Seidel v. TELUS Communications Inc.

Seidel v. TELUS Communications Inc.
Collection
Supreme Court Judgments
Date
2011-03-18
Neutral citation
2011 SCC 15
Report
[2011] 1 SCR 531
Case number
33154
Judges
McLachlin, Beverley; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall; Cromwell, Thomas Albert
On appeal from
British Columbia
Subjects
Arbitration
Civil law
Notes
SCC Case Information: 33154
Decision Content
SUPREME COURT OF CANADA
Citation: Seidel v. TELUS Communications Inc., 2011 SCC 15, [2011] 1 S.C.R. 531
Date: 20110318
Docket: 33154
Between:
Michelle Seidel
Appellant
and
TELUS Communications Inc.
Respondent
- and -
Barreau du Québec, Canadian Arbitration Congress
and ADR Chambers Inc.
Interveners
Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
Reasons for Judgment:
(paras. 1 to 51)
Joint Dissenting Reasons:
(paras. 52 to 176)
Binnie J. (McLachlin C.J. and Fish, Rothstein and Cromwell JJ. concurring)
LeBel and Deschamps JJ. (Abella and Charron JJ. concurring)
Seidel v. TELUS Communications Inc., 2011 SCC 15, [2011] 1 S.C.R. 531
Michelle Seidel Appellant
v.
TELUS Communications Inc. Respondent
and
Barreau du Québec, Canadian Arbitration Congress
and ADR Chambers Inc. Interveners
Indexed as: Seidel v. TELUS Communications Inc.
2011 SCC 15
File No.: 33154.
2010: May 12; 2011: March 18.
Present: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
on appeal from the court of appeal for british columbia
Consumer protection — Contracts — Arbitration — Class actions — Stay of proceedings — Cell phone service contract containing private and confidential mediation and arbitration and class action waiver clause — Customer filing claim in B.C. Supreme Court for declaratory and injunctive relief alleging cell phone service provider engaged in deceptive and unconscionable practices — Customer seeking relief as individual and as representative of class — Cell phone company obtaining stay of proceedings under Commercial Arbitration Act — British Columbia Business Practices and Consumer Protection Act (BPCPA) stating agreements waiving or releasing rights, benefits or protections under the Act are void — Whether BPCPA renders arbitration clause void such that the stay of the court proceedings should be lifted — Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, ss. 3, 171, 172 — Commercial Arbitration Act, R.S.B.C. 1996, c. 55, s. 15.
Arbitration — Competence‑competence principle — Effect of arbitration clause on jurisdiction of court — Customer signing contract with mobile phone service provider containing mandatory mediation and arbitration clause — Customer filing claim in B.C. Supreme Court for declaratory and injunctive relief under the Business Practices and Consumer Protection Act — Whether question of jurisdiction should be determined by court or arbitrator — Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, ss. 3, 171, 172 — Commercial Arbitration Act, R.S.B.C. 1996, c. 55, s. 22.
TELUS and S entered into a written cellular phone services contract in 2000. The standard form contract included a clause referring disputes to private and confidential mediation and arbitration. It further purported to waive any right to commence or participate in a class action. By statement of claim filed in the Supreme Court of British Columbia, S asserted a variety of claims, including (but not limited to) statutory causes of action under the Business Practices and Consumer Protection Act (BPCPA), alleging that TELUS falsely represented to her and other consumers how it calculates air time for billing purposes. She sought remedial relief under ss. 171 and 172 of the BPCPA in respect of what she contends are deceptive and unconscionable practices, as well as certification to act on her own behalf and as representative of a class of allegedly overcharged customers.
In the course of S’s application to have her claim certified as a class action, TELUS applied for a stay of all proceedings on the basis of the arbitration clause, pursuant to s. 15 of the Commercial Arbitration Act. The trial judge denied TELUS’s application finding it was premature to determine whether the action should be stayed until the certification application had been decided. Applying the competence‑competence principle, the Court of Appeal held that S was bound by the arbitration clause contained in the contract of adhesion in respect of all claims. In the result, the Court of Appeal allowed the appeal and entered a stay of S’s action in its entirety, holding that it is for the arbitrator to determine which claims are subject to arbitration and which should go before a court.
Held (LeBel, Deschamps, Abella and Charron JJ. dissenting): The appeal should be allowed in part, and the stay lifted in relation to the s. 172 claims.
