In Ileman v. Rogers Communications Inc., a unanimous
division of the Court of Appeal for British Columbia upheld the
lower court's refusal to certify a claim against Canada's
national telecommunications companies for their charging cellphone
users a "system access fee".
The Plaintiff's Claim
The plaintiff attempted to certify a class action on the basis
that the defendants represented to consumers that a system access
fee is charged and collected by them on behalf of a third party
agency or body, or alternatively that it is a government regulatory
cost recovery charge (the "Representation"). He alleged
that the Representation is false and amounted to a "deceptive
act or practice" within the meaning of the British Columbia
Business Practices and ConsumerProtection Act
("BPCPA"). The plaintiff sought declaratory and
injunctive relief and a restorative order under the BPCPA.
The plaintiff also brought a claim for unjust enrichment and
monies had and received against Bell. The plaintiff conceded that
the claims for unjust enrichment and monies had and received
against TELUS and Rogers and Fido (except for a short period of
time in the case of Rogers and Fido) had to be stayed as a result
of the Supreme Court of Canada's decision in Seidel v.
TELUS Communications Inc., which held that if the cellular
telephone service contracts contained arbitration clauses,
subscribers were precluded from litigating in respect of those
contracts, except for under the BPCPA.
Certification Judge's Refusal to Certify
With respect to the claim under the BPCPA, the certification
judge held that the phrase "system access fee", without
more, arguably had the capability of leading consumers to believe
that the entirety of the fee was required to offset the
defendants' costs paid to government for their respective
spectrum licences. But he held that a restorative order was not
available to the plaintiff because he had to establish a
proprietary interest in the monies to be restored and there was no
foundation for a pleading of such an interest. He also held that a
class proceeding was not the preferable procedure for seeking a
declaration or an injunction pursuant to the BPCPA.
The certification judge concluded that the claim for unjust
enrichment was bound to fail because the contracts, which expressly
provided for the payment of system access fees, were a juristic
reason for the enrichment. Further, as there was no pleading of a
failure of consideration it was plain and obvious that the
plaintiff's claim for monies had and received was also bound to
The Court of Appeal's Reasons for Judgment
The Court of Appeal held that the certification judge erred in
concluding that there was a cause of action from the use of the
phrase "system access fee". The Court found that there
was no foundation for the certification judge's conclusion that
the term had the capability of leading consumers to believe that
the entirety of the fee was required to offset the defendants'
costs paid to government. The Court found unassailable the
certification judge's earlier finding that there was nothing in
the word "fee" and the term "system access fee"
that suggested that the fee would be remitted to government.
The Court of Appeal then dealt with the grounds of appeal raised
by the plaintiff. The Court concluded that although the
certification judge interpreted s. 172(3)(a) of the BPCPA too
narrowly by importing into it a "proprietary nexus"
requirement, he was correct in his conclusion that the plaintiff
did not have "an interest" in any money in the hands of
the defendants as that phrase is used in s. 172(3)(a) and thus the
plaintiff's claim for a restoration order was bound to fail.
The Court also upheld the certification judge's decision that
the claims for unjust enrichment and monies had and received were
bound to fail.
The full decision of the Court of Appeal is available online,
and is indexed as 2015 BCCA 260.
Impact of Decision
This decision affirms that whether "the pleadings disclose
a cause of action" is a substantive element of the test for
certification. Cases can (and do) fail at that initial stage.
The recent decision of the Ontario Court of Appeal in BMW Financial Services Canada, a Division of BMW Canada Inc. v. McLean provides some useful insight into the relationship between automobile dealers and the financing arms of the manufacturers for whom those dealers are franchisees.
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