| C A N A D A |
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| PROVINCE OF QUÉBEC |
| DISTRICT OF MONTRÉAL |
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| No. : 500-06-000914-180 |
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| S U P E R I O R C O U R T |
| (Class Action) |
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| MAJESTIC ASSET MANAGEMENT LLC, ès |
| qualité of manager, vested with |
| full |
| the |
| the TURN8 |
| administration powers over |
| TACTICAL EQUITY FUND |
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| -and- |
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| TURN8 PARTNERS INC. |
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| Representative Plaintiffs |
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| v. |
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| THE TORONTO-DOMINION BANK |
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| Defendant |
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| DEFENCE OF THE DEFENDANT THE TORONTO-DOMINION BANK |
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| IN DEFENCE TO THE REPRESENTATIVE PLAINTIFFS’ (“PLAINTIFFS”) ORIGINATING |
| APPLICATION, THE DEFENDANT, THE TORONTO-DOMINION BANK |
| (“TD BANK”), |
| RESPECTFULLY SUBMITS THE FOLLOWING: |
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| 1. |
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| 2. |
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| 3. |
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| 4. |
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| As regards the allegations set forth at paragraphs 1, 2 3 and 4 of the Originating Application |
| (“Application”) it refers this Honourable Court to the judgment authorizing the institution of the |
| class action rendered by Justice Morrison on June 21, 2019 (“Authorization Judgment”) and |
| denies anything inconsistent therewith; |
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| As regards the allegations set forth at paragraph 5 of the Application, it prays act of the |
| definitions put forth by the Plaintiffs save and except for the terms “Corrective Disclosures” and |
| “Pressure Selling Program” which are unproven terms and therefore denied. Any subsequent |
| reference herein to “Impugned Documents” is strictly for identification purposes and without |
| admission of any kind; |
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|
| It denies the allegations set forth at paragraph 6 of the Application and adds that it is exclusively |
| predicated on the two inadmissible CBC Reports communicated as Exhibits P-10 and P-11, |
| the contents of which are wholly unproven and which Plaintiffs unlawfully characterize as |
| corrective disclosures, as well as two confidential witness statements, which were filed at the |
| authorization hearing but were never communicated as exhibits to the Application; |
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| It denies the allegation set forth at paragraph 7 of the Application and adds that Plaintiffs have |
| failed to communicate any evidence, expert or otherwise, establishing that TD Bank’s |
| Canadian Retail Business Segment experienced a significant increase in non-interest income, |
| that was not due to “inter alia wealth asset growth and higher personal and business banking |
| fee-based revenues” as disclosed in the Impugned Documents; |
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| - 2 - |
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| 5. |
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| 6. |
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| 7. |
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| 8. |
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| 9. |
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| It denies the allegations set forth at paragraph 8 of the Application and adds that Plaintiffs’ |
| characterization of TD Bank’s incentives as a “Pressure Selling Program” is a strategic and |
| disingenuous invention; |
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| It denies the allegations set forth at paragraph 9 of the Application and adds that they are |
| based exclusively on the two inadmissible CBC Reports communicated as Exhibits P-10 and |
| P-11, the contents of which are wholly unproven and which Plaintiffs unlawfully characterize |
| as corrective disclosures, as well as two confidential witness statements, which were filed at |
| the authorization hearing but were never communicated as exhibits to the Application; |
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| It denies the allegations set forth at paragraphs 10, 11, 12, 13 and 14 of the Application and |
| adds that Plaintiffs have not filed any evidence in support thereof; |
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| As regards the allegations set forth at paragraphs 15 and 16 of the Application, it denies |
| making any such misrepresentations; |
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| As regards the allegations set forth at paragraph 17 of the Application, it denies that Plaintiffs |
| are entitled to any statutory or CCQ relief; |
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| 10. As regards the allegations set forth at paragraph 18 of the Application, it refers this Honourable |
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| Court to the Authorization Judgment and denies anything inconsistent therewith; |
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| 11. As regards the allegations set forth at paragraph 19 of the Application, it refers this Honourable |
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| Court to Exhibits P-1 and P-2 and denies anything inconsistent therewith; |
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| 12. As regards the allegations set forth at paragraph 20 of the Application, it refers this Honourable |