Per McLachlin C.J. and Binnie, Fish, Rothstein and Cromwell JJ.: The purpose of the BPCPA is consumer protection. As such, its terms should be interpreted generously in favour of consumers. Section 172 of the BPCPA contains a statutory remedy whereby a person other than a supplier may bring an action in the Supreme Court of British Columbia to enforce the statute’s consumer protection standards whether or not the person bringing the action has a special interest or is affected by the consumer transaction that gives rise to the action. Such a plaintiff is properly characterized as a public interest plaintiff. This conclusion is reinforced by s. 3 of the BPCPA which provides that any agreement between parties that would waive or release “rights, benefits or protections” conferred by the BPCPA is void. To the extent S’s claim in the Supreme Court invokes s. 172 remedies in respect of rights, benefits or protections conferred by the BPCPA, her court action must be allowed to proceed notwithstanding the mediation/arbitration clause.
The choice to restrict or not restrict arbitration clauses in consumer contracts is a matter for the legislature. Absent legislative intervention, the courts will generally give effect to the terms of a commercial contract freely entered into, even a contract of adhesion, including an arbitration clause. Section 172 is clearly designed to encourage private enforcement in the public interest. It was open to the legislature to prefer the vindication and denunciation available through a well‑publicized court action to promote adherence to consumer standards. The legislature understood that the policy objectives of s. 172 would not be well served by a series of isolated low‑profile, private and confidential arbitrations.
A proper interpretation of s. 172 of the BPCPA must be approached textually, contextually and purposively. Whether characterized as procedural or substantive, a s. 172 right is indubitably a “right” conferred by the statute and cannot be waived by contract. S therefore possesses a statutory “right” to take her action invoking s. 172 remedies to the Supreme Court.
As to her alternative complaints, however, whether under other sections of the BPCPA, the now repealed Trade Practice Act, or at common law, the TELUS arbitration clause is valid and enforceable. Accordingly, S’s court action in these respects should be stayed pursuant to s. 15 of the Commercial Arbitration Act.
The class action waiver is not severable from the arbitration clause as a whole. Accordingly, it is also rendered void by s. 3 of the BPCPA. If there is any ambiguity in the TELUS clause, it must be resolved in favour of S’s right of access to the court by the principles of contra proferentum. Accordingly, S is not barred from continuing to seek certification of her s. 172 claims as a class action.
As for the procedural issues raised in this appeal, British Columbia has adopted the competence‑competence principle through the combined operation of s. 22 of the Commercial Arbitration Act and Rule 20(2) of the Rules of the British Columbia International Commercial Arbitration Centre (“BCICAC Rules”). Absent legislated exception, any challenge to an arbitrator’s jurisdiction over S’s dispute with TELUS should first be determined by the arbitrator, unless the challenge were to involve a pure question of law, or one of mixed fact and law that requires for its disposition “only superficial consideration of the documentary evidence in the record”. Whether or not s. 172 of the BPCPA has the legal effect claimed for it by S was a question of law to be determined on undisputed facts. This matter was properly entertained by the Supreme Court in the first instance, and the competence‑competence principle was not violated.
Per LeBel, Deschamps, Abella and Charron JJ. (dissenting): Absent a clear statement by the legislature of an intention to the contrary, a consumer claim that could potentially proceed either by way of arbitration or class action must first be submitted to arbitration. The BPCPA does not manifest explicit legislative intent to foreclose the use of arbitration as a vehicle for the resolution of disputes under that Act in British Columbia. As such, a clause in a standard form consumer contract for the supply of mobile phone services, which mandates that all disputes with the service provider be resolved by way of arbitration displaces the availability of class proceedings in the province of British Columbia.
