The case concerns duplicative non-sufficient funds (NSF) fees
The Ontario Superior Court of Justice has certified a class action lawsuit against The Bank of Nova Scotia following allegations that it improperly charged duplicative non-sufficient funds (NSF) fees.
The certification is part of a broader series of class actions targeting similar practices across several Canadian banks. In Alexander v. The Bank of Nova Scotia, 2024 ONSC 1958, the plaintiff argued that the bank unlawfully charged a second NSF fee on a dishonoured pre-authorized debit (PAD) when a payee re-presented the same PAD after it had already been rejected due to insufficient funds. According to the plaintiff, the bank's standard form contract does not permit charging an NSF fee more than once for the same transaction. This practice allegedly violates consumer protection laws in Ontario and constitutes unjust enrichment.
Highlighting the impact of these charges, the plaintiff noted that the duplicative fees disproportionately affect low-income Canadians, who are more likely to maintain low balances and, thus, are more vulnerable to such fees.
The court's decision to certify the class action was influenced by the clear definition of the class, which includes any personal deposit account holder with the bank who was charged an NSF fee on a re-presented PAD between June 21, 2020, and April 30, 2024. This class definition allows for an identifiable group whose claims share common issues, thus meeting the criteria for a class proceeding under the Class Proceedings Act.
The common issues identified for certification include whether the bank's contract allowed for charging multiple NSF fees on a single transaction and whether there is a juristic reason for the bank's receipt of the fees, among others. The court also considered whether damages could be determined on an aggregate basis and whether the bank should pay pre- and post-judgment interest.
The action seeks various remedies, including damages for breach of contract, a disgorgement of all monies claimed to be illegally paid by the class members, punitive damages, and an equitable rate of interest and costs.
Ultimately, the court was satisfied that the criteria under the Class Proceedings Act have been met. The court’s decision to grant certification sets the stage for a common issues trial that will address the legality of the bank's fee practices, potentially impacting how banks administer NSF fees in the future.
