CRT QB LETN MACLEOD

general reply k thE Plaintiffs allegations regarding ethical issues, the Defmdant8 state

that at all times the Defmdants condua their Wsiness acc~rdingto deal principle,

Action No. 0306-01086

IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL CENTRE OF LETHBRIDGE / MACLEOD BETWEEN:

LAWRENCE EDWARD ELFORD Plaintiff -and-

RBC DOMINION SECURITIES INC.and RBC DOMINION SECURITIES LIMITED carrying on business as RBC INVESTMENTS and RBC F'INANCIAL Defendants STATEMENT OF DEFENCE 1.

The Defendants admit paragraphs 1 to 4 inclusive and agree with the place and time estimate of trial in paragraph 22 of the Claim. The Defendants state that it would be appropriate to have this matter heard by a Justice of the Court of Queen's Bench. In relation to paragraph 5 of the Claim, the Defendants acknowledge that the pleading properly describes some of the duties of an investment advisor to his clients, and correctly sets out a portion of the Defendants' Code of Ethics. Save as admitted or commented upon, all else is denied.

2.

In general response to the Plaintiffs constructive dismissal allegations the Defendants state that on November 8, 2002 (dated November 7, 2002) the Plaintiff voluntarily submitted a written resignation from employment with the Deferrdants. The Plaintiffs .

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resignation was without prior notice to or discussion with the Defendants.

The

Defendants specifically deny all allegations of constructive dismissal and state in the alternative that at all relevant times the Plaintiffs business was fostered and encouraged by the Defendants, to the benefit of the Plaintiff, the Defendants and RBC's clients. 3.

In general reply to the Plaintiffs allegations regarding ethical issues, the Defendants state that at all times the Defendants conduct their business according to ethical principles,

2 and in compliance with its own business policies as well as the regulatory standards established governing the securities industry in Canada. The Defendants further state that all ethical concerns raised by the Plaintiff were reviewed, investigated and thereafter the Plaintiff promptly received the considered response of the Defendants. In the opinion

of the Defendants' management, the Plaintiff raised no valid ethical concerns regarding the business practices of the Defendants. In answer to the whole of the Plaintiffs claim, the Defendants state that the Plaintiffs concerns and /or allegations were investigated and reviewed, each on separate occasions by the Investment Dealers Association and in each instance the Plaintiff's concerns and

allegations were dismissed, as meriting no Wher investigation by the IDA.

In specific answer to paragraphs 6 (a), (b) and (c), 7, and 8 of the Claim, the Defendants state that any and all issues raised by the Plaintiff regarding the Defendants' business practices were reviewed and considered. In all instances it was determined the Plaintiff either ignored the Defendants' policies; or alternatively, misconstrued or misunderstood the issues involved. At no time have the Defendants allowed investment advisors in its employ to carry on business practices contrary to securities industry regulations and /or the Defendants' policies and ethical practices. In specific denial of paragraph 6(d) the Defendants state that the Defendants' business practices maintain the highest concern for public protection and clarity of issues. In direct reply to paragraphs 8 and 9 of the Claim, the Defendants state that at all relevant times the Plaintiff was aware, having provided written acknowledgement of same on August 17, 2000, of the Defendants' regulations and policies regarding publication of advertisements and business solicitation. Notwithstanding the Plaintiffs awareness of same, the Plaintiff regularly contravened the Defendants' policies and regulations in this regard, as well as the policies and regulations of the Investment Dealers Association and the Canadian Securities Institute regarding publications and business solicitation. As a result of the Plaintiffs unwillingness to follow corporate and industry regulations, the

3 Plaintiff was reprimanded; and on two occasions, October 10, 2000 and May 29, 2002, received written reprimands regarding his conduct. 8.

In response to paragraph 10 of the Claim, the Defendants state that the written reprimands provided to the Plaintiff were designed to remind the Plaintiff of his obligations regarding public protection and clarity of issues with respect to published material; and to ensure that the Plaintiff conducted his business practices in an ethical manner, consistent with the Defendants' policies and industry standards.

