IN THE SUPREME COURT OF BRITISH COLUMBIA

Transcription

1 File no: Victoria Registry IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: JANE RENAUD Plaintiff AND HSBC INVESTMENTS (CANADA) LIMITED Defendant Brought pursuant to the Class Proceedings Act (R.S.B.C., 1996., c.50) WRIT OF SUMMONS & STATEMENT OF CLAIM Merchant Law Group Barristers and Solicitors Belleville Street Victoria, BC V8V 1W9 Facsimile: Telephone: Court Box 138

2 File no: Victoria Registry IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: JANE RENAUD Plaintiff AND HSBC INVESTMENTS (CANADA) LIMITED Defendant Brought pursuant to the Class Proceedings Act (R.S.B.C., 1996., c.50) WRIT OF SUMMONS J?->* -m J. ;7r... Name and Address of each Plaintiff: - 2; Jane Renaud S: 0- C/O Merchant Law Group ict3 Lqw Belleville St. -0L.i?-3'='. Victoria, BC V8V 1W9

3 Name and Address of each Defendant: HSBC Investments (Canada) Limited C/O Legal Department HSBC Bank Canada West Georgia St. Vancouver, BC V6C 3E9 ELIZABETH THE SECOND, by the Grace of God, of the United Kingdom, Canada and Her other Realms and Territories, Queen, Head of the Commonwealth, Defender of the Faith. To the defendants: HSBC Investments (Canada) Limited TAKE NOTICE that this action has been commenced against you by the plaintiff for the claim set out in this writ. IF YOU INTEND TO DEFEND this action, or if you have a set off or counterclaim that you wish to have taken into account at the trial, YOU MUST (a) (b) GIVE NOTICE of your intention by filing a form entitled "Appearance" in the above registry of this court, at the address shown below, within the Time for Appearance provided for below and YOU MUST ALSO DELIVER a copy of the Appearance to the Plaintiffs address for delivery, which is set out in this Writ, and if a Statement of Claim is provided with this Writ of Summons or is later served on or delivered to you, FILE a Statement of Defence in the above registry of this court within the Time for Defence provided for below and DELIVER a copy of the Statement of Defence to the Plaintiff's address for delivery. YOU OR YOUR SOLICITOR may file the Appearance and the Statement of Defence. You may obtain a form of Appearance at the registry. JUDGMENT MAY BE TAKEN AGAINST YOU IF (a) (b) YOU FAIL to file the Appearance within the Time for Appearance provided for below; or YOU FAIL to file the Statement of Defence within the Time for Defence provided for below. TIME FOR APPEARANCE

4 If this writ is served on a person in British Columbia, the time for appearance by that person is 7 days from the service (not including the day of service). If this writ is served on a person outside British Columbia, the time for appearance by that person after service, is 21 days in the case of a person residing anywhere within Canada, 28 days in the case of a person residing in the United States of America, and 42 days in the case of a person residing elsewhere. TIME FOR DEFENCE A Statement of Defence must be filed and delivered to the plaintiff within 14 days after the later of (a) the time that the Statement of Claim is served on you (whether with this writ of summons or otherwise) or is delivered to you in accordance with the Rules of Court, and (b) the end of the Time for Appearance provided for above. [or, if the time for defence has been set by order of the court, within that time.] (1) The address for the registry is: Ministry of Attorney General Court Registry PO Box 9248 Stn Prov Govt 2nd Floor, 850 Burdett Avenue Victoria, British Columbia V8W 952 (2) The plaintiffs ADDRESS FOR DELIVERY is: C/O Merchant Law Group Belleville Street Victoria, British Columbia V9B 4V7 Fax number for delivery (if any):

5 (3) The name and office address of the plaintiff's solicitor is: Darren Williams Merchant Law Group Belleville Street Victoria, British Columbia V8V 1 W9 Tel: Fax: ~olidior for the Plaintiff

6 File no: Victoria Registry IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: JANE RENAUD Plaintiff AND HSBC INVESTMENTS (CANADA) LIMITED Defendant Brought pursuant to the Class Proceedings Act (R.S.B.C., 1996., c.50) STATEMENT OF CLAIM PLAINTIFF 1. The plaintiff, Jane Renaud, resident of Victoria, British Columbia, is a retiree who prior to 2001 had purchased interests in pooled fund portfolios marketed by HSBC Asset Management (Canada) Ltd., and who held those investments through the end of the year The Plaintiff's address for service is care of the Merchant Law Group at Belleville Street, Victoria B.C. V8V 1 W9.

