Mills v. Royal Bank of Canada, 2011 ABQB 128

Court of Queen ’ s Bench of Alberta Citation: Mills v. Royal Bank of Canada, 2011 ABQB 128 Date: 20110302 Docket: 0801 10856 Registry: Calgary Between: Edward G. Mills Plaintiff - and - Royal Bank of Canada, RBC Direct Investing Inc., The Royal Trust Company, and Royal Trust Corporation of Canada Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice W.A. Tilleman _______________________________________________________ Introduction [ 1 ] This case is about the relationship between a bank and its customer.

When an error has been made by the bank, when can a customer expect compensation for the error? When is it too late for the customer to notify the bank? And does it matter what the customer does with the money in the meantime? [ 2 ] The Plaintiff, Mr. Ed Mills, claims that the Defendants, the Royal Bank Financial Group (RBC), acted in breach of trust when it failed to properly configure a RRSP mortgage on his home, resulting in a failure to forward interest payments to Mr. Mills for approximately 5 years. Mr. Mills claims damages resulting from the error.

[ 3 ] The RBC claims that Mr. Mills’ action cannot succeed. The account agreement between the parties includes a verification clause requiring Mr. Mills to notify the RBC of any error within 30 days of receiving an account statement (the error went unnoticed for approximately 5 years). The RBC also claims that this failure to notify means that Mr. Mills’ claim is barred under the Limitations Act , R.S.A. 2000, c. L-12. Alternatively, the RBC claims that the cause of the loss in Mr. Mills’ account is due to Mr. Mills’ trading of the funds, not the error of the RBC.

Having received the benefit of the availability of those funds for trading, the RBC claims that Mr. Mills cannot now claim that RBC caused a loss in the RRSP account. Finally, the RBC claims that if RBC caused a loss, it should be set-off by the losses caused by Mr. Mills’ trading of the RRSP funds. Facts [ 4 ] In August of 2002, Mr. Mills approached the RBC to set up a RRSP mortgage on a home he was purchasing. Mr. Mills heard about RRSP mortgages from a friend and co-worker who had such a mortgage with the RBC. The RBC confirmed to Mr. Mills that a RRSP mortgage was a valid investment option and that Mr.

Mills could, through his RRSP, charge himself a high 7.5% interest rate. [ 5 ] On or about August 14, 2002, Mr. Mills transferred approximately $181,000 in RRSP funds from National Bank Financial to the RBC to set up the RRSP mortgage. To set it up, Mr. Mills was required to open a self-directed RRSP account. [ 6 ] Self-directed RRSP accounts with the RBC are administered by RBC Direct Investing Inc. [1] , a subsidiary within the RBC financial Group that does not advise on customer’s investment decisions.

As it relates to investment advice, RBC Direct Investing Inc. says: [RBC Direct Investing Inc.] does not give investment advice or recommendations to me or does not accept any responsibility to advise me on the suitability of any of my investment decisions or transactions. I acknowledge that I am responsible for my investment decisions as well as for any profits or losses that may result. [2] [ 7 ] Though the account was properly created, Mr. Mills’ RRSP funds were inexplicably not used to fund his mortgage. Instead, Royal Trust funded the mortgage and Mr.

Mills paid monthly mortgage payments of $1,316.80, configured with an inordinately high 7.5% interest rate, for nearly 5 years. [ 8 ] Neither party realized that the RRSP mortgage was improperly configured. Mr. Mills testified that he “just thought it was going on well because [his] payments were coming out and everything was good”. The RBC did not discover the error until approximately June 2007, when Mr. Mills contacted the RBC regarding the portability of the mortgage to a new home. At that point an RBC employee must have reviewed Mr.

Mills’ account and it was discovered, to the RBC’s embarrassment, that no RRSP had ever existed. How did RBC miss the error? [ 9 ] Five years had passed and bank officials tried but could not find the mistake. Counsel for Mr. Mills tried to get details from the RBC as to what the error was and how it had occurred. Read-in from examinations for discovery, Ms. Patti Auld, a “mortgage professional” at the RBC working with Mr. Mills, admitted “ I don’t have a clue ” when asked how the error occurred. On the stand, Mr.

