Canada: SCC Weighs-In On Consumer Protection Remedies In Quebec Class Actions

On September 19, 2014, the Supreme Court of Canada released a trilogy of decisions examining the standing of representative plaintiffs and the availability of consumer protection legislation in the class action context. Though these decisions are particular to Québec, and its consumer protection legislation, they provide insight into how consumer protection legislation is broadening the scope of available remedies in class actions.

In Bank of Montreal v Marcotte, 2014 SCC 55, Amex Bank of Canada v Adams, 2014 SCC 56, and Marcotte v Federation des caisses du Desjardins du Quebec, 2014 SCC 57, the representative plaintiffs brought class actions on behalf of consumers who incurred conversion charges from banks as a result of making foreign currency purchases on their credit credits. Among other things, the representative plaintiffs: (a) alleged that the conversion charges imposed by the banks violated section 12 of Québec's Consumer Protection Act (QCPA) because the charges were not properly disclosed by the banks; and (b) sought repayment of the conversion charges under section 272 (the remedies section) of the QCPA.

Decisions and Issues

At the Québec Superior Court, the trial judge divided the banks into two groups: the Group "A" Banks (including BMO, NBC Citibank, and TD banks) and the Group "B" Banks (RBC, CIBC, Scotia, and Laurentian banks). The trial judge found that the Group "A" and "B" Banks violated section 12 of the QCPA by failing to mention the conversion charge or to provide details about it to cardholders. Under section 272 of the QCPA, these banks (with the exception of TD bank) were ordered to make collective retribution to cardholders in the amount of the conversion charges. TD Bank was ordered to make individual retribution because it refused or failed to provide the information at trial required to make collective retribution. The trial judge also awarded punitive damages in the amount of $25 per cardholder against each Group "A" Bank.

The Québec Court of Appeal overturned the trial judge's findings against the Group "B" Banks, holding instead that these banks had met the disclosure requirements under the QCPA. However, the Court of Appeal accepted the trial judge's findings with respect to the Group "A" Banks, with the exception of the award of punitive damages, which were overturned against all of the Group "A" Banks except TD.

The Supreme Court of Canada accepted the Court of Appeal's decision with respect to the Group "B" Banks, but restored the trial judge's award of punitive damages against all of the Group "A" Banks.

At all three levels, the courts were required to examine, among other issues:

  1. Whether the representative plaintiffs had standing to bring the class actions, despite not having a direct cause of action against some of the named banks; and
  2. Whether the requirement for the banks to disclose the conversion charges under the QCPA was in conflict with the Constitution Act, 1867 and federal head of powers, which regulates banking in Canada, such that the doctrines of interjurisdictional immunity and paramountcy apply. The banks advanced a similar argument with respect to the Bank Act.

On the issue of standing, the Supreme Court found that nothing in the nature of class actions or the authorization (i.e., certification) criteria require a representative plaintiff to have a direct cause of action or legal relationship with each defendant in the class action. Rather, the court's focus is on, among other things, whether there are identical, similar or related questions of law or fact and whether there is someone who can adequately represent the class.

In the present case, the Supreme Court held that the similarity of issues among the banks (including the interpretation and application of the QCPA and the constitutional applicability of the QCPA to the Constitution Act, 1867 and the Bank Act) gave the plaintiffs the required standing in these actions. In making its decision, the Supreme Court was guided by its decisions in Infineon and Vivendi, which require courts to adopt a proportionate approach to class action standing that economizes judicial resources and enhances access to justice.

On the issues of interjurisdictional immunity and paramountcy, the Supreme Court examined sections 12 and 272 of the QCPA and found no conflict with the Constitution Act, 1867. In its reasons, the Supreme Court noted that the provisions of the QCPA which require banks to disclose information and provide broader remedies to consumers did not impair the federal power to regulate banking activities, or impair the ability of banks to dictate the terms of their relationships to consumers. Rather, they were intended to provide further rights and remedies to consumers.

The banks tried to make a similar argument with respect to the Bank Act, and that sections 12 and 272 of the QCPA were in conflict with the Bank Act because they effectively allowed consumers to nullify their contracts with the bank. The Supreme Court rejected this argument, finding that the consumers were not seeking to nullify their contracts, but were seeking to reduce the amounts they otherwise had to pay the banks for conversion charges.

Future Application to the Class-Action Context

There are two important takeaways from the Supreme Court of Canada's decisions:

  1. In Québec, as in other Canadian jurisdictions, a representative plaintiff does not require a direct cause of action against all defendants in order to represent the class; and
  2. The robust rights and protections available to consumers under the QCPA may be used more frequently, and where it is not in direct conflict with other federal legislation, to expand the scope of remedies otherwise available to a class of consumers under the civil law.

Though these decisions come from the Supreme Court of Canada, their application is particular to Québec, which has a very expansive consumer rights and remedies provisions under the QCPA as compared to other jurisdictions. As such, it is unclear at this stage how universal these decisions or their principles will be applied in common law jurisdictions.

Notwithstanding, the decisions recognize that the rights and remedies under consumer protection legislation will not be easily marginalized by pre-existing legislation, particularly where there is no conflict. As such, consumers, including those in the class action context, may begin to increase their reliance on breaches and remedies under the consumer protection legislation where the context permits.

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.

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