Eaton et al. v. HMS Financial Inc. et al., (2008) 458 A.R. 282 (QB)

• Judge: Rooke, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: October 09, 2008
• Citations: (2008), 458 A.R. 282 (QB);2008 ABQB 631

Eaton v. HMS Financial Inc. (2008), 458 A.R. 282 (QB)

MLB headnote and full text

Temp. Cite: [2008] A.R. TBEd. OC.086

Heike Eaton, Harlan Light, Douglas Alexander and William Barrett, as representative plaintiffs (plaintiffs) v. HMS Financial Inc. and Skyward Management Inc., Garth S. Bailey, Garth S. Bailey Professional Corporation, 990137 Alberta Ltd., 1037149 Alberta Ltd., operating as Cedar Management, 105382 Alberta Inc., 1070199 Alberta Ltd., 1079373 Alberta Ltd., 993638 Alberta Ltd., A-Z Investment Group, Abba Resources Unlimited, Academy Financial Inc., Academy Financial Planners & Consultants Inc., Ailanthus International Inc., Altruistic Holdings Ltd., Aspire Group International Realty Inc., Bailey & Dawes LLC, Bailey Daws LLP, Bogner Industries Ltd., B.P. Fritz Consulting Inc., the Carpenter's Shop Corporation, Casselman MCS Financial Inc., Cedar Pointe Consulting Group Inc., Chase Forbes Trust Ltd., CLJ Consulting LLC, Commonwealth Marketing Group Ltd., Community Credit Union Ltd., Companions Inc., D.K. Defreitas Professional Corporation, The Dakota Corporation, Dana I. Carlson, Datas Consulting, Defreitas & Associates, Desmond K. Defreitas, Diverse Equities Inc., Ethan Equities Inc., First National Bank of San Diego, Five Continents Consulting, Five Continents Consulting Corporation, Fowlks & Snyder LLP, Global Trustees (NZ) Limited, Graceful Beneficence Guessworks, Guessworks Foundation, The Hillpro Group Inc., Horizon Bank International Limited, Horizon Fiduciary Inc., HSBC Bank Canada, International Investments Inc., Jesco Inc., Kamikey Services Inc., Kelso Enterprises Inc., Kirby Audit Services Inc., Kingdom Advisors, Klass "A" Strategies Inc., La Alta Ltd., Linderhall PTY Ltd., M & M Computer Consulting, M & M Investments 101 Ltd., Magellan Moranda Investments, Marcol Management Ltd., Maritime, LLC, McCarthy Tetrault LLP, McCullough Financial Corporation, Michael Grosh Professional Corporation, Mountain Star Capital Corp., Mountain View Credit Union Limited, NDX Development LLC, Numa Ltd., Oxyoke Farms Ltd., Paget Capital Ltd., Paradise Bay Holdings Inc., Phoenix Global Resources Ltd., Pine Grove Management Inc., Richard Fowlks, RLM Consulting LLC, Sellars Financial Inc., Talisman Financial Investments Inc., Tamika Enterprises Inc., Thor Empire Trust, Titania Consulting Inc., TJ Kelly Inc., Tools of The Carpenter, Transmax Technologies Ltd., Triple-SSS Holdings Inc., Tyrolia Foundation, Vitron Consulting Inc., Singer Brothers Holdings, Zurich Ventures Inc., A. Gary Young, Guy Bailey, Alfred Barnfield, Connie Bartel, Robert Bartel, Victor Bauman, Mylo Berstad, Nancy Buford, Cameron Campbell, Rick Childers, Blaine A. Cisna, Kevin Coombes, Ellen Kate Covey, Douglas A. Cowan, Margaret Dart, Stanley Defreitas, Don Dickerson, Eugene Leroy Duce, Arnold Dyck, Juan Exposito, Alfredo Farpon, Ray Fisher, Jack Folsom, Jim Folsom, Richard Fowlks, Barie Fritz, Crystal Anne Fyn, Phyllis Fyn, Robert E. Fyn a.k.a. Colonel Fyn, Allan A. Gray, Michael Grosh, David Guess, Neil Guess, Kendra Haskett, Arnold Henry, David Henry, Gord Hiebert, Samuel Higgins, Winston Indsarsingh, Colleen Jespersen, James Jespersen, Mark Jespersen, Sharrell Jespersen, Wayne Johnson, Terry Kelly, Barbara L. King, Arthur Klassen, Ed Knott, Ruby Leachman, George Lennox, William Lenz, Daniel Lescamela, Willie Lichtner, Lucia Ling, Barbara Lockhart, Ron Lowrie, Don MacGillivray, Danny R. MacNaughton, Norma A. MacNaughton, Peter Manousos, Michael McCullough, William McGrath, Dave Miller, Mohan Maharaj, Rosendo Mendez, Peter Mol, Brad Mooney, Peter Morrisseau, Tom Oldridge, Roy Overton, Gertrude M. Prete, Donald Rabby, Amin Famji, Bilkish Ramji, Stan W. Remin, Jeffrey Robinson, Katherine Rodrigues-Bailey, Daniel Romero, John Romero, Orest Rusnak, Arie Schalk, Randall Seabrook, Claude Seguin, Robert J. Sellars, William Serediuk, Peter L. Sheridan, Janet Stark, Murray Stark a.k.a. Harold Murray Stark a.k.a. Murray H. Stark, Delmer Strobel, Verna Strobel, Cheryl Taylor, Milton Teibe, Robert F. Terborg, Enrique Toscano a.k.a. Chico Toscano, Lee-Anna Toscano, Henk Ujiterlinde, Wilma Ujiterlinde, Heather Vance, Christine Williams, John W. Willock, Margaret Wright, Stan Wright, Claude Zinger, John Doe, Richard Doe and XYZ Corp. (defendants)

(0501 08152; 2008 ABQB 631)

Indexed As: Eaton et al. v. HMS Financial Inc. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Rooke, J.

