A British Columbia court has ruled that HSBC and CIBC can get a look at expert reports filed in an ongoing class action suit involving alleged “closet indexing” against TD Asset Management Inc. (TDAM).
The Supreme Court of B.C granted access to a series of expert reports that have been filed on behalf of plaintiffs in a proposed class action against TDAM alleging that several of its funds engaged in closet indexing — selling funds that promise active management while providing portfolios that essentially track an index.
The firms that brought the application seeking access to the reports that were used as evidence in the case against TDAM — HSBC Global Asset Management (Canada) Ltd. and HSBC Investment Funds (Canada) Inc., and CIBC — are facing similar lawsuits brought by the same lawyers in the TDAM case.
A decision in the TDAM case is currently under reserve, following a 33-day trial.
Applications to certify class actions against HSBC and CIBC have also been heard by the same judge, and those decisions are under reserve as well.
In the meantime, the firms requested access to the plaintiffs’ reports — prepared by Prof. Martijn Cremers, Andre Fok Kam, David Jarvis and Prof. Mikhail Simutin — arguing that the “open court principle” requires that they be allowed access to evidence filed in the case.
Counsel for the plaintiffs argued against granting access, saying that the evidence shouldn’t be distributed until a decision is handed down in its case and all appeals have been exhausted. Counsel also argued that the evidence is subject to litigation privilege, and that the experts were hired on the basis that their work would be used in court and would otherwise be confidential.
The court sided with the firms, ruling that litigation privilege no longer applies once reports are submitted in court and that there is no assurance of confidentiality for experts who provide evidence in court proceedings.
The court also said there’s no reason that allowing access to evidence in this case will harm the progress of the other proposed class actions.
Finally, the court ruled that the plaintiffs’ counsel failed to meet the test for overriding the presumption of open courts that was established in a recent Supreme Court of Canada ruling involving murdered pharma executive Barry Sherman.
That decision confirmed that the open court principle could only be limited when that “openness poses a serious risk to an important public interest.”