Packed with valuable information, our publications help you stay in touch with the latest developments in the fields of law affecting you, whatever your sector of activity. Our professionals are committed to keeping you informed of breaking legal news through their analysis of recent judgments, amendments, laws, and regulations.

Advanced search
  • A New Look at Interlocutory Injunctions

    The year 2018 has been an important one for case law regarding injunctions: the Supreme Court of Canada and the Court of Appeal of Quebec each rendered decisions that redefined certain parameters for the issuing of a interlocutory injunction. R. v. Canadian Broadcasting Corp. On February 9, 2018, the Supreme Court of Canada rendered a unanimous decision in R. v. Canadian Broadcasting Corp.1 The most significant aspect of this decision is that the Court redefines the serious issue to be tried criterion when it comes to a mandatory interlocutory injunction, which is an injunction that orders the defendant to do something, as opposed to a prohibitive injunction, which orders the defendant to refrain from doing something. An accused was found guilty of first degree murder of a minor, following which the Canadian Broadcasting Corporation (“CBC”) published information on its website that revealed the identity of the victim. A ban prohibiting the publishing, broadcasting, or transmission in any way of any information that could identify the victim was ordered under section 486.4(2.2) of the Criminal Code, at the Crown’s request. CBC refused to remove the information from its website, and the Crown filed an application to have CBC declared guilty of criminal contempt and to obtain an interlocutory injunction ordering the removal of the information from CBC’s website. The first judge dismissed the Crown’s application, concluding that it had not met its burden with regard to the criteria for obtaining a mandatory interlocutory injunction. The Court of Appeal allowed the appeal and granted the injunction. The Supreme Court explains that, when it comes to mandatory interlocutory injunctions, the applicant must demonstrate more than the serious issue to be tried, as established by the decision RJR—MacDonald Inc. v. Canada (Attorney General).2 The threshold to be applied is a “strong prima facie case,” which requires the applicant to establish “[...] a strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice”.3 The two other criteria for issuing an interlocutory injunction (irreparable harm and balance of convenience) remain the same. The Court specifies that the modified test only applies to mandatory interlocutory injunctions, explaining that an interlocutory injunction framed in prohibitive language may nevertheless require the defendant to take positive action. For example, ordering that CBC stop transmitting the information that established the identity of the victim would require positive action on the part of CBC, that is, to take measures to remove the information from its website. The Court emphasizes the importance of looking past the form and the wording used, in order to determine the real essence of the order sought. Pointing out the discretionary nature of the decision to issue an interlocutory injunction and the duty of deference with regard to intervention on the part of appeal courts, the Court allows the appeal and restores the decision of the chambers judge, concluding that the Crown had not demonstrated a strong prima facie case of criminal contempt. In fact, since section 486.4(2.2) of the Criminal Code could be reasonably interpreted as only prohibiting publications transmitted after the publication ban, the Crown could not establish that it had a strong likelihood to succeed at trial. Groupe CRH Canada inc. c. Beauregard          On June 21, 2018, the Court of Appeal rendered a decision in Groupe CRH Canada inc. c. Beauregard,4 which will surely often be cited, since it redefines the relationship that exists between the three criteria for the issuance of an interlocutory injunction. The respondents, waterfront residents near Chemin de la Butte-aux-Renards (the “Road”), commenced legal proceedings to seek an interlocutory and permanent injunction and damages to stop truck traffic on the Road. The Road was the only access road that enables trucks to obtain supplies from the stone quarry operated by the appellant CRH Canada Group Inc. (“CRH”), and from manufacturing facilities for products related to asphalting, which belonged to the appellant Bau-Val Inc. (“Bau-Val”). The impleaded party, KPH Turcot, was awarded the design-build contract for the Turcot project and would receive its supplies from the CRH quarry, which led to increased traffic on the Road since the spring of 2016. The Superior Court issued an interlocutory injunction prohibiting the operation of trucks in the evenings and at night (from 5:30 p.m. to 6:29 a.m.), limiting