King v. RBC Dominion Securities Inc., 2012 NSSC 225

SUPREME COURT OF NOVA SCOTIA Citation: King v. RBC Dominion Securities Inc., 2012 NSSC 225 Date: 20120613 Docket: Syd. No 246513 Registry: Sydney Between: Henry David King and Joyce Carmel King Applicants v. RBC Dominion Securities Inc./RBC Dominion Valuers Mobiliers Inc. a body corporate, and Frank Youden Respondents LIBRARY HEADING Judge: The Honourable Justice Cindy A. Bourgeois Heard: June 11, 2012, in Sydney, Nova Scotia Decision: June 13, 2012 Subject: Consolidation of proceedings Civil Procedure Rules 37.02 and 37.03

Summary: The Applicants sought to consolidate their claim against the Defendants, with three other actions, all involving the same Defendants and allegations regarding the improper / negligent conduct of an investment advisor. Issue: Should the matters be consolidated, heard at the same time, or heard in sequence? Result: After reviewing the Rules, case authorities and material before the Court, the motion was dismissed

SUPREME COURT OF NOVA SCOTIA Citation: King v. RBC Dominion Securities Inc., 2012 NSSC 225 Date: 20120613 Docket: Syd. No 246513 Registry: Sydney Between: Henry David King and Joyce Carmel King Applicants v. RBC Dominion Securities Inc./RBC Dominion Valuers Mobiliers Inc. a body corporate, and Frank Youden Respondents Judge: The Honourable Justice Cindy A.

Bourgeois Heard: June 11, 2012 in Sydney, Nova Scotia Decision: June 13, 2012 Counsel: Robert Risk and Jennifer Anderson, for the Applicants Roderick Rogers, Q.C., on behalf of Nigel Campbell, for the Respondents By the Court : Introduction: [ 1 ] This is a motion brought by Henry and Joyce King, originally seeking consolidation of an action in which they are plaintiffs with three other named actions. All four matters have common defendants, namely RBC Dominion Securities Inc. and Frank Youden. [ 2 ] It would appear that all four plaintiffs are represented by Mr. Risk and Mr. McPhee of Sampson McDougall.

In all four actions, the defendants are represented by Mr. Campbell of Blakes. Mr. Rogers responded to this motion on behalf of Mr. Campbell.

[ 3 ] It appears to be unrefuted that the plaintiffs in all four actions were former clients of the Defendant RBC, having held investment accounts during certain periods of time. It is alleged that the investment advisor personally responsible for the respective accounts was a Mr. Bagnell. Mr. Bagnell was allegedly supervised by Mr. Youden. [ 4 ] In the four actions, each plaintiff claims that Mr. Bagnell negligently managed their respective accounts, and all are seeking the same type of financial damages, along with “ aggravated, punitive and exemplary damages ” .

It is further alleged in each action, that the Defendant Youden negligently failed to supervise Bagnell, and that RBC, as the employer of both men, is vicariously liable. [ 5 ] Although the position of the parties will be canvassed in greater detail herein, at this juncture it may be helpful to comment upon the somewhat shifting nature of the remedy being sought by the Applicants. [ 6 ] In their thorough written submissions, the Applicants clearly focussed upon establishing why consolidation (pursuant to Rule 37.02) of the four actions was an appropriate remedy.

Although the Applicants did reference the possibility of the matters being heard together (pursuant to Rule 37.03) in their written submissions, such was clearly not the preferred remedy sought. What was clearly indicated was that the Applicants did not seek, or want the actions heard in sequence. [ 7 ] At the outset of oral arguments, Mr. Risk advised the Court that although the Applicants were still seeking consolidation, based upon his view of the uncertainty of the law of consolidation in light of the new Rules, such was giving rise to concern. Mr.

Risk did not want to create, by consolidation, a situation where the determination of the issues relating to one plaintiff would be conclusive of the other three actions. If such would be the effect of consolidation, Mr. Risk advised that the Applicants would want the matters to be heard together, pursuant to Rule 37.03. [ 8 ] Following the Respondents ’ oral submissions, Mr. Risk again altered the nature of the remedy being sought by the Applicants. Specifically, it was requested that the Court consider as an appropriate remedy, directing that all four matters be heard sequentially.

