Executive Summary: Key Legal and Evidentiary Issues

• Liability turned on whether BMO acted in a reasonably prudent and diligent manner under article 1458 of the Civil Code of Québec when its programming caused an incompatibility with the plaintiff's VOIP telephone line.
• Article 7 of the Online Banking Agreement, governing two-factor authentication verification codes, was central to establishing what the bank had undertaken and what it later changed.
• Evidence showed BMO took nearly 18 months to diagnose its own system and advise the plaintiff, and modified its agreement without specific notice to clients.
• BMO's fraud-protection defence failed for lack of probative evidence, as the plaintiff's banking activity was not out of the ordinary.
• Punitive damages were refused because the evidence did not establish gross negligence or intentional concealment by the bank.
• Moral damages claimed (some $3,000) were found grossly exaggerated, with the Court using a prior $200 goodwill payment as the basis for its assessment.

Facts of the case

Jeremy Cooperstock, a longtime client of the Bank of Montreal (BMO), had for many years used the bank's online banking system with a VOIP (Voice Over Internet Protocol) telephone line without any problems. As of April 2024, he was no longer able to use the system correctly: he was intermittently but repeatedly locked out, and certain transactions were refused. He contacted various BMO services by telephone and in person at his branch to find the cause and a solution, but all his efforts were fruitless, and his complaints did not receive satisfactory answers. After one complaint, BMO paid him a $200 goodwill indemnity. It was only in November 2025 that Mr. Cooperstock was advised that his problems were due to BMO's programming and the resulting incompatibility with his VOIP line. He sued BMO in the Small Claims Division of the Court of Quebec for moral and punitive damages, alleging negligence in the bank's programming and tardiness in advising him of the situation. BMO denied liability and argued the damages were grossly exaggerated.

Policy terms and contractual clauses at issue

Mr. Cooperstock invoked article 7 of the Online Banking Agreement, which in its 2024 version stated that verification codes may be sent from time to time to validate a client's identity — the "2 Factor authentification" process — and that "We may send you a verification code via SMS, automated voice call, email or push notification to your mobile device". In November 2025, coinciding with the date Mr. Cooperstock was finally advised of the cause of his problems, the agreement was modified with several additional provisos. The relevant addition indicated that verification codes sent by SMS/text message can only be delivered to Canadian and US mobile numbers, and that SMS text messages may not be delivered to numbers associated with or assigned to a VOIP service.

The court's reasoning and analysis

The Court concluded that BMO did not act in a reasonably prudent and diligent manner, thereby engaging its responsibility under article 1458 of the Civil Code of Québec. Its programming unwittingly caused an incompatibility with Mr. Cooperstock's system without advising him; it did not provide a swift diagnosis of its own system and offered no solution, causing him inconvenience for nearly 18 months; and once it discovered the problem, it changed its agreement without any specific notice to clients. This constituted fault. BMO's argument that lockouts and refused transactions resulted from its fraud protection protocol — and thus proved prudence — was rejected for lack of probative evidence, since Mr. Cooperstock's use of online banking, including while travelling, was not out of the ordinary, and the real cause was the unknown VOIP incompatibility. On damages, however, the Court agreed with BMO that the claim was grossly exaggerated. There was no basis in fact or law for punitive damages, as the evidence did not show gross negligence or that BMO intentionally hid the truth. For moral damages, the evidence showed Mr. Cooperstock spent at most four hours dealing with the bank, and while he suffered stress, it was far from serious; the Court found his roughly $3,000 evaluation for lost time and inconvenience a clear exaggeration and used the earlier $200 goodwill payment as the basis for its own calculation. It also accepted one proven instance of pecuniary damage: a $77.15 interest/penalty charge incurred when a lockout prevented a timely credit card payment.

Ruling and overall outcome

The Court granted the plaintiff's application in part, making Mr. Cooperstock the successful party, though for far less than he claimed. BMO was condemned to pay him $477.15 — comprising $400 for his time and frustration and $77.15 for the late-payment charge — plus interest at the legal annual rate and the additional indemnity under section 1619 of the Civil Code of Québec from October 3, 2024, the date of the demand letter, together with legal costs of $115.00.