| Court to Exhibit P-3 and denies anything inconsistent therewith as well as the allegations made |
| in Plaintiff’s affidavit filed as Exhibit P-20, and prays act of the fact that Turn8 made all |
| investment decisions for The Fund, which included the purchase of the TD Bank shares in |
| issue; |
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| 13. As regards the allegations set forth at paragraph 21 of the Application, it refers this Honourable |
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| Court to Exhibit P-4 and denies anything inconsistent therewith; |
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| 14. |
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| It admits the allegations set forth at paragraph 22 of the Application, but adds that Plaintiffs’ |
| proposed causes of action relate solely to TD Bank’s Canadian Retail Business Segment; |
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| 15. |
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| It admits the allegations set forth at paragraph 23 of the Application and adds that the shares |
| traded on the NYSE are irrelevant for the purposes of this class action as the description of |
| the Class specifically excludes shares traded on that exchange; |
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| 16. As regards the allegations set forth at paragraphs 24, 25, 26, 27, 28, 29, 30, 31, 32, 33 and 34 |
| of the Application, it refers this Honourable Court to the 2015 MD&A filed as Exhibit P-5 and |
| denies anything inconsistent therewith; |
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| 17. As regards the allegations set forth at paragraph 35 of the Application, it refers this Honourable |
| Court to the 2015 Annual Report filed as Exhibit P-6 and denies anything inconsistent |
| therewith; |
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| - 3 - |
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| 18. As regards the allegations set forth at paragraphs 36, 37, 38, 39, 40, 41, 42 and 43 of the |
| Application, it refers this Honourable Court to the 2016 MD&A filed as Exhibit P-7 and denies |
| anything inconsistent therewith; |
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| 19. As regards the allegations set forth at paragraph 44 of the Application, it refers this Honourable |
| Court to the 2016 Annual Report filed as Exhibit P-8 and denies anything inconsistent |
| therewith; |
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| 20. As regards the allegations set forth at paragraph 45 of the Application, it refers this Honourable |
| Court to the quarterly MD&As filed as Exhibit P-19 and denies anything inconsistent therewith; |
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| 21. As regards the allegations set forth at paragraph 46 of the Application, it refers this Honourable |
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| Court to Exhibit P-23 and denies anything inconsistent therewith; |
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| 22. |
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| It denies the allegation set forth at paragraph 47 of the Application and adds that it is exclusively |
| predicated on the two inadmissible CBC Reports communicated as Exhibits P-10 and P-11, |
| the contents of which are wholly unproven and which Plaintiffs unlawfully characterize as |
| corrective disclosures, as well as two confidential witness statements, which were filed at the |
| authorization hearing but were never communicated as exhibits to the Application; |
|
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| 23. As regards the allegations set forth at paragraphs 48, 49 and 50 of the Application, it refers |
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| this Honourable Court to Exhibit P-9 and denies anything inconsistent therewith; |
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| 24. |
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| 25. |
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| It ignores the allegations set forth at paragraph 51 of the Application and adds that The Fund |
| continued to purchase TD Bank shares even after the alleged corrective disclosures, including |
| on February 14, 2018 (when the stock was trading at $72.32), thereby contradicting Plaintiffs’ |
| allegations of over-inflation, as appears from the trade confirmations communicated herewith |
| as Exhibit D-1; |
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| It denies the allegations set forth at paragraphs 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62 and |
| 63 of the Application, since the allegations made by the CBC are vague, unsubstantiated, |
| unverifiable, inadmissible and contradicted by the March 20, 2018 report of the Financial |
| Consumer Agency of Canada (“FCAC”) which reviewed the domestic retail sales practices of |
| Canada’s six largest banks and concluded that it “did not find widespread mis-selling during |
| its review”. It adds that Plaintiff Turn 8’s representative Craig McFadzean admitted during his |
| deposition that he was unaware of the said FCAC report filed as Exhibit P-25; |
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| 26. |
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| It denies as drafted the allegations set forth at paragraph 64 of the Application and refers this |
| Honourable Court to the contents of Exhibit P-12 alone; |
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| 27. As regards the allegations set forth at paragraph 65 of the Application, it refers this Honourable |
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| Court to Exhibit P-13 and denies anything inconsistent therewith; |
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| 28. As regards paragraphs 66 and 67 of the Application, it admits the existence of the March 10th |
| News Article but denies the contents of the two CBC Reports referred to in the excerpt cited |