the operation of trucks on weekends to three Saturdays per year, and restricting the operation of trucks during the day. Among the grounds of appeal raised, the appellants claimed that the chambers judge did not consider the balance of convenience after having concluded that the respondents met the prima facie case criterion. First, the Court clarifies the fact that there is no true distinction to make between determining if there is a serious issue to be tried and a prima facie case: it is essentially sufficient for the application to be neither frivolous nor vexatious. It should be noted that the Court does not refer to the decision R. v. Canadian Broadcasting Corp. decision rendered a few months earlier, which redefined this criterion for mandatory interlocutory injunctions. This could probably be explained by the fact that the Court of Appeal had before it an application to issue a prohibitive interlocutory injunction for which it must have been of the opinion that the new criterion established by the Supreme Court of Canada did not apply. With regard to the second criterion, the Court recalls the wording used in article 511 of the Code of Civil Procedure, which codifies interlocutory injunctions: prejudice must be serious or irreparable, which means to that an injunction can be issued even if the prejudice can be compensated monetarily, if and so long as the prejudice is “serious.” The most significant aspect of this decision is the analysis carried out by the Court with regard to the balance of convenience criterion. The Court comes to the firm conclusion that a judge who has before him an application for interlocutory injunction must analyze the balance of convenience criterion, even if the applicant demonstrates a strong prima facie case. This conclusion seems to contradict a number of precedents, including the landmark case of James Bay Development Corporation v. Chief Robert Kanatewat,5 which was to the effect that the balance of convenience should not be analyzed if the applicant demonstrates a strong prima facie case. [14]      At the interlocutory injunction stage these rights are apparently either (a) clear, or (b) doubtful, or (c) non-existent: (a) If it appears clear, at the interlocutory stage, that the Petitioners have the rights which they invoke then the interlocutory injunction should be granted if considered necessary in accordance with the provisions of the second paragraph of Article 752 C.P. (b) However, if at this stage the existence of the rights invoked by the Petitioners appears doubtful then the Court should consider the balance of convenience and inconvenience in deciding whether an interlocutory injunction should be granted. (c) Finally if it appears, at the interlocutory stage, that the rights claimed are non-existent then the interlocutory injunction should be refused. The Court indicates that even if there were a violation of an objective legislative standard of public order, the criterion of the balance of convenience must still be analyzed and could be used as an argument against the application of the standard. It is clear that this change made by the Court is a major one: henceforth, the applicant is never exempt from demonstrating that the balance of convenience criterion is in the his favour, even if said applicant demonstrates a strong prima facie case. The Court provides two cases in which judges may discontinue their analyses of the prima facie case criterion: [our translation] “(a) when the applicant does not meet the preliminary condition of the  "prima facie case" or the "serious issue to be tried", such that the application may be denied for this reason; and (b) when the case is based on a pure question of law” (para. 77). Finally, the Court briefly mentions that, in Quebec, it is possible for judges to discontinue their analyses based on the prima facie case criterion for cases in which the interlocutory injunction is aimed at enforcing contractual obligations. The Court does not elaborate more on this obiter, which can be applied in Quebec, where specific performance is the default remedy for not performing a contractual obligation, and not an exception, as it is in common law. On the basis of its analysis of the balance of convenience, the Court partially allows CRH’s appeal, quashing the injunction which limited the operation of trucks during the day on weekdays. With regard to Bau-Val, as the first judge acknowledged that the traffic generated was minimal, the  injunction was quashed.  Conclusion Litigants parties must be familiar with these two decisions that redefine the criteria required for issuing an interlocutory injunction.   2018 SCC 5 1994 CanLII 117 (SCC). The Court’s reasons were delivered by the Honourable Justice Brown. para. 17 2018 QCCA 1063 (CanLII) [1975] C.A. 166

    Read more
  • Mandatory mediation at the Small Claims Division: Merchants, be prepared!

