Richard v. Time Inc.

Richard v. Time Inc.
Collection
Supreme Court Judgments
Date
2012-02-28
Neutral citation
2012 SCC 8
Report
[2012] 1 SCR 265
Case number
33554
Judges
McLachlin, Beverley; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Cromwell, Thomas Albert
On appeal from
Quebec
Subjects
Civil law
Notes
SCC Case Information: 33554
Decision Content
SUPREME COURT OF CANADA
Citation: Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265
Date: 20120228
Docket: 33554
Between:
Jean-Marc Richard
Appellant
and
Time Inc. and Time Consumer Marketing Inc.
Respondents
Official English Translation
Coram: McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Charron and Cromwell JJ.
Joint Reasons for Judgment:
(paras. 1 to 217)
LeBel and Cromwell JJ. (McLachlin C.J. and Deschamps, Fish, Abella and Charron JJ. concurring)
Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265
Jean‑Marc Richard Appellant
v.
Time Inc. and Time Consumer Marketing Inc. Respondents
Indexed as: Richard v. Time Inc.
2012 SCC 8
File No.: 33554.
2011: January 18; 2012: February 28.
Present: McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Charron and Cromwell JJ.
on appeal from the court of appeal for quebec
Consumer protection — Prohibited business practices — False or misleading representations — Court of Appeal finding that merchant’s representations would not mislead consumer “with average level of intelligence, scepticism and curiosity” — Test for determining whether general impression given by representation constitutes prohibited practice — Consumer Protection Act, R.S.Q., c. P‑40.1, ss. 218, 219, 228, 238(c).
Consumer protection — Prohibited business practices — Recourses — Conditions for exercising recourses — Conditions that apply where consumer seeks, under s. 272 of Consumer Protection Act, to have court sanction violations of Title II of that Act — Consumer Protection Act, R.S.Q., c. P‑40.1, ss. 2, 253, 272.
Consumer protection — Prohibited business practices — Recourses — Consumer seeking compensatory and punitive damages under s. 272 of Consumer Protection Act — Conditions for awarding damages and criteria for determining their quantum — Consumer Protection Act, R.S.Q., c. P‑40.1, s. 272 — Civil Code of Québec, S.Q. 1991, c. 64, art. 1621.
In his mail, R received an “Official Sweepstakes Notification” (the “Document”) in the form of a letter supposedly signed by the manager responsible for the sweepstakes. Along the edge of the letter were boxes printed in colour, some of which, because they referred to Time magazine, could lead the recipient to infer that it was from T and TCM. In the Document, which was written in English only, several exclamatory sentences in bold uppercase letters, whose purpose was to catch the reader’s attention by suggesting that he or she had won a cash prize of US$833,337, were combined with conditional clauses in smaller print, some of which began with the words “If you have and return the Grand Prize winning entry in time”. In addition, the back side of the letter informed R that he would qualify for a $100,000 bonus prize if he validated his entry within five days. The mailing also contained a reply coupon and a return envelope on which the official rules of the sweepstakes appeared in small print. The reply coupon also offered R the possibility of subscribing to Time magazine. As well, the rules stated that a winning number had been pre‑selected by computer and that the holder of that number could receive the grand prize only if the reply coupon was returned by the deadline. If the holder of the pre‑selected winning number did not return the reply coupon, the rules explained, the grand prize winner would be selected by random drawing among all eligible entries, that is, everyone who had returned the reply coupon, and each participant’s odds of winning would then be 1:120 million. Convinced that he was about to receive the promised amount, R immediately returned the reply coupon that was in the envelope. In doing so, he also subscribed to Time magazine. R began regularly receiving issues of the magazine a short time later, but the cheque he was expecting was a long time coming. He contacted T and TCM, which informed him that he would not be receiving a cheque, because the Document had not contained the winning entry for the draw and was merely an invitation to participate in a sweepstakes. They also informed him that the manager who had signed the letter did not exist; the name was merely a “pen name”.
R filed a motion to institute proceedings in which he asked the Quebec Superior Court to declare him to be the winner of the cash prize mentioned in the Document and to order T and TCM to pay compensatory and punitive damages corresponding to the value of the grand prize. The Superior Court allowed the action in part. It held that the Document contravened Title II of the Consumer Protection Act (“C.P.A.”) on prohibited business practices and that the civil sanctions provided for in s. 272 C.P.A. were accordingly available. The judge set the value of the moral injuries suffered by R at $1,000 and fixed the quantum of punitive damages that were also awarded to him at $100,000.
