Canada: Class Action And Consumer Law: The Court Of Appeal Excludes Non-Consumers From The Approved Class In An Authorized Class Action

Last Updated: March 26 2012
Article by Luc Thibaudeau

With the collaboration of Jean Saint-Onge, Ad. E.

Consumer protection law and the Consumer Protection Act apply first and foremost to economic activities in the retail sector. Expenditures associated with this sector represent more than sixty-five percent of all expenditures in the province. It is also an area of the law which frequently comes before the courts. In many cases, these disputes arise in the context of a class action. Many believe that class actions are well-suited as a procedural vehicle for dealing with some of the provisions of the CPA, such as, for example, the provisions relating to prohibited commercial practices.

In the past few months, several judgments have been rendered in this area, shedding a welcome light on some of the merchants' obligations under the CPA. The subjects dealt with in these judgments are in the news and relate to products and services widely offered by merchants.

We will be commenting on some of these judgments in a forthcoming series of bulletins. This bulletin discusses a recent judgment of the Court of Appeal dealing with compulsory arbitration clauses.


In the case of Comtois v. Telus Mobilité, the motion for authorization to institute a class action was granted by the Court of Appeal on March 29, 2010. The authorization allowed the institution of a class action on behalf of clients of Telus who were billed for roaming charges for calls made or received in Quebec after April 24, 2004.


By way of a motion during the proceeding, Telus asked the Superior Court to change the class for which authorization was granted. In particular, Telus asked that the corporate customers, i.e. non-consumers, be excluded from this class on the grounds that the contracts signed with them contained a compulsory arbitration clause. Telus argued that this clause was valid because it was not covered by the prohibition contained in section 11.1 of the CPA, since contracts concluded with corporations are not covered by the CPA, and the Superior Court had no jurisdiction to hear the action in relation to these legal persons.

Justice Rochon of the Court of Appeal had written the following regarding the compulsory arbitration clause contained in the contract of the applicant who was seeking authorization:

[Translation] [54] This contractual provision, which has been unenforceable against consumers since April 1, 2007, is allegedly still enforceable against legal persons. I certainly may agree, but I am unable to rule on this issue due to the state of the record. There is no evidence in the file that the respondent has given notice to refer a dispute with a legal person to arbitration. Thus, at this stage, no party has asked to refer the file to arbitration. Where no formal request has been made, the court cannot do so on its own initiative.


By judgment rendered on November 3, 2010, Justice Mark G. Peacock of the Superior Court refused to grant the application to amend the class for two reasons: (1) Telus had not given notice of arbitration to its corporate customers who were members of the class, so that the principle of the economy of resources laid down in article 4.2 of the Code of Civil Procedure


applied in favour of resolving all the claims in a single proceeding; and (2) the contracts included a clause of joint and several liability which provided that the natural persons using the telephones in question were jointly and severally liable, with the corporate customers, for the obligations of the latter. As a result, the corporations' obligations were inextricably linked to those of the users. Justice Peacock held that it would be contrary to the interests of justice for the courts to rule on the users' claims while an arbitration tribunal decides the corporations' claims. On December 21, 2010, leave to appeal the judgment of Justice Peacock was granted by Justice Marie-France Bich of the Court of Appeal, and the appeal was heard on November 9, 2011 by Justices Pierre Dalphond, Nicolas Kasirer and Guy Gagnon of the Court of Appeal.


Justice Pierre Dalphond, writing for the Court of Appeal, rendered judgment on January 27, 2012. He identified the issues as follows: (1) did Telus have to prove the existence of new facts to succeed in its application to amend the class? (2) was it necessary for a notice of arbitration to have been sent to the corporate customers to exclude them from the class? (3) did the judge at first instance err in relying on article 4.2 CCP to refuse the amendment? (4) did the judge at first instance err in his interpretation of the joint and several liability clause? and (5) was the arbitration clause contained in Telus's contract clearly abusive?

