A British Columbia Supreme Court judge has denied an application by embattled securities firm, Pacific International Securities Inc., to dismiss a former client’s lawsuit against the firm.

In the case of Farooq Rashid Velmi vs. Pacific International, its broker, Akbar Hassanally, and the Hong Kong Bank of Canada, a Master’s decision, pronounced on May 14, dismissed a portion of the claim for damages, but permitted two other claims to proceed to trial. PI was appealing that decision, asking for all claims to be dismissed.

The judge in the case found, “I cannot say that there is no triable issue between the parties on this particular claim. The appeal is dismissed and the plaintiff shall have its costs of the appeal in the cause.”

According to the decision, prior to May 1991, Pacific, through Hassanally, promoted a private placement in MTC Electronic Technologies Co. to Velmi. And Velmi was encouraged to provide leads on other persons who might be interested in investing in MTC. In return, he was promised a finders’ fee, to be paid in MTC shares, equivalent to 10% of any shares he helped place.

It is alleged that Hassanally embezzled about US$287,413 from Velmi’s finder’s fee. The forged cheques were drawn on the Hongkong Bank, which has since reimbursed Velmi.

The earlier decision threw out a claim for compensatory damages, but allowed claims for damages based upon the shares’ highest trading value arising out of an alleged breach of trust. Pacific International says that since the money was repaid the case should be dismissed.

“As to the claim for punitive and aggravated damages, as against Pacific, it is clear that the plaintiff’s pleadings do not assert only a vicarious liability on the part of Pacific for the torts of its employee, rather independent causes of action against Pacific are pled,” notes the decision.

Pacific and its directors were recently named in a notice of hearing from the BCSC, alleging that it failed to ensure that proper compliance procedures were in place at the firm, resulting in it dealing with several criminals and securities law violators in the U.S. The firm has denied the allegations and vows to oppose them.