The Court of Appeal allowed the appeal of T and TCM and concluded that they had not violated the C.P.A. First, T and TCM had not violated s. 228 C.P.A. by failing to indicate clearly in the Document that R might not be the grand prize winner. Moreover, using the name of a fictitious person as the signer of the Document did not contravene s. 238(c) C.P.A., since it did not have the potential to mislead consumers about the merchant’s identity. Finally, there were no false or misleading representations in the Document, as it would not mislead a consumer “with an average level of intelligence, scepticism and curiosity”. The Court of Appeal set aside the award of compensatory and punitive damages.
Held: The appeal should be allowed in part.
Per McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Charron and Cromwell JJ.: The analytical approach chosen by the Court of Appeal for establishing the general impression conveyed by the advertisement of T and TCM was inconsistent with the test adopted by the legislature. According to s. 218 C.P.A., which guides the application of all the provisions of Title II concerning prohibited business practices, to determine whether a representation constitutes such a practice, it is necessary to consider the “general impression” given by the representation and, where appropriate, the “literal meaning” of the words used in it. In the case of false or misleading advertising, the general impression is the one a person has after an initial contact with the entire advertisement, and it relates to both the layout of the advertisement and the meaning of the words used. It is analysed without considering the personal attributes of the consumer who has instituted proceedings against the merchant. To be consistent with the legislature’s objective of protecting vulnerable persons from the dangers of certain advertising techniques, the general impression test must be applied from the perspective of the average consumer, who is credulous and inexperienced and takes no more than ordinary care to observe that which is staring him or her in the face upon first entering into contact with an entire advertisement. Considerable importance must be attached not only to the text, but also to the entire context, including the way the text is displayed to the consumer. Defining the average consumer as having “an average level of intelligence, scepticism and curiosity” is inconsistent with the letter and the spirit of s. 218 C.P.A. A court asked to assess the veracity of a commercial representation must engage, under s. 218 C.P.A., in a two‑step analysis that involves — having regard, where appropriate, to the literal meaning of the words used by the merchant — (1) describing the general impression that the representation is likely to convey to a credulous and inexperienced consumer; and (2) determining whether that general impression is true to reality. If the answer at the second step is no, the merchant has engaged in a prohibited practice.
In this case, the average consumer, after first reading the Document, would have been under the general impression that R held the winning entry and had only to return the reply coupon to initiate the claim process. The Document’s strange collection of affirmations and restrictions was not clear or intelligible enough to dispel the general impression conveyed by the most prominent sentences. Even if it did not necessarily contain any statements that were actually false, the fact remains that it was riddled with misleading representations within the meaning of s. 219 C.P.A. Furthermore, the contest rules were not all apparent to someone reading the Document for the first time. These are important facts that T and TCM were required to mention. As a result, T and TCM also violated s. 228 C.P.A. However, the use by T and TCM of a “pen name” in their advertising material did not amount to a violation of s. 238(c) of the C.P.A., as the Document contained no false representations concerning their status or identity. It can be understood from a single reading that the Document was from them and that they did not claim to have a particular status or identity that they did not actually have.
Subject to the other recourses provided for in the C.P.A., a consumer can institute proceedings under s. 272 C.P.A. to have the court sanction a failure by a merchant or a manufacturer to fulfil an obligation imposed on the merchant or manufacturer by the C.P.A., by the regulations made under the C.P.A. or by a voluntary undertaking. Where a merchant or a manufacturer fails to fulfil an obligation to which s. 272 C.P.A. applies, the consumer can claim a contractual remedy, compensatory damages and punitive damages, or just one of those remedies. It will then be up to the trial judge to award the remedies he or she considers appropriate in the circumstances. However, the sanction available under s. 272 for failing to fulfil an obligation must be imposed in accordance with the principles governing the application of the C.P.A. and, where applicable, the rules of the general law. In particular, legal interest under that provision depends on the existence of a contract to which the Act applies, since s. 2 C.P.A. establishes the basic principle that a consumer contract must exist for the Act to apply, except in the specific case of the penal provisions. The recourse is therefore available only to natural persons who have entered into a contract governed by the Act with a merchant or a manufacturer.
The presumption of fraud provided for in s. 253 C.P.A. does not delimit the scope of s. 272 C.P.A. or govern the principles that underlie the application of that section. Rather, it provides consumers with additional protection in situations in which they do not wish or are not able to exercise a recourse under s. 272 C.P.A. Similarly, s. 217 C.P.A., which provides that the fact that a prohibited practice has been used is not subordinate to whether or not a contract has been made, is not intended to govern the conditions under which the recourses provided for in s. 272 C.P.A. are available and can be exercised. It relates only to the existence of a prohibited practice and authorizes the Director of Criminal and Penal Prosecutions to enforce the Act on a preventive basis, in keeping with the legislature’s intention.
