An Ontario Superior Court of Justice Divisional Court has dismissed an appeal from investment firms Trapeze Capital Corp. and Trapeze Asset Management Ltd. that sought to dismiss civil lawsuits from a couple of former clients who allege that the firms mismanaged their investment portfolios.
In an earlier decision, a motions judge denied the Toronto-based firms’ bid to dismiss the actions, which they subsequently appealed. According to the decision on appeal, the firms sought to have the claims dismissed on the grounds that they were brought after the limitation period for civil lawsuits expired.
In siding with the clients in the initial decision, the motions judge ruled that the clients weren’t aware that they may have a case for a civil claim against the firms until the details of regulatory actions brought by the Investment Industry Regulatory Organization of Canada (IIROC) and the Ontario Securities Commission (OSC) were made public.
“The motion judge rejected the position implicitly put forward by the appellants that [the client] should not have accepted their assurances but rather should have disbelieved them and started a lawsuit,” the court noted in its appeal decision. “Nor was it reasonable to suggest that [clients] should have known about the OSC or IIROC investigations until the appellants notified their clients about them.”
On appeal, the court sided with the clients once again, declining to dismiss the lawsuits, ruling that there was “no overriding or palpable error” in the decision of the motions judge.