Court of Appeal Confirms Statutory Limitation Period Applicable to Securities Class Actions

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The Court of Appeal for Ontario considered the interaction between the limitation period in s. 138.14 of the OSA and s. 138.3(6) of the Ontario Securities Act (OSA), which provides that multiple misrepresentations may be considered, at the discretion of the court, to constitute a single misrepresentation. In Kaynes v BP, P.L.C., 2018 ONCA 337​, the appellant, a putative representative plaintiff in a class proceeding, sued on fourteen alleged misrepresentations. Eleven of the misrepresentations were made more than three years before the action was commenced. The Court confirmed that s. 138.14(1) is an “event triggered limitation period,” which commences on the making of an oral statement or the release of an impugned document. It is designed to run without regard to the plaintiff’s knowledge of the facts giving rise to the cause of action.

The appellant argued that treating the alleged 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. The Court of Appeal disagreed and held that 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. Second, 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. An interpretation of the OSA that considers only the “twin goals of investor protection and the deterrence of corporate misconduct” is too narrow.  Third, s. 138.3(6) was designed to protect issuers from multiple rights of action or multiple liability for essentially the same misrepresentation repeated on a number of occasions, and not to allow plaintiffs to sue on statute-barred misrepresentations.