Supreme Court: consumer protection law doesn't permit businesses to sue Telus | iNFOnews | Thompson-Okanagan's News Source
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Supreme Court: consumer protection law doesn't permit businesses to sue Telus

The Supreme Court of Canada is seen in Ottawa on October 2, 2012. THE CANADIAN PRESS/Adrian Wyld
Original Publication Date April 04, 2019 - 10:56 AM

TORONTO - Telus Corp. scored a victory Thursday, after the Supreme Court of Canada ruled that business customers of its mobile phone service are contractually prevented from joining class action suits.

A majority of judges in the 4-3 decision ruled that an Ontario judge erred in allowing Avraham Wellman, a Telus business customer, to be a plaintiff in a consumer class action case against a Telus billing practice.

The class action was fought over the company's practice of "rounding up" talking time to the next minute, thereby depleting a plan's monthly minutes faster than if the actual time was recorded.

Telus had argued Ontario's consumer protection law didn't apply to business customers like Wellman and he had to abide by his contract's provisions for deciding disputes outside of the court system, through arbitration.

Four judges at Canada's top court agreed with Telus, but three others dissented.

Lawyer Craig Lockwood, who's not involved with the Telus-Wellman litigation, said it's one of a series of cases that have been dealing with "the inherent tension" between the class action regime and the arbitration provisions in contracts.

The Wellman case had the potential to reduce the effectiveness of contracts with mandatory arbitration provisions by giving businesses an opportunity to seek out like-minded consumers to wage a united class action battle.

Lockwood, a partner at Osler, Hoskin & Harcourt LLP, said the Supreme Court was asked to decide whether Ontario's Arbitration Act gives judges the discretion to include business customers in consumer class actions.

The case went to Canada's top court after Telus appealed an Ontario judge's ruling, which said Wellman could be a representative plaintiff in the consumer class action case because it was unreasonable to separate the two groups.

The Supreme Court's majority disagreed with the judge's decision, which was upheld by the Ontario Court of Appeal.

The Supreme Court ruled that the Ontario Arbitration Act doesn't give judges that discretion and business customers must be bound by the arbitration provisions of their contracts.

"Sorting between consumers and non-consumers may be cumbersome in certain cases, but this inconvenience does not permit the court to re-cast the legislation as it sees fit in order to avoid such difficulties," the decision said.

"In sum, the motions judge and the Court of Appeal erred in law by interpreting s. 7(5) of the Arbitration Act, 1991 incorrectly and refusing to order a stay that, under s. 7(1), was mandatory. Section 7(5) of the Arbitration Act, 1991 does not permit the court to ignore a valid and binding arbitration agreement."

Telus issued a statement Thursday saying it was pleased that the Supreme Court recognized commercial arbitration as an effective and appropriate method of resolving disputes.

"Arbitration supports our desire to resolve issues directly with our business customers in a manner that is simple, timely and cost-effective for them. We believe that most business customers feel the same way . . ."

However, three Supreme Court justices disagreed with the majority ruling.

"Since 2002, the Ontario Court of Appeal has interpreted s. 7(5) as granting the discretion to stay matters that would otherwise be subject to arbitration.

"Similarly, for nearly a decade, the Ontario Court of Appeal has interpreted s. 7(5) as permitting otherwise arbitrable matters to be joined with class actions in the public interests of avoiding duplicative proceedings, increased costs, and the risk of inconsistent results."

The dissenting opinion goes on to say arbitration was intended to be a means to resolve disputes between parties on a relatively equal bargaining footing.

"Parties to mandatory individual arbitration clauses cannot reasonably be said to have “come to the table” and bargained, since there is no bargaining table. That individuals and companies sign these contracts is a function not of bargaining choices, but of an absence of choice."

The dissenting judges concluded that the Ontario judge had properly used discretion by deciding to allow the business claims "to be joined with the consumer class action dealing with the same issues."

Companies in this story: (TSX:T)

News from © The Canadian Press, 2019
The Canadian Press

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