Canada: The Tail Won’t Wag The Dog: Ontario Court Of Appeal Declines Jurisdiction Over Securites Misrepresentation Case Outside Canada

Last Updated: September 5 2014
Article by Jason Squire

The Ontario Court of Appeal has called on judges to show restraint in assuming jurisdiction over securities trading on foreign exchanges, in its recent decision Kaynes v BP, PLC, 2014 ONCA 580. While the plaintiffs in this proposed class action resided in Ontario, such residence ultimately was insufficient for the Ontario Superior Court to keep jurisdiction where the issuer was foreign and the trading in question took place on foreign exchanges. The Court of Appeal instead deferred to the jurisdiction of the United States District Court, where parallel proceedings were already underway.


This proposed class action was rooted in allegations that BP made misrepresentations in its public disclosures in relation to the highly publicized 2010 Deep Water Horizon oil spill in the Gulf of Mexico. BP is a United Kingdom ("UK") corporation with no property or business in Canada. BP formerly listed securities on the Toronto Stock Exchange, but those had not traded on any Canadian exchange for about two years before the oil spill occurred.  When BP ceased trading in Canada, it undertook to continue sending investor documents to its investors in Canada in the same manner that such documents were required to be sent to its security holders resident in the United States ("US").

The plaintiff, an Ontario resident who purchased BP "American Depository Shares" on the New York Stock Exchange ("NYSE"), asserted the statutory cause of action for secondary market misrepresentation under section 138.3 of Ontario's Securities Act. The proposed class consisted of Canadian residents who acquired BP securities on any exchange.

A proceeding based on the same alleged misrepresentations was already underway in the United States District Court for the Southern District of Texas. Certification was denied in December 2013, but the US plaintiffs were given leave to make a second attempt to establish the necessary elements for certification. Many of the Canadian residents in the proposed Ontario class action fell within the class proposed in the US proceeding.

Ontario's Jurisdiction

In Canada, in order for a court to have jurisdiction over a claim, there must exist a "real and substantial connection" between either the defendant or the subject matter of the claim and the forum. The Supreme Court of Canada, in the 2012 decision Club Resorts Ltd. v Van Breda, 2012 SCC 17, established four connecting factors that, if present, give rise to a presumption of a real and substantial connection: 1) the defendant is domiciled or resident in Ontario; 2) the defendant carries on business in Ontario; 3) the claim is for a tort committed in the forum province; and 4) a contract connected with the dispute was made in the forum province. Where one of these presumptive connecting factors is present, the forum in question has jurisdiction and is able to adjudicate on the claim.

Even where a court has jurisdiction, it may choose not to exercise it. Courts have a discretionary power to decline to exercise their jurisdiction on the basis of forum non conveniens: where there is a forum more appropriate to adjudicate on the claim. Underlying the forum non conveniens analysis is the principle of comity – respect for the courts and legal systems of other countries.

The Court of Appeal found that Ontario had jurisdiction in this case. The Court drew on the decision in Moran v Pyle National (Canada) Ltd., [1975] 1 SCR 393, where the Supreme Court of Canada held that a tort grounded in products liability occurred in Saskatchewan – where injury occurred – despite the fact that the defendant had no other ties to Saskatchewan. As the product entered into the normal channels of trade and it was reasonably foreseeable that the product would be used where it was, the forum where the plaintiff suffered damage was entitled to exercise jurisdiction over the foreign defendant. Analogizing this to the present case, Sharpe J.A. held that BP released the documents containing alleged misrepresentations – and thus allegedly committed the statutory tort in question – in Ontario. Although BP released the documents outside of Ontario, it knew it was obliged to provide those documents to its Ontario shareholders. This was sufficient to establish a real and substantial connection to Ontario.

The Court then went on to hold that jurisdiction should have been declined on the basis of forum non conveniens. Comity strongly favoured Ontario declining jurisdiction. The volume of trading in BP securities that had taken place in Canada well before the events at issue had been dwarfed by trading on the NYSE and London exchanges; the Court noted that to take jurisdiction in Ontario on the basis of that negligible trading would allow the "tail to wag the dog."  Both the US and UK approaches to securities law assert jurisdiction on the basis of the exchange where the securities are traded, and the plaintiff's claim significantly depended on the disclosure obligations imposed under US securities law. Ontario's assertion of jurisdiction would "fly in the face" of these foreign legal regimes -- the US regime in particular, which claims exclusive jurisdiction in this type of situation. The fact that the plaintiffs in the proposed class resided in Ontario was insufficient to outweigh these considerations, and the Court of Appeal stayed the action as regarding share purchases on foreign exchanges.

The Court of Appeal's decision in BP does not address the issue arising out of the US Supreme Court's decision in Morrison v National Australia Bank, 561 US 247 (2010), which had held that so-called 'securities fraud' cases could not be brought in the US pursuant to US securities laws in respect of shares transacted on exchanges foreign to the US.  The important feature of the BP decision is that there were proceedings underway in the US, and the US class already included those (including Canadians) who had purchased their shares on the New York Stock Exchange.  If BP had involved securities traded in Canada or otherwise outside of the US, it is not clear that the court would have declined jurisdiction.

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.

Jason Squire
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.