7 DEFENDANT 3. The Defendant, HSBC Investments (Canada) Limited, formerly known as HSBC Asset Management Limited (hereafter "HSBC Asset Management"), is an extraprovincial company with a registered head office in British Columbia located at West Georgia Street, Vancouver B.C. V6C 3E9 (hereafter "HSBC Investments"). 4. HSBC Asset Management and HSBC Investments are hereafter collectively referred to as the "Defendant". 5. The Defendant carries on business, inter alia, by providing investment advising and management services to institutional, retail, and individual clients, and acted, and acts, as manager for HSBC Pooled Funds, being a family of public mutual funds that are sold to investors as part of an investment management service offered by the Defendant. 6. At December 31, 2004 the Defendant managed US$204.1 billion in investment assets. The Defendant is a subsidiary of HSBC Bank Canada, the seventh largest bank in Canada. HSBC Bank Canada is a subsidiary of HSBC Holdings PLC, the third largest international banking and financial services provider in the world, with US$1.27 trillion in investment assets as at December 31, At all material times prior to 2001 the Defendant, promoted and sold to investors interests in the Defendant's pooled fund portfolios, including pooled fund portfolios being marketed under the following names: a. "Conservative Growth of Capital"; b. "Growth of Capital";

8 c. "Registered Conservative Growth of Capital"; d. "Registered Growth of Capital" (collectively the "Pool Fund Portfolios"). 8. The Defendant committed those breaches of contract, duty of care, and fiduciary duty set out in paragraph 39 below, thereby causing the plaintiff those injuries described in paragraphs 40,41, and 42 below. CLASS BRITISH COLUMBIA CLASS MEMBERS 9. The plaintiff brings this action on behalf of a class defined as follows: Investors, including individuals and their estates, and corporations, resident in British Columbia, who between the years 2000 and 2002, held investments in HSBC Asset Management (Canada) Ltd. pooled fund investment portfolios known as: "Conservative Growth of Capital", "Growth of Capital", "Registered Conservative Growth of Capital", and "Registered Growth of Capital". NON-BRITISH COLUMBIA CLASS MEMBERS 10. The plaintiff brings this action on behalf of a class defined as follows: Investors, including individuals and their estates, and corporations, not resident in British Columbia, who between the years 2000 and 2002, held investments in HSBC Asset Management (Canada) Ltd. pooled fund investment portfolios known

9 as: "Conservative Growth of Capital", "Growth of Capital", "Registered Conservative Growth of Capital", and "Registered Growth of Capital". 11. Hereafter the plaintiff, and each individual class member, is referred to as the "Plaintiff '. 12. The injuries of the Plaintiff include: a. Loss of investment capital; and b. Loss of investment income and interest. THE PLAINTIFF'S FACTS AND CLAIM 13. At all material times prior to 2001 the Defendant marketed and sold to the public a family of investment products the Defendant referred to as "Pooled Fund Portfolios". 14. The Defendant, through their agents or employees, offered interests in the Pooled Fund Portfolios to members of the public, including members of the public already banking and investment customers of the Defendant. 15. At all material times the Defendant knew the Pooled Fund Portfolios differed in respect of, inter din, whether they were registered or non-registered investments for tax purposes, whether they were of a national or global investment focus, and particularly, their level of investment risks and investment conservatism. 16. At all material times the Pooled Fund Portfolios offered by the Defendant were of three primary groups:

10 a. Unregistered Model Portfolios; b. Registered Model Portfolios; and c. Global Market Portfolios. 17. Each of the three primary groups of portfolios had their own constituent portfolios, numbering 18 in total. 18. The Defendant scored each of the constituent portfolios with a range of points (between 20 and 100) that were intended, inter alia, to reflect the level of investment risk of that portfolio. A score of 20 was of lowest risk, and a score of 100 was of highest risk. 19. In respect of the "Unregistered Model Portfolios", the Defendant offered the following individual portfolios, with the following investment risk score ranges: "Current Income Plus Capital Preservation": (20-30 points); "Current Income Plus Inflation Protection": (31-42 points); "Conservative Growth of Capital and Income": (43-54 points); "Growth of Capital and Income": (55-65 points); "Conservative Growth of Capital": (66-77 points); "Growth of Capital": (78-89 points); "Tax Preferred Growth of Capital": (78-89 points); and "Aggressive Growth of Capital": ( points). 20. In respect of the "Registered Model Portfolios", the Defendant offered the following individual portfolios, with the following investment risk score ranges: a. "Registered Current Income Plus Capital Preservation": (20-30 points);

11 b. "Registered Current Income Plus Inflation Protection": (31-42 points); c. "Registered Conservative Growth of Capital and Income": (43-54 points); d. "Registered Growth of Capital and Income": (55-65 points); e. "Registered Conservative Growth of Capital": (66-77 points); f. "Registered Growth of Capital": (78-89 points); and g. "Aggressive Growth of Capital": ( points) In respect of the "Global Model Portfolios", the Defendant offered the following individual portfolios, with the following investment risk score ranges: a. "Global Balanced": (66-77 points); b. "Global Growth of Capital": (78-89 points); and c. "Global Equity" ( points). 22. Each of these Pooled Fund Portfolios were comprised of "assets classes" of the following three types: a. Cash; b. Bonds; and c. Equities. (individually referred to hereafter as an "Asset Class") 23. Each Asset Class within a particular portfolio had a prescribed range that determined what percentage of the entire investment in the portfolio that Asset Class could comprise. The range of each Asset Class was set by a minimum and maximum percentage of the overall investment in the portfolio. 24. The unregistered Pooled Fund Portfolio known as "Current Income plus Inflation

12 Protection", for example, had the following characteristics: 7 Asset Class Cash Bonds Equities Overall Asset Allocation (%) Minimum Range Target in Range 4.5% 5% 55% 62.5% 20% 32.5% Maximum Range 25% 75% 40% wherein the percentage of the overall investment in the portfolio invested in Equities could not fall below 20% and could not rise above 40%. At all times, the total percentages invested in Cash, Bonds and Equities would equal 100% of the monies invested in the portfolio. 25. As part of promoting and selling to the Plaintiff interests in the Pooled Fund Portfolios, the Defendant, their agents or employees under the direction of the Defendant, completed a verbal or written questionnaire with the Plaintiff so as to collect information about the Plaintiff that would allow the Defendant or their agent to recommend the risk-appropriate Pooled Fund Portfolio for that investor. 26. Questions asked of the Plaintiff included, but were not limited to: a. age; b. annual income; c. dependants; d. retirement status or expectations; e. savings; f. other investments; E. investment objectives; h. investment risk tolerances.

13 27. At all material times the Defendant knew the purpose of the Defendant's questioning of the Plaintiff was, inter alia, to: a. Fulfill their obligation to the "Know Your Client" principles of investment advising; b. Assess the investment risk tolerances of the Plaintiff; and c. Allow the Defendant, their agents or employees, to recommend and sell to the Plaintiff the Defendant's Pooled Fund Portfolio that best suited the Plaintiff's investment risk tolerances. 28. The Defendant's questionnaire of the Plaintiff was designed to produce a score between 20 and 100 points, with 20 representing a client that sought low investment risk, and 100 representing a client that was accepting of higher investment risk. 29. The Defendant knew that the Defendant, its employees or agents, recommended to the Plaintiff that the individual Plaintiff invest their monies in the Defendant's Pooled Fund Portfolio that corresponded to that Plaintiff's score on their questionnaire. 30. The Defendants, their agents or employees did in fact recommend that the Plaintiff invest their monies in specific Pooled Fund Portfolios belonging to the Defendant on the basis of the score produced from the questionnaire and the Pooled Fund Portfolio of corresponding score, and the Plaintiff did in fact invest their monies in those portfolios as a result. 31. In so doing the Plaintiff provided their consent to invest in only the particular

