Executive Summary: Key Legal and Evidentiary Issues

• Characterisation of the $12,160.53 shortfall as a market value adjustment (RVM) arising from early withdrawal of a 5-year Guaranteed Investment Account (GIA), rather than as fees or an unlawful penalty.
• Adequacy of Manulife’s disclosure of the risk that early redemption of a guaranteed interest account could trigger a market value adjustment and reduce the amount transferred.
• Assessment of whether any misrepresentation or faulty advice was given by Manulife representatives (including explanations about fees and transfer terms) in connection with the RRSP transfer to Tangerine.
• Interpretation of the contractual and plan documents governing the RRSP, GIA and market value adjustment, including the online VIP Room disclosures and account statements.
• Application of the plaintiff’s burden of proof under articles 2803, 2804 and 1457 of the Civil Code of Québec, and whether Marandola proved fault, damage and causal link.
• Determination that no contractual or extra-contractual fault by Manulife was established, leading to dismissal of the small claims action without any monetary award or costs order in favour of either party.

Facts of the dispute

Olindo Marandola, the plaintiff, held a group RRSP (REER collectif) with Manulife which, upon his retirement, was converted on 2 March 2022 into a personal RRSP invested in a 5-year Guaranteed Investment Account (GIA) scheduled to mature in March 2027. The product was a fixed-term guaranteed interest investment where the return is only fully guaranteed if held to maturity. After setting up the personal plan, Marandola decided he no longer wished to keep his RRSP assets with Manulife and wanted to transfer the funds to another financial institution, Tangerine. In his own account of events, he stated that a Manulife representative named Kimberley told him there would be a monthly $25 fee if he kept money in the Manulife account and that a $100 fee would apply if he transferred to another institution. Uncomfortable with ongoing fees, he chose to transfer out his RRSP. The necessary transfer form was completed and returned, and the transfer to Tangerine was processed around 13–14 May 2022. When he reviewed the transfer amounts, he noticed that approximately $12,160.53 appeared to be “missing” from the expected value of his RRSP. Marandola considered this a wrongful loss and later claimed a total of $13,360.53 (being $12,160.53 plus interest) as damages before the Small Claims Division of the Court of Québec. According to him, Manulife had improperly debited his account when executing the transfer to Tangerine in 2022 and had never properly justified this reduction.

Manulife’s explanations and communications

Following inquiries by Marandola, Manulife representatives explained that the shortfall was not a fee but resulted from a “market value adjustment” (raj uste ment de la valeur marchande, RVM) applied when guaranteed funds are withdrawn or transferred before maturity. Manulife’s position was communicated through various correspondence, including statements and explanations sent in 2022, and a detailed response from the Office of the Ombudsman. The Ombudsman’s letter explained that when Marandola’s 2-year term GIA matured, he had selected a new 5-year GIA maturing in 2027. The terms disclosed on Manulife’s VIP Room website for registered retirement savings plans stated that Guaranteed Term Funds may be subject to a market value adjustment when withdrawn prior to maturity, and that the amount withdrawn could be different from the amount invested. The online information further specified that, for withdrawals or transfers out of a GIA, the investor would receive the lesser of: (1) the current value of the GIA with interest earned, or (2) the market value adjusted to reflect interest rate movements and the shortened investment period. Because Marandola chose to transfer his funds effective 13 May 2022, well before the 2027 maturity date, Manulife applied a negative RVM to his account. In the Ombudsman’s view, this was fully consistent with the contractual terms and the disclosures available to the plaintiff, and there were no grounds to reach a different conclusion. Manulife refused to reimburse the amount corresponding to the RVM and indicated that the internal complaint process was concluded.