As noted above, in the Applicants ’ written submissions, this was a remedy that was opposed. Law: [ 9 ] In their Notice of Motion, the Applicants rely upon Civil Procedure Rules 37.02 and 37.03 which read: 37.02 A judge may order consolidation of proceedings if the proceedings to be consolidated are of the same kind, that is to say, actions, applications, applications for judicial review, or appeals, and one of the following conditions is met: (

a) a common question of law or fact arises in the proceedings; (

b) a same ground of judicial review or appeal is advanced in the applications for judicial review or appeals and the ground involves the same or similar decision-makers; (

c) claims, grounds, or defences in the actions or applications involve the same transaction, occurrence, or series of transactions or occurrences; (

d) consolidation is, otherwise, in the interests of the parties. 37.03 A judge may order that proceedings be tried or heard together, or in sequence.

[10] Although not specifically plead or mentioned by either party, given the arguments raised by both Counsel, the Court has takennote of Rule 37.04 which provides: 37.04(1) A judge may order common issues in two or more proceedings be tried, or heard, together.

(2) The judge who orders the trial, or hearing, together of common issues may provide times for the trial, or hearing, of the issuesthat are to be tried, or heard, separately. [11] I have also considered

Section 41(

g) of the Judicature Act, R.S.N.S., 1989, c.240 which provides: 41. In every proceeding commenced in the Court, law and equity shall be administered therein according to the following provisions: (

g) the Court, in the exercise of the jurisdiction vested in it in every proceeding pending before it, shall have power to grant, and shallgrant, either absolutely or on such reasonable terms and conditions as to the Court seems just, all such remedies whatsoever as any of theparties thereto appear to be entitled to in respect of any and every legal or equitable claim properly brought forward by them respectivelyin the proceeding so that as far as possible all matters so in controversy between the parties may be completely and finally determinedand all multiplicity of legal proceedings concerning any of such matters avoided. [12] Consideration of a consolidation motion is also guided by common law authority.

Although there have been several decisionsrendered under the new 2009 Rule, it is recognized that authorities made under the 1972 Rules have continuing applicability (SeeComeau v. Ballam Insurance Services Ltd. 2010 NSSC 404). [13] Most, if not all case authorities from this jurisdiction refer to the principles outlined by Saunders, J. (as he then was) in Stone v.Confederation Life Insurance Co. (1993), (NS SC), 117 N.S.R. (2d) 194.

Adopting the approach endorsed by thePrince Edward Island Supreme Court, His Lordship outlined six factors for consideration on a motion for consolidation, as follows: [10] Prince Edward Island’s Procedure Rule 39.01 is identical to our Civil Procedure Rule 39.02. In Re Hillcrest Housing Ltd. and ClansLtd., supra, the court in considering whether an order should be made for consolidation, referred to six factors relevant to thisdetermination.

The factors are stated at p.247 of the decision and can be summarized as follows: (1) the general convenience and expense; (2) whether a jury notice is involved; (3) how far the actions have progressed; (4) whether the plaintiffs have separate solicitors; (5) actions should not be consolidated where matters relevant in one action have arisen subsequent to the commencement of the other,and the actions have proceeded to a considerable extent; and (6) where consolidation is otherwise proper, the fact that on discovery questions would be unobjectionable in one action which might beprivileged in the other action is not a sufficient reason for refusing an order consolidating the actions. [14] In addition to the above, Saunders, J. further noted as follows:

“ In addition, the court recognized the principle formulated in a number of cases and stated at p.247: ‘ The common element in these decisions is that in order for consolidation to be ordered a decision in one case would dispose of the essential cause of action in the other case. ’ ” [ 15 ] It is the above principle which appears to be the source of angst for the Applicants, and the root of the alternate remedies being advanced in this motion. Mr.

Risk is fearful that the application of the above principle may result, if the matters are consolidated, in the Plaintiff King ’ s claim being completely disposed of based upon the outcome of another plaintiff ’ s claim. [ 16 ] This fear is unfounded in my view for two reasons. Firstly, the above quote is not intended to reflect a mandatory outcome should two or more actions (or other matters) be consolidated. It was intended to be a statement of one of the determining factors required to support a consolidation motion in the first instance.