Ryan Duggan, the regional manager of RBC Direct Investing Inc., admitted that he had no knowledge of where Mr. Mills’ mortgage payment was actually going, he did not know how the error occurred, or if any funds were ever actually advanced by the RBC for the mortgage: Mr. Vipond: Do you know specifically what the error was with respect to Ed Mills’ 2002 request to fund or invest his RRSP in the mortgage registered against his house?

Mr. Duggan: I don’t believe that I know specifically what the error was. Mr. Vipond: Ok, and then as a follow up to that, we looked at the certificate, the land certificates that showed that there was a mortgage, and we showed that the mortgage was registered in the name of the Royal Bank, so we had seen some mortgage documents where the mortgage was listed as Royal Trust Corporation of Canada Mr. Duggan: Mmhmm. Mr. Vipond: You recall that? Mr. Duggan: Yes I do. Mr. Vipond: And, do you know if anyone advanced money under that mortgage? Mr. Duggan: Did anyone advance money under the mortgage? Mr.

Vipond: Yes, did any of Royal Bank, Royal Trust, Royal Trust Corporation of Canada, RBC Direct Investing Inc, do you know, did any of those entities invest money, forward money under that mortgage? Mr. Duggan: I do not know. From the evidence, and as hard as it is to believe, the RBC does not seem to know what the error was or how it occurred. [ 10 ] As to how this error had gone unnoticed by the RBC for so long, it is a combination of the nature of self-directed RRSP accounts at the RBC, a communication failure by the RBC mortgage professionals, and a group of corporate bodies not communicating with each other.

Mr. Duggan made it clear that RBC Direct Investing Inc. does not administer mortgages for the RBC. Instead, RBC Direct Investing Inc. administers customer’s self-directed RRSP accounts. RBC Direct Investing Inc. takes investment orders from customers, fulfills those orders if there are funds available to do so, and reports back to the customer in monthly statements. The monthly statements are merely investment and trading summaries, constructed, in part, using information given to the RBC by third parties. RBC Direct Investing Inc. puts the onus on the customer to ensure the statements are correct.

RBC Direct Investing Inc. does not even review these accounts to ensure that they contain only qualified investments. A self-directed RRSP with the RBC is very much self-directed . Therefore, without being informed by the RBC mortgage professionals, RBC Direct Investing Inc. had no idea that Mr. Mills was supposed to be holding a RRSP mortgage and it had no reason to question Mr. Mills’ subsequent trading behaviour. How did Mr. Mills miss the error? [ 11 ] Counsel for the RBC tried to get details from Mr. Mills as to how the error could have gone undetected for so long. The error is apparent on Mr.

Mills’ monthly statements - because of the way the statement is structured - and Mr. Mills was closely monitoring the performance of his RRSP account in other ways. [ 12 ] The error is visible on the face of Mr. Mills’ monthly RRSP statements - statements that he received every month since August 2002. As of October 2002 the statement indicated that no mortgage investment was held (that statement shows $182,558.16 in cash and a $3,342.07 mutual fund). The November 2002 statement shows only 0.25% interest generated on the cash in the RRSP. A far cry from the 7.5% Mr. Mills was expecting to receive. [3]

[ 13 ] Mr. Mills claims not to have noticed the error even though he clearly monitored the account in other ways, most notably, to ensure he had cash to invest. In February 2003 Mr. Mills began trading stock with the funds meant for his RRSP mortgage, and did so month after month, year after year. The trading continued until January 2007. In almost every month Mr. Mills was buying and selling stock. A lot of stock. [ 14 ] Though there was significant trading nearly every month, I will only list a few of the more notable periods (including dramatic account fluctuations) in Mr. Mills’ trading history: 1.

In February 2003, he bought $65,600 in stock over the course of over 20 trades. 2. In June 2004, only $214.01 of cash remained in the RRSP, the rest was held in shares of various companies. 3. In November 2004, approximately 70 trades were made. 4. In December 2005, he sold his stock and held $344,747.28 in cash in his RRSP. [4] 5. In February 2006, he again purchased large quantities of stock, $298,800 worth in Savanna Energy Services Corporation. 6. In January 2007, after having sold his entire stake in Savanna Energy Services Corporation, Mr.