14 9 Pooled Fund Portfolio, and the ranges of Asset Classes of the particular portfolio, that matched the risk tolerances as measured and demonstrated by Defendant at the time of providing their consent. DEFENDANT'S CONTRACTUAL DUTIES: 32. At all material times there were express or implied terms of contract between the Defendant and the Plaintiff that the Defendant would: Changes to Asset Class Ranges: a. inform the Plaintiff if the Defendant intended to change the Asset Class ranges in any Pooled Fund Portfolio in which they held an interest; b. inform the Plaintiff of the possible consequence of the change referred to in paragraph 32(a) above, in particular, what effect on the risk to their investments that such a change would entail; c. seek the informed consent of the Plaintiff before malung the change referred to in paragraph 32(a); d. not make the change referred to in paragraph 32(a) above without the Plaintiff's informed consent, or in the event the Plaintiff objected to such a change; and e. having made the change referred to in paragraph 32(a) above, whether by informed consent of the Plaintiff or not, take reasonable steps to inform the Plaintiff that the change or changes to the Asset Class range or ranges had

15 been made; Allocations of Investments: f. inform the Plaintiff if the Defendant intended to change the allocation of the Plaintiff's investment monies in an Asset Class to a percentage of the overall investment monies that exceeded that previously consented to by the Plaintiff: g. inform the Plaintiff of the possible consequence of a change in the allocation of investment monies referred to in paragraph 32(f) above; h. seek the informed consent of the Plaintiff before making the change in the allocation of investment monies referred to in paragraph 32(f) above; i. not make the change in the allocation of investment monies referred to in paragraph 32(f) above without the Plaintiff's informed consent, or in the event the Plaintiff objected to such a change; and j. having made the change in the allocation of investment monies referred to in paragraph 32(f) above, whether by informed consent of the Plaintiff, the Defendant would take reasonable steps to inform the Plaintiff that the change or changes had been made and what possible or actual consequence there was. DEFENDANT'S DUTY OF CARE: 33. At all material times, the Defendant owed the Plaintiff a duty of care to:

16 Changes to Asset Class Ranges: a. inform the Plaintiff if the Defendant intended to change the Asset Class ranges in any Pooled Fund Portfolio that the Plaintiff held an interest in; b. inform the Plaintiff of the possible consequence of the change referred to in paragraph 33(a) above, in particular, what effect on the risk to the Plaintiffs investments that such a change would entail; c. seek the informed consent of the Plaintiff before making the change referred to in paragraph 33(a); d. not make the change referred to in paragraph 33(a) above without the Plaintiff's informed consent, or in the event the Plaintiff objected to such a change; and e. having made the change referred to in paragraph 33(a) above, whether by informed consent of the Plaintiff or not, take reasonable steps to inform the Plaintiff that the change or changes to the Asset Class range or ranges had been made; Allocations of Investments: f. inform the Plaintiff if the Defendant intended to change the allocation of the Plaintiff's investment monies in an Asset Class to a percentage of the overall investment monies that exceeded that previously consented to by the Plaintiff;

17 0. inform the Plaintiff of the possible consequence of a change in the allocation of investment monies referred to in paragraph 33(f) above; h. seek the informed consent of the Plaintiff before making the change in the allocation of investment monies referred to in paragraph 33(f) above; 1. not make the change in the allocation of investment monies referred to in paragraph 33(f) above without the Plaintiff's informed consent, or in the event the Plaintiff objected to such a change; and j. having made the change in the allocation of investment monies referred to in paragraph 33(f) above, whether by informed consent of the Plaintiff or not, take reasonable steps to inform the Plaintiff that the change or changes had been made and what possible or actual consequence there was. DEFENDANT'S FIDUCIARY DUTIES: 34. At all material times, the Defendant knew, or ought to have known, that the Plaintiff was: a. relative to the Defendant, their employee and agents, unsophisticated in respect of the practices of investing; b. reliant on the Defendant, their employee and agents, for their investing advice; and c. vulnerable to, and powerless against, the individual effects consequent upon changes the Defendant made to a Pooled Fund Portfolio held be investors