For the contractual remedies provided for in s. 272 C.P.A. to be available, a consumer does not have to prove fraud and its consequences on the basis of the ordinary rules of the civil law, since, given the influence that prohibited practices can have on a consumer’s decision to enter into a contractual relationship with a merchant, a prohibited practice in itself constitutes fraud within the meaning of art. 1401 of the Civil Code of Quebec (“C.C.Q.”). As well, a merchant or manufacturer who is sued cannot raise a defence based on “fraud that has been uncovered and is not prejudicial”. The recourse provided for in s. 272 C.P.A. is based on the premise that any failure to fulfil an obligation imposed by the Act gives rise to an absolute presumption of prejudice to the consumer. Proof that one of the statutory contractual obligations that are set out primarily in Title I of the Act has been violated entitles a consumer, without having to meet any additional requirements, to obtain one of the contractual remedies provided for in s. 272. A consumer who wishes to benefit from this presumption in order to have a court sanction the use by a merchant or a manufacturer of practices prohibited by Title II of the Act must prove the following: (1) that the merchant or manufacturer failed to fulfil one of the obligations imposed by Title II of the Act; (2) that the consumer saw the representation that constituted a prohibited practice; (3) that the consumer’s seeing that representation resulted in the formation, amendment or performance of a consumer contract; and (4) that a sufficient nexus existed between the content of the representation and the goods or services covered by the contract. This last requirement means that the prohibited practice must be one that was capable of influencing a consumer’s behaviour with respect to the formation, amendment or performance of the contract. Where these four requirements are met, the contract so formed, amended or performed constitutes, in itself, a prejudice suffered by the consumer, and the consumer is entitled to demand one of the contractual remedies provided for in s. 272 C.P.A.
The recourse in damages provided for in s. 272 C.P.A. is not dependent on the specific contractual remedies set out in s. 272(a) to (f). It must nevertheless be exercised in accordance with the rule concerning the legal interest required to institute proceedings under s. 272 and is subject to the general rules of Quebec civil law. In addition, a claim for extracontractual compensatory damages is available, since fraud committed during the pre‑contractual phase is a civil fault that can give rise to extracontractual liability. Where the recourse in damages provided for in s. 272 C.P.A. is available to a consumer, his or her burden of proof is therefore eased, regardless of whether the recourse is contractual or extracontractual in nature, because of the absolute presumption of prejudice that results from any unlawful act committed by the merchant or manufacturer. This presumption means that the consumer does not have to prove that the merchant intended to mislead. A consumer to whom the irrebuttable presumption of prejudice applies has also succeeded in proving the fault of the merchant or manufacturer for the purposes of s. 272 C.P.A.
In this case, R has discharged his burden of proving a sufficient nexus between the prohibited practices engaged in by T and TCM and his subscription contract with them. R subscribed to Time magazine after reading the documentation T and TCM had sent him, and the trial judge found that he would not have subscribed to the magazine had he not read the misleading documentation. As a result, the Document is deemed to have had a fraudulent effect on R’s decision to subscribe to Time magazine. The conduct of T and TCM that is in issue constitutes a civil fault that triggers their extracontractual liability.
There is no reason to interfere with the trial judge’s finding that the fault of T and TCM caused moral injuries to R or with her award of $1,000 for those injuries. T and TCM have not shown that she erred in assessing the evidence or in applying the legal principles with regard either to their liability or to the quantum of damages.
Furthermore, consumers can be awarded punitive damages under s. 272 C.P.A. even if they are not awarded contractual remedies or compensatory damages at the same time. Because s. 272 C.P.A. establishes no criteria or rules for awarding punitive damages, such damages must be awarded in accordance with art. 1621 C.C.Q. and must have a preventive objective, that is, to discourage the repetition of undesirable conduct. The award must also be consistent with the objectives of the C.P.A., namely to restore the balance in the contractual relationship between merchants and consumers and to eliminate unfair and misleading practices. Violations by merchants or manufacturers that are intentional, malicious or vexatious, and conduct on their part in which they display ignorance, carelessness or serious negligence with respect to their obligations and consumers’ rights under the C.P.A. may result in awards of punitive damages. However, before awarding such damages, the court must consider the whole of the merchant’s conduct at the time of and after the violations.