Secondly, recent case law has indicated that as a factor in a consolidation motion, it is not mandatory. [ 17 ] Although the continuing relevance of the six factors outlined by Saunders, J. has been continually endorsed, including recently by the Court of Appeal in Best v Pontius , 2009 NSCA 39 , there has been some divergent consideration as to whether it is mandatory in order to successfully argue for consolidation that “ a decision in one case would dispose of the essential cause of action in the other case. ” [ 18 ] Although that remains an important consideration favouring consolidation, the absence of same does not preclude it.

As noted by Hood, J. in MacNutt v Nova Scotia (Attorney General) 2005 NSSC 337 , and very recently by Rosinski, J. in Jeffrie v. Hendriksen , 2011 NSSC 351 , an alternate consideration is whether the proceedings in question are “ inextricably intertwined ” . With respect, I disagree with Counsel for the Applicant that the law with respect to consolidation has become unclear since the advent of the new Rules. It remains, as it was in the past, a balancing of factors.

Position of the Parties: [ 19 ] Having now reviewed the framework in which this motion is to be considered, I turn to the positions advanced by the parties. [ 20 ] The original and primary position of the Applicant is nicely summarized in their Counsel ’ s brief as follows: It is submitted that the four actions sought to be consolidated in this motion meet the test contained in Rule 37.02. Firstly, the four proceedings sought to be consolidated are of the same kind, each being an action initiated under the Nova Scotia Civil Procedure Rules (1972).

Further, each action involves common questions of law and fact arising out of the management and supervision of similar investment accounts over a similar period of time. Finally, consolidation is otherwise in the interests of the parties. [ 21 ] The Applicants highlight that the actions brought against the Defendants are identical, raising the same issues as it relates to the negligent management by Mr. Bagnell with each plaintiff during an overlapping period of time.

It is submitted that judicial economy is a very important consideration, as expert evidence will be adduced in each matter relating to the standard of care and quantification of damages. The Court should avoid duplication. Further, as each plaintiff intends to elect trial by civil jury, it is argued in support of its preferred remedy of consolidation, that it would be highly duplicitous and an unreasonable use of court resources to undertake four separate trials.

[ 22 ] In support of the alternate remedy of sequential trials, the Applicants submit that this is a remedy within the Court ’ s discretion to grant, if consolidation is found to be inappropriate. The Applicants rely upon the decision of the Alberta Court of Queen ’ s Bench in Jeerh v. Yorkton Securities Inc. 2004 ABQB 975 . [ 23 ] The Respondents take a very contrary view.

Although acknowledging the pleadings establish that the Defendants and the nature of the claims against them are identical in all four matters, the Respondents submit that the legal and factual issues to be determined in each action are very individualized, and certainly not common across all four actions. Similarities are acknowledged, but such are not sufficient to justify consolidation.

The Respondents submit the same concerns apply to having the actions heard together. [ 24 ] By way of example, as it relates to the standard of care, the Respondents assert as follows in their written submissions: “ For the same reason, there is little to no overlap in the issues of law amongst the claims of the Moving Parties. The abstract professional standards to which the Respondents are subject, such as the jurisdiction of the IDA over the Respondents, are not controversial and will take minimal time to establish.

The more contentious questions of law, namely what professional and legal standards applied in the context of a given relationship with each Moving Party, will turn on the unique circumstances and preferences of each specific Moving Party. Conduct that may be a breach of a legal or professional obligation for one Moving Party could be perfectly acceptable for another.

As such, a determination on the questions of law raised by one Moving Party will say nothing about the same issue with respect to another Moving Party. ” [ 25 ] As to whether consolidation is in the best interest of the parties, the Respondents assert that the Applicants ’ wish to have a single jury hear the matter is problematic. It is asserted that having the jury hear allegations of negligence arising from a series of transactions involving four different plaintiffs would be tantamount to permitting similar fact evidence.

The perils of such evidence, and in particular the improper influence such may have on a single jury ought to be, in the Respondents ’ submission, fatal to a motion for consolidation, or having the actions heard together. [ 26 ] The Respondents further submit that given the lateness in which it was raised, this Court should not consider the alternative remedy of sequential trials. Even if it is considered, the Respondent submits that the material before the Court does not support the appropriateness of an order in that regard.