On the first issue, Justice Dalphond distinguished the case before him from the decision of the Court of Appeal in the case of Syndicat des employés de l'Hôpital St-Ferdinand in which it held that an application to amend a class must be supported by new facts, pursuant to article 1022 CCP. However, in the present case, although the application by Telus referred to article 1022 CCP, it was in fact based on article 940.1 CCP, since it asked the Court to decline jurisdiction and refer the parties to arbitration. It dealt primarily with a jurisdictional issue.

On the second issue, Justice Dalphond held that it was not necessary for an arbitration notice to have been sent for the Superior Court to decline jurisdiction. The courts have no power to hear a claim where there is a valid and enforceable arbitration clause between the parties. In such a case, the Superior Court cannot decide the rights of a person in the context of a class action any more so than it can in the context of an individual action.

Justice Dalphond noted that, in Quebec, where the contract governing the parties' relationship contains an arbitration clause, the only competent forum to hear a dispute governed by this clause is the arbitration tribunal. The courts of law can acquire jurisdiction only when the parties agree to waive the application of the arbitration clause. Thus, even in the absence of an arbitration notice, the Superior Court must decline jurisdiction in respect of the members who are linked to Telus by a valid arbitration clause. Furthermore, Justice Dalphond added that he questioned why a party would be forced to give notice of arbitration where he considers that there is no dispute with his co-contracting party?

He concluded that the law cannot lead to such an absurd result. It is true, in the context of the exercise of an action to assert a personal right, that the courts have never required a defendant to give notice of arbitration in order to grant a request to refer a file to arbitration. Nor does the law provide for such a requirement.

Regarding the application of article 4.2 CCP, Justice Dalphond noted that, in the case of Marcotte v. Ville de Longueuil, the Supreme Court determined that this provision does not create substantive law and is only to be used as a principle for guiding the courts with respect to case management. To use article 4.2 CCP to disregard a legal principle, such as that contained in article 2638 of the Civil Code of Québec regarding a jurisdictional issue, is an error in law. The result is that article 4.2 CCP only applies if the court has jurisdiction to hear the dispute.

With respect to the interpretation of the joint and several liability clause contained in Telus's contracts, Justice Dalphond found that Justice Peacock had erred in using the criterion of convenience to refuse to dissociate the remedies of the consumers from the remedies of the corporate customers. To thereby refuse to apply a clear and valid arbitration clause is an error in law.

Finally, with respect to the validity, per se, of the arbitration clause, firstly, Justice Dalphond noted that the CPA did not apply to Telus's corporate customers, as this was not a consumer contract. Regarding the allegedly abusive nature of the arbitration clause on the grounds that the clause contained a waiver of the right to participate in a potential class action, Justice Dalphond noted that the arbitration tribunal has the primary jurisdiction to decide this issue, as the Supreme Court has held on numerous occasions.


This decision of the Court of Appeal highlights the fact that there are two types of customers that are quite distinct from each other using the services and products of cellphone suppliers. This decision raises, but does not clearly address, the following issue: under what circumstances is a cellphone contract a consumer contract as opposed to a commercial contract? Where it is a commercial contract, the new provisions of the CPA on contracts involving sequential performance for a service provided at a distance would not apply.

This raises the further issue: when a cellphone is used exclusively (or to a large extent) for business purposes (or, in the terms of the Civil Code of Québec, for the operation of an enterprise), are the terms of use of the service governed by the provisions of the CPA? The answer to this question must lie in the definition of consumer contained in section 1(e) of the CPA: a consumer means "a natural person, except a merchant who obtains goods or services for the purposes of his business." Legal persons are therefore excluded ipso facto. But what about natural persons who use cellphone services for their business? On the face of it, it seems that a contract for a cellphone used for the operation of a business would not be a consumer contract and that, in such a case, the conditions for the use of the service and the terms governing the acquisition or rental of the phone are quite possibly not subject to the CPA. Thus, for these types of customers, the prohibitions against a fixed term, the stipulations dealing with the termination of the contract, the applicable indemnities, and the other specific terms contained in the CPA would have no effect.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.