Canada: Ontario Court Of Appeal Inspiring Consumer Misrepresentation Class Actions

Last Updated: February 4 2016
Article by Laurie Baptiste

Most Read Contributor in Canada, September 2018

The Ontario Court of Appeal is once again making headlines with the case of Ramdath v George Brown College, which has turned out to be a doubly significant case at the intersection of class actions and consumer protection legislation.

The case first captured attention in 2013 when the Ontario Court of Appeal confirmed that students are "consumers" and education a "consumer product", and that consumers do not need to prove reliance on a false, misleading or deceptive representation to establish an unfair practice and a right to a remedy. Now in its most recent decision, the Court went further still—confirming the Consumer Protection Act1 does not require any reliance on or even knowledge of the unfair practice and also that corrections of an unfair practice will be too late and of no effect if done after a consumer makes an agreement to purchase.

In addition, this was the first award of aggregate damages at trial under s. 24 of the Class Proceedings Act2 in an Ontario class action, including to a class with a consumer protection claim, and the Court of Appeal upheld that award. The Court helpfully clarified that, in a claim for unfair business practice, individual proof of reliance is not required to quantify and award damages and the amount of damages is not required to be determined on an individual basis.

The overall result is an expansion of the application of consumer protection legislation and a lowering of the bar for recovery for unfair business practices and misrepresentation class actions. This decision has some potential to inspire other consumer protection class actions. The Court itself expressly found that the lack of need to prove reliance or inducement in claims under the Consumer Protection Act facilitates the use of that act as a basis for class actions.

As a result of Ramdath, all those who make or provide consumer products or services, including educational providers and institutions, should be aware of this decision and ought to be thoughtful and careful in all of their communications and in the information they distribute about their products or services.

Background and Decision Below

Feldman JA, for the Court, summarized succinctly the relevant background and decision below (at paras 2-3). As he explained, the plaintiffs/appellants were students (mostly foreign students) who enrolled in a post-graduate program in International Business Management at George Brown College ("GBC") in 2007 and 2008. They claimed that GBC's course calendar contained a misleading statement that program graduates would have "the opportunity to complete three industry designations/certifications" in addition to the GBC graduate certificate. However, students had to complete additional courses or work experience as well as exams at their own expense, in order to fulfill the requirements for the industry designations. They first complained to GBC and then commenced a class action against GBC for negligent misrepresentation, breach of contract and unfair practice under the Consumer Protection Act.

Feldman JA also explained how the class action has proceed in stages:

  1. The first stage was certification of the class action;3
  2. Next, there was a common issues trial where the court found the statement in the course calendar was a negligent misrepresentation and an unfair practice.4 That decision was upheld on appeal.5
  3. Then there was the damages trial, at which the court awarded aggregate damages for the statutory cause of action but removed one group of students from the certified class (the latest group to start the program, in September 2008, whom had been orally advised at the beginning of the term about a correction to the course calendar within the 10-day course withdrawal period).6

The students appealed the change to the class composition (i.e., the removal of the one group of students) and GBC cross-appealed on the aggregate damages award.

There Should Have Been No Exclusions From The Certified Class

In regards to the appeal by the students, the Court of Appeal found that the trial judge made a number of errors of law and a palpable overriding error of fact which undermined his analysis when he excluded the third group of students from the certified class.

First, the Court reiterated that because the plaintiffs elected to pursue only their Consumer Protection Act claim at the damages trial (and not their claim for negligent misrepresentation), reliance on the misrepresentation was no longer in issue. Therefore, the trial judge erred in considering evidence as to reliance by the third group of students. The facts showed that all of the students who commenced the program in September 2008 had entered into an agreement with GBC (i.e., they had enrolled) and made some payment toward tuition while course calendar still contained the misrepresentation. Given that, all of these students were subject to the unfair practice and entitled to a remedy.

