2019 QCCQ 4570, 2019 QCCQ 4570

J.K.-Estate of M.K. c. RBC Dominion Securities Inc. 2019 QCCQ 4570 COURT OF QUEBEC « Small Claims Division» CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL « Civil Division » N°: 500-32-152875-169 DATE: July 25 th , 2019 ______________________________________________________________________ PRESIDED BY THE HONOURABLE SYLVIE LACHAPELLE, J.C.Q. ______________________________________________________________________ J. K.-ESTATE OF M. K. Plaintiff c. RBC DOMINION SECURITIES INC.

Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Mr. J. K. " Mr. J. K. [1] " appointed Liquidator of the succession of Mr. M. K. " Mr. M. K. " institutes proceedings on behalf of the Estate of Mr. M. K.. [ 2 ] Mr. J. K. alleges that at all material times, Mr. M. K. was a vulnerable aged person having a right of protection against any form of exploitation as provided for by art. 48 of the Quebec Charter of Human Rights and Freedoms . [ 3 ] Mr. J. K. alleges that since at least August 12, 1999, Mr.

M. K. was having difficulty managing his financial affairs and that Investment Advisor, Mr. Brian Léonard " Mr. Léonard " exploited Mr. M. K.’s severe and prolonged mental and physical impairments to engage in fraudulent transactions in respect of his assets. [ 4 ] Mr. J. K. reproaches that on July 28, 2006, Mr. Léonard eliminated a cash balance in Mr. M. K.’s account with the intention of ending the monthly interest payments made by RBC Dominion Securities Inc. " RBC ". [ 5 ] More particularly, Mr.

Léonard executed two purchase transactions of securities on August 10, 2007 and November 2, 2007 that eliminated Mr. M. K.’s interest bearing cash balance held by RBC. [ 6 ] According to Mr. J. K., Mr. M. K. was ill suited for the purchase of high risk securities and speculative trading in securities and in the circumstances the purchase of securities amounted to fraud. [ 7 ] Mr. J. K. adds that on November 7, 2007, Mr.

Léonard fraudulently purchased 300 shares of Citigroup Inc. for $10,998.85 and that by January 30, 2009, these 30 shares had decreased by 88% of their purchase price which is other than a temporarely decline in value. [ 8 ] On May 9, 2011, the 300 shares were exchanged in a reverse split to just 30 shares that has the effect of forever reducing dividend income and in May 31 st , 2016, those 30 shares are worth $1,829.61 thus representing a permanent decline in value which according to Mr. J. K. demonstrates that RBC acted fraudulently in purchasing these securities from the cash and Mr. M.

K.’s account. [ 9 ] Thus, Mr. J. K. claims an amount $9,169.24 corresponding to the loss in value of the Citigroup Inc. shares plus the lost of the interests of $25 per month since the purchase of the securities that amount to $2,500. [ 10 ] Finally, Mr. J. K. found in opening Mr. M. K.’s mail that a cheque of $50 of dividends from National Bank dated May 10, 1995 negociated August 4, 1997 was dishonored by RBC "which approximates the beginning of Mr. M. K.’s incapacity and RBC failed to issue a new cheque". [ 11 ] In addition, a total of $1,250 in Minimum Household Fees "MHF" was charged to Mr. M.

K. with instructions on the avoidance of these fees which due to Mr. M. K. impairements, it was impossible for him respond to or act upon; and, [ 12 ] On July 15, 2002, 5000 shares of People Jewelers were removed from Mr. M. K.’s account as "deemed worthless" but according to Mr. J. K. this company is still operating. [ 13 ] Thus, Mr. J. K. claims damages to the amount of $13,019.14 and punitive damages of $1,980.76 for a total of $15,000. [ 14 ] Mr. J. K. also asks the Court to order RBC to surrender 5000 shares of People Jewelers. [ 15 ] RBC contests that claim and refuses to pay arguing that :

a) the different claims constituting Mr. J. K.’s action are time-barred;

b) there is absence of fault; and

c) Mr. J. K. did not incur any damages. Analyze and decision 1. Prescription of the action [ 16 ] Mr. J. K.’s action, being based on personal rights, is prescribed by three years [2] . [ 17 ] Regarding the claim for allegedly fraudulent transactions, the transactions were performed in August and November of 2007. [ 18 ] Mr. M. K. would have been made aware of the transactions in order for them to be performed and received notices as well as monthly statements which reflected the transactions [3] . [ 19 ] There has been no evidence demonstrating that Mr. M.

K. was unware of the transactions at the time or was unable to act. [ 20 ] Therefore, the claims regarding the allegedly fraudulent purchase of securities became prescribed in August and November of 2010, making Mr. J. K.’s action initiated in 2016 time-barred. [ 21 ] Mr. J. K.’s claim for the stale cheque is also time-barred. [ 22 ] The cheque was issued in May 10, 1995 and refused by RBC on August 13, 1997. [ 23 ] Therefore, the claim became prescribed on August 13, 2000, making Mr. J. K.’s action initiated in 2016 time-barred. [ 24 ] Finally, Mr. J.