| by Plaintiffs for the reasons previously mentioned. It adds that the March 10th News Article |
| (Exhibit P-14) relied upon by Plaintiffs also indicates that one analyst at Barclays likened the |
| story to a “Wells Fargo moment” but noted that they ultimately “do not believe that there will |
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| - 4 - |
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| be much of an impact on TD, as [they] would be surprised if the issues described were as |
| systemic as occurred with Wells Fargo in the U.S."; |
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| 29. |
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| It denies as drafted the allegation set forth at paragraph 68 of the Application and refers this |
| Honourable Court to the contents of Exhibit P-12 alone; |
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| 30. As regards the allegations set forth at paragraph 69 of the Application, it refers this Honourable |
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| Court to Exhibit P-21 and denies anything inconsistent therewith; |
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| 31. As regards the allegations set forth at paragraph 70 of the Application, it refers this Honourable |
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| Court to Exhibit P-22 and denies anything inconsistent therewith; |
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| 32. As regards the allegations set forth at paragraph 71 of the Application, it refers this Honourable |
| Court to Exhibits P-21 and P-22 and denies anything inconsistent therewith, and adds that as |
| previously indicated the FCAC report dated March 20, 2018 concluded that there was no |
| widespread mis-selling at the Canadian banks (Exhibit P-25); |
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| 33. |
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| It denies allegations set forth at paragraphs 72, 73 and 74 of the Application and adds that |
| Plaintiffs have failed to communicate any evidence of the alleged “Pressure Selling Program” |
| and have failed to communicate any expert or other evidence demonstrating that the increased |
| earnings in TD Bank’s Canadian Retail Business Segment were attributable to any reasons |
| other than those indicated in the Impugned Documents. Furthermore, TD Bank never restated |
| its financial statements which constitutes further evidence of the baselessness of Plaintiffs’ |
| allegations; |
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| 34. As regards the allegations set forth at paragraphs 75 and 76 of the Application, it refers this |
| Honourable Court to the terms of the Impugned Documents and denies anything inconsistent |
| therewith; |
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| 35. |
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| It denies the allegations set forth at paragraph 77, 78 and 79 of the Application since they are |
| nothing more than baseless accusations and specious mischaracterizations; |
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| 36. |
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| It denies the allegations set forth at paragraph 80 of the Application and adds that Plaintiff |
| Turn8’s representative Craig McFadzean admitted during his deposition that he was unaware |
| of the identity of any employees or managers who allegedly “attempted to escalate such |
| matters” and “were threatened and asked if they were ‘still a right fit for the job’” referred to |
| therein; |
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| 37. As regards the allegations set forth at paragraph 81 of the Application, it refers this Honourable |
| Court to TD Bank’s Code of Conduct filed as Exhibit P-23 and denies anything inconsistent |
| therewith; |
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| 38. |
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| It denies the allegations set forth at paragraphs 82 and 83 of the Application; |
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| 39. As regards the allegations set forth at paragraph 84 of the Application, it refers this Honourable |
| Court to TD Bank’s 2015 and 2016 MD&As (Exhibits P-5 and P-7) and denies anything |
| inconsistent therewith; |
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| - 5 - |
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| 40. |
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| It denies the sweeping and unsubstantiated allegations set forth at paragraphs 85 and 86 of |
| the Application; |
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| 41. As regards paragraph 87 of the Application, it refers this Honourable Court to section 225.8 et |
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| seq. of the QSA and denies anything inconsistent therewith; |
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| 42. As regards the allegations set forth at paragraph 88 of the Application, it refers this Honourable |
| Court to Exhibit P-9 and denies anything inconsistent therewith. It adds that The Fund |
| continued to purchase TD Bank shares after the Class Period, including on April 25, 2017 and |
| February 14, 2018, as appears from the trade confirmations (Exhibit D-1); |
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| 43. As regards the allegations set forth at paragraph 89 of the Application, it denies having made |
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| any misrepresentations in the Impugned Documents; |
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| 44. As regards paragraph 90 of the Application, the allegations set forth therein are questions of |
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| law; |
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| 45. |
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| It denies as drafted the allegations set forth at paragraphs 91 and 92 of the Application, since |