I

9.

In specific answer to paragraph 11 of the Claim, the Defendants state that at all times management of the Defendants responded in a constructive and timely manner to all advertising issues raised by the Plaintiff. Further, at all relevant times, the Defendants encouraged and assisted the Plaintiff, without threats, to conduct his business practices in accordance with the Defendants' policies and industry standards.

10.

In specific denial of paragraph 14 of the Claim, the Defendants state that on November 7, 2002 the Plaintiff and his assistants were apprehended in an attempt to depart the

Defendants' business premises after hours, surreptitiously, and without prior notice to the Defendants. Further, upon the Plaintiff's departure on November 7, 2002 the Plaintiff improperly removed documentation and information which was proprietary to the Defendants, contrary to the Plaintiffs employment agreement with the Defendants, md contrary to industry standards. Despite demands made by the Defendants for return of its proprietary information, it was not returned until December 18,2002. 11.

In response to paragraphs 15, 17 and 19 of the Claim, the Defendants state that to their knowledge any decrease in the Plaintiffs business arises as a result of a number of factors, including general market conditions, the type of investment products in which the Plaintiff deals, and the fact that a number of the clients previously served by the Plaintiff chose to keep their business with the Defendants.

The Defendants specifically deny the allegations contained in paragraph 16 of the Claim

and in the alternative state that the Defendants dealt appropriately, and consistent with the provisions and requirements of the Employment StandardsAct of Alberta.

In answer to paragraph 18 of the Claim, the Defendants state that the alleged damages are not related to the issues in this action, are remote, not compensable; and in any event

were self-induced by the Plaintiff. In reply to paragraphs 17, 19, 20 and 21 of the Claim, the Defendants deny the alleged damages suffered; and in specific response to paragraph 21, the Defendants state the Plaintiffs plea in this regard is inappropriate and self-senin% and does not constitute a

WHEREFORE THE DEFENDANTS PRAY THAT THE PLAINTIFF'S ACTION BE DISMISSED WITH COSTS.

DATED at the City of Calgary, in the Province of Alberta, this 12th day of November, 2003, and DELIVERED by Rooney Prentice, Barristers, Solicitors for the Defendants, whose

address fox service is in care of the said soficitors at #501, 407 - 8th Avenue S.W., Calgary, Alberta T2P 1E5.

AND BETWEEN:

RBC DOMINION SECURITIES INC.and RBC DOMINION SECURITIES LIMITED carrying on business as RBC INVESTMENTS and RBC FINANCIAL Plaintiffs by Counterclaim -andLAWRENCE EDWARD ELFORD

Defendant by Counterclaim COUNTERCLAIM

The Plaintiffs by Counterclaim repeat and adopt all allegations and assertions made in their Statement of Defence.

The Plaintiffs by Counterclaim state that fi-om time to time complaints were received fiom clients regarding the Defendant by Counterclstim.

Such complaints were

investigated as received and assessed for validity by the Plaintiffs by Counterclaim. One such client, Mrs. H, received compensation from the Defendants in the amount of $16,418.32. Pursuant to the Defendant by Counterclaim's employment arrangements, as well as industry standards and practice, the Defendant by Counterclaim is obliged to indemnify and reimburse the Plaintiff by Counterclaim in the amount of $16,418.32. The Plaintiffs by Counterclaim have received additional client complaints which are currently being reviewed and assessed. Specifics of any damages suffered as a result of the Defendant by Counterclaim's business practices will be provided in the course of these proceedings. On November 7, 2002 the Defendant by Counterclaim was apprehended, after hours, in the process of removing both personal effects and the Plaintiffs by Counterclaim's proprietary information and material, &om the Plaintiffs by Countercfaim's pJace of. business. At that time, it was noted that portions of the Plaintiffs by Counterclaim's proprietary information had already been removed from the Plaintiffs by Counterclaim's offices. The Plaintiffs by Counterclaim states that upon the Defendant by Counterclaim's later departure from the Plaintiffs by Counterclaim's premises, he and assistants in his employ wrongfully and inappropriately removed additional confidential and proprietary information of the Plaintiffs by Counterclaim. Despite requests and demands for return of such information by the Plaintiffs by Counterclaim, the Defendant by Counterclaim wrongfully utilized the proprietary information for the purpose of business solicitation, thereby causing loss and damages to the Plaintiffs by Counterclaim estimated at $640,000.00. The Defendant by Counterclaim did not return the Plaintiffs by Counterclaim's information until December 18,2002, having taken the benefit of the wrongfully utilized proprietary information.