An award of punitive damages was justified in this case, but the amount of $100,000 awarded by the trial judge should be varied. Although the trial judge did not err in finding that T and TCM had sent many mailings in Quebec to a large number of consumers and that these promotional sweepstakes had enabled them to sell many new subscriptions, she did err in considering the Charter of the French language and the patrimonial situation of T and TCM when assessing the appropriate quantum of punitive damages. T and TCM had intentionally violated the C.P.A. in a calculated manner in this case, and that violation was capable of affecting a large number of consumers, whereas nothing in the evidence indicates that, after R complained, T and TCM took corrective action to make their advertising clear or consistent with the letter and spirit of the C.P.A. This is an aggravating factor. On the other hand, the impact on R of the fault committed by T and TCM remains quite limited, though, it is true, not negligible, and R’s attitude contributed to the proportions this case has ultimately assumed. Nevertheless, the fact that the amount of the award of compensatory damages is small favours awarding a significant amount of punitive damages. An amount of $15,000 suffices in the circumstances to fulfil the preventive purpose of punitive damages, underlines the gravity of the violations of the Act and sanctions the conduct of T and TCM in a manner that is serious enough to induce them to cease the prohibited practices in which they have been engaging, if they have not already done so.
Costs in the Superior Court and the Court of Appeal will be taxed in accordance with the tariffs applicable in those courts. However, R will have his costs in the Supreme Court of Canada on a solicitor and client basis because of the importance of the issues of law he raised.
Cases Cited
Distinguished: Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130; Vorvis v. Insurance Corporation of British Columbia, [1989] 1 S.C.R. 1085; Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595; approved: Nichols v. Toyota Drummondville (1982) inc., [1995] R.J.Q. 746; Québec (Procureur général) v. Distribution Canovex Inc., [1996] J.Q. no 5302 (QL); Option Consommateurs v. Brick Warehouse, l.p., 2011 QCCS 569 (CanLII); Tremblay v. Ameublements Tanguay inc., 2011 QCCS 3078 (CanLII); Turgeon v. Germain Pelletier Ltée, [2001] R.J.Q. 291; Beauchamp v. Relais Toyota inc., [1995] R.J.Q. 741; Lambert v. Minerve Canada, compagnie de transport aérien inc., [1998] R.J.Q. 1740; disapproved: Ata v. 9118‑8169 Québec Inc., 2006 QCCS 3777, [2006] R.J.Q. 1883; Lafontaine v. La Source d’eau Val‑d’Or inc., 2001 CanLII 10566; Jabraian v. Trévi Fabrication Inc., 2005 CanLII 10580; Santangeli v. 154995 Canada Inc., 2005 CanLII 32103; Martin v. Rénovations métropolitaines (Québec) ltée, 2006 QCCQ 1760 (CanLII); Darveau v. 9034‑9770 Québec inc., 2005 CanLII 41136; considered: Riendeau v. Brault & Martineau inc., 2007 QCCS 4603, [2007] R.J.Q. 2620, aff’d 2010 QCCA 366, [2010] R.J.Q. 507; referred to: Prebushewski v. Dodge City Auto (1984) Ltd., 2005 SCC 28, [2005] 1 S.C.R. 649; R. v. Colgate‑Palmolive Ltd., [1970] 1 C.C.C. 100; Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824; Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27, [2011] 2 S.C.R. 387; Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772; R. v. Imperial Tobacco Products Ltd., [1971] 5 W.W.R. 409; P.G. du Québec v. Louis Bédard Inc., 1986 CarswellQue 981; Adams v. Amex Bank of Canada, 2009 QCCS 2695, [2009] R.J.Q. 1746; Marcotte v. Banque de Montréal, 2009 QCCS 2764 (CanLII); Marcotte v. Fédération des caisses Desjardins du Québec, 2009 QCCS 2743 (CanLII); Chrysler Canada Ltée v. Poulin, 1988 CanLII 1001; A.C.E.F. Sud‑Ouest de Montréal v. Arrangements alternatifs de crédit du Québec Inc., [1994] R.J.Q. 