Executive Summary: Key Legal and Evidentiary Issues

• Responsibility of the Caisse and Fiducie for unreasonable delay in executing a transfer of a locked-in retirement account (CRI) despite having the necessary information on 11 February 2020.
• Scope of the prudence and diligence obligations of a caisse and a trust company as administrators of another’s property under the Civil Code and financial services legislation.
• Proof that a corrected transfer form was effectively received on 11 February 2020 and that no adequate follow-up or communication with the client occurred before the transfer was finally processed on 17 March 2020.
• Causation between the delayed liquidation of the CRI and the proven loss of market value during a period of extreme COVID-19–related market volatility, notwithstanding arguments that similar losses would have occurred at the new institution.
• Application of the duty to mitigate damages where the investor refused to cash the transfer cheque and to accept an internal settlement offer conditioned on a full and final release.
• Threshold for punitive damages, abuse of procedure and “manquement important” under the C.p.c., and why the court declined to punish the Desjardins entities beyond compensatory relief.

Facts of the case

Osmany Terry Diaz became the holder of a locked-in retirement account (compte de retraite immobilisé, or CRI) after a divorce in 2014, when he received part of his ex-spouse’s pension in the partition of the family patrimony. The funds were governed by Quebec’s pension legislation, specifically the Loi sur les régimes volontaires d’épargne-retraite and the Règlement sur les régimes complémentaires de retraite. In 2015, Diaz placed these sums in a life income fund with the Caisse du Centre-Nord de Montréal (the Caisse) and later transferred them into a CRI. The account was invested in Desjardins funds, with approximately 51% in fixed income (such as bonds) and 49% in growth assets (equities) through the Fonds Desjardins. Fiducie Desjardins inc. (Fiducie) acted as trustee and custodian of the funds, and Desjardins Cabinet de services financiers inc. (DCSF) was the financial services arm; both are subsidiaries of Fédération des caisses Desjardins du Québec (the Fédération). In early 2020, Diaz decided to move his CRI to National Bank of Canada (Banque Nationale du Canada, BNC). On 11 February 2020, BNC, acting on his instructions, sent an “Autorisation de transfert de placements enregistrés” (transfer authorization form) to the Caisse to transfer the CRI. The value of the CRI at that time was approximately $126,899. Diaz requested a transfer “au comptant” (in cash), meaning liquidation of the existing holdings and remittance of the proceeds to BNC.

Delay in processing the transfer

The Caisse was responsible for receiving transfer requests and sending them to Fiducie for execution. According to Desjardins’ internal standards, normal processing time for such a transfer is 24 to 48 business hours after receipt of a properly completed form. In this instance, the process broke down. The initial form sent on 11 February 2020 was incomplete as to whether the transfer was to be in cash or in kind, and whether it was total or partial. BNC then corrected the document and re-sent a corrected form. The court examined fax headers and internal documents and concluded that the Caisse received the corrected form on 11 February 2020 as well, only minutes after the original transmission. Despite this, the Caisse’s advisor, Pierre-Richard Gaston, forwarded the incomplete initial form to Fiducie for execution, without informing Diaz of any problem with the paperwork and without following the internal requirement to contact the client to confirm the legitimacy of the transfer and discuss the request. Fiducie, for its part, rejected the transfer request based on the incomplete form and did not communicate this rejection to Diaz, the Caisse, or BNC in a way that triggered corrective action. No one informed Diaz that his transfer instructions had not been carried out.

Execution of the transfer and market losses

Only on 17 March 2020—more than a month after the original instructions—did the Caisse send the correctly completed transfer form to Fiducie. On that same date, Fiducie liquidated the CRI investments and issued a cheque for $110,849.77 to BNC, representing the market value after the sharp COVID-19–driven downturn in both equity and bond markets. Diaz, dismayed at the magnitude of the loss compared to the February value, refused to allow BNC to cash the cheque, and BNC returned it to Desjardins. The funds corresponding to the cheque amount were then held in a transitional account at Fiducie pending new investment instructions. During this period, Diaz repeatedly complained to the Caisse and then to the Fédération about the handling and delay in processing the transfer. Ultimately, the Fédération offered him an indemnity of $15,956.16, representing the difference in fair market value of the CRI between 14 February 2020 (a date used as a proxy based on the normal processing delay) and 17 March 2020, plus transfer fees of $57.49, on condition that he sign a full and final release. Diaz rejected this offer. After receiving a letter from Desjardins in February 2021 warning him about the tax consequences of leaving the funds uninvested, Diaz finally gave new investment instructions in 2021.

Legal framework and duties of the parties

The court analysed the legal nature of the relationships between Diaz and the various Desjardins entities. It characterised the link with the Caisse as involving elements of both mandate and contract of services, governed by the Civil Code of Québec and the Loi sur les coopératives de services financiers (L.c.s.f.). As a caisse holding client funds and executing financial instructions, the Caisse had to act with prudence and diligence in managing and administering the money entrusted to it. The Fédération, of which the Caisse must be a member, is empowered under the L.c.s.f. to develop and provide services for the benefit of member caisses and may act as their mandatary, but it remains a distinct legal person separate from each caisse. Fiducie Desjardins is constituted under the Loi sur les sociétés de fiducie et les sociétés d’épargne and, as trustee and administrator of the Fonds Desjardins within Diaz’s CRI, owed the duties of a trustee and administrator of another’s property: to act prudently, diligently, and in the best interests of the beneficiary. The court also noted that the same individual, Gaston, acted both as an employee of the Caisse and as an authorised representative of Fiducie, which reinforced the need for careful handling and clear communication.

