Wadden et al. v. BMO Nesbitt Burns, (2015) 360 N.S.R.(2d) 39 (CA)

• Judge: MacDonald, C.J.N.S., Saunders and Oland, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: May 14, 2015
• Jurisdiction: Nova Scotia
• Citations: (2015), 360 N.S.R.(2d) 39 (CA);2015 NSCA 48

Wadden v. BMO Nesbitt Burns (2015), 360 N.S.R.(2d) 39 (CA);

    1135 A.P.R. 39

MLB headnote and full text

Temp. Cite: [2015] N.S.R.(2d) TBEd. MY.026

Calvin Wadden, Andrea Wadden and 3019620 Nova Scotia Limited (appellants) v. BMO Nesbitt Burns (respondent)

(CA 424852; 2015 NSCA 48)

Indexed As: Wadden et al. v. BMO Nesbitt Burns

Nova Scotia Court of Appeal

MacDonald, C.J.N.S., Saunders and Oland, JJ.A.

May 14, 2015.

Summary:

A complex series of multi-party actions arose out of the collapse of a publicly-traded technology company, Knowledge House Inc. (KHI). National Bank Financial Ltd. (NBFL) started a number of actions against clients and former clients for unpaid margin debt arising from the collapse. Some of NBFL clients defended those claims by alleging that they had been the victims of a conspiracy by NBFL's employee, Clarke, and others to manipulate KHI share prices. NBFL issued a statement of claim, in what became the main action, against Potter (a lawyer), Clarke, and others, alleging that they conspired to manipulate the price of KHI shares and that the conspiracy resulted in a fraud being committed against NBFL. Several of the respondents in the main action started actions against NBFL, including Dunham, the Weirs, Blackwood Holdings (a Weir company), Barthe and Wadden (collectively referred to as the "Dunlop clients" as they were all represented by a lawyer named Dunlop). Wadden, his wife and a numbered company (plaintiffs) commenced a separate action against BMO Nesbitt Burns Inc. respecting the handling of his margin accounts. By the time of trial, the only remaining parties were the Dunlop clients, NBFL and its parent, the National Bank of Canada, and BMO Nesbitt Burns Inc.

The Nova Scotia Supreme Court, in a judgment reported (2013), 333 N.S.R.(2d) 60; 1055 A.P.R. 60, allowed the claims by Dunham, the Weirs and Blackwood Holdings and assessed damages, including punitive damages. Barthe's claim was allowed in part, for the time up to when he became aware of the stock manipulation scheme. The court dismissed the plaintiffs' claim against NBFL and BMO Nesbitt Burns Inc., considering Wadden to be an insider who actively participated in the stock manipulation scheme. NBFL's third party claim against Wadden was allowed. BMO sought an award of lump costs of $725,000 plus disbursements of $200,000.

The Nova Scotia Supreme Court, in a judgment reported (2014), 341 N.S.R.(2d) 94; 1081 A.P.R. 94, awarded BMO costs of $725,000 and $140,000 in disbursements jointly and severally against the plaintiffs. The plaintiffs appealed the dismissal of their claim and applied to introduce fresh evidence on the appeal. Wadden's wife appealed the decision to make the costs award joint and several.

The Nova Scotia Court of Appeal declined to permit the introduction of the fresh evidence and dismissed the plaintiffs' appeal dismissing their claim. The trial judge made no palpable and overriding error warranting appellate intervention. The appeal from the discretionary costs award was dismissed where there was no error in principle and the award was not was plainly wrong.

Editor's Note: The trial decision of this case was reported under the "Indexed As" name National Bank Financial Ltd. v. Potter et al.

Brokers - Topic 3083

Duties of broker to principal - Stockbrokers (incl. commodity brokers) - Contractual duties - [See Brokers - Topic 3091 ].