114; Centre d’économie en chauffage Turcotte inc. v. Ferland, [2003] J.Q. no 18096 (QL); 9029‑4596 Québec inc. v. Duplantie, [1999] R.J.Q. 3059; Boissonneault v. Banque de Montréal, [1988] R.J.Q. 2622; Service aux marchands détaillants ltée (Household Finance) v. Option Consommateurs, 2006 QCCA 1319 (CanLII); Chartier v. Meubles Léon ltée, 2003 CanLII 7749; Kingsway Financial Services Inc. v. 118997 Canada inc., 1999 CanLII 13530; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401; de Montigny v. Brossard (Succession), 2010 SCC 51, [2010] 3 S.C.R. 64; Béliveau St‑Jacques v. Fédération des employées et employés de services publics inc., [1996] 2 S.C.R. 345; Gastonguay v. Entreprises D. L. Paysagiste, 2004 CanLII 31925; Mathurin v. 3086‑9069 Québec Inc., 2003 CanLII 19131; Systèmes Techno‑Pompes inc. v. Tremblay, 2006 QCCA 987, [2006] R.J.Q. 1791; Champagne v. Toitures Couture et Associés inc., [2002] R.J.Q. 2863; Quebec (Public Curator) v. Syndicat national des employés de l’hôpital St‑Ferdinand, [1996] 3 S.C.R. 211; Landry v. Quesnel, [2002] R.J.Q. 80; Provigo Distribution inc. v. Supermarché A.R.G. inc., 1997 CanLII 10209; Genex Communications inc. v. Association québécoise de l’industrie du disque, du spectacle et de la vidéo, 2009 QCCA 2201, [2009] R.J.Q. 2743; Fondation québécoise du cancer v. Patenaude, 2006 QCCA 1554, [2007] R.R.A. 5; Voltec ltée v. CJMF FM ltée, [2002] R.R.A. 1078; Procureur général du Québec v. Boisclair, [2001] R.J.Q. 2449; Augustus v. Gosset, [1996] 3 S.C.R. 268; Lambert v. Macara, [2004] R.J.Q. 2637; Finney v. Barreau du Québec, 2004 SCC 36, [2004] 2 S.C.R. 17.
Statutes and Regulations Cited
Act respecting access to documents held by public bodies and the protection of personal information, R.S.Q., c. A‑2.1, s. 167.
Act respecting prearranged funeral services and sepultures, R.S.Q., c. A-23.001, s. 56.
Charter of human rights and freedoms, R.S.Q., c. C-12, s. 49.
Charter of the French language, R.S.Q., c. C‑11.
Civil Code of Québec, S.Q. 1991, c. 64, art. 1386, 1387, 1388, 1401, 1407, 1412, 1621, 1899, 1902, 1968.
Combines Investigation Act, R.S.C. 1985, c. C-23, s. 52(4) .
Competition Act, R.S.C. 1985, c. C-34, s. 52(4) .
Consumer Protection Act, R.S.Q., c. P-40.1, ss. 1(e), 2, 6.1, Title I, 8, 9, 54.1, Title II, 216, 217, 218, 219, 220 to 251, 228, 238, 253, Title IV, 261, 262, 271, 272, 277, 290, 310, 314, 316.
Consumer Protection Act, S.Q. 1971, c. 74.
Petroleum Products Act, R.S.Q., c. P-30.01, s. 67.
Trade‑marks Act, R.S.C. 1985, c. T-13 .
Tree Protection Act, R.S.Q., c. P-37, s. 1.
Authors Cited
Baudouin, Jean‑Louis. “Rapport général”, dans Travaux de l’Association Henri Capitant des amis de la culture juridique française, t. 24, La protection des consommateurs. Paris: Dalloz, 1975, 3.
Baudouin, Jean‑Louis, et Patrice Deslauriers. La responsabilité civile, 7e éd., vol. I, Principes généraux. Cowansville, Qué.: Yvon Blais, 2007.
Baudouin, Jean‑Louis, et Pierre‑Gabriel Jobin. Les obligations, 6e éd. par Pierre‑Gabriel Jobin avec la collaboration de Nathalie Vézina. Cowansville, Qué.: Yvon Blais, 2005.
Belobaba, Edward P. “Unfair Trade Practices Legislation: Symbolism and Substance in Consumer Protection” (1977), 15 Osgoode Hall L.J. 327.
Couture, Luc‑André. “Rapport sur la protection du consommateur au niveau fédéral en droit pénal canadien”, dans Travaux de l’Association Henri Capitant des amis de la culture juridique française, t. 24, La protection des consommateurs. Paris: Dalloz, 1975, 303.
Dallaire, Claude. “La gestion d’une réclamation en dommages exemplaires: éléments essentiels à connaître quant à la nature et l’objectif de cette réparation, les éléments de procédure et de preuve incontournables ainsi que l’évaluation du quantum”, dans Congrès annuel du Barreau du Québec (2007). Montréal: Service de la formation continue, Barreau du Québec, 2007, 71.