| in 2015 TD Bank had more than 81,000 full time employees and operated 1,165 retail branches |
| that served 15 million customers throughout Canada; |
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| 46. |
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| It denies the allegations set forth at paragraph 93 of the Application; |
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| 47. |
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| It denies the allegations set forth at paragraphs 94 and 95 of the Application and adds that |
| Plaintiff Turn8’s representative Craig McFadzean, who made all the investment decisions with |
| respect to The Fund, admitted during his deposition that he did not rely on anything specific in |
| the Impugned Documents to purchase the TD Bank shares in issue and admitted that he relied |
| upon other factors relevant to a long-term investment strategy; |
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| 48. |
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| It denies the allegations set forth at paragraphs 96 and 97 of the Application; |
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| 49. |
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| It denies the allegations set forth at paragraphs 98 and 99 of the Application and adds that |
| Plaintiffs have failed to file any documents or provide any details in support of their primary |
| market claim; |
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| 50. As regards the allegations set forth at paragraphs 100, 101, 102, 103 and 104 of the |
| Application, it denies having committed any fault in violation of Article 1457 of the CCQ and |
| that Plaintiffs or any other Class Members suffered any loss; |
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| AND IN FURTHER DEFENCE TO THE PLAINTIFFS’ ACTION BUT WITHOUT PREJUDICE TO |
| THE FOREGOING, THE DEFENDANT SUBMITS THE FOLLOWING: |
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| I. |
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| ABSENCE OF MISREPRESENTATIONS |
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| A. NO FALSE OR MISLEADING REPRESENTATIONS |
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| - 6 - |
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| 51. The Plaintiffs first rely on supposedly false and misleading statements regarding TD Bank's |
| business practices, risk management and ethics policies regarding its Canadian Retail |
| Business Segment; |
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| 52. While the Plaintiffs were certainly entitled to regroup this repetitive and overlapping selection |
| of TD Bank representations, they could not legitimately redefine, conflate or otherwise |
| misconstrue these statements in the process; |
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| 53. The alleged TD Bank business practice misstatements only refer to its continued delivery of |
| legendary outstanding and efficient customer service, as well as its continued recognition as |
| an extraordinary place to work; |
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| 54. Contrary to Plaintiffs’ allegations at paragraph 72 of the Application, TD Bank's statements |
| pertaining to its legendary, outstanding and efficient customer service, as well as those |
| asserting that TD Bank is an extraordinary place to work, were entirely accurate and true, as |
| confirmed by the following third-party industry awards and reviews, communicated herewith as |
| Exhibit D-2 en liasse: |
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| i. Customer Service Awards |
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| a) TD Canada Trust, TD Bank’s customer-focused personal and small business banking |
| brand, ranked “highest in customer satisfaction among the big five retail banks" in 2015 |
| for the tenth year in a row according to the J.D. Power Canadian Retail Banking |
| Customer Satisfaction Study which analyzes retail banking customers’ satisfaction with |
| their primary financial institution. The 2015 Canadian Retail Banking Customer |
| Satisfaction Study was based on responses from more than 14,000 customers |
| surveyed in April and May 2015 and measured customer satisfaction based on seven |
| factors: product; self-service; personal service; facilities; communication; financial |
| advisor; and problem resolution. TD Canada Trust performed well on all seven factors; |
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| b) TD Canada Trust ranked first in Customer Service Excellence among the Big Five |
| Retail Banks in 2016 for the twelfth year in a row according to the Ipsos Best Banking |
| Awards, which recognized Canadian financial institutions for excellence in customer |
| experience. The 2016 Best Banking Awards were based on ongoing quarterly |
| Customer Service Index (CSI) survey results with a sample size of 47,305 completed |
| surveys yielding 67,678 financial institution ratings nationally as of August 2016; |
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| c) TD Canada Trust was voted in 2016 as the Most Trusted Brand in the Bank/Trust |
| Company category for the fifth year in a row according to the 2016 Reader’s Digest |
| Trusted Brand Survey in Canada. The Most Trusted Brand is an annual nationwide |
| online survey conducted by Ipsos on behalf of Reader’s Digest. The 2016 survey |
| results were based on the opinions of more than 4,000 Canadians surveyed between |
| September 4 and 14, 2015 who were asked in an open-ended question to identify the |
| brands they trust the most across 40 product categories; |
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| ii. Workplace Awards |
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| - 7 - |
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| d) For the eighth consecutive year, TD Bank was recognized as one of Canada’s Best |