K.’s claim for minimum household fees is for the most part time-barred. In fact, all fees charged before June 17, 2013, three (3) years before Mr. J. K.’s action was commenced, are prescribed. 2. Absence of fault [ 25 ] Mr. J. K. has not satisfied the burden of proof which rests with him with regard to any of the aspects of his action against RBC [4] . [ 26 ] Mr. J. K.’s case rests on the suppositions that Mr. M. K. was incapacitated as of 1997, that RBC was aware of Mr. M. K.’s alleged incapacity and that it fraudulently exploited this incapacity.

However, these propositions are completely without merit and are not supported by any evidence. [ 27 ] The Court analyzes the issue of alleged incapacity of Mr. M. K. in the file Kuropatwa vs. Cummings Centre [5] and concludes that these propositions are not supported by the evidence. [ 28 ] On the contrary, the evidence reveals that Mr. M. K. was competent at the time the transactions were performed. [ 29 ] Mr. M.

K. who was assisted on a regular basis by physicians, social workers and volunteers between at least 2003 and 2013 was described as lucid, competent and it is only in 2013 that a demand for protective supervision was initiated by the social worker. [ 30 ] Mr. Cyrille Aubin " Mr. Aubin ", Branch Manager and Vice-President, RBC Dominion Securities " RBC ", testifies that it is only on April 16, 2013 that RBC received a letter from the Curator public notifying it that M. M. K. would be placed under protective supervision. [ 31 ] Thus, prior to receiving the letter from the Curator public, RBC was unaware of Mr. M.

K.’s health condition and its alleged impact on his ability to manage his financial affairs. [ 32 ] Mr. J. K. suggests that Mr. M. K. was obviously incapacitated as of 1997, such that RBC must have known. However, Mr. J. K. has not provided any explanation as to why 16 years would have passed since the onset of Mr. M. K. alleged incapacity, before protective supervision was put into place. [ 33 ] Therefore, the Court concludes that Mr. J. K. has not demonstrated that Mr. M.

K. was in fact incapacitated as of 1997 as he claims and has not provided any evidences of RBC’s alleges knowledged of this incapacity. [ 34 ] As a result, RBC could not have exploited Mr. M. K.’s health condition, as it had no knowledge of such condition. [ 35 ] On the contrary, RBC managed Mr. M. K.’s monies in according with its duties and Mr. M. K.’s instructions. [ 36 ] In fact, in the course of 16 years, RBC merely made two transactions on Mr. M.

K.’s behalf and removed worthless securities of a stock that was no longer trading [6] . [ 37 ] These two transactions, which consisted in the purchase of financial institutions stock, do not amount to “high-risk” or “speculative” trading. In fact, Mr. J. K. has not presented any evidence to support his allegation that the securities purchased were not suitable for Mr. M. K.’s investment profile. [ 38 ] Mr. Aubin testifies that in addition, these transactions were duly approved by Mr. M. K.. Confirmation notices were sent to Mr. M.

K. on the date both transactions were made, and the transactions were also reflected in the account statements he received on a monthly basis [7] .

[ 39 ] As for the minimum household fees, they were debited from Mr. M. K.’s in accordance with RBC’s Administrative Account Service Fees Policy in force at the relevant time period [8] . [ 40 ] Consequently, no fault by RBC has been demonstrated by Mr. J. K.. 3. Absence of damages [ 41 ] Mr. J. K. has also failed to demonstrate the damages that were alleged suffered. [ 42 ] First, the annual rate of return on Mr. M. K.’s account for the period ranging from January 1, 2000 to June 30, 2016 amounts to 10.74%.

As an investment portfolio must be analyzed as a whole, a return of 10.74% is perfectly acceptable and is far from constituting a damage [9] . [ 43 ] Further, Mr. J. K. has not demonstrated that any loss has been incurred with regard to the Citigroup inc. shares, as these securities have not been sold. In fact, the alleged loss is hypothetic as no " decline in value " of a stock can be said to be " permanent " [10] . [ 44 ] In any event, RBC is not Mr. M. K.’s insurer, and cannot be held liable for market downturns [11] . 4. Punitive damages [ 45 ] Since the Court concludes that Mr. J.

K.: 1) has not demonstrated that RBC breached the right of protection against exploitation as provided by art. 48 of the Quebec Charter of Human Rights and Freedoms; 2) has not demonstrated that RBC exhibited any illicit, intentional, abusive, malicious or vexatious behaviour that would warrant an award of punitive damages. [ 46 ] The claim for punitive damages is ill-founded in fact and law. [ 47 ] Therefore, Mr. J. K.’s claim in this regard is dismissed. FOR THESE REASONS, THE COURT: DISMISSES Plaintiff’s demand introductory of suit; WITH COSTS. __________________________________ SYLVIE LACHAPELLE, j.c.Q.

Dates of hearing: May, 3 rd , 2018, October 16 th , 2018, January 21 st , 2019 and February 5 th , 2019