18 across the country. 35. At all material times the Defendant knew, or ought to have known, that the Defendant, its employees and agents: a. were in a position of trust with the Plaintiff and the Plaintiff's investments; b. held a position of superior investment knowledge and control in selling the Pooled fund Portfolios to the Plaintiff; c. could make changes to the investments of the Plaintiff without the their knowledge or control; d. intentionally created a system of matching investor's risk tolerances with the Defendant's Pooled Fund Portfolios of purportedly similar risk which lead investors to believe their risk tolerances were being properly suited to investments and those tolerances were being honoured and monitored by the Defendant and the Defendant's practices. 36. The Plaintiff relied upon the Defendant to exercise utmost good faith toward the Plaintiff, who relied upon the care and investment knowledge of the Defendant, which the Defendant held themselves, their employees and agents, out as having. 37. As a result of those facts set out in paragraphs 34,35, and 36 above, the Defendant owed a fiduciary duty to the Plaintiff. 38. As part of the Defendant's fiduciary duty to the Plaintiff the Defendant had a fiduciary duty to:

19 14 Changes to Asset Class Ranges: a. inform the Plaintiff if the Defendant intended to change the Asset Class ranges in any Pooled Fund Portfolio in which the Plaintiff held an interest; b. inform the Plaintiff of the possible consequence of the change referred to in paragraph 38(a) above, in particular, what effect on the risk to the Plaintiffs investments that such a change would entail; c. seek the informed consent of the Plaintiff before making the change referred to in paragraph 38(a); d. not make the change referred to in paragraph 38(a) above without the Plaintiff's informed consent, or in the event the Plaintiff objected to such a change; and e. having made the change referred to in paragraph 38(a) above, whether by informed consent of the Plaintiff, take reasonable steps to inform the Plaintiff that the change or changes to the Asset Class range or ranges had been made; Allocations of Investments: f. inform the Plaintiff if the Defendant intended to change the allocation of the Plaintiffs investment monies in an Asset Class to a percentage of the overall investment monies that exceeded that previously consented to by the Plaintiff; 0. inform the Plaintiff of the possible consequence of a change in the

20 15 allocation of investment monies referred to in paragraph 38(0 above; h. seek the informed consent of the Plaintiff before making the change in the allocation of investment monies referred to in paragraph 38(0 above; i. not make the change in the allocation of investment monies referred to in paragraph 38(f) above without the Plaintiff's informed consent, or in the event the Plaintiff objected to such a change; and j. having made the change in the allocation of investment monies referred to in paragraph 38(0 above, whether by informed consent of the Plaintiff or not, take reasonable steps to inform the Plaintiff that the change or changes had been made and what possible or actual consequence there was. BREACHES BY THE DEFENDANT: 39. In breach of the Defendant's aforesaid fiduciary duties, their duties in contract, and their duty of care, the Defendant: Unauthorized Changes in Asset Class Limits: a. failed to inform the Plaintiff that the Defendant planned or intended to change Asset Class ranges in the Pooled Fund Portfolios; b. failed to inform the Plaintiff as to the possible consequences of the changes referred to in paragraph 39(a) above; failed to seek the consent or informed consent of the Plaintiff for the

21 16 changes referred to in paragraph 39(a) above; d. failed to address the Plaintiff of their investment needs in light of the intended changes referred to in paragraph 39(a) above; e. did in fact change, without the informed consent or knowledge of the Plaintiff, the Asset Class ranges in the following Pooled Fund Portfolios: "Conservative Growth of Capital", "Growth of Capital", "Registered Conservative Growth of Capital". and "Registered Growth of Capital". (hereafter the "Affected Portfolios"); f. failed to inform the Plaintiff of the changes referred to in paragraph 39(e) above: g. failed to address the Plaintiff in respect of their investment needs in light of the Defendant's completed changes to the Asset Class ranges of the Affected Portfolios; Unauthorized Investments over Authorized Asset Class Limits: h. failed to inform the Plaintiff they intended to allocate the Plaintiff's investment capital and income, or portions thereof, to investments within the Affected Portfolios at levels above the previously authorized limits of the Asset Classes within that portfolio; I. failed to inform the Plaintiff as to the consequences of the unauthorized allocation referred to in paragraph 39(h) above; j. failed to seek the consent or informed consent of the Plaintiff to make the