| Employers for 2017 according to Aon Hewitt. TD Bank also ranked in 2016 among the |
| Gold Level Best Employers. The Best Employers in Canada Study is based on the |
| opinions of an average of 700,000 employees across approximately 200 Canadian |
| companies; |
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| e) As of 2016, TD Bank had, each year since 2006, consistently been recognized by The |
| Great Place to Work Institute as one of the Best Workplaces in Canada. Great Place |
| to Work’s Best Workplaces compilation is the world's largest annual workplace study, |
| representing the opinions of 11 million employees globally; |
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| f) TD Bank had also consistently been acknowledged as one of MediaCorp's Top 100 |
| Employers in Canada on a yearly basis since 2008. MediaCorp’s Canada’s Top 100 |
| Employers is a national competition that recognizes the employers which lead their |
| industries in offering exceptional workplaces for their employees. Employers are |
| evaluated by the editors of Canada’s Top 100 Employers according to eight criteria: |
| physical workplace; work atmosphere and social; health, financial and family benefits; |
| vacation and time off; employee communications; performance management; training |
| and skills development; and community involvement; |
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| g) TD Bank ranked in the top 25 employers in Canada according to Glassdoor’s Canada |
| Best Places to Work 2016 Employees' Choice Awards. The winners were ranked based |
| on their overall rating achieved on Glassdoor’s website during the previous year; |
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| 55. |
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| In any event, the continued pursuit of a successful strategy does not factually equate to the |
| guaranteed delivery of that strategy by every single one of TD Bank’s 81,000-plus employees |
| on behalf of 15 million customers in the Canadian Retail Business Segment; |
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| 56. The 2015 and 2016 Outlook and Key Priorities sections of the MD&As were TD Bank's goals |
| and objectives which could not reasonably be interpreted as unequivocal guarantees of future |
| conduct for every single TD Bank employee; |
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| 57. Contrary to Plaintiffs’ allegations set forth at paragraph 79 of the Application, there was also |
| nothing untrue or misleading when affirming that TD Bank had created a Fair and Responsible |
| Banking Compliance Group which provided oversight, monitoring and analysis of unfair, |
| deceptive and abusive practices. This statement instead necessarily confirmed that TD Bank |
| was not perfect and that some of its employees could engage in such isolated practices |
| notwithstanding its enviable and recognized customer service record; |
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| 58. Nor is it false or misleading to state that TD Bank’s risk management embodied the tone at the |
| top set by management, the acceptance of only risks which could be understood and the |
| promotion of challenges and reporting of unacceptable risks. Again, these statements |
| identified the existence of risks, reputational or otherwise, which any large retail operation |
| could not avoid no matter how vigilant; |
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| 59. The disclosure of the existence and duties of TD Bank's senior executive team and reputational |
| risk committee as well as each employee's duty to positively contribute to TD Bank's reputation |
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| - 8 - |
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| was patently accurate and true. What is misleading is to suggest that these disclosures |
| amounted to a public covenant that every single employee would effectively do so in the future; |
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| 60. Furthermore, the disclosure of TD Bank’s definition of its own reputational risks was neither |
| false nor misleading. On the contrary it was a stark reminder that even the best of reputations |
| can be falsely and temporarily tarnished by the actions of a very few; |
|
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| 61. The statements drawn from TD Bank’s Code of Conduct and Ethics were neither deliberately |
| nor unintentionally false or misleading either and Plaintiffs have not adduced any evidence of |
| unethical, illegal or predatory practices which supposedly render this reputational roadmap |
| obsolete; |
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| 62. |
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| In particular, the Plaintiffs have failed to prove any supposed Pressure Selling Program and |
| have instead gratuitously made up this term based on analogies to the cross-selling scandal |
| involving Wells Fargo. During his deposition, Craig McFadzean admitted he had no knowledge |
| of the origin of the term. The disingenuous and inappropriate use of this colourful definition in |
| the Application is not a lawful substitute for evidence; |
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| 63. Moreover, the Plaintiffs’ concurrent reliance on the hearsay allegations included in the CBC |
| Reports is equally unavailing. These reports only in turn refer to vague, unverifiable, |
| unsubstantiated and subjective opinions of a few supposed yet unidentified tellers and |
| managers; |
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| 64. The CBC Reports fail to identify any employees who were supposedly fired or threatened as |
| well as any meaningful evidence of actual unrealistic incentive targets and policies. They do |
| not provide any crucial context necessary to assess any of the breaches allegedly committed. |
| They do not contain or refer to any actual witness statements or reports derived from the |
