SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: CV-11-52070
DATE: 2013/09/06
RE: Charlotte Umutoni (Plaintiff) v. Jean Chrysostome Safari, also known as Richard Safari and Cécile Umulinga Minega, also known as Cécile Umulinga Safari (Defendants)
BEFORE: Mr. Justice Robert Smith
COUNSEL: Denis Cadieux, for the Plaintiff
Richard Safari, self-represented
Cécile Umulinga Safari, self-represented
DATE HEARD AT OTTAWA: August 6, 2013
E N D O R S E M E N T
[1] The plaintiff Charlotte Umutoni (“Charlotte”) has brought a motion for a summary judgment seeking the return of $132,000.00 plus interest, being the balance of the funds she transferred to the defendants Jean Chrysostome Safari (also known as Richard Safari) and Cécile Umulinga Minega (also known as Cécile Umulinga Safari) to be invested on her behalf.
Issue – Is there a genuine issue requiring a trial?
a) Amount Advanced by the Plaintiff and Amount Remaining
[2] The plaintiff initially transferred a total of $188,000.00 to the defendants’ investment account with Scottrade, bearing account number 71531331 in 2005. Charlotte received withdrawals totaling $56,000.00, leaving a capital balance according to her evidence of $132,000.00.
[3] The defendant Jean Safari agrees that the Plaintiff advanced $188,000 to him to invest for her in the American stock market during 2005. He calculates that he returned $66,656.00 to the plaintiff by August 11, 2008, leaving a balance of $121,344. However, in his email of January 3, 2009 the defendant offered to reimburse the plaintiff the totality of the principal remaining with him of plus or minus $135,000.00. The $135,000.00 figure is greater than and very close to the plaintiff’s amount of $132,000.00.
[4] I find that on a balance of probabilities I accept the plaintiff’s evidence that there is a balance remaining of $132,000.000 of the $188,000.00 advanced by her, and that this is an accurate number as it is very close to the two amounts estimated by the defendant ($135,000.00 and $121,344.00). I also find that a trial is not required in order for me to have a full appreciation of the evidence of the amount advanced by the plaintiff to the defendants and the amount returned to the plaintiff. This evidence is not really contested.
b) Did the Defendants breach the terms of the contract or were they negligent in how they invested the plaintiff’s funds?
[5] The defendants acknowledge that they received the sum of $188,000.00 from the defendant between February 18, 2005 and October 31, 2005 and that Mr. Safari agreed to invest these funds on behalf of the plaintiff in the American stock market. The funds were deposited into a joint investment account in the names of both defendants.
[6] At the time the funds were transferred to the defendants, the plaintiff resided in Rwanda and the defendants resided at 60 Grand Avenue, Johnson City, New York. Pelletier J. has already held that the continuing promises to repay the funds to the plaintiff, made after she moved to Ontario, Canada were sufficient to give the Ontario Court jurisdiction in this matter and also extended the limitation period.
[7] The plaintiff in her evidence stated that the defendant was a close cousin and held himself out as a financial advisor and convinced her that he could invest her savings in the United States and obtain a better return on investment than in other places in the world. She further states that the defendant assured her that her capital would be completely protected.
[8] The defendant Jean Safari disputes that he ever represented that he was a licenced financial advisor and denies ever advising the plaintiff that her capital would be protected. The defendant Richard Safari states that the plaintiff knew there were risks when investing in the stock market and that she voluntarily assumed the risks involved.
[9] I am unable to decide the contested issues of whether the defendant Richard Safari represented that he was a financial advisor or assured the plaintiff that her capital would be protected because they involve findings of credibility that I am unable to make on a summary motion.
[10] The defendant Jean Safari also denies the plaintiff’s allegation that he used the plaintiff’s funds to purchase a house in his wife’s name and start a hairdressing business but states that by 2008 he had lost all of the plaintiff’s funds he had invested in the stock market. Jean Safari stated that he was simply investing the plaintiff’s funds as a close family friend. He stated that he considers the plaintiff as a sister, although she is his first cousin.
[11] The defendant Jean Safari denies holding himself out as a financial advisor and in his submissions stated that he was not qualified or competent to invest the plaintiff’s funds or his own funds in the stock market. He further stated that he took unacceptable risks when investing her and his own funds and lost the balance of $132,000.00 of the plaintiff’s funds by making bad investments.
[12] By accepting Mr. Safari’s evidence that he was not qualified as a financial advisor and lacked the competence required to invest the plaintiff’s funds, and lost the balance of her funds by making inappropriate risky investments, I am able to decide that Jean Safari acted negligently and caused the plaintiff to lose $132,000.00 without a trial. The fact that he was also negligent in the manner he invested his own funds is not a defence to acting negligently in the manner that he invested the plaintiff’s funds.
[13] I further find that the defendant’s acknowledged conduct of accepting funds from the plaintiff and then proceeding to invest those funds for her when he lacked the competence, was not qualified, and took unjustified and unreasonable risks when investing her funds, would constitute a breach of the implied term of their agreement that the defendant Jean Safari would invest her funds in a prudent and reasonable manner.