Brokers - Topic 3091

Duties of broker to principal - Stockbrokers (incl. commodity brokers) - Negligence - Standard of care - A complex series of multi-party actions arose out of the collapse of a publicly traded technology company, Knowledge House Inc. (KHI) - In one action, Wadden, a KHI shareholder and director, sued BMO Nesbitt Burns (investment/brokerage type company), alleging, inter alia, that BMO's handling of his accounts between March and August 2000 was negligent and in breach of its contractual obligations causing him financial losses respecting KHI stock - Wadden claimed that BMO breached its standard of care in not advising of restrictions placed on its margin accounts and improperly freezing his accounts - The trial judge found that Wadden was aware of the conditions on his account - Freezing the accounts was consistent with BMO's gatekeeping functions, having regard to the fact that Wadden was an insider of KHI with insider information about the stock manipulation scheme - BMO was not liable in contract or negligence - The Nova Scotia Court of Appeal dismissed the plaintiffs' appeal - The grounds of appeal all involved the trial judge's fact findings, credibility findings, inferences from those fact findings, and mixed question of fact and law without any extricable question of law - There was no palpable and overriding error warranting appellate intervention - Any of the cited examples of misapprehending evidence and errors of fact were inconsequential to the trial judge's reasoning and ultimate decision - See paragraphs 1 to 128.

Courts - Topic 583

Judges - Duties - Re reasons for decisions - The trial judge's reasons for judgment dismissing the plaintiffs' action included (copied) a portion of the defendant's closing submissions - On appeal, the plaintiffs argued that the trial judge erred in basing findings based on those submissions - The Nova Scotia Court of Appeal rejected the argument - The reliance on a portion of the defendant's closing submissions did not show that the trial judge failed to independently and impartially assess the evidence - The court noted that the trial judge rejected some of the defendant's submissions and that the accepted portions accurately reflected the trial evidence and/or were not contentious - See paragraphs 80 to 108.

Courts - Topic 590

Judges - Duties - Duty to appear just and impartial - [See Courts - Topic 583 ].

Practice - Topic 7170

Costs - Party and party costs - Liability for party and party costs - Joint and several liability - Wadden et al. (the three plaintiffs) sued BMO Nesbitt Burns Inc. (BMO) - The plaintiffs' action was dismissed - BMO claimed costs - The three plaintiffs submitted that the costs should be assessed pro-rata, based on their respective claims against BMO - The trial judge held that there was no principled basis, or circumstances special to this case, justifying departure from the general rule that liability for costs should be joint and several - The claim of the plaintiffs, who were related parties, overlapped in respect of the factual and legal issues - They adopted a single common argument against BMO - One counsel acted for all three plaintiffs - The plaintiffs' goal and basis for imposing liability was common to all of the plaintiffs - One of the plaintiffs appealed the decision that the plaintiffs should be jointly and severally liable for the costs award - The Nova Scotia Court of Appeal stated that "An award of costs is a discretionary decision. The judge's determination is to be set aside only if there was an error in principle, or the costs award is 'plainly wrong'. I am not satisfied that either criteria was satisfied here." - See paragraphs 129 to 133.

Practice - Topic 8800

Appeals - General principles - Duty of appellate court regarding findings of fact - [See Practice - Topic 8800.1 ].

Practice - Topic 8800.1

Appeals - General principles - Duty of appellate court regarding findings of mixed law and fact by a trial judge - The plaintiffs appealed the dismissal of their negligence and breach of contract action against the defendant - The grounds of appeal all involved the trial judge's fact findings, credibility findings, inferences from those fact findings, and mixed question of fact and law without any extricable question of law - The Nova Scotia Court of Appeal held that the standard of review for all grounds of appeal was palpable and overriding error - See paragraph 51.

Practice - Topic 8820

Appeals - General principles - Duty of appellate court re findings of credibility by trial judge - [See Practice - Topic 8800.1 ].

Practice - Topic 9031

Appeals - Evidence on appeal - Admission of "new evidence" - The plaintiffs' action for negligence and breach of contract against the defendant was dismissed at trial - On appeal, the plaintiffs sought to introduce fresh evidence in the form of certain documentary evidence - The Nova Scotia Court of Appeal declined to admit the fresh evidence - First, the plaintiffs had the documents at trial and chose not to admit them - The plaintiffs failed to exercise due diligence - Secondly, none of the documents were attached to the affidavits in support of the motion to admit fresh evidence - Accordingly, the documents were not tendered in admissible form - The plaintiffs were asking the court to admit the documents and include them in determining the merits of the appeal notwithstanding that the documents were not provided to the court to examine - Finally, whether the documents sought to be introduced as fresh evidence were relevant was doubtful - See paragraphs 33 to 50.