Canadian courts, both in Quebec and in the common law jurisdictions, have endorsed the use of arbitration as a dispute resolution mechanism and now encourage its use. Lower courts across Canada swiftly followed this Court’s lead in accepting and endorsing arbitration as a legitimate dispute resolution mechanism, and this shift in attitude where there is no longer hostility towards arbitration clearly took root. It is now settled that if a legislature intends to exclude arbitration as a vehicle for resolving a particular category of legal disputes, it must do so explicitly. In British Columbia, the current approach to arbitration was adopted with the enactment of the Commercial Arbitration Act. British Columbia’s modern commercial arbitration legislation was influenced in part by the UNCITRAL Model Law on International Commercial Arbitration and the legislature clearly intended to incorporate the competence‑competence principle into the province’s domestic arbitration legislation. Challenges to the arbitrator’s jurisdiction — namely arguments that an agreement is void, inoperative or incapable of being performed — should be resolved first by the arbitrator. A court should depart from this general rule only if the challenge is based on a question of law, or on questions of mixed fact and law that require only superficial consideration of the documentary evidence in the record, and is not merely a delaying tactic. This requirement of deference to the arbitrator’s jurisdiction is related directly to the role of the court that must, in considering an application for a stay of proceedings, determine whether the agreement is “void, inoperative or incapable of being performed”, which must be narrowly construed. Courts should therefore be mindful to avoid an interpretation that makes it possible to sidestep the competence‑competence principle and turns the “inoperative” exception into a back door for a party wanting to “escape” the agreement. The British Columbia Court of Appeal recognized that the competence‑competence principle is part of the province’s law. It did not err in doing so. Therefore, absent a challenge to the arbitrator’s jurisdiction based solely on a question of law or on one of mixed fact and law requiring only superficial consideration of the evidence in the record, the existence or validity of an arbitration agreement to which the Commercial Arbitration Act applies must be considered first by the arbitrator and the court should grant the stay.
S argues that the effect of the arbitration clause is to deny her the exercise of her rights under the BPCPA. The purpose of consumer protection legislation like the BPCPA is to protect consumers from losses suffered when they purchase goods and services that do not meet existing standards. Class actions have a significant social and legal role in Canadian law. However, since a class action is only a way to group together a number of individual claims, it concerns the procedure for bringing an action. As this Court has put it, the certification of a class action confers a procedural right. It does not change either the substantive law or the substantive rights of the parties. Where a court would, because of an arbitration agreement, not have jurisdiction over a dispute, that jurisdiction cannot be conferred on it by commencing a class proceeding.
In British Columbia, no explicit legislative direction has been enacted which would remove consumer disputes from the reach of arbitration legislation. S nevertheless argues that an arbitrator lacks the jurisdiction to grant either of the specific remedies contemplated in s. 172 of the BPCPA. She submits that these remedies can be granted only by the Supreme Court and, therefore, that s. 172(1) itself creates a substantive right to have a dispute resolved in the public court system. As a result, the agreement to submit this dispute to arbitration constitutes a waiver — in violation of s. 3 of the BPCPA — of the substantive right to those particular remedies. In light of ss. 171 and 172 and of the powers conferred on arbitrators in British Columbia, it is evident that the legislature has not barred the submission of such claims to arbitration. The remedy sought by a claimant under s. 172 is a declaration or an injunction. Either an arbitrator or a court can adjudicate a monetary claim under s. 171. What is important here is that the adjudicator has jurisdiction to make a declaration or order an injunction, which are the same remedies as are contemplated in s. 172. Arbitrators exercising their jurisdiction under arbitration legislation are generally understood to have jurisdiction to make any award a court could make. But the British Columbia legislation goes further, as it explicitly grants arbitrators broad remedial powers. An arbitrator deriving his or her authority from the Commercial Arbitration Act, and by extension from the BCICAC Rules, also has broad remedial powers including injunctions and other equitable remedies and the arbitrator can therefore, unless the parties have agreed otherwise, grant the declaratory and injunctive relief sought by S under ss. 172(1)(a) and (b) of the BPCPA.
Access to justice is protected both by the broad powers given to arbitrators and by the representative action provided for in the BPCPA. Although third party consumers would not be bound by the arbitrator’s order, TELUS would be bound by it. There is no requirement that the arbitral award itself, which would incorporate the remedy S seeks, be private and confidential. Therefore, an arbitrator could order a supplier, in this case TELUS, to advertise the particulars of any order or award granted against it to the public at large. This would fulfill a public purpose. Given their broad remedial powers, arbitrators are authorized to grant this very public remedy.
The reference in s. 172 to the Supreme Court as the forum in which claims may be brought does not confer exclusive jurisdiction on that court to adjudicate claims under that section. The purpose of that reference is to clarify that the Supreme Court, not the Provincial Court, may grant declaratory and injunctive relief. Further, the use of the word “may” makes it even clearer that the Supreme Court is not intended to be the only forum in which these remedies can be sought. By enacting s. 172, the legislature provided a means not only to have claims dealt with by the director or any person, both of whom seek orders on behalf of consumers, but also to have the arbitration rules apply. In doing so, it provided a way to use the private dispute resolution system to obtain the same declaratory or injunctive relief against a supplier as can be obtained by means of a class action. Access to justice can only be enhanced by this approach.
