Guy Paquette

The appellants, financial services entities within the Desjardins Group, appealed the Quebec Court of Appeal's decision authorizing a class action brought by an investor in capital-guaranteed term savings products that ultimately yielded no return at maturity.

The majority held that the Superior Court erred in analyzing the conditions for authorization under article 1003 of the former Code of Civil Procedure, and affirmed the Court of Appeal's authorization of the class action against both the financial services firm (on a theory of systematic breach of the duty to inform) and the asset management company (on a theory of extracontractual breach of duties of competence and management).

The majority further specified that any punitive damages claim in relation to asset-backed commercial paper must be limited to Unaffected Claims as defined in the Third Amended Plan of Compromise and Arrangement sanctioned under the Companies' Creditors Arrangement Act.

Three justices dissented in part, concluding that authorization against the financial services firm should be denied for failure to establish common questions, while agreeing that the action against the asset management company should be authorized solely with respect to compensatory damages.

The Court considered whether section 27 of the Crown Liability and Proceedings Act removes Crown immunity from discovery when the Crown is not a party.

It held that immunity can be displaced only by clear statutory language, and section 27 applies only to proceedings against the Crown.

Because neither the Crown nor the chief investigator was a party, the investigator could refuse discovery.

The appeal was allowed and the respondents’ discovery motion was dismissed with costs throughout.