Canada: BC's Court Of Appeal Decertifies "Children's Cough And Cold" Class Action And Confirms That The "Business Practices And Consumer Protection Act" Is An "Exhaustive Code" For The Regulation Of Consumer Transactions In British Columbia

The recent decision in Wakelam v Wyeth Consumer Healthcare/Wyeth Soins de Sante Inc.1 signals the British Columbia Court of Appeal's intention to deal with difficult questions of law early on in class action proceedings - at the certification stage - rather than leaving such questions for the trial judge or "another case."2 In doing so, the Court of Appeal has confirmed that BC's Business Practices and Consumer Protection Act3 is a complete code, and confirmed that alleged breaches of the BPCPA cannot be used by would-be plaintiffs to establish the requisite "wrongful act" required to prove tort and equitable claims.

The Facts

Prior to December 2008, cough syrup had a long history of use in children. In December 2008, Health Canada reversed its longstanding policy permitting the sale of non-prescription cough and cold medicine ("cough syrup") for use by children under the age of six. The prevailing scientific understanding had been that cough syrup worked the same way for children and adults, and that its demonstrated efficacy in adults could be extrapolated to children. However, Health Canada moved away from depending on such extrapolation - in the absence of direct evidence of efficacy in children – and revised its labeling requirements for the medicine to say that it should not be used by children under the age of six.

Following this change of policy, the plaintiff, Ms. Wakelam, commenced an action against several manufacturers of cough syrup claiming that she purchased approximately five bottles before December 2008 for use by her son who was under the age of six. Ms. Wakelam did not allege that her son was harmed by the cough syrup, or that the cough syrup failed to work. Instead, Ms. Wakelam claimed that by marketing cough syrup for use in children under the age of six before December 2008 (even though permitted to do so by Health Canada), the defendant manufacturers engaged in "deceptive acts or practices" contrary to the BPCPA, and made representations contrary to the Competition Act.4

In April 2011, Ms. Wakelam brought an application for class certification under BC's Class Proceedings Act5 seeking to certify a class consisting of all persons resident in British Columbia who purchased cough syrup for use by children under the age of six and supplied by the defendant manufacturers since 1997.6 The certification judge granted certification on most of the terms sought by Ms. Wakelam.7

The defendant manufacturers appealed certification on several grounds.8 In particular, with respect to the BPCPA, the manufacturers appealed certification on the basis that the certification judge erred in law by finding that Ms. Wakelam's pleadings disclosed a cause of action consisting of a breach of the BPCPA for which a court might grant restitutionary relief.

Cause(s) of Action Under BPCPA

Ms. Wakelam's BPCPA claim was grounded on the assertion that the defendant manufacturers engaged in "deceptive acts or practices" by "supplying, soliciting, offering, advertising, and promoting" cough syrup for use in children under the age of six during the class period.9 Specifically, her claim asserted that the defendant manufacturers: (1) represented that the cough syrup was effective for children when it was not; (2) failed to disclose that the cough syrup was not effective for children; and (3) failed to disclose that cough syrup can be dangerous when it is used by children under six. Each representation or omission, Ms. Wakelam asserted, had the "capability, tendency or effect" of deceiving or misleading consumers in British Columbia and thus constituted deceptive acts or practices pursuant to the BPCPA ("Alleged Breaches").10

In addition to the damages potentially available to Ms. Wakelam pursuant to the BPCPA as a result of the Alleged Breaches, Ms. Wakelam relied on the Alleged Breaches to claim that the defendant manufacturers had also committed the requisite "element" or "wrongful act" needed to seek recovery on the basis of "unjust enrichment, waiver of tort and constructive trust" ("Restitutionary Claims").11 On the assumption that she could prove the Restitutionary Claims by proving the Alleged Breaches, Ms. Wakelam sought to recover restitution or disgorgement from the profits of the defendant manufacturers in relation to the sale of the impugned cough syrup, which remedies would not otherwise be available to her under the BPCPA.

On Appeal

Although the defendant manufacturers continued to dispute the Alleged Breaches, on this appeal the manufacturers argued that the Restitutionary Claims could not meet the "plain and obvious" test for class certification, due to recent decisions made by the Supreme Court of Canada and the BC Court of Appeal.12 In Koubi, the Court of Appeal held that the BPCPA "is an 'exhaustive code' for the regulation of consumer transactions and that so called 'anti-enrichment' claims premised on breach of the [BPCPA] are not available in law."13 As such, the Court of Appeal decertified the anti-enrichment portion of the claim. These decisions had not been available to the certification judge at Ms. Wakelam's original certification hearing.

In Wakelam the Court of Appeal followed, and expanded upon, the reasoning in Koubi, holding that there is "no legislative intent to create restitutionary causes of action arising from or based on breaches" of the BPCPA. Accordingly, the Court of Appeal reasoned that the allegations of waiver of tort, unjust enrichment, and constructive trust were bound to fail, and thus decertified those portions of Ms. Wakelam's claim and with it her claims for disgorgement of the profits of the defendant manufacturers. The Court of Appeal went on to consider the other grounds of appeal raised by the defendant manufacturers, and ultimately struck out all monetary claims and decertified the entire proceeding, leaving Ms. Wakelam to seek certification of the few non-monetary portions of her claim that remained at a later date.14

Takeaways

The series of recent judicial pronouncements from BC's highest court signals that the courts are prepared to tackle difficult questions of law head on in the context of class action proceedings. Parties facing claims brought under the BPCPA may now more easily be able to preclude claims for non-statutory monetary relief as a result of Wakelam and other recent decisions. Plaintiffs, to date, have regularly relied on restitutionary claims to avoid the difficultly of demonstrating causation and harm on a class wide basis. The effect of Wakelam is that it may now be easier to avoid restitutionary claims, to focus on claims for damages with their difficult individual issues of causation and harm, and to thereby resist class certification.

Footnote 

1 2014 BCCA 36 ("Wakelam").

2 Ibid at 64.

3 SBC 2004, c 2 ("BPCPA").

4 RSC 1985, c C-34 ("Competition Act").

5 RSBC 1996, c 50 ("CPA").

6 See e.g. Wakelam at 61-62.

7 Wakelam v Johnson & Johnson, 2011 BCSC 1765.

8 Wakelam at para. 7.

9 Ibid at paras. 45-46.

10  Ibid.

11 Ibid at para. 55.

12 Ibid at para. 56; see also e.g. Koubi v Mazda, 2012 BCCA 310 ("Koubi").

13 Ibid at para. 56.

14 Ibid at para. 109.

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2014 McMillan LLP

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