22 17 allocation referred to in paragraph 39(h) above; k. failed to address the Plaintiff in respect of their investment needs in light of the Defendant's plans to make the allocation referred to in paragraph 39(h) above; 1. allocated the Plaintiff's investment capital and income, or portions thereof, to investments within the Affected Portfolios at levels above the previously authorized limits of the Asset Classes within those portfolios; m. failed to inform the Plaintiff that the Defendant made the unauthorized allocation referred to in paragraph 39(1) above; n. failed to inform the Plaintiff of the consequences of the unauthorized allocation referred to in paragraph 39(1) above; o. failed to address the Plaintiff in respect of their investment needs in light of the Defendant's the unauthorized allocation referred to in paragraph 39(1) above; and P. such other breaches as the Plaintiff may discover in the course of this litigation. 40. Following the Defendant's breaches as set out above, the Asset Classes in which the Defendant had, without the informed consent or authorization of the Plaintiff, increased the ranges and allocated the Plaintiff's investment monies in respect of, suffered a sudden and significant decline in value. 41. As a result the Plaintiff suffered a loss of investment capital and income and

23 18 interest that they would not have suffered had the Defendant not increased the maximum investment range for these Asset Classes and allocated the Plaintiff's investment monies to that Asset Class in that increased amount. INJURIES TO THE PLAINTIFF 42. As a result of the aforesaid breaches committed by the Defendant the plaintiff has suffered loss of investment capital and income and interest. COMMON ISSUES 43. The plaintiff and the class members have the following questions of fact and law in common: a. Did the Defendant owe the Plaintiff a contractual obligation, a duty of care or a fiduciary duty not to alter the Asset Class ranges within each of the Pooled Fund Portfolios without their informed consent? b. Did the Defendant owe the Plaintiff a contractual obligation, a duty of care or a fiduciary duty not to invest their monies within Pooled Fund Portfolios at levels above the those authorized limits of the Asset Classes within that portfolio; c. Did the Defendants change the maximum ranges of the Asset Class within the Pooled Fund Portfolios, and if so, by how much? d, Did the Defendant allocate the Plaintiff's investment monies within Pooled

24 Fund Portfolios at levels above those authorized limits of the Asset Class within that portfolio? e. Did the Defendant breach their contractual obligation, duty of care or fiduciary duty when they changed the Asset Class ranges and made allocations of investments above the previously authorized limits? f. If the Defendant's did have such an obligation or duty and they did breach it, did the breaches cause the Plaintiff's losses of investment capital and income? g. If the Defendant's breaches did cause the Plaintiff's losses of investment capital and income, how are those losses measured and what are they? h. Are the Defendants liable for exemplary or punitive damages for their conduct? THE PLAINTIFF'S CLAIM: A. an order certifying this proceeding as a class proceeding and naming the plaintiff as representative plaintiff for the class; B. aggregate assessment of monetary relief to a class or subclass; C. damages for loss of investment capital; D. damages for loss of investment income and interest;

25 E. general and special damages; F. punitive or exemplary damages for breach of fiduciary duty; G. costs; H. such further relief as the Court deems fit and proper; and I. pre-judgment and post-judgment interest. Place of trial: Victoria, British Columbia Dated at Victoria, British Columbia, December 22,2006 MERCHANT LAW GROUP ' *' "P I, / Per: Solicitors for the Plaintiffs E.F. Anthony Merchant Q.C. #,, Darren Williams B.Sc. LL.b. # Belleville Street Victoria, British Columbia, V8V 1 W9 Telephone: (250) Fax : (250)