Harnam v Chandran, 2013 ABQB 600

Court of Queen ’ s Bench of Alberta Citation: Harnam v Chandran, 2013 ABQB 600 Date: 20131016 Docket: 1201 08021 Registry: Calgary Between: Hari Harnam & Gary Guidry Plaintiffs/Applicants - and - Shariff Chandran, Chitra Chandran, Philip C. Pincus, Platinum Equities Inc., Glenmore & Centre Registered Investments Ltd., Glenmore & Centre Registered Capital Ltd., Accretive Asset Management Corp., Glenmore & Centre Retail Gp Ltd., Riaz Mamdani, Strategic Financial Corp., Strategic Equity Corp., Glenmore & Centre Ltd. and Accolade Equities Inc.

Defendants/Respondents _ ________________________________________ ______________ Reasons for Judgment of the Honourable Mr. Justice A.D. Macleod _________________________________________ ______________ [ 1 ] Harnam and Guidry are plaintiffs in this proceeding filed pursuant to the Class Proceedings Act, SA 2003 against a number of defendants. They bring this application for an order certifying the action as a multi-jurisdictional class proceeding under the Act. The matter comes before me because I am the case manager of this action and another related one.

The action is brought against the Defendants by unhappy investors in a commercial real estate investment that was managed, operated and marketed by the Defendants.

The Plaintiffs state in paragraph 10 of their brief as follows: 10. Broadly speaking, the Claim alleges: (

a) investors, including the Representative Plaintiffs, invested funds in the Glenmore Investment, a Calgary-based real estate investment scheme marketed and operated by the Platinum Defendants; (

b) the real estate Property in question was a developed strip mall with a number of tenants that the Strategic Defendants sold to the Glenmore Partnership, which was a limited partnership managed by the Platinum Defendants; (

c) the Platinum Defendants and the Strategic Defendants knowingly caused the Glenmore Partnership to materially overpay for the Property; (

d) the purchase price was paid using funds contributed by investors, including the Representative Plaintiffs, and take-back financing provided by the Strategic Defendants; (

e) the Platinum Defendants and the Strategic Defendants devised and structured the Purchase Transaction and the related take-back financing so that (

i) the Property was encumbered with mortgages for an amount above the true fair market value of the Property and (ii) the Strategic Defendants maintained complete operational, financial and informational control over the Property; (

f) the defendants used the Glenmore Investment to conspire to wrongfully take and use Investor Funds for their personal benefit; (

g) the defendants were unjustly enriched as a result of their misconduct; (

h) the Platinum Defendants were negligent in their management of the Glenmore Investment and the Glenmore Partnership and breached the terms of the LPA with investors; and (

i) the Platinum Defendants made misrepresentations in the offering memoranda prepared for investors that give rise to a statutory cause of action under the Alberta Securities Act. [ 2 ] As mentioned, there is a related action (the Starratt action) but there there is an interim consent order staying the portion of that action related to this one. [ 3 ] I have had the benefit of affidavits from the applicants which were both the subject of cross examination.

There is substantial agreement among the parties as to the general principles relating to class actions and indeed, the Platinum Defendants which include 9 of the Defendants do not oppose certification and filed no materials in connection with this application. [ 4 ] I agree with the principles set forth in the Plaintiff’s brief under General Principles Relating to Class Actions (paragraphs 18 to 21). Class actions allow individuals to consolidate their complaints into a single action and appoint one or more representatives to advocate on their behalf.

Common issues are tried together and the court’s decision is binding on all members of the class and as such, these are procedural tools which are intended to provide a fair, simple and efficient mechanism to deal with a large number of claims involving common matters. In Western Canadian Shopping Centres Inc. v Dutton , 2001 SCC 46 the Court articulated three goals of class proceedings: judicial economy, access to justice and behavioral modification.

Alberta now has legislation in the form of the Class Proceedings Act and we have had the benefit of further decisions from our Court and the Court of Appeal providing assistance in making decisions as to which cases are appropriate to be certified. Section 5(1) of the Class Proceedings Act sets out the certification analysis and if the requirements of that

section are met the action is to be certified. Before me, the Strategic Defendants largely restricted their objection to the proposition that there is another method of resolving the claims that are more practical and more efficient and that the proposed class proceedings would create greater difficulty than those likely to be experienced if the relief were sought by other means. Accordingly, they say, s. 5(1)(

d) is not satisfied. [ 5 ] Before dealing with that submission I begin by saying that with respect to the rest of s. 5 I am satisfied that all other criteria are met. The Statement of Claim does disclose a cause of action and there are common issues. There is an identifiable class and the two proposed representatives are well able to advocate on behalf of themselves and the rest of the class. This is a proceeding where the goals of judicial economy, access to justice and behavioral modification apply.

I further agree with the definition of the class submitted by the Plaintiffs. [ 6 ] The Strategic Defendants propose that this action proceed by way of claim on behalf of the Limited Partners pursued by a general partner appointed for that purpose. The essence of the argument is that all of the claims advanced are actually claims of the Limited Partners and they are all derivative in the sense that they are claims of the partnership. [ 7 ] I disagree.

The investors are claiming, among other things, that the Defendants knowingly created a structure which was designed to defraud the Plaintiffs and this included the establishment of the Limited Partnership and the transactions between it and the Platinum Defendants which resulted in a scheme deliberately designed to cause the Plaintiffs’ loss. They claim, inter alia, that the “Glenmore Agreements” are void for illegality and contrary to public policy. This includes the Limited Partnership Agreement and all the agreements that form the basis of the investment and the relationship among the parties.

Furthermore, some of the investors’ claims rise from the securities legislation and are totally independent of any potential claims by Limited Partners. Indeed, not all of the investors are Limited Partners. [ 8 ] In addition, I am of the view that in this case a class proceeding would be preferable “in the sense of preferable to other procedures such as joinder, test cases, consolidation and so on”. (see para. 31 in Hollick v Toronto (City), 2001 SCC 68 . It seems to me totally inappropriate for this court to embark upon an inquiry as to the best possible procedure.

The Plaintiffs have placed issues before the court and have proposed a class action. Given the claims advanced by the Plaintiffs I am convinced that a class action is the appropriate procedure to achieve judicial economy, efficiency and access to justice.

[ 9 ] Accordingly, the application is granted and the court hereby: (

a) certifies this action as a class proceeding pursuant to the Class Proceedings Act in accordance with the class, sub-classes and common issues set out in the application; (

b) designates Messrs. Harnam and Guidry as the Representative Plaintiffs; and (

c) orders costs in favour of the Plaintiffs in connection with this application against the Strategic Defendants. Heard on the 18 th day of September, 2013. Dated at the City of Calgary, Alberta this 16 th day of October, 2013. A.D. Macleod J.C.Q.B.A. Appearances: Andrew F. Suntner/Joanne Luu B. Sawatsky, Student-at-Law Burnet, Duckworth & Palmer LLP for the Plaintiffs Harnam and Guidry S.S. Smyth /R.F.T. MacIsaac McCarthy Tetrault LLP for the Defendants Strategic Financial Corp., Strategic Equity Corp., Glenmore & Centre Ltd. And Mamdani, Riaz Daniel B.R. Johnson J.

Feniuk, Student-at-Law Borden Ladner Gervais LLP For the Defendants Chandran, Shariff; Chandran, Chitra; Platinum Equities Inc., Glenmore & Centre Registered Capital Ltd. And Glenmore & Centre Registered Investments Ltd., Glenmore & Central Retail, and Accretive Asset Manager