The applicants sought an order requiring the respondent credit union to return approximately $5,000,000 that had been held in their accounts.
The credit union, under administration by the regulator, had unilaterally collapsed the applicants' term deposits and appropriated the funds, claiming a right of set-off under the Credit Unions and Caisses Populaires Act, 1994 for unliquidated damages related to alleged fraud and breach of fiduciary duty.
The court held that the statutory right of set-off does not permit a financial institution to unilaterally appropriate funds for unliquidated and disputed claims without judicial determination.
The court ordered the credit union to restore the accounts to their previous state and compensate the applicants for lost interest.
