Clark v. TD Waterhouse Canada Inc., 2012 ABQB 502

Court of Queen ’ s Bench of Alberta Citation: Clark v. TD Waterhouse Canada Inc., 2012 ABQB 502 Date: 20120731 Docket: 0601 12779 Registry: Calgary Between: Alex Clark Plaintiff - and - TD Waterhouse Canada Inc. Defendant Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R. Paul Belzil _______________________________________________________

The Action [ 1 ] The Plaintiff, who was not represented by legal counsel at trial, filed an Amended Amended Statement of Claim against the Defendant. He claims the Defendant failed to properly administer his Locked in Retirement Account such that he sustained damages. [ 2 ] He seeks an unspecified award of special damages together with an unspecified claim for punitive or exemplary damages.

Factual Background [ 3 ] In the spring of 2004, the Plaintiff ’ s employment with Warner Music was terminated after 30 years of service. [ 4 ] He received a severance package and became legally entitled to transfer his Registered Pension Plan (RPP) administered by Canada Life. The Plaintiff was a long time customer of the Toronto Dominion Bank and spoke to Ms. Nancy Jones, Investment Consultant at the Forest Lawn Branch in Calgary. [ 5 ] The Plaintiff decided to set up a Self Administered Locked in Retirement Account (LIRA) and authorized the transfer of his RPP to TD Canada Trust.

On May 27, 2004 the Plaintiff signed an application for the transfer of his RPP into a LIRA. This document clearly identified that the Plaintiff ’ s LIRA was regulated by Alberta legislation. On June 3, 2004 Canada Life forwarded a cheque in the amount of $306,150.56 to the credit of the Plaintiff. [ 6 ] The cheque stub clearly identified that the pension funds were locked in by the provisions of the Alberta Employment Pensions Plans Act , RSA 2000, c. E-8 . [ 7 ] On July 6, 2004 the Plaintiff met with Maurizio Pezzente with TD Waterhouse, which is a subsidiary of the Toronto Dominion Bank.

He prepared an internal transfer form for the purpose of transferring the LIRA to the Defendant. [ 8 ] On the first page of this document a box is checked off indicating that the applicable legislation is Federal. On the same date, the Plaintiff signed an account application with the Defendant on which is written “ Federal ” beside the Plaintiff ’ s former employer, Warner Music. [ 9 ] In addition, on the same date, the Plaintiff executed an Addendum to Retirement Savings Plan which is headed “ Federal LIRA ” . [ 10 ] The Plaintiff was born in Scotland and holds dual Canadian-UK citizenship.

He decided to return to Scotland and applied to Canada Revenue Agency to be declared a non-resident of Canada for tax purposes. [ 11 ] CRA granted the application and the Plaintiff was declared a non-resident of Canada as of October 27, 2004.

He sold his Alberta residence and moved to Scotland. [ 12 ] On January 10, 2005, the Plaintiff, who was then residing in Scotland, wrote to the Defendant requesting that $60,000 be transferred from his LIRA to his chequing account. [ 13 ] On January 26, 2005, the Plaintiff again wrote to the Defendant requesting that a further $129,132.90 be transferred from his LIRA to his chequing account. Both requests were honoured by the Defendant.

[ 14 ] On May 10, 2005, the Plaintiff requested a further transfer of $21,959.65 from his LIRA into his chequing account. On June 7, 2005, an employee of the Defendant forwarded an email to the Plaintiff advising that the request could not be honoured as the pension was federally legislated. The email also advised that the two previous advances should not have been made. [ 15 ] Over the ensuing months the Plaintiff corresponded by email and mail with a number of individuals including the TD Ombudsman ’ s office as to why this third request for an advance was refused. [ 16 ] On April 4, 2006, Ms.

Jo-Anne Proulx, the Assistant Ombudsman for TD, forwarded by email and regular mail a letter confirming that the Plaintiff ’ s LIRA was governed by Alberta legislation and that the funds could be withdrawn at the request of the Plaintiff. [ 17 ] Following receipt of this communication, the Plaintiff transferred the balance of his LIRA to another financial institution. Discussion Under which jurisdiction was the Plaintiff ’ s LIRA governed? [ 18 ] The correspondence on April 4, 2006 from Ms.