Second, the Court found the trial judge erred by excluding the third group of students because an oral correction had been provided within the 10-day course withdrawal period and they had an opportunity to withdraw. To the extent the trial judge's conclusion was made on the basis of reliance or knowledge, that was an error of law. The Court clarified that claims under the Consumer Protection Act based on an agreement entered into following an unfair practice do not require any reliance or even knowledge of the unfair practice. In the alternative, if the trial judge found the oral correction had essentially nullified the unfair practice for the third group, the Court found the oral correction came too late. The students had entered into their agreements with GBC after the unfair practice and before the correction, so their claim had already crystallized.

Finally, the Court found the trial judge erred in finding the third group of students had the opportunity to withdraw and obtain a full refund and so were not victims of an unfair practice.

Aggregate Damages Desirable – Reliance and Individual Assessment Not Needed

The damages phase of proceedings went forward based only on the students' claim for aggregate damages due to the unfair practice, which did not require proof of reliance by any of the class members. Nonetheless, GBC's position was that such damages depended on showing individual causation and could only be assessed on an individual basis. The trial judge disagreed and assessed damages on an aggregate basis.

The Court of Appeal endorsed the trial judge's view that it was desirable to award aggregate damages where the criteria of s. 24(1) of the Class Proceedings Act were met. The Court also agreed with the overall approach of the trial judge and his focus on the "reasonableness" standard to determine aggregate liability, as well as with the three criteria he set out to ensure fairness to both sides (at para 76):

  1. whether the non-individualized evidence presented by the plaintiff is sufficiently reliable;
  2. whether use of the evidence will result in unfairness or injustice to the defendant, such as overstatement of its liability; and
  3. whether the denial of an aggregate approach will result in a "wrong eluding an effective remedy" and a denial of access to justice.

The Court noted that the specific question before the trial judge was "whether aggregate damages could be awarded in this case as the remedy for an unfair practice under s. 18(2) of the Consumer Protection Act. It therefore involved the interaction between the Consumer Protection Act and the Class Proceedings Act" (at para 79).

In this regard, there were two key related issues raised by GBC: (1) Even when reliance was not an element of establishing an unfair practice, was an award of damages dependent on showing an individual causal connection? (2) Did the court have to determine the amount of damages on an individual basis?

The trial judge had avoided answering either question directly finding, in the end (in error), a sufficient causal connection had already been established. The Court of Appeal dealt with the questions head-on. First, the Court confirmed that because there is no requirement for reliance or inducement, claims for liability under the Consumer Protection Act are proper for certification (as in this case), which facilitates the use of that act as a basis for class actions. Further, while to be awarded damages under s. 18(2) of the Consumer Protection Act a consumer still needed to establish causation, the necessary causal link in this case flowed from entering the agreement after or while an unfair business practice was occurring. A causal link was not required between the actual unfair practice and the damages (as suggested by GBC) as that would wrongly reintroduce the need for reliance or inducement into the remedy.

Overall, the Court clarified that individual proof of reliance is not required to quantify and award damages—in a statutory claim for an unfair business practice under the Consumer Protection Act, reliance is not a component of the claim.

Further, damages are not required to be determined on an individual basis. The Court upheld the trial judge's approach in relying on evidence from particular individual plaintiffs and extrapolating from that evidence for the whole group. The Court found the trial judge was properly looking for reliable evidence to "reasonably" determine components of aggregate damages as required. The Court also found no error with the trial judge's reliance on expert evidence for certain components of damages.

Case Information

Ramdath v. George Brown College of Applied Arts and Technology, 2015 ONCA 921

Date Released: December 24, 2015

Docket: C59349

Footnotes

[1] RSO 1990, c C.31.

[2] 1992, SO 1992, c 6.

[3] 2010 ONSC 2019.

[4] 2012 ONSC 6173.

[5] 2013 ONCA 468.

[6] 2014 ONSC 3066 and 2014 ONSC 4215.

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