Any argument based on the view that access to justice requires claims based on s. 172 of the BPCPA to be made by way of a class proceeding is without merit. Access to justice is fully preserved by arbitration, and there is no need to resort to a class proceeding to so ensure. The arbitrator can grant the remedies contemplated in s. 172 of the BPCPA against TELUS. The arbitration agreement between S and TELUS does not therefore constitute an improper waiver of S’s rights, benefits or protections for the purposes of s. 3 of that Act. Section 172 of the BPCPA merely identifies the procedural forum in which an action with respect to the rights, benefits and protections provided for in s. 3 may be brought in the public court system. It does not explicitly exclude alternate fora, such as an arbitration tribunal, from acquiring jurisdiction.
Whether an arbitration clause in a consumer contract is unfair or unconscionable must always be determined on a case‑by‑case basis in light of the relevant facts. In Canada, the courts have left the question whether arbitration is appropriate for particular categories of disputes to the discretion of the legislatures. The British Columbia legislature remains free to address any unfairness or harshness that might be perceived to be imposed as a result of the inclusion of arbitration clauses in commercial contracts. The legislatures of Quebec, Ontario and Alberta have seen fit to amend their consumer protection legislation to prohibit or limit waivers of class proceedings and arbitration clauses in agreements to which their consumer protection legislation applies. The British Columbia legislature made a choice both by incorporating the provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the UNCITRAL Model Law on International Commercial Arbitration and by refraining from enacting provisions expressly limiting arbitration clauses and waivers of class proceedings in the consumer context. It also made another choice: to confer broad remedial jurisdiction on arbitrators. These choices are ones to which this Court must defer.
Cases Cited
By Binnie J.
Referred to: Griffin v. Dell Canada Inc., 2010 ONCA 29, 98 O.R. (3d) 481; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801; Rogers Wireless Inc. v. Muroff, 2007 SCC 35, [2007] 2 S.C.R. 921; MacKinnon v. National Money Mart Co., 2004 BCCA 473, 50 B.L.R. (3d) 291; MacKinnon v. National Money Mart Co., 2009 BCCA 103, 89 B.C.L.R. (4th) 1; Bisaillon v. Concordia University, 2006 SCC 19, [2006] 1 S.C.R. 666; GreCon Dimter inc. v. J.R. Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401; Desputeaux v. Éditions Chouette (1987) inc., 2003 SCC 17, [2003] 1 S.C.R. 178; Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63; Smith v. Co‑operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129; ACS Public Sector Solutions Inc. v. Courthouse Technologies Ltd., 2005 BCCA 605, 48 B.C.L.R. (4th) 328; Co‑operators Life Insurance Co. v. Gibbens, 2009 SCC 59, [2009] 3 S.C.R. 605; Bauer v. Bank of Montreal, [1980] 2 S.C.R. 102.
By LeBel and Deschamps JJ. (dissenting)