Proulx to the Plaintiff clarified that at all times material, this LIRA was subject to Alberta legislation, therefore withdrawals were permitted for non-residents. There is no evidence that the Plaintiff ’ s LIRA was ever federally regulated. Was the Federal designation in some of the Defendant ’ s documents in error? [ 19 ] Given my conclusion that this LIRA was subject to Alberta legislation, it necessarily follows that the reference in some of the Defendant ’ s documents to the Plaintiff ’ s LIRA being federally regulated was in error.

Who committed the error? [ 20 ] The Plaintiff testified that he never advised anyone that his LIRA was federally regulated. I believe him. [ 21 ] Maurizio Pezzente was the sole witness called on behalf of the Defendant. He testified that he could not recall where he obtained the information that the Plaintiff ’ s LIRA was federally regulated and that this information could have come from an entry on his computer screen, other documentation or from the Plaintiff himself. [ 22 ] I find as a fact that the error originated with an employee of the Defendant. This error was corrected in Ms.

Proulx ’ s correspondence of April 4, 2006. I also find as a fact that the error was honest and inadvertent, not intentional. [ 23 ] In the result, I have concluded that the error was solely caused by the Defendant. Did this error by the Defendant change the legal status of the Plaintiff ’ s LIRA? [ 24 ] I do not accept that this error did or could have changed the legal status of the Plaintiff ’ s LIRA.

[ 25 ] I have already concluded that at all material times the Plaintiff ’ s LIRA was governed by Alberta legislation. The governing legislation was not and could not be changed merely because an employee of the Defendant recorded incorrect information. Did the Defendant ’ s error constitute a breach of fiduciary duty? [ 26 ] The Plaintiff alleges that the Defendant was a fiduciary and breached its duty of care as a fiduciary. [ 27 ] There can be no suggestion on this evidentiary record that there was any misappropriation of the Plaintiff ’ s LIRA by the Defendant which in no way benefitted from the error.

He did experience a delay in gaining access to the balance of his LIRA from June 7, 2005 to April 4, 2006, a period of nine months. [ 28 ] During this period of time, the Plaintiff ’ s funds continued to be held in his Self Administered LIRA and continued to increase in value. After April 4, 2006 the Plaintiff had full access to all of his funds and in fact withdrew all of them, which he then placed into another financial institution. [ 29 ] There is a legal distinction between a breach of a fiduciary duty and an administrative error. [ 30 ] In Adeco Exploration Company Ltd. v.

Hunt Oil Company of Canada Inc. 2008 ABCA 214 , the Alberta Court of Appeal dealt with a factual situation wherein an oil company negligently failed to renew oil and gas leases. While upholding the trial judge ’ s decision that this failure to renew resulted from negligence, it overturned a finding that this error resulted in a breach of a fiduciary duty. The Court focused on the fact that the error was not intentional and in no way benefitted the oil company.

It also noted that there was no evidence that the oil company did not act loyally or that it was in a conflict of interest. [ 31 ] This is analogous to the factual situation before me. The Defendant ’ s error was unintentional. Furthermore, it in no way benefitted from it and was never in a conflict of interest with the Plaintiff. [ 32 ] I do not accept that any breach of fiduciary duty has been proven by the Plaintiff but rather what occurred is properly characterized as a temporary administrative error which was fully corrected.

Did the Plaintiff suffer any damages arising from the two withdrawals he requested and received? [ 33 ] The Plaintiff argued that he suffered damages respecting the two withdrawals as had they not been withdrawn, the shares which were sold to generate these funds would have continued to increase in value.

This argument is predicated on the theory that the Defendant should not have permitted these withdrawals as it had recorded the LIRA as being federally regulated. [ 34 ] I have already concluded that, at all material times, the LIRA was governed by Alberta legislation and thus the withdrawals could legally be made by a non-resident. [ 35 ] The Plaintiff received all of the funds he requested respecting the two withdrawals subject to withholdings for tax.

