Canaccord Capital Corp. has won a judgment against a former client, enforcing a guarantee against an individual shareholder for the liabilities of a corporate client.

The client, 884003 Alberta Inc. and its sole shareholder, Granger Cumberford, opened a trading account at Canaccord back in 2000. By Aug. 3, 2000, 884003 owed Canaccord $350,599.33 as a result of transactions conducted on the account. On Oct. 10, 2001, a B.C. judge granted Canaccord judgment against 884003 for the funds owing. Canaccord sought to enforce a guarantee Cumberford made to cover the numbered company’s obligations.

Cumberford incorporated 884003 in the late spring of 2000. He was the sole shareholder and director, as well as the president and secretary of the company. The purpose of the company was to open trading accounts to buy and sell shares of Insurcom, thereby stimulating the market for those shares. Cumberford was also Insurcom’s investor-relations officer.

The court found that the evidence fell far short of proving an alternative claim of fraudulent misrepresentation, but it did uphold the guarantee against Cumberford. “To the contrary, the evidence showed that the representations Mr. Cumberford made to Canaccord were representations that he believed to be true and that, in fact, were true at the time that he made them,” the court said. “Unfortunately and unexpectedly, the market for those shares collapsed in less than two months, a situation that the evidence proved was, to say the least, unforeseen by Mr. Cumberford.”

Cumberford argued that the claim was not enforceable because the law governing it was the law of Alberta, not B.C.

However, the B.C. court found that B.C. was the proper jurisdiction, and it upheld Canaccord’s claim. Specifically, the court found that Cumberford set up the account with Canaccord because it was located in B.C., and because he wanted to expand the market for Insurcom shares to that province. The court also noted that the transactions took place in B.C.