October 9, 2008.

Summary:

The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme). The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act. Certain defendants (the financial institutions) applied to strike the action against them for failing to establish a cause of action under rule 129 of the Alberta Rules of Court.

The Alberta Court of Queen's Bench ordered that the action be certified as a class action subject to certain conditions and exceptions. The financial institutions' applications to strike all causes of action against them under rule 129 were dismissed. However, certain causes of action were struck under rule 129 and/or would be subject to further amendments to the amended amended statement of claim.

Contracts - Topic 3521

Performance or breach - Breach - General - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - Certain defendants (the financial institutions) applied to strike the action against them for failing to establish a cause of action under rule 129 of the Alberta Rules of Court - The financial institutions argued that they could not be liable in contract, as alleged in paragraphs 92 and 98 of the amended amended statement of claim, because they had no contractual relations with any plaintiff - Accordingly, a breach of contract claim could not succeed - The Alberta Court of Queen's Bench struck the cause of action of breach of contract - It was acknowledged by the plaintiffs that there was no evidence to support any contract between the plaintiffs and any of the financial institutions - The plaintiffs said only that, in addition to lawyers through whom investments flowed, one or more of the financial institutions held accounts for the "principal fraudsters in the scheme" - This did not establish grounds for a cause of action in contract by the plaintiffs against the financial institutions - See paragraph 222.

Equity - Topic 3607

Fiduciary or confidential relationships - Relationships which are not fiduciary - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme- Certain defendants (the financial institutions) applied to strike the action against them for failing to establish a cause of action under rule 129 of the Alberta Rules of Court - The financial institutions argued that there was no breach of fiduciary duty where there was no fiduciary relationship between them and the plaintiffs - The Alberta Court of Queen's Bench struck the cause of action of breach of fiduciary duty - Having regard to the nature of the relationship between the plaintiffs and the financial institutions and the facts pleaded, there was no support in law for the existence of a fiduciary relationship between the financial institutions and the investors, of whom it suggested it had no knowledge, because there was no relationship between the financial institutions and the investors, and as such it was plain and obvious that the claim had to fail - The requirements to establish a fiduciary duty were not evident from the facts pleaded and the creation of a duty on a policy basis would not be in the public interest - See paragraphs 223 to 225.

Practice - Topic 208.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Creation of sub-classes - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme) - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - The plaintiffs suggested that the class be comprised of all individuals, other than the defendants, who had invested money with the defendants and suffered losses - The Alberta Court of Queen's Bench ordered the certification of the class action - Relying on rule 41.6 of the Alberta Rules of Court, certification should proceed with a potential number of both plaintiff and defendant subclasses, with some common issues related to that/those subclass(es) only - This might better allow for the resolution of some issues that were not common to all parties - Accordingly, as to the defendants, subclasses would seem to include the principal defendants (those allegedly directly involved in fraud and a conspiracy to defraud), the customer care specialists who assisted them in the promotion of the HMS scheme, the financial institutions, the lawyers, and possibly others - As to the plaintiffs, the court would consider the creation of subclasses if there was a demonstrated benefit, and anticipated that such subclasses might include those who were "pure investors", and those who were not only investors but were paid commissions to bring others into the HMS scheme - Within each potential subclass, there might be a need for further subclasses - Some common issues might relate to all classes and some might relate only to some subclasses - See paragraphs 206 to 212.

Practice - Topic 209.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Members of class - General - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(b) of the Act, required an identifiable class of two or more persons - The plaintiffs suggested that the class be comprised of all individuals, other than the defendants, who had invested money with the defendants and suffered losses - The Alberta Court of Queen's Bench held that the proposed class definition should be slightly amended to make clear that it was only parties making investments in the HMS scheme that were included, not investments in other investment vehicles through the defendant financial institutions - See paragraph 44.

Practice - Topic 209.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Members of class - General - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme) - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(b) of the Act required an identifiable class of two or more persons - The plaintiffs suggested that the class be comprised of all individuals, other than the defendants, who had invested money with the defendants and suffered losses - The customer care specialists (CCS) defendants took exception with the class definition - They pointed out that their group consisted of financial advisors and CCS with whom individual investor clients invested - The CCS investors invested for the individual investors in the HMS scheme - The individual investors through CCS did not invest directly in the HMS scheme - The CCS defendants had suffered losses and had brought an independant action - In essence, the CCS defendants' argument was that the class definition should be restricted to those individuals who invested directly with HMS, not through the CCS, because the independant action sought relief for those investors - The CCS defendants raised two issues: double counting and conflict of interest - The Alberta Court of Queen's Bench rejected CCS' assertions and ordered the certification of the class action - If any investor who invested in HMS through CCS wanted to be part of the independant action and not this one, they could opt-out of this one - This might require some further orders, depending on how the independant action proceeded, to ensure that any double counting didn't become double recovery - The second issue was that the CCS group might have conflicts of interest - The CCS group seemed to admit liability, while maintaining that they were duped too, but had not paid back their investors - It might be that some of the investors who invested through the CCS might not want to continue to rely on the CCS group to recover their investments and might be happy to be class members - The court set the class definition as "all individuals, other than the Defendants, who have invested money with HMS, directly or indirectly, and suffered losses" - See paragraphs 45 to 54.

Practice - Topic 209.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Members of class - General - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(b) of the Act required an identifiable class of two or more persons - The plaintiffs suggested that the class be comprised of all individuals, other than the defendants, who had invested money with the defendants and suffered losses - The defendant HSBC argued that the criteria for class definition included objective criteria, and that evidence was required to establish a rational connection between the class and one or more common issues - HSBC contended that, with the class definition proposed by the plaintiffs, "there is no requirement that the class members must have invested money in the alleged fraudulent scheme", and suffered losses by virtue of the fraudulent scheme - The Alberta Court of Queen's Bench rejected HSBC's assertions and ordered the certification of the class action - Such a requirement would be forbidden because that would be a merit-based criterion (i.e., that the loss was due to fraud, a matter to be determined) - See paragraph 55.