[14] The defendant does not allege that he made prudent and reasonable investments, rather he admits that he lacked the competence to make reasonable investments and took unjustified and unreasonable risks when investing the plaintiff’s money. This evidence is confirmed by the evidence of the defendant that he lost $132,000.00 of the plaintiff’s funds and $117,005.00 of his own funds for a total of $249,005.00 in his investments between 2005 and the end of 2008.
[15] I am satisfied that the plaintiff has met her onus of showing on a balance of probabilities that a trial is not required to find that the defendant has breached the implied terms of their agreement to invest the plaintiff’s funds in a prudent and reasonable manner, and that he was negligent in the manner in which he invested her funds and caused the plaintiff to lose $132,000.00 as a result of his negligent conduct.
[16] I further find that the defendants have not met their onus of showing that a trial is required to decide the issue of whether Jean Safari acted in a negligent manner and breached an implied term of their agreement. A reasonable inference can be drawn from the evidence, given by the defendant that he was incompetent and not qualified to invest the plaintiff’s funds and his numerous offers to repay her the sum of approximately $135,000.00 plus interest confirm that he accepted responsibility for the loss.
[17] I find that the plaintiff agreed to accept the risks of investing in the American stock market as indicated in her email, but I find she agreed to accept the normal risks of investing in the stock market but would have reasonably expected that the defendants had the competence and skill to invest her funds in a reasonable, diversified portfolio, and not to have taken inappropriate risks when investing her funds. In an email to her spouse, dated January 3, 2009 the defendant represented to the plaintiff that he had his licence in finance, six months of courses in the in the U.S., seven years of training in accounting at Butare, Kigali and Kinshasa, and five years of experience in the stock market.
c) Breach of Fiduciary Duty
[18] In Hayward v. Hampton Securities Ltd. (2004), 2004 8981 (ON CA), 187 O.A.C. 183, the Court of Appeal held that the following factors should be considered to determine if a financial advisor has breached his or her duties to an investor:
i) Level of vulnerability
[19] In this case the plaintiff is a mother of three children living in Rwanda and who relied on and had complete trust in her cousin Jean Safari to invest her savings prudently.
ii) The confidence of the investor in the advisor
[20] The plaintiff had complete confidence and relied totally in the defendant. The defendant did not provide any accounting to the plaintiff whatsoever for over three years. She relied on him completely from 2005 to 2008, when she demanded the return of her money.
iii) Dependence on advisor
[21] The plaintiff was completely dependent on the defendant as he did not provide any information on the investments he made or the balance of those investments either monthly, quarterly or annually for three years until 2008.
iv) Discretionary power of the advisor
[22] The defendant exercised complete discretion on the investments he purchased and sold and he comingled her funds with his and his wife’s own investments. The defendant admitted that he lacked competence to make reasonable investments but went ahead anyway and made inappropriate and excessively risky investments. I find that this conduct is negligent behavior.
[23] There is no evidence that the defendant Cécile Umulinga Safari gave any negligent investment advice to Charlotte or made investments for the plaintiff. However she received the plaintiff’s funds which were comingled with her investment funds which were jointly held with Jean Safari. As a result I find that she is jointly liable with Jean Safari to return the balance of the funds she received of $132,000.00 to the plaintiff with interest as she also had a responsibility to ensure that the funds received by her from the plaintiff were not invested negligently. She failed to ensure that the plaintiff’s funds were reasonably invested or returned to the plaintiff, as Jean Safari was not competent or qualified to invest her funds.
[24] The defendant Jean Safari also acknowledged that on his Facebook page, printed off last week, he described himself as CEO of Everest Investments, New York. He acknowledged that this is not true, that there is no such business and he is not the CEO. He said he only made those statements on his Facebook page to gain prestige for himself, but that he has now removed it.
[25] Considering all of the evidence I find that it is in the interests of justice for me to draw a reasonable inference from the evidence that the defendant Richard Safari was negligent in the manner in which he invested the plaintiff’s funds and his actions caused her to lose the balance of $132,000.00. I further find that a full appreciation of the evidence related to the issues of negligence and breach of contract is available to the court without the requirement of a trial with its additional costs and delay to the parties. I also find that the codefendant Cécile Umulinga Safari is negligent and responsible, as a joint owner of the investment account, to have ensured that the plaintiff’s funds were not negligently invested, and she failed to do so.
Disposition
[26] For the above reasons the motion for summary judgment is granted and the defendants are ordered to pay the plaintiff the sum of $132,000.00 U.S. dollars plus interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43, effective on January 1, 2009 when the defendant Jean Safari promised she could receive the balance of the funds that she had sent to the defendants.
Costs
[27] The plaintiff may make submissions within 10 days, the defendants may respond within 10 days, and the plaintiff shall have a further seven days to reply.
R. Smith J.
RELEASED: September 6, 2013
COURT FILE NO.: CV-11-52070
DATE: 2013/09/06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Charlotte Umutoni c. Jean Chrysostome Safari, also known as Richard Safari et Cécile Umulinga Minega, also known as Cécile Umulinga Safari
BEFORE: Mr. Justice Robert Smith
COUNSEL: Denis Cadieux, for the Plaintiff
Richard Safari, self‑represented
Cécile Umulinga Safari, self‑represented
ENDORSEMENT
Mr. Justice Robert Smith
RELEASED: September 6, 2013