q107/random_k4/source.md

C A N A D A

PROVINCE OF QUÉBEC
DISTRICT OF MONTRÉAL

No. : 500-06-000914-180

S U P E R I O R   C O U R T
(Class Action)

MAJESTIC  ASSET  MANAGEMENT  LLC,  ès
qualité  of  manager,  vested  with
full
the
the  TURN8
administration  powers  over
TACTICAL EQUITY FUND

-and-

TURN8 PARTNERS INC.

Representative Plaintiffs

v.

THE TORONTO-DOMINION BANK

Defendant

DEFENCE OF THE DEFENDANT THE TORONTO-DOMINION BANK

IN  DEFENCE  TO  THE  REPRESENTATIVE  PLAINTIFFS’  (“PLAINTIFFS”)  ORIGINATING
APPLICATION,  THE  DEFENDANT,  THE  TORONTO-DOMINION  BANK
(“TD  BANK”),
RESPECTFULLY SUBMITS THE FOLLOWING:

1.

2.

3.

4.

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;

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;

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;

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;

- 2 -

5.

6.

7.

8.

9.

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;

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;

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;

As  regards  the  allegations  set  forth  at  paragraphs  15  and  16  of  the  Application,  it  denies
making any such misrepresentations;

As regards the allegations set forth at paragraph 17 of the Application, it denies that Plaintiffs
are entitled to any statutory or CCQ relief;

10.  As regards the allegations set forth at paragraph 18 of the Application, it refers this Honourable

Court to the Authorization Judgment and denies anything inconsistent therewith;

11.  As regards the allegations set forth at paragraph 19 of the Application, it refers this Honourable

Court to Exhibits P-1 and P-2 and denies anything inconsistent therewith;

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;

13.  As regards the allegations set forth at paragraph 21 of the Application, it refers this Honourable

Court to Exhibit P-4 and denies anything inconsistent therewith;

14.

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;

15.

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;

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;

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;

- 3 -

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;

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;

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;

21.  As regards the allegations set forth at paragraph 46 of the Application, it refers this Honourable

Court to Exhibit P-23 and denies anything inconsistent therewith;

22.

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;

23.  As regards the allegations set forth at paragraphs 48, 49 and 50 of the Application, it refers

this Honourable Court to Exhibit P-9 and denies anything inconsistent therewith;

24.

25.

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;

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;

26.

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;

27.  As regards the allegations set forth at paragraph 65 of the Application, it refers this Honourable

Court to Exhibit P-13 and denies anything inconsistent therewith;

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

- 4 -

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.";

29.

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;

30.  As regards the allegations set forth at paragraph 69 of the Application, it refers this Honourable

Court to Exhibit P-21 and denies anything inconsistent therewith;

31.  As regards the allegations set forth at paragraph 70 of the Application, it refers this Honourable

Court to Exhibit P-22 and denies anything inconsistent therewith;

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);

33.

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;

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;

35.

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;

36.

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;

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;

38.

It denies the allegations set forth at paragraphs 82 and 83 of the Application;

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;

- 5 -

40.

It denies the sweeping and unsubstantiated allegations set forth at paragraphs 85 and 86 of
the Application;

41.  As regards paragraph 87 of the Application, it refers this Honourable Court to section 225.8 et

seq. of the QSA and denies anything inconsistent therewith;

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);

43.  As regards the allegations set forth at paragraph 89 of the Application, it denies having made

any misrepresentations in the Impugned Documents;

44.  As regards paragraph 90 of the Application, the allegations set forth therein are questions of

law;

45.

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;

46.

It denies the allegations set forth at paragraph 93 of the Application;

47.

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;

48.

It denies the allegations set forth at paragraphs 96 and 97 of the Application;

49.

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;

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;

AND IN FURTHER DEFENCE TO THE PLAINTIFFS’ ACTION BUT WITHOUT PREJUDICE TO
THE FOREGOING, THE DEFENDANT SUBMITS THE FOLLOWING:

I.

ABSENCE OF MISREPRESENTATIONS

A.  NO FALSE OR MISLEADING REPRESENTATIONS

- 6 -

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;

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;

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;

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:

i.  Customer Service Awards

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;

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;

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;

ii.  Workplace Awards

- 7 -

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;

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;

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;

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;

55.

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;

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;

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;

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;

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

- 8 -

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;

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;

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;

62.

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;

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;

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;

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;

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;

B.  ABSENCE OF MATERIALITY

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;

- 9 -

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;

69.  Materiality

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;

70.

It is also trite law that materiality involves a case-by-case application of a legal standard to a
specific and contextual factual matrix;

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;

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;

73.  The QSA's approach to materiality is not grounded on a reasonable investor test but rather on

a narrower market impact test;

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;

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;

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;

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;

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;

- 10 -

79.  These

facts  alone  suffice

thus  any
misrepresentations, including the alleged omitted disclosure of  supposed mis-selling and its
enhancement of domestic non-interest retail revenues;

finding  of  materiality  and

to  preclude  any

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;

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;

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;

83.

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;

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;

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;

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