Moreover, given that Alberta legislation permitted withdrawals by non-residents, the Defendant was legally obligated to comply with these requests. [ 36 ] I do not accept that he sustained any damages in connection with these two withdrawals. He alone made the decision to request them and the Defendant complied with his requests.

Did the Plaintiff sustain any damages relating to the balance in his LIRA? [ 37 ] In his testimony, the Plaintiff acknowledged that he transferred the full balance of his LIRA to another financial institution after April 4, 2006 and also acknowledged that the balance had gained value during this period of time. The Plaintiff was the beneficiary of this increase in value and there is no evidence that the Plaintiff lost any portion of his LIRA. [ 38 ] The Plaintiff testified that he had no immediate need for the third request of $21,959.65.

He received these funds along with the balance of his LIRA when he closed the account shortly after April 4, 2006. [ 39 ] I accept that an administrative error by a financial institution could result in a customer suffering compensable losses, including borrowing costs during the period of time during which the customer was wrongly denied access to his funds. [ 40 ] However, there is no evidence that the Plaintiff incurred any losses respecting the balance in his LIRA during the nine month period wherein he was refused further withdrawals from his LIRA.

He did not testify that he needed further funds from the LIRA during this period and, in particular, there is no evidence that he incurred any borrowing costs during this period. [ 41 ] In the result, I do not accept that the Plaintiff has established that he suffered any compensable damages with respect to the balance in his Self Administered LIRA. Did the Plaintiff sustain any other damages? [ 42 ] The Plaintiff alleges that, as a result of the Defendant ’ s error, he was forced to return to Canada.

He also claims other losses including a loss of the increase in value of his Alberta residence which he sold as well as loss of business opportunities while he was unable to access the balance of his LIRA. [ 43 ] As noted, the Plaintiff sold his residence in Alberta after CRA granted his request to become a non-resident for tax purposes and moved to Scotland. He also testified that he moved back to Canada to deal with this dispute.

However, he acknowledged that all of his dealings with the Defendant were by email, telephone or regular post. [ 44 ] Although time zone differences complicated communications, I do not accept that the Plaintiff has satisfied the burden of proving that this dispute was the cause of his return to Canada. The decision to return to Canada was his and his alone and the Defendant is not responsible to pay any costs associated with that return to Canada. [ 45 ] I do not accept that the Plaintiff has proven any damages in connection with the sale of his Alberta residence.

He made the decision to sell this residence and received the equity from its sale. [ 46 ] Moreover, I do not accept that the Plaintiff has proven that he suffered any loss of business opportunities between June 7, 2005 and April 4, 2006. There is a complete absence of evidence to substantiate this claim. [ 47 ] As noted above, the LIRA continued to gain value and there is no evidence that the Plaintiff had any intention of withdrawing the balance of his LIRA prior to April 4, 2006. The Claim for Punitive or Exemplary Damages.

[ 48 ] In Whiten v. Pilot Insurance Co. 2002 SCC 18 , the Supreme Court of Canada held that punitive damages are not awarded routinely but rather only in circumstances wherein the defendant has engaged in deliberate, egregious conduct. [ 49 ] Given that I have concluded that the Defendant ’ s error was honest, inadvertent and not intentional, there is no factual basis for awarding punitive or exemplary damages. Conclusion and Order [ 50 ] Although the Plaintiff proved that the Defendant committed an administrative error, he failed to prove that he sustained any losses as a result.

Accordingly, the Plaintiff ’ s claim is dismissed in its entirety. [ 51 ] Given that the Defendant was solely responsible for the administrative error the Defendant is not entitled to recover costs from the Plaintiff. Heard on the 16 th and 17 th day of July, 2012. Dated at the City of Edmonton, Alberta this 31 st day of July, 2012. R. Paul Belzil J.C.Q.B.A. Appearances: Alex Clark [...] Okotoks AB [...] [...] Rinus de Waal De Waal Law for the Defendant