MacKinnon v. National Money Mart Co., 2004 BCCA 473, 50 B.L.R. (3d) 291; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801; Rogers Wireless Inc. v. Muroff, 2007 SCC 35, [2007] 2 S.C.R. 921; Bisaillon v. Concordia University, 2006 SCC 19, [2006] 1 S.C.R. 666; MacKinnon v. National Money Mart Co., 2009 BCCA 103, 89 B.C.L.R. (4th) 1; Desputeaux v. Éditions Chouette (1987) inc., 2003 SCC 17, [2003] 1 S.C.R. 178; Horton v. Sayer (1859), 4 H. & N. 643, 157 E.R. 993; Lee v. Page (1861), 30 L.J. Ch. (N.S.) 857; Edwards v. Aberayron Mutual Ship Insurance Society Ltd. (1876), 1 Q.B.D. 563; Doleman & Sons v. Ossett Corp., [1912] 3 K.B. 257; Scott v. Avery (1856), 5 H.L.C. 811, 10 E.R. 1121; Johnston v. Western Assurance Co. (1879), 4 O.A.R. 281; Nolan v. Ocean, Accident and Guarantee Corp. (1903), 5 O.L.R. 544; Cayzer, Irvine and Co. v. Board of Trade, [1927] 1 K.B. 269; Brand v. National Life Assurance Co. (1918), 44 D.L.R. 412; Altwasser v. Home Insurance Co. of New York, [1933] 2 W.W.R. 46; Re Rootes Motors (Canada) Ltd. and Wm. Halliday Contracting Co., [1952] 4 D.L.R. 300; Deuterium of Canada Ltd. v. Burns & Roe of Canada Ltd. (1970), 15 D.L.R. (3d) 568, rev’d (1971), 21 D.L.R. (3d) 568, aff’d [1975] 2 S.C.R. 124; Procon (Great Britain) Ltd. v. Golden Eagle Co., [1976] C.A. 565; Vancouver v. Brandram‑Henderson of B.C. Ltd. (1959), 18 D.L.R. (2d) 700; National Gypsum Co. v. Northern Sales Ltd., [1964] S.C.R. 144; Vinette Construction Ltée v. Dobrinsky, [1962] B.R. 62; Gordon and Gotch (Australasia) Ltd. v. Montreal Australia New Zealand Line Ltd. (1940), 68 B.R. 428; Zodiak International Productions Inc. v. Polish People’s Republic, [1983] 1 S.C.R. 529; Ville de Granby v. Désourdy Construction Ltée, [1973] C.A. 971; Sport Maska Inc. v. Zittrer, [1988] 1 S.C.R. 564; GreCon Dimter inc. v. J.R. Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401; Boart Sweden AB v. NYA Stromnes AB (1988), 41 B.L.R. 295; Automatic Systems Inc. v. Bracknell Corp. (1994), 12 B.L.R. (2d) 132; BWV Investments Ltd. v. Saskferco Products Inc. (1994), 125 Sask. R. 286; Quintette Coal Ltd. v. Nippon Steel Corp., [1991] 1 W.W.R. 219; Burlington Northern Railroad Co. v. Canadian National Railway Co. (1995), 59 B.C.A.C. 97, rev’d [1997] 1 S.C.R. 5; Condominiums Mont St‑Sauveur Inc. v. Constructions Serge Sauvé Ltée, [1990] R.J.Q. 2783; Gulf Canada Resources Ltd. v. Arochem International Ltd. (1992), 66 B.C.L.R. (2d) 113; R. v. Collins, 2000 BCCA 437, 140 B.C.A.C. 311; R. v. St. Lawrence Cement Inc. (2002), 60 O.R. (3d) 712; British Columbia Government and Service Employees’ Union v. British Columbia (Minister of Health Services), 2007 BCCA 379, 245 B.C.A.C. 39; Dalimpex Ltd. v. Janicki (2003), 64 O.R. (3d) 737; Dawson (City) v. TSL Contractors Ltd., 2003 YKCA 3, 180 B.C.A.C. 205; Dancap Productions Inc. v. Key Brand Entertainment Inc., 2009 ONCA 135, 246 O.A.C. 226; Jean Estate v. Wires Jolley LLP, 2009 ONCA 339, 96 O.R. (3d) 171; No. 363 Dynamic Endeavours Inc. v. 34718 B.C. Ltd. (1993), 81 B.C.L.R. (2d) 359; Kaverit Steel and Crane Ltd. v. Kone Corp. (1992), 87 D.L.R. (4th) 129; Mind Star Toys Inc. v. Samsung Co. (1992), 9 O.R. (3d) 374; Scherk v. Alberto‑Culver Co., 417 U.S. 506 (1974); Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158; Marcotte v. Longueuil (City), 2009 SCC 43, [2009] 3 S.C.R. 65; Jedfro Investments (U.S.A.) Ltd. v. Jacyk Estate (2005), 2 B.L.R. (4th) 151, aff’d (2006), 80 O.R. (3d) 533, aff’d 2007 SCC 55, [2007] 3 S.C.R. 679; Ting v. AT&T, 319 F.3d 1126 (2003); Szetela v. Discover Bank, 118 Cal.Rptr.2d 862 (2002).
Statutes and Regulations Cited
Act to amend the Consumer Protection Act and the Act respecting the collection of certain debts, S.Q. 2006, c. 56, s. 2.
Arbitration Act, R.S.B.C. 1979, c. 18.
Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, ss. 1(1) “consumer”, “consumer transaction”, “supplier”, 3, 4 “deceptive act or practice”, 5, 8, 9, 10(2), 171, 172, 173, 189, 190, 192.
Civil Code of Lower Canada, art. 13.
