The Marcotte case, a Quebec class action against several financial institutions in relation to allegedly undisclosed currency conversion fees, was the subject of recent reasons by the Supreme Court of Canada. Our blog on that case is available HERE. Marcotte is not alone: financial institutions and the fees they charge, particularly where it may be alleged that such fees have not been adequately disclosed, remain big business for class actions plaintiffs.
In the recently released decision of Sandhu v. HSBC Finance Mortgages Inc. et al (reasons available HERE), the British Columbia Supreme Court has certified an action seeking damages or restitution from HSBC Finance Mortgages Inc. and the Household Trust Company in relation to title insurance fees.
The plaintiffs allege that when borrowers enter into a mortgage commitment with the HSBC defendant, they authorize a variety of fees relating to title insurance, variously described as a “Premium”, the “Policy Insurance Cost” and “Additional Charges”. The plaintiffs allege that some of these fees are actually for undisclosed legal fees and legal costs of the defendants.
The plaintiffs further allege that the provider of title insurance charged a set premium for title insurance as well as a set amount for legal fees, which amounts were not disclosed to the borrowers; and that the defendants required the borrowers obtain title insurance to obtain a residential mortgage. As a result, the plaintiffs seek damages or restitution for breach of contract, negligence and breaches of consumer protection legislation, the Competition Act, the Financial Institutions Act, the Trust and Loan Companies Act and the Mortgage Brokers Act.
In its reasons, the court noted that borrowers are able to make other arrangements to provide the assurances regarding title as required by the HSBC defendant, and that borrowers did sign an acknowledgement that they were recommended to obtain independent legal advice before signing the mortgage and that they could retain a lawyer to act for them at any stage of the transaction. Nonetheless, the court found that the procedural test for certification was made out.
Despite recent good news on certification for B.C. class action defendants, the weight of the authorities remains in favour of certification. This appears particularly the case where allegations of failure to disclose are made.