Canada: Inappropriate Forum Results In Stay Of Ontario Securities Class Action

In a recent decision that will be of interest to public issuers, the Ontario Court of Appeal in Kaynes v. BP has stayed a potential securities class action against BP, PLC (BP). As a result of the decision, it is likely that Ontario courts will take a more restrained approach to determining whether actions involving foreign issuers whose securities do not trade on a domestic exchange should be adjudicated in Ontario.


The background to the Kaynes decision is set out in our October 2013 Blakes Bulletin: Will Recent Decision "Open the Floodgates" to Securities Class Actions Against Foreign Issuers? The plaintiff, a Canadian resident, commenced a proposed class action in Ontario alleging that BP made misrepresentations in its public disclosure relating to the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Common law and statutory misrepresentation claims were advanced. The plaintiff held BP American Depository Shares (ADS) purchased exclusively over the New York Stock Exchange. BP ADS were traded on the Toronto Stock Exchange until August 2008, when they were de-listed due to low trading volume, but none of the plaintiff's securities were purchased on the TSX.

While BP conceded that the Ontario court did have jurisdiction over claims of purchasers of BP securities on the TSX, BP moved to dismiss or stay the action on the basis that the Ontario court did not have jurisdiction over the claims of purchasers of BP securities on exchanges outside of Ontario. The Ontario Superior Court of Justice dismissed BP's motion. The court concluded that the statutory cause of action for secondary market misrepresentation against BP pursuant to Part XXIII.1 of the Ontario Securities Act should be classified as a "statutory tort" that was committed in Ontario, creating a presumption that Ontario courts have jurisdiction over the dispute. The court rejected BP's argument that courts in the U.S. or U.K. were more appropriate forums for adjudicating the claims of the proposed class.


In a unanimous decision, the Ontario Court of Appeal agreed that although Ontario courts could assume jurisdiction over the claims of purchasers of BP securities on foreign exchanges, jurisdiction in this case should have been declined because there were more appropriate forums available to resolve the dispute.


The Court of Appeal agreed with the motion judge that the proposed action against BP involved "a tort committed in Ontario," which is one of the "presumptive connecting factors" for jurisdiction set out by the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda. The Court of Appeal concluded that BP's release of its normal course disclosure documents to shareholders in Ontario established a presumption that a tort had been committed in Ontario:

"...when BP released documents that it was legally required to provide its Ontario shareholders, it committed an act that had an immediate and direct connection with Ontario, an act that is sufficient to establish a real and substantial connection between the claim of this plaintiff and Ontario."

Appropriate Forum

Having found that Ontario courts had jurisdiction over the dispute, the Court of Appeal then considered whether to exercise its discretion to decline jurisdiction under the forum non conveniens doctrine. Under this doctrine, which the Supreme Court explained in Club Resorts, a court can decline jurisdiction if the moving party establishes that another forum has a sufficient connection to the dispute and is a more appropriate forum for its adjudication. The principle of comity and respect for the courts and legal systems of other countries underlies the forum non conveniens analysis.

In determining that Ontario was not the appropriate forum in Kaynes, the court had regard to the following factors:

  • The U.S. securities class action regime and the U.K. law allowing for secondary market misrepresentation claims are based on the principle that securities litigation should take place in the forum where the securities transaction takes place (this is known as the "exchange-based" approach, and has been adopted by the U.S. Supreme Court)
  • There was a pending class action in the U.S. based on the same alleged misrepresentations and included claims of all BP shareholders, including the plaintiff
  • Purchasers on foreign exchanges should have a reasonable expectation of needing to look to a foreign court to litigate their claims
  • The overwhelming majority of Canadians who acquired BP equity shares during the proposed class period did so on foreign exchanges, and the volume of ADS traded on the TSX "was dwarfed by the trading in ADS on foreign exchanges"
  • Order and fairness will be achieved by "adhering to the international standard tying jurisdiction to the place where the securities were traded," thus avoiding a multiplicity of proceedings involving the same claims or class of claims

The Court of Appeal concluded the motion court erred by not recognizing the full international context of the securities law regimes of Ontario, the U.S., and the U.K. It emphasized that the number of BP shareholders who acquired shares on a Canadian exchange was negligible, and agreed with BP's argument that permitting the plaintiff to proceed with the proposed Ontario class action in such circumstances would be a classic example of the "tail wagging the dog."


The decision in Kaynes reduces the likelihood that Ontario will become an "overflow" jurisdiction for securities class actions against foreign issuers with securities traded on foreign exchanges. The Court of Appeal's focus on the merits of the exchange-based approach adopted in the U.S. and U.K. suggests that Ontario courts will now take a more restrained approach to determining whether actions involving securities purchased on foreign exchanges should be allowed to proceed in Ontario. This is consistent with the outcome in Silver v. IMAX, where the Ontario Superior Court effectively removed the 85 per cent of class members who purchased on a foreign exchange from an Ontario securities class action, limiting the class to investors who purchased their shares on the TSX. See our March 2013 Blakes Bulletin: U.S. Settlement Reduces Global Class in Ontario Securities Class Action for more on this case.

Subject to the outcome of any appeal, the Court of Appeal's decision in Kaynes is likely to result in securities class actions commenced in Ontario being analyzed in a broader international context. This could make it more difficult for such claims to proceed against foreign issuers whose securities do not trade over a Canadian exchange.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
23 Nov 2018, Other, Toronto, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

28 Nov 2018, Speaking Engagement, Toronto, Canada

Arbitration has a number of advantages and some disadvantages for the resolution of domestic and international commercial disputes.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions