The Ontario Superior Court of Justice (Small Claims Court) has dismissed a professional negligence lawsuit filed by three investors against RBC Dominion Securities Inc. (DS) and Waterloo, Ont. advisor Andrew Dienst, in a decision dated Sept. 4.
In Wu v Royal Bank of Canada, the court found that DS and Dienst did nothing wrong, and the clients’ portfolio would have performed better if they’d followed their advisor’s advice.
In the lawsuit, former clients Xu Fee Wu, Rong Lan Yu and Has Chu Wu claimed they lost more than $75,000 due to professional negligence.
The court rejected the plaintiffs allegation. It found that the clients consented to every trade in their account, and even if there was any misunderstanding about the trades, there was no evidence of any damages.
“The plaintiffs focused on the KYC information and whether the defendants properly recorded the information they were given or properly assessed the clients’ risk tolerance. Based on the evidence I am unable to find as a fact that any error or failure occurred on the part of the defendants,” Deputy Judge J. Sebastian Winney stated in the decision.
Additionally, the court found that there were no damages in the case.
“Looking at the plaintiffs’ investment portfolio in its entirety, the plaintiffs wish to segregate out twelve funds which suffered losses to a total of $86,985.81. But that is an artificial approach to any damages analysis, particularly in the absence of expert evidence to suggest a problem with any purchase advice as to those funds. A loss on some funds coupled with a gain on others, does not necessarily prove that any damages were suffered,” the court stated.
The account generated a small gain during the time that the plaintiffs held it at DS. Indeed, the court found that the gain would have been much larger if the client’s had followed Dienst’s advice to sell a couple of securities, but the clients refused because they didn’t want to realize a loss, or pay a trading commission.
“In that scenario the plaintiffs’ overall outcome for the five years would have been a gain of about $41,000 instead of about only $4,000. That difference was caused by Ms. Yu declining to follow advice from Mr. Dienst which appears to have been perfectly sensible advice,” the court stated.