Practice - Topic 209.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Members of class - General - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(b) of the Act required an identifiable class of two or more persons - The plaintiffs suggested that the class be comprised of all individuals, other than the defendants, who had invested money with the defendants and suffered losses - The defendant HSBC argued that there needed to be a temporal restriction to accord with the time of HSBC's or anyone else's involvement, as long as there was an investment in the HMS scheme - The Alberta Court of Queen's Bench rejected HSBC's assertions and ordered the certification of the class action - That HSBC, or other defendants, might have had an involvement for a certain period of time was a detail and there was nothing in HSBC's argument that convinced the court that there was any requirement for a temporal limit in the class definition - See paragraph 56.

Practice - Topic 209.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Members of class - General - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme) - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(b) of the Act required an identifiable class of two or more persons - The plaintiffs suggested that the class be comprised of all individuals, other than the defendants, who had invested money with the defendants and suffered losses - The defendant HSBC argued that there was no basis for the distinction between defendants who had suffered losses and non-defendants who had suffered losses; that is the customer care specialists (CCS) defendants (who had invested for individual investors in the HSM schemes and had suffered losses) should also be part of the plaintiff class - The Alberta Court of Queen's Bench rejected HSBC's assertions and ordered the certification of the class action - The court stated that "firstly, it seems incredible as a matter of procedure that the CCS could be plaintiffs and defendants in the same action, even in different roles - indeed, I find it a non-starter. Secondly, on the merits, the Plaintiffs reply that 'the rationale for that is abundantly clear - it is not appropriate for fraudsters or co-conspirators who facilitated the fraud on a massive scale to be included in the class of wronged investors', and, moreover, that the CCS Defendants have [an independant] Action in which to seek recovery" - See paragraphs 57 to 59.

Practice - Topic 209.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Members of class - General - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme) - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(b) of the Act required an identifiable class of two or more persons - The plaintiffs suggested that the class be comprised of all individuals, other than the defendants, who had invested money with the defendants and suffered losses - The defendant CIBC asserted that the class definition was overbroad, was not linked to the allegations in the pleadings and included those with potential conflicts - As to conflicts, CIBC raised the issue of returns and commissions, asserting that the class definition did not deal with those who, overall, profited from the HMS scheme to the detriment of later investors as a result of receiving returns on their initial investment - The Alberta Court of Queen's Bench rejected CIBC's assertions and ordered the certification of the class action - This litigation was not about claims made by those who had no claim (those who got in and got out with their investment and a return) but only by those who still had a claim - Therefore, aside from the conflicts issue, the issue of whether certain plaintiffs received some returns was irrelevant - Moreover, there was no suggestion that any of those who profited overall should be defendants because they held returns that belonged to those who lost - See paragraphs 60 to 64.