    Lavery closely monitors new developments in consumer law and is committed to keeping the business community informed of the latest developments in this area of the law by regularly publishing newsletters dealing with new case law or legislative changes which may impact, influence, or even transform practices in the retail sector. The current projects of the legislator respecting judiciary case management of consumer law may very well modify the manner in which merchants handle customer complaints. In this respect, consumer law is a privileged child of the Code of civil procedure reform. Indeed, the Quebec government recently implemented a mandatory mediation pilot project for the Small Claims Division of the Court of Québec. On May 15, 2015, the Regulation to establish a pilot project on mandatory mediation for the recovery of small claims arising out of consumer contracts1 (the “Regulation”)2 came into force. Pursuant to the Regulation, mandatory mediation is imposed on the parties where the claim before the Small Claims Division arises from a consumer contract. A consumer contract includes any agreement between a merchant and a consumer for the acquisition of goods or services.3 When one considers that the Small Claims Division has jurisdiction to hear cases with a value of up to $15,000, it follows that a significant portion of the retail industry is covered by this pilot project. The pilot project, which is established for 3 years, only covers the judicial districts of Gatineau and Terrebonne,4 but we expect that the government will make it applicable throughout the province if the results are positive. To a certain extent, Quebec would follow suit with neighbouring Ontario, where mediation is mandatory for all matters that come before the Small Claims Court.5 WHAT JUSTIFIES MANDATORY MEDIATION? Mandatory mediation gives concrete expression to one of the guiding principles of the new Code of Civil Procedure (hereinafter, the “NCCP”) that came into force on January 1, 2016, which is to ensure accessibility to the courts and swiftness of civil justice. This is particularly illustrated by the fact that the legislator dedicated Title I of Book I of the NCCP to private dispute prevention and resolution processes. Contrary to these private dispute prevention and resolution processes such as negotiation, mediation and arbitration chosen by mutual agreement of the parties,6 the pilot project establishes mandatory mediation. The legislator therefore gives preferred treatment to judiciary claims between consumers and merchants, which may be explained by two objectives: (i) Free up the courts and promote swift access to justice Approximately 25% of the cases at the Small Claims Division concern claims involving consumer contracts.7 In addition, a study of the Office de la protection du consommateur published in 2010 reveals that 83% of the merchants continue to refuse mediation.8 One may think that the legislator wishes to reverse the trend and compel the parties to reestablish their communication in order to settle their disputes according to mutually agreed upon conditions. This measure will free up the courts, thus promoting swift access to justice. (ii) Restore the balance between the parties in a consumer contract The imbalance between consumers and merchants9 has always been a source of concern for the legislator. By making mediation mandatory as part of the pilot project, the government reaffirms its will to protect consumers by requiring merchants to discuss with them before an impartial third party in order to settle a dispute which ended up before the courts. Making consumer contracts subject to mandatory mediation a priority is explained by the fact that consumer contracts rank among the most common contracts, with personal consumption expenses in Quebec representing more than 100 billion dollars (which includes the automobile and food sectors).10 The obligation to submit these cases to mediation thus promotes maintaining harmony between the parties, which is an essential element to the sector’s health. WHAT MAY WE EXPECT? The process begins when the Small Claims Court clerk notifies the parties that they are subject to mediation.11 Our interpretation of the Regulation makes us conclude that this notice will be sent by the clerk once the defence is filed with the Court. The clerk must offer the mediation mandate to a mediator whose name is on the list of mediators that he has drawn.12 These mediators are lawyers or notaries certified by their professional orders.13 Once appointed, the mediator communicates with the parties to agree on a date and time for the mediation session.14 The process is intended to be swift: the mediator must hold the mediation session within 30 days following the date on which his mandate has been confirmed to him in writing.15 When a party fails to attend the mediation session so fixed or to