Civil Code of Québec, S.Q. 1991, c. 64, art. 3149.
Class Proceedings Act, R.S.B.C. 1996, c. 50, ss. 4(1)(d), 13, 41.
Code of Civil Procedure, R.S.Q., c. C‑25, arts. 940.1, 943, 943.1, 943.2.
Commercial Arbitration Act, R.S.B.C. 1996, c. 55, ss. 15, 22, 23, 29.
Commercial Arbitration Act, S.B.C. 1986, c. 3, s. 15.
Consumer Protection Act, R.S.Q., c. P‑40.1.
Consumer Protection Act, 2002, S.O. 2002, c. 30, Sch. A, ss. 7, 8, 100.
Copyright Act, R.S.C. 1985, c. C‑42, s. 37 .
Fair Trading Act, R.S.A. 2000, c. F‑2, s. 16.
International Commercial Arbitration Act, R.S.B.C. 1996, c. 233.
Interpretation Act, R.S.C. 1985, c. I‑21, s. 44 (h).
Miscellaneous Statutes Amendment Act (No. 2), 1988, S.B.C. 1988, c. 46, s. 11.
Provincial Court Act, R.S.B.C. 1996, c. 379.
Small Claims Act, R.S.B.C. 1996, c. 430, s. 3.
Solicitors Act, R.S.O. 1990, c. S.15, s. 23.
Supreme Court Act, R.S.B.C. 1996, c. 443, s. 15.
Trade Practice Act, R.S.B.C. 1996, c. 457, ss. 3, 4(3)(b), (e), 18(3).
Treaties and Other International Instruments
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 330 U.N.T.S. 3.
United Nations. Commission on International Trade Law. UNCITRAL Model Law on International Commercial Arbitration, U.N. Doc. A/40/17 (1985), Ann. I, arts. 8, 16.
Authors Cited
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APPEAL from a judgment of the British Columbia Court of Appeal (Finch C.J.B.C. and Rowles, Newbury, Tysoe and Neilson JJ.A.), 2009 BCCA 104, 88 B.C.L.R. (4th) 212, [2009] 5 W.W.R. 466, 68 C.P.C. (6th) 57, 267 B.C.A.C. 266, 450 W.A.C. 266, 304 D.L.R. (4th) 564, [2009] B.C.J. No. 469 (QL), 2009 CarswellBC 608, reversing a decision of Masuhara J., 2008 BCSC 933, 85 B.C.L.R. (4th) 372, 295 D.L.R. (4th) 511, [2008] B.C.J. No. 1347 (QL), 2008 CarswellBC 1490. Appeal allowed in part, LeBel, Deschamps, Abella and Charron JJ. dissenting.
Arthur M. Grant and Bruce W. Lemer, for the appellant.
Robert S. Anderson, Q.C., Sean Hern and Nicholas T. Hooge, for the respondent.
Babak Barin, Gaston Gauthier and Frédéric Côté, for the intervener Barreau du Québec.
Ivan G. Whitehall, Q.C., and Alejandro Manevich, for the intervener the Canadian Arbitration Congress.
Barry Leon, Andrew de Lotbinière McDougall and Daniel Taylor, for the intervener ADR Chambers Inc.
The judgment of McLachlin C.J. and Binnie, Fish, Rothstein and Cromwell JJ. was delivered by
[1] Binnie J. — This appeal concerns a dispute between TELUS Communications Inc. (“TELUS”) and one of its customers, the appellant Ms. Seidel, arising out of a cell phone contract. The contract, drawn up by TELUS, provided that “[a]ny claim, dispute or controversy” shall be referred to “private and confidential mediation” and thereafter, if unresolved, to “private, confidential and binding arbitration”. TELUS says that mediation and arbitration offer a low-cost, quick, private and effective means of sorting out disputes according to rules the parties themselves have agreed to. Notwithstanding these provisions, Ms. Seidel filed a statement of claim in the Supreme Court of British Columbia setting out a variety of complaints including some that invoke rights, benefits or protections under the British Columbia Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 (“BPCPA”). This consumer legislation is designed, it is contended, to remedy the mischief described by Sharpe J.A. of the Ontario Court of Appeal:
The seller’s stated preference for arbitration is often nothing more than a guise to avoid liability for widespread low-value wrongs that cannot be litigated individually but when aggregated form the subject of a viable class proceeding . . . . When consumer disputes are in fact arbitrated through bodies such as NAF that sell their services to corporate suppliers, consumers are often disadvantaged by arbitrator bias in favour of the dominant and repeat-player corporate client . . . .