Practice - Topic 209.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Members of class - General - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(b) of the Act required an identifiable class of two or more persons - The plaintiffs suggested that the class be comprised of all individuals, other than the defendants, who had invested money with the defendants and suffered losses - The defendant Carlson asserted that a rational connection had to exist between the proposed class and the common issues - Carlson asserted that beyond merely an identifiable group, at least one personal cause of action had to be maintained for certification, and that there was no evidence establishing that Carlson had any interactions or relationships with any of the representative plaintiffs - The Alberta Court of Queen's Bench rejected Carlson's assertions and ordered the certification of the class action - Notwithstanding that the evidence was that the proposed plaintiff class representatives did not have a personal cause of action against Carlson, they were proposed as class representatives of the broad plaintiff class, not individual members of the subclasses - The evidence was sufficient at this stage in this unique case, before document disclosure, to make it apparent that one or more of the class members, albeit not specifically identified on the record at this time, had an action against Carlson, and that was sufficient - See paragraphs 65 to 67.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(a) of the Act required that plaintiffs establish that the pleadings disclosed a cause of action - The defendant financial institutions asserted that there were not causes of action pleaded against them - Alternatively, the financial institutions asserted that the plaintiffs "do not have any evidence to support their allegations" of failure to report suspicious activities in banking - The Alberta Court of Queen's Bench rejected the financial institutions' assertions and ordered the certification of the class action - Evidence was admissible under s. 5(1)(a), but that section required only that the "pleadings disclose a cause of action", not that there was evidence to support a pleading that disclosed a cause of action - The financial institutions failed to make a convincing argument that the pleadings did not disclose a cause of action - They failed to indicate what elements of a cause of action were omitted, and how, as a result, the pleadings were flawed - See paragraphs 31 to 34.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme) - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(a) of the Act required that plaintiffs establish that the pleadings disclosed a cause of action - The plaintiffs contended that the defendant Carlson was an active conduit for the payment of funds by investors to HMS and commissions back to investors on behalf of HMS - It was alleged that Carlson utilized his trust accounts to assist in the flow of investment funds to HMS from defrauded investors - Carlson asserted that there was insufficient evidence of any actual contact between Carlson and any member of the plaintiff class to establish the requisite cause of action, because the proposed representative plaintiffs had no knowledge of Carlson or his role - The Alberta Court of Queen's Bench rejected Carlson's assertions and ordered the certification of the class action - There was evidence that appeared to tie Carlson to the HMS scheme, but it was not specifically tied to an individual representative plaintiff - This was a weakness in the plaintiffs' case, but one that was not insurmountable at this stage - Section 5(1)(a) required only that the pleadings disclose a cause of action, not that the plaintiffs provide evidence to prove it - Thus, the pleading of same was sufficient in the circumstances, at this stage, in the absence of more specific evidence with respect to individual class members - However, should there not be more evidence forthcoming in the certification proceeding, Carlson could apply for the case to be dismissed or decertified against him - See paragraphs 35 to 41.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme) - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(c) of the Act required that the claims of the prospective class members raise a common issue, whether or not the common issue predominated over issues affecting only individual prospective class members - The plaintiffs asserted that the primary common issue was whether there was a legitimate investment offered by the defendants or whether the HMS scheme was a fraudulent scheme - The primary issue was joined by 16 others (see paragraph 73) - The defendants asserted the claims pleaded were not common issues as against all of them and that a finding against any of them as a class would not determine liability against them individually and individual examinations of the circumstances would be required - The Alberta Court of Queen's Bench rejected the assertions and ordered certification of the class action - Notwithstanding lengthy arguments by the defendants to the contrary, the court was not satisfied at this point in the litigation, in this unusual case, that individual issues would predominate over common issues - Moreover, certification of a class proceeding would deal with two main, and a substantial number of other common issues that would go to the resolution of the litigation, no matter what individual issues remained - The need for individual assessments would undoubtedly arise, but the existence of a need for individual assessments was not a bar to certification - See paragraphs 70 to 114.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme) - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(d) of the Act required, as a prerequisite for certification, that a class proceeding be the preferable procedure for the fair and efficient resolution of the common issues and s. 5(2) referenced five criteria, including that common issues predominated - The plaintiffs asserted that the primary common issue was whether there was a legitimate investment offered by the defendants or whether the HMS scheme was a fraudulent scheme - The primary issue was joined by 16 others (see paragraph 73) - The Alberta Court of Queen's Bench ordered the certification of the class action - The court held that there were allegations and evidence of systemic misrepresentations, and allegations of breaches of duty, sufficient in each case to pursue the common issues to a common trial, and that the common issues qualitatively predominated over "questions affecting only individual prospect class members" - Alternatively, even if that were not so, it was only a matter that had to be considered and was not fatal in itself - Even if there were not a predominance, the court found that the pursuit of the common issues identified would significantly advance the litigation - See paragraphs 121 to 153.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(d) of the Act required, as a prerequisite for certification, that a class proceeding be the preferable procedure for the fair and efficient resolution of the common issues and s. 5(2) referenced five criteria, including that no persons were interested in controlling the prosecution of the case - The Alberta Court of Queen's Bench ordered the certification of the class action - Here, where the prime alleged perpetrators had absconded, there had to be many claimants to share the cost of the difficult pursuit - A class proceeding was ideally suited to this type of case where, notwithstanding the relative large individual claims ($80,000 on average - although the plaintiffs said there were many in the $5,000 range), the action was difficult to litigate and recovery was difficult to achieve, and, even if successful on liability, might be small in actual recovery - Thus, the cost of litigation was relatively significant and required a concerted, common effort - While it was the obligation of the plaintiffs to address whether any individual interest was controlling the litigation, the court found no evidence to support that there was, and thus found this issue was not a bar to certification - See paragraphs 154 to 158.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(d) of the Act required, as a prerequisite for certification, that a class proceeding be the preferable procedure for the fair and efficient resolution of the common issues and s. 5(2) referenced five criteria, including that the claims were not subject to any other proceedings - The Alberta Court of Queen's Bench ordered the certification of the class action - There was an action started in the United States and an independent action brought by some defendants - Neither were duplicative actions - See paragraphs 159 to 161.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(d) of the Act required, as a prerequisite for certification, that a class proceeding be the preferable procedure for the fair and efficient resolution of the common issues and s. 5(2) referenced five criteria, including that other resolutions of the claims were less practical and efficient - The defendants asserted that certification would result in a multitude of individual discoveries and trials and that up to 1,000 individual proceedings would not be more efficient or effective and would not be consistent with the objective of judicial economy - The Alberta Court of Queen's Bench ordered the certification of the class action - A trial on common issues might resolve some individual actions completely, and any liability of the defendants with lesser involvement might be resolved by settlement agreements, especially with the disclosure of further information from the defending defendants, all with a prospect of avoiding 1,000 trials - Even to the extent that the background could be proved once, rather than 1,000 times, that was both judicial economy and access to justice - Further, access to justice would be furthered by certification for five reasons: lack of economy of pursuit or proscription because of applicable limitation periods; an opportunity for foreign litigants to recover; class members were "protected from any adverse cost award in relation to the common issues stage"; availability of class counsel through the aggregation of potential damages and contingency fee arrangements; and the defendants had less ability to create "procedural obstacles and hurdles that individual litigants may not have the resources to clear" - See paragraphs 162 to 175.

Practice - Topic 209.3

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Certification - Considerations (incl. when class action appropriate) - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - The defendants argued that the plaintiffs' proposed litigation plan failed to set out a workable method of advancing the proceedings - They also argued that the litigation plan was grossly inadequate for the following failures: no plan as to how to identify, locate and obtain the evidence of witnesses; how and when discovery would be conducted; identity and retention of experts; and how individual issues would be resolved and damages assessed, after the determination of common issues - The Alberta Court of Queen's Bench ordered the certification of the class action - The Amended Litigation Plan addressed many of the concerns: communications with class members; notice of certification and opt-in/opt-out; identification of proposed class members; some provisions for identification of witnesses; production management and exchange of records; discovery of representative plaintiffs and defendants; trial witnesses and experts (if necessary); some general provisions regarding individual issues; and distribution of amounts recovered and settlement - The current Amended Litigation Plan constituted a "workable method of advancing the proceedings on behalf of the class" for what was known now - See paragraphs 198 to 205.