agree on holding such a session, the mediator files with the court office a report stating that it is impossible to proceed with the mediation and the case may therefore be heard by the court.16 However, the court may penalize a party’s failure to participate in the mandatory mediation by condemning such party to pay the legal costs or damages or, if the faulty party is the creditor, by reducing or cancelling the interests payable to that party.17 If the mediation is successful, the parties file either a notice that the case has been settled or the agreement they have signed.18 If it is not, the mediator sends to the clerk, within 10 days of the mediation session, a report giving an account of the facts, the positions of the parties and the questions of law raised.19 The case may then be heard by the court.20 MAY ONE REQUEST TO BE EXEMPTED? Having a vested interest for the pilot project to be successful, the government has provided that a party may only be exempted from participating in the mandatory mediation session for a serious reason.21 A party who wishes to be exempted from mandatory mediation must make an application in writing to the court not later than 20 days after being notified by the clerk that a case is subject to mediation.22 The clerk informs the other parties of the application; they then have 10 days to present their observations in writing.23 HOW TO PREPARE FOR MEDIATION? By making mediation mandatory, the government sends a clear message to merchants: they will have to modify some of their complaint processing practices. In order to make the process efficient, and taking into account the fact that time with the mediator is limited, the prior preparation of the mediation session will have a significant impact on its orientation and on the outcome of the dispute. By being well prepared, a merchant will better understand his case, both from a factual and legal point of view, and will be able to highlight the weaknesses of the consumer’s case, if any. In order to be well prepared in the event that the merchant would face a suit and would then have to attend a mediation session, it is crucial for the merchant to do his homework in advance. Thus, he may find it beneficial to establish a clear complaint and claim management policy. Although the structure of the management policy may depend on the nature and the scope of the operations of the enterprise, merchants should minimally address the following questions when developing his policy: Are calls with consumers recorded? With their consent? Are reliable notes of all communications and interventions with consumers taken? In which way? Is there a particular person or persons assigned full-time to complaint and claim management or is the file entrusted with the representative who knows best about the facts of the case? Does the merchant wish to examine the goods which are the subject of the dispute? Does he want to give a mandate to an expert? How should he proceed? Is a response to the demand letter to be sent? In which cases? In which cases will the customer be contacted by phone? Are third parties or witnesses involved in the matter? May compensation, other than monetary compensation, be offered to the consumer in order to settle the dispute? --> a Are calls with consumers recorded? With their consent? b Are reliable notes of all communications and interventions with consumers taken? In which way? c Is there a particular person or persons assigned full-time to complaint and claim management or is the file entrusted with the representative who knows best about the facts of the case? d Does the merchant wish to examine the goods which are the subject of the dispute? e Does he want to give a mandate to an expert? How should he proceed? f Is a response to the demand letter to be sent? In which cases? In which cases will the customer be contacted by phone? g Are third parties or witnesses involved in the matter? h May compensation, other than monetary compensation, be offered to the consumer in order to settle the dispute? Once this policy is established, the following has to be done for each matter: establish the facts in dispute in chronological order prepare the documentary or material evidence (ex.: invoices, correspondence, recordings, etc.) determine what are the practices of the sector in similar situations determine the position and the arguments quantify the claim fix a scale to calculate how much the merchant would be prepared to pay to settle the claim --> a establish the facts in dispute in chronological order b prepare the documentary or material evidence (ex.: invoices, correspondence, recordings, etc.) c determine what are the practices of the sector in similar situations d determine the position and the arguments e quantify the claim f fix a scale to calculate how much the merchant would be prepared to pay to settle the claim Lastly, the merchant would be well-advised to hold regular meetings with legal counsel to take stock of the claims subject to mandatory mediation. This will allow him to validate the legal framework of his file and the strategy to adopt at the mediation session. If the merchant establishes a clear complaint and claim management policy and ensures that it is well implemented in his enterprise, these periodic meetings will be quick and efficient. WHAT ARE THE BENEFITS? Mandatory mediation offers definite benefits to the merchant. Firstly, the process is swift and cost-efficient. In fact, the services of the mediator are free since his fees are assumed by the Ministère de la Justice.24 As for the consumer, he can only be satisfied to be offered the opportunity to present his case to an impartial person without being subject to the usual judicial formalities before the court. Secondly, a successful mediation allows the merchant to avoid the risk of seeing the name of his enterprise associated with an unfavourable judgment, sometimes being cited out of context, thus allowing him to protect his image. Thirdly, mediation is a flexible process, the parties are free to negotiate the parameters of their settlement to achieve a mutually satisfying solution. Moreover, since mediation is confidential,25 the information shared during the process cannot be used in legal proceedings if mediation is unsuccessful. Lastly, the process may allow the merchant to better understand the consumer’s case and prepare accordingly for a trial should mediation fail. However, this statement is subject to a caveat: even if the mediation session reveals the other party’s cards, one must always remember that the parties are required to participate in good faith.26 In other words, the merchant should not participate in the mediation session for the sole purpose of verifying the solidity of the consumer’s case, but rather attend with the sole objective of trying to find a solution to the dispute.27 WHAT IS THE BOTTOM LINE? One has to keep in mind that with the pilot project which subjects the claims arising from a consumer contract to mandatory mediation, the legislator wants to promote the dialogue between consumers and merchants. The merchant may participate in this dialogue in an effective manner by establishing a clear complaint and claim mangement policy, which may also include a resolution process which would take place before matters are submitted to the court. Such an approach allows the merchant to quickly demonstrate the seriousness of his file, thus maximizing his chances of achieving a profitable settlement. A merchant can only derive benefits from the process, as establishing a dialogue with consumers shows that he has a clear understanding of his customers’ needs.   Regulation to establish a pilot project on mandatory mediation for the recovery of small claims arising out of consumer contracts, CQLR, c. C-25.01, r. 1. In accordance with articles 28 and 836 of the Act to establish the new Code of Civil Procedure, S.Q. 2014 c. 1. According to section 1 of the Regulation, the definition given to the expression “consumer contract” is that set out in article 1384 of the Civil Code of Québec, that is, “a contract whereby one of the parties, being a natural person, the consumer, acquires, leases, borrows or obtains in any other manner, for personal, family or domestic purposes, property or services from the other party, who offers such property and services as part of an enterprise which he carries on.” Prec., note 1, s. 1. Rules of the Small Claims Court, Reg. 258/98 (Ont.), s. 13.01. Prec., note 2, art. 1. Pierre-Claude LAFOND, L’accès à la justice civile au Québec : portrait général, Cowansville, Éditions Yvon Blais, 2012, p. 140. Pierre-Claude LAFOND, L’accès à la justice civile au Québec : portrait général, Cowansville, Éditions Yvon Blais, 2012, p. 138. Pierre E. AUDET, “La médiation obligatoire pour les petites créances d’au plus 15 000 $ découlant d’un contrat de consommation”, Justice privée et décrochage judiciaire, Les Entretiens Jacques-Cartier, Montréal, October 3, 2014. Luc THIBAUDEAU, Guide pratique de la société de consommation, Cowansville, Éditions Yvon Blais, 2013, p. 157. In 2014, the retail sector has represented in excess of 505 billion dollars in Canada: Id. Prec., note 1, s. 6. Id., s. 7. Id., s. 22. Id., s. 21.. Id., s. 26. Id., s. 27. Préc., note 1, s. 28. Id., s. 29. Id. Id., s. 2. For the purposes of the Regulation, the expression serious reason particularly means the existence of an order preventing a party from being in the presence of the other party, the fact that the travelling expenses related to the party’s participation in the mediation exceed the possible advantages or the fact that the parties have already participated in a mediation session for the same dispute. Id., s. 3. Id. Prec., note 1, s. 12. Id., s. 18 to 20. Id., s. 16. Id., s. 16.

    Read more
  • Consumer law and class actions: Beware of unilateral amendments to contracts involving sequential performance

     This publication was co-authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Lavery closely monitors new developments in consumer law class actions and is committed to keeping the business community informed of the latest developments in this area of the law by regularly publishing newsletters dealing with new case law or legislative changes which may impact, influence, or even transform practices in this area. Over the past 18 months, the Superior Court of Québec, in three class actions1, conducted an analysis of unilateral amendment clauses2in service contracts pertaining to the telecommunications industry. In these decisions, which we will refer to hereinafter as the “Telecom Trilogy”, the Court refused to recognize the validity of the clauses that were submitted to it and ordered the restitution of additional fees paid by consumers pursuant to rate changes. The Court highlighted the importance of disclosing to a co-contracting party the entire range of fees that such party may be called upon to pay over the term of a service contract, including related or additional fees.3The disclosure of fees is subject to strict parameters set out in the provisions of the Consumer Protection Act4 and the Civil Code of Québec.5 These cases reiterate, as a matter of principle, the importance of a fixed-term service contract’s enforceability, with little regard for the inherent risks to which merchants are exposed due to the unpredictability of market conditions. In a fixed-term contract, merchants are generally the ones assuming such risks.6 However, in the context of an indeterminate-term contract, the consumer, upon receipt of the notice of amendment sent by the merchant, must decide whether to accept such amendments and the new terms of the contract or to terminate the contract. UNILATERAL AMENDMENT CLAUSES AND SECTION 12 OF THE C.P.A. In the three cases analyzed by the Superior Court, the service contracts contained clauses allowing for the unilateral amendment by the service provider of certain contractual terms and conditions, including rates and/or usage fees, upon delivery of a 30 days’ written notice.7 In two of those cases, the service provider had introduced new fees that applied to incoming text messages, whereas in the other case, the service provider had set an internet usage allowance system that resulted in increased charges to the user. In all three cases, the service providers had provided their clients with 30 days’ prior notice of the amendments to the terms of the contract. The Court found that the amendment procedure that was followed breached section 12 of the C.P.A., which prohibits merchants from claiming fees from the consumer when they are not precisely indicated in the contract.8 The objective of the provision is to [TRANSLATION] “ensure that the consumer enters into a consumer contract in an informed manner”9, with a clear understanding of the circumstances. The unilateral amendment clauses contained in the service providers’ contracts failed to set out objective criteria specifying the nature or frequency of such future amendments or increases10, which resulted in the consumer being unable to specifically foresee the magnitude of further cost increases that would be added to the obligations already set out in the initial contract. UNILATERAL AMENDMENT CLAUSES AND THE CIVIL CODE OF QUÉBEC In the Laflamme case, the Court also analyzed this issue in the light of the provisions of the C.C.Q.11Article 1373 C.C.Q. states that a prestation arising out of a contract must be “possible and determinate or determinable”. Article 1374 C.C.Q. adds that the prestation “may relate to any property, even future property, provided that the property is determinate as to kind and determinable as to quantity”. In applying these provisions, Justice Nantel determined that a unilateral amendment clause is not automatically invalid, but that in order to be valid, it must contain the following elements: The subject of the modification; and Prior indications, objective criteria and thresholds that [TRANSLATION] “are not solely controlled by the beneficiary of the clause”12 allowing for the co-contracting party [TRANSLATION] “to anticipate the triggering event and the extent of the modification”.13 In Laflamme, the terms of the unilateral amendment clause14 did not make it possible to establish or clearly determine the specific value of the increase in costs which may result from such an amendment to the contract, making such clause illegal under the C.C.Q. UNILATERAL AMENDMENT CLAUSES AND SECTION 11.2 C.P.A. On June 30, 2010, the legislator introduced section 11.2 C.P.A. which, in certain circumstances, allows for the unilateral amendment of consumer contracts where prescribed conditions are met,15 such as the delivery by the merchant of a 30 days’ prior notice to the consumer stating the nature of the amendment, its effective date, as well as the right of the consumer to refuse it and terminate the contract without penalty up to 30 days after the amendment becomes effective. However, under section 11.2 C.P.A., the amendment of an essential element of a fixed-term contract is prohibited, which includes the nature of such goods or services that are the object of such contract, the price of the goods or services or, if applicable, the term of the contract. To date, no court has applied or interpreted section 11.2 C.P.A., which was not applicable in the context of the three class actions discussed above, since the contested clauses were used by the suppliers prior to this provision being passed. However, Justice Paquette, in Martin, commented on the matter.16 She noted that section 11.2 C.P.A. was passed in line, and not inconsistently with section 12 C.P.A. and that its purpose is to consolidate the principle according to which the consumer must not be taken by surprise. She concluded that had section 11.2 C.P.A. been in force when the supplier increased the cost of a service included in the contract, the amendment would have been unenforceable against the consumer since the consumer could not terminate the contract without penalty. Moreover, the amendment was made in respect of the price, which is an essential element of the contract that cannot be modified, notwithstanding section 11.2 C.P.A., given the fact that the contract was for a fixed-term. Although section 11.2 C.P.A. provides for a strict process that merchants must follow when amending the terms of a consumer contract, it appears from the interpretation of the Court in the Telecom Trilogy, that this provision is nevertheless more flexible than articles 1373 and 1374 C.C.Q. Indeed, section 11.2 C.P.A. does not require that a unilateral amendment clause contain [TRANSLATION] “predetermined indications which [...] illustrate the type of amendments which may be brought about” or of the “objective criteria and markers”. Furthermore, section 11.2 does not include any requirement for [TRANSLATION] “the clause [...] to clearly allow the consumer to have detailed knowledge of the amount of the fees which will be charged to him for any given service during the contract”. RECONCILING THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION’S (THE “CRTC”) WIRELESS CODE AND SECTION 11.2 C.P.A. The Wireless Code adopted by the CRTC (the “Code”) came into force on December 2, 2013. It is the result of a series of consultations with various stakeholders of the telecommunications industry and aims to regulate its practices. The Code prohibits telecommunication enterprises from unilaterally amending the main clauses in their service contracts, but not the other terms therein. Nothing is specified in respect of amendments to other terms where they would affect the price. The Code was invoked in two cases, and the Court explicitly dealt with the argument in the Martin case. However, the judges concluded that the Code could not apply to the facts put before them as such facts had occurred prior to its coming into force. Justice Paquette did however mention that the terms of the contract dealing with pay-per-use services, such as text messaging fees, were not considered to be key terms, and could therefore be unilaterally amended pursuant to the Code.17 This interpretation will certainly be the subject of comments and reactions. The interpretation of “principal terms” and “accessory terms” will most likely be the subject of a debate to be closely followed in the coming years. Courts may soon answer these questions as a class action against two other service providers was recently authorized by the Superior Court of Québec, whose decision was upheld by the Court of Appeal.18 THE PENALTIES Merchants who do not comply with section 12 C.P.A. are liable to the penalties listed at section 272 C.P.A.19, including the possibility for the consumer to ask for the termination of the contract and the award of punitive damages. In each of the Telecom Trilogy cases, the Court ordered that the clients be compensated for the additional fees they incurred as a result of the amendments to their contracts. In Union, the Court also awarded punitive damages in favour of one of the subclasses20, since the provider had failed to inform its new clients, who entered into same contracts, of the imminent increase in fees despite the fact that the decision to increase such fees had already been made. In the Court’s opinion, the provider had failed to communicate an important fact, in breach of section 228 C.P.A. This breach, alone, justified the granting of punitive damages for an amount of $500 per member of the subclass. The Court’s award of punitive damages illustrates that a class action award can amplify the C.P.A.’s deterrent force. COMMENTS The Telecom Trilogy reminds merchants that they must disclose the amount of all fees that will be charged to their clients. Furthermore, section 11.2 C.P.A. adds to this principle a number of procedures for merchants to follow when relying on a unilateral amendment clause. These three decisions were appealed. It will be interesting to see whether the Court of Appeal will clarify the scope of section 11.2 C.P.A. and define the conditions under which such provision may cohabit with section 12 C.P.A. We might also wonder if the CRTC’s policy will soften the application of the C.P.A. and give service providers arguments that focus the debate, not on price, but rather on distinctions as to what constitutes “principal terms” versus “accessory terms” of a contract. Other decisions are anticipated in respect of unilateral contractual amendments. We might consider, for example, loyalty programs.21 Indeed, two class actions in which it is alleged that illegal amendments of such programs were made have already been authorized22and a third application was recently filed.23 It is to be expected that the courts will, in a subequent trilogy, provide additional clarifications in respect of the rights and obligations of merchants when amending consumer contracts unilaterally. 1 Laflamme v. Bell Mobilité Inc., 2014 QCCS 525 (2014-02-18), inscription in appeal, 2014-03-18 (C.A.) (“Laflamme”); Martin v. Société Telus Communications, 2014 QCCS 1554 (2014-04-08), inscription in appeal, 2014-05-08 (C.A.) and Application to dismiss the appeal, 2014-05-28 (C.A.) (“Martin”); Union des consommateurs v. Vidéotron s.e.n.c., 2015 QCCS 3821 (2015-08-21) (“Union”). 2 A unilateral amendment clause allows a contracting party, in this case, the service provider, to make changes to a contract prior to its expiry. 3 It is to be noted that the qualification of such fees (related or additional) has yet to be analyzed. 4 CQLR, c. P-40.1 (“C.P.A.”), sections 11.2 et 12. 5 CQLR, c. C-1991 (“C.C.Q.”), articles 1373 et 1374. 6 Subject to the distinctions discussed in this article. 7 Each of the service contracts contained terms such as “upon not less than 30 days notice”, “subject to a minimum notice period of 30 days”, or “after having provided you with a 30 day notice”. 8 Laflamme, par. 46. 9 Martin, par. 37. 10 Martin, par. 38. 11 One of the subclasses of the class action was not composed of consumers within the meaning of the C.P.A. 12 Garderie éducative La Souris Verte inc. v. Chrétien, 2010 QCCS 4843, par. 49, cited in Laflamme, par. 66. 13 Laflamme, par. 66. 14 The clause was drafted as follows: “We will not increase your basic monthly voice Plan or excess airtime charges during the course of the commitment period, provided that you remain eligible, throughout the entire commitment period, for the Plan and the services you have chosen. (...) During the term, we may increase other charges (including network access fees), and may also charge additional fees after having provided you with a 30 day prior notice”. (Laflamme, par. 33.) 15 Sections 11.2 and 12 C.P.A. apply to all types of consumer contracts. We are only discussing their application within the context of telecommunications service contracts; however the basic principles remain the same, regardless of the type of contract, with the exception of variable credit contracts pursuant to section 129 C.P.A., to which the rules set out in section 11.2 C.P.A. do not apply. 16 Martin, par. 59-63. 17 Martin, par. 67. 18 Amram v. Rogers Communications inc. (and Fido Solutions inc.), 2012 QCCS 4453. Leave to appeal granted for the sole purpose of modifying some paragraphs of the judgment in the first instance, 2015 QCCA 105. Leave to appeal to the Supreme Court dismissed (S.C.C., 2015-09-24). 19 For further information concerning the application of this section, please see our newsletter Need to Know published in August 2015: 20 The subclass consisted of members who had subscribed to an extreme high-speed internet plan after June 28, 2007. 21 For a brand, business or an organization, consumer loyalty management is the art of creating and managing a durable personal relationship with each of its clients, particularly by awarding them benefits such as discounts or gifts once they have accumulated points earned through previous purchases. 22 Option consommateurs v. Corporation Shoppers Drug Mart, 2012 QCCS 1078; Neale v. Groupe Aéroplan inc., 2012 QCCS 902. 23 Proceedings filed against the Toronto Dominion Bank on July 17, 2015:

    Read more