Dumais, Claude‑René. “Une étude des tenants et aboutissants des articles 271 et 272 de la Loi sur la protection du consommateur” (1985), 26 C. de D. 763.
L’Heureux, Nicole. Droit de la consommation, 5e éd. Cowansville, Qué.: Yvon Blais, 2000.
L’Heureux, Nicole. “L’interprétation de l’article 272 de la Loi sur la protection du consommateur” (1982), 42 R. du B. 455.
L’Heureux, Nicole, et Marc Lacoursière. Droit de la consommation, 6e éd. Cowanswille, Qué.: Yvon Blais, 2011.
Lebeau, Françoise. “La publicité et la protection des consommateurs” (1981), 41 R. du B. 1016.
Lluelles, Didier, et Benoît Moore. Droit des obligations. Montréal: Thémis, 2006.
Masse, Claude. Loi sur la protection du consommateur: analyse et commentaires. Cowansville, Qué.: Yvon Blais, 1999.
Nahmiash, Laurent. “Le recours collectif et la Loi sur la protection du consommateur: le dol éclairé et non préjudiciable — l’apparence de droit illusoire”, dans Développements récents sur les recours collectifs. Cowansville, Qué.: Yvon Blais, 2004, 75.
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APPEAL from a judgment of the Quebec Court of Appeal (Chamberland, Morin and Rochon JJ.A.), 2009 QCCA 2378, [2010] R.J.Q. 3, SOQUIJ AZ-50590237, [2009] J.Q. no 15288 (QL), 2009 CarswellQue 12570, reversing a decision of Cohen J., 2007 QCCS 3390, [2007] R.J.Q. 2008, SOQUIJ AZ-50442262, [2007] Q.J. No. 7531 (QL), 2007 CarswellQue 6654. Appeal allowed in part.
Hubert Sibre, Annie Claude Beauchemin and Jean‑Yves Fortin, for the appellant.
Pascale Cloutier and Fadi Amine, for the respondents.
English version of the judgment of the Court delivered by
LeBel and Cromwell JJ. —
I. Introduction
[1] This appeal arises out of an advertising campaign that undoubtedly did not turn out as intended. The central issues in the case are whether the respondents, by mailing a document entitled “Official Sweepstakes Notification” (the “Document”) to the appellant, engaged in a practice prohibited by the Consumer Protection Act, R.S.Q., c. P‑40.1 (“C.P.A.”), and, if so, whether the appellant is entitled to punitive and compensatory damages under s. 272 C.P.A. To decide these issues, the Court must, inter alia, define the characteristics that are relevant to the determination of whether a commercial representation is false or misleading, as well as the conditions for exercising the recourses in damages provided for in s. 272 C.P.A.
[2] In concrete terms, the appellant is appealing a judgment in which the Quebec Court of Appeal denied his claim for damages on the basis that the content of the Document did not violate any of the provisions of the C.P.A. (2009 QCCA 2378, [2010] R.J.Q. 3). The Court of Appeal’s main reason for denying the claim was that the Document would not mislead a consumer [translation] “with an average level of intelligence, scepticism and curiosity” (para. 50). In this Court, the appellant argues that the criteria used by the Court of Appeal to define the average consumer for the purposes of the C.P.A. undermine certain of the foundations of Quebec consumer law. He is therefore asking this Court to reject that definition, find that the Document is misleading and award him punitive damages equivalent to nearly $1 million.
[3] For the reasons that follow, we agree with the appellant that the Document contains representations that contravene the C.P.A.’s provisions concerning prohibited business practices. We also agree with him that the Court of Appeal’s definition of the “average consumer” is inconsistent with the objectives of the C.P.A. and must therefore be rejected. Finally, we would allow his claim for compensatory and punitive damages, but only in part.
II. Origin of the Case
[4] On August 26, 1999, the appellant, Jean‑Marc Richard, found the Document in his mail. It was in English only and was in the form of a “letter” addressed to him and signed by Elizabeth Matthews, Director of Sweepstakes. Along the edge of the letter were various boxes printed in colour, some of which, because they referred to Time magazine, could lead the recipient to infer that it was from the respondents. The Document began with a sentence that immediately caught the reader’s attention:
OUR SWEEPSTAKES RESULTS ARE NOW FINAL: MR JEAN MARC RICHARD HAS WON A CASH PRIZE OF $833,337.00!