Practice - Topic 209.4

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Certification - Appointment or replacement of representative plaintiff - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme) - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(e) of the Act required that the representative plaintiff "fairly and adequately represent the interests of the class; produce a plan that sets out a workable method of advancing the proceedings and notifying class members; and have no conflicts with the interests of other class members. This requires a common interest; a motivation to vigorously prosecute the claim; competent counsel; capacity to bear costs; and capably represent the interests of the class" - The defendants asserted that the proposed representative plaintiffs had received an interest return on investments - They asserted that these proposed representative plaintiffs might thus be unjustly enriched, might have to return receipts, might be in a constructive trust situation, may be subject of an accounting and tracing, and, therefore, conflicts might be apparent and arise - The Alberta Court of Queen's Bench ordered the certification of the class action - The fact that some investors had received some of their investments back did not, of itself, constitute an unjust enrichment - It was just part of the whole HMS scheme - The certification related to losses only, which could be determined at the individual assessment stage - Moreover, any necessary distinctions could be made by the future naming of subclasses or, if future conflicts became apparent, a future change in the representative plaintiff - There was no convincing conflict of interest on the allegations relating to returns on investments - See paragraphs 183 and 187.

Practice - Topic 209.4

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Certification - Appointment or replacement of representative plaintiff - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme (the HSM scheme) - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(e) of the Act required that the representative plaintiff "fairly and adequately represent the interests of the class; produce a plan that sets out a workable method of advancing the proceedings and notifying class members; and have no conflicts with the interests of other class members. This requires a common interest; a motivation to vigorously prosecute the claim; competent counsel; capacity to bear costs; and capably represent the interests of the class" - The defendants asserted that certification should be denied because there were conflicts of interest between the proposed representative plaintiffs because some received commissions for promoting the HMS scheme - The Alberta Court of Queen's Bench ordered the certification of the class action - While apparently based on innocence and being duped, receiving commissions suggested some complicity in the HMS scheme - This was not a potential or speculative conflict, but an actual, current one - To continue to retain commissions was a conflict, and anyone who was going to be a representative plaintiff would have to surrender those commissions to the plaintiff class prior to the certification order to avoid the conflict, or another representative plaintiff had to be nominated for review - Additionally, the amount of such commissions would be subtracted from any recovery from any members of the plaintiff class on any final distribution - See paragraphs 185 and 188.

Practice - Topic 209.4

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Certification - Appointment or replacement of representative plaintiff - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(e) of the Act required that the representative plaintiff "fairly and adequately represent the interests of the class; produce a plan that sets out a workable method of advancing the proceedings and notifying class members; and have no conflicts with the interests of other class members. This requires a common interest; a motivation to vigorously prosecute the claim; competent counsel; capacity to bear costs; and capably represent the interests of the class" - The defendants asserted that certification should be denied because the proposed representative plaintiffs had "little or no knowledge of that [plaintiff] class" suggesting that they were not appropriate - The Alberta Court of Queen's Bench ordered certification of the class action - It was not necessary for the proposed representative plaintiffs to have knowledge of the particulars of every claim that they were put forward to represent - It was understood that there were individual issues that might ultimately require resolution - What was required was that the representative plaintiffs possess sufficient knowledge of matters pertinent to the common issues to allow them to fairly and adequately represent the interests of the class or subclass - The proposed representative plaintiffs met this standard - See paragraphs 189 and 190.

Practice - Topic 209.4

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Certification - Appointment or replacement of representative plaintiff - The plaintiffs sued the defendants, alleging that they were part of a class of some 1,000 investors who invested approximately $80 million in what they alleged was a fraudulent investment scheme - The plaintiffs applied for certification of the action as a class action under the Class Proceedings Act - Section 5(1)(e) of the Act required that the representative plaintiff "fairly and adequately represent the interests of the class; produce a plan that sets out a workable method of advancing the proceedings and notifying class members; and have no conflicts with the interests of other class members. This requires a common interest; a motivation to vigorously prosecute the claim; competent counsel; capacity to bear costs; and capably represent the interests of the class" - The defendants asserted that certification should be denied because the plaintiffs had not demonstrated that the proposed representative plaintiffs had the capacity to bear "the significant costs that will be incurred", an ability which they asserted was necessary, and that the plaintiffs did not have "concrete and specific alternative funding arrangements in place" and had not provided the specifics of those arrangements - The Alberta Court of Queen's Bench rejected the defendants' assertions and ordered certification of the class action - Contingency fee agreements were allowed in Alberta under s. 38(1) of the Act - Further, there was nothing in s. 5(1) of the Act which suggested that a class representative needed to demonstrate such a financial capability in order to qualify as a spokeperson for the class - Finally, class counsel was committed to pursue a remedy - Absent evidence to the contrary, the defendants' arguments did not preclude certification - Any such evidence could support a security for costs application - See paragraphs 191 to 193.

Practice - Topic 209.7

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Certification - Evidence and proof - [See first and second Practice - Topic 209.3 ].

Practice - Topic 210.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Procedure - General (incl. venue, discovery, etc.) - [See eighth Practice - Topic 209.3 ].

Practice - Topic 210.2

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class actions - Procedure - Multiple or competing actions (incl. appointment of lead counsel) - [See sixth Practice - Topic 209.3 ].

Practice - Topic 1463

Pleadings - Statement of claim - General - Requirement of disclosing cause of action - [See first and second Practice - Topic 209.3 ].

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - [See Contracts - Topic 3521 , Equity - Topic 3607 and first and second Practice - Topic 209.3 ].

Cases Noticed:

Windsor v. Canadian Pacific Railway Ltd. (2006), 402 A.R. 162; 2006 ABQB 348, affd. (2007), 417 A.R. 200; 410 W.A.C. 200; 2007 ABCA 294, appld. [para. 2].

Titan Investments Limited Partnership, Re (2005), 383 A.R. 323; 2005 ABQB 637, refd to. [para. 4, footnote 2].

Cunningham (Trustee of Ponzi) v. Brown et al. (1924), 265 U.S. 1; 44 S. Ct. 424; 68 L. Ed. 873; 1924 U.S. Lexis 3570 (Sup. Ct.), refd to. [para. 4, footnote 2].

Rieser v. Hayslip; Canyon Sys. Corp., In re (2006), 343 B.R. 615; 2006 Bankr. Lexis 1004 (S.D. Ohio, E. Div. Bktcy. Ct.), refd to. [para. 4, footnote 2].