Mills held $231,455.65 in cash within the RRSP. [ 15 ] In explaining his trading behaviour, Mr. Mills stated that Royal Trust told him he could buy stock. He stated: I called up the Royal Trust. I had an 800 number from them and I called up Royal Trust and said ‘was there anything I could do on trading stocks’ and they told me there was money in there because of equity or whatever that I could, I could do it. I don't remember the person's name that I talked to, I just asked them if I could trade stocks and they said yes I could and I said ok, lets buy some stocks. [ 16 ] When asked, Mr.

Mills admitted that he was responsible for his investment decisions and that he made them using his own information: Mr. Patterson: And you understood, sir, that this was a self-directed RRSP account? Mr. Mills: Yes. Mr. Patterson: Alright, and that you were responsible for the investment decisions? Mr. Mills: That’s correct, yes. ...

Mr. Patterson: Well, lets do it this way, sir, in February of 2006, if you look at 2 through 4 of that statement, you’ll see that you purchased quite a number of shares in something called Savanna Energy Services Corp. Mr. Mills: Yes. Mr. Patterson: Alright. Mr. Mills: Ok. Mr. Patterson: And so you took the bulk of that $344,000 in cash and you spent most of it on shares in one company, right? Mr. Mills: Yes. Mr. Patterson: And that was a decision that you made, right? Mr. Mills: That’s correct yes. Mr. Patterson: Alright, no one at RBC or Royal Trust or Action Direct advised you to do that, right? Mr.

Mills: No they didn’t. Mr. Patterson: And, would you agree, sir, that making that purchase of $298,000 dollars in shares represented a fairly risky investment strategy? Mr. Mills: Not with the information that I had. Mr. Patterson: Oh, so you had some inside information? Mr. Mills: I had a friend that worked there. Mr. Patterson: Oh ok, and so you used that information to buy these shares? Mr. Mills: Yes I did. ... Mr.

Patterson: Ok, we can agree sir that notwithstanding how good of a friend he was this was a riskier investment than the mortgage that you had originally intended to set up in the RRSP account, right?

Mr. Mills: Sure yes. [ 17 ] Even so, Mr. Mills claims unsophistication, asserting he did not understand the nature of a RRSP mortgage. His understanding of the RRSP mortgage was probed during cross-examination: Mr. Patterson: What appealed to you and your wife about this type of mortgage, as I understand it, is that instead of paying interest on the loan to the bank you would be paying it to yourself? Mr. Mills: that’s correct. Mr. Patterson: You would be paying it into your RRSP account? Mr. Mills: Yes. Mr. Patterson: And you were perfectly clear on that? Mr. Mills: Yes. Mr. Patterson: That’s why you wanted it?

Mr. Mills: Yes. Mr. Patterson: That was the most important feature of it to you? Mr. Mills: Yes. Mr. Patterson: And you understood that the RRSP was going to hold the mortgage, right? Mr. Mills: Yes. Mr. Patterson: And so you understood, that for the RRSP to hold the mortgage you had to have an RRSP account, right? Mr. Mills: Yes. Mr. Patterson: And you understood that within that RRSP account you had to have as much money, at least, as the value of the mortgage, right? Mr. Mills: Yes.

Mr. Patterson: Because the RRSP was advancing the funds for the mortgage, right? Mr. Mills: Right. ... Mr. Patterson: Lets go back to August of 2002, you had experiences with mortgages by that time? Mr. Mills: Yes. Mr. Patterson: How many? Mr. Mills: I don’t know.... uhh.. 3 or 5 Mr. Patterson: Ok, alright so fair to say that by the time August of 2002 comes around you had three to five mortgages in your life. Mr. Mills: Yes. ... Mr. Patterson: Once they bought the mortgage they can’t use that money to buy something else, right? Mr. Mills: Yes, I understand that. Mr.

Patterson: Ok, and you understood that in 2002? Mr. Mills: I understood that money had to transfer to the new owners yes, how the RRSP mortgage worked I did not understand. ... Mr. Patterson: Right ok, and you expected the interest component of [your monthly payment] to show up in your self-directed RRSP account every month, right? Mr. Mills: Yes, yes I did. Mr. Patterson: That was the whole point of the exercise right?

Mr. Mills: I don’t, yes it was suppose[d] to go to my RRSP account, but I didn’t know if it was suppose[d] to go every month. Mr. Patterson: Alright, you were making a payment every month. Mr. Mills: Yes. Mr. Patterson: Alright, and the whole point of it was to get this money into your RRSP account, right? Mr. Mills: Yes, yes. Mr. Patterson: So you expected it to show up every month, didn’t you? Mr. Mills: No. ... Mr. Patterson: You weren’t sure when it was going to show up, just no idea? Mr.

Mills: I wasn’t, I knew it would show up in the year sometime, but I didn’t know when, whether it was every 6 months or whether it was once a year. Mr. Patterson: Or monthly? Mr. Mills: Right. Mr. Patterson: Could have been, been monthly? Mr. Mills: Right. Mr. Patterson: The money was coming out of your account each month, wouldn’t you expect it to go into the RRSP account every month? Mr. Mills: No sir. Mr. Patterson: Alright, but at least every 6 months, you’ll give me that? Mr. Mills: Once a year I’ll give you (laughs), every 6 months, I don’t know.

Mr. Patterson: So the best you’ll say is that you thought that interest had to go into your account at least once a year? Mr. Mills: I thought so yes. [18] To summarize, Mr. Mills claims that the error went unnoticed for so long because he did not understand how the RRSPmortgage worked. Not knowing how it was to work, he claims that he only expected interest income to show up on his statements once ayear. Furthermore, he claims that he traded stock with the RRSP funds because Royal Trust told him he could.

Ultimately he assumedthere was no error because he “was getting the right amount out of [his] cheque every month,” so he “never thought to ask”. Law Limitations [19] In Alberta, the common law rule of discovery for limitation periods stated in Central Trust Co. v. Rafuse, (SCC), [1986] 2 S.C.R. 147, 31 D.L.R. (4th) 481 has been replaced by the Limitations Act, R.S.A. 2000, c. L-12. Section 3(1) reads: 3(1) Subject to

section 11, if a claimant does not seek a remedial order within (a) 2 years after the date on which the claimant first knew, or in the circumstances ought to have known, (

i) that the injury for which the claimant seeks a remedial order had occurred, (ii) that the injury was attributable to conduct of the defendant, and (iii) that the injury, assuming liability on the part of the defendant, warrants bringing a proceeding, or (b) 10 years after the claim arose, whichever period expires first, the defendant, on pleading this Act as a defence, is entitled to immunity from liability in respect of theclaim. [20] In respect to when a person knew or ought to have known (the three criteria in s. 3(1)(a)), the Alberta Court of Appeal in J.N.v.

Kozens, 2004 ABCA 394, 361 A.R. 177 at paras. 14-16 has applied the test used by the Supreme Court of Canada in Novak v. Bond, (SCC), [1999] 1 S.C.R.808, 172 D.L.R. (4th) 385. When discussing the provision in British Columbia, McLachlin J.(as she then was) in Novak at para. 81 stated: ...On this approach, s. 6(4)(

b) may be read as denoting a time at which a reasonable person would consider that someone in the plaintiff’sposition, acting reasonably in light of his or her own circumstances and interests, could – not necessarily should – bring an action. Thisapproach is neither purely subjective nor purely objective. The question becomes: “in light of his or her own circumstances and interests,at what point could the plaintiff reasonably have brought an action?” The reasonable person would only consider that the plaintiff could

not have brought an action at the time the right to do so first arose if the plaintiff’s own interests and circumstances were serious,significant, and compelling. [emphasis in original] This test applies in each of the three criteria in s. 3(1)(a): Kozens; see also Gayton v. Lacasse, 2010 ABCA 123, 482 A.R. 179. [21] Note that while the legislation in Alberta is not identical to that in British Columbia, the test still has an objective element. Asthe Court stated in Yugraneft Corp. v.

Rexx Management Corp., 2010 SCC 19, [2010] 1 S.C.R. 649 at para. 60: Section 3(1)(a)(iii) provides that the limitation period will commence only once the plaintiff knew or ought to have known that the injuryit received warrants bringing a proceeding. Thus s. 3(1)(

a) ensures that the scheme created by the Limitations Act balances the interestsof both plaintiffs and defendants. However, much like its counterpart in the B.C. Limitation Act at issue in Novak v. Bond, s. 3(1)measures the conduct of the plaintiff against an “objective” standard. Section 6(4) of the B.C. Act provides that the limitation period willnot commence until the facts available to the plaintiff are such that a “reasonable person . . . would regard those facts as showing” thatthe plaintiff was (

a) able to bring a claim, and (

b) that the claim had a reasonable prospect of success. Section 3(1) of the Alberta Actdoes not refer to a “reasonable person” and its discoverability criteria are not identical with those in s. 6(4) of the B.C. Act. However, itdoes subject the knowledge elements of its discoverability rule to an objective test: the plaintiff must know or “ought to have known” theelements that trigger the running of the limitation period. Thus, constructive or imputed knowledge, in addition to actual knowledge, willtrigger the limitation period. [22] I am convinced by the behaviour of Mr.

Mills and how the error was eventually discovered that he did not have subjectiveknowledge of the error before June 2007. The question is whether Mr. Mills ought to have known of the criteria in s.3(1)(a) 2 yearsbefore he filed his Statement of Claim on September 10, 2008? The answer is ‘yes’. [23] Discoverability does not require perfect knowledge: De Shazo v. Nations Energy Co., 2005 ABCA 241, 367 A.R. 267 atpara. 31. However, mere suspicion is not enough: Photinopoulos v. Photinopoulos (1988), 1988 ABCA 352 , 92 A.R. 122 atpara. 26 (Alta. C.A.); see also Nasrin Karim Professional Corp. v.

Bank of Nova Scotia, 2007 ABCA 10, 404 A.R. 303 at para. 56. [24] Mr. Mills ought to have known much earlier than June 2007. He received monthly statements. Those statements showed theinvestments (intended for the mortgage) to be in cash, with reductions or debits for stock purchases and corresponding credits to the newstock account. Further, and contrary to his assertions, Mr. Mills had no margin account and thus could have only traded with funds tiedby the bank’s mistake to his mortgage. I find that he knew those funds were in a cash account and no other liquid assets were in thataccount.

Therefore, he either knew, or without doubt after several months he surely ought to have known, the cash he used to buy stockswith came from a misfiled bank fund. To conclude, in light of Mr.

Mills’ own circumstances and interests, and assuming that it wasreasonable for him to believe that he would only receive interest income into his RRSP on a yearly basis, and assuming that hereasonably believed he could actively trade the funds meant for his RRSP mortgage, the earliest point in which he ought to have known,with the exercise of reasonable diligence, that the injury or loss occurred, that it was attributable to the conduct of the defendants, andthat it warranted bringing a proceeding, was a year after the error was discoverable on the face of his monthly statements.

And I do findthe error was discoverable on the face of his monthly statements. [25] Therefore, the limitation period started to run as of October 2003. As such, Mr. Mills’ right to bring a claim expired nearly 3years before he filed his Statement of Claim on September 10, 2008. Breach of Trust [26] If I am wrong as to the application of the Limitations Act, then Mr. Mills’ claim will fail because the obligation to provedamages lies with the Plaintiff and he did not discharge his burden. I will explain this point next. [27] Mr.

Mills’ trading activity within the misfiled RRSP account amounts to an ‘intervening act’, as discussed by McLachlin J.’s(as she then was) ‘common sense’ approach to causation in Canson Enterprises Ltd. v. Boughton & Co., (SCC), [1991]3 S.C.R. 534, supported by the Court in Hodgkinson v. Simms, (SCC), [1994] 3 S.C.R. 377, and unanimously adoptedin Cadbury Schweppes Inc. v. FBI Foods Ltd., (SCC), [1999] 1 S.C.R. 142. A detailed

summary of the law isprovided in ICR Brokerage Inc. v. Crescent Restaurants Ltd., 2010 SKCA 92, [2010] 9 W.W.R. 219 at paras. 64-75.

[ 28 ] In Canson , McLachlin J. (as she then was) stated at p. 551-556: While foreseeability of loss does not enter into the calculation of compensation for breach of fiduciary duty, liability is not unlimited. Just as restitution in specie is limited to the property under the trustee's control, so equitable compensation must be limited to loss flowing from the trustee's acts in relation to the interest he undertook to protect. Thus Davidson states "it is imperative to ascertain the loss resulting from breach of the relevant equitable duty " (at p. 354, emphasis added).

The need for a link between the equitable breach and the loss for which compensation is awarded is fair and sound in policy and is supported by in Guerin . The trial judge in Guerin did not measure damages as the difference between the lease which was entered into and that which the Band was prepared to authorize, because the golf club would not have entered into a lease at all on the terms sought by the Band, and it could not therefore be said that the breach had caused the Band to lose the opportunity to enter a lease on the authorized terms. ... Doyle v.

Olby (Ironmongers) Ltd. is likewise helpful in considering mitigation. Sachs L.J. stated, "the court must obviously take care not to include sums for consequences which may be due to the plaintiff's own unreasonable actions" (at p. 171). In a similar vein Winn L.J. remarked that: . . . no element in the consequential position can be regarded as attributable loss and damage . . . in any case where the person deceived has not himself behaved with reasonable prudence, reasonable common sense or can in any true sense be said to have been the author of his own misfortune.

The damage that he seeks to recover must have flowed directly from the fraud perpetrated upon him. (at p. 168) (It should be noted that while in Doyle v. Olby (Ironmongers) Ltd. Lord Denning said that "[t]here is nothing to be taken off in mitigation" this is because "there is nothing more that he could have done to reduce his loss" (at p. 167).

In that case the plaintiff was indeed behaving as a reasonable and prudent person in the circumstances.) The thrust of these dicta is that while the plaintiff will not be required to act in as reasonable and prudent a manner as might be required in negligence or contract, losses stemming from the plaintiff's unreasonable actions will be barred. [emphasis added]. ... ... it is essential that the losses made good are only those which, on a common sense view of causation, were caused by the breach.

The plaintiff will not be required to mitigate, as the term is used in law, but losses resulting from clearly unreasonable behaviour on the part of the plaintiff will be adjudged to flow from that behaviour, and not from the breach. [emphasis added] [ 29 ] Applying the law to this case if the facts were different such that Mr. Mills was a passive investor he would have won his case; damages would have been easy to calculate and it would be impossible for the RBC to explain away their careless fund management regarding the transfer. In other words, had Mr.

Mills’s account sat inactive for nearly 5 years, the loss would have been unimpeachably caused by RBC’s breach. [ 30 ] However, Mr. Mills actively traded stock using his RRSP funds. [5] In December 2005, he had earned approximately $127,626 trading stock, an amount nearly twice what he would have expected to make if the RRSP mortgage was properly configured throughout. Even the simplest RRSP investor would have known that story (or at least the access to the funds) was too good to be true.

And, at that point he had mitigated any loss that would have occurred as a result of RBC’s breach, even though, as detailed above, he had no duty to do so. The subsequent losses were therefore not caused by RBC’s breach but, in fact, by Mr. Mills’ decisions, including the ominous purchase of approximately $298,000 in shares in Savanna Energy Services Corporation in February 2006. Therefore, Mr. Mills has not

detailed or shown that the losses flow from the breach he asserts. Verification Clause [31] As it relates to negligence and the application of the verification agreement, the RBC cannot be released, by the operation ofthe verification clause, from its own negligence: Cavell Developments Ltd. v. Royal Bank of Canada, (BC CA), 78D.L.R. (4th) 512. Cavell referenced the Uniform Commercial Code used in the United States. Under the UCC a bank cannot easily get arelease from its duty of care to its customer: see sections 4-103 and 4-406 of the UCC.

But neither can a bank’s customer expect to sit onstatement information that he knew or should have known was wrong and fail to report it to the bank in a reasonable time (which I would say on these facts is one year)[6] and then claim any losses years later were the bank’s fault.

The bank’s liability exists but it is notlimitless or open-ended. [32] There are policy considerations supporting the prompt and thorough reporting of errors by customers, placed in parallel to theoffsetting but related principle that a bank cannot win a claim against a blameless customer whose failure to report was based on thebank’s own negligent mistake. To be sure, I do not agree with a bank that admits negligence and then still demands strict compliancewith the self-reporting rule of the verification clause. [33] Yet, I do not find Mr. Mills to be a blameless customer.