[5] However, a closer look at the Document reveals that this passage was part of a two‑part sentence that read as follows:
If you have and return the Grand Prize winning entry in time and correctly answer a skill‑testing question, we will officially announce that
OUR SWEEPSTAKES RESULTS ARE NOW FINAL: MR JEAN MARC RICHARD HAS WON A CASH PRIZE OF $833,337.00!
[6] This opening sentence clearly illustrates the technique used in the writing and layout of the Document: several exclamatory sentences in bold uppercase letters, whose purpose was to catch the reader’s attention by suggesting that he or she had won a large cash prize, were combined with conditional clauses in smaller print, some of which began with the words “If you have and return the Grand Prize winning entry in time”. For example, the Document identified the appellant as one of the latest sweepstakes winners and stated in large print that payment of his cash prize had been authorized. However, the heading “LATEST CASH PRIZE WINNERS”, under which the appellant’s name appeared, was preceded by the following sentence in small letters: “If you have and return the Grand Prize winning entry in time, our new list of major cash prize winners will read as follows”.
[7] This same writing technique was used elsewhere in the letter, as several prominent sentences intended to boost the recipient’s enthusiasm were combined with inconspicuous conditional clauses. It will be helpful to reproduce some passages from the Document to better illustrate the specific features of this technique:
If you have and return the Grand Prize winning entry in time and correctly answer a skill‑testing question, we’ll confirm that
WE ARE NOW AUTHORIZED TO PAY $833,337.00 IN CASH TO MR JEAN MARC RICHARD!
. . .
. . . And now that we’ve been authorized to pay the prize money, the very next time you hear from us if you win, it will be to inform you that
A BANK CHEQUE FOR $833,337.00 IS ON ITS WAY TO —— ST!
. . .
. . . The truth is, if you hold the Grand Prize winning number,
YOU WILL FORFEIT THE ENTIRE $833,337.00 IF YOU FAIL TO RESPOND TO THIS NOTICE!
[8] Along with these many references to the “Grand Prize winning entry”, the Document assigned the appellant a “Prize Claim Number” that was to be used for identification purposes when the entries were validated. In addition, the back side of the letter informed the appellant that he would qualify for a $100,000 bonus prize if he validated his entry within five days. It then referred to various benefits the appellant could have if he decided to subscribe to Time magazine at the same time as he validated his entry. All this information was set out as follows in the Document:
YOU’LL QUALIFY FOR A $100,000.00 BONUS IF YOU RESPOND WITHIN 5 DAYS!
. . .
YOU’LL RECEIVE A FREE GIFT: THE ULTRONICTM PANORAMIC CAMERA & PHOTO ALBUM SET!
. . .
YOU’LL ALSO RECEIVE TIME AT UP TO 74% SAVINGS!
. . .
. . . And if you hold the Grand Prize winning entry,
A BANK CHEQUE FOR $833,337.00 IN CASH WILL BE SENT TO YOU VIA CERTIFIED MAIL — IF YOU RESPOND NOW!
[9] To show more clearly what the Document looked like, we have reproduced it in its entirety in an appendix to these reasons. For now, suffice it to say that the Document’s visual content and writing style are central to the issue of whether the mailing of the Document constitutes a prohibited practice within the meaning of the C.P.A.
[10] In addition to the Document, the mailing received by the appellant contained a reply coupon entitled “Official Entry Certificate” and a return envelope on which the official rules of the sweepstakes appeared in small print. The reply coupon also offered the appellant the possibility of subscribing to Time magazine for a period ranging from seven months to two years. As well, the official rules stated that a winning number had been pre‑selected by computer and that the holder of that number could receive the grand prize only if the reply coupon was returned by the deadline. If the holder of the pre‑selected winning number did not return the reply coupon, the rules explained, the grand prize winner would be selected by random drawing among all eligible entries, that is, everyone who had returned the reply coupon, and each participant’s odds of winning would then be 1:120 million.
[11] The appellant testified that he had carefully read the Document twice the day he received it and had concluded that he had just won US$833,337. The next day, he took the Document to work to ask a vice‑president of the company he worked for, whose first language was English, whether he had understood the Document correctly. The vice‑president agreed that the appellant had just won the grand prize referred to in the Document. Convinced that he was about to receive the promised amount, the appellant immediately returned the reply coupon that was in the envelope. In doing so, he also subscribed to Time magazine for two years, and this entitled him to receive a free camera and photo album, as was indicated on the back of the Document.
