Court of Appeal of Quebec

Ravary c. Fonds mutuels CI inc.

April 16, 2018


Thibault, Healy, Cohen (ad hoc)

Appeal from a judgment rendered in the course of a proceeding by the Superior Court dismissing an application de bene esse. Allowed.

In their class action, the seven applicants, including the appellant, allege that the mutual funds in question did not implement measures to prevent the trading market timing strategies of certain investors. On June 30, 2015, the trial judge rendered a “framework judgment” in which he limited the class action to certain trades, that is, those that took place between January 1, 2000, and December 31, 2003, within a five-day window, for a sum equal or superior to $10,000. On November 12, 2015, at the respondents’ request, the judge split the proceeding so that the liability portion could be decided before the damages. Deeming the information that he received from the respondents to be inconclusive, the appellant filed an application de bene esse to amend the definition of the class to limit its scope to the funds managed by the respondents and obtain additional information, particularly, all of the trades for certain specific accounts, for the period covered in the framework judgment. Only the judge’s refusal to allow the disclosure of these financial documents is at issue here.

The judge’s ruling deprived the appellant of relevant evidence to establish the truth of the allegations in his proceeding. It causes him irremediable injury, which the final judgment is not likely to remedy. The right of appeal is therefore subject to the conditions set out in article 31 of the Code of Civil Procedure (CQLR, c. C-25.01).

A framework judgment is not necessarily a final judgment but, in some respects, it is an interlocutory judgment that may be varied when circumstances justify doing so. In this case, the appellant established the existence of new circumstances, that is, the identification of the client accounts of those investors who systematically exploited the vulnerability of the funds in question and the negative and abnormal result of the trades identified under the framework judgment. Furthermore, his request does not aim to vary this judgment but to obtain the disclosure of additional information to establish the liability of the respondents. It is from this perspective that his application must be considered. Also, with the information currently in his possession, the appellant cannot establish that the actions of certain investors had a negative impact on the performance of the shares owned by the class members, an element he was authorized to prove in the severance judgment. Thus, the information requested is useful and likely to further the debate. Additionally, refusing to disclose this information would have two consequences. First, it would deprive the appellant of the right to establish the truth of the facts he alleges, in breach of his right to be heard. Second, it would prevent him from agreeing to a transaction, including a discontinuance of his proceeding, if there is no negative impact on the performance of the shares owned by the class members, which would hinder the objective of dispute resolution. The resulting injury is irremediable. 

*Summary by SOQUIJ
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