Class action can be filed only when the group of people have common questions in their application that can be resolved together.
The appellant, Desjardins Financial Services, advised the respondent, Asselin, to purchase the Perspectives Plus Term Savings (PP) and Alternative Term Savings (ALT) in March 2005. Asselin invested the money as advised by the financial adviser of the Firm. The financial adviser guaranteed capital at maturity and represented them as safe and providing an attractive return. However, in February 2010, the respondents got an investment statement stating that the investment has returned 0 percent for 2009.
In September 2011, Asselin filed an application in the Quebec Superior Court to seek authorization for filing a class action against the Firm claiming the liability of the Firm for breaching its duty to inform about the risks involved in the investments. However, the court dismissed the application. Thereafter the Court of Appeal allowed Asselin’s appeal and authorized him to file a class action against Firm and Management. A class action is where a number of people, i.e. a group or a class, collectively get their complaint dealt with at once.
The issues in the supreme court of Canada were: Whether the Court of Appeal made an error in authorizing the respondent’s action against Firm following art. 1003 of Code of Civil Procedure of Quebec (C.C.P.)? Whether the Court of Appeal made an error in authorizing the respondent’s action against Management following Companies’ Creditors Arrangement Act (C.C.A.A.)?
The majority bench at the Supreme Court stated that the Court of Appeal was correct to authorize the class action against the Firm and the Management. However, the court held that the appeal should be allowed in part, i.e. class action asking for punitive damages should not be argued. The class action was allowed stating that even if there is one common question in the group’s application, class action should be authorized. And in this case, what is common to all the people is the generalized and systematic failure of the Firm to disclose information concerning the risk involved in the investments. The court also held that the financial advisers’ individual advice or duty is not relevant when the Firm at the first place failed to provide information to the financial advisers about the risks involved. The court also observed that all the conditions laid down under precedent of Bank of Montreal v. Bail Ltée,  2 S.C.R. 554 were satisfied by the client-firm relationship in the present case. Therefore, class action was allowed recognizing the contractual breach of the Firm’s duty to inform the representatives (direct liability) and clients (indirect liability).