On March 23, 2009, the British Columbia Court of Appeal
(B.C.C.A.) in MacKinnon v. National Money Mart
Company, 2009 BCCA 103 (Money Mart) confirmed
that arbitration clauses in consumer contracts, including consumer
loan agreements and service contracts, are enforceable even in the
face of a proposed class action. This means that, where the parties
have entered into an agreement to arbitrate, even if a proposed
class action has been filed, the action should be stayed and the
dispute sent to arbitration. In reaching this conclusion, the
B.C.C.A. applied two decisions of the Supreme Court of Canada that
had arisen from disputes in Québec. This decision has
particular implications for jurisdictions, like B.C., that lack
legislation prohibiting arbitration agreements with consumers.
The Supreme Court of Canada addressed this question in two
concurrent appeal cases from Québec: Union des consommateurs v. Dell
Computer Corp,  2 S.C.R. 801, 2007 SCC 34
[Dell], and Muroff v. Rogers Wireless Inc.,  2 S.C.R.
921, 2007 SCC 35 [Rogers]. In Dell, the
majority of the court held that the substantive agreement to
arbitrate was to be enforced despite the fact that the case had
been certified as a class action. The majority set out a
jurisdictional approach to arbitration clauses in the class actions
environment: arbitration is based on a substantive agreement,
whereas a class action (even once certified) is merely procedural.
Where the parties have agreed to arbitrate and the requirements of
the arbitration legislation are met, the court is without
jurisdiction. Accordingly, in this case, Madam Justice Deschamps,
speaking for the majority, set out a general rule of referral to
arbitration for all but pure questions of law.
In Dell's companion case, Rogers, a mobile
telephone service agreement contained an arbitration clause
referring all disputes to arbitration. The plaintiff subscriber
alleged overcharges on long-distance "roaming" calls and
sought class action certification. Chief Justice McLachlin applied
the principles in Dell and ruled that the matter should be
sent to arbitration. The Québec courts had also determined
this case was appropriate for certification.
The live question has been whether common law courts will
interpret the principles from Dell and Rogers
favouring arbitration broadly, or whether they will confine them to
On March 13, 2009, a panel of five justices of the Court of
Appeal of British Columbia in Money Mart held that the
principles from Dell and Rogers, including the
general rule of referral, were the law in British Columbia. In so
doing, British Columbia's pre-Dell approach was
overruled. Newbury J.A. for the court reasoned that Dell
and Rogers logically extend to the law of British
Columbia. She held that the various features of class proceedings
are essentially procedural and "cannot be used to overcome the
exclusive jurisdiction of arbitral tribunals or to modify the
substantive rights of parties to arbitration agreements. The lesson
of the Supreme Court's decisions is that a valid agreement to
arbitrate "removes the dispute from the court's purview
provided one of the parties applies [for a stay of the court
proceeding] within the applicable time limit."
McCarthy Tétrault Notes
In British Columbia, as in Québec, then, where parties
enter into an agreement to arbitrate any dispute between them,
including where the agreement to arbitrate is contained in an
on-line purchase contract or a loan document, the courts cannot
resolve the dispute by class action or individual action if one of
the parties applies for a stay.
Some provinces, including Ontario and Québec, have
already provided a legislative "fix" for this situation,
forbidding arbitration agreements in certain types of consumer
contracts. In other provinces, including British Columbia, no such
legislation is in place, or has yet been proposed. The result is
that in British Columbia, an arbitration clause in a contract
— including a consumer contract — appears to be
an enforceable way to require disputes with customers be resolved
by arbitration rather than class action.
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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