[12] The appellant received the camera and photo album a short time later. He also began regularly receiving issues of the magazine. However, the cheque he was expecting was a long time coming. Believing that he had been patient enough, he decided to call Elizabeth Matthews at Time Inc. to inquire about the processing of his cheque. After leaving a few messages to which he received no reply, the appellant was finally able to speak with a representative of the marketing department of the respondent Time Inc. in New York. He then learned that he would not be receiving a cheque, because the Document mailed to him had not contained the winning entry for the draw. During the telephone conversation, Time Inc.’s representative told the appellant that the Document was merely an invitation to participate in a sweepstakes. The appellant was also informed that Elizabeth Matthews did not exist; the name was merely a “pen name” used by the respondents in their advertising material.
[13] The appellant replied that the Document clearly announced that he was the prize winner. His protests got him nowhere. The respondents flatly refused to pay him the amount he was claiming.
[14] On September 29, 2000, the appellant filed a motion to institute proceedings. He first asked the Quebec Superior Court to declare him to be the winner of the cash prize mentioned in the Document. He argued that the Document was an offer to contract within the meaning of art. 1388 of the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”), and that he had accepted the offer by returning the reply coupon. He accordingly asked the court to order the respondents to provide him with the skill‑testing question and pay him the grand prize amount. In the alternative, he asked the court to order the respondents to pay compensatory and punitive damages corresponding to the value of the grand prize (A.R., vol. I, at p. 53).
III. Judicial History
A. Quebec Superior Court (2007 QCCS 3390, [2007] R.J.Q. 2008, Cohen J.)
[15] Cohen J. began by considering the contractual portion of the claim. She found that the parties had not entered into a contract and accordingly refused to order payment of the prize claimed by the appellant.
[16] Cohen J. then considered the appellant’s claim for damages, which was based on alleged violations of the C.P.A. She held that the convoluted style of the offer contravened Title II of the C.P.A. on prohibited business practices. She wrote the following:
The very same “conditional” wording which enabled Time to avoid the argument that a contract was formed or that it undertook unconditionally to pay $833,337 to Mr. Richard, illustrates the contention that this document was specifically designed to mislead the recipient, that it contains misleading and even false representations, contrary to the clear wording of article 219 of the Consumer Protection Act . . . . [Emphasis in original; para. 34.]
[17] Cohen J. reached this conclusion on the basis of the general impression conveyed by the Document. Referring to s. 218 C.P.A., she stated that the Document gave the general impression that the appellant had won the grand prize. In her view, the general design of the Document thus amounted to a false or misleading representation within the meaning of s. 219 C.P.A.
[18] Cohen J. added that the Document contained two false representations. First, its signer, Elizabeth Matthews, did not exist, so she could not have “certified” the content of the Document, contrary to what was stated. That fiction was in clear contravention of ss. 219 and 238 C.P.A., since it gave an imaginary person a particular status or identity (para. 38). Next, the fact that the appellant might not be the grand prize winner had been withheld from him by the respondents or, at the very least, had been “buried in a sea of text” with the expectation that his enthusiasm would induce him to subscribe to Time magazine (para. 39). In Cohen J.’s opinion, the failure to reveal such an important fact was contrary to s. 228 C.P.A. She summed up her view on the presence of false or misleading information in the Document as follows: “It is patently obvious to any reader that the mailing from Time was not only false and incomplete, it was specifically designed to be misleading, both in the words chosen, the size of the conditions or disclaimers and their ambiguity, especially to a person who is not reading in his or her mother tongue” (para. 40).
[19] Cohen J. added that she did not need to determine whether the appellant had actually been misled by the content of the Document (para. 49). To hold that a commercial representation is a practice prohibited by the C.P.A., it is sufficient for a court to find that the average consumer, that is, one who is credulous and inexperienced, could be misled:
There can be no doubt here that the unsolicited publicity sent to Mr. Richard indeed had the capacity to mislead if viewed through the eyes of the average, inexperienced French‑speaking consumer in Quebec. In any event, the testimony of Mr. Richard made it clear that he would never have read the subscription portion of the document had the misleading representations not been present, making it obvious that his paid subscription to Time Magazine was a direct result of these misleading representations in the present case. [para. 49]
[20] According to Cohen J., the respondents’ advertising strategy, as revealed by the content of the Document, involved the use of practices prohibited by Title II of the C.P.A. As a result, the civil sanctions provided for in s. 272 C.P.A. were available.
[21] Relying on the principles adopted by the Quebec Court of Appeal in Nichols v. Toyota Drummondville (1982) inc., [1995] R.J.Q. 746, Cohen J. stated that, in certain circumstances, punitive damages can be awarded under