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WHEREFORE THE PLAINTIFFS BY COUNTERCLAIM PRAY: An accounting in relation to financial benefits derived by the Defendant by

Counterclaim in utilizing the Plaintiffs by Counterclaim's proprietary information and judgment for reimbursement; An indemnity and damages in the amount of $Z6,418.32 in relation to client H;

Damages to be assessed in relation to outstanding client complaints; Costs of this Counterclaim.

DATED at the City of Calgary, in the Province of Alberta, this 12th day of November, 2003, and DELIVERED by Rooney Prentice, Barristers, Solicitors for the Plaintiffs by Counterclaim whose address for service is in care of the said solicitors at #501, 407 - 8th Avenue S.W., Calgary, Alberta T2P 1E5.

~ R ~ ~ J D H E ~ J T ~ ~ CONSENTED TO BY:

KRUSHEL FAIUUNGTON

Per: for the Plaintiff

TO

THE

DEFENDANT

BY

Action No; 0306-01086

COUNTERCLAIM: You have been sued. You are the Defendant by Counterclaim. You have only 15 days to file and serve a Statement of Defence to Counterclaim or Demand of Notice. You or your lawyer must file your Statement or Demand of Notice in the Office of the Clerk of the court of Queen's Bench of Calgary, Alberta. You or your lawyer must also leave a copy of your Statement of Defence to Counterclaim or Demand of Notice at the address for service for the Plaintiff by Counterclaim named in the Statement of Defence and Counterclaim.

WARNING: If you do not do both things within 15 days, you may automatically lose the lawsuit. The Plaintiff by Counterclaim (Defendant) may get a Court Judgment against you if you do not fde, or do not give a copy to the Plaintiff by Counterclaim (Defendant), or do either thing late.

BENCH OF ALBERTA JUDICIAL CENTRE OF LETHBRIDGE/MACLEOD IN THE COURT OF QUEEN'S

BETWEEN: LAWRENCE EDWARD ELFORD Plaintiff Defendant by Counterclaim

RBC DOMINTON SECURITIES INC. and RBC DOMINION SECURITIES LIMITED carryidg on business as RBC INVESTMENTS and RBC FINANCIAL Defendants Plaintiff~byCounterclaim

The Defenda-tiffs on business at:

bv Counte&aim)

c

m

AMENDED STATEMENT OF DEFENCE AND

COUNTERCLAIM The Defendants' (Plaintiffs zddress for service i~

bv

Countercl*

c/o Fraser Milner Caserain LLP Barristers and Solicitors Caldw. Alberta T2P 4x7 &tention: James R. Rooney. O.C.

This Amended Statement of Defence and Counterclaim is frled by: FRASER MlLNER CASGRAIN LLP Barristers and Solicitors ' 30' Floor, Fifth Avenue Place 237 - 4 Avenue S.W.

File Nos. 015121-108 JBR

01/31/2086

1%: 44

403-381-5128

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i

CRT I;IE LETH MACLEOD

PAGE

LAWRENCE EDWARD ELFORD

6

If you do mot do bath Wnps withln 13 Bays, you m y utomadcdy lase the Jawsuit. The P l M f f by Counterdafm (Defendant) may @C r Coun J u d ~ ~ ~$@inst c n t you if you da pot Blt, or do nor give a capy to the Plaintiff by Cauntarclaim (Defendant), or do either thing lute. WARNING?

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