Determination: [ 27 ] I have considered the excellent written and oral submissions of both Counsel, the applicable Rules and case authorities. I have also considered the evidence filed in support of the motion, consisting of affidavits from the Applicant, as well as the Plaintiffs in the other three actions. From those affidavits I note, that there is consent to the consolidation and all plaintiffs intend to proceed by way of jury. It is also apparent from the evidence provided that the time frames in which Mr.

Bagnell interacted with the individual plaintiffs did overlap, to a certain extent, but also covered differing periods of time. By way of example, the time frame asserted by the Plaintiffs in which they allege Mr. Bagnell and Mr.

Youden “ employees of RBC, were negligent in the handling of accounts ” in their respective affidavits are as follows: Applicants King - February 28, 1998 to March 31, 2003; Plaintiff Fraser - February 1, 2000 to March 31, 2003; Plaintiffs Murphy - July 23, 1998 to October 28, 2004; Plaintiff Black - April 1, 1997 to May 30, 2003. [ 28 ] Each affidavit also confirms the nature of the causes of action contained in the respective pleadings. [ 29 ] Turning now to Rule 37.02, given that these matters are all actions, I can proceed to the other considerations as outlined.

(

a) a common question of law or fact arises in the proceedings : [ 30 ] Based on the identical nature of the pleadings, I accept that there are shared questions of law amongst the four actions. In all actions the standard of care of a reasonable investment advisor and supervisor will need to be determined.

Should negligence be established, the Court will also likely rely upon the same principles in terms of proper quantification of financial losses. [ 31 ] Beyond the assertions contained in the pleadings, however, there is little evidence in support of the motion to assist the Court in fully appreciating just how similar, and potentially duplicitous the evidence at four separate trials will be. [ 32 ] In my view, in order to be supportive of consolidation, there should, except perhaps in the most simple of cases, be more than just a single common question of law or common question of fact.

The Court in most instances will be tasked at looking at the degree of commonality between two or more matters - the more issues and facts in common, the more supportive such will be of consolidation. [ 33 ] It should be remembered however, that it is the Applicant who bears the burden of proof, and must marshal evidence accordingly.

Although from the pleadings and submissions of Counsel, the Court accepts that expert evidence will be called, there is nothing before the Court to permit me to assess the degree of overlap in the evidence to be adduced on behalf of each plaintiff. [ 34 ] Are the same experts being called in relation to each claim? In terms of financial quantification do the expert(s) ’ reports overlap in terms of duplication of content, and if so, to what degree? Are experts being called to prove and quantify the aggravated damages claimed in the four actions?

If so, are there common facts and issues as between some or all of the four claims? [ 35 ] The answers to the above queries are just examples of the type of information the Court would find helpful in understanding the extent of commonality in the evidence to be adduced at trial, and in particular how such impacts on trial time and risk of evidence being duplicated. When raising this concern with Mr.

Risk, it was suggested that the pleadings and submissions of Counsel should suffice, and that nothing more could or should reasonably be presented to the Court in terms of evidence. [ 36 ] In support of this view, Mr. Risk relies upon the opening comments of Rosinski, J. in Jeffrie v. Hendriksen , supra who writes: “ [1] Contested Motions to Consolidate two proceedings involve the application of well established legal principles to uncertain facts.

The decision to do so is necessarily discretionary, and particularly difficult to justify to a rigorous standard, because the judge is asked to predict the timing and context of not just one, but two previously separate proceedings, and compare the consequences expected should the matter proceed separately as opposed to together. [2] Into this uncertain terrain, I now tread. ” [ 37 ] I certainly agree with the sentiment expressed by Justice Rosinski that motions for consolidation do, by their nature, call upon the Court to gaze to some degree into the future.

However, what must be kept in mind is that the Court needs to be afforded some evidentiary foundation upon which to base the endeavour. In that instance, Justice Rosinski was considering the proposed consolidation of two applications. Therefore, the Court would have had the benefit of some affidavit evidence upon which to embark upon the comparison of “ the consequences expected should the matters proceed separately as opposed to together. ” That is not the case here. [ 38 ] Rather, I appear to find myself in a similar position as Moir, J. in Shane v. Allen , 2011 NSSC 28 .