| alleged clandestine investigation of five Vancouver branches. The reports also fail to identify |
| any minimal verifications of the supposed employee affirmations which it appears were given |
| repeated airtime merely because they could be utilized as fodder for predatory and sensational |
| journalism; |
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| 65. Finally, the Plaintiffs have not adduced an iota of evidence confirming that TD Bank |
| “consistently failed to provide adequate monitoring and oversight of identified and escalated |
| reputational risk matters” or that its internal controls were inefficient and defective; |
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| 66. Such conclusions cannot be reasonably inferred in respect of about 100 million Canadian retail |
| customer interactions annually involving more than 81,000 employees, based only on isolated, |
| unidentified and unverifiable recriminations; |
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| B. ABSENCE OF MATERIALITY |
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| 67. All of the aforementioned impugned statements invoked against TD Bank also invariably fail |
| to qualify as misrepresentations, since they fall well short of the applicable statutory materiality |
| standard; |
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| - 9 - |
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| 68. This is also true in respect of the Plaintiffs’ further allegation that TD Bank’s reported Canadian |
| retail revenue increases were misleading since they omitted to identify that they purportedly |
| were attributable to mis-selling programs and practices; |
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| 69. Materiality |
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| is an essential and express condition or component of any statutory |
| misrepresentation. Even if a single misrepresentation had been factually established, which is |
| vehemently denied, it could not trigger any statutory securities relief, absent an additional |
| finding of materiality; |
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| 70. |
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| It is also trite law that materiality involves a case-by-case application of a legal standard to a |
| specific and contextual factual matrix; |
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| 71. The burden to establish materiality rests squarely with the Plaintiffs and cannot be presumed |
| save when common sense inferences are warranted, which is clearly not the case here; |
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| 72. The Plaintiffs’ failure to meet this burden is glaring for a number of fundamental reasons |
| including the fact that they rely at the outset, on the wrong standard – the reasonable investor |
| test – to determine materiality; |
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| 73. The QSA's approach to materiality is not grounded on a reasonable investor test but rather on |
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| a narrower market impact test; |
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| 74. While the distinction between disclosures of material fact and changes is paramount, both are |
| specifically subject to an objective market impact test as appears from the unequivocal wording |
| of Sections 5 and 5.3 of the QSA. The same is true for all other statutory securities schemes |
| adopted in Canada; |
|
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| 75. Plaintiffs’ allegation pertaining to materiality, set forth at paragraph 96 of the Application, is not |
| only grammatically incongruent but is also predicated on a purported expert report (Exhibit P- |
| 24), which repeatedly invokes and relies on the reasonable investor test to arrive at erroneous |
| conclusions of market impact; |
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| 76. The statutory definition of materiality does not rest on a plurality of possible factors which could |
| have been considered by the reasonable investor but rather on whether the particular |
| misrepresentations alleged could objectively have had a significant effect on the market price |
| or value of the shares in question; |
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| 77. The market impact test is defined in strictly economic terms and limits actionable |
| misrepresentations to those which impact the objective interest of all investors in a financial |
| return. It represents a legislative choice to prudently balance consumer protection imperatives |
| and the promotion of sound economic policy; |
|
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| 78. Remarkably, the Plaintiffs are fully aware that TD Bank's financial statements were never |
| restated following the purported CBC Reports’ corrective disclosures and that no sanctions, |
| criminal or regulatory were ever asserted let alone levied against the Bank or its directors and |
| officers in relation to the CBC Reports; |
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| - 10 - |
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| 79. These |
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| facts alone suffice |
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| thus any |
| misrepresentations, including the alleged omitted disclosure of supposed mis-selling and its |
| enhancement of domestic non-interest retail revenues; |
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| finding of materiality and |
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| to preclude any |
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| 80. Purported instances of mis-selling which are insufficient to precipitate or compel a restatement |
| of revenues cannot be seriously qualified as significantly impactful to the capital markets and |
| are thus immaterial; |