Syncrude Canada Ltd. v. Tibo Steel Products Ltd. et al. (2001), 292 A.R. 368; 2001 ABQB 478, refd to. [para. 11].

Fairweather v. Fairweather, [1946] O.J. No. 314 (H.C.), refd to. [para. 11].

King v. Kokot (1980), 18 C.P.C. 269; 119 D.L.R.(3d) 154 (Ont. H.C.), refd to. [para. 11].

Nay v. Nay (1981), 34 A.R. 221 (C.A.), refd to. [para. 11].

Oberg v. Foothills Provincial General Hospital et al. (1999), 232 A.R. 263; 195 W.A.C. 263 (C.A.), refd to. [para. 11].

Hollick v. Metropolitan Toronto (Municipality) et al., [2001] 3 S.C.R. 158; 277 N.R. 51; 153 O.A.C. 279; 2001 SCC 68, refd to. [para. 17].

Western Canadian Shopping Centres Inc. et al. v. Dutton et al., [2001] 2 S.C.R. 534; 272 N.R. 135; 286 A.R. 201; 253 W.A.C. 201, refd to. [para. 26].

Campbell et al. v. Flexwatt Corp. et al. (1997), 98 B.C.A.C. 22; 161 W.A.C. 22; 15 C.P.C.(4th) 1 (C.A.), refd to. [para. 26].

Elms et al. v. Laurentian Bank of Canada et al., [2000] B.C.T.C. 143; 73 B.C.L.R.(3d) 366 (S.C.), affd. (2001), 155 B.C.A.C. 73; 254 W.A.C. 73; 90 B.C.L.R.(3d) 195 (C.A.), refd to. [para. 26].

Murphy v. BDO Dunwoody LLP et al., [2006] O.T.C. 630 (Sup. Ct.), refd to. [para. 32].

Ragoonanan et al. v. Imperial Tobacco Canada Ltd. et al., [2005] O.T.C. 950; 78 O.R.(3d) 98 (Sup. Ct.), refd to. [para. 53].

Millard et al. v. North George Capital Management Ltd. et al., [2000] O.T.C. 305; 47 C.P.C.(4th) 365 (Sup. Ct.), refd to. [para. 63].

Millard et al. v. North George Capital Management Ltd. et al., [2006] O.T.C. Uned. C75 (Sup. Ct.), refd to. [para. 63].

Mouhteros v. DeVry Canada Inc. (1998), 70 O.T.C. 138; 41 O.R.(3d) 63 (Gen. Div.), refd to. [para. 65].

Gillespie v. Gessert (2006), 32 C.P.C.(6th) 319 (Alta. Q.B.), refd to. [para. 65].

Pauli et al. v. ACE INA Insurance et al. (2002), 322 A.R. 104 (Q.B.), refd to. [para. 65].

Canada Cement LaFarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1981] 4 W.W.R. 385 (B.C.C.A.), refd to. [para. 66].

MacKinnon v. National Money Mart Co. et al. (2004), 203 B.C.A.C. 85; 332 W.A.C. 85 (C.A.), refd to. [para. 66].

Frey et al. v. BCE Inc. et al. (2006), 282 Sask.R. 1 (Q.B.), refd to. [para. 66].

Alberta Society for Pension Reform v. Alberta et al. (2007), 450 A.R. 191; 2008 ABQB 74, consd. [para. 67].

Endean v. Canadian Red Cross Society et al., [1997] B.C.T.C. Uned. 766; 36 B.C.L.R.(3d) 350 (S.C.), revd. (1998), 106 B.C.A.C. 73; 172 W.A.C. 73; 48 B.C.L.R.(3d) 90 (C.A.), leave to appeal allowed (1998), 235 N.R. 400; 120 B.C.A.C. 158; 196 W.A.C. 158 (S.C.C.), refd to. [para. 72].

Chadha v. Bayer Inc., [2003] O.J. No. 27 (C.A.), refd to. [para. 79].

Williams v. Equitable Life Insurance Co. of Canada, [2003] O.A.C. Uned. 106 (C.A.), refd to. [para. 82].

Williams v. Mutual Life Assurance Co. - see Williams v. Equitable Life Insurance Co. of Canada.

Ayrton v. PRL Financial (Alta.) Ltd. et al. (2005), 370 A.R. 141; 52 Alta. L.R.(4th) 106 (Q.B.), affd. (2006), 384 A.R. 1; 367 W.A.C. 1; 265 D.L.R.(4th) 240 (C.A.), refd to. [para. 84].

Harrington v. Dow Corning Corp. et al. (2000), 144 B.C.A.C. 51; 236 W.A.C. 51; 193 D.L.R.(4th) 67 (C.A.), refd to. [para. 84].

Rumley et al. v. British Columbia, [2001] 3 S.C.R. 184; 275 N.R. 342; 157 B.C.A.C. 1; 256 W.A.C. 1, refd to. [para. 84].

Abdool et al. v. Anaheim Management Ltd. et al. (1995), 78 O.A.C. 377; 21 O.R.(3d) 453 (Div. Ct.), refd to. [para. 89].

Samos Investments Inc. v. Pattison et al., [2001] B.C.T.C. 1790; 22 B.L.R.(3d) 46 (S.C.), refd to. [para. 90].

Carom et al. v. Bre-X Minerals Ltd. et al. (2000), 138 O.A.C. 55 (C.A.), refd to. [para. 90].

Collette v. Great Pacific Management Co. et al. (2004), 195 B.C.A.C. 79; 319 W.A.C. 79; 26 B.C.L.R.(4th) 253; 2004 BCCA 110, leave to appeal dismissed (2004), 333 N.R. 393; 213 B.C.A.C. 320; 352 W.A.C. 320 (S.C.C.), refd to. [para. 90].

