An Ontario court has rejected a motion from a financial firm seeking leave to appeal the certification of a class action against it, concerning allegations that it failed to warn investors about a possible investment scam.

The Ontario Superior Court of Justice has denied a motion from Canadian Western Trust Co. (CWT), which was seeking leave to appeal a decision certifying a class action against the company (along with several other firms and individuals). The plaintiffs in the case are alleging that they lost their retirement savings due to a scam between August 1998 and June 2001. The case has not been tried and the allegations have not been proven.

According to the decision, Ivany v. Canadian Western Trust Company, 2013 ONSC 6969, CWT sought to appeal decisions certifying the case as a class action against it, arguing that the decision was incorrect, and that there are conflicting decisions on some of the issues raised in the case.

For instance, the decision says that the firm argues that the plaintiffs’ pleadings do not disclose a cause of action. Yet, it notes that the claim does include allegations that the investment scheme was a scam, and that CWT failed to warn certain investors about it.

“It is clear that the motions judge determined an adequate cause of action was disclosed,” the decision states. “In doing so, he identified what he called a ‘super-added duty’ that custodial trustees such as CWT may owe to beneficiaries — to warn of risks posed to their assets.”

The decision indicates that counsel for CWT described this duty “as a new legal concept that could… have serious and wide ranging implications”. However, the court disagreed, saying that there is precedent for the claim that a “custodial trustee may be found to have a common-law duty to plan beneficiaries beyond the terms of the contractual documents, depending on the factual circumstances determined at trial.”

The court also sided with the motions judge on his finding that the question of whether the firm had a duty to warn investors, after it was warned by other authorities, represents an issue for trial.

“The certifying judge noted that the live issues for trial included whether CWT had received or should have been equipped to receive warnings from the OSC in 1999 and from CRA in March 2000, what CWT ought to have done in response to the warnings, and whether the warnings gave rise to a ‘super-added’ duty on CWT to warn its class members to ensure that they did not make such investments using their CWT accounts given the exculpatory language of the CWT documents signed by them,” the decision says. “He found that it was not plain and obvious that this claim had no chance of success.” And, the Superior Court indicates that it agrees with that ruling.

Additionally, the decision says that CWT argued that the process used by the motion judge to settle the terms of the certification order represents a change concerning certification motions generally. Again, the court ruled against the firm, saying that there’s no good reason to doubt the process.

It also rejected its arguments that there are conflicting decisions on issues raised by the case, and it dismissed the motion for leave to appeal, saying, “There is no conflicting decision from another judge or court in Ontario or elsewhere on the matters involved in the proposed appeal and there is no good reason to doubt the correctness of the certification order.”