Oct 31, 2007
Big Win for our Litigation Department
By: Irving Marks and Barbara Green
In a precedent setting decision successfully argued by Irving Marks and Barbara Green in October, 2007, the Ontario Superior Court held that Bank of Montreal (“BMO”) could not be liable for the conduct of its subsidiary, BMO Nesbitt Burns. Accordingly, BMO’s motion to strike the lawsuit as frivolous and vexatious, succeeded. The Plaintiffs had claimed that BMO, as parent corporation, was liable for the losses they suffered from the allegedly “bad advice” provided in respect of their investments from BMO Nesbitt Burns, BMO’s subsidiary. The Court disagreed.
The Plaintiffs did not assert that BMO provided negligent advice to them, or that BMO directly caused or contributed to their fiscal losses. Rather, the Plaintiffs alleged that BMO, as the parent company of BMO Nesbitt Burns, was liable for the alleged misconduct of its subsidiary and its subsidiary’s employee. They claimed that a relevant consideration was that BMO and BMO Nesbitt Burns jointly hold themselves out to the public to be operating as: “BMO Financial Group”.
Mr. Marks and Ms. Green persuaded the Court to strike the action against BMO on the basis that it disclosed no reasonable cause of action and was frivolous and vexatious. Justice Himel determined that BMO and BMO Nesbitt Burns are separate and distinct legal entities. There was no basis to “pierce the corporate veil”, or to imply an agency relationship between the two entities.
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