Metera et al. v. Financial Planning Group et al. (2003), 332 A.R. 244 (Q.B.), refd to. [para. 90].

Owners-Condominium Plan No. 0020701 v. Investplan Properties Inc. et al., [2006] A.R. Uned. 192 (Q.B.), refd to. [para. 90].

Saskatchewan Wheat Pool v. Canada, [1983] 1 S.C.R. 205; 45 N.R. 425, refd to. [para. 93].

Joanisse et al. v. Barker et al., [2003] O.T.C. 733 (Sup. Ct.), refd to. [para. 95].

Egglestone v. Baker - see Joanisse et al. v. Barker et al.

MacKinnon v. National Money Mart Co. et al., [2005] B.C.T.C. 271; 2005 CarswellBC 436 (S.C.), refd to. [para. 95].

L.K. Oil & Gas Ltd. and XL Food Systems Ltd. v. Canalands Energy Corp. (1989), 98 A.R. 161; 68 Alta. L.R.(2d) 269 (C.A.), refd to. [para. 95].

Tracy v. Instaloans Financial Solutions Centres (B.C.) Ltd. et al., [2006] B.C.T.C. 1018 (S.C.), refd to. [para. 96].

Cloud v. Canada (Attorney General) (2004), 192 O.A.C. 239 (C.A.), refd to. [para. 97].

Standard Chartered Bank v. Pakistan National Shipping Corp. (No. 2), [2003] 1 A.C. 959, refd to. [para. 104].

Wilson v. Bobbie (2006), 392 A.R. 232 (Q.B.), refd to. [para. 104].

Kelemen v. El-Homeira (1999), 250 A.R. 67; 213 W.A.C. 67 (C.A.), leave to appeal dismissed (2000), 261 N.R. 399; 271 A.R. 398; 234 W.A.C. 398 (S.C.C.), refd to. [para. 104].

Kripps et al. v. Touche Ross & Co. et al. (1997), 89 B.C.A.C. 288; 145 W.A.C. 288 (C.A.), refd to. [para. 104].

Yorkshire Trust Co. v. Empire Acceptance Corp. (1986), 24 D.L.R.(4th) 140 (B.C.S.C.), refd to. [para. 104].

Canada Cement LaFarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191, refd to. [para. 104].

Kiriri Cotton Co. v. Dewani, [1960] 1 All E.R. 177, refd to. [para. 104].

Ontario Securities Commission v. British Canadian Commodity Options Ltd. et al. (1979), 22 O.R.(2d) 278 (H.C.), refd to. [para. 104].

Yang et al. v. Overseas Investments (1986) Ltd. et al. (1995), 166 A.R. 178 (Q.B.), refd to. [para. 113].

Hoy v. Medtronic Inc. et al. (2003), 183 B.C.A.C. 165; 301 W.A.C. 165; 14 B.C.L.R.(4th) 32; 2003 BCCA 316, refd to. [para. 117].

Reid v. Ford Motor Co. et al., [2003] B.C.T.C. 1632; 2003 BCSC 1632, refd to. [para. 117].

Caputo et al. v. Imperial Tobacco Ltd. et al., [2004] O.T.C. 112; 236 D.L.R.(4th) 348 (Sup. Ct.), refd to. [para. 117].

Rose v. Pettle et al., [2004] O.T.C. 203; 43 C.P.C.(5th) 183 (Sup. Ct.), refd to. [para. 119].

Gariepy et al. v. Shell Oil Co. et al., [2002] O.T.C. 459; 23 C.P.C.(5th) 360 (Sup. Ct.), affd. [2004] O.J. No. 5309 (Div. Ct.), refd to. [para. 124].

Olsen et al. v. Behr Process Corp. et al., [2003] B.C.T.C. 1252 (S.C.), refd to. [para. 125].

Kristal Inc. et al. v. Nicholl and Akers et al., [2006] A.R. Uned. 257; 2006 ABQB 168, refd to. [para. 127].

Pearson v. Inco Ltd. et al., [2002] O.T.C. 515; 33 C.P.C.(5th) 264 (Sup. Ct.), affd. (2004), 183 O.A.C. 168 (Div. Ct), revd. (2005), 205 O.A.C. 30; 78 O.R.(3d) 641 (C.A.), refd to. [para. 127].

Controltech Engineering Inc. v. Ontario Hydro et al. (1998), 72 O.T.C. 351 (Gen. Div.), refd to. [para. 136].

Ward-Price v. Mariners Haven Inc. et al., [2002] O.T.C. 871 (Sup. Ct.), refd to. [para. 141].

Shaw v. BCE Inc. et al., [2003] O.J. No. 2695 (Sup. Ct.), refd to. [para. 141].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, refd to. [para. 148].

Rumley et al. v. British Columbia (1999), 131 B.C.A.C. 68; 214 W.A.C. 68; 72 B.C.L.R.(3d) 1 (C.A.), refd to. [para. 150].

Howard Estate et al. v. British Columbia (1999), 18 B.C.T.C. 40; 66 B.C.L.R.(3d) 199 (S.C.), refd to. [para. 154].

Dalhuisen v. Maxim's Bakery Ltd., [2002] B.C.T.C. 528; 2002 BCSC 528, refd to. [para. 154].

Moyes v. Fortune Financial Corp. et al., [2002] O.T.C. 883 (Sup. Ct.), refd to. [para. 165].

Tiemstra v. Insurance Corp. of British Columbia, [1996] B.C.T.C. Uned. 635; 22 B.C.L.R.(3d) 49 (S.C.), affd. (1997), 95 B.C.A.C. 144; 154 W.A.C. 144; 38 B.C.L.R.(3d) 377 (C.A.), refd to. [para. 166].

Williams v. Mutual Life Assurance Co. of Canada et al., [2000] O.T.C. 751 (Sup. Ct.), affd. (2001), 152 O.A.C. 344 (Div. Ct.), affd. (2003), 170 O.A.C. 165; 226 D.L.R.(4th) 112 (C.A.), refd to. [para. 168].