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| 81. Moreover, given TD Bank's market capitalization and its 81,000-plus employees’ engagement |
| in Canadian retail activities in 1,165 branches with 15 million customers, it is inconceivable that |
| isolated concerns would have had any significant effect on the market price or value of TD |
| Bank stock during the Class Period; |
|
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| 82. Only systemic mis-selling practices could potentially have had a significant impact on the |
| markets. As discussed earlier, the inadmissible CBC Reports communicated as Exhibits P-10 |
| and P-11 do not establish any actual evidence and in any event did not refer to any widespread |
| or systemic business practice violations; |
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| 83. |
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| It is the Plaintiffs alone who have without any factual basis alleged widespread and systemic |
| mis-selling. Even their expert report (Exhibit P-24) has instead recognized this absence of |
| systemic evidence by relying entirely on an assumption of the truthfulness of Plaintiffs’ |
| allegations; |
|
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| 84. The FCAC was established in 2001 by the Government of Canada as an independent agency, |
| responsible for monitoring and enforcing compliance with consumer protection legislation, |
| regulations and industry commitments by federally regulated financial entities. The Plaintiffs |
| and their expert were or ought to have been fully aware prior to filing suit that the FCAC had |
| launched an investigation into the domestic retail sales practices of Canada’s six leading |
| banks, following the abovementioned CBC Reports, and had concluded that there was no |
| evidence of any systemic or widespread mis-selling practices at TD Bank and these other |
| banks; |
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| 85. The FCAC did so following the review of 4500 complaints, 100,000 pages of sales incentive, |
| compliance and governance banking documentation and 600 interviews with bank personnel |
| including board chairs and directors, senior management, middle management and frontline |
| employees; |
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| 86. The Courts have long ago confirmed that class actions are not commissions of inquiry and |
| should not be utilized to attempt to overturn the findings of industry regulators merely to please |
| unharmed and opportunistic Plaintiffs; |
|
|
| 87. The courts instead owe deference to the findings of highly specialized and expert regulators |
| who have already invested considerable public resources in order to arrive at sound |
| investigative conclusions; |
|
|
| 88. Finally, in this vein, the Plaintiffs were necessarily aware that the temporary decline in TD |
| Bank’s share price was not alone evidence of materiality, especially since this drop was |
|
|
| - 11 - |
|
|
| precipitated by speculation as to the veritable scope of unsubstantiated and exaggerated |
| editorials; |
|
|
| 89. |
|
|
| It is precisely because they did not view the alleged misrepresentations as material that Plaintiff |
| Turn8 purchased TD Bank shares on February 14, 2018 at the price of $72.32 following the |
| CBC Reports; |
|
|
| 90. The Plaintiffs’ action is thus not only self-serving but also clearly abusive; |
|
|
| II. ABSENCE OF VERITABLE CORRECTIVE DISCLOSURES |
|
|
| 91. As addressed earlier herein, the CBC Reports do not even amount to admissible evidence and |
|
|
| could hardly form the legal basis of any correction or signpost for a QSA claim; |
|
|
| 92. Moreover, even if the vague, unsubstantiated and unverifiable contents of the CBC Reports |
| were wrongfully presumed to be true, they would not rise to any level of significance when |
| considered in their proper factual context, which is more fully described at paragraphs 78 to |
| 85 herein; |
|
|
| 93. The CBC Reports did not correct or bring to light any material misstatement or omission but |
| instead encouraged investors to speculate that the reported issues were widespread based on |
| unverifiable and biased sensationalism and exaggeration; |
|
|
| 94. This lack of veritable and legitimate factual content also precludes the demonstration of any |
|
|
| possible nexus with the very real contents of the Impugned Documents; |
|
|
| 95. The March 6, 2017 CBC Report did not unleash a “firestorm” of anything but speculation; |
|
|
| 96. Further, a public correction must be identified with precision and the dual date approach |
|
|
| adopted by the Plaintiffs is not only indecisive but legally flawed; |
|
|
| 97. Only the March 6, 2017 CBC Report could have qualified as a corrective disclosure had it |
|
|
| reported anything materially true or viable; |
|
|
| 98. The March 10, 2017 CBC Report was an unverifiable complement of the previously disclosed |
|
|
| instances of mis-selling program allegations; |
|
|
| 99. The fact that TD Bank stock price increased following the March 6, 2017 CBC Report and only |
| dropped temporarily after the March 10, 2017 CBC Report, confirmed that the markets were |
| erroneously responding to stoked fears that unsubstantiated incidents of mis-selling were |
| indicative of the widespread practices previously reported in the Wells Fargo scandal |
| addressed next; |
|
|
| III. CONFOUNDING FACTORS AND ABSENCE OF CAUSATION |
|
|
| 100. The March 2017 CBC Reports were posted on the heels of a 2016 systemic mis-selling |
| banking scandal involving Wells Fargo Corporation, as appears from a Forbes online article |
| communicated herewith as Exhibit D-3; |
|
|
| - 12 - |
|
|
| 101. The Wells Fargo scandal involved the opening of 3.5 million unauthorized customer credit-card |
| and bank accounts as well as systemic efforts to hide this illegal activity from customers. Over |