(Griffin v. Dell Canada Inc., 2010 ONCA 29, 98 O.R. (3d) 481, at para. 30)
[2] The choice to restrict or not to restrict arbitration clauses in consumer contracts is a matter for the legislature. Absent legislative intervention, the courts will generally give effect to the terms of a commercial contract freely entered into, even a contract of adhesion, including an arbitration clause. The important question raised by this appeal, however, is whether the BPCPA manifests a legislative intent to intervene in the marketplace to relieve consumers of their contractual commitment to “private and confidential” mediation/arbitration and, if so, under what circumstances.
[3] My colleagues LeBel and Deschamps JJ. attempt to cast the appeal in terms of whether or not arbitrators should be seen as “second-class adjudicators” (para. 55) and paint those with whom they disagree as exhibiting an “undercurrent of hostility towards arbitration” (para. 101). Respectfully, I believe the Court’s job is neither to promote nor detract from private and confidential arbitration. The Court’s job is to give effect to the intent of the legislature as manifested in the provisions of its statutes.
[4] The BPCPA issue was rightly entertained by the courts below rather than in the first instance by an arbitrator notwithstanding the adoption of the competence-competence principle in British Columbia, because it raised an issue of jurisdiction on undisputed facts on which an authoritative judicial interpretation was appropriate (see Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801, at paras. 84-86).
[5] Section 172 of the BPCPA contains a remedy whereby “a person other than a supplier, whether or not the person bringing the action has a special interest or any interest under this Act or is affected by a consumer transaction that gives rise to the action, may bring an action in Supreme Court” to enforce the statute’s consumer protection standards. Under s. 3 of the BPCPA, any agreement between the parties that would waive or release “rights, benefits or protections” conferred by the BPCPA is “void”. My opinion is that to the extent Ms. Seidel’s claim in the Supreme Court invokes s. 172 remedies in respect of “rights, benefits or protections” conferred by the BPCPA, her court action must be allowed to proceed notwithstanding the mediation/arbitration clause. This includes her claims for declaratory and injunctive relief and, if granted, ancillary relief in the form of restoration to consumers of any money acquired by TELUS in contravention of the BPCPA.
[6] The reason for this conclusion is simple. Section 172 provides a mandate for consumer activists or others, whether or not they are personally “affected” in any way by any “consumer transaction”. Section 172 contemplates such a person “bringing the action”. The action is specified to be brought “in Supreme Court”. The clear intention of the legislature is to supplement and multiply the efforts of the director under the BPCPA to implement province-wide standards of fair consumer practices by enlisting the efforts of a whole host of self-appointed private enforcers. In an era of tight government budgets and increasingly sophisticated supplier contracts, this is understandable legislative policy. An action in the Supreme Court will generate a measure of notoriety and, where successful, public denunciation, neither of which would be achieved to nearly the same extent by “private, confidential and binding arbitration”.
[7] Private arbitral justice, because of its contractual origins, is necessarily limited. As the BPCPA recognizes, some types of relief can only be made available from a superior court. Accordingly, to the extent Ms. Seidel’s complaints shelter under s. 172 of the BPCPA (and only to that extent), they cannot be waived by an arbitration clause and her court action may continue, in my opinion. As to her alternative complaints, whether under other sections of the BPCPA, the now repealed Trade Practice Act, R.S.B.C. 1996, c. 457 (“TPA”), or at common law, the TELUS arbitration clause is valid and enforceable. As to those claims, her court action should be stayed pursuant to s. 15 of the Commercial Arbitration Act, R.S.B.C. 1996, c. 55 (“CAA”).
[8] I should flag at the outset two issues that this appeal does not decide. Firstly, of course, Ms. Seidel’s complaints against TELUS are taken to be capable of proof only for the purposes of this application. We are not assuming the allegations will be proven, let alone deciding that TELUS did in fact engage in the conduct complained of. Secondly, Ms. Seidel’s action is framed as a class proceeding, for which she is seeking certification. The present appeal concerns only her individual action. Whether or not the s. 172 claims should be certified as a class action is a matter that will have to be determined by the courts of British Columbia, which have yet to address the issue.
