An Ontario Superior Court of Justice has dismissed a large claim against Toronto-based TD Waterhouse Inc. for losses suffered by a couple of seemingly older, wealthier clients.
The couple, who claimed to have lost $1.2 million as a result of poor advice from a TD Waterhouse financial advisor more than a decade ago, was dismissed for delay.
The decision declining to reinstate the action, released earlier this week, provides a snapshot of some of the apparent missteps that can arise between affluent clients and their advisors.
In 2007, the couple launched an action for more than $1.6 million against TD Waterhouse and their advisor two years after losing money from their investments in Olympus United Funds, which had gone into receivership.
The couple claimed “breach of contract, negligence, negligent misrepresentation and breach of fiduciary duty.”
Their claim alleged that even though they were high net worth, they had never used an advisor before and their conservative approach to risk had limited their previous investments to bonds and income mutual funds.
The couple also claimed they were told the Olympus-related investments the advisor made on their behalf between 2003 and 2005 were as safe as guaranteed investment certificates, but with “more growth potential,” the decision says.
They also alleged that these investments were “contrary to industry standards, practice, rules and regulations, including the ‘know-your-client’ rule.”
TD Waterhouse responded that the clients were not new to financial advice and that they knew and understood the risks they were taking.
“[TD Waterhouse alleges] that the plaintiffs signed documents in 2003 concerning the Olympus investments in which they represented that they had the knowledge and experience to evaluate and assess the merits of that investment,” says Justice Master Wiebe, who heard the motion by the plaintiffs to restore the lawsuit, in the decision. “They allege that they kept the plaintiffs fully informed of the Olympus investment throughout, and received the plaintiffs’ informed approval. They deny ‘any dependence or vulnerability’ on the part of the plaintiffs.”
After several years of delays in producing documents and responding to requests for information, apparently almost all originating with counsel for the clients, it transpired in 2013 that the clients had had investment accounts with BMO Nesbitt Burns Inc. and The Cable Group at RBC Dominion Securities Inc. at the same time as their TD Waterhouse investments.
Finally, in late 2013 after the plaintiffs missed a crucial deadline, the action was dismissed for delay. The plaintiffs’ lawyer then stated that medical reasons had prevented him from attending to his practice.
The case then dragged until the 2017 hearing, with the plaintiffs attempting to have the action reinstated, alleging that they had always intended to pursue their claims and that the delays were due to the inadvertence of their lawyer.
In holding for TD Waterhouse, the court noted several factors related to the delay that may have caused prejudice to the firm: Investment Industry Regulatory Organization of Canada rules only require members to retain records for seven years; the plaintiff clients, as well as their lawyer, appeared to have abandoned the case during a three-year hiatus; and the plaintiff’s memory appeared to be fading, making the recollection of key events difficult. The court also noted that TD Waterhouse had not been passive or disruptive and had been willing to move forward with the case.
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