| 5,000 employees had been fired for mis-selling, and seven top members of its executive team |
| were fined as a result of the Wells Fargo scandal, as appears from a CNN online article |
| communicated herewith as Exhibit D-4; |
|
|
| 102. Wells Fargo was not only investigated but charged and fined by a group of regulatory agencies |
| to the tune of $US185 million on September 8, 2016. It also paid out $US2.7 billion in civil and |
| criminal lawsuits and its chief executive John Stumpf was not only forced to resign but also |
| subsequently banned from ever working in the banking sector; |
|
|
| 103. TD Bank’s stock drop following the March 10, 2017 CBC Report was not at all attributable to a |
| proven and truthful factual corrective disclosure but rather to speculative fears that the CBC |
| Reports had scooped the next Wells Fargo; |
|
|
| 104. Most of the market analyst reports which were issued in the days following the CBC Report |
| (Exhibit P-11) confirmed TD Bank’s stock drop was attributable to unproven fears and |
| speculation that TD Bank might be the next Wells Fargo or that its stock would not command |
| its usual premium while the CBC hearsay allegations were being properly investigated, as |
| appears from the analyst reports communicated herewith as Exhibit D-5 en liasse; |
|
|
| 105. For instance, the March 13, 2017 Credit Suisse report confirmed the following: |
|
|
| “The immediate reaction has been to draw parallels to the allegations |
| regarding WFC's [Wells Fargo Corporation's] sales practices which |
| resulted in a US$185m settlement on Sept.8th, 2016.” |
|
|
| 106. The BMO report issued on the same date also confirmed fear and not TD Bank factual |
|
|
| corrections were at the heart of the stock drop: |
|
|
| “The market's rush to judgment is understandable, especially in the wake |
| of the Wells Fargo cross-selling scandal; but to conclude that what is |
| suggested to be happening at TD is the same as what transpired at Wells |
| Fargo is a stretch, in our view.” |
|
|
| 107. As further appears in part from the Eight Capital report of the same date, the stock drop |
| precipitated by the CBC Reports extended to the entire banking sector, again demonstrating |
| that speculation and not any specific TD Bank corrective disclosure was the market driver: |
|
|
| “It was not surprising to see the group sell off in sympathy to TD through |
| Friday's trading session, which we interpret in part as the market |
| concluding that other banks may not be immune to similar allegations. |
| Few would be surprised to learn that there was increased pressure on |
| front line sales personnel on the back of lower retail banking volumes over |
| the past several years. |
|
|
| We should note, however, there is nothing that we have observed that |
| would suggest that TD Bank specifically has more aggressive or |
| inappropriate sales practices relative to peers.” |
|
|
| - 13 - |
|
|
| 108. Finally, in this regard, it is remarkable that the March 20, 2018 FCAC report specifically |
| considered the Wells Fargo scandal before concluding that it had found no evidence of any |
| widespread mis-selling at TD Bank or the five other largest Canadian banks; |
|
|
| 109. The subsequent communication by Plaintiffs of a further CBC report (Exhibit P-26) suggesting |
| that Canada’s six largest banks interfered with the FCAC report finding of no widespread mis- |
| selling is entirely false and their beleaguered attempt to sway this Honourable Court with |
| additional hearsay opinions on the contrary attests to the significance of the FCAC findings; |
|
|
| IV. CCQ CLAIM |
|
|
| 110. The CCQ Class Member claims invoked by the Plaintiffs are each subject to and conditional |
|
|
| on a finding of reliance, as they do not benefit from any statutory presumption in this regard; |
|
|
| 111. Even so, no evidence of any reliance on the Impugned Documents has been adduced; |
|
|
| 112. The deposition of Plaintiff Turn8’s representative Craig McFadzean instead confirmed that |
| while he alone made the decision to purchase TD Bank stock on behalf of The Fund, he never |
| relied on any of the Impugned Documents; |
|
|
| 113. Similarly, the Class Members do not benefit from any statutory calculation facilitating their |
|
|
| burden to each establish a veritable loss under the CCQ; |
|
|
| 114. Consequently, even if the Class Members were able to establish any lawful evidence of any |
| material representation, liability could not be determined on a class wide basis and an |
| individual recovery scheme would be necessary to preserve TD Bank’s fundamental right to a |
| full and unfettered defence; |
|
|
| 115. Subsidiarily, any Class Members residing outside of Québec cannot avail themselves of |
|
|
| Québec law in any event; |
|
|
| WHEREFORE, PLEASE THIS HONOURABLE COURT: |
|
|
| DISMISS Plaintiffs’ Application; |
|
|
| MAINTAIN the Defence of The Toronto-Dominion Bank; |
|
|
| THE WHOLE with costs, including expert fees. |
|
|
| - 14 - |
|
|
| Montréal, February 8, 2021 |
|
|
| INF LLP |
| Mtre Marianne Ignacz |
| Mtre Laurent Nahmiash |
| mignacz@infavocats.com |
| lnahmiash@infavocats.com |
|
|
| 255, Saint-Jacques Street, 3rd floor |
| Montréal, Québec H2Y 1M6 |
| Tel: 514-312-0293 |
| Fax: 514-312-0292 |
|
|
| Attorneys for The Toronto-Dominion Bank |
|
|
| No. : 500-06-000914-180 |
|
|
| PROVINCE OF QUEBEC |
| DISTRICT OF MONTREAL |
|
|
| SUPERIOR COURT |
| (Class Action Division) |
|
|
| MAJESTIC ASSET MANAGEMENT LLC |
| -and- |
| TURN8 PARTNERS INC. |
|
|
| Representative Plaintiffs |
|
|
| v. |
|
|
| THE TORONTO-DOMINION BANK |
|
|
| Defendant |
|
|
| DEFENCE OF THE DEFENDANT |
| THE TORONTO-DOMINION BANK |
|
|
| COPY |
|
|
| Mtre Marianne Ignacz |
| Mtre Laurent Nahmiash |
| mignacz@infavocats.com |
| lnahmiash@infavocats.com |
| 255, St Jacques Street, 3rd Floor |
| Montréal, Québec H2Y 1M6 |
| Telephone : 514-312-0293 |
| Fax : 514-312-0292 |
| O/F : 8019-0001 |
| B10114 |
| infavocats.com |
|
|
|
|