Documentary records and plan history

The evidence before the Court included several key documents: account statements for January to May 2022, online disclosures in the VIP Room, and confirmations of the RRSP plan structure and transactions. The records confirmed that the group RRSP had been converted into a personal RRSP and that the funds were invested in a 5-year guaranteed interest account. The statements and plan documents described that withdrawals or transfers from guaranteed funds before maturity might give rise to a market value adjustment—either increasing or decreasing the amount payable depending on prevailing interest rates. Additional plan documentation stated, in general terms, that Manulife could correct any errors or omissions on statements and that withdrawals or transfers from guaranteed funds prior to maturity could result in a RVM that might either increase or decrease the amount of the withdrawal or transfer. The historical transaction records also identified that the account in question was a Manulife 5-year guaranteed interest account under a registered retirement savings plan, with standard tax and fee warnings indicating that taxes are withheld when funds are cashed out of a registered plan and that fees may be incurred when funds are withdrawn, possibly causing discrepancies in displayed data. Although the plaintiff later referred to a distinction between a “Guaranty Investments Account” and a “Guaranty Interests Account” and claimed an additional lost amount of $675.46, the judgment does not indicate that this alleged mislabelling altered the legal analysis of the RVM or created a separate contractual breach.

Mechanics of the market value adjustment

Manulife led evidence explaining how the RVM worked in this case. The guaranteed interest account was set up on 2 March 2022 for a five-year term. On 4 May 2022, roughly two months later, Marandola redeemed his personal RRSP account (MS105274) to transfer it to Tangerine. Because this redemption occurred before the March 2027 maturity date, it was an early withdrawal under the GIA terms. Between 2 March and 4 May 2022, interest rates had increased. According to Manulife, that rate increase meant the market value of the fixed-rate GIA, if liquidated early, was lower than its face value—so a negative RVM of $12,160.53 was applied. As a result, the amount actually transferred to Tangerine was $12,160.53 less than the account’s nominal value on that date. Manulife also argued that if the amount actually received by the plaintiff on early redemption had been reinvested at then-prevailing higher market rates for the balance of the original five-year term, the total value at the end of that period would have matched what he would have received by simply leaving the funds in the original GIA to maturity. In other words, the RVM was presented as a neutralizing mechanism to reflect economic reality when withdrawing from a fixed-term product in a rising interest rate environment, rather than as a penalty or unjust fee. The Court accepted this explanation as consistent with the contractual framework and the financial logic behind market value adjustments.

Legal framework and burden of proof

The Court recalled the general rules on burden of proof in civil matters under the Civil Code of Québec. Articles 2803 and 2804 provide that a party who wishes to enforce a right must prove the facts that support its claim, and that proof is sufficient when the existence of a fact is rendered more probable than its non-existence, unless the law requires a higher standard. In the context of an action in damages, article 1457 CCQ requires the plaintiff to prove a fault by the defendant, the damages suffered and a causal link between the fault and the damages. Applying these provisions, the Court emphasized that Marandola had to demonstrate, on a balance of probabilities, that Manulife had committed a contractual or extra-contractual fault in relation to the transfer of his funds, whether by failing to disclose essential terms, misrepresenting the impact of early withdrawal, or incorrectly applying the RVM. The Court found, however, that the evidence did not support a finding of fault. The contractual and informational documents—both in written statements and online—clearly warned that early withdrawals or transfers from guaranteed funds might trigger a market value adjustment, which could either increase or decrease the amount payable depending on interest rate movements. Moreover, Manulife’s explanations about the rising interest rate environment and the resulting negative RVM were coherent, and the plaintiff did not adduce persuasive evidence to contradict them or to show that the adjustment was miscalculated or improperly applied.

Court’s analysis and outcome

In its analysis, the Court concluded that the plaintiff had not discharged his burden of proof. While Marandola clearly suffered a financial reduction in the amount transferred to Tangerine, this reduction flowed from a contractual mechanism inherent in the guaranteed interest account’s terms rather than from wrongdoing on Manulife’s part. The Court accepted Manulife’s evidence that the RVM was properly applied and that the risk of such an adjustment was adequately disclosed through statements and online materials accessible to the plaintiff, as well as through oral explanations when the personal RRSP and GIA were established on 2 March 2022. The judge therefore found no contractual breach, misrepresentation or negligence by Manulife in how the transfer was handled. On this basis, the Court held that no fault had been committed by Manulife and that Marandola’s claim for $13,360.53 in damages was unfounded. Accordingly, the Court dismissed the plaintiff’s claim in its entirety. Manulife Investments was thus the successful party. No damages or monetary amounts were awarded in its favour; the Court ordered that, given the particular circumstances of the file, each party should bear its own costs. As a result, there was no determinable monetary award or costs recovery for Manulife, and the net financial outcome was simply the dismissal of the plaintiff’s small claims action with no sums ordered to be paid by either side.