Although the Notice of Motion there indicated that consolidation was being sought, much like here, the remedy changed during Counsel ’ s submissions. There, the motion was dismissed due to a lack of evidence establishing a sufficient commonality regarding the nature of evidence intended to be called at trial. [ 39 ] Consolidation was originally sought of nine actions involving investor plaintiffs, an individual investment advisor defendant,

and several other corporate defendants. Through submissions it became apparent that a complete consolidation of all issues was not being sought, but rather some issues to be dealt with in common, others separately. The motion was ultimately dismissed with the Court explaining: “ [3] ...

I do not consider that the court is at this stage sufficiently furnished with information about the claims to be able to make a reasonable assessment of which issues could be tried in common and which issues have to be set to be tried individually. ” [ 40 ] As the matter presently before the Court appears to be quite similar to that addressed by Moir, J., his additional comments are instructive, and in my view, equally applicable to the matter before me: “ [4] As Mr. Awad suggests, the issue of vicarious liability is likely one that could be common.

It may even be one that could be determined separately as a question of law. Negligent supervision could be a common issue. There may be a sub-issue about causation that would have to be set off as individual. I simply do not have enough evidence about the case to make that conclusion. The supervision issue could be a common issue if we see it to allege systemic problems as opposed to a one time failure.

Again, I would need to be furnished with information to make that kind of assessment. [5] Punitive damages cannot be determined until after the assessment of compensatory damages because compensatory damages have to be taken into consideration in settling the amount of punitive damages. It is also the case that any liability for punitive damages will depend upon the culpability toward each individual not culpability toward the group as a whole.

Again, I am not furnished with information by which I can assess whether individual culpability is that important or not. ... [7] Turning to the cause of action in negligence. As Mr. Pierce points out, even the duty itself, when it goes beyond an investment advisor ’ s obligation to see to the execution of the client ’ s orders and the fundamental and simple obligations of an investment advisor becomes rather individualistic.

Again, it may be of that all of the cluster of issues around negligence can be reduced to something common and the differences will not matter, but I have not been furnished, by evidence, with enough information to make that kind of assessment. [8] The consequential damages are individual to each client. I must say that the process of assessing the individual damages will be eased a great deal by findings that are common if the cases have enough commonality between them.

At this stage, all I can say is that the consequential damages require their individual assessment. [9] The issue of aggravated damages is individual because it is meant to compensate the plaintiff for the plaintiff ’ s own loss and that is not exactly the same in every case. Again, unless evidence shows that everyone was treated the same way and everyone had roughly the same reaction to the treatment aggravated damages requires individual assessments.

I have not been furnished with evidence suggesting that. ” [ 41 ] Based on the material before me, although there are some common legal issues as plead, I cannot determine what degree of commonality exists between the four actions. There will be common issues and facts. However, it is not possible at this juncture to determine the degree of commonality, in what the pleadings disclose as being four relatively complex actions. (

b) a same ground of judicial review or appeal is advanced in the applications for judicial review or appeals and the ground involves the same or similar decision-makers. [ 42 ] This condition does not apply in the present instance. (

c) claims, grounds, or defences in the actions or applications involve the same transaction, occurrence, or series of transactions or occurrences.

[ 43 ] The Applicants rely on this condition as supportive of their request for consolidation. They assert that all four causes of action arise from a series of negligent financial transactions undertaken by Mr. Bagnell. [ 44 ] The Respondents characterize the transactions much differently. Although acknowledging the transactions are similar in nature and have the commonality of Mr. Bagnell ’ s involvement, they do not fall into the condition as specified in the Rule. [ 45 ] I agree with the approach put forward by the Respondents. Rule 37.02(

c) contemplates the actions involving the “ same transaction, occurrence, or series of transactions. ” The use of the word “ same ” as opposed to “ similar ” is instructive. [ 46 ] In all four actions, the allegations of negligence arise from transactions undertaken in each respective plaintiffs ’ investment accounts. Although some were in the same time frame, some are separated widely in time. By way of example, according to the affidavits Plaintiff Black will be raising concern about transactions undertaken in April, 1997.

