Executive Summary: Key Legal and Evidentiary Issues

• Plaintiff Kenneth Greg Hunter alleged that BMO Trust Company and BMO InvestorLine Inc. withheld taxes from RRIF accounts in excess of what was required under the Income Tax Act and Income Tax Regulations.
• Central to the dispute was whether withholding tax should be calculated based on the total annual RRIF withdrawal or on each individual transaction.
• Significant litigation risks existed, including the absence of direct legal precedent, a statutory bar under s. 227(1) of the Income Tax Act, limitation defences, and the defendants' argument that class members suffered no damages.
• Estimated maximum potential damages were approximately $5 million, but could fall to $1–2 million or lower depending on the assumptions accepted, with individual class member recoveries ranging from approximately $25 to $750.
• Direct distribution of settlement funds to class members was impracticable due to the prohibitive costs of a claims process, the average age of class members (81 years old), and the unavailability of direct RRIF deposits without an advance CRA ruling.
• The court approved a $1.95 million all-inclusive settlement, with the net balance directed cy-près to HelpAge Canada, alongside court-approved Class Counsel fees and disbursements.

Facts of the case

Kenneth Greg Hunter commenced a class action on March 30, 2022, against BMO Trust Company ("BMO Trust") and BMO InvestorLine Inc. ("InvestorLine") before the Ontario Superior Court of Justice. InvestorLine is a registered investment dealer offering Registered Retirement Income Fund ("RRIF") accounts structured as trusts, with BMO Trust acting as trustee. Hunter alleged that the defendants withheld taxes from RRIF accounts in amounts exceeding what was required under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) and the Income Tax Regulations, C.R.C. c. 945, and that doing so was contrary to the standard-form trust agreement governing the class members' RRIFs. The plaintiff sought damages for lost tax-free growth on the allegedly over-withheld amounts.

The dispute centred on the defendants' calculation method: they computed withholding taxes based on the total annual withdrawal from each RRIF account (the "Policy"), while the plaintiff argued that withholding taxes should instead be calculated separately for each individual transaction, which would have resulted in lower amounts being withheld. The defendants maintained that the Policy was correct and, in any event, that class members suffered no damages because they could have reinvested any resulting tax refunds from the Canada Revenue Agency ("CRA") into tax-free vehicles such as Tax-Free Savings Accounts ("TFSAs"). A contested certification motion was originally scheduled for October 8–9, 2024, and was later adjourned to May 27–29, 2025, to be heard alongside the defendants' motion for summary judgment based on a limitations defence.

Policy terms and contractual clauses at issue

The core contractual issue was whether the defendants' Policy of aggregating annual RRIF withdrawals for withholding tax purposes was consistent with the standard-form trust agreement governing class members' accounts. The plaintiff's position was that the trust agreement required withholding to be calculated per transaction, not on an annual aggregate basis. The defendants disputed this interpretation and relied, among other defences, on s. 227(1) of the Income Tax Act, which provides that no action lies against any person for deducting or withholding any sum of money in compliance or intended compliance with the Act. The defendants also raised limitation defences, arguing that if the limitation period ran from the date of the Policy or the date of the relevant withdrawals, many claims would be time-barred.

Court's reasoning and analysis

The court considered two motions: one for settlement approval and one for approval of Class Counsel's fees and disbursements. On the settlement approval motion, Justice Glustein applied the framework under s. 27.1 of the Class Proceedings Act, 1992 ("CPA"), which requires the court to be satisfied that a settlement is fair, reasonable, and in the best interests of the class. The court noted a strong initial presumption of fairness where a settlement is negotiated at arm's length and recommended by class counsel.

The court identified substantial litigation risks, including the absence of case law directly supporting the plaintiff's theory of liability, the statutory bar under s. 227(1) of the Income Tax Act, the defendants' no-damages argument, and the complexity of damages calculations. Maximum potential damages were assessed at approximately $5 million under the most plaintiff-favourable assumptions, falling to the range of $1–2 million under more moderate assumptions, and potentially lower still. Individual recoveries were estimated to range from approximately $25 to $750, with Hunter's own damages at the higher end due to his younger age (54 years old at the time of withdrawal) compared to the class average age of 81. The court found that the $1.95 million settlement represented approximately 40% of the maximum estimated damages, which fell within the zone of reasonableness given the significant risks.

On the cy-près distribution question, the court applied s. 27.2 of the CPA, which permits cy-près awards where it is not practical or possible to compensate class members directly using best reasonable efforts. The court accepted that direct RRIF deposit was unavailable without a costly and uncertain advance CRA ruling, that approximately one-third of class members had already closed their accounts, and that a full claims-based distribution process would cost an estimated $550,000 — roughly equal to the net funds available for class members after legal fees. In such circumstances, the court found that a cy-près distribution to HelpAge Canada, a national registered charity dedicated to improving the lives of older Canadians, was appropriate and consistent with the court's jurisprudence.

On the fee approval motion, the court applied s. 32 of the CPA, noting the presumption in favour of approving the percentage fee set out in a class counsel retainer agreement. Class Counsel, Paliare Roland Rosenberg Rothstein LLP, sought a 30% contingency fee in accordance with the retainer agreement, reduced from 33% because litigation funding was obtained from the Class Proceedings Fund. The court found the fee request fair and reasonable, noting that Class Counsel's docketed time exceeded the fees sought, that the case was complex, and that counsel had taken on significant risk throughout the litigation.

Ruling and overall outcome

Justice Glustein granted both motions on June 5, 2026. The proposed settlement was approved as fair, reasonable, and in the best interests of the class. Under the settlement, the defendants — BMO Trust Company and BMO InvestorLine Inc. — were required to pay an all-inclusive amount of $1.95 million into a settlement fund. Out of that fund, Class Counsel's fees and disbursements, including $187,881.82 in disbursements, and the Class Proceedings Fund statutory levy were to be paid, with the net balance of over $1 million directed cy-près to HelpAge Canada. The defendants also agreed to operational enhancements, including updated website information and call centre training for RRIF account holders on withholding tax rules. Class Counsel's 30% contingency fee and disbursements of $187,881.82 were approved. No class members objected to the settlement or the fee request, and the plaintiff, Hunter, on behalf of the class, succeeded in obtaining court approval of the $1.95 million settlement fund.