The City of Hamilton issued the following statement this morning about the City’s legal action against Henry Juroviesky and Juroviesky & Ricci LLP.
The action alleges Jurovieksky was negligent in his duties representing the City in a $10-million lawsuit related to the City’s investment in toxic Asset-Backed Commercial Paper by missing deadlines that resulted in dismissal of the City’s action.
(My previous post outlining the missed deadlines)
You can read the Statement of Claim:
Statement of Claim as released by the City of Hamilton.
Of note, City Council approved filing a lawsuit in the amount of $11-million against Henry Juroviesky and Juroviesky & Ricci LLP. “The City Manager will also be reviewing the details of this matter to ensure appropriate accountability” – meaning the City’s legal department, who was responsible for overseeing outside counsel, may be held to account for poor supervision.
The full City of Hamilton statement received by email at 12:29EDT follows:
City Statement: Asset Backed Commercial Papers (ABCP’s)
At this time, the City is pursuing all possible avenues to achieve full recovery of its ABCP investments. Furthermore, the City Manager will be reviewing the details of this matter to ensure appropriate accountability.
Asset Backed Commercial Papers (ABCP’s) are a form of investment. On July 24, 2007, the City bought an ABCP investment from Deutsche Bank with a face value of $10 Million, payable on September 26, 2007. The City paid $9,919,000 for this ABCP. Metcalfe & Mansfield were the trustees of the Devonshire Trust, which was the vehicle for the ABCP. These types of investments were common and purchased by a number of municipalities and other public sector investors. These investments were also permitted under the Municipal Act since approximately 2002. The City of Hamilton incorporated the use of these securitized investments in the City’s “Reserves and Trusts Investment Policies” in 2004 through a report approved by Council (FCS04010). This Investment Policy was again updated in 2009.
It is important to note that the investments were rated AAA grade i.e. the highest quality possible. In early August 2007 as a result of broader international fiscal and financial market issues, there was an Asset Backed Commercial Paper (ABCP) market collapse. Subsequently, on August 15, 2007 various banks and investors entered into an agreement that became known as the Montreal Accord. Devonshire was part of this initial agreement. In addition, the “Pan Canadian Investment Committee” was formed to deal with the ABCP issue. Devonshire withdrew from this process.
On June 24, 2009, City Council authorized the retainer of Juroviesky & Ricci LLP to represent the City in litigation to attempt to recover on the ABCP investment. This was seen as an avenue for potential recovery of the City’s investment in addition to the other ongoing litigation. Mr. Juroviesky commenced an Action on behalf of the City of Hamilton on August 5, 2009. This Action was commenced by a Notice of Action which required that a Statement of Claim be filed with the Court by September 4, 2009. No Statement of Claim was filed on September 4, 2009 and this Action therefore expired.
Mr. Juroviesky commenced a second Action on behalf of the City on September 25, 2009.
On December 22, 2010, Madam Justice Frank dismissed the second Action against Metcalfe & Mansfield on the basis that it had not been commenced within the applicable limitation period, which she ruled commenced “sometime before August 23, 2009”.
Using different legal representation –Peter Roy and Derek McKay of Roy Elliot O’Connor LLP, the City appealed this ruling; and on March 13, 2012 the Court of Appeal released its ruling dismissing the City’s Appeal once again sighting that the limitation period had not been met.
On March 21 and 22, Council received a full update and briefing regarding this matter from the City Solicitor. In order to protect the City’s interests and prospects for recovery it is prudent to maintain confidentiality with respect to the information and legal advice which was presented.
The City has commenced a legal action against Mr. Henry Juroviesky and his firm Juroviesky & Ricci LLP. The claim is for damages in the amount of $11 Million arising out of the dismissal of the City’s Action against Metcalfe & Mansfield. A copy of the City’s Statement of Claim is attached.
As this matter is before the Courts, the City will not be elaborating upon the Statement of Claim or discussing the background or evidence in this matter in any public forum at this time.
Furthermore, the City remains apprised and aware of other recovery prospects that are currently being sought. These include the following:
- Metcalfe & Mansfield, as trustee of the Devonshire Trust, has obtained a $650+ Million dollar Judgment against Barclays Bank. That case is, not surprisingly, under Appeal. Should the Judgment be upheld, the Devonshire Trust would wind up with funds to pay out to investors, which would include the City of Hamilton on its $10 Million ABCP.
- Deutsche Bank is currently involved in regulatory proceedings before the Investment Industry Regulatory Organization of Canada (IIROC). In other proceedings IIROC has “fined” major banks who were involved in the ABCP market. IIROC recently obtained a court order permitting it to pay out the “fines” to investors who had lost money on ABCPs. If Deutsche Bank is “fined” by IIROC, and if IIROC makes a payout to investors, some of those funds could flow to the City based on the purchase of the $10 Million ABCP from Deutsche Bank.
In conclusion and to reiterate,the City will continue to vigorously pursue all possible avenues to achieve full recovery of its investment. The City Manager willalsobe reviewing the details of this matter to ensure appropriate accountability.
Attached please also find the City v. Juroviesky Statement of Claim.
GM, Finance & Corporate Services
**City Manager’s Office- Strategic Communications Program Manager
**City of Hamilton / Tel.: 905.546.2424 ext. 2261