Justice A.D. Mcleod of the Court of Queen’s Bench has granted a court order summarily dismissing all claims against Strategic Group companies and its leadership in a class action lawsuit that started in 2012. Under the terms of the order, the plaintiffs are obligated to pay Strategic Group a partial compensation for legal fees and reputational harm caused by the plaintiffs’ unfounded allegations.
“It is incredibly rare for class action settlements to involve no payment to the plaintiffs. To my knowledge, it is almost unheard of for the Court to approve a settlement that contemplates the plaintiffs paying the defendants,” said Beamer Comfort, General Counsel for Strategic Group. “Strategic Group, like the plaintiffs, suffered considerable losses from its dealings with the other defendants. This represents a culmination of years of work to explain Strategic Group’s role in the transactions to the plaintiffs and the alignment of our mutual interests in seeing the remaining defendants held accountable.”
The class action was originally launched before the Court of Queen’s Bench of Alberta claiming a conspiracy to defraud real estate investors. Although a number of companies under the Strategic Group banner were named as defendants, Strategic Group has consistently stated that its role was limited to being an arms-length vendor and financier of properties acquired by the remaining defendants. The remaining defendants later marketed those properties to potential investors. Through a combination of the economic downturn of 2008 and mismanagement and misappropriation of funds by the remaining defendants, both Strategic Group and the class action plaintiffs suffered significant losses.
An affidavit from the representative plaintiff confirms that there was “no corroboration or support” for claims that Strategic Group was responsible for any losses. The representative plaintiff went on to state that the settlement agreement to pay Strategic Group was “in the best interests of our various investment groups based upon the information, records and evidence that has been obtained to date in this action.”
A parallel 2014 investigation by the Alberta Securities Commission into the business of the remaining defendants found that Strategic Group and its leadership were not in any way responsible for the losses suffered by investors.
“The dismissal of the plaintiffs’ claims is vindication for Strategic Group and our team,” said Riaz Mamdani, CEO of Strategic Group. “This was ultimately a baseless and unfair class action lawsuit that included Strategic Group because of our supposed deep pockets.”
“While I empathize with the plaintiffs, it is a relief to bring an end to their misguided attempts to blame Strategic Group for remaining defendants’ conduct,” continued Mr. Mamdani. “Ultimately, our interests have always aligned with those of the plaintiffs, and we hope they are successful in their claim against the remaining defendants.”
Strategic Group thanks Sean Smyth and the defence team at McCarthy Tétrault LLP for their hard work that led to this outstanding and precedent-setting result.