Not only because of his frequent trading in a non-existent margin account, but also because he knew the mortgage was issued against his house according to the Land Titles registration for the home[7] and that the mortgage did not find its place on bank statements opened by him for several years. Also, he ought to have known of the mortgage because he and his wife signed the mortgage documents.[8] Damages [34] But for Mr. Mills’ active trading, the damage for the RBC’s failure to pay interest on the RRSP mortgage, is 7.5% monthly, or$63,760.03 without the tax gross-up.

Aside from speculation regarding any CRA tax or other implications that may or may not exist, Mr.Mills did not trace, to the Court’s satisfaction, damages in or out of the impugned account - for whatever reason. One such reason mightbe that to do so is not only complicated; moreover, that accounting exercise would have flagged stocks and proven the sophistication andquantity of the share trading or the actual surplus and deficits Mr. Mills caused in both directions within the account. To repeat, at the end of the day, had Mr.

Mills left the account alone and not manipulated it, I would have found his losses to be $63,760.03.[9] Prepayment Penalty [35] After the erroneous mortgage was discovered when Mr. Mills sought to purchase another home, the RBC charged Mr. Mills aprepayment fee of three months interest to prepay the mortgage and finally set up a RRSP mortgage.

The bank clearly ought to havewaived this fee since it was the RBC’s mistake that created the erroneous mortgage in the first place, notwithstanding that the Mills’ signed the erroneous mortgage and mistakenly lived with it for nearly 5 years.[10] The prepayment penalty was wrongfully levied against the Mills’ and the bank will reimburse them for the $2,685.25 they paid to payout the erroneous mortgage.[11] Conclusion [36] Mr. Mills complains about the RBC’s duties. However, the duties of fair and accurate reporting go both ways. Beforeasserting a claim against the RBC, Mr.

Mills’ duty was to exercise the care of an ordinary bank customer which would be to reportpromptly and reasonably to an obvious error on his monthly statement. He was well-positioned to discover the error. Again, on thesefacts, I disagree with the bank that it was 30 days but I also disagree with Mr. Mills that the discovery and reporting period was longerthan one year. At that point Mr. Mills’ statutory and common law duty to discover had caught up with his trading practices.

[ 37 ] In conclusion, and in addition to reasons I’ve detailed above, equity is not on Mr. Mills’ side. He blames the RBC and its subsidiaries for an admitted error that in the end allowed him to invest monies that should not have been available to him. The principles of equity that would otherwise act to compensate an innocent plaintiff, as Denning M.R. stated in Hussey v. Palmer , [1972] 3 All ER 744 at p. 748, “because justice and good conscience so require,” cannot operate where the plaintiff’s claim is that he is asking me to make a ruling that the bank save him from his own investment decisions.

Costs [ 38 ] The parties may speak to costs. Heard on the 17 th , 18 th , 19 th and 20 th days of January, 2011. Dated at the City of Calgary, Alberta this 2 nd day of March, 2011. W.A. Tilleman J.C.Q.B.A. Appearances: Grant Vipond and Monique Morin for the Plaintiff Jerome Patterson and Corey Sandquist for the Defendants [1] RBC Direct Investing Inc. and Royal Bank Action Direct Inc. are the same entity. At some point the name was changed from Royal Bank Action Direct Inc. to RBC Direct Investing Inc.

For the purposes of clarity, I will refer to it as RBC Direct Investing Inc. throughout, even though it may have been called Royal Bank Action Direct Inc. at relevant times. [2] Exhibit 1 Tab 8 at EM000003 [3] Supra para. 7. [4] Though Mr. Mills did transfer in $31,563.40 from another RRSP in November 2005 and redeemed a mutual fund for $4,557.88 in September 2005, the majority of the large increase from August 2002 to December 2005 represented income made by trading stock. Income approximately equal to $127,626, an amount nearly double what he would have expected to receive in interest throughout the

term of the RRSP mortgage. [5] Supra para. 14. [6] Supra para. 17 (Remember, again, Mr. Mills thought he would receive notice of interest payments in his account on a yearly basis). [7] Exhibit 1 Tab 17. [8] Exhibit 1 Tab 16. [9] See p. 4 of the Statement of Claim. [10] See Exhibit 1 at Tab 13. [11] Supra note 8.