Canada: Proven Or Presumed Prejudice? The Quebec Court Of Appeal Clarifies The Burden Of Proof Under Consumer Protection Law

Is a consumer plaintiff required to prove the actual prejudice suffered and its causal link with the alleged violation in order to obtain compensatory damages under Quebec's Consumer Protection Act ("CPA")? In recent years, counsel acting for plaintiffs and defendants in class actions tended to have different answers to this question based on different interpretations of the Supreme Court decision in Richard v. Time Inc., 2012 SCC 8 ("Time"). In the recent judgment Videotron c. Union des consommateurs, 2017 QCCA 738, the Quebec Court of Appeal clarifies the issue and the meaning of the "absolute presumption of prejudice" discussed by the Supreme Court in Time.

Background

In 2007, Videotron, a major Internet service provider in Quebec, introduced a new Internet plan providing an unlimited access for a monthly fixed amount. The plan was an enormous success, with about 40,000 customers who subscribed to it.

Soon after its launch, Videotron experienced technical challenges with its new plan. A minority of subscribers were consuming an excessive amount of bandwidth, resulting in a generalized slowdown of the network for all subscribers.

In order to resolve the issue, Videotron imposed a cap on monthly consumption of bandwidth (100 Go) and charged a $1.50 fee for each additional Go consumed by subscribers under the plan. This change was made applicable to existing subscriptions, pursuant to a clause in the contract allowing Videotron to change certain conditions of the plan, as well as new subscriptions. Videotron nonetheless continued to promote its plan as providing an unlimited access.

A class action was filed shortly thereafter, alleging that Videotron could not unilaterally change the conditions of its plan. The plaintiff also alleged that Videotron misrepresented the changes it made to the plan to its existing subscribers.

The class action was authorized (certified in Quebec parlance) in 2011 and, following a trial, a judgment on the merits of the case was rendered in August 2015. Relying extensively on Time, and invoking section 272 of the CPA, the Quebec Superior Court held Videotron liable and used the "presumption of prejudice" arising from the CPA to grant damages to various subclasses. An appeal followed.

Court of Appeal Decision

The Court of Appeal confirmed that Time stands for the principle that when a violation of the CPA is established, a consumer plaintiff may obtain one of the remedies provided by section 272 of the CPA without having to prove an actual prejudice and causation (e.g., that the consumer would not have entered into the contract but for the merchant's misrepresentation). In other words, the consumer plaintiff then benefits from a "presumption of prejudice". However, the Court of Appeal clarified that Time draws a distinction between the two subparagraphs of section 272 CPA, with the so-called "presumption of prejudice" applying only to the contractual remedies contemplated in sub-paragraph 1 (performance of the obligation, reduction of the obligation or cancellation of the contract) and not to claims of compensatory damages contemplated by subparagraph 2.

The Court of Appeal held that any claim for compensatory damages under subparagraph 2 of section 272 CPA remains subject to the general rules of Quebec civil law, which require proof of prejudice and causation.

Based on this finding, the Court of Appeal reversed some of the damages awarded by the Superior Court, including those to compensate class members for the loss of a "multiservice rebate", on the basis that causation between that loss and Videotron's CPA violation had not been proven. Citing their earlier decision in Montreal v. Biondi, 2013 QCCA 404, the Court of Appeal mentioned that causation, in the context of a class action, can be proven by a factual presumption, but that it must be a presumption arising out of the evidence, which was not the case here.

Commentary

The Videotron judgment is significant in its clarification of the restricted scope of the "presumption of prejudice" that arises under the s. 272 CPA. Other judgments by the Court of Appeal on the issue would be welcome, however, since a Superior Court judge recently refused in Option Consommateurs c. Meubles Léon, 2013 QCCS 2028 to follow Videotron on the basis that, in his view, the Court of Appeal's interpretation of the Supreme Court Time decision was incorrect. Stay tuned.

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