The annuitants invested in an RRSP with Desjardins Trust, which deposited the funds in the Caisse and issued non-negotiable deposit certificates.
The annuitants later borrowed from the Caisse, granting a movable hypothec with delivery on the RRSP funds as security, and handing over the certificates.
The annuitants then made an assignment in bankruptcy.
The trustee rejected the Caisse's claim as a secured creditor, arguing that a non-negotiable instrument could not be the object of a pledge.
The Supreme Court of Canada held that a movable hypothec with delivery on a claim not represented by a negotiable instrument is valid under the Civil Code of Québec if the debtor transfers effective control of the claim to the creditor, the title is handed over, and the hypothec can be set up against the debtor of the claim.
The appeal was allowed.
