Canada: Top Up Or Give Up: Prepaid Phone Card Class Action Dismissed

Last Updated: April 25 2016
Article by Wendy Sun

Prepaid mobile phone servicesoffer flexibility and freedom to those who do not wish to be locked intoa monthly plan. The downside is that prepaid phone cards only remain active for a certain period of time, called the "active period". At the end of the active period any unused credits expire, unless the user "tops up" the account before the end of the active period.

The Ontario Court of Appeal has recently upheld Bell's practiceof expiring unused credits at the end of the active period in Sankar v Bell Mobility Inc., dismissing an appeal from summary judgement granted in favour of Bell in February 2015.

Bell's prepaid wireless phone cards allow customers to access its wireless network for a specified period of time. The customer can extend the activation period by topping up the account, that is, by adding additional credits on the account. Customers who do not top up lose thecredits on the account, as it is Bell's practice to claim the unused funds the day after the end of the active period. For instance, if the active period ended on June 30 and the account had not been topped up, Bell would claim the balance on the account on July 1.

The plaintiffs, a class consisting of consumers who had purchased pre-paid mobile phone cards, alleged that Bell's policy of expiring unused credits breached its service contract and wasalso contrary to Ontario'sGift Card Regulationunder theConsumer Protection Act,which prohibits the imposition of expiry dates on gift cards.

No breach of contract

The breach of contract argument boiled down towhether Bell was contractually entitled to seize the unused credits remaining on the accountonthe stated expiry date, orafter the expiry date. To answer thatquestion, the court had to interpret the expiry provisions in theagreements during the class period. Bell and Solo's agreements stated:

Value deposited into your prepaid account is available as prepaid credits for your Service and such credits are non-refundable, non-transferable, and will expire after a specified time period.

Virgin Mobile's agreement provided that:

All Top Ups [...] have specified active periods and an expiry date. The active period starts on the date you place the Top Up on your account. Any Top Up balance on your account after the expiry date is forfeited and non-refundable. If you Top Up your account before your existing credit expires or is used up, then your existing credit is added to the new Top Up value and the active period of the earlier Top Up is extended so that the later expiry date of the two Top Ups is valid for the entire amount.

To determine the parties' understanding at the time of the contract, Belobaba J. examined a number of other documents given to the class members, includingthe brand brochures and pamphlets, information written on the back of the prepaid cards, receipts for top up transactions (called "PIN receipts" because they contain a personal informationnumber used to activate the credit),and information available on the defendants' websites. All of these documents containedconsistent and unambiguous language which led the Belobaba J. to conclude that the defendants intended and the subscribers understood that any unused credits would expire at the end of the active period, and could be seized any time after that date. Thus if the active period ended on June 30, the credits could be seized onJuly 1.

On appeal, the plaintiffs argued that Belobaba J.should not have relied on extrinsic materials such as the PIN receipts, phone cards, brochures and websites, and instead should have considered subsequent communications from Bell to its customers stated in the subscriber-account information, which could have been interpreted in favour of the plaintiff.

The Court of Appeal disagreed, holding that the motion judge was entitled to rely on other documents that formed part of the contractual relationship at the time the agreement was made.

Because modern contracts are often made partly on paper and partly on the internet, it is not uncommon for contract terms to be found in a number of documents. Information contained on the PIN receipts, phone cards, and websites were not contemporaneous, but were interrelated withthe initial agreements.

On a plain reading of all the documents, the credits expired at the end of the active period, and Bell wasentitled to collect the unpaid funds on the following day, the court held. WhileBell's subsequent communication to its customers was misleading, the plaintiffs did not claim for misrepresentation or promissory estoppel on a class-wide basis as it would require proof of individual reliance.

Not a gift card

The prohibition on expiry dates forgift card agreements found in the Gift Card Regulation madeunder theConsumer Protection Act did not apply, Belobella J. held, because theRegulation onlycovers cash-equivalent credits or vouches that are purchased asgifts forthird parties rather than for personal consumption. While the Regulationwouldapply to prepaid phone cards purchased as a gift for a third party, there is no breach of theRegulationbecause none of the defendant's PIN Receipts had expiry dates. TheRegulationis only concerned with expiry dates on the gift card itself, and not with any time-limitations on the services that are provided once the card is activated.

The Court of Appeal did not find it necessary to address the issue of whether theGift Card Regulationapplies only to cards or voucherspurchased as gifts. Instead, the court agreed with the motion judge that the Regulation only prohibits an expiry date on the future performance of the agreement. Nothing in the language of theRegulationpreventsan agreement from being time limited, similar to the situation where a gym membership expires 30 days after activation.

Consumer contracts in the internet age

This case provides an interesting example of interpretation of contracts in the age of the internet. Belobaba J.'s approach, which was accepted by the Court of Appeal, highlights how virtually all of the communications by a business to its customers might be used to interpret the contract. Here, the fact that Bell's communications were, for the most part, consistent with the interpretation sought by Bell, won the day. Still, the suggestion that subsequent communications that are inconsistent might give rise to an estoppel highlights the importance of consistency of terms across all communications by a business to its customers.

The two decisions also provide a useful clarification of the law on gift cards, clarifying the distinction between the expiry of a gift card, which is not allowed, and a time limitation ona service provided pursuant to a gift card once activated, which is allowed.

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.

Wendy Sun
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions