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Simon Shields, LLB

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Simon Shields,
LLB

Barrister and Solicitor
(Retired)
LSUC #37308N


simonshields@isp.com

Legal Writing and Research

CONSUMER LAW

Consumer Protection (Ontario) Law
General CPA Law
(01 July 2013)

Chapter 1 - Overview

  1. Overview
    (a) General
    (b) Key Concepts
    (c) Regulatory Techniques Used
    (d) Remedies
    (e) Municipal Jurisdiction Over Consumer Protection
  2. Statutory and Contractual Interpretation Principles
    (a) Overview
    (b) No Waiver of CPA Rights by Consumer
    (c) Application of the CPA
    (d) Ambiguities in Consumer Agreements and Disclosure Duties
  3. Identifying Which CPA Rules Apply to Your Situation
------------------------------

1. Overview

(a) General

The Consumer Protection Act (CPA) is Ontario's legislative attempt to regulate a large range of consumer-focussed economic sectors in order to mitigate abusive business practices.

Aside from recent class action proceedings, this is an area of little sustained advocacy. This is due to the usually small dollar value of most individual transactions - a situation that works to the great advantage of large supplier corporations whose chronic abuses of consumer law often go unchallenged, and even when challenged result only in small losses to them given the lack of systemic remedies available under the CPA system.

The CPA regime is complicated to understand and cumbersome to apply. However I hope that this Isthatlegal.ca Consumer Law (Ontario) Legal Guide assists consumers to understand and use the laws as they stand.

(b) Key Concepts

The following are key terms which define the application and operation of the Consumer Protection Act regime [CPA 1].
  • "Consumer"

    The term 'consumer' is defined as an "individual acting for
    personal, family or household purposes and does not include a
    person who is acting for business purposes" [CPA 1].

  • "Consumer Transactions"

    The key term "consumer transactions" is a broad category which
    includes 'consumer agreements' (ie. contract, considered
    immediately below) and which also captures "any act or instance
    of conducting business or other dealings with a consumer". This
    larger concept is an attempt to capture all business practices
    leading up to, during and after the execution of a 'consumer
    agreement'.

  • Ontario Nexus

    The CPA only applies to consumer transactions when they have an
    Ontario 'nexus' [CPA 2(1)]:

    CPA 2(1)
    Subject to this section, this Act applies in respect of all
    consumer transactions if the consumer or the person engaging in
    the transaction with the consumer is located in Ontario when
    the transaction takes place.

  • "Consumer Agreements"

    These are contracts for the supply of consumer goods or services
    between a "supplier" (eg. a retailer) and a consumer (eg. a
    customer).

  • "Representations"

    'Representations' are 'representations, claims, statements,
    offers, request or proposals' made for sales or collection
    purposes. The primary CPA target of representations are
    advertising representations, though it has neglected potential in
    application to collection practices.

  • Goods

    "Goods" means any type of property.

  • Services

    "Services" means anything other than goods, including any
    service, right, entitlement or benefit;

  • Payment

    "Payment" means consideration of any kind, including an
    initiation fee;

  • Supplier

    "Supplier" means a person who is in the business of selling,
    leasing or trading in goods or services or is otherwise in the
    business of supplying goods or services, and includes an agent of
    the supplier and a person who holds themself out to be a supplier
    or an agent of the supplier.
Case Note: Ramdath v George Brown College of Applied Arts and Technology (Ont CA, 2013)
A community college was held to be a 'supplier', and their students 'consumers', under the CPA for purposes of a class action certification alleging unfair practices in the form of negligent misrepresentations made in the course of inducing them to register.
(c) Regulatory Techniques Used

The regulatory techniques used under the CPA regime are several. Some examples are:
  • Mandatory Disclosure

    This most commonly used CPA tool requires suppliers to, prior or
    at the time of executing a consumer agreement - and sometimes on
    an ongoing basis, provide clear, detailed and specific
    information regarding the terms of the arrangement.

  • Prohibition of Illegal Practices

    The CPA either prohibits or regulates several specific abusive
    business practices, including:

    - false, misleading and deceptive representations ['unfair
    practices']

    - negative-option contract formation [CPA 13], and

    - waiver of statutory warranties.

  • Cost Regulation

    - making estimates binding (final cost may not exceed 10% of any
    estimate given) [CPA 10];

    - a range of sector-specific cost, fee and charge prohibitions or
    regulations are scattered throughout the Part B chapters that
    address economic sectors individually.
(d) Remedies

The remedies available to consumers to address CPA violations are several, and include:
  • Rescission

    In perhaps the most potent of all CPA remedies, the CPA grants
    consumers the right to rescind (cancel), on notice to the
    supplier, consumer agreements that are non-compliant with its
    rules [Ch.7].

  • Civil Action

    The normal contractual remedial route of the civil courts is made
    expressly available to enforce CPA entitlements, such as
    restitution of payments made under rescinded contracts or for
    illegal fees [Ch.7].

  • Direct Action by Non-Payment

    There are several instances in relation to specific economic
    sectors where the CPA removes the supplier's entitlement to
    payment when they are in violation of CPA duties, particularly
    with respect to disclosure.

  • Administration Enforcement

    Consumers may register complaints with the Ministry of Consumer
    Services, which may investigate and issue a variety of compliance
    and similar orders [Ch.8].

  • Prosecution

    Regulatory prosecutions are available for a wide range of CPA
    violations [Ch.9].
(e) Municipal Jurisdiction Over Consumer Protection

It is a little known fact that municipalities have 'consumer protection' jurisdiction in relation to their traditional jurisdiction over licensing businesses.

This was made plain in the high-profile case of Municipal Parking Corporation v Toronto (City) (Ont CA, 2007) where the City of Toronto passed a by-law prohibiting the issuance of 'private' parking tickets by private parking lot operators to drivers who parked on their lots without paying.

The court characterized the 'fines' as "common law damage claims in the form of private parking tickets", though commonly they were perceived bt drivers as 'legitimate' tickets issued under the Provincial Offences Act (POA), who then proceeded to pay them as indicated on the tickets.

The City grounded its prohibition under its business licensing jurisdiction which included jurisdiction over 'consumer protection' [Municipal Act s.150(1)](both parking lots and private parking lot enforcement agencies had to be licensed). The first level court dismissed this argument partly on the grounds that trespassing drivers could not be considered 'consumers'.

The Court of Appeal found that this interpretation was too restrictive and that a 'broad and purposive' interpretation of municipal law did encompass such persons as being 'consumers':
Considered in this context, in my view, a broad purposive approach suggests that "consumer" would include those persons and entities with whom a licensee transacts, engages or deals directly as part of carrying on its licensed business activities.
The court also cited the CPA definition of consumer in support of this
broad interpretation [CPA 1]:
CPA 1
"consumer" means an individual acting for personal, family or
household purposes and does not include a person who is acting for business purposes;

2. Statutory and Contractual Interpretation Principles

(a) Overview

Explained here are key principles of statutory and contractual interpretation. The common law often imposes interpretive rules or even 'tendencies' in different areas of law to resolve closely-balanced situations, and these are some expressly imposed by statute that relate to the application of the CPA.

(b) No Waiver of CPA Rights by Consumer

This is probably the most important CPA interpretive principle and it defeats any 'supplier' (ie. retailer) efforts to avoid the CPA regime through the inclusion of written 'waivers' of CPA rights and remedies embedded within consumer agreements. It reads simply [CPA 7(1)]:
CPA 7(1)
The substantive and procedural rights given under this Act apply
despite any agreement or waiver to the contrary.
Case Note: Weller v. Reliance Home Comfort Limited Partnership (Ont CA, 2012)

In this case, which did not directly apply CPA 3 but which bears directly on the statutory interpretation of a key CPA concept ('termination' of a consumer agreement), it was held that a CPA-granted or required consumer right to terminate a consumer agreement (whether this is applies to a contractual right to terminate is arguable) must be unconditional. In this case the offending conditions which rendered the termination 'right' non-compliant were requirements that the consumer not be in arrears at the time of termination, and that they pay a water heater removal charge:
[16] I agree with the appellant that the right to terminate must be unconditional. An agreement that attaches conditions to the right to terminate does not provide the consumer with a true alternative to accepting the amendment. Depending upon the conditions for termination, the consumer could effectively be coerced into accepting the proposed amendment. Such an interpretation would be inconsistent with the consumer protection objective of the legislation.

...

[17] The agreement in this case attaches at least two conditions to the consumer’s ability to terminate the contract: (1) the consumer must not be in default under the agreement; and (2) the consumer must pay the standard removal charges. These conditions may well be reasonable but in the result the right to terminate is not unconditional. The agreement therefore does not comply with s. 42 of the Regulation and was not binding on the consumer.
(c) Application of the CPA

This next provision is called in the legislation an "anti-avoidance" provision. It reads [CPA 3]:
CPA 3
In determining whether this Act applies to an entity or
transaction, a court or other tribunal shall consider the real
substance of the entity or transaction and in so doing may
disregard the outward form.
Essentially this provision authorizes judges or adjudicators to disregard the technical or 'formal' nature of a transaction or a party's business organization and to ask themselves if the situation is 'in essence' a consumer transaction. It is targetted at both situations that are by their nature 'on the line' and at efforts by suppliers to structure their deals to avoid CPA application.

(d) Ambiguities in Consumer Agreements and Disclosure Duties

This next one is a common conflict-resolution interpretative principle that is broadly applied to 'benefits-conferring' legislation (which the CPA is) under the common law. It would almost certainly be inferred by a court or an adjudicator even if it was not expressly set out in the Act [CPA 11]:
CPA 11
Any ambiguity that allows for more than one reasonable interpretation of a consumer agreement provided by the supplier to the consumer or of any information that must be disclosed under this Act shall be interpreted to the benefit of the consumer.
Note however that it is expressly extended to disclosure duties, recognizing and emphasizing the importance of this regulatory technique to the CPA regime as a whole. Most disclosure duties are spelled out in relation to specific 'forms' of consumer agreement [see Ch.3] or specific economic sectors [see theh part B chapters].
Case Note: Seidel v TELUS Communications Inc.
In Seidel v TELUS Communications (SCC, 2011) the court, while denying the enforceability of contractual provisions in a consumer contract that purported to restrict the consumer's right to sue (it tried to force them to arbitration), stated the following respecting statutory interpretation of consumer protection legislation:
[37] As to statutory purpose, the BPCPA is all about consumer protection. As such, its terms should be interpreted generously in favour of consumers: Smith v. Co-operators General Insurance Co., 2002 SCC 30 (CanLII), 2002 SCC 30, [2002] 2 S.C.R. 129, and ACS Public Sector Solutions Inc. v. Courthouse Technologies Ltd., 2005 BCCA 605 (CanLII), 2005 BCCA 605, 48 B.C.L.R. (4th) 328. The policy objectives of s. 172 would not be well served by low-profile, private and confidential arbitrations where consumers of a particular product may have little opportunity to connect with other consumers who may share their experience and complaints and seek vindication through a well-publicized court action.
The court added, on the issue of whether the contract precluded class actions, the additional comment on statutory interpretation in 'contracts of adhesion' (large-scale, unmodifiable, 'take-it-or-leave-it' contracts) generally:
[47] I take this language to be clear. However, if there is any ambiguity in the TELUS clause, it is resolved in favour of Ms. Seidel’s right of access to the court by the principles of contra proferentum. “Whoever holds the pen creates the ambiguity and must live with the consequences”: Co-operators Life Insurance Co. v. Gibbens, 2009 SCC 59 (CanLII), 2009 SCC 59, [2009] 3 S.C.R. 605, at para. 25; see also, ACS Public Sector Solutions, at para. 50, per Donald J.A. This, the Court said in Bauer v. Bank of Montreal, 1980 CanLII 12 (SCC), [1980] 2 S.C.R. 102, “is particularly true where the clause is found in a standard printed form of contract, frequently termed a contract of adhesion, which is presented by one party to the other as the basis of their transaction” (p. 108).

3. Identifying Which CPA Rules Apply to Your Situation

This is complicated but it is CRUCIAL to properly understanding and applying Consumer Protection Act (CPA) rules.

First, let's take the concept of an economic 'sector'. This, quite logically, is the main topic by which consumer agreements are categorized under the CPA. Sectors include such economic activities as "motor vehicle repair", "chattel leases", 'loans' etc. I have set the 'sectors' chapters out in Part B and this is the first place most of you will have headed. This is an entirely natural, but also quite WRONG way to understand the CPA, because:
Even if you have found a 'sector' chapter that fits with your situation, you CANNOT ASSUME that all the rules set out in that chapter apply to your situation.
This is because the CPA superimposes a second type of categorization overtop of all sectors of consumer agreements, based on the 'form' of the consumer agreement, and each 'form' has its own rules - some of which may conflict the 'sector' rules.

The different 'forms' depend on the manner in which the consumer agreement was created (ie. as a 'direct agreement', a 'remote agreement' or an 'internet agreement') or by whether it is a 'future performance agreement' [categorizing your situation by 'form' is explained in Ch.3: 'CPA Forms of Consumer Agreement"].

In fact, one consumer agreement could fall into one sector (typically just one), and then into one or even more 'forms'. Plainly this can lead to confusion and even conflict in the rules. Because of this the CPA provides for 'Rule Conflict Resolution', which - when conflict arises - determines which rules apply [see Ch.4].

Oh right, and there are sectors which are fully (or partially exempt) from CPA rules as well.

Below I do my level best to try to lead you through this. Assuming that I haven't screwed it up, you will probably screw it up the first time - so be persistent. Here are the steps:

Step 1

Review Part C, Ch.2 ["CPA Exemptions from Coverage"] to see if you can locate your consumer situation in any of the s.2,3 or 4 exemption types (ie. fully CPA-exempt, partially CPA-exempt or under federal jurisdiction).
  • if the sector is fully exempt or under federal jurisdiction, see
    if you can locate a chapter covering it in Part B. If you can -
    use it. If not it is because I haven't written one yet and you
    are on your own. Sorry.

  • if the sector is NOT MENTIONED in Ch.2, proceed to step 2.

  • if the sector is mentioned but is 'partially exempt' proceed to
    step 3.
Step 2

If your situation does not fall into an identified consumer sector don't be surprised, lots don't (eg. 'left-handed monkey wrench refinishers" or "skyhook recalibrators"). But if you are SURE it IS a consumer situation [ie. a goods or services transaction made for "personal, family or household purposes" - NOT for business purposes: CPA 1] - then it *may* be covered by the CPA general rules covered in Part C, Chapters 5 to 10.

Proceed to Step 4.

Step 3

If the economic sector that covers your situation is 'partially-exempt' from the CPA, read the details of those exceptions in Part C, Ch.2, s.3 ["CPA Exemptions from Coverage: Partially CPA-Exempt Categories"]. Subject to those exceptions, your situation *may* be covered by the CPA general rules covered in Part C, Chapters 5 through 10.

Proceed to Step 5.

Step 4

Review Chapter 3 ["CPA Forms of Consumer Agreements"] to determine if your situation falls into any one or more of the four 'form' categories explained there (ie. future performance agreements, direct agreements, internet agreements or remote agreements).
  • if it does NOT fall into any of these four forms, then your
    situation is probably governed by the general CPA rules covered
    in Part C, Chapters 5 to 10.

  • if it falls into one (only) of the 'forms', then your situation
    is probably governed by the rules of that 'form' AND the general
    CPA rules covered in Part C, Chapters 5 to 10.

  • if it falls into two or more of the 'forms', then go to Part C,
    Ch.4 ["CPA Rule Conflict Resolution"] and follow the explanation
    there to determine which of the 'sector' or 'form' rules are
    paramount, or if they can co-exist together. Your situation is
    probably governed by those Ch.4-generated rules AND the general
    CPA rules covered in Part C, Chapters 5 to 10.
Step 5

Review Chapter 3 ["CPA Forms of Consumer Agreements"] to determine if your situation falls into any one or more of the four 'form' categories explained there (ie. future performance agreements, direct agreements, internet agreements or remote agreements).
  • if it does NOT fall into any of these four forms, then your
    situation is probably governed by the general CPA rules covered
    in Part C, Chapters 5 to 10, subject to the applicable sector
    partial exemptions set out in Part C, Ch.2, s.3 ["CPA Exemptions
    from Covererage: Partially CPA-Exempt Sectors"].

  • if it falls into one (only) of the 'forms', then your situation
    is probably governed by the rules of that 'form' AND the general
    CPA rules covered in Part C, Chapters 5 to 10, subject to the
    applicable partial exemptions set out in Ch.2 ["CPA Exemptions
    from Covererage"].

  • if it falls into two or more of the 'forms', then go to Part C,
    Ch.4 ["CPA Rule Conflict Resolution"] and follow the explanation
    there to determine which if the 'sector' or 'form' rules are
    paramount, or if they can co-exist together. Your situation is
    probably governed by those Ch.4-generated rules AND the general
    CPA rules covered in Part C, Chapters 5 to 10, subject to the
    applicable partial exemptions set out in Ch.2 ["CPA Exemptions
    from Covererage"].

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