Findings on fault and responsibility

The court held that both the Caisse and Fiducie committed faults in handling Diaz’s transfer request, whereas the Fédération did not. For the Caisse, the key failures included forwarding the wrong (incomplete) transfer form to Fiducie, ignoring internal directives to contact Diaz upon receipt of the transfer request, and failing to follow up when the transfer was not executed within the expected timeframe. For Fiducie, the core fault was rejecting the incomplete transfer without taking any concrete step to inform Diaz or ensure that the corrected form was used, thereby contributing to the prolonged delay. Together, these failings deprived Diaz of timely execution of his instructions and of the ability to decide for himself whether and when to remain in, or exit, the markets during a period of fast-moving volatility. The court rejected the argument that the COVID-19 pandemic and the influx of anxious client calls could excuse the delay; it observed that when the corrected form was finally processed on 17 March 2020, the transfer could be completed within a single day, demonstrating that the pandemic environment did not make proper execution impossible. As for the Fédération, the court found no evidence that it took part in the operational processing of Diaz’s transfer. Its later involvement was limited to the complaint process and settlement proposal, and there was no legal relationship making it jointly liable for the specific transactional faults committed by the Caisse and Fiducie.

Causation, damages and mitigation

All parties admitted that the CRI lost $15,956.16 in value between mid-February and 17 March 2020. Diaz claimed $15,929.54 as financial loss, as well as amounts for time and resources, moral damages, and punitive damages. The Caisse and Fiducie argued that the market downturn would have occurred regardless, since Diaz intended to invest in a growth-oriented portfolio at BNC, and that he failed to mitigate by refusing to cash the cheque, delaying reinvestment, and rejecting the internal settlement offer. The court rejected the suggestion that the loss was purely hypothetical or unavoidable. It emphasised that Diaz had requested a cash transfer and that, had the CRI been liquidated promptly once the corrected form was received, BNC would have received a cheque at the earlier, higher value. At that point Diaz could have chosen whether to reinvest immediately, alter his asset mix, or stay in cash. His autonomy over the timing and nature of investment decisions during a highly volatile period was precisely what the negligent delay had taken away. On mitigation, the court noted that Diaz had limited investment knowledge and had just experienced a significant loss relative to his modest income. It refused to treat his refusal to immediately redeploy funds in the markets as an unreasonable failure to mitigate, particularly since he did not claim any loss beyond the crystallised loss as of 17 March 2020. Likewise, the duty to minimise damages did not oblige him to accept a settlement conditioned on a full and final release of all claims, as that would effectively force him to abandon his right to seek judicial redress. However, his claim for “time, energy and resources” failed for lack of specific proof of calls, correspondence and efforts.

Moral, punitive and procedural aspects

The court accepted that Diaz had suffered some psychological harm from being left in the dark for over a month while his retirement funds dropped in value and his transfer remained unexecuted. He described insomnia, shame and a sense of being cheated, along with anxiety linked to the disappearance of the account details from his online access after the transfer was finally processed. The judge found a direct link between the information vacuum created by the Caisse and Fiducie’s omissions and Diaz’s stress and anxiety during the short delay period, awarding him $500 in moral damages as a reasonable and proportionate sum. By contrast, the court refused any award tied to Diaz’s idea of using the CRI to help purchase a first home, holding that the strict statutory rules on locked-in retirement funds make such an objective legally unrealistic and that his actual steps toward a purchase (no pre-approval, no property visits) were embryonic. Punitive damages were also denied. Diaz invoked the Charter of human rights and freedoms provisions on peaceful enjoyment of property, arguing that his right to dispose of his funds had been intentionally infringed. The court reiterated that punitive damages in Quebec are exceptional, reserved for intentional and illicit rights violations aimed at punishment and deterrence rather than compensation. It found no evidence that Desjardins had engaged in a deliberate strategy to block the transfer or exert undue pressure to retain the client; indeed, no representative ever contacted Diaz to attempt such a retention strategy in relation to this transfer. The faults were serious but not intentional rights violations. Diaz also asked the court to declare the defence abusive under article 51 C.p.c. and to sanction a “manquement important” under article 342 C.p.c., mainly on the basis that the defendants had not proved certain pleaded facts and that a witness did not produce all requested documents. The court stressed that abuse requires a blameworthy use of procedure, not the mere failure to prove every allegation. It noted that Diaz bore the burden of proof for most of his claims and had not fully met it, and that the alleged evidentiary shortcomings had neither delayed the trial nor affected its outcome. Both the abuse motion and the article 342 request were rejected. Each party was ordered to bear its own legal costs.

Outcome and final orders

In the final analysis, the court found that the Caisse du Centre-Nord de Montréal and Fiducie Desjardins inc. had breached their duties of prudence and diligence in handling Diaz’s CRI transfer request, causing him a proven financial loss and some compensable moral prejudice. The Fédération des caisses Desjardins du Québec was cleared of any fault or legal responsibility. Diaz’s broader monetary demands, including large moral and punitive damage claims, were pared back significantly based on the evidence. The court partially granted Diaz’s claim, ordering the Caisse and Fiducie, on a solidary basis, to pay him a total of $16,429.54 (corresponding to $15,929.54 in financial loss and $500 in moral damages), together with interest at the legal rate from 2 July 2021, while dismissing his action against the Fédération and leaving each party to bear its own costs.