The court found the pleadings vague and required amendments for the certification to proceed
The BC Supreme Court has adjourned a decision on certifying a class action lawsuit against an asset management company and its founder due to vague pleadings.
In Mackenzie v Chartwell Asset Management Inc., 2024 BCSC 1185, the court addressed whether Cheryl Mackenzie could certify her lawsuit against Chartwell Asset Management Inc. (CAM) as a multi-jurisdictional class proceeding. This decision follows Mackenzie's claim that she and others lost money invested through CAM due to misinformation about the nature of the investments.
Mackenzie claimed that CAM and its founder, Gregory Cameron, misled her and the proposed class about the true nature of their investments. According to Mackenzie, Cameron directly managed the investments and provided advice. Cameron disputed this, asserting that CAM’s portfolio managers were responsible for investment management and advice.
CAM opposed the certification application but did not attend the hearing, having lost legal representation. Despite CAM's position as an "empty shell," Mackenzie pursued her certification application against both CAM and Gregory Cameron.
The Supreme Court found Mackenzie's pleadings vague and insufficiently particularized, requiring amendments to proceed. The court acknowledged Mackenzie's more focused allegations and identified potential common issues that could be properly pleaded. The judge emphasized that the interests of justice favoured giving Mackenzie an opportunity to amend her claims.
To certify a class action under the Class Proceedings Act, the court emphasized that Mackenzie must meet five requirements: disclose a cause of action, identify a class of two or more persons, raise common issues among class members' claims, demonstrate that a class proceeding is the preferable procedure, and show that the representative plaintiff can fairly and adequately represent the class.
The court stressed that certification does not determine the case's merits but assesses whether a class proceeding is the appropriate form for prosecuting the claims. Mackenzie's evidence mirrors the allegations in her amended notice of civil claim (ANOCC), describing her interactions with Cameron and her decision to invest with CAM based on his advice and assurances. She claimed that her previous investments were not yielding success and that Cameron assured her of the safety and long-term security of the new investments.
In contrast, Cameron maintained that he was not involved in investment decisions or advice, focusing on CAM's finances and human resources. He asserted that portfolio managers were solely responsible for investment management.
Mackenzie referred to disciplinary actions by FP Canada and the BC Securities Commission (BCSEC) against CAM and Cameron. FP Canada found that Cameron failed to recommend appropriate strategies for low-risk investors and did not adequately disclose investment risks. The BCSEC identified deficiencies in CAM’s handling of a substantial loan in its high-income fund, which eventually defaulted.
Ultimately, the court has given Mackenzie 90 days to apply for amendments to her pleadings and certification materials. While Mackenzie has identified potential claims, the court required more focused and particularized allegations to proceed.