Cases Noticed:

Coates v. Capital District Health Authority et al. (2011), 299 N.S.R.(2d) 202; 947 A.P.R. 202; 2011 NSCA 4, refd to. [para. 40].

T.G. v. Nova Scotia (Minister of Community Services) et al. (2012), 316 N.S.R.(2d) 202; 1002 A.P.R. 202; 2012 NSCA 43, refd to. [para. 40].

Housen v. Nikolaisen et al. (2002), 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 52].

Davison et al. v. Nova Scotia Government Employees Union (2005), 231 N.S.R.(2d) 245; 733 A.P.R. 245; 2005 NSCA 51, refd to. [para. 52].

Armco Capital Inc. v. Armoyan (2011), 300 N.S.R.(2d) 255; 950 A.P.R. 255; 2011 NSCA 22, refd to. [para. 54].

R. v. Sheppard (C.) (2002), 284 N.R. 342; 211 Nfld. & P.E.I.R. 50; 633 A.P.R. 50; 2002 SCC 26, refd to. [para. 63].

Cojocaru v. British Columbia Women's Hospital and Health Center et al. (2013), 445 N.R. 138; 336 B.C.A.C. 1; 574 W.A.C. 1; 2013 SCC 30, refd to. [para. 84].

Savoury v. Nova Scotia (Attorney General) (2013), 328 N.S.R.(2d) 268; 1039 A.P.R. 268; 2013 NSCA 36, refd to. [para. 97].

MacNeil v. Nova Scotia (Attorney General) et al. (2000), 183 N.S.R.(2d) 119; 568 A.P.R. 119; 2000 NSCA 31, refd to. [para. 97].

Farnya v. Chorny, [1951] B.C.J. No. 152 (C.A.), refd to. [para. 98].

Berney v. Bishop of Norwich (1867), 36 L.J. Ecc. (P.C.), refd to. [para. 98].

St. Elizabeth Home Society v. Hamilton (City) (2010), 266 O.A.C. 136; 2010 ONCA 280, refd to. [para. 110].

Lambert v. Quinn et al. (1994), 68 O.A.C. 352; 110 D.L.R.(4th) 284 (C.A.), refd to. [para. 110].

Lévesque v. Comeau et al., [1970] S.C.R. 1010, refd to. [para. 110].

Canada Trustco Mortgage Co. v. Co-operators General Insurance Co. (1997), 163 N.S.R.(2d) 241; 487 A.P.R. 241 (C.A.), refd to. [para. 110].

Doiron v. Haché (2005), 290 N.B.R.(2d) 79; 755 A.P.R. 79; 2005 NBCA 75, refd to. [para. 110].

Burke v. Cory (1959), 19 D.L.R.(2d) 252 (Ont. C.A.), refd to. [para. 123].

Griffin v. Corcoran (2001), 193 N.S.R.(2d) 279; 602 A.P.R. 279 (C.A.), refd to. [para. 131].

Ontario v. Rothmans Inc. et al. (2013), 305 O.A.C. 261; 2013 ONCA 353, refd to. [para. 131].

King v. On-Stream Natural Gas Management Inc., [1993] B.C.J. No. 2283 (S.C.), refd to. [para. 131].

Giles et al. v. Westminster Savings Credit Union et al. (2010), 287 B.C.A.C. 281; 485 W.A.C. 281; 2010 BCCA 282, refd to. [para. 131].

Authors and Works Noticed:

Orkin, Mark M., The Law of Costs (2nd Ed. 2015) (looseleaf), s. 208.1 [para. 131].

Sopinka, John, Lederman, Sidney N., and Bryant, Alan W., The Law of Evidence in Canada (4th Ed. 2014), § 6.450 [para. 110].

Counsel:

Calvin and Andrea Wadden, appellants, in person;

Linda L. Fuerst and Andrew Porter, for the respondent.

This appeal was heard on November 17, 2014, at Halifax, N.S., before MacDonald, C.J.N.S., Saunders and Oland, JJ.A., of the Nova Scotia Court of Appeal.

On May 14, 2015, Oland, J.A., delivered the following judgment for the Court of Appeal.