A brokerage firm isn’t responsible for a former client’s long lost inheritance, an Ontario court ruled, concluding that they couldn’t prove that the firm had anything to do with their missing funds — and, in any case, the time to file a lawsuit had expired.
The Ontario Superior Court of Justice granted a motion brought by CIBC and its subsidiaries, CIBC Wood Gundy and CIBC World Markets, which were the defendants in a lawsuit brought by former clients, alleging that the firms had misappropriated the proceeds of an inheritance they received in 2004, when the mother of one of the clients died.
According to the court’s decision, a former CIBC client, John Ratcliffe, received an inheritance of various U.S. stocks when his mother died in 2004. Those stocks were liquidated and the proceeds, totalling around $280,787, were deposited into a joint investment account at CIBC in 2004 and 2005.
In 2022, Ratcliffe and his wife filed a lawsuit against the firms alleging that the money had disappeared, and that the firms were responsible. The court said that they alleged that the defendants misappropriated their funds in 2005, but that they didn’t discover it until 2020 when they were trying to deal with some tax issues.
The decision noted that the clients closed their accounts at CIBC in 2014, the same year their former advisor retired from the industry — and that the clients now don’t know what happened to the money in their account.
“Mr. Ratcliffe claims to have no memory of what happened to the money in the joint investment account,” it said.
The firms brought a motion for summary judgment, arguing that there was no genuine issue requiring a trial, and that the action was launched after the expiry of the limitation period.
On both counts, the court agreed.
“Although the plaintiffs may genuinely believe that the defendants are responsible for the loss of their money, it is a claim based on conjecture, not evidence,” the court said.
“The plaintiffs’ claim that the defendants misappropriated Mr. Ratcliffe’s inheritance but have produced no evidence in support of this allegation. The documentary evidence conclusively establishes that the shares were sold, and the proceeds deposited in the joint investment account. Because of his professed lack of memory, Mr. Ratcliffe does not know what happened to the money,” the court said.
Ultimately, the court concluded that it couldn’t determine what happened to the inheritance money.
“But that is not the issue in this litigation,” it said. “The plaintiffs’ claim is based on misappropriation of the funds, and they cannot prove that.”
Moreover, the court also noted that the action was commenced too late, after the limitation period had passed.
“Although the plaintiffs assert that they only discovered the existence of the joint investment account and the misappropriation of the funds in May 2020, that is directly contradicted by documents they acknowledge were in their possession in 2004 and 2005,” it said. “They closed all their accounts with the defendants in 2014. The only reasonable inference is that they would have known many years before May 2020 that funds once held by the defendants no longer existed.”
As a result, it dismissed the action.
The court acknowledged that the ruling “will likely be very upsetting” to the plaintiffs. It said that it doesn’t believe that Mr. Ratcliffe’s lack of memory about what happened to the money is being feigned, and that his wife genuinely believes that it was embezzled by the defendants.
“But suspicion is not proof in a court of law,” it said. “The result of a trial in this case is a foregone conclusion: The action would be dismissed.”