Kumar v. Mutual Life Assurance Co. of Canada - see Williams v. Mutual Life Assurance Co. of Canada et al.

Gregg v. Freightliner Ltd. et al., [2003] B.C.T.C. 241; 2003 BCSC 241, refd to. [para. 176].

Wilson v. Servier Canada Inc. et al., [2000] O.T.C. 884 (Sup. Ct.), refd to. [para. 179].

Bouchanskaia v. Bayer Inc., [2003] B.C.T.C. 1306; 2003 BCSC 1306, refd to. [para. 180].

Fakhri et al. v. Capers Community Markets, [2003] B.C.T.C. 1717; 26 B.C.L.R.(4th) 152; 2003 BCSC 1717, affd. (2004), 203 B.C.A.C. 227; 332 W.A.C. 227; 2004 BCCA 549, refd to. [para. 180].

Fakhri v. Alfalfa's Canada Inc. - see Fakhri et al. v. Capers Community Markets.

Shiels et al. v. TELUS Communications Inc. et al., [2004] A.R. Uned. 147; 2004 ABQB 76, refd to. [para. 180].

Bellaire v. Independent Order of Foresters, [2004] O.J. No. 2242 (Sup. Ct.), refd to. [para. 201].

MacDonald et al. v. Board of Education of Dufferin-Peel Catholic District, [2000] O.T.C. 919 (Sup. Ct.), refd to. [para. 201].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84, refd to. [para. 223].

Wuttunee et al. v. Merck Frosst Canada Ltd. et al. (2007), 291 Sask.R. 161; 2007 SKQB 29, refd to. [para. 223].

Air Canada v. M & L Travel Ltd., Martin and Valliant, [1993] 3 S.C.R. 787; 159 N.R. 1; 67 O.A.C. 1, refd to. [para. 226].

Barnes v. Addy (1874), L.R. 9 Ch. App. 244, refd to. [para. 226].

Gold v. Rosenberg et al. (1995), 86 O.A.C. 116; 129 D.L.R.(4th) 152 (C.A.), affd. [1997] 3 S.C.R. 767; 219 N.R. 93; 104 O.A.C. 1, refd to. [para. 226].

Soulos v. Korkontzilas et al., [1997] 2 S.C.R. 217; 212 N.R. 1; 100 O.A.C. 241, refd to. [para. 227].

Citadel General Life Assurance Co. et al. v. Lloyd's Bank of Canada et al., [1997] 3 S.C.R. 805; 219 N.R. 323; 206 A.R. 321; 156 W.A.C. 321, refd to. [para. 230].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 232].

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268, refd to. [para. 232].

Cooper v. Hobart - see Cooper v. Registrar of Mortgage Brokers (B.C.) et al.

Cooper v. Hobart et al. (1999), 14 B.C.T.C. 201 (S.C.), refd to. [para. 232, footnote 25].

Tottrup v. Lund et al. (2000), 255 A.R. 204; 220 W.A.C. 204 (C.A.), refd to. [para. 236].

Tottrup v. Alberta (Minister of Environment) - see Tottrup v. Lund et al.

Whistler Cable Television Ltd. v. IPEC Canada Inc., [1992] B.C.T.C. Uned. F55; 75 B.C.L.R.(2d) 48 (S.C.), refd to. [para. 237].

Statutes Noticed:

Class Proceedings Act, S.A. 2003, c. C-16.5, sect. 5(1)(a) [sect. 27 et seq.]; sect. 5(1)(b) [para. 43 et seq.]; sect. 5(1)(c) [para. 71 et seq.]; sect. 5(1)(d) [para. 115 et seq.]; sect. 5(1)(e) [para. 180 et seq.]; sect. 5(2) [para. 115 et seq.].

Authors and Works Noticed:

Campion, John A., and Dimmer, Diana W., Professional Liability in Canada (2003 Looseleaf Update, Release 1), p. 7-9 [para. 112].

Mark, Alan H., and Brown, Michael, It is Personal: The Representative Plaintiff in Class Actions (2004), 1 Can. Class Action Rev. 121, p. 128 [para. 66].

Rotman, Leonard I., Deconstructing the Constructive Trust (1999), 37 Alta. L. Rev. 133, pp. 153, 154 [para. 228].

Winkler, Warren K., Advocacy in Class Proceedings Litigation (2000), 19:1 Adv. Soc. J. 6-9, p. 3 [para. 201].

Counsel:

Craig Gillespie and Jim Cumming (Cuming Gillespie & Raymaker) and Graham McLennan and Stuart Chambers (McLennan Ross LLP), for the plaintiffs;

Anne L. Kirker (Macleod Dixon LLP), for the Alberta Lawyers Insurance Association and the Canadian Lawyers Insurance Association;

John L. Ircandia and Diane F. Audino (Borden Ladner Gervais LLP), for the defendant, HSBC Bank Canada;

Louise Novinger-Grant (Burnet Duckworth & Palmer LLP), for the defendant, McCarthy Tetrault LLP;

A. Webster MacDonald, Q.C. and G. Matthews (Blake Castles LLP), for the defendants, Canadian Imperial Bank of Commerce and First National Bank of San Diego;

Sid J. Kobewka (Kobewka Stadnyk LLP), for the "Kobewka CCS" defendants;

Gorden Desautels and J.R. Cusano (Gowling Lafleur Henderson LLP.), for the defendants, Mountain View Credit Union Limited and Community Credit Union Ltd.;

C.G. Docken, Q.C. (Docken & Company), for the defendants named as plaintiffs in Action No. 0601-03553;

Virginia May, Q.C. and Elizabeth Aspinall (May Jensen Shawa Solomon LLP), for the defendant, Dana I. Carlson.

These applications were heard on April 23 and 24, 2007, by Rooke, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following reasons for judgment on October 9, 2008.