice of motion for leave to commence an action under that Part of the statute.
Justice Perell's decision largely follows the previous decisions considering the "statute-bar monster", but was required to address one novel argument. The plaintiffs contended that the misrepresentations that occurred prior to the limitation period were part of a "continuing misrepresentation" (s. 138.3(6)), thereby defeating the defendants' limitation argument. Justice Perell found that the plaintiffs' argument ran contrary to the statutory scheme, considering that the "continuing misrepresentation" was included to protect defendants from "multiple liability for disclosure violations that were so interconnected to be considered a single disclosure violation" (para. 47). He held the plaintiffs' interpretation of the statute would upset the "delicate balance between various market participants" that Justice Côté described in the trilogy (para. 47).
Despite being decided under the now-clarified statutory regime, this decision is notable for issuers as it suggests the Court will prevent plaintiffs' attempts to make the strict limitation period in Part XXIII.1 more plaintiff-friendly.
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