Plaintiff Murphy will be raising concern about transactions undertaken until October 2004. There does not appear to be a connection among the transactions undertaken in all four actions, other than Mr. Bagnell ’ s involvement. The pleadings clearly state each plaintiff had their own investment accounts which are the subject matter of their litigation. There is no evidence before the Court to establish that the series of transactions are all part of the “ same ” transaction as contemplated by the Rule. (

d) consolidation is otherwise, in the interests of the parties: [ 47 ] This conditions allows a broad approach to assessing a motion for consolidation. [ 48 ] The six factors outlined in Stone , supra can, in my view, be considered as part of this final condition. [ 49 ] Considering the six factors, I note that the plaintiffs have all indicated that a jury trial will be selected, there is also commonality of counsel, and Mr. Risk in his submissions indicates that all four actions are at the same stage of litigation.

Factors 5 and 6 do not appear to have application in the present case. [ 50 ] The factor heavily relied upon by the Applicants, is that general convenience favours consolidation, as expense will be greatly lessened, if the matters are consolidated. [ 51 ] Based on Counsel ’ s submission, I accept that similar expert evidence will need to be called in support of all four claims. As noted earlier, this would be in relation to standard of care, and quantification of damages. The Applicants seek to avoid having the same experts testify about the same matters at four trials.

This of course, would also be in the best interest of all parties and the Court. [ 52 ] I am not, however, based on the material before me, satisfied as to the extent of evidentiary overlap which would result should the trials remain separate. In fact, based on the individual pleadings, it seems as if much of the expert evidence adduced would have to be specific to each individual plaintiff ’ s claim. Each of their financial losses would be particular to the quantum invested, the nature of the investments made, and the market conditions.

Even if some time savings could be had by witnesses testifying once as to common matters, it seems more likely that experts will spend considerable time addressing the unique claims of each plaintiff. I am reminded of the words of Saunders, J. in Stone , supra , where he states at para. 9: “ [9] While on its face, there may be some attraction to the argument that judicial economy would invite a combination of cases where some of the medical experts may be the same persons, there is much more to an application for consolidation than that.

I must consider all of the circumstances, all of the issues that have been raised by the parties in their respective litigation and determine whether or not it would be just and appropriate to combine those two cases. Having done so, I am convinced there are cogent reasons for refusing consolidation. ”

[ 53 ] As a final matter, I share the Respondents ’ concern with respect to the impact on a single jury of hearing multiple allegations of negligence relating to four sets of plaintiffs. Perhaps this concern could be minimized if further evidence in relation to the commonality of issues had been before the Court, however, at this stage, it is a valid concern. [ 54 ] Having considered all of the above, I cannot conclude that the four actions are “ inextricably intertwined ” , nor that the outcome of one will be conclusive of the other three.

Although the Applicants have demonstrated that they can bring themselves, to some degree within the conditions in Rule 37.02, and the Stone factors, I am not convinced that consolidation is appropriate. [ 55 ] Having determined consolidation is not appropriate, I turn now to the alternative remedies sought, namely that the matters be heard together, or in sequence. The Applicant has made it clear that they intend to have a civil jury trial, regardless of how the matters are ultimately formulated.

This would include the intention of having one jury hear four consecutive trials. [ 56 ] In terms of having the trials heard together, again, I am not satisfied that the nature of the evidence to be called at the trials of these matters would make such an outcome appropriate. There is inadequate evidence before the Court to appreciate the consequences on the form, length and structure of the resulting proceedings to knowledgeably make such a determination. [ 57 ] As for the Applicant ’ s request to have the trials heard in sequence, I decline to consider that matter.

That request was raised for the first time by the Applicants in their reply oral submissions. Their written submissions had specifically indicated they were not seeking sequential trials. It is unreasonable in my view, to “ switch gears ” at such a late stage, without giving the Respondents any type of reasonable opportunity to meaningfully address the request. [ 58 ] As an observation, Rule 37.04 may have the most applicability to the present instance. It was, however, not relied upon by the Applicant.

Perhaps, should the common issues and factual matters be better articulated, the Court could, in future consider the appropriateness of a remedy thereunder. [ 59 ] The motion is accordingly dismissed. Should the parties be unable to agree with respect to costs, written submissions should be filed no later than July 6, 2012. J.