[9] The British Columbia Court of Appeal stayed all of Ms. Seidel’s claims — both under the BPCPA and otherwise. I would therefore partly grant the appeal to allow her claims under s. 172 of the BPCPA to go forward as candidates for certification. In other respects, the appeal should be dismissed.
I. Facts
[10] TELUS and Ms. Seidel entered into a written cellular phone services contract in 2000. By a statement of claim dated January 21, 2005, she claims that TELUS falsely represented to her and other consumers how it calculates air time for billing purposes. She seeks redress against what she contends are deceptive and unconscionable practices contrary to ss. 3, 4(3)(b) and 4(3)(e) of the TPA and ss. 4, 5, 8(3)(b) and 9 of the BPCPA (statement of claim, at paras. 11-12). She invokes both s. 171 and s. 172 remedies. Further, as stated, she seeks certification to act on her own behalf and as representative of a class of allegedly overcharged customers, pursuant to the Class Proceedings Act, R.S.B.C. 1996, c. 50 (“CPA”).
[11] I leave aside her claims under the TPA which are clearly subject to the arbitration agreement, and therefore not before the court. With respect to s. 172 of the BPCPA, however, she seeks a declaration that TELUS engaged in deceptive and unconscionable trade acts and practices under s. 172(1)(a). She also seeks an interim and permanent injunction under s. 172(1)(b), prohibiting TELUS from engaging in such acts and practices, and an order under s. 172(3)(a) restoring monies that TELUS acquired, she says, by contravening the BPCPA, including a proper accounting.
[12] In 2007, in the course of Ms. Seidel’s application to have her claim certified as a class action, TELUS applied for a stay on the basis of the arbitration clause pursuant to s. 15 of the CAA. In doing so, it relied on this Court’s decisions in Dell and Rogers Wireless Inc. v. Muroff, 2007 SCC 35, [2007] 2 S.C.R. 921, in which Quebec class certification proceedings were stayed pending the arbitration of consumer disputes. Ms. Seidel is obliged in the first instance, TELUS says, to have her entire complaint, including the BPCPA claims, dealt with by arbitration, as provided for in their service contract. Under the competence-competence principle, the arbitrator will determine what, if anything, is excluded from his or her jurisdiction and can thus be taken to the courts (R.F., at para. 30).
[13] Unfortunately, the initial 2000 contract containing the original arbitration clause on which TELUS relies cannot be found. However, the 2003 contract is in evidence and contains the following arbitration clause (an almost identical clause is found in the 2004 renewed contract):
15. ARBITRATION: Any claim, dispute or controversy (whether in contract or tort, pursuant to statute or regulation, or otherwise and whether pre-existing, present or future — except for the collection from you of any amount by TELUS Mobility) arising out of or relating to: (a) this agreement; (b) a phone or the service; (c) oral or written statements, or advertisements or promotions relating to this agreement or to a product or service; or (d) the relationships which result from this agreement (including relationships with third parties who are not parties to this agreement), (each, a “Claim”) will be referred to and determined by private and confidential mediation before a single mediator chosen by the parties and at their joint cost. Should the parties after mediation in good faith fail to reach a settlement, the issue between them shall then be determined by private, confidential and binding arbitration by the same person originally chosen as mediator. Either party may commence court proceedings to enforce the arbitration result when an arbitration decision shall have been rendered and thirty (30) days have passed from the date of such decision. By so agreeing, you waive any right you may have to commence or participate in any class action against TELUS Mobility related to any Claim and, where applicable, you hereby agree to opt out of any class proceeding against TELUS Mobility otherwise commenced. . . . [Emphasis added; A.R., at p. 83.]
The last sentence of the arbitration clause quoted above purports to waive any right Ms. Seidel may have to commence or participate in a class action. It is suggested on behalf of TELUS that that last sentence constitutes a separate bargain — distinct from the arbitration provision that precedes it — that survives any invalidity of the rest of the clause in relation to s. 172 proceedings. On this alternative submission, Ms. Seidel could still proceed in court with her individual s. 172 action but would be contractually barred from seeking its certification as a class proceeding. As will be seen, I would reject this submission of TELUS as well.
II. Judicial History
A. Supreme Court of British Columbia (2008 BCSC 933, 85 B.C.L.R. (4th) 372; Masuhara J.)
[14] The applications judge concluded that Dell could not be said to have set out a test of general application. In his view, it rested on provisions specific to Quebec law and should not be taken to have overruled earlier B.C. precedent, including in