SCC Concurs RRSP Judgment

On June 5, 2003, the Supreme Court of Canada concurred in a judgment that now allows investors holding a total of approximately $9 billion in a RRSP of Desjardins Trust to use such funds as leverage for a loan. The S.C.C. ruled that financial institutions can pledge amounts held in a trust-style registered retirement savings plan as security. This possibility had been previously abolished by a judgment handed down by the Court of Appeal of Québec in January 2001.

The S.C.C.’s judgment will also allow any person who is not operating a business to grant a moveable hypothec with delivery on claims, regardless of whether or not they are represented by a negotiable instrument (in this case, a certificate of deposit). This conclusion, which allows a claim not represented by a negotiable instrument to be pledged as security, has ended the debate that has been opposing Quebec authors of sureties and hypothecs.

The case, which involved the Caisse Populaire Desjardins de Val-Brillant and Blouin, was heard before the S.C.C. on November 6, 2002.

Caisse Populaire Desjardins de Val-Brilliant and Blouin were represented by Fasken Martineau DuMoulin LLP in Quebec, with a team that included P.-Michel Bouchard and Christian Trépanier. The adverse party was represented by Jean-Patrick Bédard of Gravel, Bédard Vaillancourt in Quebec